Peter Jackson negotiating to direct Hobbit

Wellington film-maker Peter Jackson may yet direct the two Hobbit movies after all.

The Lord of the Rings director is in negotiations to shoot the long-awaited adaptations, Entertainment Weekly reported today.

Mexican Guillermo del Toro pulled out over ongoing delays in a start date for filming the $209 million project, with latest estimates put at January 2011 with the earliest likely release date 2012.

Jackson was reported to have met studio representatives at the beginning of June after saying he would not rule out directing The Hobbit if another suitable director could not be found.

His original hand-picked choice, del Toro, left the job on May 30, but said he would continue to help with the script with Lord of the Rings screenwriters Fran Walsh and Phillippa Boyens.

Obstacles to a deal remain, including agreeing on a schedule that will allow Jackson to fast-track the films for release in 2012 and 2013, but talks have heated up in recent days between Warner Brothers/New Line and Jackson's team.

Complications include the shaky financial situation of partner MGM, which owns The Hobbit rights and could hold up the production timetable.

Since del Toro's departure, Warners/New Line, which tended to dominate in production decisions over partner MGM, never did a full-on search for a director, even as some names surfaced as possible contenders, because Warners/New Line was trying to woo Jackson back to Middle Earth, Reuters reported.

To Warners/New Line, Jackson was the most logical choice not only because he made the Lord of the Rings movies but also because he was deeply involved as a producer on the Hobbit films.

The New York Daily News said reports Jackson, Walsh and Boyens were expected to travel to London and Los Angeles in early July to cast potential actors were considered a sign the New Zealander was taking a more hands-on role.