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

9:36 PM PST 10/26/2010 by Jonathan Handel

Warner Bros. also looking for New Zealand legislation; studio may make 'Hobbit' decision by end of week.

It's essentially all come down to money, and a decision may come in the next few days.

New Zealand Prime Minister John Key is quoted in three local press reports (Stuff, TVNZ and New Zealand) as saying that Warner Bros. wants two things as a condition of keeping the "Hobbit" shoot in New Zealand.

One goal is legislation clarifying that actors can be treated as independent contractors, putting them beyond the reach of labor unions. Key expressed confidence that the government would enact this "clarification." The country's government is center-right and has been described by a labor leader as anti-union.

The tougher issue is money. "I think it's fair to say on the financial side there's a fair bit of hardball being played on both sides," Key said. He added, "We have the capacity to move a little bit, but we don't have the capacity to write out checks that we can't afford to cash."

"In the end," he said, "money talks in Hollywood. That's just the way it works."

The parties appear to be at some distance. Key said Warner Bros was asking for "lots" and the government was offering "not lots."

Key also said the government could move "at the margins" on the issue, but that it won't be drawn into a bidding war or try to bridge the gap between New Zealand's 15% production subsidy and the up to 30% incentives reportedly offered by other countries.

Warners' subsidiary New Line had no comment.

Another issue identified in one press report is the value of the New Zealand dollar, which has reportedly increased from 55 cents "when the movies were first discussed" to 75 cents. The change makes it more expensive to shoot the two-part movie in New Zealand and may emerge as justification for an increase in the subsidy.

Key's comments came after a meeting with Warner Bros. executives Tuesday night Los Angeles time (Wednesday afternoon in New Zealand). He had had a two-hour meeting the previous day with New Line president Toby Emmerich and Warners Home Entertainment president Kevin Tsujihara. Lawyers for both sides then continued meeting into the night.

It is unclear if Key is scheduled for another meeting with Warners executives before he leaves for a scheduled trip to Vietnam on Thursday New Zealand time. Earlier, Key said he expected the studio would reach a decision by the end of the week.

Council of Trade Unions leader Helen Kelly decried the push for legislation as "opportunistic" on the part of the government and as unnecessary in light of assurances of non-interference the union had already given. If the change goes through, she told THR, "an international corporation will determine New Zealand's labor laws."

When asked in a television interview if the legislative change would be "at the behest of Warner Bros," Key neither denied nor agreed with the premise, but spoke of "the practicalities of the world in which we're living."

Kelly also argued that the potential legislation could be broad enough to disempower vast swaths of the country's workers. However, the government has not said whether it would seek legislation that broad, or whether it would just apply to the film industry, or even just to actors.

In a separate development, director-producer Peter Jackson claimed that an Aug. 17 letter from the International Federation of Actors made it clear that the unions "had already voted to blacklist us, before even asking for one conversation with me."

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