Shankman, whose New Line musical "Rock of Ages" is in post-production, met with New Line executives the day before Thanksgiving and is now working out the details, an individual close to the project told TheWrap.
Despite its strong association with the ballet, "Nutcracker" is not a musical. Instead, it will be a reinterpretation of the E.T.A. Hoffman story about a 7-year-old girl whose favorite toy, a Nutcracker, comes to life, beats the evil Mouse King and takes her to a magical land inhabited by dolls.
The director and choreographer's Offspring Entertainment is based at New Line, and was the production company on the studio's 2007 "Hairspray, 2009's "17 Again" and the 2010 movie "Going the Distance."
It is unclear when "Nutcracker" will be released. New Line has a major tentpole, "The Hobbit: There and Back Again" scheduled to be released in December 2013, and is unlikely to release "Nutcracker" around the same time. The story is closely tied to the holiday season, though, so it is likely to be a holiday release.
Deadline first reported the news.