Submitted by: kirkland on Monday October 23rd, 2006 at 08:13 PM EST

Citing a skyrocketing budget and Jackson's unwillingness to scale back his paycheck, Universal Pictures and 20th Century Fox have bailed on the Lord of the Rings mastermind's big-screen adaptation of Microsoft's hugely popular videogame, casting a shadow over the would-be franchise's future.

Universal and Fox created a big stir in the summer of 2005 when they announced they had clinched a deal with the Kiwi filmmaker to develop Halo into a must-see summer blockbuster.While Jackson and longtime partner Fran Walsh came aboard to executive produce and develop the script by Alex Garland ( 28 Days Later ), the Oscar-winning director had no plans to helm the project, instead tapping pal Neill Blomkamp to make his feature directing debut.

According to Daily Variety , Universal and Fox were supposed to pay Microsoft a $5 million advance for the film rights by Oct. 15. The Redmond, Washington-based software company also stood to earn up to 10 percent of the movie's box-office gross and other ancillary-related income; likewise, Jackson and his team were due to receive a hefty upfront salary and a cut of the film's profits.

» Full story @ E! Online