New Zealand may lose the filming of "The Hobbit" movies because of an actors' pay dispute, with financial backers Warner Bros. making arrangements to shift the production elsewhere, director Peter Jackson warned Thursday.
The "Lord of the Rings" film trilogy based on the J.R.R. Tolkien novels relied heavily on the rugged landscape of New Zealand, which in turn received a tourism boost after becoming associated with Tolkien's Middle Earth fantasy world inhabited by hairy-footed little people and host of other colorful beings.
But the $500 million, two-movie prequel, "The Hobbit," may end up shooting somewhere else, Jackson's Wingnut Films said.
The New Zealand union, Actors Equity, insisted the dispute was being resolved and that it had lifted its work bans on the project, while foreign counterparts, including the powerful U.S. Screen Actors Guild that had backed the boycott, said its members were now free to work on the films.
But senior producers in Jackson's company said it may be too late to save the production in New Zealand.
Fran Walsh, Jackson's partner and co-producer, said Warner Bros. already had an executive in England scoping locations and assessing the studio used for shooting the Harry Potter series to relocate "The Hobbit" movies.
Why would Warner Bros. "go to a place where they're almost guaranteed industrial action during the shoot?" Walsh told New Zealand's National Radio on Thursday. "They are saying they need stability and certainty and that's no longer here — they can protect their investment better elsewhere."
Jackson's company, Wingnut Films, said in a statement that Warner Bros. representatives were coming to New Zealand next week "to make arrangements to move the production offshore" because "they are now, quite rightly, very concerned about the security of their investment."
The industrial dispute began in late September when Actors Equity arranged an international boycott of the movies when Jackson refused to hold talks on a union-negotiated collective agreement on wages and conditions for local actors, saying they should get a deal that matched those of their international colleagues.
Jackson and the films' backers, Warner Bros., MGM and New Line Cinema, said a collective agreement would expose Wingnut to unfair liabilities and sanctions under New Zealand law. They said the actors would be employed as independent contractors, with pay and conditions based on the local industry's standard working conditions.
The Screen Actors Guild and British actors joined the work blacklist of "The Hobbit," which is expected to include Sir Ian McKellen reprising the role of the wizard Galdalf from the Rings movies.
New Zealand Council of Trade Unions president Helen Kelly said Thursday the industrial issues were on the way to being resolved and the blacklist was lifted on Sunday.
"New Zealand performers want the movie made here as much as anyone," she said.
In a statement posted Wednesday on its website, the Screen Actors Guild advised members it had lifted its blacklist on "The Hobbit" after advice from the New Zealand union and that members were free to work on the film.
Jackson said in his statement the dispute had already done serious damage by undermining Warner Bros. confidence in the New Zealand industry.
"Unfortunately lifting the blacklist does nothing to help the situation," the statement said.
Warner Bros. did not immediately comment on the situation.
Jackson denied being anti-union on TV One's "Close Up" program Thursday.
"I'm in four unions," he said, adding that "people have the right to have the best terms and conditions they possibly can." The union boycott was "the actions of a few actors ... who don't honestly understand the repercussions of the situation."
It was "absolute rubbish" to suggest the films were being deliberately moved away from New Zealand by the studios for financial reasons, he said in his first interview on the issue, noting it was being done "on sets ... that are being built to shoot on. This is Gollum's Cave, for God's sake."
"For the first time ever New Zealand actors were going to get some residuals (payments for spin-off products like DVDs and merchandise) on the Hobbit. They were going to get a share of the profits," he said.
The pay row is the latest in a string of troubles to hit the project. In May, original director Guillermo Del Toro quit after two years of involvement citing production delays. Jackson, the New Zealander who was a key creative force behind the Rings movies, stepped in as director. Filming was due to begin in New Zealand in February.
It also caused upheaval within New Zealand's film industry, which received a huge boost with the success of the Rings films and Jackson's sudden rise in profile in Hollywood that came as a result.
Late Wednesday, more than 1,000 film technicians chanting "Save The Hobbit" and waving banners that said "SOS Hobbits" marched through the capital, Wellington, demanding actors end their dispute.
Economic Development Minister Gerry Brownlee said he had been told several other foreign-funded productions had put work on hold while they watch the outcome of "The Hobbit" dispute.
He said the government next week would meet with Warner Bros. and ask "how can we give ... more certainty about things — because they don't trust the unions."
After the huge success of the "Lord of the Rings" trilogy, Jackson has spent the past three years working on adapting "The Hobbit." Written before the Rings saga, the novel introduces key characters such as title character Bilbo Baggins, and first describes the elaborate world of dwarves, trolls, elves and monsters that both tales inhabit.
Warner Bros. is a unit of Time Warner Inc.