Lord of the Rings director Peter Jackson has settled his accounting and legal dispute with New Line Cinema, and has signed on to executive produce the next two movies, based on J.R.R. Tolkien's The Hobbit.

New Line and Metro-Goldwyn-Mayer Studios plan to make two prequels to the Ring series, with an adaptation of The Hobbit and a sequel that will be filmed simultaneously in New Zealand.

Jackson had accused New Line of manipulating the books and miscalculating his share of the box office receipts for the first movie, The Fellowship of the Ring. The Rings trilogy has grossed about $3 billion worldwide. Jackson sued New Line, and in September a judge ruled against New Line's attempt to throw out the lawsuit. He also ordered New Line to preserve the e-mail messages it had been automatically purging from its system.

When New Line originally announced plans for an adaptation of The Hobbit, Jackson initially refused to participate. MGM helped bring the warring sides together. Jackson and New Line did not reveal the terms of their settlement.

"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," said Jackson in a statement. "We are delighted to continue our journey through Middle Earth."

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