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

Shares dive 13% after restructuring statement

Follows course taken by Comcast's new spin-off company

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Challenges seen in selling debt-laden direct TV networks

(New throughout, includes information, background, remarks from industry experts and experts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

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

Media business are thinking about choices for fading cable television TV services, a long time golden goose where profits are wearing down as countless customers accept streaming video.

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

Bank of America research expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service assets are a "extremely rational partner" for Comcast's brand-new spin-off business.

"We strongly believe there is capacity for relatively large synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, using the market term for conventional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable service including TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate division in addition to 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 finally paying off.

"Streaming won as a behavior," said Jonathan Miller, president of digital media investment business Integrated Media. "Now, it's winning as a company."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will distinguish growing studio and streaming properties from profitable but diminishing cable TV company, giving a clearer financial investment photo and likely setting the stage for a sale or spin-off of the cable system.

The media veteran and adviser forecasted Paramount and others may take a comparable course.

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

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

Zaslav indicated that scenario throughout Warner Bros Discovery's investor call last month. He stated he expected President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market combination.

Zaslav had engaged in merger talks with in 2015, though a deal never emerged, according to a regulatory 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 much easier for WBD to offer off its linear TV networks," eMarketer expert Ross Benes said, referring to the cable business. "However, finding a buyer will be challenging. The networks are in financial obligation and have no signs of development."

In August, Warner Bros Discovery jotted down the value of its TV assets by over $9 billion due to uncertainty around fees from cable and satellite distributors and sports betting rights renewals.

Today, the media business 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 contract, together with an offer reached this year with cable and broadband service provider Charter, will be a design template for future settlements with distributors. That might help 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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