The Los Angeles Times reports that New Line's Bob Shaye is in talks with filmmaker Peter Jackson's representatives to potentially work something out in regards to his involvement in the "Lord of the Rings" prequel adaptation of "The Hobbit".

Shaye says "Yes, that's a fair statement. Notwithstanding our personal quarrels, I really respect and admire Peter and would love for him to be creatively involved in some way with THE HOBBIT."

The result is one of the juiciest rumours in a while. IESB reports that although Jackson won’t be back to direct, a source of theirs is telling them that Sam Raimi is looking to direct with Peter Jackson attached to produce.

Raimi has previously said he would not take on the project without Jackson’s blessing and is apparently leaning towards it as his next project rather than the "Clash of the Titans" remake.