The folding of New Line into corporate daddy Warner Bros. is inevitably a big story--just the contrast in management style between the departing Bob Shaye, 68, and Michael Lynne, 66 and Warner boss Jeff Bewkes, who made the move, is intriguing--but hardly a surprising one. (The shoe has been waiting to drop since a February 6 conference call in which Bewkes said, "there is an obvious question about whether it still makes sense for us to have two completely separate studio infrastructures at Warner and New Line.")

Since then Shaye had been in New York for an extended visit, presumably trying to find a plan by which he and Lynne could stick with the company. The founder's e-mail to his employees said their exit was ""painful decision, because we love New Line and the people who work here have been like our second families."

One producer knowledgeable about the company described the events leading to the move as a perfect storm comprising three horrible years at the box office, Bewkes' need to "fix something quick" (with both the what-to-do-with-AOL quandary and the unwieldiness of Time Warner Cable being longer-term projects), and the need for newly ascended Jeff Robinov to put his specialty divisions in order.

In the last category, Shaye and Lynne's long unwillingness to cede control to the company that linked with them in 1996 by acquiring the studio's then-parent Turner Broadcasting System, mixed with such untoward events as another perfect storm around the company's one huge success, Lord of the Rings (New Line was sued by director-producer Peter Jackson, original option holder Saul Zaentz, and more recently, the Tolkien estate).

That perfect record of being called chiselers on their biggest hit (the first two disputes were settled out of court) dovetails with Warner Bros.'s need to take the Hobbit project in hand--now that Jackson has agreed to produce it--and free it from potential legal entanglement by the Tolkien trust.

Whoever steps in to take charge of New Line will be someone congenial to Robinov and will report to Warner Bros. Chief Executive Barry Meyer and President Alan Horn. Within minutes of the staff meeting that brought the announcement yesterday, New Line execs Toby Emmerich and Mark Ordesky were working the phones to reassure current filmmaking partners that certain slated pictures are still on track.

The studio, founded in Bob Shaye's Greenwich Village apartment four decades ago, will in the near future lay off hundreds from among the current 600 employees. The irony is that a comedy with a good chance at substantial box office, Semi-Pro, hits this theaters this weekend.

If they perhaps made no picture more misguided than the Marlon Brando starrer, The Island of Dr, Moreau, they had their share of successes, as enumerated by Bewkes: The Lord of the Rings trilogy, The Mask, Austin Powers, Blade, Rush Hour, Elf, Wedding Crashers and Hairspray established the studio as a sometimes successful operator in the sphere of genre films, which is the niche they'll probably still occupy with a reduced slate. A notable top-shelf exception would be The Hobbit, which has been rumored to be earmarked for Guillermo Del Toro to direct.

Said Bewkes:

We can enhance [New Line's] 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

A continuing open question is the future of specialty divisions Warner Independent and Picturehouse. With a bit of a rag-tag record dating back to the failure of the studio chiefs to see eye to eye with initial president Mark Gill (his March of the Penguins hit couldn't assuage them), some in town look to the company to install Bob Berney, the Picturehouse head whose project-picking and marketing are generally admired, as the chief over both operations. Robinov is well aware that his own expertise does not lie with the sort of successes Picturehouse has had with offbeat bets like Del Toro's Pan's Labyrinth, which cost a fairly frugal $16 million but made a respectable $37 million domestically after winning three Oscars: "Jeff would never look at that picture and say, 'good idea'," said the producer.

(Michael Lynne, left and Bob Shaye at the opening of Hairspray, July, 2007)