According to The Hollywood Reporter, Shyamalan discussed "Lady in the Water" with Disney but the two parties couldn't come to terms on the project. Commenting to The Hollywood Reporter, Shyamalan said, "Since we met a few years ago, Alan and Jeff (Robinov, Warners' president of production) have gone out of their way to offer me the best on their studio slates time after time. I felt their personal connection to my movies. 'Lady in the Water' is a personal movie with a big idea, and it seems just perfect for Warner Bros. I'm thrilled they responded to the story, and we all can't wait to get started."
"Lady in the Water" is the story of an apartment superintendent who finds a sea nymph living in the apartment pool.
Casting is under way with filming scheduled to begin in Philadelphia in August 2005.
SOURCE: The Hollywood Reporter
