In March 2005, Jackson launched a lawsuit against New Line, claiming he had lost revenue from merchandising, video, and computer games releases associated with The Fellowship of The Ring.[7] He did not seek a specific settlement, but requested an audit to see whether New Line had deprived him of money.[5] Jackson felt the lawsuit was minor, and that New Line would still let him make the film,[8] although he wanted it settled before he would make the film.[5] New Line co-founder Robert Shaye was annoyed with the lawsuit and said in January 2007 that Jackson would never again direct a film for New Line, accusing him of being greedy.

On December 18, 2007, it was announced that Jackson would be executive producer of The Hobbit and its sequel.

ég held ég hafi allavegana skilið þetta rétt svona. gaurinn þanna shaye sem sagði a peter myndi aldrei leikstýra fyrir þá aftur sagði svo að hann vildi samt að peter ætti einhvern þátt í verkefninu þannig að…. held ég hafi skilið þetta rétt.