[Update: An official press release from New Line and Warner Bros. confirms what is said below. Peter Jackson is directing, the films are officially greenlit and production begins in February]

As promised by Peter Jackson, good news for The Hobbit has finally come to start off our weekends on a high note. While unofficially, we knew J.R.R. Tolkien’s tale of Bilbo Baggins’ journey was going to happen sooner or later, officially it has the green light, so says an insider close to production.

MGM, the main obstacle creating the development turmoil, has agreed to commit to The Hobbit and while they need to sort out their financial obligations to the project, negotiations are still ongoing (almost finished?) over the management and ownership.

The news comes from The Wrap whose source details that The Hobbit films have been given the green light and that production is set to begin in February.  Peter Jackson will be writing the screenplays, producing and stepping into the director’s chair for both parts, making him the one true helmsmen of the Middle-earth movie pentalogy (3 Lord of the Rings pics + 2 Hobbit features).

With Jackson’s deal reportedly having been finalized this week, MGM and Warner Bros. went ahead and finally gave the go ahead for production on The Hobbit to move forward.

With sets having already been constructed, actors in talks for key roles and the scripts near completion ($30 million spent so far on production), both industry talent and moviegoers alike can be relieved that MGM’s financial woes are no longer holding back our return to Middle-earth.

Now that this mess is over, the MGM ownership situation still needs to be resolved. While Warner Bros.’ New Line Cinemas is in charge of production, MGM has to cover half of the nearly half-billion dollar budget as they own international distribution rights. MGM is therefore looking for funding options which could include Lionsgate or Spyglass stepping in or Warner Bros. covering more of the budget for greater distribution rights.

Soon, we can move on to the fun stuff: Casting! Will Martin Freeman have time in between projects that jives with The Hobbit’s production schedule?

Expect confirmation from the studio(s) shortly on The Hobbit, once New Zealand labor disputes and the financial plan are resolved. Interestingly enough, if production does indeed begin in February, Ian Mckellen (Gandalf) was actually correct in one of his forward-looking statements about the project!

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The Hobbit Part 1 is still scheduled for theatrical release December 19, 2012, with Part 2 following a year later in December, 2013.

Sources: The Wrap, Los Angeles Times