WB Takes Over New Line

Published by Jeff Leins on: February 28th, 2008

Variety confirms that Time Warner and new CEO Jeff Bewkes has decided to roll New Line Cinema into Warner Bros, ending its 40-year run as an independent studio.

New Line will continue to operate as a separate entity, maintaining its own operations such as development, production, marketing, distribution and business affairs.

Co-chiefs and co-founders Bob Shaye and Michael Lynne are stepping down.

In a memo to their employees, they said the changes would mean New Line will “probably be a much smaller operation than in the past.” This means major lay-offs. (See the entire letter below.)

Earlier this month it was rumored that the company would be folded back into WB amidst another major lawsuit over the Lord of the Rings profits with possible delays on the horizon for The Hobbit.

The studio has also had some problems finding a hit recently, including the domestic box office bomb that was The Golden Compass. The last movie that was a runaway hit would probably be 2005’s Wedding Crashers. And only the Lord of the Rings trilogy before that.

CEO Jeff Bewkes said, “Given the trend toward fewer movie releases, New Line and Warner Bros. will now have more complementary release slates, with New Line focusing on genres that have been its strength.” Don’t run two movies under the same conglomerate on the same opening weekend. Sounds reasonable. It doesn’t make sense to compete with yourself.

Bewkes also said New Line would no longer sell off international rights to finance films. “With the growing importance of international revenues, it makes sense for New Line to retain its international film rights and to exploit them through Warner Bros.’ global distribution infrastructure,” he added.

It does absolutely make sense. A huge problem with the whole Golden Compass fiasco was that New Line sold foreign distribution rights to cover the $180 million budget. Then the movie bombed her and did fairly well overseas (almost 80% of its total $330 million gross). The majority of profits for big blockbusters come from overseas and Bewkes is aware of that.

How this affects future projects (i.e. the two Hobbit movies) is still up in the air.

Again, the entire memo is after the jump:

To: New Line Colleagues

From: Bob Shaye and Michael Lynne

Subject: Our Company

This afternoon, Time Warner is announcing that New Line will become a unit of Warner Bros. This is, of course, a very difficult and emotional time for all of us who have worked at New Line. While there is not much we can say that can lessen the impact of this announcement, we did want you to know about the decision before you read about it in the press.

New Line will maintain its own identity and will continue to produce, market, and distribute movies. But New Line will now do so as part of Warner Bros. and will probably be a much smaller operation than in the past. Time Warner hopes that operating New Line as a unit of Warner Bros. will allow New Line to focus on the creative side of movie-making, while reducing costs and taking advantage of Warner Bros.’ distribution systems. The company will be holding group meeting with New Line employees tomorrow in Los Angeles and New York to discuss this announcement, and is committed to letting employees know as soon as possible about how this change affects them individually.

For our part, we will be stepping down as Co-Chairmen and Co-CEOS of New Line. This was a painful decision, because we love New Line and the people who work here have been like our second families. But we will be leaving the company with enormous pride in what all of us at New Line have accomplished together. From its humble beginnings 40 years ago, our studio has created some of the most popular and successful movies of all time. Those movies are a tribute to the amazing creative energy and entrepreneurial abilities of the talented people at New Line. They are a legacy that will endure forever.

Although we are stepping out of New Line, we intend to remain actively involved in the industry in an entrepreneurial capacity, and will keep you advised of developments.

We thank all of you who have worked so hard to make New Line such a success. We are very proud of every one of you.

Bob & Michael