NEW YORK (Reuters) - Time Warner Inc is consolidating its two film studios to fold New Line Cinema — behind movies like “The Lord of the Rings” trilogy and “Hairspray” — under the wing of Warner Bros. Entertainment.
The move 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 on Tuesday. It added that the two executives are in talks “about possible future business relationships with the company.”
New Line will become a unit of Warner Bros. It will maintain separate development, production, marketing and distribution operations, but will coordinate those functions with Warner Bros. to cut costs and boost margins.
“We are moving quickly to improve our business performance and financial returns,” Time Warner President and CEO Jeff Bewkes said in a statement.
“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.”
Bewkes said New Line could make use of Warner Bros.’ global distribution network to boost overseas box office receipts, and the combined entertainment unit can take better advantage of digital distribution channels.
The move comes after Time Warner said earlier in February that it wants to cut costs at New Line and review its structure as an independent studio.
The New York-headquartered media conglomerate, which also owns CNN, HBO and Time Inc, is under pressure from investors to revive its stock price, which has lagged that of peers like News Corp or Walt Disney Co over the past 12 months.
Time Warner shares closed down 3.09 percent, or 51 cents, at $16.02 on the New York Stock Exchange before the statement, and were unchanged in extended trading.