WELLINGTON, New Zealand (AP) - Studios backing the movie version of "The Hobbit" want New Zealand to give them more tax breaks and to change labor laws if they are to go ahead with the $500 million project in the country, the prime minister said Tuesday.
Prime Minister John Key held crisis talks Tuesday with senior executives from Warner Bros. and New Line Cinema about keeping the project in New Zealand after a dispute about pay and conditions for local actors threw the production into turmoil last week.
New Zealand Actors' Equity called off an international boycott of "The Hobbit" last week, but director Peter Jackson said the studios were not confident there won't be more trouble during the production and were considering moving it elsewhere. The studio executives flew to the capital, Wellington, for meetings before making a final decision.
The dispute has become a national issue in New Zealand, which received a huge boost to its tourism and film-making industries after "The Lord of the Rings" trilogy was made here by Jackson. Hundreds of people marched in several cities Monday to support the movies being made in the country.
Key said the studios want the risk of union disruption taken out of the equation, so government lawyers would look urgently at changing labor laws. Also, ministers would "run the numbers" on improving tax incentives for the studios - currently about 60 million New Zealand dollars ($45 million).
The studios "were not coming here with a ransom note or trying to put a gun to our head, but commercial reality is the actions of the union have encouraged them to look at other countries which have better deals than we do," Key told reporters after the meeting.
"They are out of here if we can't give them the clarity, there's no question about that," Key said.
Key said he expects to meet with the studio bosses again this week and to have a decision by the weekend on whether the films are made in New Zealand.
The studio representatives did not comment to media after the meeting.
"The Lord of the Rings" films based on J.R.R. Tolkien's novels relied heavily on the rugged landscape of New Zealand, which became associated with Tolkien's Middle Earth fantasy world inhabited by hairy-footed little people and host of other colorful beings.
"The Hobbit" is Tolkien's prequel to the story of "The Lord of the Rings," and much of the production crew and some of the cast from the Rings were due to join the new project.
Before the meeting, Key said the country would not be drawn into a tax break bidding war. He said afterward that the studios had no faith in the union, and it was still "50-50" whether production would remain in New Zealand.
The industrial dispute began last month when Actors Equity arranged an international boycott of the movies when Jackson refused to hold talks on a union-negotiated agreement on wages and conditions for local actors.
The U.S.-based Screen Actors Guild and British actors joined a worldwide work blacklist of "The Hobbit." But last week New Zealand Actors' Equity called off their boycotts and pledged there would be no industrial action during the films' production.