It was announced today that Golden Compass studio New Line Cinema will be consolidated into Warner Bros., with heads Robert Shaye and Michael Lynne leaving the company.

New Line will continue to produce, market, and distribute films, but will do so in a reduced capacity and as part of the Warner Bros. studio. Production-wise, New Line will focus on genre films and utilize the distribution systems of its sister company.

Industry watcher Nikki Finke had been forecasting trouble at New Line as Shaye and Lynne's contracts with parent company Time Warner approached expiration. After producing the record-breaking Lord of the Rings trilogy, the franchise that lent New Line prestige and launched it as a major film studio, a string of recent under-performing projects (The Last Mimzy, directed by Shaye himself, and The Golden Compass) weakened the studio's stock.

New Line's costly legal battles with LOTR director Peter Jackson, recently settled, and the lawsuit lobbied against them by the estate of J.R.R. Tolkien, likely exacerbated the situation for New Line.

From the official press release:

"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.'"

Founded 40 years ago by Shaye and Lynne, the company grew from independent beginnings and was the home of films like John Waters' Pink Flamingos and Teenage Mutant Ninja Turtles. This week New Line is releasing the Will Ferrell basketball comedy Semi-Pro.

Source: Deadline Hollywood Daily