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

13% after reorganizing announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds information, background, remarks 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 chose to separate its decreasing cable companies such as CNN from streaming and studio operations such as Max, laying the foundation for a possible sale or spinoff of its TV business as more cable television customers cut the cable.

Shares of Warner leapt after the company stated the brand-new structure would be more deal friendly and it expected to complete 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 television TV companies, a long time golden goose where revenues are wearing down as millions of consumers embrace streaming video.

Comcast last month unveiled plans to divide most of its NBCUniversal cable television networks into a new public business. The new business would be well capitalized and positioned to get other cable networks if the industry combines, one source informed Reuters.

Bank of America research study analyst Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable television service possessions are a "very sensible partner" for Comcast's new spin-off company.

"We highly think there is potential for relatively large synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for traditional television.

"Further, our company believe WBD's standalone streaming and studio properties would be an appealing takeover target."

Under the new structure for Warner Bros Discovery, the cable company including 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 department together with film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

"Streaming won as a habits," stated Jonathan Miller, chief executive of digital media investment firm Integrated Media. "Now, it's winning as a company."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming possessions from rewarding however diminishing cable television service, providing a clearer investment picture and likely setting the stage for a sale or spin-off of the cable unit.

The media veteran and consultant anticipated Paramount and others may take a similar path.

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

"The concern is not whether more pieces will be moved around or knocked off the board, or if further consolidation will occur-- it refers who is the buyer and who is the seller," wrote Fishman.

Zaslav signified that circumstance throughout Warner Bros Discovery's financier call last month. He said he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media industry consolidation.

Zaslav had taken part in merger talks with Paramount late in 2015, though an offer never materialized, according to a regulatory filing last month.

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

"The structure modification would make it easier for WBD to sell off its linear TV networks," eMarketer analyst Ross Benes said, describing the cable television company. "However, finding a purchaser will be difficult. The networks are in debt and have no signs of development."

In August, Warner Bros Discovery composed down the worth of its TV properties by over $9 billion due to uncertainty around charges from cable television and satellite distributors and sports betting rights renewals.

This week, the media company announced a multi-year offer increasing the general costs Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast agreement, together with an offer reached this year with cable television and broadband supplier Charter, will be a design template for future settlements with distributors. That might assist stabilize pricing 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)

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