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The Two Towers

New Line co-chiefs Shaye, Lynne mix common-sense economics with high-risk investments to run 'Rings' around the competition

Years ago, a businessman with a hippie’s heart climbed a five-story walk-up in Greenwich Village and began plotting to seize America’s movie screens. His plan? Peddle films about reefer madness, sex maniacs and a mad, chainsaw-wielding Texan. Not to mention some serious Euro art films with titles like “Preparez vos mouchoirs.”

In time, Bob Shaye surrounded himself with a rotating counterculture cast that featured an LSD guru and a thespian drag queen, along with a Kennedy assassination conspiracy theorist, a gay ex-pro football player and a leader of the Black Panther Party — anything that would sell.

Such was the gonzo stronghold of New Line Cinema in the 1970s.

Flash-forward three decades to an office tower near Central Park. New Line’s soothing gray carpets and open-air cubicles exude the earnest air found at a magazine publisher, if its most colorful tenants were hobbits and if movie merchandise, not back issues, crowded the shelves.

By scraping by for years and sticking to an unlikely script, Shaye has taken his once lunatic child all the way to the top of Hollywood’s heap. “Who would have thought they would have made it to the degree that they did? I certainly didn’t,” says author Peter Biskind, who met Shaye in the early ’70s. Back then, Biskind says, New Line was “a zoo.”

“They’re the true independents — forget Miramax,” says Tom Bernard, the co-president of Sony Pictures Classics who marketed New Line’s movies to college campuses in the 1970s. “They’re the ones who really pulled it off.”

The comparison is not an idle one. New Line and Miramax have long been rivals, with the main historical point of difference being the latter’s precedent-setting run of Oscar success.

This past year, however, New Line reached a creative, critical and commercial pinnacle, bringing home 11 Oscars for the third “Lord of the Rings” film and scoring a slew of such smaller hits as “Elf” and “Freddy vs. Jason.”

The company has long delivered a disconcerting mix of horror and urbanity, oddity and art. Now Shaye seems capable of making any movie he wants.

New Line survived largely because Shaye never lost his taste for risk or abandoned his maverick vision. The son of a Detroit wholesale grocer, he always had a knack for commercializing art and a focus on the bottom line.

But alone, Shaye might never have transcended his eclectic roots. As his company struggled, he needed a financial architect, a savvy consigliere to nudge New Line toward the mainstream and into the big leagues.

“Bob was a counterculture guy. He met Michael Lynne, and Michael Lynne made him legitimate. … It was the perfect combination,” says Bernard, who oversaw a lecture series for Shaye in the early days that included Timothy Leary, Divine and Black Panther/Chicago Eight defendant Bobby Seale.

As other independents failed in the ’80s, New Line kept churning out surprising hits, from “Teenage Mutant Ninja Turtles” to “Boogie Nights.” Along the way, Shaye and Lynne helped launch the careers of such actors as Chris Tucker and directors like Peter Jackson and Paul Thomas Anderson.

Although the company has long since passed into corporate hands, it’s still Shaye and Lynne calling the shots. The two men, who were Columbia U. Law School classmates, have stayed on course throughout New Line’s wild triumphs and black eyes. They have managed to enter Hollywood’s elite — but on their own terms and without, as Shaye often notes, “smoking the Hollywood crack pipe.”

The co-chairmen of New Line are reclining on opposite ends of a black leather couch in New York. Shaye and Lynne may be among Hollywood’s most powerful executives, but both men work in relatively modest, almost anti-mogul offices. On this summer afternoon, Shaye, with his slightly scraggly, curly gray hair; jeans; and black sneakers, is a marked contrast to Lynne’s crisp slacks and loafers.

The men have a reputation for enjoying the good life, for working and playing hard. They share similar but slightly different interests.

Shaye loves to cook — he whips up meals as his jet shuttles between New York and L.A. — and has collected paintings by Picasso, Matisse and others. Lynne leans toward contemporary art and wine-making; he has a vineyard on Long Island.

Lynne often is described as the smooth, button-down counterpart to Shaye’s gruff introvert. Many current and former employees describe Shaye, for all of his maverick innovations, as a fundamentally brooding, temperamental figure known to purposely keep the lighting low in his compact office, one wall of which is dominated by the framed sentiment “prudent aggression.”

Confronted with one such observation, Shaye waves it away as “horseshit.”

“He doesn’t suffer fools gladly,” says director John Cameron Mitchell, who directed “Hedwig and the Angry Inch” for New Line. “He can be irascible and unpredictable, but he also says what he’s going to do and he does what he says.”

Lynne is more of a schmoozer, refined and methodical. “Michael is more diplomatic,” says Michael De Luca, New Line’s former production chief, “but he’s no less direct.”

Lynne’s also known as the financial yin to his friend’s creative yang, though this distinction has blurred with time.

Lynne is still more involved in New Line’s daily financial operation, but he’s also deeply enmeshed in its artistic decisions. Nothing major gets done without both men agreeing.

“We’ve grown more together over the years, so our minds are more alike,” explains Lynne. It’s almost like looking in the mirror: “Everything on the left is on the right, and everything on the right is on the left. … It’s a very complementary situation.”

Roots

Shaye founded New Line in 1967. He has always loved film. As a child during the 1940s, he set up a movie theater in a garage and lured patrons by offering them bubble gum — then in short supply — with their 10-cent admission.

Former and current employees say Shaye likes to take gambles on his movies, but always in the context of a plan. New Line’s mantra is “Prudent Aggression.” Shaye gives out paperweights engraved with bits of encouragement and boardroom zen like “Not a loser in the bunch” and “The journey is the destination.”

To a number of employees, New Line is like a home away from home and Lynne and Shaye are like mentors or surrogate parents. Both men are described as open to employees’ ideas.

“People pitch tents at New Line and there’s a reason why: These are the two troop leaders,” says Marian Koltai-Levine, an executive VP for marketing at Fine Line Features.

“Bob is dad and Michael is mom,” says “Rush Hour” director Brett Ratner. When he doesn’t get something from Shaye, Ratner sneaks over to Lynne.

The friends first met at Columbia in the early 1960s. Although they weren’t close, they had something in common: Neither one wanted to be there. Lynne, an English lit major, loved theater. Shaye, who had tried acting, was daydreaming about movies.

“My father wanted me to go to law school and I wanted to make movies,” Shaye says. “We compromised and I went to law school.”

Shaye took refuge in copyright law, with its connection to literary rights. He went to Sweden on a Fulbright scholarship after graduation and founded New Line soon after returning, distributing fare that ranged from Jean-Luc Godard’s Rolling Stones documentary “Sympathy for the Devil” to such campy ’30s cautionary tales as “Reefer Madness” and “Sex Maniacs.” Lynne specialized in entertainment and became a showbiz lawyer.

In 1980, the two men bumped into each other in Greenwich Village. At the time, Shaye wanted to move from distributing arthouse and exploitation films — what movies he says he could find — into production. But he was spending most of his time trying to raise money.

“I couldn’t even do what I didn’t want to do, which was to be a film distributor,” he says. “It was really living hand to mouth.”

Lynne had raised money for film productions so, on that day in Greenwich, Shaye pitched his old classmate. “He gave his spiel,” Lynne remembers. “It didn’t sound that good to me.”

Capital gains

Lynne eventually agreed to represent Shaye for a $10,000 retainer — the company he soon learned, only had $40,000 in the bank. Lynne took him to see a bankruptcy lawyer just in case.

To get more credit for New Line, Lynne first renegotiated its debt with a number of small business investment companies. New Line also tapped into the emerging homevideo market, selling 10 films to RCA/Columbia for $15 million.

That deal showed important support for the still-unproven company, Lynne says. And, for low-budget New Line, $1.5 million per picture was a relative bonanza.

In November 1984, New Line released “Nightmare on Elm Street,” a surprise hit that cost $1.8 million and made $25 million.

It was the company’s biggest success — a success that Shaye thought he could repeat. “Nightmare 2” was in theaters the following year, inaugurating New Line’s hallmark romance with franchises.

In 1986, Lynne, now on the company’s board of directors, helped take New Line public. At the time, Wall Street firms were investing in independents. Shaye entertained proposals that would sell much of New Line but would raise more than $50 million in high-interest junk bonds.

Instead, he and Lynne followed a more conservative plan by Drexel Burnham Lambert. It brought in less than $5 million but carried less debt and kept much more of New Line in Shaye’s hands. After going public, Shaye says, “we really started to stand on our own two feet.”

“All of these pieces came together,” adds Lynne, “and the company became decently financed, although small.”

Lynne and Shaye say other independents went for more money, but then buckled under the debt. As the decade neared its end, the casualties mounted — once-potent companies like Cannon and Vestron fell one after the other.

“They got desperate and went out and did a lot of stupid things,” Shaye notes.

Not that there weren’t questions about New Line’s future. A 1988 article in Newsweek noted the importance of the “Nightmare” films, which by then had grossed $120 million, and wondered if New Line had a second act.

Any doubts were trampled in 1990 when the company enjoyed a seminal moment — commercially, if not critically. “Teenage Mutant Ninja Turtles,” which New Line acquired for $3 million, grossed $130 million to record one of the fattest profit margins ever for an independent film.

High/low country

By the early ’90s, New Line was perfecting its strategy of targeting specific audiences with inexpensive niche and genre films — “movies for the dating crowd, movies that kids like to go see,” says Shaye. “They scared you and your girlfriend would put her arms around you. … It helped make the evening.”

New Line made movies for less than $15 million, utilizing unknown or emerging actors and directors. If things went well, the films would yield modest profit. If the movies resonated beyond the core audience, in came the real coin.

Always, Shaye and Lynne wanted to nurse sequels and franchises. “We were creating them out of whole cloth, ” says Lynne.

De Luca says Shaye constantly reminded employees to stick to the knitting. “It was the single-minded pursuit of the franchise,” De Luca says.

But he adds Shaye also wanted New Line to be original and go where the studios weren’t.

Under De Luca, New Line carved a niche in the growing market for urban films — movies like “Friday” and “Menace II Society.” Its newly sprouted Fine Line Features division brought in sophisticated hits like “The Player” and hit one out of the park with “Shine.”

“Bob was always one step ahead of diversifying, of going in all directions and doing it well,” says John Waters, whose films Shaye has championed dating back to 1973’s art schlock classic “Pink Flamingos.”

Waters says Shaye never tried to turn his movies into something else. “He was never afraid of anything weird. He always seems to try for originality.”

New Line’s slate of films always exhibited a bipolar feel — horror and art, high and low. The company behind “Dumb and Dumber” also brought audiences “Hoop Dreams” and “Shine.” De Luca backed edgy successes like “Seven” and “Boogie Nights.”

Biskind says that where most independents stuck to traditional art films, New Line never balked at releasing exploitation and fringe movies – even taste-defying pictures like “Pink Flamingos.” “From the beginning they were in both camps,” says Biskind. “That’s really contributed to Shaye’s success.”

Big and bigger

But the company also began to lose its direction in the ’90s as New Line became a child of corporate mergers. Ted Turner purchased New Line in 1993. Although he had to adapt to corporate sociology, Shaye also became a billionaire and Lynne reaped a comparable fortune. Not surprisingly, Shaye says he has no regrets over the sale.

In 1996, Turner Broadcasting System merged with Time Warner, which then merged with AOL in 2002. Under its new corporate parents, New Line was expected to ramp up production. The company, flush with cash, started taking larger bets, and the decade turned into a roller-coaster ride.

Lynne says New Line forgot that big budgets don’t necessarily mean full theaters. In a way, he says, mid-’90s successes like “Dumb and Dumber” led the company astray.

“There was a little bit of pride and hubris that ended up embodied in the place,” Lynne says. “This is not a business where you really ever figure it all out.”

In 1996, New Line distributed costly flops including “The Island of Dr. Moreau” and “The Long Kiss Goodnight.” The studio rebounded with Adam Sandler’s “The Wedding Singer” and the “Austin Powers” movies, but then crashed again in 2000. One spectacular mess, “Town and Country” starring Warren Beatty, reportedly cost $90 million and took in less than $7 million domestically. Shaye and Lynne were outmaneuvered by star Warren Beatty and wound up greenlighting the movie without a finished script.

De Luca, who was fired in late 2000, takes the blame. “I was like a wild pitcher,” he says.

For De Luca, who had started logging scripts at New Line when he was 19, the company was like home. He had always been very close to Shaye. During the rough periods, Shaye sometimes wouldn’t meet his eye in the elevator. “He made you feel the failures,” De Luca says. “You definitely feel the chill.”

New directions

De Luca’s replacement, Toby Emmerich, also rose up from within the company’s ranks. He started in the music division. When he took over production, Shaye told him to focus on reviving franchises and projects like “Freddy vs. Jason.”

“We were just making edgy, little movies that were going nowhere,” Shaye says. “It was almost a need for nourishment.”

Speculation grew that New Line would be folded into Warner Bros., its larger Time Warner sibling. And New Line’s high-profile flops came as it rolled out its biggest gamble yet — the first “The Lord of the Rings” film, “The Fellowship of the Ring.”

Mitchell, whose “Hedwig” came out just before the first “Rings” film, remembers Shaye being nervous but also exuding an unshakeable faith.

In many ways, the project was classic New Line. Always attuned to sequel and franchise potential, Shaye and Lynne couldn’t resist a ready-made trilogy — especially a venerated literary one. By making three movies at once, they saved millions of dollars. Although they play down the project’s risks, others say that if the movies had tanked, New Line would have come to an end.

“They bet the farm,” says Sony Classics’ Bernard, who ran into Shaye at this year’s Academy Awards. “What will you do now?” Bernard asked Shaye. “You won. It’s over.”

Circle of life

It’s hard to imagine what Shaye and Lynne can do next. Hard, that is, except for Shaye and Lynne. “Back to the starting gate. Every nine months it’s another race,” Shaye says with Midwestern pep.

Lynne offers that it would be a huge mistake to aim for another “Lord of the Rings.” “It’s probably not going to happen that way ever again, not for us and not for anybody else. That’s not what the game is about.”

New Line, with about 594 total employees on both coasts, remains small. But it’s nimble and experienced, says Lynne, and ready to make anything.

Shaye boasts that New Line now is attracting “the creme-de-la-creme” — directors like Terrence Malick and David Cronenberg.

“They believe in our commercial instincts and we believe in their creative instincts,” Shaye says. He adds that people know New Line understands how hard it is to make a good film. Shaye directed “Book of Love” in 1990, and is expected to try out the helmer’s chair again.

New Line’s recent releases range from dramas like “Maria Full of Grace,” via its Fine Line imprint and its teaming with HBO, to the stoner comedy “Harold and Kumar Go to White Castle.” “It takes me back to my youth,” Shaye laughs about the latter.

In many respects, neither New Line nor its heads changed much. “They have a childlike essence. They haven’t lost it,” says Mark Kaufman, a senior VP for production and music. “When they lose it, that will be the end.”

De Luca, Ratner and others say that Shaye hasn’t changed.

“He lives like a hippie,” Ratner says, despite Shaye’s expansive, art-filled digs. Like others, Ratner sees New Line as the kind of place where a lowly intern can write a script that becomes a movie. “People can achieve their dreams there,” says the helmer.

It’s also a place that still welcomes its ghosts — spirits like Waters, who is making another movie for Shaye. “I’m the insane relative that comes to visit every few years,” Waters says.

Still, beneath the mountain of Frodo and Austin Powers dolls, it’s becoming harder to see New Line’s wild roots and freewheeling days.

In his office, Shaye keeps a remarkably odd statue by his desk. It’s a lifesize model of a nasty, drooling creature from “Aliens.” Although New Line didn’t release the movie, Shaye bought the beast anyway.

Some employees don’t know what to make of it. Perhaps because thrills have always been dear to the boss’s heart, there’s a logic to this creepy objet d’art. It certainly makes an impression.

Shaye says the monster reminds him of the value of a good fright. And maybe, as he sits in his office, with the lights on or off, he just appreciates the company.