So, today Time-Warner announced that New Line Cinema, makers of the Peter Jackson LORD OF THE RINGS films, is ceasing to exist as an autonomous entity. Both Michael Lynne and Rbt Shaye, the studio heads, are leaving the company, apparently effective immediately, while in upcoming days and weeks "hundreds" of New Line's six hundred employees will be let go, with the rest being re-assigned to positions within Warner Brothers. Basically, it sounds as if New Line is becoming an imprint within WB, rather than a semi-independent subsidiary with its own production line. What this means for THE HOBBIT movie, or lack thereof, will do doubt become clear sooner rather than later; I suspect that the deep pockets of Time-Warner will move to settle the lawsuits and get the film in production as soon as possible, but you never know.
There's a pretty good write-up regarding New Line's fate here:
The general consensus seems to be that they might have headed this off if THE GOLDEN COMPASS had been a big hit, but its performance below the (I think exaggerated) expectations they had for it pretty much doomed the company.
For more on Shaye's role in the Peter Jackson films ever getting made, see Kristin Thompson's THE FRODO FRANCHISE.