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From Today's New York Times 29 Feb 2008 07:48 #17824

  • Larry Thomas
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Time Warner announced Thursday that New Line Cinema, one of its marquee movie studios, would become a unit of Warner Brothers, ceasing to operate as a full-service, stand-alone unit.

In the process, New Line will shed an unspecified but substantial number of its 600 employees, including Robert Shaye, the studio’s founder, and his co-chairman, Michael Lynne.

New Line, which Mr. Shaye founded in New York in 1967, became famous for promoting the work of independent directors while minting box-office gold like the “Nightmare on Elm Street” series and later the “Lord of the Rings” trilogy. In recent years, the studio had been battered by poorly performing movies and legal wrangling over “Lord of the Rings.”

The consolidation — the first far-reaching decision by Jeffrey L. Bewkes, Time Warner’s new chief executive — could double New Line’s earnings, according to analysts. The company said it expected to record a “fairly sizable” revamping charge tied to discontinuing some operations at New Line in 2008, and cautioned that earnings would not reflect the full benefit until 2010.

“We are moving quickly to improve our business performance and financial returns,” said Mr. Bewkes, who is under pressure to lift Time Warner’s share price. Its shares have recently traded at about $16.

In addition to cutting costs, another reason behind the move was the increasing importance of the international box office, Mr. Bewkes said. New Line has largely relied on the advance sale of foreign rights to bankroll its pictures. But Mr. Bewkes said that strategy leaves too much money on the table.

“The Golden Compass,” the recent fantasy epic starring Nicole Kidman, is a prime example. The movie was a hit overseas, generating some $260 million in ticket sales, but New Line had sold off most of the foreign rights.

Mr. Bewkes will now decide what to do with the company’s two other boutique movie studios, Picturehouse and Warner Independent Pictures.

While it had struggled, New Line was hardly moribund. It is releasing the movie version of “Sex and the City” this spring and recently resolved its legal dispute with the director Peter Jackson, clearing the path for him to make “The Hobbit.”

Indeed, the consolidation may be as much about egos as economics. Mr. Shaye and Mr. Lynne — whose aggressive style and loyalty to offbeat projects like “The Last Mimzy” have raised eyebrows — have long resisted combining New Line with Warner Brothers, leading to a running soap opera for the company.

Mr. Shaye, 68, and Mr. Lynne, 66, declined to be interviewed. In an internal memorandum, they said they intended to remain “actively involved in the industry in an entrepreneurial capacity.”

Barry M. Meyer, chairman of Warner Brothers, and Alan F. Horn, the studio’s president, also declined to comment. In an internal memo, they wrote, “We want to take our time to make sure that we understand New Line’s business and properly align this valuable asset that’s now affiliated with the studio.”
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Re: From Today's New York Times 29 Feb 2008 09:42 #17825

  • Mike
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boo hoo/ loved New Line/ always great for us to deal with.WB? Not so much.

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Re: From Today's New York Times 29 Feb 2008 10:42 #17826

  • RoxyVaudeville
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Ditto to what you just said Mike.
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Re: From Today's New York Times 29 Feb 2008 13:13 #17827

  • leeler
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you are right about that, Mike. Wonder if this will change WB any....or make it worse
"What a crazy business"
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Re: From Today's New York Times 14 Mar 2008 10:18 #17828

  • muviebuf
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It has now been formally announced that beginning with "Harold and Kumar Escape From Guantanamo" on April 25th all New Line product would be released by Warner Brothers.
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