Updated: So much for selling New Line Cinema .. instead, still-new Time Warner (NYSE: TWX) CEO Jeff Bewkes is making the studio a division of Warner Bros. Entertainment and New Line’s co-chairmen/co-CEOs Robert Shaye and Michael Lynne are out. What this actually means, aside from the ego shift and the decision that New Line was worth keeping, is a little blurry, especially given this language from the release: “New Line will maintain separate development, production, marketing, distribution and business affairs operations, but will closely integrate and coordinate those functions with Warner Bros. to maximize film performance and operating efficiencies, achieve significant cost savings, and improve margins.”

Bewkes cited digital as part of the rationale for combining the studios, saying Time Warner can “take better advantage of digital distribution platforms by combing our studios.” Also, international distribution rights will be kept in house.

Update: According to the memo Jeff Bewkes sent to staff, which we’ve obtained, the move does include layoffs: “This consolidation will also result in changes, including the elimination of jobs at New Line.  Warner Bros. is currently working through the details and will let people know how the changes affect them as soon as possible.  Colleagues whose jobs are eliminated will be treated fairly and respectfully.  These are very difficult decisions, but they’re important for the future success of our film studios and our company.” (See now that NYMag.com had the memo earlier.)

Update II: Nikki Finke’s take comes along with artwork. Finke: “Right now, there are more questions than answers about how this is going to work precisely. Even the Warner Bros people are saying that.”

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