The first official film adaptation of Tolkien's work was an adaptation of The Hobbit in 1967.
Tolkien was previously approached twice about film adaptation rights to The Lord of the Rings in the late 50s, but neither of those projects ever ended up being produced.
In 1962 William Snyder of Rembrandt Films secured the rights to make an adaptation of The Hobbit for $15,000 plus a percentage of profits in countries that were part of the Berne Convention (at that time The Hobbit was not under copyright in the United States.) The contract required that Snyder “produce a full-color motion picture version” of the book by June 30, 1967 in order to retain the rights to The Lord of the Rings.
With suspicious ease William Snyder of Rembrandt Films agreed our main conditions, and early in 1962 a contract was sent to him for signature. Then he suddenly realised that American copyright in The Hobbit was even more equivocal than that of The Lord of the Rings, and re-negotiation had to commence. In the end only the advance of $15,000 and a share of any profits earned in countries that were signatories of Berne remained. But we were not in a strong position.
George Allen & Unwin A Remembrancer
Gene Deitch was set to write and direct, and Jiří Trnka was the art designer. A full script was written and some concept art was made while Snyder unsuccessfully tried to find a backer.
But I dreamed big, visually. I pitched Snyder the idea to employ Jiří Trnka to design the film. It was going to be a lavish production in a rich painting style! I was thinking of making use of the great set-building skill of the model makers at Trnka’s studio, in a sort of update of what Max Fleischer tried many years earlier, the use of real set backgrounds, with drawn animation characters superimposed over them.
genedeitchcredits.com - "Jiří Trnka"
In January, 1966 Snyder asked Zdenka and me to come to America to do a presentation to 20th Century-Fox. ... By the time we arrived in New York, however, Snyder had already blown the deal by asking 20th for too much money. Tolkien’s name hadn’t yet reached them either. I had a fat script, but no other film companies were then interested. It was crushing.
genedeitchcredits.com - "William L. Snyder"
However, shortly before the cut-off date in their contract came, The Lord of the Rings came out in paperback in the United States, and the popularity of the books skyrocketed.
Snyder thought, “Why invest money, plus a year-and-a-half of work, when you can make money without all that sweat?” Not only had the Tolkien estate lawyers given Snyder the rights for peanuts, but in their ignorance of film terminology, they had left I in the contract: It merely stated that in order to hold his option for THE LORD OF THE RINGS, Snyder had to “produce a full-color motion picture version” of THE HOBBIT by June 30th 1966[1967]. Please note: It did not say it had to be an animated movie, and it did not say how long the film had to be!
genedeitchcredits.com - "William L. Snyder"
So they took whatever little they had (some 2d concept art), made a 12 minute film-reel of a camera panning over it, and added a voice-over. Then they "released" the film.
I arrived with the rough answer print on June 29th. Snyder had already booked a small projection room in midtown Manhattan. After a quick test screening – and Snyder was duly impressed – I ran downstairs and stopped people on the sidewalk, asking them if they would like to see a preview of a new animated film, for only 10¢ admission. I handed each willing customer a dime, which they handed back. After the screening, the few, puzzled audience members were asked to sign a paper stating that on this day of June 31, 1966[1967], they had paid admission to see the full-color animated film, “THE HOBBIT!”
genedeitchcredits.com - "William L. Snyder"
With the film "released" on time, Snyder was able to sell the rights back for $100,000.
You can watch the "film" here, (probably takes less time than reading this post):
For further reading see: