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Last Updated: Thursday, 11 January 2007, 10:10 GMT
Jackson ruled out of Hobbit film
Peter Jackson
Peter Jackson fell out with New Line after making The Lord of the Rings
The Lord of the Rings director Peter Jackson has been ruled out of making The Hobbit, the head of film studio New Line has told the Sci-Fi Channel.

Jackson is locked in a legal battle with New Line over money from The Lord of the Rings trilogy.

New Line co-chairman Bob Shaye told the Sci-Fi Wire that Jackson would never make The Hobbit "during my watch".

The director responded by telling Variety magazine it was "regrettable" Mr Shaye had made the issue personal.

I don't want to work with that guy any more - why would I?
New Line's Bob Shaye on Peter Jackson
In November, Jackson revealed New Line was preparing to make The Hobbit without him because it could not wait for the legal case to be resolved.

But the dispute has intensified, with Mr Shaye saying: "He's got a quarter of a billion dollars paid to him so far, justifiably, according to contract, completely right.

"And this guy... turns around without wanting to have a discussion with us and sues us and refused to discuss it unless we just give in to his plan.

"I don't want to work with that guy any more. Why would I? So the answer is he will never make any movie with New Line Cinema again while I'm still working at the company."

New Line only holds the rights to The Hobbit, which tells of how Bilbo came by the ring of power, for a limited time.

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