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Warner Bros. absorbs New Line

LOS ANGELES, California (AP) — Media giant Time Warner Inc. said Thursday its Warner Bros. Entertainment studio would absorb its New Line Cinema unit, an independent studio that redistributed quirky films like Reefer Madness and made blockbusters like The Lord of the Rings trilogy.

New Line founder Robert Shaye and his co-chief executive, Michael Lynne, decided to leave the 40-year-old studio but were discussing possible future business deals with the conglomerate.

New Line has been our respective life’s work as well as our second family, Shaye and Lynne said in a joint statement. While we’re sad to be leaving, we’re enormously proud to have overseen its extraordinary growth.

New Line will maintain separate development, production and marketing departments but will integrate those functions with its new parent division to cut costs and improve profitability, Time Warner said.

The new alignment also will help the two companies coordinate film releases and let New Line benefit from the international and digital distribution contracts of Warner Bros., the company said.

As an example of lost revenue opportunities, New Line’s The Golden Compass made $70 million domestically through February 24 but raked in $261 million abroad, from which the studio saw limited benefit because it had to sell those distribution rights to various other companies.

The Warner Bros. international network will allow Time Warner to reap such sales directly.

The move marks the first major restructuring effort by Time Warner President and CEO Jeff Bewkes since he took over as chief executive January 1.

Bewkes is under pressure to boost Time Warner’s share price, which stagnated during the tenure of Dick Parsons, who took over as CEO in 2002 after a difficult merger with AOL.

Shares fell 51 cents, or 3.1 percent, Thursday to close at $16.02 but rose 11 cents in after-hours trading.

Media analyst Howard Vogel called the New Line move a relatively easy and simple step to improve efficiency at Time Warner.

But he said it signaled the departure of two industry veterans who had established New Line’s edgy lineup with hits such as A Nightmare on Elm Street in 1984.

New Line was bought in 1994 by Ted Turner’s Turner Broadcasting System, which was acquired by Time Warner two years later.

They never intended to be part of Time Warner and Warner Bros., Vogel said of Shaye and Lynne.

New Line has several potential hits in production, such as the next film in the Rings series, The Hobbit, which is set for release in 2010, and Sex and the City: The Movie due to hit theaters in May.

Among Warner Bros.’ franchises are the Harry Potter series. It also made the recent movies Sweeney Todd: The Demon Barber of Fleet Street and I Am Legend.

Time Warner’s other divisions include AOL, Time Inc., Time Warner Cable, Home Box Office, Turner Broadcasting System and Warner Bros. Entertainment.
Warner Bros. absorbs New Line – found here.


February 29, 2008 - Posted by | Uncategorized

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