(Photograph by Emma Abraham)

Kristin here–

Behind closed doors, major negotiations and offers concerning the film of The Hobbit are presumably passing back and forth. The glimpses afforded the public via the key players suggest a stormy process. One of those players, Bob Shaye, is president of New Line Cinema, which he founded in 1967 and has headed ever since. He was the one who in 1998 took on the Lord of the Rings project and decided to make the film in three parts.

On January 10th, a report posted on the internet quoted Shaye as declaring that Peter Jackson will never get to direct The Hobbit for New Line.

That’s quite a leap from the situation as it was back on October 2, when I posted my first blog on the subject. At that point MGM (which owns the distribution rights for The Hobbit) had just announced that it and New Line would co-produce the film. The studio’s spokesperson mentioned Jackson as the director of choice.

The big concern among fans then was whether Jackson, who had been announcing new producing and directing projects right and left, would have time in his schedule to tackle such a major project—especially given that MGM suggested that the film might be made in two parts.

Having written a book, The Frodo Franchise, with the cooperation of the filmmakers, I weighed in on the logistics of all this. As I said at the time, since finishing my research in New Zealand in 2004, I have not had direct contact with Jackson or the others privy to the negotiations concerning his subsequent projects. I simply offered an educated opinion on the situation and why Jackson might well be able to fit The Hobbit into his schedule. The recent major developments suggest that it’s time again to provide some additional context.

One fundamental bit of backstory on the whole issue of who will direct The Hobbit dates back to early 2005, when Jackson filed a lawsuit against New Line. The entire complaint, published March 25, 2005, is available online. It makes a number of claims concerning New Line, including ways in which the exploitation of The Fellowship of the Ring and its licenses was dealt with. Primarily it alleges that New Line did not “properly account, calculate and pay to Wingnut its share of the profits” (i.e., from theatrical distribution) and didn’t “properly allocate license fees paid with respect to packages of defendants’ film properties that include the Film.” I take it that the latter refers to the DVDs. Jackson insists that the lawsuit does not demand a set amount of money but simply a proper auditing of the money from the Fellowship release, licensed goods, and DVD.

On November 19, 2006, Jackson and producing/writing partner Fran Walsh posted a letter on TheOneRing.net. In essence they said that they had been approached by New Line to make The Hobbit, with the implication that the lawsuit would be settled if they accepted. Jackson and Walsh countered by saying that they would not link the film to the lawsuit. New Line decided to find another director, and Jackson and Walsh told the fans they would not be making The Hobbit.

There followed a storm of protest on the Internet. MGM pointed out that it still wanted Jackson to direct The Hobbit. Saul Zaentz, who had sold the production rights back in 1997, said he hoped that Jackson would direct.

At that point, an observer might reasonably assume that the participants were drawing lines in the sand. Jackson clearly wanted to direct The Hobbit, but he had plenty of other projects in the pipeline and did not need to chase this one. Perhaps he saw the November 19 announcement as a way to pressure New Line into settling the lawsuit. Perhaps New Line suspected that they would end up owing Wingnut a great deal of money if the audit occurred.

There the situation evidently stood for nearly two months, with no public signs of either side budging. Then, in a brief interview with Sci Fi Wire (the news service of the Sci Fi Channel’s website) posted on January 5, Shaye declared: “I do not want to make a movie with somebody who is suing me. It will never happen during my watch.” Shaye declared that Jackson had so far been paid “a quarter of a billion dollars,” implying that suing for more was greedy and again emphasizing: “He will never make any movie with New Line Cinema again while I’m still working for the company.” Wingnut’s deal with New Line for producing, directing, and writing LOTR involved flat fees for Jackson and Walsh as well as an undisclosed percentage of the income and bonuses if the film hit certain box-office levels.

Later the same day, Jackson responded on Ain’t It Cool News, briefly reiterating in measured terms the reasons for the lawsuit and expressing regret at Shaye’s statement.

Where do things stand now?

According to the November 19 letter, Mark Ordesky (Executive Producer of LOTR) was the one who called Jackson about The Hobbit. In the course of it he mentioned that the option on the production rights for the novel would eventually revert to Saul Zaentz. Hence New Line’s need for speed and its decision to seek another director. Rumors that Sam Raimi had been approached circulated, though no evidence for that has surfaced.

It is customary for production options on a literary property to be sold for a limited time. Given that we just passed the tenth anniversary of Zaentz’s sale of the rights, obviously that wasn’t the period. Who knows how many years are left? Is New Line using that issue as a way to put pressure on Jackson? Quite possibly.

New Line must realize that Jackson’s name adds tens of millions of dollars in value to The Hobbit as a film property. Its executives know that fans are up in arms about all this. A poll taken by TheOneRing.net beginning December 18 asked whether fans would go see The Hobbit if it were directed by someone other than Jackson. “Definitely No—No way without PJ!” garnered 62.5% of the votes; “Not likely—I can’t imagine another team involved” drew 14.1%; “Very likely—Can’t wait for any live-action Hobbit film!” 10.3%; “Don’t know—Depends on who directs,” 10.3%; “Likely—It is time for some fresh creative juices,” 2.6%. 10,143 people voted, thousands higher than in other recent TORN polls.

Clearly indignant fans would be more likely to participate in such a poll than would non-indignant ones. And no doubt many of the fans would change their minds and go to The Hobbit as directed by someone else. Still, considerable resentment would linger and be volubly expressed right up to the time of the film’s release. Any director approached by New Line would doubtless be aware that he (or possibly she) would be swimming upstream against a flood of fan opprobrium. Would any major director agree to it? Some of the likeliest candidates are also friends of Jackson’s.

Another relevant factor that New Line would have to consider is whether any of the actors would return to work under a different director. Jackson creates a fierce loyalty among the people he works with. During the making and release of LOTR, the actors rallied behind him during a number of disputes with the studio.

On November 22, Ian McKellen put the Jackson/Walsh letter on his series, “E-Post: The Lord of the Rings” and added a comment: “The LOTR fans are already expressing a sense of betrayal. On my own account, I am very sad as I should have relished re-visiting Middle Earth with Peter again as team-leader. It’s hard to imagine any other director matching his achievement in Tolkien country. We will have to await developments but being an optimist I am hoping that New Line, MGM and Wingnut can settle outstanding problems so that the long expected ‘Hobbit’ is filmed sooner rather than later.”

Of course not all that many characters in LOTR appear in The Hobbit. Gandalf is the crucial one, and McKellen strongly implies that he wouldn’t return under another director. Elrond appears in two brief episodes. (The general opinion is that Ian Holm would be too old to play Bilbo, who is 50 in the novel.) Jackson has mentioned the possibility of showing the White Council meeting, which is only mentioned in the book, and that would involve at least Galadriel and Saruman. It is quite possible that the relevant actors would refuse to return unless Jackson helms the film. Important crew members might do the same.

The possibility of the rights reverting to Zaentz remains vague unless someone reveals the length of New Line’s option. I suspect that Zaentz would like nothing better than to regain those rights. He is a formidable producer himself, having three Best Picture Oscars on his mantel (One Flew over the Cuckoo’s Nest, Amadeus, and The English Patient). He got a very significant cut of the gross income from Lord of the Rings, as well as loads of money from the licensed products. By producing The Hobbit himself, he would probably receive a considerably higher cut.

He also wouldn’t have to depend on New Line’s accounting practices. Zaentz himself sued New Line over his share of the box-office take for LOTR. His suit alleged that although his contract gave him a cut of the gross theatrical income, New Line had calculated his share on net revenues, paying him $168 million. The trial was set to commence on July 19, 2005, but New Line entered into negotiations and settled with Zaentz in August, giving him an additional $20 million.

Lawsuits like this aren’t uncommon in Hollywood, so the Jackson/Walsh and Zaentz claims against New Line are not extraordinary events. The Zaentz case does, however, give some indication of the kinds of money involved. It is notable that New Line has caved as a result of a lawsuit somewhat similar to the one now in contention.

Presumably Jackson and Walsh’s suit will eventually make it to court if New Line does not do as they did with Zaentz and settle it. Thus the advantage of shutting Jackson out of the Hobbit project doesn’t seem apparent to an outsider. They’ll face it at some point—why not bite the bullet, settle, and regain access to the one director virtually guaranteed to make this valuable literary property into a huge hit?

The success of LOTR went beyond any of its makers’ most optimistic expectations. That success was largely due to Jackson and Walsh. They were the ones who brought the project to New Line, which otherwise would have had no way of getting the novel’s production rights. The first film came out in a year that was perhaps the worst the studio had ever endured. In January, 2001, cutbacks imposed by AOL Time-Warner, New Line’s owner, had forced Shaye to let go a hundred employees. This was not a minor thing for such a small company, and one which was known for its long-term retention of a tight-knit staff. In the spring of 2001 New Line had two of its most costly failures with the Adam Sandler comedy Little Nicky and the infamous Town and Country. The December release of Fellowship pulled New Line out of a huge slump. It is probably not true, as many predicted at the time, that the studio would have ceased to exist had it not been for LOTR. It does seem likely, though, that Shaye would have had far less autonomy and power in running the company that he had started.

I discuss the events of that period in detail in The Frodo Franchise. At this point, the fracas seems odd indeed, both from a personal and a financial point of view. There may be other factors involved that those not apparent to outsiders, and we may well never learn what those were.

In the meantime, the actors involved grow older. Ian McKellen went to New Zealand and began playing Gandalf in January of 2000, when he was 60. Last year, at 66, he predicted, “I’ve got another 10 years in me, probably, of capering.” In the same interview he remarked, “I would love to do ‘The Hobbit,’ yes. Partly because I would hate to see anybody else playing Gandalf.”

So would just about anyone else.

[Added August 6: For my earlier comments on the Hobbit project, go here.

For updates, see here and here.]