According to the cover story in the current Entertainment Weekly, the dispute between Lord of the Rings director Peter Jackson and New Line Cinema 'may finally be nearing resolution,' which means the way may be cleared for Jackson to direct a proposed two-film adaptation of J.R.R. Tolkien's The Hobbit.  Since each film in Jackson's LOTR trilogy has earned over a billion dollars in worldwide box office and DVD sales, and everyone from actors Ian McKellen and Viggo Mortenson to film critics and heads of fan organizations believes that Jackson is the perfect choice to direct any proposed Hobbit films, the stakes in this dispute are very high.

According to EW: 'sources close to the talks (between Jackson and New Line) tell us that they are detecting a lot less frost in the air, and that a deal may be reached that would usher J.R.R. Tolkien's maiden Middle-earth masterpiece to screens before the end of the decade.'

Earlier this year prospects for a Jackson-directed Hobbit film from New Line appeared bleak as New Line's co-CEO Bob Shaye, in response to a lawsuit filed by Jackson over the disposition of profits from the LOTR films, appeared to definitively rule out Jackson as a potential director of The Hobbit (see 'Jackson's Feud With New Line Heats Up').  But recently New Line's position has been softening.  Shaye told the L.A. Times in August: 'I really respect and admire Peter and would love for him to be creatively involved in some way in The Hobbit.'

Even earlier in the year in an interview with Charlie Rose that was broadcast last Thursday (but apparently recorded prior to the release of Spider-Man 3), Michael Lynne, Shaye's co-CEO at New Line distanced himself from Shaye's remarks telling Rose: 'Whatever Bob said was really Bob's statement and New Line doesn't take a position on that or hasn't. We have had a dispute with Peter and we are trying to resolve it.  It happens a lot...It ought to be resolvable and what happens in the future, whether we will be working together or not, the future will tell that.'

Even if the dispute over LOTR revenues is resolved and Jackson is offered a chance to direct The Hobbit, it would likely mean that he would have to rearrange his increasingly busy schedule.  He getting ready to direct a movie based on Alice Sebold's bestselling novel The Lovely Bones and has also signed on to direct a Tintin film for Steven Spielberg (see 'Peter Jackson, Spielberg to Direct Tintin Movies').