Neil Gaiman made an appearance at the Paramount Panel last night at the San Diego Comic-Con and had this to say.
“I’ve been saying since 1991, I’d rather see no ‘Sandman’ movie than a bad ‘Sandman’ movie made. I think the time of a good ‘Sandman’ movie is getting closer. With luck, we’ll see the ‘Death’ movie first ’cause that’s small and cheap and I’m going to direct it. [A ‘Sandman’ movie] needs someone with the passion of a Peter Jackson for ‘Lord of the Rings’ or Sam Raimi on ‘Spider-Man’ to get the film through Warner Bros.”
So there you go. Gaiman also said something about cloning a fan boy and locking them in a room with knives, the survivor could direct the movie. Word is Gaiman has been invited to the Hellboy 2 set, probably to get some tips and tricks for directing that Death movie.