Peter Jackson's long-cherished Hobbit movie appeared to be dead in the water after the director was effectively blacklisted by his former backers, New Line Cinema.

Robert Shaye, co-chairman of New Line, insisted that Jackson would never make another movie for New Line, following a fractious legal dispute over the profits from the Lord of the Rings trilogy.

"I do not want to make a movie with somebody who is suing me," Shaye said in an interview with the Sci Fi Channel. "So the answer is that he will never make any movies with New Line Cinema again while I'm still working for the company." New Line currently controls the film rights to The Hobbit, the Tolkien fantasy that paved the way for The Lord of the Rings.

"I don't care about Peter Jackson anymore," Shaye added. "He wants to have another $100m or $50m or whatever he's suing us for. He doesn't want to sit down and talk about it. He thinks we owe him something after we've paid him over a quarter of a billion dollars ... Cheers, Peter."

Initially regarded as a high-risk gamble, the Lord of the Rings trilogy wound up making nearly $3bn at the global box office. But Jackson's production company launched a lawsuit against New Line following the alleged discovery of financial anomalies in a partial audit of The Fellowship of the Ring, the first film of the trilogy. Jackson contends that the studio has refused to agree to an audit of the other two films, The Two Towers and The Return of the King.

"Fundamentally our legal action is about holding New Line to its contractual obligations and promises," Jackson said in a statement. "It is regrettable that Bob has chosen to make it personal."