Returning to our January coverage of industry rumours: Claudia Eller of the LA Times reports that New Line in its current form will cease to exist. Founder Bob Shaye and co-chair Michael Lynne have spent the last few weeks trying to save the 40 year old studio but were ultimately unsuccessful and the two will be leaving their posts. New Line Cinema will be absorbed by Time Warner’s film studio Warner Bros. It will continue to maintain separate operations but will rely on Warner’s international infrastructure to save costs and improve its profits. “New Line Cinema becomes Hollywood’s latest distributor to downsize its ambitions and business strategy in a tough market, where bloated overhead and soaring production and marketing costs have compromised profitability, once-reliable DVD sales have cooled and movie attendance is flat.” Read more.

It is unclear at this time how this development will effect the fate of the His Dark Materials movie franchise. Thanks to randomthotz for the tip.