peterjackson.jpgAfter nearly three years of legal battling and public bad-mouthing and six months of settlement talks, it's all over. Even better, it's back to Middle Earth for all parties. Today's big news is that JRR Tolkien's The Hobbit and its sequel will finally be made back-to-back for New Line and MGM the way they should be -- under the Academy-Award-winning creative vision of Mr. Lord Of The Rings. But Jackson won't be directing this time out, because of his previous commitments to DreamWorks for The Lovely Bones and Tintin trilogy with Steven Spielberg. While that will disappoint his LOTR fans, they'll be pleased to know that the famed director will be integrally involved as executive producera long with his partner Fran Walsh. I'm told Jackson will make all creative decisions in concert with New Line, which will manage the production of the films. 

new-line.jpgThe two Hobbit films – The Hobbit and its sequel – have long been stalled. Now they are scheduled to be shot simultaneously, with pre-production beginning as soon as possible. Principal photography is tentatively set for a 2009 start, with the intention of releasing The Hobbit in 2010 and its sequel the following year, in 2011.

This deal settles all of Jackson's litigation relating to the LOTR trilogy after he sought to audit New Line's accounting for the 1st Lord Of The Rings pic. I understand that New Line forked over big bucks to Jackson (how much exactly is secret). mgmlogosmall.jpgBut the director will be able to pursue audits of accounting on LOTR's 2nd and 3rd installments. But the biggest ramification is that this may well allow Shaye to stay on as chairman/CEO of New Line when his contract expires next year. He certainly needed the leverage after several years of disappointments and outright flops. (Like this month's The Golden Compass whose budget soared to $200M-$250M but whose domestic tally is just $44M. The pic is doing OK overseas, however.) Shaye's future prospects improve since it's entirely possible that The Hobbit could duplicate the humongous critical and financial success of the LOTR Trilogy which grossed nearly $3 billion worldwide at the box office and whose 3rd installment Return of the King in 2003 swept the Academy Awards, winning all of the eleven categories in which it was nominated, including Best Picture, the first ever for a fantasy film. But Shaye's image is tarnished forever by his LOTR legal debacle; his public bad-mouthing of Peter Jackson earned Shaye the nickname "Lord Of The Rants".

hobbit.JPGThe deal provides for New Line and MGM to co-produce and co-distribute worldwide The Hobbit and its sequel. New Line will distribute in North America and MGM will distribute internationally (through its arrangement with Fox). That provides MGM chairman/CEO Harry Sloan with the shot in the arm he needs to secure more financing for his struggling studio. MGM has always owned the worldwide theatrical and television distribution rights to The Hobbit, while New Line always owned the right to make a Hobbit film. So going forward both studios knew they had to work together since they also are 50-50 financing the films. "Harry Sloan and MGM, because of the rights they had, were in a unique position to be helpful to both sides in the dispute," an insider told me.

The Hobbit wound up more or less collateral damage as Jackson and Shaye fought over LOTR accounting in the courts. Jackson recently won a major legal victory against New Line during the discovery phase of his 2005 lawsuit to enforce the audit provision of his contract. Shaye's activities during the lawsuit were scummy. At one point, New Line's counsel produced only "one third of a box" of audit documents and claimed that's all there was. This, even though Jackson's side had requested communications and documents from profit participant audits on any New Line property: film, television, sound tracks or video games. But, in a deposition, New Line auditor Ken Horowitz described five to 10 cabinets filled with audit records. The federal magistrate on September 18th blasted New Line's "persistent disregard" of not just the U.S. District Court's discovery orders, but Jackson's right to documents "that the court has already determined are relevant to the claims and defenses in this action. Without the true facts, there can be no just result." Of course, the magistrate sanctioned New Line.
samraimi.jpgSo who'll helm The Hobbit? Unclear, but Jackson's involvement as executive producer and creative visionary will help secure a director, that's for sure. Recently Spider-Man's Sam Raimi, whose name has been most mentioned, said he'll only direct The Hobbit if Jackson produced. "If [Jackson] didn't want to direct it, and he was producing it," Raimi told MTV Tuesday about his two conditions, "then I would love to be considered for the project." That certainly gaves Jackson's side an even better bargaining position with New Line as settlement talks continued. At one point, relations between Jackson and New Line were so disastrous that the director shopped his sought-after Lovely Bones project to every studio in Hollywood except Bob Shaye's.

I was able to confirm the settlement after news first leaked onto the website TheHobbitBlog.com early this morning. Later today, Sloan and Shaye will make a joint announcement about the settlement and deal. The usual excess of fawning statements by all concerned were made. Peter Jackson issued this sattement: “I’m very pleased that we’ve been able to put our differences behind us, so that we may begin a new chapter with our old friends at New Line.  The Lord of the Rings is a legacy we proudly share with Bob and Michael [Lynne], and together, we share that legacy with millions of loyal fans all over the world. We are delighted to continue our journey through Middle Earth. I also want to thank Harry Sloan and our new friends at MGM for helping us find the common ground necessary to continue that journey.”

Harry Sloan said, "Peter Jackson has proven himself as the filmmaker who can bring the extraordinary imagination of Tolkien to life and we full heartedly agree with the fans worldwide who know he should be making The Hobbit. Now that we are all in agreement on The Hobbit, we can focus on assembling the production team that will capture this phenomenal tale on film."

Bob Shaye said: “We are very pleased we have been able to resolve our differences, and that Peter and Fran will be actively and creatively involved with The Hobbit movies.  We know they will bring the same passion, care and talent to these films that they so ably accomplished with The Lord of the Rings Trilogy.”

“Peter is a visionary filmmaker, and he broke new ground with The Lord of the Rings," noted Michael Lynne, New Line Co-Chairman and Co-CEO (whose contract also expired in 2008 same time as Shaye's. “We’re delighted he’s back for The Hobbit films and that the Tolkien saga will continue with his imprint.  We greatly appreciate the efforts of Harry Sloan, who has been instrumental in helping us reach our new accord.”

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