'Hobbit' Staying in New Zealand

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

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."


Labour MP Trevor Mallard disagreed. "The idea that we change law based on a one-off and under pressure from a foreign company is anathema to me, and especially when it is done in crisis mode, it is very dangerous," he said.

He added, "Doing something that makes us look like a banana republic ... is the sort of thing that happens in Fiji, not in New Zealand."

Green Party co-leader Russel Norman also was critical. "We're going to prostitute our industrial law to satisfy a multinational corporation," he said.

Key said the statutory revision would apply only to the film industry, not to television or to workers more broadly. It won't be limited to actors.

Kiwis were relieved that the project would remain in-country. Mark Harrison, organizer of Save the Hobbit rallies throughout the country, told The Hollywood Reporter that "New Zealand actually got a sweet deal."

About 75% of 8,200 respondents to a local newspaper's poll approved as well; the other 25% felt the deal was "a rip-off."

The relationship forged between the government and Warners is unusual. For instance, even though the incentive program involves public money, Key refused to spell out how the program criteria would be broadened, saying it was a commercial secret for the studio.

In addition, Key announced a "long-term strategic partnership" with Warners that will see joint promotion of New Zealand as a film-production and tourism destination. The government will offset up to $10 million of Warners' marketing costs.

The partnership also will involve promotion across an unspecified range of Time Warner properties and inclusion of material on DVDs and downloads. New Zealand also will host one of the "Hobbit" world premieres.

Separately, SPADA and the union indicated that there would be a review of the "Pink Book" guidelines covering actors' working terms and conditions for productions in the future.

Pip Bulbeck in Sydney contributed to this report.