EXCLUSIVE: In what amounts to a dream come true for fans of Middle Earth, Peter Jackson has decided to direct two installments of The Hobbit, trusted sources are telling me. His deal is being negotiated right now with Warner Bros , New Line and MGM.

He will shortly take the reins over from Guillermo del Toro, after Jackson extricates himself from other project obligations that caused Jackson and manager Ken Kamins to initially deny he would be the director. While Jackson’s camp has been tight-lipped, I’m told that the case is being made to MGM's owners to loosen the purse strings and make the movies happen. The impetus for these talks is that Jackson will be the director of both of The Hobbit films, which will be shot back-to-back in his New Zealand backyard.

Despite Jackson camp denials that directing was a consideration, there were high hopes that Jackson would helm since del Toro bowed out. More recently, there have been major clues, despite the denials. While several directors have angled for the job--the most recent rumors focused on David Yates and Jackson's District 9 protege Neill Blomkamp--no offer was ever made. I think that's because Jackson was figuring out if he wanted to direct two more films, and Kamins had to pave the way once he decided to continue the saga he started with The Lord of the Rings. It became more evident lately, when he, Fran Walsh and Philippa Boyens scheduled a trip to London the week of July 4, followed by a trip to Los Angeles the following week, to meet the most impressive actors who’ve been put on tape by casting directors. Jackson, Walsh and Boyens wrote the scripts with del Toro. But if someone else was directing, wouldn’t that filmmaker be brought aboard before those casting decisions were made?

More to come...