Roll the credits on New Line Cinema, the 40-year-old studio behind such iconic movie franchises as "The Lord of the Rings," "Austin Powers" and "A Nightmare on Elm Street."
The company will lay off hundreds of employees between its Los Angeles and New York facilities and be merged into its corporate sibling, Warner Bros.
The consolidation marks the end of the line for the once scrappy producer that prided itself on taking creative risks that other studios wouldn't. But in recent years New Line strayed from its street-smart roots with a slew of costly flops that ended its role as a big-time player in the volatile movie business.
In a sign of retrenchment that is increasingly prevalent in Hollywood, the company will now focus on making fewer movies limited to the kind of smaller, low-cost "genre" horror and comedy pictures upon which it built its name.
New Line becomes the latest free-standing Hollywood studio to abandon its ambitions as a full-fledged company in a market in which bloated overhead and soaring production and marketing costs have squeezed profits amid flat movie attendance and sagging DVD sales.
It comes just as the studio is to release today what could be one of its most promising comedies in a long time, the basketball spoof "Semi-Pro" starring Will Ferrell.
Over the last three years, DreamWorks SKG, the once highflying live-action studio founded by Steven Spielberg, David Geffen and Jeffrey Katzenberg, was sold to Viacom Inc. and scaled back as part of the media company's Paramount Pictures. At the same time, Harvey and Bob Weinstein's Miramax Films became a much smaller unit of owner Walt Disney Co. after the brothers were forced out. Metro-Goldwyn-Mayer was gobbled up by a consortium of investors including Sony Pictures, Comcast Corp. and two major private equity firms.
"People start out with high hopes for these indie studios," media analyst Harold Vogel said. "But ultimately they encounter rising costs and difficulties in managing the businesses. At some point, the cash flow and balance sheets fall short of their ambitions."
The consolidation of New Line is the first corporate maneuver by Time Warner Inc.'s recently named Chief Executive Jeffrey Bewkes to rein in costs at the New York media giant, whose stock price has stagnated since its merger with America Online eight years ago. Bewkes is under pressure from shareholders to boost profitability at Time Warner, which owns cable channels such as CNN and HBO; cable systems that are the largest in Southern California; and publishing operations that include Time, Sports Illustrated and People magazines.
