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New Line now joins Carloco Pictures as a studio that had a major hit then drove themselves into the ground with one FLOP picture.
In the early 90's Carloco made over one billion dollars with two hits Terminator 2 and Basic Instinct, then a few moderate hits such as Stargate and Universal Soldier. Then it took one film called Cutthroat Island to cause everything to crash down. The film cost 110 million to make and only earned 10 million. The film lost so much money it earned a spot in the Guiness Book of World Records for the Biggest loss ever by a studio. That later was taken by The Adventures of Pluto Nash, but that did not bankrupt a studio.
New Line made over a billion on the LOTR films, ticket sales then accompanies by the merchandise, DVD and TV rights. THen Bob Shaye screws Jackson over his rightful earnings, thus stops the production of the Hobbit. Shaye then tries to do his own fantasy films to show that he can out do Jackson. His film was the Last Mimzy, yep that was one really sucky title.
What really killed New Line was The Golden Compass, a film based on a series of books by a Militant Atheist who openly hated the works of Tolkien and CS Lewis, made some public comments that turned off the public then DECIDED to sink money into a film for this trilogy. Rumors are swirling around the internets that it cost close to 300 million to make. The entire budget of all 3 LOTR films. This was only the first film!
So we have here the same thing that doomed United Artists in 1980, no control over spending and huge ego in control of things. This led to UA sinking 44 million into Heaven's Gate which FLOPPED and folded the studio.
Here we have Shaye ego causing him to piss off Jackson, delay the production of the Hobbit. Then make one film as a pissing contest that was total crap, then sink 300 million into a Holiday film based on books that are labeled as Anti-god and written by n atheist.
Now after that fiasco, Shaye new he was toast and as one desperate last measure. Made good with Jackson, (more like Grovel) to make the Hobbit because he new his job was now on the line.
Money and EGO ever mix well.