Peter Jackson says he's not directing The Hobbit

Hat tip to commenter TJR for the news that Peter Jackson won't be directing The Hobbit:

Several years ago, Mark Ordesky told us that New Line have rights to make not just The Hobbit but a second "LOTR prequel", covering the events leading up to those depicted in LOTR. Since then, we've always assumed that we would be asked to make The Hobbit and possibly this second film, back to back, as we did the original movies. We assumed that our lawsuit with the studio would come to a natural conclusion and we would then be free to discuss our ideas with the studio, get excited and jump on board. We've assumed that we would possibly get started on development and design next year, whilst filming The Lovely Bones. We even had a meeting planned with MGM executives to talk through our schedule.

However last week, Mark Ordesky called Ken and told him that New Line would no longer be requiring our services on the Hobbit and the LOTR 'prequel'. This was a courtesy call to let us know that the studio was now actively looking to hire another filmmaker for both projects.

Ordesky said that New Line has a limited time option on the film rights they have obtained from Saul Zaentz (this has never been conveyed to us before), and because we won't discuss making the movies until the lawsuit is resolved, the studio is going to have to hire another director.

Given that New Line are committed to this course of action, we felt at the very least, we owed you, the fans, a straightforward account of events as they have unfolded for us.

We have always had the greatest support from The Ringers and we are very sorry our involvement with The Hobbit has been ended in this way. Our journey into Tolkien's world started with a phone call from Ken Kamins to Harvey Weinstein in Nov 1995 and ended with a phone call from Mark Ordesky to Ken in Nov 2006. It has been a great 11 years.

This outcome is not what we anticipated or wanted, but neither do we see any positive value in bitterness and rancor. We now have no choice but to let the idea of a film of The Hobbit go and move forward with other projects.

We send our very best wishes to whomever has the privilege of making The Hobbit and look forward to seeing the film on the big screen.

New Line had better tread carefully here -- without Jackson any prequel will feel oddly disconnected to the extremely popular (and award-winning) Lord of the Rings film trilogy. Will Ian McKellan and Ian Holm still want to be involved if Jackson isn't directing? I wonder if New Line will find themselves rethinking this decision -- seems like it's going to hurt them more than it will damage Peter Jackson and Co.