Peter Jackson and New Line have settled their dispute over The Lord of the Rings trilogy, and Jackson must be satisfied, because he and partner Fran Walsh are going to produce two films based on J.R.R. Tolkien's The Hobbit, which will be co-financed and distributed by MGM and New Line, with New Line distributing in the U.S., and MGM getting the international distribution rights.
According to the press release, "The two “Hobbit” films – “The Hobbit” and its sequel – 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 “The Hobbit” release slated for 2010 and its sequel the following year, in 2011."
No word on a director or stars, but we'd say this is great news.