Guillermo del Toro is top shelf when it comes to horror, so much in fact, that he has turned dark fantasy films into commercial hits. It is no wonder that he has been tasked with yet another Harry Potter movie….but this behemoth is taking on Peter Jackson territory now.

The Hollywood Reporter reports, del Toro is on the short list of directors lined up for the next installments of the Lord of the Rings series. The two movies based on Tolkien’s “The Hobbit” will be co-financed by New Line and MGM.

Fans are well aware of the problems Peter Jackson encountered in the courtroom with the studios over the Rings franchise. While that was resolved in December 2007, Jackson since moved on to adapting The Lovely Bones and Tintin. With his schedule full and the writer’s strike holding back projects, New Line and MGM are looking elsewhere.

Del Toro seems a likely choice to appease fans considering his background with the Oscar-nominated Pan’s Labyrinth, the fanboy flick Hellboy, bloody Blad II, and the atmospheric The Devil’s Backbone.

Del Toro and Jackson will oversee The Hobbit’s writing together once the strike is over. Principal photography for the films, which will be shot back to back, is tentatively set for 2009. The production budget is estimated at $150 million per film (holy shit).

The first film is slated for 2010 release and the second will be released in 2011