Peter Jackson and New Line Cinema (NYSE: TWX) finally reached an agreement to make J.R.R. Tolkien's "The Hobbit," a prequel to the blockbuster trilogy "The Lord of the Rings." While it appears that the parties have settled their longtime blood fued over Lord of the Rings' royalties, the announcement today is that Jackson will NOT direct "The Hobbit", but serve as "Executive Producer" together with his on- and offscreen partner Fran Walsh. So how significant is that little detail?

"Rings," was a huge success with worldwide box office gross of nearly $3 billion, but relations between Jackson and New Line turned sour and ended up in litigation. The reason is that Jackson and Fran Walsh claimed that the studio cooked the books and kept the couple from getting their fair share of the revenues from the triologi.

With the litigation settled for an undisclosed amount of money, the good news for "Rings" fans is that the two "The Hobbit" films (scheduled to be shot simultaneously) are now ready to be put in production, co-financed and co-distributed on a 50/50 split between New Line and MGM (NYSE: SNE) (NSDQ: CMCSA).

"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."

Pre-production will start immediately, actual production is set to begin in 2009 with a released planned for 2010, with the sequel scheduled for a 2011 release.

However, no director has been named yet and it is not really clear what specific roles Jackson and Walsh will play in the making of "The Hobbit." It is also not clear who will adapt "The Hobbit" for the silver screen. The joint press release simply says the couple will serve as executive producers and "manage the production," but gave no further details. While MGM topper Harry Sloan has succeeded in brokering a truce between Jackson and New Line, I think there is more than meets the eye in this agreement...

I hate to play the devil's advocate here, but Jackson is a pretty busy man these days. Next fall he appearently shooting an adaptation of "The Lovely Bones" and "Tintin". And the feud is not something he will just forget about. So I guess all of us who are fans of "Rings" can just hope that Jackson's heart will still be in it so that "Hobbit" will be as good as "Rings," but I would not bet my life on it just yet. If he's not directing the two movies, it's a clear indication of that he's not "all in" this time around.

Joakim Baage

Flickr Image By callumalden