Hard 'Hobbit' to break

NEW YORK -- Bilbo lives!

After publicly feuding for more than a year, "Lord of the Rings" director Peter Jackson and New Line Cinema have reached agreement to make J.R.R. Tolkien's "The Hobbit," a planned two-film prequel to the blockbuster trilogy.

Jackson, who directed "Rings," will serve as executive producer for two "Hobbit" pictures. They will tell the story of how the young hobbit Bilbo Baggins originally came to possess the nefarious One Ring that Frodo, his adopted heir, needed three films to dispose of.

A director for the films has yet to be named. Production is tentatively set to begin in 2009 with a release planned for 2010 and 2011.

Relations between Jackson and New Line soured after "Rings" despite a collective worldwide box office gross of nearly $3 billion. Jackson shepherded Tolkien's Middle-Earth saga to a combined 17 Academy Awards including best picture for 2003's "The Lord of the Rings: The Return of the King." The trilogy also includes 2002's "The Lord of the Rings: The Two Towers" and 2001's "The Lord of the Rings: The Fellowship of the Ring."

"I'm very pleased that we've been able to put our differences behind us, so that we may begin a new chapter with our old friends at New Line," Jackson said in a statement.

Two "Hobbit" films are scheduled to be shot simultaneously, similar to how the three "Lord of the Rings" films were made all at once.