Now that Peter Jackson has found his role as an executive producer in the upcoming Lord of the Rings prequel films, it looks like New Line and MGM may be eyeing a strong director who already has some fantasy credits: "Pan's Labyrinth's" Guillermo del Toro.

Although no one has signed on the dotted line just yet, The Hollywood Reporter says Toro has become the front runner for the two films, based on the 1937 novel "The Hobbit" by JRR Tolkien. In the original story, Bilbo Baggins -- who had a minor role in the Lord of the Rings trilogy -- becomes the central character as he works with the dwarves and the wizard Gandalf to find a dragon named Smaug and his treasure.

The strike has prevented the studios from hiring a writing team for the movies, but it hasn't stopped them seeking out a director. Toro has credits that include "Labyrinth" as well as "The Devil's Backbone" and "Hellboy."

Both films will be shot at the same time next year, and have been awarded a budget of $300 million, or about $150 million per movie. Along the same lines, the Lord of the Rings trilogy had budgets of just $90 million per film.

They are expected to be released in 2010 and 2011.

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