Peter Jackson landed back in New Zealand today with a surprise Christmas present for his Wellington studio team - the greenlight to reprise Middle-earth once more with two films adapting The Hobbit.
Plans to make J.R.R. Tolkien's earlier tale about Bilbo Baggins, which set the scene of the Lord of the Rings, had been snared in litigation and between Jackson and New Line, the studio which backed the trilogy over earnings from the films, as well as rights issues with another studio, MGM.
But all parties have come to an agreement meaning Jackson and partner Fran Walsh are to executive produce the two films to be shot back-to-back in 2009. At this stage no decision had been made on who might direct the films.
Spokesman Matt Dravitski said Jackson was hesitant to direct it himself and likened his involvement to that of George Lucas' in the original Star Wars trilogy - having established the franchise, Lucas had other directors do parts two and three.
The Weta Workshop and Digital teams only woke to the news today that The Hobbit was a go after the agreement was finalised in the United States yesterday. Jackson signed the deal after finishing the American shoot of his next directorial effort, an adaptation of Alice Sebold's The Lovely Bones.
Shooting resumes on the film in New Zealand in late January.
It was also too early to say who, if any, of the Lord of the Rings cast might reprise their roles, where and when the film shoot might take place in New Zealand, or whether the hundreds of New Zealanders who appeared as extras in the LOTR would be needed again.
"We had just about got to the end of people sending us photos of themselves dressed in various velvet creations and now that's going to start up again," laughed Dravitski.
The strike by the writer's guild meant there would be no script for the film until that dispute was settled, which could also delay the start of filming.
So far as Jackson's protracted wrangle with New Line goes, it appears the parties are making nice after what appeared to be a long and ugly dispute over money owed by the studio, headed by Bob Shaye and Michael Lynne, to the film-maker from the three films.
In a prepared statement Jackson said: "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. The Lord of the Rings is a legacy we proudly share with Bob and Michael, and together, we share that legacy with millions of loyal fans all over the world. We are delighted to continue our journey through Middle-earth."
It appeared the agreement had been brokered by MGM boss Harry Sloan whose company has long held the distribution rights to any film of The Hobbit.
Said Lynn: "We greatly appreciate the efforts of Harry Sloan, who has been instrumental in helping us reach our new accord."
The Hobbit films have tentative release dates of 2010 and 2011.