The announcement was made by executive producers Peter "King Kong" Jackson, his partner Fran Walsh, New Line president Toby Emmerich, and Mary Parent, the new chief of MGM’s Worldwide Motion Picture Group.

New Line will oversee development/manage production. Both films are being co-produced/co-financed by New Line Cinema/MGM, with Warner Bros. distributing domestically and MGM handling international.
The studios will start shooting next year, for a 2011- 2012 tent-pole release.
Jackson’s WETA stages and post/VFX facilities will be used for both films, with New Zealand again the site of 'Middle-earth'...
"The Hobbit:, aka "There and Back Again", was originally a childrens' story by author J. R. R. Tolkien in the tradition of a fairy tale. Tolkien wrote the story in the late 1920s initially for his three sons. It was eventually published September 21, 1937 .
The story is set in a time 'between the dawn of Faerie and the Dominion of Men' and follows the quest of 'Bilbo Baggins', the 'Hobbit', to win his share of treasure guarded by the dragon 'Smaug'. His journey takes him from rural surroundings to darker, deeper territory, meeting denizens of the 'Wilderland' along the way. By accepting the romantic, adventurous side of his nature (the 'Tookish' side) and utilizing his wits, Bilbo develops a level of maturity, competence and wisdom...
"The Hobbit" is the precursor to Tolkien's second, longer saga "The Lord of the Rings"...