Embracer Group strikes new deal with Warner Brothers to make new LORD OF THE RINGS movies

In a fairly neat solution to what was threatening to become a legally complex entanglement of rights, Lord of the Rings movie rights-holders Embracer Group have forged a new deal with Warner Brothers and New Line Cinema to create new feature films derived from the novel.

Not Amazon but you get the idea.

The Lord of the Rings film rights were acquired from the Saul Zaentz Company by New Line in 1997 to create a feature film trilogy based on the novel. Peter Jackson directed this trilogy to tremendous acclaim, which was released from 2001 to 2003 (New Line's parent company is Warner Brothers). Warner Brothers teamed up with MGM, who owned part of the film rights to The Hobbit, to produce a prequel trilogy based on that novel ten years later. Last year, the film rights were set to lapse, reverting back to the Saul Zaentz Company. Warner Brothers had put an animated motion picture, War of the Rohirrim, into production and claimed this was enough to satisfy their legal requirement to get a film into production before the rights were due to lapse. The Saul Zaentz Company disagreed.

Whilst legal arguments were being thrashed out, the Saul Zaentz Company suddenly sold their Lord of the Rings-related rights to the Embracer Group, the Swedish multimedia mega-corp which has been hoovering up various comic book, video game and board game companies for the past decade. Exactly why Embracer would step into such a legal minefield before it had been resolved seemed unclear.

Except, of course, it is now clear. Embracer simply created a new deal with Warner Brothers and New Line, immediately resolving all legal questions and allowing everyone to move forwards with new projects.

What those projects might be is unclear. Today's statement includes a note that the companies have no interesting in mounting a remake of Peter Jackson's seminal movie trilogy. There are also rights complications with The Hobbit (MGM, now owned by Amazon, retain some of the rights to the project) and also a question over TV rights, since Amazon struck a separate deal with the J.R.R. Tolkien Estate to launch their first TV show, The Rings of Power, which launched last year to a mixed reception. There has been some suggestion that Warner Brothers might be able to create a Lord of the Rings-derived TV series as long as it stayed within even stricter legal boundaries than Amazon, but it's not been clarified what those could be.

Any further projects will have to derive from The Lord of the Rings alone, and probably in the cinema. It's possible that film-makers will tap the Third Age for more ideas of a show, maybe focusing on ides like the settling of the Shire, the war with the Witch-King of Angmar, the adventures of the young Aragorn or possibly picking up a story with some of the surviving film characters several decades on from the movie trilogy. Such projects will have to survive the withering scorn and cynicism of fans watching out for a cash-grab exploitation of Tolkien's material.

In the meantime, The Lord of the Rings: The War of the Rohirrim hits cinemas on 12 April 2024, whilst Amazon's Rings of Power is currently shooting its second season for a 2024 debut.

Embracer Group buys Middle-earth Enterprises, acquires video game rights to Middle-earth and possible film rights

Middle-earth Enterprises, the rights-holding and media company for works related to J.R.R. Tolkien's The Lord of the Rings and, partially, The Hobbit, has been sold by its owners, the Saul Zaentz Company, to Swedish video game mega-company Embracer Group. The terms of the deal are unknown, but the Saul Zaentz Company previously valued the property at over $2 billion.

The history of the Middle-earth media rights is complex, but can be boiled down as follows: in 1968 J.R.R. Tolkien sold the screen rights and related merchandising rights to his novels The Hobbit (1937) and The Lord of the Rings (1954-55) to United Artists. United Artists sold the rights to film producer Saul Zaentz in 1976, who in turn set up Middle-earth Enterprises to handle the deal. United Artists included the full rights to The Lord of the Rings but retained some of the rights to The Hobbit, on the basis that any film adaptation would start with the first book before moving onto the sequel. However, Zaentz circumvented this by producing an animated film based directly on The Lord of the Rings in 1978, with Ralph Bakshi directing. MGM bought United Artists in 1981, acquiring their rights to The Hobbit in the process. Although Bakshi's film was unsuccessful, its existence allowed Middle-earth Enterprises to licence merchandising, including video games, colouring books and so on, as long as they were nominally related to the Bakshi film. A legal clarification also allowed the company to produce spin-off merchandise derived from the novels in very narrow fields, allowing for video games based on The Hobbit and the book version of The Lord of the Rings to follow.

In 1997, New Line Cinema acquired the film rights to The Lord of the Rings from Middle-earth Enterprises. Negotiations with MGM over The Hobbit fell through, so Peter Jackson proceeded with a feature film adaptation of The Lord of the Rings by itself, released to critical acclaim and mass commercial success in 2001-03. The legal agreement between Middle-earth Enterprises/The Saul Zaentz Company allowed for New Line to retain the film rights as long as new films were produced or fresh agreements could be made, otherwise the rights would revert. New Line merged with Warner Brothers Pictures in 2008.

After very complex negotiations, a deal was struck between New Line Cinema, Warner Brothers, Middle-earth Enterprises and MGM to produce a movie trilogy based on The Hobbit. This reached the screens between 2012 and 2014 and was commercially successful, but critically derided. In 2017 the Tolkien Estate clarified that they retained television rights to the Middle-earth franchise and reached an agreement worth $250 million with Amazon Prime Television to produce a TV show based on the books. This show, The Rings of Power, debuts on Amazon on 2 September after almost three years in production. Amazon reached a deal with New Line/Warner Brothers to allow them to use some aspects of the visual design of the films if necessary.

In June 2021, Warner Brothers announced they were developing a new animated film, The Lord of the Rings: The War of the Rohirrim, as a cinematic release. It was later claimed this was a rights-holding exercise, allowing Warner Brothers to retain ownership of the film rights for a further period of time. However, the Saul Zaentz Company argued that an animated film did not fulfil the terms of the contract. As a result, in February 2022, the Saul Zaentz Company and Middle-earth Enterprises announced they had regained control of the film rights and would be selling them off to the highest bidder, with a minimum price of $2 billion.

Warner Brothers subsequently argued that by putting The War of the Rohirrim into production, they retained the feature film rights to the franchise. It is believed the two companies then went into arbitration.

The news today, to some extent, kicks the can down the road. By selling the entirety of Middle-earth Enterprises to Embracer, the Saul Zaentz Company gets paid and basically leaves Embracer to make the legal arguments themselves.

The move certainly comes as a shock to the industry, who expected the sale to be delayed until the legal dispute had been resolved, and certainly did not expect an overseas video game company to swoop in and buy out the rights. With Amazon producing the Rings of Power TV show and having recently acquired MGM (and their rights related to The Hobbit), it was assumed that they would buy out the Saul Zaentz Company's rights. This move suggests that either Embracer offered far more money than Amazon were willing to pay, which seems highly unlikely, or Amazon decided it didn't want the extended franchise rights, which also seems unlikely. It'll be interesting to see what the explanation is for that.

In the meantime, Embracer have certainly acquired the video game rights to The Hobbit and The Lord of the Rings.

Projects already underway, such as Daedalic Entertainment's upcoming video game The Lord of the Rings: Gollum, are unaffected by the move.

Swedish video game company Embracer Group was founded in 2011 and began buying up smaller publishers and developers by the dozen, soon expanding into other media areas. As of August 2022, the company owns Dark Horse Media (owners of Dark Horse Comics), Asmodee (the owners of board game companies including Asmodee and Fantasy Flight), Gearbox Entertainment, THQ Nordic and Saber Interactive. Middle-earth Enterprises will continue to operate as a discrete company, with its video game operations to be handled in collaboration with Embracer Freemode. 

Saul Zaentz Company to sell its LORD OF THE RINGS screen and merchandising rights

The Saul Zaentz Company is to sell its long-standing screen and merchandising rights to J.R.R. Tolkien's work, which it has held since 1976.

United Artists struck a deal with J.R.R. Tolkien in 1968 to secure the screen rights to Tolkien's novels The Hobbit (1937) and The Lord of the Rings (1954-55), along with related merchandising rights. Tolkien had been reluctant to sell the screen rights, but had wanted to secure a legacy for his children and, in particular, to provide for the education of his grandchildren. United Artists worked on several prospective movie projects over the next decade, most notably a live-action collaboration with John Boorman which ultimately did not reach the screen (during research, Boorman developed ideas which led to his 1981 Arthurian movie Excalibur instead).

In 1976 United Artists decided to sell some of its rights to Tolkien's works to raise funds for more original projects. Film producer Saul Zaentz, fresh from the success of One Flew Over the Cuckoo's Nest, acquired the full rights to The Lord of the Rings and the production rights to The Hobbit; United Artists held onto the distribution rights to The Hobbit, figuring that any film adaptation would want to start with the earlier novel (these rights were later acquired by MGM when they bought United Artists). This led Zaentz to produce an animated version of the first half of The Lord of the Rings in 1978 with director Ralph Bakshi; the film was not successful enough to allow a sequel to be produced.

Zaentz established a new company called Tolkien Enterprises to handle the rights he'd acquired; the name was later changed to Middle-earth Enterprises to avoid confusion with the Tolkien Estate. Tolkien Enterprises entered into licencing and merchandising deals for various merchandise related to the property, including video games and a tabletop roleplaying game from Iron Crown Enterprises (ICE). In 1997, Zaentz entered into an agreement with New Line Cinema for a new, live-action film adaptation of The Lord of the Rings, to be directed by Peter Jackson. Released as three movies between 2001 and 2003, the the trilogy made $3 billion at the box office and was critically acclaimed.

Zaentz continued to benefit from various licencing deals related to the books and films. Several years later, a complex deal was worked out between New Line, their new owners Warner Brothers and Hobbit rights-holders MGM to produce a film series based on The Hobbit. This trilogy was released between 2012 and 2014 to financial success, but a much more muted critical reception. Zaentz died in January 2014, shortly after the release of the second film in the trilogy.

Zaentz's death and the subsequent reversion of the live-action film rights from New Line to the Zaentz Company in 2020 seems to have spurred the company's decision to sell. The package includes the live-action film rights to The Lord of the Rings in full, the production rights to The Hobbit, spin-off merchandising rights to both properties (including tabletop games, video games, miniatures), theme park rights and rights related to live events based on both novels. The package is expected to raise at least $2 billion before any potential bidding begins.

The logical home for the rights is Amazon. Amazon reached a deal with New Line and Warner Brothers in 2017 as part of their project to bring a Lord of the Rings-branded television series to the air, boosted by an unprecedented $250 million deal with the Tolkien Estate granting them certain limited rights to other Tolkien writings (believed to incorporate strictly-limited rights to Tolkien's posthumous works The Silmarillion and Unfinished Tales). Amazon subsequently acquired MGM, meaning they also now own the distribution rights to The Hobbit. Acquiring the Saul Zaentz Company's rights would reunite the full rights to The Hobbit for the first time since 1976, and would also clear the way for Amazon to helm any future remake of the films.

Amazon entered production on its Middle-earth prequel television series, The Rings of Power, in February 2020. The series, which has become the most expensive single television series ever made, is expected to debut its first trailer during the Super Bowl on Sunday. The show is currently scheduled to hit the air on 2 September this year.

It's possible other companies might also be interested in the deal, with Warner Brothers likely keen to investigate following their production (via subsidiary New Line) of the six successful live-action Middle-earth movies to date. Warner Brothers are also currently developing an animated Middle-earth movie, War of the Rohirrim, and that project entered production early enough to not be affected by this reversion of rights. However, the likely high price tag may dissuade Warner Brothers, or encourage them to enter into a partnership with Amazon over future possible projects.