Warner Bros Discovery Sets Stage For Potential Cable Deal By > 자유게시판

Shares dive 13% after reorganizing statement

Follows path taken by Comcast's brand-new spin-off business

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds details, background, comments from market experts and experts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its declining cable such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV business as more cable television customers cut the cord.

Shares of Warner leapt after the company stated the new structure would be more deal friendly and it expected to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media companies are thinking about options for fading cable TV businesses, a long time money cow where revenues are wearing down as millions of consumers welcome streaming video.

Comcast last month revealed strategies to divide most of its NBCUniversal cable networks into a brand-new public company. The brand-new business would be well capitalized and placed to get other cable television networks if the industry consolidates, one source informed Reuters.

Bank of America research analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service properties are a "really sensible partner" for Comcast's brand-new spin-off company.

"We highly believe there is potential for fairly substantial synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the market term for conventional television.

"Further, we think WBD's standalone streaming and studio possessions would be an attractive takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable television TV business consisting of TNT, Animal Planet and CNN will be housed in an unit called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a different division along with film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring shows an inflection point for the media market, as investments in streaming services such as Warner Bros Discovery's Max are lastly paying off.

"Streaming won as a habits," said Jonathan Miller, primary executive of digital media investment firm Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will distinguish growing studio and streaming possessions from lucrative but shrinking cable television company, offering a clearer financial investment picture and likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and adviser predicted Paramount and others might take a similar course.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before getting the even larger target, AT&T's WarnerMedia, is placing the business for its next chess move, composed MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be walked around or knocked off the board, or if additional consolidation will take place-- it refers who is the buyer and who is the seller," composed Fishman.

Zaslav signaled that scenario during Warner Bros Discovery's investor call last month. He stated he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media industry consolidation.

Zaslav had actually participated in merger talks with Paramount late in 2015, though a deal never ever emerged, according to a regulative filing last month.

Others injected a note of care, noting Warner Bros Discovery brings $40.4 billion in financial obligation.

"The structure modification would make it simpler for WBD to offer off its linear TV networks," eMarketer expert Ross Benes said, referring to the cable television TV business. "However, discovering a buyer will be challenging. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery made a note of the value of its TV properties by over $9 billion due to unpredictability around costs from cable television and satellite distributors and sports betting rights renewals.

Today, the media business revealed a multi-year deal increasing the overall fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast contract, together with an offer reached this year with cable television and broadband supplier Charter, will be a design template for future negotiations with distributors. That could assist support prices for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles; Editing by Shilpi Majumdar, Arun Koyyur, Keith Weir and David Gregorio)