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 information, background, remarks from market insiders and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its decreasing cable television TV organizations 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 customers cut the cord.

Shares of Warner leapt after the business said 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 business are thinking about choices for fading cable businesses, a long time golden goose where revenues are deteriorating as countless consumers embrace streaming video.

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

Bank of America research analyst Jessica Reif Ehrlich wrote that Warner Bros cable tv properties are a "extremely rational partner" for Comcast's new spin-off company.

"We highly think there is potential for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for conventional tv.

"Further, our company 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 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 separate division in addition to movie studios, consisting of 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 finally paying off.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new corporate structure will distinguish growing studio and streaming properties from successful however diminishing cable television organization, giving a clearer investment image and most likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and advisor predicted Paramount and others might take a comparable path.

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

"The question is not whether more pieces will be walked around or knocked off the board, or if further consolidation will take place-- it is a matter of who is the purchaser and who is the seller," composed Fishman.

Zaslav signified 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, unlocking to media industry debt consolidation.

Zaslav had participated in merger talks with Paramount late in 2015, though an offer never ever materialized, according to a regulative filing last month.

Others injected a note of caution, keeping in mind Warner Bros Discovery brings $40.4 billion in debt.

"The structure modification would make it easier for WBD to sell off its direct TV networks," eMarketer analyst Ross Benes said, describing the cable television company. "However, finding a purchaser will be tough. The networks are in financial obligation and have no indications of growth."

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

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

Warner Bros Discovery is wagering the Comcast agreement, together with a deal reached this year with cable television and broadband service provider Charter, will be a template for future negotiations with suppliers. That could help support 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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