NEW YORK (AP) - Peter Jackson and New Line Cinema have reached agreement to make J.R.R. Tolkien's ''The Hobbit,'' a planned prequel to the blockbuster trilogy ''The Lord of the Rings.''

Relations between Jackson and New Line had soured after the enormous success of ''Rings,'' but Metro-Goldwyn-Mayer Studios (MGM) helped the two sides reach agreement. MGM and New Line will split the film 50/50, a spokesman for MGM 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,'' Jackson said in a statement.

So far, Jackson has only agreed to produce The Hobbit, with his partner Fran Walsh. However, I'm hoping he'll eventually decide to direct. He just has to. I'm really looking forward to this, either way!

It's amazing that New Line finally decided to sign Peter Jackson up for the Hobbit after all the bad blood between them.

It wouldn't have anything to do with the mediocre business thier next blockbuster franchise "The Golden Compass" is doing?

;)