You'd think over $1 billion in U.S. box office and 17 Oscars would add up to something right? Not if you're Peter Jackson. The mastermind behind the The Lord of the Rings phenomenon is currently in the middle of a bizarre turf war over who controls J.R.R. Tolkien's prequel to the series, The Hobbit.

Not surprisingly, fans have been salivating at the idea of Jackson returning to helm an adaptation of the beloved novel. It didn't seem to be a real possibility until MGM announced a few months ago it was going to team up with New Line to make the movie. Complicating matters was that MGM has long owned the rights to release any feature adaptation of "The Hobbit," but New Line is currently the only entity who can produce it. Confused? Unfortunately, it gets more complicated.

According to Variety, Jackson sued New Line over its accounting practices for the "Rings" trilogy, claiming he had been denied profits from the mega-moneymaking films. It also seems New Line only controls the production of The Hobbit because of a "limited time option" from producer Saul Zaentz. Those rights are close enough to expiring that the studio informed Jackson he would not be directing the project unless he settled his lawsuit against them. Jackson responded by announcing to his kingdom, er, sending a detailed letter of the whole affair to a prominent "Rings" fan site. As you can imagine, that horde wasn't thrilled. Meanwhile, MGM was furious that New Line would set an ultimatum to Jackson without consulting them. An MGM spokesman was quoted as saying, "The matter of Peter Jackson directing The Hobbit films is far from closed."

Needless to say, everyone involved has a lot to lose here. New Line is suffering through a horrible string of box office bombs and probably needs the inevitable Hobbit bounty more than anyone else. MGM is trying to rebuild its brand and is counting on a Jackson/Hobbit formula to be a part of that. Jackson is sitting pretty with the millions he's made off the original series and King Kong, but it's clear he isn't thrilled with the idea of another filmmaker playing in his universe. Rumors floated over the holiday weekend that Spider-Man's Sam Raimi had been offered The Hobbit, but that idea seems as ludicrous as other fan favorites such as Steven Spielberg or Quentin Tarantino directing the flick. There is too much money to be made for it to not work out in the end, but the question is whether Jackson will give on his lawsuit or make New Line (and MGM) sweat it out. The whole drama may just turn into one of the biggest industry stories of 2007.