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This is, in my estimation, a logical, necessary and ballsy move by Time Warner’s new chief Jeff Bewkes (unless Toby Emmerich is kept on as New Line Cinema’s president of production, which would be moronic). It also shows that Bewkes is moving aggressively to start the transformation process of a corporation desperate for change after so many years when his predecessor Richard Parsons acted like just a caretaker of the status quo. But with change comes pain, and New Line Cinema into Warner Bros will indeed cause pain to personnel and projects. Right now, there are more questions than answers about how this is going to work precisely. Even the Warner Bros people are saying that. The short-term good news for those fearful of losing their jobs is that, as part of the consolidation, New Line will be operated as a unit of Warner Bros and maintain separate development, production, marketing, distribution and business affairs operations. Of course, how long that lasts is anybody’s guess, and Bob Shaye and Michael Lynne forecast that New Line will become a much smaller company. Bewkes refused to renew their contracts. The pair co-founded the company 40 years ago and did a brilliant job creating a powerhouse studio large in profit if not size and scope. They also sold that company and made a shitload of money. time_warner_logo.jpgHollywood has witnessed this again and again: moguls sell the company they built and then expect to have a free hand running it under the new ownership. But they can’t have their cake and eat it too. Shaye especially became a victim of his own arrogance and avarice. Worse, he didn’t keep his eye on the bottom line. And he unnecessarily pissed off creative partners who had done great work for the studio. Bob had a long and successful run: now it’s over because of hubris and karma. Readers of DHD know that I first broke this story back on January 21st, and followed every twist and turn since then. For background, read my previous postings below. Then scroll down for the various interoffice memos and official Warner Bros/New Line news release.

  1. Decision Day Fast Approaching For Bob Shaye, Michael Lynne, and New Line
  2. Worse News For New Line: Tolkien Sues
  3. BusinessWeek Urges Jeff Bewkes To Move New Line Into Warner Bros
  4. TW’s Bewkes Confirms New Line Changes
  5. SOURCES: Terry Semel Looks At New Line
  6. SOURCES: Bob Shaye’s New Line Contract Won’t Be Renewed By TW Boss
  7. Peter Jackson And Bob Shaye Settle; Jackson Will Exec Produce ‘Hobbit’
  8. Another Reason Bob Shaye Should Retire
  9. The Dog Ate New Line’s Balance Sheets…
  10. Bob Shaye’s Mea Culpa Too Little Too Late
  11. It’s Official! Carlisle To New Line
  12. Is This Russell’s New Line Replacement?
  13. Another Reason Why Bob Shaye Is A Prick
  14. Bob Shaye Looks Like Even Bigger Idiot…
  15. Studios To Fight Over Unusual Peter Jackson Pic Deal (But Not New Line)
  16. Bombs Away: Shaye’s ‘Mimzy’ Tracking 0
  17. Peter Jackson Answers Lord Of The Rants

Memo From Bob Shaye and Michael Lynne to New Line staff:

To: New Line Colleagues
From: Bob Shaye and Michael Lynne
Subject: Our Company

This afternoon, Time Warner is announcing that New Line will become a unit of Warner Bros. This is, of course, a very difficult and emotional time for all of us who have worked at New Line. While there is not much we can say that can lessen the impact of this announcement, we did want you to know about the decision before you read about it in the press.

New Line will maintain its own identity and will continue to produce, market, and distribute movies. But New Line will now do so as part of Warner Bros. and will probably be a much smaller operation than in the past. Time Warner hopes that operating New Line as a unit of Warner Bros. will allow New Line to focus on the creative side of movie-making, while reducing costs and taking advantage of Warner Bros.’ distribution systems. The company will be holding group meeting with New Line employees tomorrow in Los Angeles and New York to discuss this announcement, and is committed to letting employees know as soon as possible about how this change affects them individually.

For our part, we will be stepping down as Co-Chairmen and Co-CEOS of New Line. This was a painful decision, because we love New Line and the people who work here have been like our second families. 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. Those movies are a tribute to the amazing creative energy and entrepreneurial abilities of the talented people at New Line. They are a legacy that will endure forever.

Although we are stepping out of New Line, we intend to remain actively involved in the industry in an entrepreneurial capacity, and will keep you advised of developments.

We thank all of you who have worked so hard to make New Line such a success. We are very proud of every one of you.

Bob & Michael

Memo from Barry Meyer and Alan Horn to Warner Bros and New Line staff:

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Dear Colleagues,

Today it was announced that New Line Cinema will be operated as a unit of Warner Bros. Entertainment. Full details of that announcement are in the memo from Jeff Bewkes distributed earlier today.

As Jeff said, this consolidation is necessary to help ensure the ongoing success of Time Warner’s filmed entertainment operations by maximizing efficiencies and more effectively exploiting creative opportunities. This decision was also, in part, driven by the fact that the worldwide movie business is rapidly changing on a daily basis, and we need to constantly refine our business model to remain competitive.

New Line has a 40-year history of creative success, and we have enormous respect for the company and its co-chairmen and co-CEOs, Bob Shaye and Michael Lynne. We want to take our time to make sure that we understand New Line’s business and properly align this valuable asset that’s now affiliated with the Studio. We will share pertinent information with you as it becomes available.

Thank you for your continued support through this time of change, and please join us in welcoming New Line to the Warner Bros. family.

Best regards,
Barry Meyer, Alan Horn

Memo from Time Warner’s Jeff Bewkes:

To: All Time Warner Employees
From: Jeff Bewkes
Subject: New Line to Become a Unit of Warner Bros.

This afternoon, we announced that New Line will be operated as a unit of Warner Bros. New Line will continue to retain its own brand identity and will maintain separate development, production, marketing, distribution, and business affairs operations, but it will now coordinate those functions with Warner Bros.

The combination should strengthen our company’s filmed entertainment business by combining New Line with Warner Bros.’ industry-leading position and global reach. New Line has a proud 40-year legacy of producing creative, cutting-edge entertainment. That will continue. But, given trends in the industry toward fewer movie releases, the importance of a coordinated strategy for the international and digital distribution of filmed entertainment, and the need to continue to make sure that we’re running our businesses as efficiently as possible, it made sense for us to combine our studios’ infrastructures.

Bob Shaye and Michael Lynne, the Co-Chairs and Co-CEOs of New Line, have chosen to leave the company, but we’re in discussions about possible future business relationships. Bob and Michael have a unique partnership that is noteworthy not only for its longevity, but also for its record of innovation and success. They have guided New Line’s growth from a privately-held art film distributor to the world’s leading independent film studio – home to such popular films as The Lord of the Rings trilogy, The Mask, Austin Powers, Blade, Rush Hour, Elf, Wedding Crashers and Hairspray. I thank Bob and Michael for their enduring contributions to Time Warner and look forward to working with them in the future.

This consolidation will also result in changes, including the elimination of jobs at New Line. Warner Bros. is currently working through the details and will let people know how the changes affect them as soon as possible. Colleagues whose jobs are eliminated will be treated fairly and respectfully. These are very difficult decisions, but they’re important for the future success of our film studios and our company.

As always, thank you for your hard work and support as our company moves forward. I’ll continue to keep you updated on our progress.

Time Warner Official News Release:

TIME WARNER CONSOLIDATES FILMED ENTERTAINMENT BUSINESSES
New Line Cinema To Be A Unit Of Warner Bros. Entertainment

NEW YORK, February 28, 2008 – Time Warner Inc. (NYSE: TWX) announced today the consolidation of its filmed entertainment businesses, Warner Bros. Entertainment and New Line Cinema.  The combination brings together New Line’s 40-year legacy as the world’s most successful and innovative independent film studio with Warner Bros.’ creative leadership and unparalleled scale and reach in global distribution and marketing.

As part of the consolidation, New Line will be operated as a unit of Warner Bros.  New Line will maintain separate development, production, marketing, distribution and business affairs operations, but will closely integrate and coordinate those functions with Warner Bros. to maximize film performance and operating efficiencies, achieve significant cost savings, and improve margins.

In making the announcement, Time Warner’s President and Chief Executive Officer Jeff Bewkes said:  “We are moving quickly to improve our business performance and financial returns.  New Line has built a strong franchise of cutting-edge entertainment.  We can enhance its value by combining it with Warner Bros.  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.  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.  We can also take better advantage of digital distribution platforms by combining our studios.  These changes will enhance our revenue opportunities and drive dramatic cost efficiencies and higher margins at New Line.”

New Line’s Co-Chairmen and Co-CEOs Robert Shaye and Michael Lynne have elected to leave the studio, but are in discussions about possible future business relationships with the company.

Mr. Bewkes said:  “Bob and Michael have a unique partnership that is noteworthy not only for its stability and longevity, but for its record of innovation and success.  They have guided New Line’s growth from a privately held art film distributor to the world’s leading independent film studio that is home to some of the most popular films in entertainment history, including The Lord of the Rings trilogy, The Mask, Austin Powers, Blade, Rush Hour, Elf, Wedding Crashers and Hairspray.  We thank Bob and Michael for their enduring contributions to Time Warner and look forward to a continuing working relationship with them.”

Mr. Shaye and Mr. Lynne said:  “New Line has been our respective life’s work as well as our second family.  While we’re sad to be leaving, we’re enormously proud to have overseen its extraordinary growth and worked with so many dedicated and talented colleagues.  New Line represents innovation, creativity, and independent success.  We hope that the company can continue to be a leader in creating entertainment that resonates around the world.  We will now focus our efforts on exploring new entrepreneurial opportunities.”