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LOS ANGELES (Reuters) - After years of delays, Hollywood is finally close to producing a movie based on J.R.R. Tolkien's "The Hobbit," the Los Angeles Times reported on Saturday, citing people familiar with the matter.
Time Warner Inc's Warner Bros, its subsidiary New Line Cinema, and Metro-Goldwyn-Mayer appear to be near a deal to start production in mid-January of the two-part prequel to the blockbuster "Lord of the Rings" trilogy.
The studios hope to release the first "Hobbit" film during the 2012 holiday season and the second in December 2013, the newspaper said.
MGM, Warner, and New Line declined comment.
If production does not begin by the first quarter of next year, "The Hobbit" will miss its planned release dates and will again have to be delayed, the paper said.
One remaining hurdle is getting an official go-ahead from debt-laden MGM, which is trying to decide on a plan for reorganization. Under a long-standing agreement, MGM owns half the rights and controls international distribution to "The Hobbit," the paper said.
MGM is struggling with about $4 billion of debt after being bought out in 2005. The buyers included private equity firms Providence Equity Partners, TPG, Quadrangle Group and DLJ Merchant Banking Partners, and media companies Sony Corp and Comcast Corp.
The two Hobbit films, which will be shot together, are expected to cost close to $500 million, the paper said.
Even as the studios finally closed in on a deal, "The Hobbit" faced another setback after a fire engulfed director Peter Jackson's New Zealand workshop, according to New Zealand's TVNZ website.
The website said the cause of the fire was under investigation on Saturday after crews battled flames for three hours the day before at the studio, which would have been used to shoot parts of the film.
Reporting by Sue Zeidler; Editing by Peter Cooney