New Zealand reaches deal on Hobbit

The New York Times reports: Warner Brothers agreed to keep Peter Jackson’s production of The Hobbit in New Zealand after the government promised to change local labor laws and offered extra financial incentives, Prime Minister John Key said today.

The deal came after two days of talks between Mr. Key and other government officials and executives from Warner and its New Line Cinema unit.

Filming of the two Hobbit movies, which is expected to start in February, had been threatened by a dispute over whether a New Zealand branch of an Australian union could engage in collective bargaining on the Hollywood films, which they have not been able to do in the past.

A New Zealand actors union, backed by a larger union, the Media, Entertainment & Arts Alliance of Australia, had demanded collective bargaining for work on the films, but both Warner and government officials contended that collective bargaining with actors was barred by New Zealand law.

The unions withdrew their demand and lifted their call that international unions boycott the films, but Warner executives remained concerned about the possibility of labor disruptions.

As part of the deal to keep production of the The Hobbit in New Zealand, the government will introduce new legislation on Thursday to clarify the difference between an employee and a contractor, Mr. Key said during a news conference in Wellington, adding that the change would affect only the film industry.

In addition, Mr. Key said the country would offset $10 million of Warner’s marketing costs as the government agreed to a joint venture with the studio to promote New Zealand “on the world stage.”

He also announced an additional tax rebate for the films, saying Warner Brothers would be eligible for as much as $7.5 million extra per picture, depending on the success of the films. New Zealand already offers a 15 percent rebate on money spent on the production of major movies..

Mr. Jackson’s office in New Zealand declined to immediately comment.