New Line Cinema used to be the brainchild of Bob Shaye and Michael Lynne, and it rose from relative obscurity to become the name behind projects like Austin Powers and Lord of the Rings. But oddly enough, one of Shaye and Lynne’s most successful ventures ended up being their downfall.

That’s right - the two former heads of studio recently had their contracts re-evaluated, and, as pretty much everyone suspected, they were sacked. New Line Cinema is now owned by Time Warner, which tolerates failure about as much as your typical Bond villain.

You may remember a small-time splatter director named Peter Jackson who had an idea to film Lord of the Rings. New Line Cinema ate it up, and the rest is history. Almost.

Turns out that New Line didn’t really keep fantastic records of tiny little details like profits and who was entitled to a cut. Jackson had to sue them for the audit that he was contractually entitled to, but even under a court order, they were still only able to produce a third of a box of paperwork.

To make a long story short, the lawsuit rages on, though Jackson and the former New Line heads are privately in talks to settle.

But that’s not all.

Last summer, New Line marketing chief Russell Schwartz was fired (by Shaye, of course). The reasoning given was that Shaye’s own directorial debut, The Last Mimzy, was a box office flop. After pouring millions into marketing, the studio only earned a fraction of it back. Shaye used Schwartz as a scapegoat for the failure, despite The Last Mimzy’s bad reviews.

So what will happen to New Line now? While nobody seems terribly eager to snap up the struggling studio, Terry Semel, former head of Warner Brothers, has reportedly been in talks with Time Warner. Word should get out in the next few weeks whether or not they’ve started negotiations. Never fear - New Line will be back.

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