posted 02-29-2008 03:26 PM                    

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New Line in Warner's corner
Company ends 40-year run as indie studio
By DADE HAYES, DAVE MCNARY

New Line

Jeff Bewkes

Bob Shaye
Shaye
The colorful 40-year run of New Line is coming to an abrupt end, costing the jobs of most of the company's 600 staffers.

The company -- home to "The Lord of the Rings," "Austin Powers," "Friday the 13th," "A Nightmare on Elm Street," "Rush Hour," "The Mask" and "Boogie Nights" -- will be folded into Warner Bros. as a small genre arm.

But toppers Bob Shaye, who founded the company in his New York apartment, and Michael Lynne will not be part of the package.

No exact numbers have been divulged for how many of New Line's staffers will stay but the surviving entity will be a shell of its former self, refocusing on the horror, comedy and urban genre pics that helped put it on the map decades ago. Employees will attend meetings today in Los Angeles and New York to discuss future plans.

Time Warner said New Line would continue to have development, marketing, business affairs and some distribution operations but those will be cut severely. And New Line films will go out through Warner Bros. pipes after this weekend's "Semi-Pro."

Warner will likely make ample use of completed New Line pics since the usually prolific studio has dated only three pics for 2009.

New Line production prexy Toby Emmerich and distribution-marketing topper Rolf Mittweg are staying on for the time being and will report to Alan Horn and Barry Meyer. It's anticipated Emmerich will segue into a producing deal and be succeeded by chief operating officer Richard Brener.

The fate of Time Warner's specialty film divisions, Picturehouse and Warner Independent Pictures, wasn't addressed Thursday, but New Line's oversight of Picturehouse signals that the operations will also be consolidated.

Picturehouse prexy Bob Berney had no comment.

Time Warner CEO and president Jeff Bewkes wouldn't address other operations, but told Daily Variety the consolidation is "a move toward the label model," adding, "New Line will have its own voice, but focus on a smaller slate and franchises they have built. The main operation, the arms and legs, will be at Warner Bros."

Thursday's announcement -- a few minutes after the closing bell of the New York Stock Exchange -- was not a complete surprise in the wake of Bewkes' first earnings call as TW chief on Feb. 6. Citing an industry shift toward fewer releases, he said cutbacks at New Line would be central to a plan to save $50 million annually.

Bewkes is under pressure to improve results companywide and budge a stagnant stock. He said New Line will stop its longstanding practice of selling off international rights to finance films as many of its output deals are due to expire.

"With the growing importance of international revenues, it makes sense for New Line to retain its international film rights and to exploit them through Warner Bros.' global distribution infrastructure," he added.

That switch was likely hastened by New Line's selling off foreign rights to the pricey "The Golden Compass," only to see it underperform domestically while delivering abroad. Final domestic cume was $70 million, while international gross has topped $260 million.

In a message to New Line staffers, Shaye and Lynne warned New Line will be much smaller.

"This was a painful decision, because we love New Line, and the people who work here have been like our second families," Shaye and Lynne said. "But we will be leaving the company with enormous pride in what all of us at New Line have accomplished together. From its humble beginnings 40 years ago, our studio has created some of the most popular and successful movies of all time."

The curtain fell just four years after "The Lord of the Rings: The Return of the King" vaulted New Line to the pinnacle of the film biz. The third installment of the ultra-risky $270 million trilogy won the best picture Oscar and grossed $1.1 billion worldwide.

The three films together were a cultural event and the stuff of movie lore, bringing in billions in B.O. and merchandise. Rejected by other studios, Peter Jackson found a home for his JRR Tolkien obsession at New Line, which rolled the dice on an 18-month shoot in New Zealand by a helmer with no prior studio hits.

Since then, however, New Line had fallen on harder times. Its lone breakout post-"Rings" pic was "Wedding Crashers," which tallied $209 million in summer 2005. Its only solid performers since were "Rush Hour 3" and "Hairspray."

With the absence of hits came grim headlines. Shaye waged an expensive -- and ultimately unsuccessful -- legal fight against Jackson over gross receipts from the "Rings" pics. He also quarreled with favorite son Brett Ratner over back-end deals for "Rush Hour 3," an on-and-off project that finally came out last summer. And Shaye opted to take time out from running the company to direct "The Last Mimzy," a bland kidpic that grossed just $21.5 million last year.

In a major exec shift last year, New Line promoted Brener in a move seen as a signal that Brener might be Emmerich's eventual successor. Dominating its slate are mid-priced comedies such as "Harold and Kumar Escape From Guantanamo"; "Sex and the City"; "He's Just Not That Into You" with Drew Barrymore, Jennifer Aniston and Jennifer Connolly; "The Ghosts of Girlfriends Past" with Matthew McConaugh3y and Jennifer Garner; and "Four Christmases" with Vince Vaughn and Reese Witherspoon.

The significant non-comedies on the upcoming slate: "Journey to the Center of the Earth 3D," kid fantasy "Inkheart" and "Time Travelers Wife," with Rachel McAdams. Plans to release the year's films are at press time full steam ahead. Picturehouse titles include "Run Fat Boy Run," "Kitt Kittredge," with Abigail Breslin and "The Women," with Meg Ryan, Annette Bening, Jada Pinkett Smith, and Debra Messing.

A key New Line property, "The Hobbit," was stalled for years due to the court battle between Shaye and Jackson -- even though it represented a logical franchise extension of "The Lord of the Rings." Partly at the behest of MGM topper Harry Sloan (who owned half of "The Hobbit" rights and would not go forward unless Jackson was involved creatively), Shaye and Lynne buried the hatched with Jackson by settling the lawsuit a few months ago.

"The Hobbit" has Guillermo Del Toro in talks to direct, and the picture will be unaffected by the ouster of Shaye and Lynne. Though the films won't be scripted until a director is hired, and Jackson wraps "The Lovely Bones," the expectation is that the films will be ready for release for Christmas 2011 and 2012. Harry Potter will have wound down at WB by then, and the corporation will surely welcome another fantasy franchise that has an eager global audience waiting. New Line will distribute domestically, while MGM has international rights.

Thursday's announcement didn't address the fate of New Line's TV, homevid and legit operations.

On the small screen, New Line TV has seen mixed results, earning praise for scripted fare like Fox's "Kitchen Confidential," but mostly sticking with reality entries. In March, WE: Womens Entertainment is slated to bow "High School Confidential," a documentary series about 14 teenage girls as they navigate high school; TV Land is on board this July with "Family Foreman," which focuses on the life of George Foreman and his family.

New Line has a separate marketing and sales operation for home entertainment; Warner has long handled physical distribution of DVDs.

New Line originally trafficked in a checkered mix of auteur films like Godard's "Sympathy for the Devil" and midnight movies like "Reefer Madness" and early John Waters fare. After years of hand-to-mouth existence, the company reached a new level of stability thanks to the 1980s homevid boom and the startling $25.5 million take from slasher pic "Nightmare on Elm Street" in 1984.

Having survived brushes with insolvency, the company became expert at serving the teen and twentysomething aud, pioneering the use of street teams and campus screenings. After "Nightmare" came profitable franchises like "House Party," "Friday," "Blade," "Austin Powers" and "Rush Hour."

With its newfound success came two acquisitions -- one by Ted Turner, the other by Time Warner -- that made Shaye a billionaire.

The company's current woes mirror the time just before "Rings" hit the jackpot. Emboldened by its great run in the 1990s under wunderkind production chief Michael De Luca, New Line made profligate choices with Adam Sandler's "Little Nicky" and Warren Beatty starrer "Town & Country."

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