In Hollywood the bigger the movie production the more drama it has surrounding it, even the ones with guaranteed profit margins. Notable recent examples include the Spider-Man franchise losing its director and star and getting the reboot treatment, and the next James Bond movie feeling the force of MGM’s financial challenges.

However, more than any other project in recent memory, The Hobbit has had troubles of monumental proportions. Everything from director Guillermo del Toro walking away – prompting Peter Jackson to dutifully step in – to resulting delays of MGM’s financial problems even calling into question whether or not we’ll even see The Hobbit at all.

But Hobbit fans can breathe a little easier knowing that the two-part adaptation may finally be over the bumps in the road and on the straight and narrow as it’s being reported that the project is close to getting the crucial greenlight. For real this time…

LA Times is reporting from “several people familiar with the matter” (who didn’t disclose their identity due to not being allowed to talk about the situation in public) that Warner Bros. (specifically its subsidiary New Line Cinema) and MGM are close to finalizing a deal with Peter Jackson who would fulfill co-writing, producing and directing duties.

An update to the story yesterday from two people close to the production states that both MGM and WB have already spent $45 million on pre-production including scripting fees, visual effects, set preparations and casting meetings.

Although problems of all kinds have plagued The Hobbit for a long time now, most of them have reportedly been sorted out, including the issues over the estate of J.R.R. Tolkien (a deal was reached last year). WB and New Line are already set to commit their half of the money and now up to MGM’s side. Even if things are looking better for The Hobbit, negotiations are still a bit shaky at this stage as MGM still has to reach an agreement with the 140 lenders it owes debts to (remember these are the folks who ultimately control the future of the troubled company).

MGM is scrambling to put together a workable reorganization plan which would include new management being put in place (expected to be Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum). There’s also the chance of an Indian company making a play – Sahara India Pariwar have reportedly had “exploratory talks” about buying MGM for $2 billion.

MGM is very eager to make the movie (who wouldn’t be?) and if they do commit we will likely hear word in the next few days. Twentieth Century Fox has also been mentioned as potential investors since they already have a deal with MGM for international distribution of other movies. WB may also loan the money which would give that studio more power than it already has including additional distribution rights.

Warner Bros and IMAX deal The Hobbit delay The Hobbit Close To Getting Greenlit (Possibly In 3D)

If and when The Hobbit gets the go-ahead, the aim is to start shooting in mid-January 2011. This coincides with what Sir Ian McKellen said recently about The Hobbit aiming for a January start next year. Release dates for both parts have already been set for December 2012 and December 2013, so production needs to begin in the first quarter of 2011 or else we’ll be looking at even more Hobbit delays.

Those of you who have been following The Hobbit news will likely be aware of yet another snag the production has recently hit in the form of members of the Screen Actors Guild being advised not to work on the film(s) because of accusations of it being a non-union production (Jackson swiftly hit back). However, sources are saying that the SAG issue will likely be resolved soon which adds to the clearing of the way for a greenlight.

Continue to page 2 for news on Jackson’s Weta Workship fire issues and info on The Hobbit coming in 3D…

So things appear to be looking up for the much-troubled production of The Hobbit. But wait! There’s time for one more bump in the road: Reports have come in that Peter Jackson’s miniatures workshop in New Zealand has burned to the ground. The fire broke out on Friday and it apparently took 50 firefighters three hours to put out the blaze.

This is the same workshop (one of the few of its kind in the world) that was used for the miniatures special effects work done for both the Lord of the Rings trilogy and Jackson’s King Kong remake. It would have been the one utilized for The Hobbit but a burnt building is all Jackson has left. Presumably it will be rebuilt but this throws more unforeseeable trouble at The Hobbit that it just doesn’t need.

In addition to all this Hobbit news, both good and bad, there’s also reports surfacing about the films being in 3D (you can decide for yourself whether that falls into the “good” or “bad” category). This has been rumored before and apparently those rumors were squashed when at Comic-Con it was said that The Hobbit was more intimate than the Lord of the Rings trilogy and thus would stay in 2D.

the hobbit smaug 570x421 The Hobbit Close To Getting Greenlit (Possibly In 3D)

However, after the success of 3D movies like Avatar, Alice in Wonderland and Clash of the Titans (to name but a few) it appears The Hobbit will be taking the leap into that third dimension after all. The New York Times reports the news from one person who has been briefed on the plans, although it’s noted that since the source is anonymous that nothing is certain on The Hobbit 3D front. If it does turn out to be true we can expect official word pretty soon as I imagine (read: hope to hell) Jackson and Co. would want to shoot the film in 3D rather than convert it in post-production.

Whenever The Hobbit officially sets sail, it is expected that both parts (which are planned to be shot back-to-back a la LOTR) will come to a whopping cost of $500 million to produce. For comparison the Lord of the Rings trilogy cost less than $300 million (not including marketing) to make and that had one more movie than The Hobbit will have. But I’m sure when all is said and done it will make its money back (and then some!), not just because it has the massively popular LOTR to help its reputation and appeal but also that it’s based on a book beloved by readers of all ages. And of course there’s the overpriced 3D tickets.

the hobbit banner The Hobbit Close To Getting Greenlit (Possibly In 3D)

Could we see The Hobbit break Avatar‘s worldwide box office record? Even for the prequel tale of the adventures of Bilbo Baggins that seems like a tough challenge. But for all it has going for it, I wouldn’t be surprised if we saw a new all-time box office record holder after the release of The Hobbit.

Stay tuned to Screen Rant to find out if The Hobbit gets the greenlight soon, if the latest 3D rumors are true and of course the much-awaited official casting announcements (Martin Freeman appears to be a frontrunner for the coveted role of Bilbo).

If all goes to plan we will see Part 1 of The Hobbit hit theaters (possibly in 3D) on December 19th, 2012, with Part 2 following a year later in December, 2013.

Sources: LA Times, NY Times and Deadline