After months of uncertainty, "The Hobbit" will now shoot in New Zealand after the government cut a $25 million deal with Warner Bros.
A short-lived actors union boycott prompted Warner Bros. reps to travel to New Zealand to review the studio's decision to shoot Sir Peter Jackson's two-part adaptation of author J.R.R. Tolkien's novel in New Zealand.
Prime Minister John Key negotiated the new deal.
"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," said Key.
Key said the government would introduce legislation into parliament to change local labor laws, clarifying the differences between a 'contract worker' and a movie production employee.
New Zealand will also expand its film subsidy program for big budget movies, providing an extra $7.5 million tax rebate for each "Hobbit" movie on top of the usual 15 percent.
Warner Bros. also agreed to a joint marketing deal with the NZ government to promote the country as a film production/tourism destination, with the government offseting $10 million of those costs.
Production will start February 2011 with the first movie due for release in late 2012 and the second a year later.
"I am delighted that we have reached this result," said Key.
"Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the "Lord of the Rings" trilogy in once again promoting New Zealand on the world stage."
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