But production may move out of New Zealand

The battle over Middle-earth isn’t over.

Unions may have called off a boycott of Peter Jackson’s “The Hobbit,” but New Line and Warner Bros. could still move the big-budget production out of New Zealand entirely.

That’s according to Jackson, as well as several insiders who are involved with the production. In a statement, Jackson said the damage inflicted by New Zealand Actors’ Equity and other groups was long since done.

“The lifting of the blacklist on ‘The Hobbit’ does nothing to help the films stay in New Zealand,” Jackson said. “Next week, Warners is coming down to New Zealand to make arrangements to move the production offshore. It appears we now cannot make films in our own country — even when substantial financing is available.”

Jackson’s statement, issued jointly with producing partner Fran Walsh, was released not long after New Zealand Actors’ Equity called off the boycott early Thursday in New Zealand.

“Following positive developments in discussions between the Screen Production & Development Assn. and NZ Actors’ Equity over the last week and in an effort to re-establish stability in the New Zealand film industry, NZ Equity has recommended to all international performance unions that they rescind any forms of advice to their members that they not work on the feature film production ‘The Hobbit,’” said the newly organized union in a statement.

New Line and parent company Warner Bros. didn’t comment, but insiders stressed that Warners — which ultimately will make the decision about where to shoot “Hobbit” — hasn’t yet made a decision.

New Zealand Prime Minister John Key issued his own statement, saying he is prepared to meet with Warners in a bid to keep “The Hobbit” in that country.

“I think we have a strong position, but the industrial action from the unions has substantially undermined the confidence that Warner Bros. has in New Zealand,” he told Radio New Zealand. “The government will have to sit down and talk to them and see what we can do to restore that confidence.”

On Sept. 24, SAG and half a dozen actors unions advised its members to boycott “The Hobbit” due to a dispute between producers and Actors’ Equity, which alleged that local performers are treated unfairly and deserve a union contract.

SAG and AFTRA immediately rescinded their advisory after the boycott was called off, and said its members were now free to work on “Hobbit,” under SAG terms and conditions.

But Jackson said the dispute with actors unions has “undermined Warner Bros.’ confidence in New Zealand as a stable employment environment,” and the studio is “very concerned about the security of their $500 million investment.”

New Line and WB are partnering with MGM on the two-pic “Hobbit” project. Jackson is set to begin lensing the first film in February.

In a separate interview with Radio New Zealand, Walsh suggested the production could move to a studio in the U.K.

“There is the ‘Harry Potter’ studio there that they say would be perfect for us,” Walsh said.

Jackson and Walsh’s statement provoked an angry response from Helen Kelly, prexy of the New Zealand Council of Trade Unions.

Kelly suggested “Hobbit” producers want to move the production to another country for tax credit reasons, not because of union issues.

“I have two theories. One is that Warners has decided to move the film and they are using the unions as an excuse to save their reputation and Peter Jackson’s. And two, they have decided to make it here but they are going to push the government for better incentives and take down the union to do it,” Kelly told Daily Variety.

On Wednesday night in New Zealand, more than 1,000 tech and film crew workers marched against Actors’ Equity and another group backing the union. Local actors also were a part of the protest.

There also was a “Hobbit” production meeting, where tech workers were told the project was “dangerously close” to being moved, according to one person who attended the meeting.

“We will continue the fight to keep the film in New Zealand, but ultimately this decision belongs to Warner Bros.,” Jackson said. “We are however, hugely heartened by the incredible show of support from Wellington actors, technicians and crew. It is a reflection of the terrific pride New Zealand film workers have in their industry and their very real fear of losing their jobs.”

(Paul Chai contributed to this report.)

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