Guillermo Del Toro in talks to direct The Hobbit

Mexican director Guillermo Del Toro is in talks to direct back-to-back installments of J.R.R. Tolkien's The Hobbit - after Peter Jackson fell out with the movie studios.

Jackson was the highly successful director behind the Lord of the Rings trilogy  which became some of the most successful movies of all time.

For movie studio New Line making the Hobbit had become a priority in the wake of its billion-dollar success of the Oscar-winning The Lord of the Rings movies, which were co-written and directed by Jackson.

Jackson wanted to adapt Hobbit but when he got into a dispute with the studio over profit participation, the project went into limbo.

But as neither New Line nor MGM, both rights-holders to the film, wanted to risk alienating fans of the trilogy by making an adaptation that didn't have Jackson's involvement.

Jackson and the two studios came to a resolution in December that paved the way for Hobbit to get back on the road to the screen.

However, because of other commitments that included The Lovely Bones and Tintin," Jackson could not take on writing and directing roles, opting instead to become an executive producer with approval over creative elements of the pair of films.

But because of the ongoing writers' strike, no writer has been hired to adapt Tolkien's children's classic, though that process will be fast-tracked once it's resolved.  And both Del Toro and Jackson will oversee the script for the Hobbit.

Del Toro's name was on a short list of directors who could tackle the project, one of the most anticipated literary adaptations of the past decade.

An ill-chosen director for Hobbit could put billions of dollars at stake for New Line and MGM and could turn off an audience that encompasses millions of passionate readers, Tolkien fans and obsessive geeks.

Few filmmakers have the following that del Toro has, as well as a deep love for the source material, an assured grasp of fantasy filmmaking and an understanding and command of geek culture as well as its respect.

Del Toro has built up a huge fan base through such movies as the  Oscar-nominated Pan's Labyrinth, Hellboy, Blade 2 and The Devil's Backbone.

Principal photography for the films, which will be shot simultaneously, is tentatively set for 2009. The production budget is estimated at $150 million per film. The release of the first film is slated for 2010 and the second in 2011.

Hobbit, which Tolkien initially wrote for his children, was published in the UK in 1937 to wide acclaim.

It centered on Bilbo Baggins, a hobbit who joins a group of dwarves and the wizard Gandalf on a quest to find the treasure of a dragon named Smaug.

Tolkien then went on to write The Lord of the Rings 17 years later.

By Nicola Pittam, Jan 28 2008 © Copyright 2008 - Showbiz Spy