It’s the end of the line for New Line — at least in its current form.

The 40-year-old studio behind such franchises as “Lord of the Rings,” “Austin Powers” and “Rush Hour” will become a significantly smaller version of itself and merge into the Warner Brothers unit of Time Warner’s Warner Bros., the Los Angeles Times rerpots.

The development marks the end of an era for New Line founder Bob Shaye and his longtime top lieutenant, co-chairman and co-CEO Michael Lynne, who will leave the company. In recent weeks, the pair, whose contracts expire at the end of the year, made a last-ditch failed attempt to stay aboard, presenting Time Warner management with a reorganization plan that would have ensured their continued employment.

It is unclear how many people will lose their jobs as a result of the consolidation. New Line Cinema employs more than 600 people in Los Angeles and New York.

While New Line will maintain separate development, production, marketing, distribution and business affairs operations, it will rely on Warner’s global infrastructure to save significant costs and improve profit margins in the volatile movie business.

The decision is the boldest effort yet by Time Warner’s recently named Chief Executive Jeff Bewkes to slash costs at the media giant, whose stock price has largely stagnated since its merger with America Online eight years ago. Bewkes is under pressure from shareholders to take steps to improve the stock price and profitability of the company, which owns cable channels such as CNN, TBS and HBO — cable systems that are the largest in Southern California and publishing operations that include Time, Sports Illustrated and In Style magazines.

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