AN AMICABLE SPLIT: Sir Peter Jackson, left, and departing director Guillermo del Toro who says the resignation is "the hardest decision I've ever taken".

Sir Peter Jackson says he will step into the breach and direct The Hobbit himself if it becomes the only way to ensure the US$150 million (NZ$219m) film is made after the sudden departure of director Guillermo del Toro.

Wellington Chamber of Commerce has said that the film is worth "many millions of dollars" to Wellington's economy and further delays may mean the film does not start shooting until next year.

Del Toro announced yesterday he had quit the The Lord of the Rings prequel over frustration with repeated delays. He had commitments to other films and said his resignation was "the hardest decision I've ever taken".

"It was simply longer than anyone expected, the fans and the film makers," he told The Dominion Post at his Thorndon home.

"It was more a factor of the other commitments asking for a start [time] than The Hobbit needing a date to start."

Jackson and partner Fran Walsh, The Hobbit's executive producers, learned of del Toro's decision on Saturday. Jackson told The Dominion Post he was saddened by the director's departure, which was "amicable". Del Toro would continue as a Hobbit screenwriter.

Jackson met studio representatives yesterday to begin the search for a new director but wouldn't rule out directing The Hobbit himself if a suitable person could not be found.

"If that's what I have to do to protect Warner Bros' investment, then obviously that's one angle which I'll explore," he said. But stepping in as director would be difficult as he had signed writer and director contracts with Hollywood studios for two other films, with one likely to begin next year. "The other studios may not let me out of the contracts."

Del Toro, best known for Oscar-winner Pan's Labyrinth and Hellboy, was hired in 2008, when the goal was for part one of The Hobbit to be released this year. Now the earliest likely release date is 2012.

"One of my best friends died about a year ago," del Toro said. "The main thing we have in common was at age 11 we read The Hobbit. We used to spend many, many afternoons talking about how great it would be to make The Hobbit into a movie. So it was very personal to me."

He had brought his family to Wellington and had bought two homes, including one he called his "man cave". But his commitment had stretched from three years to six to make the film.

The Hobbit backers are Time Warner subsidiary New Line Cinema and MGM, but MGM was heavily in debt and up for sale.

Jackson said he did not understand all the MGM issues, but it was co-financier. "They are in no position to do that ... I would imagine it has been a significant factor in the whole thing. I know it's been very frustrating for everybody."

More delays were likely to impact on Wellington's economy. When The Hobbit was announced in 2007, Wellington Chamber of Commerce said it would be worth "many, many millions of dollars" to Wellington and "hopefully this will ensure continued buoyancy in the [film] industry for at least several years to come".

While the film is not officially in pre-production, work has already begun including rebuilding the Hobbiton set in Matamata. Russell Alexander, who operates the Hobbiton Movie Set and Farm Tour business near Matamata where scenes from Jackson's Rings trilogy were filmed said he could not comment on the situation due to confidentiality clauses in contracts he had. He said it was "business as usual" with tours of the sets.

Jackson said The Hobbit's US$150 million budget was a ballpark figure, but it could be higher if it was filmed in 3-D.

Jackson said November was now the earliest start date for shooting, but it depended on finding the right director. "I just don't know now until we get a new director. The key thing is that we don't intend to shut the project down.

"We don't intend to let this affect the progress. Everybody, including the studio, wants to see things carry on as per normal. The idea is to make it as smooth a transition as we can."

THERE AND BACK AGAIN

The long road to The Hobbit:

2003: The Lord of Rings trilogy earns US$2.91 billion (NZ$4.2 b) at the box office

December 2007: New Line Cinema and MGM announce that Jackson and Fran Walsh will be executive producers of The Hobbit, a two-part prequel to The Lord of the Rings, to be largely shot in Wellington. Tentative start date on filming is 2009.

April 2008: Guillermo del Toro joins as director and co-screenwriter with Jackson, Walsh and Philippa Boyens.

July 2009: Jackson says The Hobbit still technically has to get "the green light" from the studios and has no budget.

November 2009: MGM, US$3.7 billion (NZ$5.4b) in debt, is put up for sale.

March 2010: Del Toro says studios are considering making the film in 3-D.

April 2010: The 23rd James Bond film, another MGM project, is postponed indefinitely.

Last week: While promoting the film Splice , of which he is an executive producer, del Toro says he has been in a "tangled negotiation" with The Hobbit because of problems with MGM.

Yesterday: Del Toro quits as director.

REEL LIFE

Sir Peter Jackson has revealed to The Dominion Post that he has signed contracts as a writer and director for two new films – with work likely to begin on the first next year – but would not elaborate further.

Other known projects are:

The Adventures of Tintin – Jackson and Steven Spielberg are co-producing three movies. Spielberg has directed The Adventures of Tintin: The Secret of the Unicorn, due for release next year. Jackson will direct the second film.

Dambusters – Jackson is producer and Christian Rivers is director. Announced in 2006, some test shots have been done in the Wairarapa with scale replicas of Lancaster bombers, but there is no start date for filming. Jackson said Dambusters would move ahead once he found time to write a new draft of the script, based on drafts by British actor and film-maker Stephen Fry. Dambusters may be shot in 3-D. "That would be crying out for 3-D. It would be terrific."

Mortal Engines, based on the sci-fi book series by Philip Reeve.

His Majesty's Dragon, Throne of Jade and Black Powder War, based on the Temeraire fantasy series by Naomi Novik.