'Hobbit' Staying in New Zealand

11:35 PM PDT 10/26/2010 by Jonathan Handel

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The government will pay up to US$25 million and make legislative changes negotiated with Warner Bros. Prime Minister also announces a 'long-term strategic partnership' with studio.

UPDATED 8:02 p.m. Wednesday, Oct. 27, 2010

Money Emerges as Key Sticking Point in Bid to Keep 'Hobbit' in New Zealand

Desperate to Keep 'Hobbit,' New Zealand Officials to Meet with Warner Bros. Execs

Peter Jackson's "The Hobbit" is staying in New Zealand, but the rescue cost the country up to $25 million and some loss of sovereignty as the government moves to adopt legislation negotiated with Warner Bros.

Prime Minister John Key announced during a news conference Wednesday night (New Zealand time) that the government would broaden criteria for its large-budget incentive program, resulting in an additional rebate to the studio of up to $15 million, depending in an unspecified way on how each part of the two-part movie performs.

New Zealand Actors' Equity president Jennifer Ward-Lealand sounded a conciliatory note in a statement, saying, "We are pleased the government was able to resolve the economic concerns of Warner Bros. and New Line."

She added, "Actors' Equity will take time now to reflect on the events of the past few weeks."

Ward-Lealand made no mention of the union's unsuccessful campaign to unionize the film's actors; however, the union reiterated its pledge not to interfere with the production.

Reflecting another aspect of the agreement, the government Thursday afternoon (Wednesday night in Los Angeles) introduced legislation sought by Warners in parliament that would clarify the employment status of film-industry workers, making unionization more difficult. Parliament held a raucous debate on the subject.

However, passage seemed assured as local media reports indicated that the National Party government has support from two other parties. During parliamentary debate, Economic Development Minister Gerry Brownlee listed a third party in support as well. Labour and the Greens said they'll oppose the changes.

New Zealand's Screen Production and Development Assn., a producers' organization, said the revisions are "a welcome move to give more certainty to production companies."