Lord of the Rings fans, rejoice: Warner Bros. has reached a settlement with the estate of J.R.R. Tolkien over who owns the film rights to the story, and now production can start on The Hobbit, the prequel to the series that has been a massive success both as a series of books and as a series of movies.

The trouble started in February of 2008 when Tolkien's heirs sued Warner Bros.' New Line Cinema arm, accusing the company of shortchanging the estate on royalties. The suit sought in excess of $150 million and sought to rescind the studio's right to make Lord of the Rings movies. Bonnie Eskenazi, an attorney for the Tolkien estate, told the Wall Street Journal (subscription required) that while $150 million was the initial claim, "that demand increased after we got closer to a trial because discovery revealed additional financial impropriety."

All movie studios want to find their own Lord of the Rings/Harry Potter franchise. Disney (NYSE: DIS), for example, seems to be headed on the right track with its Narnia brand. Viacom (NYSE: VIA) made a solid effort this past weekend by releasing The Spiderwick Chronicles to the mass multiplex marketplace -- unfortunately, things didn't turn out so well, at least as I'm seeing it.

According to Boxofficemojo, Spiderwick is in a battle with Disney's Step Up 2 the Streets for second place. The latter is right now estimated to have grossed $19.7 million for the three-day weekend of February 15 through February 17; the former has just over $19 million to its credit. So, Spiderwick could exit its current third-place showing and move up in the rankings, but it won't catch up to the big winner, News Corp.'s (NYSE: NWS) Jumper. I'll tell you, I had no idea this one was going to "jump" -- what a horrible, horrible pun, huh? -- to the top of the box office charts this weekend with a $27 million take.

Final numbers will be coming later today, and we'll get a better indication of how all the movies did once Monday's holiday figures are added; also, the second weekend is always the ultimate tell. But, as of now, I don't think Viacom's Spiderwick fantasy -- which is distributed by Paramount and is co-branded with Nickelodeon Movies -- will approach the economic prestige of Time Warner's (NYSE: TWX) Potter property. Better luck next time.

Disclosure: I own shares in Disney.

After years of squabbling between the creators of The Lord of the Rings film trilogy and New Line Cinema (Time Warner, NYSE: TWX), today comes wonderful news that Peter Jackson and Fran Walsh have agreed to create not one, but TWO new hobbit movies! The prequels will be produced and distributed by New Line Cinema and MGM, and are slated for release in 2010 and 2011.

The first will be based on J.R.R. Tolkien's earlier work, The Hobbit, which follows Bilbo Baggins as he discovers the ring that becomes the macguffin of the record-breaking trilogy. Along the way, we will again encounter Gandalf, as well as a dozen dwarves, two trolls and one very angry dragon.

The plot of the second film, meant to bridge the narrative gap between The Hobbit and Lord of the Rings, will be stitched together from the volumunous notes Tolkien made for his history of Middle Earth. I'm pleased that Jackson and Walsh are heading this effort, since they have shown that they respect Tolkien's vision.

I can't wait to follow them there and back again, again.

Thanks to Matt Betts for the tip.

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"I will take the Ring," he said, "though I do not know the way."
-- Frodo Baggins, The Fellowship of the Ring

"There is no good and evil, there is only power, and those too weak to seek it."
-- Voldemort, Harry Potter and the Philosopher's Stone

In the late 1920s, J.R.R. Tolkien started writing a fantastical story about magical creatures known as hobbits, elves, and dwarves, in a made up world he called Middle Earth, for the benefit of his children. The work he completed, The Hobbit, became the prelude to one of the great literary masterpieces of all time -- The Lord of the Rings trilogy. Some 70 years later, J.K. Rowling started writing a fantastical story about a different set of magical creatures known as witches and wizards, in a not so made up world called England, for the benefit of her daughter. That book, Harry Potter and the Philosopher's Stone (Harry Potter and the Sorcerer's Stone here in the States), and the six books that followed in the series, have made Rowling the wealthiest woman in the world.

The authors share many similarities. Both are British, use initials in place of their first names, are famous for one major literary contribution (although Rowling, having the benefit of still being alive, will have many years to change that), and have had cinematic empires based on their works.

Time Warner Inc. (NYSE: TWX ) has been selected as the "undervalued stock of the month" by Paul Tracy, in his StreetAuthority Market Advisor.

The advisor explains, "We think the company's days as an industry laggard are over and we think the company is well-positioned to leverage its valuable assets and unlock shareholder value in the years ahead."

For those unfamiliar with the company's operations, he explains that Time Warner is the largest media conglomerate on the planet. First, he notes, there is AOL, which has built a powerful network of highly-trafficked web sites. He explains, "Its ubiquitous instant messenger service is used to send 1.8 billion messages every day."

Then, he adds, there is Time Warner Cable Inc. (NYSE: TWC), which has grown to become the nation's number two cable provider with a massive base of 15 million customers -- roughly half of whom have signed up for premium services such as digital video or high-speed internet.

The film business, he points out, includes Warner Brothers and New Line Cinema, and has "raked in billions" in global box office revenues from blockbuster hits like Harry Potter and The Lord of the Rings.

In fact, he says, Warner Brothers is planning to bring the Harry Potter world to life, unveiling plans to collaborate on a new theme park based on the "wildly popular" series.

Somewhere in Hollywood, a group of executives gather, brainstorming the next sequel, remake or adaptation. Wait, I mean they are brainstorming the next brilliant original cinematic idea. Well maybe, but one particular group of execs, from Time Warner Inc's (NYSE: TWX) Warner Bros., recently came up with the idea of picking up the rights to Terry Brooks' Shannara fantasy book series.

Let me give you a little background on the author and the series: Brooks had read Lord of the Rings in college and decided to write The Sword of Shannara while in law school (according to this biography). I'll be kind and say that from reading The Sword of Shannara, you can tell he is definitely a fan of the Lord of the Rings. A really big fan.

This heavy influence on Brooks likely gave Warner Bros. visions of Peter Jackson's Lord of the Rings box office totals dancing in their heads. But what I see is a lot closer to Eragon's box office take, should this movie ever get made.

See, this series, like Eragon, isn't Lord of the Rings -- it's not even close. To give you an idea of the flaws in the Shannara books, Warner Bros. has decided to start the series with the second book, The Elfstones of Shannara, instead of the first. No explanation was given, but as someone that has read them, I'll tell you why -- the first book is so close to a retelling of the Lord of the Rings that it wouldn't get by as its own movie. It only was made into a book in 1977 because hordes of rabid Lord of the Rings fans were looking for their next fantasy fix.

Anyway, enough of my ranting, I think you can see how I feel about this being made into a movie. What do you think? Have you ever heard of these books? Do you think the adaptation(s) will be successful for Warner Bros?

Lord of the Xbox -- that's what this partnership will be called. Microsoft has joined up with Lord of the Rings movie trilogy creator Peter Jackson to help develop video game content for the Xbox 360 console. This partnership, if handled correctly, will allow Microsoft to recruit more everyday people to its Xbox 360 console instead of the regular, dedicated gaming crews the Xbox universe mostly contains.

Instead of creating "games" though, Microsoft wants to ensure customers of the Xbox 360 enjoy interactive entertainment that goes beyond the gaming experience, according to Shane Kim, who leads Microsoft Game Studios.

In a move that should make "Halo" players scream with delight, Jackson said that it would first work with Bungie Studios, the game developer that published both Halo and Halo 2 and was actually purchased by Microsoft, to develop a Halo-like video game.

The Halo games, which are all-time bestsellers on the Xbox gaming console front, commanded hundreds of millions for Microsoft and injecting the same type of game with Peter Jackson at the helm surely will be a feast for Xbox 360 fans when a product is finally released.