Master of ‘Rings’ to Tackle ‘Hobbit’

By DAVID M. HALBFINGER
The New York Times
Published: December 19, 2007

LOS ANGELES — Goblins, trolls and dragons were a breeze compared with the caustic clash of egos that kept “The Hobbit” in Hollywood limbo for years. But a settlement announced on Tuesday between Peter Jackson and New Line Cinema holds the promise that peace will break out in Middle Earth and that fans could see the first of two resulting movies by December 2010.

Kevin Winter/Getty Images
Peter Jackson in Los Angeles.

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Filmography: Peter Jackson

The pact, which two people involved said was worth nearly $40 million to Mr. Jackson, ends years of litigation and acrimonious auditing over his share of the profits from the “Lord of the Rings” trilogy. Those movies grossed $2.9 billion worldwide, made Mr. Jackson’s reputation and vastly enhanced New Line’s stature among the major movie studios.

Though Sam Raimi has stated his interest, it is unclear who will direct the two Hobbit movies, but Mr. Jackson will not. Mr. Jackson and his producing and writing partners, Fran Walsh and Philippa Boyens, are committed to making “The Lovely Bones” through 2008 and then he is directing “Tintin,” based on the Belgian comic strip, for Steven Spielberg.

But Mr. Jackson and his wife, Ms. Walsh, will be executive producers of the Hobbit films, and they will share with New Line the right to approve all creative elements: director, screenwriter, script, cast, filming location, even the visual-effects company used (as if there were any doubt that his Weta Digital would be chosen). “They can assure that the films will be made with the same level of quality as if they were writing and directing,” Mr. Jackson’s manager, Ken Kamins, said.

Settlement of the litigation freed New Line, which held the rights to make a “Hobbit” movie, and Metro-Goldwyn-Mayer, which has distribution rights, to cut a 50-50 financing deal: New Line will make the two films and distribute them domestically, and MGM will distribute them overseas. The untitled sequel is described as bridging the 60-year gap between the end of J. R. R. Tolkien’s “Hobbit” and the beginning of the “Rings” trilogy.

Despite the treasure involved — or perhaps because of it — the Jackson-New Line marriage grew testy by 2003, when Mr. Jackson began complaining about his share of the profits. New Line paid added bonuses, but Mr. Jackson nonetheless began an audit, which was said to particularly antagonize Bob Shaye, the studio’s co-chairman with Michael Lynne.

Warfare broke into the open in February 2005, when Mr. Jackson sued New Line over his audit, saying the studio was stonewalling his accountants. After Mr. Jackson told fans in a Web posting late last year that New Line had formally dropped him from “The Hobbit,” Mr. Shaye exploded on the Web, “He thinks that we owe him something after we’ve paid him over a quarter of a billion dollars.”

A thaw began some weeks later, Mr. Kamins said, when Mr. Jackson dined at the home of Harry Sloan, the chairman of MGM. It held distribution rights to “The Hobbit” and Mr. Sloan was desperate to get the franchise moving. By May, during the Cannes Film Festival, Mr. Jackson and Mr. Shaye joined a multiparty conference call; it was the first time they had spoken in about two years, Mr. Kamins said. “That call created a tone that really lasted into the fall,” he said.

If Mr. Sloan was motivated to spur a deal — he said the “halo effect” alone from “The Hobbit” could help attract talent and financing to MGM — Messrs. Shaye and Lynne of New Line were said to be facing a deadline of their own: their contracts as studio bosses expire in 2008, and the public combat with Mr. Jackson was a cause for frequent criticism. (Mr. Jackson at one point offered his “Lovely Bones” project to every major studio except New Line.)

The studio, meanwhile, has had a run of two years with only two hits, “Rush Hour 3” and “Hairspray.” Its costly “Golden Compass” opened to a disappointing $25.8 million gross in its first weekend.

In an interview on Tuesday, Mr. Shaye admitted that he had taken some aspects of the dispute with Mr. Jackson quite personally, but he and Mr. Lynne insisted they had faced no pressure from above to cut a deal.

Mr. Lynne said, “No one told us we had to resolve it one way or another.”