The book, which takes place years before the events in Lord of the Rings, was expected to be filmed by Jackson, but New Line cinema, who made the blockbuster trilogy, is now looking for another director to adapt J.R.R. Tolkien's work onto the big screen.
Jackson reveals he was to not only direct The Hobbit, but there was another prequel in the works as well, covering the events leading up to those depicted in Lord of the Rings.
He says, "[Studio boss] Mark Ordesky told us 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.
"We are very sorry our involvement with The Hobbit has been ended in this way. This outcome is not what we anticipated or wanted, but neither do we see any positive value in bitterness. We now have no choice but to let the idea of a film of The Hobbit go and move forward with other projects."
This is the second high-profile film that has slipped through Jackson's fingers, after the cinema adaptation of the computer game Halo, which he was producing, was dropped by studio bosses because of the escalating costs.
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