Exclusive: Peter Jackson Close to Deal to Direct ‘The Hobbit’

The hairy New Zealander is close to answering the prayers of fans and will agree to direct “The Hobbit” pictures

Peter Jackson is close to finalizing a deal to direct “The Hobbit” films  as negotiations between MGM and Warner Bros. grind closer to a greenlight, TheWrap has learned.

Fans have been praying for Jackson to confirm that he would take over and direct the long-delayed series since Guillermo del Toro dropped out at the end of May.

Now his deal is all but complete, according to individuals close to the project. Both Jackson’s directing fee and percentage of the gross have been settled, though a number of lesser deal points remain outstanding.

Neither Warner's nor Jackson's agent Ken Kamins would comment for this story.

Jackson is already on board to write and produce “The Hobbit.” But because of financial turmoil at MGM, which owns half of the franchise together with Warners’ New Line Pictures, the J.R.R. Tolkien story has become one of the most torturous movie projects in Hollywood history.

Meanwhile, two reports over the weekend cited insider sources that a greenlight for the series would materialize in the next few days. While conceivable, those reports may as easily reflect wishful thinking on the part of the dozens of executives and lawyers on either side trying to reach agreement on terms, ownership and contingencies.

The reports also said the production would be shot in 3D.

Negotiations have been within reach of the goal line for many weeks but have dragged on due to the complexity of MGM’s situation and the large number of players involved, according to knowledgeable individuals.

“I wouldn’t stake my life that it will happen in the next two weeks,” said one weary person close to the situation.

The situation has not been helped by a recent union flap involving whether the production would use Screen Actors Guild members or not. In recent days the prime minister of New Zealand stepped in to help resolve the conflict.

At Warner's, executives are eager to get production under way, given that sets are already built in New Zealand and the cast is chafing on hold for a start date. About $30 million has already been spent on the project, the first part of which is scheduled to hit theaters Dec. 19, 2012.

But the studio is also wary to move ahead at the risk that an agreement with MGM may not hold up over time.

At MGM, the decision about greenlighting “The Hobbit,” a $400 million, back-to-back production of two films, hangs between CEO Stephen Cooper, owners-in-waiting Gary Barber and Roger Birnbaum of Spyglass Productions and the creditors committee at MGM.

Spyglass has signed a letter of intent to give the production company 4-5 percent ownership of MGM in exchange for taking over the company’s management. That deal would entail a prepackaged bankruptcy, under the supervision of the judge and with the accord of the studio’s debtors and investors.

But Warner's has no guarantees that this plan will hold up and be executed as planned.

Nonetheless, both studios are highly motivated to get to a deal and move the production forward as one of the most tangible assets either studio has to make a profitable reality.

MGM has the rights to international distribution of “The Hobbit,” while Warner's would be the domestic distributor.

The first “Hobbit” film is expected to be released in mid-December 2012, the second would follow a year later.