DOW JONES NEWSWIRES 
 

New Line Cinema and the heirs to author J.R.R. Tolkien resolved a lawsuit over the "Lord of the Rings" films, paving the way for production of a prequel - "The Hobbit" - for the highly successful film franchise.

Financial terms of the settlement weren't released Tuesday.

HarperCollins Publishers Ltd., a publishing company owned by News Corp. (NWSA), and the family's estate were co-plaintiffs in the claim that was filed in February 2008. The lawsuit sought a share of revenue from the trilogy, which brought in $3 billion combined at the box office, and to terminate the studio's rights to "The Hobbit." News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal and Dow Jones Newswires.

In the past, the family claimed it hadn't received any share of the films' profits. A lawsuit was scheduled to go to trial in October.

The author's son, Christopher Tolkien, said the trustees were "glad that this dispute has been settled in satisfactory terms," adding that New Line, a unit of Time Warner Inc. (TWX), was now allowed to proceed with the filming of "The Hobbit."

The three earlier films, which won a number of Academy Awards, were directed by Peter Jackson. He recently handed over directing reins for "The Hobbit," slated to be retold over two movies, to Guillermo del Toro, known for directing another fantasy film, "Pan's Labyrinth."

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com