Tolkiens threaten to halt 'Rings' films in row over takings

The epic legal battles over profits from The Lord of the Rings movie trilogy long ago eclipsed anything raging on Middle Earth, but New Line Cinema, the films' producer, has just got sight of its most formidable foe to date: the family of J R R Tolkien himself.

The author's descendants claim they have been diddled out of more than $150m (£75m), their share of the almost $6bn that the films based on Tolkien's books have grossed in cinema tickets and DVD sales.

And they say that if they do not get their due – and soon – they plan to scupper work on two prequels, based on Tolkien's book The Hobbit, whose planned production next year has already got devotees in a frenzy of excitement.

Peter Jackson, whose statue for best director was among the 17 Oscars bagged by the original trilogy, signed up as executive producer of the prequels only a few weeks ago after settling his own lawsuit against New Line. Jackson was claiming underpayment in what was the one of the nastiest and most personal legal tussles in the industry.

Now, members of the Tolkien family have filed a suit in a Los Angeles court accusing New Line of one of the most outrageous examples of what they call "Hollywood accounting". They say they are entitled to 7.5 per cent of gross receipts, but New Line is claiming the trilogy's costs were so high, and its income so much lower than the family's estimate, that the receipts did not even meet the minimum that would trigger payments into the two British trusts controlled by the Tolkiens.

"This case presents an extraordinary example of how enormous financial success can breed unabashed and insatiable greed," the lawsuit says. "Despite the nearly $6bn in gross revenues, New Line has crafted a fantasy tale of its own, making the stunning assertion that it has not received sufficient money to pay the plaintiffs a dime."

The trio of films took $3bn at the box office and made almost as much again in video sales and other income, but the Tolkiens say New Line has refused to let it audit the takings and may even have destroyed financial documents to cover their tracks. The studio has refused to comment on the lawsuit.

The family's lawyer, Steven Maier, said: "The Tolkien trustees do not file lawsuits lightly, and have tried unsuccessfully to resolve their claims out of court."

J R R Tolkien created the fantasy world of Middle-earth and wrote The Lord of the Rings trilogy and The Hobbit while a professor at Oxford University, and the family trust that licensed the film rights to his work dates from 1969, four years before his death. A second family trust distributes royalties to charitable causes, including Alzheimer's and cancer research, a Darfur appeal, and Save the Children, Unicef and the World Wildlife Foundation.

The two trusts are joined in their lawsuit by HarperCollins, the Rupert Murdoch-owned book publisher which owns the rights to Tolkien's literary output.

For fans, the most alarming aspect is the family's request to withdraw New Line's rights to The Hobbit, scuppering plans for two prequels slated for release in 2010 and 2011. For New Line, the prequels are a must-succeed project, because it has failed to repeat the profits it made from the trilogy and is facing steep cuts imposed by its parent company, Time Warner.