In 2008, the Tolkien Estate’s claimed that New Line studio had not paid millions of dollars in royalties it owed for the distribution of the Lord of the Rings trilogy. Peter Jackson and the Tolkien Estate did not take very well to New Line’s creative accounting and turned this claim into a lawsuit. In October 2008, both parties were in heavy negotiations trying to reach a settlement, and that settlement has finally been reached.
As a result, the Hobbit can now go into production minus any delays. The settlement means The Hobbit franchise has been released to New Line who plan on putting Guillermo del Toro behind the camera in early 2010. Expect two instalments coming out in 2011 and 2012.
Sources says the studio owed 7.5% of gross receipts from all three films, though the exact number New Line settled at to get the Tolkein Estate of their back is still unknown. The Lord of the Rings raked in around $3 billion worldwide, plus revenue from other venues as well. This puts New Lines’ IOU to the members of the trust at an estimated $220 million.
Christopher Tolkien, son of the J.R.R. Tolkien, author of The Lord of the Rings, in a statement said, “The trustees regret that legal action was necessary, but are glad that this dispute has been settled on satisfactory terms that will allow the Tolkien Trust properly to pursue its charitable objectives. The trustees acknowledge that New Line may now proceed with its proposed films of The Hobbit.”