New Zealand May Lose `Hobbit' Film Over Union Dispute, Warner Says

Warner Bros Productions Ltd may move the $500 million “Hobbit” movie from New Zealand, a blow to the nation’s tourism and film industries made famous by the “Lord of the Rings” trilogy.

Prime Minister John Key plans to meet Warner executives next week in a bid to keep the two-film prequel to the Academy Award-winning trilogy in New Zealand, spokesman Kevin Taylor said in a telephone interview. The government may increase tax breaks for making movies, the New Zealand Herald reported.

Warner is searching for other film locations after actors’ unions threatened a workers’ boycott over contracts. The Rings trilogy added about NZ$350 million ($261 million) to New Zealand’s economy in the three years to March 2002, and boosted tourism as fans flocked to locations where Frodo battled Orcs in a recreation of J.R.R. Tolkien’s Middle Earth.

“The actions of these unions have caused us substantial damage and disruption and forced us to consider other filming locations,” Paul McGuire, a Los Angeles-based spokesman for Warner, said in an e-mailed statement. “Alternative locations are still being considered.”

The feud is the latest in a series of woes to delay the filming of “The Hobbit”, the tale of Bilbo Baggins’ quest to win treasure guarded by Smaug the dragon. Guillermo del Toro quit as director in May and a Wellington studio where parts of the film were to be shot caught fire earlier this month.

Peter Jackson, the director of “The Hobbit” and the “Lord of the Rings” films, yesterday said that Warner executives planned to visit New Zealand next week and move the production offshore. The Academy Award-winner blamed the actions of New Zealand Actors’ Equity, which is backed by Australia- based Media, Entertainment and Arts Alliance.

Union Talks

“Seemingly overnight, NZ Actors Equity shredded the reputation of a burgeoning industry, which has been over forty years in the making,” Jackson said in a statement.

Warner received confirmation yesterday that the actors’ proposed boycott had been lifted by Actors’ Equity, it said in the statement. The union is seeking agreement on basic terms and conditions such as hours and breaks, according to a statement from the New Zealand Council of Trade Unions yesterday.

The “Lord of the Rings” trilogy generated $2.9 billion in worldwide box-office receipts and another $3 billion from DVDs, merchandise and other sources. New Zealand’s film industry was worth NZ$2.8 billion in 2009, according to a Statistics New Zealand report.

Wellington, New Zealand’s capital, renamed itself Middle Earth for the first film’s premiere in December 2001. The city’s newspaper changed its name to the Middle Earth Post for a day.

To contact the reporter for this story: Chris Bourke at cbourke4@bloomberg.net

To contact the editor responsible for this story: Iain Wilson iwilson2@bloomberg.net

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