As previously, excitedly reported: Peter Jackson has agreed to produce The Hobbit and its sequel.

New Line has already decided that both films will be produced at the same time, in similar fashion to how the Lord of the Rings trilogy was put together. No budgets have been assigned the films yet because, as New Line's co-chair Robert Shaye put it: "You can't budget an idea."

As reported by Entertainment Weekly, MGM and New Line want to keep Jackson's involvement in the film as broad as possible, teasing that he may take up both writing and directing responsibilities. Jackson's manager Ken Kamins said his client won't be directing the films.

"Peter won't be directing because he felt the fans have waited long enough for The Hobbit. It will take the better part of every day of the next four years to write, direct and produce two Hobbit films," Kamins said. "Given his current obligations to both The Lovely Bones and Tintin, waiting for Peter, Fran, and Phillippa to write, direct and produce The Hobbit would require the fans wait even longer."

Directors Sam Raimi (Spider-Man), Guillermo del Toro (Pan's Labyrinth), and Alfonso Cuaron (Children of Men) are the names that come up as alternate possiblities, but no official creative decision has been made.