Peter Jackson to Produce "The Hobbit"

Peter Jackson and New Line Cinema have reached agreement to make J.R.R.Tolkien's "The Hobbit," a planned prequel to the blockbuster trilogy "TheLord of the Rings."Jackson, who directed "Rings," will serve as executive producer for "TheHobbit." A director for the prequel films has yet to be named.

Relations between Jackson and New Line had soured after "Rings," despite acollective worldwide box office gross of nearly $3 billion — an enormoussuccess. The two sides nevertheless were able to reconcile, withMetro-Goldwyn-Mayer Studios (MGM) splitting "The Hobbit" 50/50, spokesmenfor both studios said Tuesday."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,"Jackson said in a statement.

"We are delighted to continue our journey through Middle Earth."Two "Hobbit" films are scheduled to be shot simultaneously, similar to howthe three "Lord of the Rings" films were made. Production is set to beginin 2009 with a released planned for 2010, with the sequel scheduled for a2011 release.Late last year, acrimony between Jackson and New Line became very public,with the studio announcing they would move forward with "The Hobbit"without the Academy Award-winning director.

Jackson sued New Line over theamount he was paid for "The Fellowship of the Ring," the first installmentof the trilogy.That litigation, the two sides announced Tuesday, has been settled.Jackson, who shepherded Tolkien's Middle-earth saga to the screen in aseries of three films, won a best-director Oscar for 2003's "The Lord ofthe Rings: The Return of the King." The trilogy also includes 2002's "TheLord of the Rings: The Two Towers" and 2001's "The Lord of the Rings: TheFellowship of the Ring."New Line, which is owned by Time Warner Inc., holds the rights to produce"The Hobbit," while MGM, which is owned by a consortium including SonyCorp. and Comcast Corp., has the right to distribute it.