My friend Chris passed this on (Thanks Chris!).

Hobbit Hostilities Escalate
Los Angeles (E! Online) – One ring might rule them all, but one lawsuit’s threatening the future of one of Hollywood’s biggest franchises.
New Line Cinema cohead Bob Shaye has lashed out at The Lord of the Rings ringmaster Peter Jackson, calling the Oscar winner greedy for suing the studio over disputed profits from the first film in the trilogy. He also left little doubt that New Line considers the director persona non grata when it comes to future projects, including the highly anticipated big-screen adaptation of J.R.R. Tolkien’s The Hobbit.
“I do not want to make a movie with somebody who is suing me,” the studio chief told Sci Fi Wire while making the publicity rounds for his own directing effort, the family-friendly fantasy film The Last Mimzy. “It will never happen during my watch.”
Shaye, who made the gutsy decision to greenlight simultaneous production on all three Lord of the Rings films, took particular offense at what he said was the New Zealander’s “arrogance” and ungrateful attitude in the wake of his success.
“Not that I don’t think Peter is a good filmmaker and that he hasn’t contributed significantly to filmography and made three very good movies. And I don’t even expect him to say ‘thank you’ for having me make it happen and having New Line make it happen,” continued Shaye, who was an executive producer on the trilogy. “But to think that I, as a functionary in a company that has been around for a long time, but is now owned by a very big conglomerate, would care one bit about trying to cheat the guy…he’s either had very poor counsel or is completely misinformed.”
The executive was also irked when many of the LOTR stars declined to participate in a video celebrating New Line’s 40th anniversaryómainly, he believed, because of their affection for Jackson.
“I don’t care about Peter Jackson anymore,” Shaye said. “He wants to have another $100 million or $50 million, whatever he’s suing us for. He doesn’t want to sit down and talk about it. He thinks that we owe him something after we’ve paid him over a quarter of a billion dollars…Cheers, Peter.”
Such remarks would seem to put the kibosh on Frodo fanatics’ dreams of Jackson returning to Middle Earth and helming The Hobbit and possibly another prequel.
Of course, it’s possible both sides are simply engaged in high-stakes brinksmanship to get what they want.
In Shaye’s case, by cutting Jackson out of the franchise that made his career and won him a trio of Oscars, the executive might be able to leverage a settlement to his liking. On the other hand, he could simply be reacting to Jackson, who, in a preemptive move, tried to force New Line’s hand in late November by sending an open letter to, voicing his issues with New Line.
In it, Jackson informed Tolkien devotees that the studio planned to move forward on The Hobbit without him, because New Line wanted to get the prequel in production before resolving his lawsuit.
The news prompted peeved fans to launch a letter-writing campaign urging the studio not to cut ties with the 45-year-old filmmaker or else face a boycott. In one hopeful sign, MGMówhich owns the distribution rights to The Hobbitótold E! Online the “game is not over” and Jackson was still a possibility to direct.
Meanwhile, in response to Shaye’s remarks this week, Jackson’s company fired back with a statement Thursday, calling his former boss’ comments “regrettable” and restating his case.
“Fundamentally, our legal action is about holding New Line to its contractual obligations and promises,” the filmmaker said. “It is regrettable that Bob has chosen to make it personal. I have always had the highest respect and affection for Bob and other senior management at New Line and continue to do so.
“But the studio was and continues to be completely uncooperative [regarding an open audit of the films’ books],” Jackson continued. “This has compelled us to file a lawsuit to pursue our contractual rights under the law. Nobody likes legal action, but the studio left us with no alternative.”
Jackson also balked at Shaye’s assertion that LOTR actors dissed the studio because of the bad blood between the filmmaker and the suits.
“I have never discussed this video with any of the cast of the LOTR. The issues that Bob Shaye has with the cast predate this lawsuit by many years,” Jackson said.
An unnamed person Jackson’s camp was quoted in Variety saying Shaye’s disparaging remarks were an attempt to put the focus on the millions of dollars Jackson made instead of any book-cooking on the studio’s part. The trade paper also reported that both parties appear to far from a settlement in the lawsuit.
Until that happens, Jackson has plenty to keep him busy. His next directorial effort, Alice Sebold’s ghost story The Lovely Bones, is due out later this year. He has also optioned Temeraire, a set of fantasy novels about dragons in the Napoleonic Wars, and is producing Dambusters, an effects-heavy remake of the World War II aerial battle drama.
One movie that’s temporarily off the drawing board is the Jackson-produced Halo. The videogame adaptation project was indefinitely shelved after Universal and 20th Century Fox pulled their financing, citing rising production costs and Jackson’s unwillingness to take a pay cut.