Time Warner (NYSE:TWX) is showing signs of life, following newly appointed CEO Jeff Bewkes' gutsy decision to consolidate the company's twin movie studios under his control. New Line will fold into the Warner Bros. brand, and the studio's former leaders have been forced out on the street. Anyone looking to hire an experienced movie mogul? How about two? Oh, don't worry -- Mike Lynne and Bob Shaye will find work somewhere.

Fade to black
You'll still see the familiar black-and-blue film strip logo at the start of the upcoming Hobbit films and so on. New Line will work as an independent subsidiary of Warner, with its own development pipeline and marketing messages. The studio will simply be much more tightly interwoven with its corporate sibling, and if there's ever a need to pull rank, Warner Bros. will win out.

Bewkes justified the move with serious business reasons: "We are moving quickly to improve our business performance and financial returns ... These changes will enhance our revenue opportunities and drive dramatic cost efficiencies and higher margins at New Line." Heads will roll; money will be saved.

Beyond a few million dollars of annual cost savings, the internal merger is proof positive that Bewkes ain't gonna fiddle while Time Warner burns. The company is facing massive challenges on every side: Its print publishing house is losing readers to online publications; AOL is getting marginalized by Google (NASDAQ:GOOG), Yahoo! (NASDAQ:YHOO) and others; and the movie studios just came through a bitter contract battle with the writers over compensation for online watching, only to face a possible actors' strike this summer.

The root of Dr. Evil
Come to think of it, the Internet seems to be at the root of every problem Time Warner faces, and it's getting darn late to do something about it. I know that unit president Kevin Tsujihara could turn his home-entertainment division into something spectacular, were he given the freedom and mandate to get started.

Let's see whether Jeff Bewkes can share that vision. Start the revolution in home entertainment, and the rest will be easier, as morale on the ground floor builds with every seemingly surprising success. If this first move is any indication, I think the man might have the cojones to go through with it.

It doesn't stop there!
And once this heavyweight aligns with the realities of a new era in the entertainment business, the rest of its big studio rivals may follow. Perhaps they'll even race Warner to the finish line. Imagine a digital Disney (NYSE:DIS), or Viacom (NYSE:VIA) with a fresh shot of dot-com. When will General Electric (NYSE:GE) make a truly universal media maven out of NBC Universal? All of this needs to happen, because the audience is getting more discerning and demanding every day. Those viewers will eventually walk away from old-line studios that won't change with the Times. Oops, I meant "times." Or did I?

Show us the way to a good Time, Jeff. Your shareholders will love you for it.

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