Fontana, the independent distribution arm of Universal Music Group, has signed an exclusive distribution deal with WaterTower Music, the inhouse label of Warner Bros. Entertainment formerly known as New Line Records.

WaterTower prexy Jason Linn, who founded the label in 2000 when it operated as a division of New Line Cinema, has become a specialist in overseeing soundtracks. WaterTower’s recent releases including “Harry Potter and the Half-Blood Prince,” Marvin Hamlisch’s score for “The Informant!” and Hans Zimmer’s “Sherlock Holmes” music.

WaterTower’s soundtrack to “Valentine’s Day” touts music from chart topper Taylor Swift, a star in the movie.

The company previously had a deal with Alternative Distribution Alliance, which is part of Warner Music Group, spun off from Time Warner in 2004.

“We are delighted to partner with a true music man like Jason,” said Fontana prexy Ron Spaulding. “His ability to offer a tremendous selection of artists and music and provide audiences a dynamic new way to connect with the movies they love is unmatched.”

Added Linn, “I believe the potent combination of our projects with Fontana’s marketing and digital innovation will continue to drive WaterTower forward.”

Releases under the New Line Records moniker include the soundtracks to the film versions of “Hairspray” and “Sex and the City,” as well as “Elf,” “The Notebook,” “The Departed,” “Wedding Crashers,” “Sideways” and “The Hangover.”

WaterTower is actively developing music projects for such Warner Bros. brands as DC Comics, Scooby-Doo and Looney Tunes, as well as Warner Bros.-produced TV skeins “Supernatural” and “The Mentalist.”

Its 2010 release schedule will include “Sex and the City 2,” “Inception,” “Going the Distance,” and “Harry Potter and the Deathly Hallows.”

Fontana distributes more than 80 labels including Downtown, Vagrant Records, American Gramophone, Savoy Label Group, Six Degrees, SMC, Upstairs Records and VP Records.