Showbiz units under scrutiny at Time Warner

By Steven Zeitchik and Georg Szalai

NEW YORK (Hollywood Reporter) - The departure of Carolyn Strauss, a longtime HBO executive and its current programming chief, is the latest indicator that Time Warner's entertainment divisions are in flux.

Since Jeff Bewkes took over as CEO, the company has folded a movie studio, set about re-creating its specialty film operations and may soon examine its already arms-length relationship with the CW and broadcast television in general.

At the same time, Time Warner has made significant investments in nonentertainment entities, last week spending $850 million for a social networking site, Bebo, with little potential to complement its film and television industries.

The moves are part of a larger rethink at Time Warner that entails closer scrutiny of its entertainment assets. While Bewkes has focused on pet Wall Street topics including the potential spinoffs or sales of AOL and Time Warner Cable, he's also given strong indications of his approach to entertainment.

One of the clear signals was the recent de facto absorption of the New Line studio into Warner Bros., to avoid overlapping businesses within the conglomerate. "The New Line move was pure Bewkes," one media executive said.

Bewkes acknowledged that philosophy when he told the Bear Stearns media conference last week that "it is far more profitable to put (movies) through one theatrical distribution system."

The likely merger between niche Picturehouse and Warner Independent fits that same philosophy. It's a mind-set that also gives rise to speculation about the future of HBO Films, for years an autonomous film-production entity that already is easing out of the theatrical business. (HBO said it expects no near-term change at HBO Films.)

And then there is the CW. The network, which already is run day-to-day by CBS, has suffered in the ratings as new series have foundered and returning shows like "Beauty & the Geek" have failed to pull in viewers.