"Hobbit" Filming Location Decided: Warner Bros Squeezes Big Concessions To Confirm New Zealand

U.S. film studio Warner Bros has squeezed big concessions out of the New Zealand government to confirm JRR Tolkein's "The Hobbit" will be filmed in New Zealand, including a law change and millions more in tax and financial incentives.

New Zealand Prime Minister John Key announced late Wednesday New Zealand local time that an agreement has been reached with Warner Bros to film JRR Tolkien's "The Hobbit" in New Zealand.

"I am pleased to announce an agreement has been reached between 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," Mr Key said in a televised press conference in Wellington.

He said it would safeguard thousands of jobs in New Zealand and would "allow us to follow the success of the Lord of the Rings trilogy" which was also shot in the South Pacific nation.

The government would introduce legislation on Thursday to "clarify the distinction between independent contractors and employees as it relates only to the film production industry."

Mr Key said it was this clarification that will guarantee the movies are made in New Zealand.

Referring to the industrial issues that have surrounded the Hobbit films in the past few weeks, which included actors unions blacklisting the film, Mr Key said it had highlighted a significant set of concerns for the way in which the international film industry operates in New Zealand.

"We will be moving to ensure that New Zealand law in this area is settled to give film producers like Warner Bros the confidence they need to produce their movie in New Zealand," he said.

The New Zealand government has also widened the qualifying criteria for the large budget screen production fund to improve New Zealand's competitiveness as a film destination for large budget films like The Hobbit.

Mr Key said as a result Warner Bros will get an additional US$7.5 million tax refund per movie, subject to the success of the movies.

"The government and Warner Bros have agreed to work together in a long term strategic partnership to promote New Zealand as both a film production and tourism destination," he said.

Mr Key said the government was determined to use The Hobbit to highlight New Zealand as a great place to visit and do business.

He said the strategic marketing opportunities for New Zealand from the movies will be worth tens of millions of dollars.

"The government will offset $US10 million of Warner Bros marketing costs as part of the strategic partnership," he said.

New Zealand will host one of the world premiers of The Hobbit movies as part of the deal.

(C) NewsRoom America 2010