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‘Hobbit’ settles in New Zealand

Equity union vows no industrial action during local production

With production due to start in three months, “The Hobbit” is finally home in New Zealand — following a vitriolic dispute underlining the high stakes of mega-budget tentpoles.

Wednesday’s settlement came at the end of a bitter one-month firefight with actors unions over a boycott that provoked Warner Bros. and director Peter Jackson to threaten to move “The Hobbit” to Europe or Australia. Making the deal required the intervention of New Zealand prime minister John Key, who announced at a press conference that he’d sweetened the terms enough for Warner Bros. to stay. Among other concessions, the studio was given a larger production subsidy.

“Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of ‘The Lord of the Rings’ trilogy in once again promoting NZ on the world stage,” he said at a news conference Wednesday night.

Key said his government plans to introduce legislation aimed at clarifying a key issue involving the use of independent contractors and employees in the film industry — even though the actors had called off the boycott a week ago and pledged that they wouldn’t disrupt “The Hobbit.” The NZ Actors Equity reiterated that pledge Wednesday.

“NZ Actors Equity stands by its unequivocal assurances to Warner Brothers and ‘The Hobbit’s’ producers there will be no industrial action while the film is produced in New Zealand,” the union said in a statement attributed to Media, Entertainment & Arts Alliance executive Simon Whipp.

The New Zealand union operates as part of Australia-based MEAA, which organized the boycott. Jackson — revered in his Kiwi homeland for elevating New Zealand’s status as a production location for “The Lord of the Rings” trilogy — took particular umbrage that an Australian union was involved, saying last month that the boycott represented a plot by the Aussies to gain control of the Kiwi film industry.

“There is a twisted logic to seeing NZ humiliated on the world stage, by losing ‘The Hobbit’ to Eastern Europe,” Jackson said at the time.

Warners, New Line and MGM announced they were greenlighting the project on Oct. 15 but didn’t give a location. The unions called off the boycott five days later. Thousands of New Zealanders took to the streets in half a dozen rallies this week to urge the government to keep “The Hobbit.”

Facing twin body blows to its film and tourism industries, Key agreed to provide additional tax rebates for Warner Bros. and work with the studio on a strategic partnership to promote New Zealand as a film production and tourism destination.

The prime minister said New Zealand is expanding its 15% subsidy program for large-budget films, resulting in an $7.5 million tax rebate for each of “The Hobbit” pics. The government will also offset $10 million of the costs in the joint marketing alliance with Warner Bros.

Details of the legislation clarifying the employer vs. contractor issue were not immediately available but Council of Trade Unions president Helen Kelly blasted the deal in an interview with a local TV station for its costs and the potential limits on workers’ rights.

It’s expected that the bill will sort out the ramifications from a 2005 court case in which a former modelmaker at Jackson’s Weta Workshop won the right to be considered an employee rather than a contractor.

Employers prefer contractors because they are cheaper and more easily dismissed than employees.

NZ Actors Equity president Jennifer Ward-Lealand said Wednesday she was grateful for the government’s new agreement with Warners.

“We are pleased the government was able to resolve the economic concerns of Warner Bros. and New Line,” she said in a statement. “The film business is an internationally competitive one and it’s important New Zealand offers incentives that allow us to continue to build our world-renowned film industry.”

Warner subsidiary New Line and MGM — which are co-financing the films — had no comment Wednesday in the wake of Key’s announcement.

“These are films that should be made in New Zealand. We have the cast, we have the crew, we have the locations,” Ward-Lealand said. “I think in many ways, the issue has helped build public awareness of the importance of the film industry to New Zealand, and the industry will be stronger as a result.”

One observer said New Zealand’s victory in keeping “The Hobbit” shoot — and the possible changes in labor law — won’t impact other film productions significantly as most shoots are not big enough to be affected by the contractor/employee issue.

“Most NZ films are six-eight week shoots so the issues don’t arise in the way that they do on a ‘Hobbit,’ which will film here for two years, or the other big-budget films,” said vet producer John Barnett of South Pacific Pictures.

While tying the $10 million sweetener to inserting New Zealand into “The Hobbit” marketing campaign will continue to boost tourism, it will do little to attract other big-budget productions faced with New Zealand’s relatively non-competitive 15% incentive program.

Australia’s government will announce the findings of its year-long review into film subsidies in the next couple of months and it’s anticipated it will boost its 15% Location Offset. That will bring renewed pressure on New Zealand to do likewise.

Decision to greenlight the films came nearly three years after New Line, MGM and Warner Bros. (parent of New Line) agreed to join up on a bigscreen version of J.R.R. Tolkien’s epic fantasy novel about the adventures of Bilbo Baggins, who obtains the ring that was the centerpiece of “The Lord of the Rings” trilogy of books and films. The three films earned $3 billion worldwide. Martin Freeman has been cast as Bilbo.

Jackson will direct both segments in addition to writing and exec producing. Pre-production on the films has been under way for many months in New Zealand. Guillermo del Toro had committed to direct “The Hobbit” pics in 2008 but became frustrated by the length of time that passed before shooting started and departed last May.

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