According to a Hollywood Reporter report, Microsoft is in talks to sell its Xbox Entertainment Studios division to Warner Bros. According to the report, the preliminary negotiations between the two companies are focusing on merging Xbox Entertainment Studios with Machinima, which Warner Bros. bought a stake in earlier this year. Machinima has worked with Xbox in the past; it helped distribute the Halo 4 spin-off Forward Unto Dawn.
Xbox Entertainment Studios was closed last month by Xbox head Phil Spencer as part of Microsoft's plan to cut 18,000 jobs before the end of the year.
Halo: Nightfall is still in the works and is slated for release this year, and the upcoming Halo live-action TV series is still in production.
We will have more on this story as it develops.