The irony is that once upon a time, Peter Jackson and Bob Shaye gave each other the greatest gifts of their careers. In 1998, Jackson's bid to make LOTR as three separate films — as opposed to two, or even one — had been rejected by virtually every studio in Hollywood. Shaye and New Line were his last hope, a fact the director camouflaged by calling a couple of times to reschedule the appointment with New Line because of his supposedly hectic itinerary. Jackson and Shaye made for an odd pair: a shy Kiwi perennially in short pants and bare feet, and one of the last real Hollywood mavericks, who was so fond of his sunglasses that Jack Nicholson once took to calling him ''Bobby Shades.'' What Jackson and Shaye did have in common was a kind of fearlessness and an absolute indifference to what other people thought was financial or creative suicide. Shaye greenlit Jackson's dream of a trio of $100 million fantasy films about elves and dwarves. (Not even Harvey Weinstein had the stomach for that; he told Jackson he'd sign on for only two. Because he was an executive producer, he wound up with a cut of the box office anyway.) And Jackson gave Shaye a $3 billion franchise and a new image for his company. New Line, which Shaye launched 40 years ago by discovering such camp classics as Reefer Madness and marketing them out of his apartment, is no longer best known for A Nightmare on Elm Street or Austin Powers.
There's invariably tension between studios and filmmakers during production. New Line learned quickly that despite being grateful for the job, the director and his partner, Fran Walsh, were not people to be shoved around. So there were scuffles and hurt feelings of varying magnitudes on both sides, all of which was compounded by the industry perception that Shaye had literally bet his studio on The Lord of the Rings. The first public indication that all was not well came around 2003. The second LOTR installment, The Two Towers, had earned its billion dollars, and it began to dawn on cast members that they weren't exactly sharing in the wealth. (Two sources close to the production recall a principal player receiving a merchandising residual check for 45 cents.) Eventually, after the bigger-name actors hinted they'd be too busy to do further publicity for the films, New Line coughed up extra bonuses. (The second-tier performers have since filed a lawsuit alleging that the studio withheld merchandising revenues.) Then came rumblings from producer Saul Zaentz. He had bought the film rights to the LOTR trilogy and The Hobbit from United Artists back in 1976 — UA partner MGM retains distribution rights to The Hobbit — and in 2004, Zaentz filed a lawsuit too, claiming that New Line wasn't paying all it owed him in royalties. His case was settled a year later for an undisclosed sum, but by then Jackson was elbows deep in his own audit of New Line's financial records.
Nobody enjoys getting audited, but it's a fact of life in Hollywood. Shaye, however, seemed to have taken Jackson's audit personally. ''It rankled him,'' notes one observer. ''Like, 'I gave this guy his shot — where does he get off?''' Shaye had apparently forgotten that Jackson was not just some cuddly Kiwi. When New Line began planning to sell the LOTR props and costumes at auction, Jackson intervened and said that he'd like to have them, both for sentimental reasons and for a museum he hoped to set up one day. The studio balked. Jackson then pointed out that he had never signed a contract for the extended Return of the King DVD. He informed New Line that he'd be happy to accept the costumes and props as his fee — the suggestion being that he might not work on the DVD otherwise. Those extended cuts had become far richer revenue streams than anyone could have predicted. Jackson got his props. The relationship between the filmmakers and the studio at that point was said to fall somewhere between hellish and nonexistent.
NEXT PAGE: ''I don't care about Peter Jackson anymore,'' Shaye railed. ''He thinks that we owe him something after we've paid him over a quarter of a billion dollars!''
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