New Zealand reaches deal to keep "Hobbit" films

Wed Oct 27, 2010 1:43pm EDT
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By Adrian Bathgate

WELLINGTON (Reuters) - New Zealand will remain the home of "The Hobbit" after the government struck a US$25 million deal with Warner Bros. and promised labor law changes to stop the film studio from relocating the big-budget movie production.

A short-lived union boycott prompted Warner Bros. representatives to travel to New Zealand this week to review the studio's decision to shoot Peter Jackson's two-part adaptation of J.R.R. Tolkien's fantasy in New Zealand.

Fearing the loss of the project worth an estimated $500 million and damage to the reputation of New Zealand's fledgling film industry, Prime Minister John Key stepped in, negotiating a deal to keep the project that was announced late on Wednesday.

"An agreement has been reached between the New Zealand government and Warner Bros. that will enable the two Hobbit movies to be directed by Sir Peter Jackson to be made in New Zealand," Key told a news conference.

Jackson's adaptation of Tolkien's "Lord of the Rings" was shot in his home country of New Zealand and garnered major international publicity for New Zealand. Warner Bros. sold nearly $3 billion worth of tickets at the box office, and the filmmaker and his team won 11 Academy Awards in 2003, including best film.

Economists said the loss of "The Hobbit" could cost New Zealand up to $1.5 billion and the danger of losing the film brought thousands of protestors into the streets in the past week.

Key said the government would introduce legislation into parliament on Thursday to change local labor laws at the heart of the dispute over "The Hobbit" which sparked protests on the streets across the country over the past week.


<p>Elijah Wood as Hobbit Frodo in a scene from "The Lord of The Rings: The Fellowship of The Ring". REUTERS/Handout</p>