MGM and New Line will co-finance and co-distribute the projects, which New Line will release in North America and MGM will handle overseas.
Jackson and Fran Walsh will serve as executive directors. A director will be announced shortly and there is intense speculation that Sam Raimi, who has expressed interest in the job if Jackson were involved, is currently the frontrunner.
New Line will oversee simultaneous production of the films and work will commence on the screenplays once the writers strike has been resolved. New Line co-chairmen and co-CEOs Bob Shaye and Michael Lynne said the goal was to commence principal photography in New Zealand in 2009 and release The Hobbit at the end of 2010 followed by the sequel a year later.
The co-chiefs said Jackson and Walsh had already conceived a concept for the sequel that will bridge The Hobbit and The Lord Of The Rings saga. 'He hasn't told us too much about it,' Shaye said.
Lynne said the process to choose a director would begin in earnest in the new year and added that he and Shaye shared mutual powers of approval on all creative elements with Jackson. 'We've had some thoughts about it while in conversation with Peter and Fran,' Shaye said, 'but no decision yet.' It is understood that Jackson himself has not been ruled out as director at this stage.
'This was a complicated dispute and there were a lot of intermediaries and it got a little acrimonious but there was never a thought that it wouldn't be the right thing to work together and deliver something that the fans were looking for,' Shaye said. 'We managed to get to a place where we found some common ground. I also want to thank Harry Sloan and our new friends at MGM for helping us to continue that journey.'
'Peter Jackson has proven himself as the film-maker who can bring the extraordinary imagination of Tolkien to life and we full heartedly agree with the fans worldwide who know he should be making The Hobbit,' MGM chairman and CEO Sloan said. 'Now that we are all in agreement on The Hobbit, we can focus on assembling the production team that will capture this phenomenal tale on film.'
The Lord Of The Rings trilogy was shot back to back in New Zealand and reportedly cost $400m. The films grossed approximately $3bn worldwide.