Bob Shaye and Michael Lynne, the maverick co-chairs of New Line, are out of jobs as of today as part of a consolidation move that makes New Line a unit of Warner Bros. (Entertainment Weekly is a unit of Time Warner.) The news comes after months of speculation that the duo was in jeopardy. The studio hasn’t had a big hit since the massive success of the Peter Jackson-directed Lord of the Rings trilogy. Most recently, New Line tried to launch a new franchise with the Nicole Kidman, Daniel Craig-starrer The Golden Compass, but the pricey pic based on the successful book series by Philip Pullman grossed only $69 million domestically.

Time Warner’s CEO Jeff Bewkes said today that New Line will maintain its own brand identity along with separate development, production, marketing, and distribution divisions but that there will be lay-offs. In a note to New Line staffers, Lynne and Shaye said that while it was a painful decision to step down, “We intend to remain actively involved in the industry in an entrepreneurial capacity.” Shaye began New Line out of his apartment more than 40 years ago, and the industry will certainly be watching whatever he does next.