Although Peter Jackson refused to make a deal with New Line Cinema, which would have allowed him to direct The Hobbit in return for settling a lawsuit with the studio over the distribution of profits from the Lord of the Rings trilogy (see 'Jackson Walks Away From The Hobbit'), he may end up directing the film anyway if New Line can't get the production underway soon. 

Speaking in Germany (and quoted on the Elbenwald Website), Saul Zaentz, who acquired the rights to J.R.R. Tolkien's novels in 1976, didn't mince words.  'Peter Jackson will definitely direct The Hobbit,' he said.  'The only question is, when. Next year the rights to The Hobbit revert to my company.  I suspect that Peter has waited because he can get a better deal with us.  He has had a nose full of dealing with the studios.  He has had to sue New Line to get his fair share of the profits from the Lord of the Rings trilogy.  With us he knows he will be treated fairly.'

Given the immense success of the LOTR trilogy, which won 17 Academy Awards and grossed nearly $3 billion dollars, the stakes in this game of 'chicken' are very high for pop culture retailers given the potential of a Jackson-directed version of The Hobbit to inspire additional game, book, comic and merchandise sales.