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Oscar winner Jackson, however, has signed on as executive producer along with his wife and producing partner, Fran Walsh, who also was instrumental in making the three Lord of the Rings films that earned $3 billion at global box offices.
In recent months, loyal 'Rings' and Tolkien fans loudly proclaimed on Internet sites that they would not support a Hobbit movie without Jackson's involvement, and Tuesday's announcement brought them some welcome relief.
"Fist in the Air! YEEEEESSSSS!!! ... ...TRUST PETER!!! THE MASTER, THE COMMANDER, THE WIZARD!," one person posted at fan site, theonering.net.
New Line co-chairman Bob Shaye said no decision has been made about who will direct the Hobbit movies, but Jackson, Walsh and the studios share approval on major creative elements and will start considering writers and directors in January.
MGM Chairman Harry Sloan, who was credited by all parties for bringing about the deal, said Jackson found it "impossible" to direct the films and meet proposed release dates in 2010 and 2011 due to other projects in the works.
"He can't get it scheduled and he doesn't want the fans to have to wait for the next two movies," Sloan said. He said the studios might postpone the films if Jackson changed his mind.
Ken Kamins, manager for Jackson and Walsh, said it was "highly unlikely" Jackson would write or direct, but he would insure their quality by keeping creative control.
Kamins pointed out that George Lucas had ceded director's duties to others for The Empire Strikes Back and Return of the Jedi without damaging the Star Wars franchise.
Jackson's vision
Fantasy novel The Hobbit tells of a world inhabited by wizards, dwarves, elves and little people called hobbits, including the central character, Bilbo Baggins. The Hobbit preceded Tolkien's 'Lord of the Rings' trilogy.
The Ring films were released from 2001 through 2003.
Jackson and Walsh envision the first film covering the events of The Hobbit and the second bridging the 80-year gap between that novel and the first book of the trilogy.
Much of the plot for the second film would be gleaned from footnotes in The Hobbit that address that gap, Kamins said.
It was that vision that led MGM, which holds film rights to the book, to insist Jackson and Walsh make the movies.
"Once (they) played out their vision for 'The Hobbit' as two movies ... MGM just took the position that we wanted to deal with Peter and it was not an option to do it with anybody else," Sloan said.
He added the studios "would welcome as much of the original ('Rings') cast as possible," adding that "some of them have even said they are interested."
For years, the making of a Hobbit movie had been delayed while Jackson and New Line wrangled over profits from the 'Rings' films. The director had sued New Line claiming it owed him money. Jackson and New Line have now settled that suit.
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