Time Warner puts New Line Cinema under Warner Bros

By Kenneth Li

NEW YORK (Reuters) - New Line Cinema, the studio behind "The Lord of the Rings" and "Hairspray," will be folded under the wing of Warner Bros Entertainment as part of an aggressive plan by parent Time Warner Inc (TWX.N: Quote, Profile, Research, Stock Buzz) to cut costs.

The highly anticipated move, announced on Thursday, ends New Line's 40 years as an independent film studio with Co-Chairmen and Co-Chief Executives Robert Shaye and Michael Lynne electing to leave.

Time Warner said the two executives are in talks "about possible future business relationships with the company."

"We are moving quickly to improve our business performance and financial returns," Time Warner President and CEO Jeff Bewkes said in a statement.

It was not immediately clear how many of New Line's approximate 600 employees would lose their jobs, Bewkes said in an internal memo to staff.

"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."

Once an indie film studio, New Line has become more mainstream in recent years, with blockbuster hits such as the "Lord of the Ring" franchise, or the "Austin Powers" trilogy. That transition has made New Line more like Warner Bros, making a merger in the cards for Time Warner.

The decision to combine the studios came after Time Warner said earlier in February it wanted to cut costs at New Line and review its structure as an independent studio.