Bewkes nukes New Line

Founders out as TW chief folds studio into WB

After a four-decade run that saw its transformation from an upstart indie company exploiting rude John Waters movies and gory horror flicks to a mini-major winning Oscars and billion-dollar worldwide grosses with the "Lord of the Rings" trilogy, New Line is being absorbed into parent company Time Warner's Warner Bros. Pictures.

As part of the cost-saving consolidation ordered by TW's new CEO Jeff Bewkes, New Line co-chairmen and co-CEOs Bob Shaye and Michael Lynne are leaving the company they founded in 1967, though Bewkes said they are in talks encompassing "a number of alternatives" and could end up producing films for New Line or Warners.

New Line will remain more than just a production label within Warners, though. It will retain its own separate development and production, marketing and distribution operations. The unit will report to Warner Bros. Entertainment chairman and CEO Barry Meyer and president and COO Alan Horn, with Jeff Robinov, president of Warner Bros. Pictures Group, also set to play a key role in overseeing the new New Line. (Shaye and Lynne had reported to the TW chairman during their tenure.)

An undetermined number of New Line's 600 staffers could face layoffs. The future of production head Toby Emmerich, who has tried to pull New Line away from horror movies, also is unknown. Bewkes said the future New Line executive lineup and details of layoffs are being worked out.

Two key factors played into Bewkes' decision, the new CEO's first major initiative to reflect the hard decisions he appears willing to make in reshaping Time Warner.

The company is in the process of reducing the number of films it distributes from both Warners and New Line, with Warners reducing its product flow from 25-30 films a year to 18-20. Bewkes said New Line, in turn, must "focus on being an indie, rather than being halfway to a major."

In recent years, as New Line's ambitions have grown, it has taken on more risk. The three "Rings" movies, released between 2001 and 2003, resulted in a boxoffice bonanza. But New Line hasn't maintained that momentum. Although it scored two $100 million-plus hits in 2007 with "Hairspray" and "Rush Hour 3," most of its lineup failed to ignite, and its pricey "The Golden Compass," though a hit abroad, fell flat in the U.S.

The company really struggled with recent movies in the $30 million-$60 million range; such titles as "Shoot 'Em Up," "Fracture" and "Rendition" found few takers at the boxoffice.

The second factor is the growing importance of foreign boxoffice. New Line traditionally has sold off many territories internationally, a strategy that has allowed it to raise production funds at the expense of losing out on the boxoffice upside of hit pictures. Warners now plans to move New Line titles through its Warner Bros. International pipeline, leaving the future of worldwide production and marketing president Rolf Mittweg up in the air.

Warners also is expected to absorb New Line's home video operations into Warner Home Entertainment.

Questions also surround the future of Picturehouse, the specialty film unit headed by Bob Berney that has been run as a joint venture between New Line and HBO. HBO has been reassessing its involvement in Picturehouse. According to one scenario making the rounds, Picturehouse could end up being consolidated with Warners' specialty unit, Warner Independent. Without divulging his plans, Bewkes said, "We are proud of Picturehouse," adding that he would find the best solution for its future.

In a memo to TW employees, Bewkes summed up the larger forces at work. "Given trends in the industry toward fewer movie releases," he wrote, "the importance of a coordinated strategy for the international and digital distribution of filmed entertainment, and the need to continue to make sure that we're running our businesses as efficiently as possible, it made sense for us to combine our studios' infrastructures."

Going forward, the slimmed-down New Line will focus on genre movies, such as horror and lower-budgeted comedies, that until recent years had been its bread and butter.

However, Bewkes added that the upcoming back-to-back movie adaptations of "The Hobbit," which New Line is to produce with MGM, will remain on the New Line slate. The company will "continue to nurture commercial franchises and create some new ones," he said, also citing the "Austin Powers," "Blade" and "Rush Hour" series.

"We will preserve the New Line voice," Bewkes said, but the operation's focus will now mainly be on complementing Warners' slate with genre work. New Line frequently has scored with comedy; Its Will Ferrell comedy "Semi-Pro" opens today, and the upcoming "Harold & Kumar Escape From Guantanamo Bay" looks promising. So New Line's comedy chops could offset Warners' own weakness in that area.

Shaye founded New Line as a distribution company for movies like "Reefer Madness" and had early success releasing Waters' movies. What put the company on the map was its first production in 1984, "A Nightmare on Elm Street." New Line also launched the careers of Mike Myers, Jim Carrey and Paul Thomas Anderson and recharged those of Adam Sandler and David Fincher.

As company founders who sold their business to a corporate parent that forced them out when it could no longer stomach their taste for more expensive risks, Shaye and Lynne found themselves in a similar position to that of Bob and Harvey Weinstein after they sold Miramax to Disney.

"I'm incredibly heartbroken by it. I'm homeless," Waters said. "Bob was the first person I was in the film business with back in 1972. I was there when the company was a tiny place in Greenwich Village with three or four employees."

Said producer Michael De Luca, who headed production for seven of the 16 years he worked at New Line: "I'm sad to see this configuration of New Line come to close because I certainly owe Bob and Michael my start and most of my career. Bob always embraced new talent and new filmmakers, and that continues to be the lifeblood of our industry. I hope to see him continue that in whatever capacity he chooses.

"The town is a little less rock 'n' roll now, and that is always a bad thing," he added.

Director Brett Ratner, who got his start at New Line with "Money Talks" before going on to the "Rush Hour" movies, said: "They are family, and it's like seeing your family fall apart. Bob is the greatest entrepreneur in this business. Now (studio heads) are all CEOs who have been hired by headhunters or taken a job. Bob is the guy who bought the first pencil for New Line Cinema."

A number of agents and producers simply were unhappy to see another buyer sidelined. Added Waters: "To me, the scary thing is when I was younger, when you went to pitch a movie, there were 20 places to go. Now there are only a handful. They just keep buying each other."

Still, one producer said, "It's better to have resolution than have everything up in the air the way it's been."

In a letter to their staff, Shaye and Lynne said it was a "difficult and emotional time" and acknowledged that the company probably would "be a much smaller operation than in the past." The pair said the decision to step down was a painful one, but they intend "to remain actively involved in the industry in an entrepreneurial capacity."

Looking back over Shaye's tenure, Waters commented: "He's lasted longer than any person that ever ran a studio. When you think about it, he's had a longer run than anybody."

Thursday's restructuring could over time allow New Line to double its earnings. Bewkes would only say that the changes will reduce costs and also boost revenue by giving New Line revenue from international territories. He has said that he wants to make Time Warner the most profitable entertainment conglomerate.

Borys Kit reported from Los Angeles; Georg Szalai reported from New York.