THE HOBBIT Stalled Indefinitely

Much to the distress of his fans, Peter Jackson has announced that he is no longer planning to direct The Hobbit, a prequel to his mega-successful Lord of the Rings trilogy, because of an ongoing accounting and legal dispute with New Line Cinema. In a highly unusual move, revealing some of the behind-the-scenes moves in a high-stakes negotiation, Jackson spoke directly to his fan base during the weekend, posting his explanation of recent events on TheOneRing.net. The statement from both Jackson and his wife and fellow producer, Fran Walsh, concluded: "This outcome is not what we anticipated or wanted, but neither do we see any positive value in bitterness or rancor. We now have no choice but to let the idea of a film of 'The Hobbit' go and move forward with other projects."The lawsuit that resulted in the current impasse originally was filed by Jackson's production company, Wingnut Films, in early 2005. It alleged that the studio gave affiliates favorable licensing deals and failed to properly calculate revenue from the DVD sales of 2001's "The Lord of the Rings: The Fellowship of the Ring."As Jackson explained it to his fans, he did not want to discuss directing Hobbit with New Line until the legal/accounting issues were settled. New Line produced the three Rings movies, which have grossed $2.9 billion worldwide and won 17 Oscars, including best picture for 2003's The Return of the King.In recent weeks, talk of the Hobbit project has reignited. While New Line holds an option on the film rights to the 1937 novel by J.R.R. Tolkien, MGM holds distribution rights. Only last week, MGM chairman and CEO Harry Sloan, speaking at the European Media Leaders Summit in London, said that he was talking with Jackson about making Hobbit and another prequel to Rings. According to Jackson, New Line co-chairman Michael Lynne had told Ken Kamins, Jackson's manager, that New Line would settle the lawsuit if Jackson would commit to directing Hobbit.But, Jackson explained, "We have also said that we do not want to tie settlement of the lawsuit to making a film of 'The Hobbit.' " He added, "In our minds, this is not the right reason to make a film, and if a film of 'The Hobbit' went ahead on that basis, it would be doomed." Visit HollywoodReporter.com for more ...