[Thud]

And Zaentz will have every reason to sue to regain the rights if New Line plays any games whatever about "in production".

[maquiladora]

MGM still holds the North American distribtion rights to any Hobbit film, so even if New Line went into production, they wouldn't be able to release the film without reaching a deal with MGM first. And as you can see above, MGM are still focused on wanting Jackson to make it.

So the most likely senario will be...production rights go back to Tolkien Enterprises at the end of the year and then MGM & Tolkien Enterprises try making The Hobbit with Jackson with no New Line involvement whatsoever.