Key comes through: $34m deal sees Hobbit stay in NZ

Key trade-offs to keep the $670 million Hobbit in NZ

  • Film-industry specific contract legislation
  • $US15m ($NZ20.4m) on top of existing 15% tax rebate
  • $US10m ($NZ13.6m) to off-set Warners' marketing

The Hobbit will be made in New Zealand, prime minister John Key said last night.

A memorandum of understanding was signed with Warner Brothers and the New Zealand government around 7pm, the prime minister said.

Mr Key, fresh from a meeting with the visiting Warner Brothers executives, told media that special, film industry-specific legislation would be introduced to Parliament tomorrow that will "clarify the distinction between independent contractors and employees as it relates to the film industry only."

The government has also thrown more money into the pot.

The $670 million production, to be shot in 3D, would involve two movies. Warner Bros would get up to $US7.5 million for each film on top of the 15% tax break already available to all-comers.

The full $US15 million ($NZ20.4 million) will only be paid if both movies are successful at the box office.

Further, the government will help defray the giant US studio's marketing costs to the tune of $US10 million ($NZ13.6 million).

The marketing boost marked the start of a "long-term strategic partnership" between the government and Warner Brothers, Mr Key said. The two had agreed to work together to promote New Zealand as a film production and tourism destination.

The prime minister said the deal would safeguard thousands of jobs, and "put New Zealand on the world stage". It would have been "unacceptable" for the production to go overseas.

READ ALSO: Warner execs score the poshest of digs

Earlier, Mr Key said the Hollywood delegation was asking for "a lot", while his government was offering "not a lot".

The PM first met with the visiting Warner Brothers executives yesterday, then again last night and this afternoon, accompanied by a clutch of senior cabinet ministers.

Sir Peter Jackson would be "a very happy camper", Mr Key said.

Earlier in the day, the prime minister said that the government was "likely" to make changes to employment law to reassure Warner the The Hobbit here without facing the threat of industrial action.

 Warner could have got better deal elsewhere
Mr Key said that in financial terms there was no doubt Warner Brothers could have got a better deal from other countries, but the studio wanted to make the movies in New Zealand and so did director Sir Peter Jackson.

"They wanted a lot more, they argued for a lot more," he said.

"I made it clear we were at our limit. ..this is a better deal than we have had with other big movies made here in the past."

And the government has scored through an agreement that New Zealand will be promoted through all the marketing DVDs and other material that will be used to publicise the two Hobbit movies, as well as hosting one of the world premieres.

To get that it will offset $US10 million of Warner Brothers marketing costs.

"The strategic marketing opportunities for New Zealand from the movies will be worth tens of millions of dollars," Mr Key said.

"In the financial sense, this is a good deal."

The New York Times New Zealand Reaches Deal to Keep ‘Hobbit’ at Home
NBR: 'I was never asked for a meeting. Not without a gun to my head' - Sir Peter

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