The rights holders having seen sense have done a deal with the people who made the LOTR films to make the hobbit.
A rare victory for common sense in hollywood the announcement is here
* MGM and New Line will co-finance and co-distribute two films, “The Hobbit” and a sequel to “The Hobbit.” New Line will distribute in North America and MGM will distribute internationally.
* Peter Jackson and Fran Walsh will serve as Executive Producers of two films based on “The Hobbit.” New Line will manage the production of the films, which will be shot simultaneously.
Looking forward to 2009/2010 when the films will be released