
In 2006, MGM (who held the rights to The Hobbit through United Artists), expressed an interest in teaming with New Line to produce the prequel, which deals with the adventures of a young Bilbo Baggins as he travels with a company of dwarves to infiltrate the liar of the mighty dragon Smaug and reclaim a horde of stolen treasure. There was however one slight problem; Jackson had launched a lawsuit against New Line the previous year accusing the studio of misrepresenting profits on The Fellowship of the Ring, and in January 2007 studio chief Robert Shaye had said that Jackson would "never make any movie with New Line Cinema again while I'm still working at the company".
New Line's blacklisting of Jackson prompted MGM to cool their interest, but after a string of financial failures Shaye began to back peddle, suggesting that he "would love for him [Jackson] to be creatively involved in some way in The Hobbit". This 'some way' soon turned into an executive producer role when it was announced in December 2007 that New Line and MGM were teaming up to produce two movies back-to-back, each budgeted at $150m and set for release in December 2011 and 2012 respectively. While Sam Raimi was initially the strong favourite for directing duties, that honour fell to Hellboy and Pan's Labyrinth director Guillermo del Toro in April 2008, and six months later del Toro, Jackson, Walsh and Philippa Boyens were hard at work fleshing out the story and developing the treatments.

Naturally this led to rumours of many other returning characters and cast members, including Liv Tyler, Viggo Mortensen, and Dominic Monaghan, along with newcomers and del Toro regulars Ron Perlman and Doug Jones. Christopher Lee - who portrays Saruman, head of the White Council - told Empire that he would reprise his role if asked but later recanted, suggesting that he did not feel physically up to the demands of travelling to New Zealand. Meanwhile, the lead role of Bilbo Baggins had been strongly linked to Wanted star James McAvoy, but a Christmas 2008 announcement failed to materialise and no further announcements have been forthcoming.
Last Month Empire Magazine spoke to both del Toro and Jackson and it was revealed that plans for the two movies have changed, with the events of The Hobbit now spanning both films. While this throws into doubt the previously announced 'bridging film', it wouldn't be too much of a stretch of the imagination to suspect a second trilogy could be in the works. With filming set for 2010 fans of Tolkien's classic fantasy world will soon have much to stoke their excitement as the production really steps up a gear up over the coming months.
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