Settlement Returns Fans to Middle-earth

The Hobbit Bilbo Baggins will go there and back again after all.

Following the settlement last week of a dispute between Warner Bros. unit New Line Cinema and trustees for J.R.R. Tolkien’s estate over profits from the “Lord of the Rings” films, New Line can proceed with plans to produce a two-part film adaptation of “The Hobbit,” a prequel to the earlier films.

The dispute followed New Line’s release of three “Lord of the Rings” films between 2001 and 2003. The films, DVDs and other products based on Tolkien’s famed books reportedly earned about $6 billion.

Last year the estate sued, claiming New Line owed it more than $150 million in profits. The lawsuit alleged breach of contract and fraud, claiming that Tolkien heirs were cheated out of money from a licensing agreement guaranteeing them 7.5% of gross receipts from the films.

In addition to seeking the $150 million, the lawsuit sought to end New Line’s rights to Tolkien’s works, which would have blocked the making of “Hobbit” films.

Parties to the lawsuit announced last week that they settled their dispute, but did not disclose the terms of their agreement.

Trial was set for October, and production is supposed to start next year on the “Hobbit” films with Guillermo del Toro directing. Mr. del Toro has directed films such as “Pan’s Labyrinth” and “Hellboy.”