New Line/Warner Bros. have agreed to keep the filming of The Hobbit films in New Zealand after the government agreed to give the movie’s backers an extra $34 million of tax payers money, plus an undertaking to *rush through changes to labour legislation ‘under urgency ‘ to clarify the position of contractors working on film productions.
However the two films, jinxed with a history of bad luck and mounting debts, aren’t anywhere near being out of the woods yet. There is still the problem of MGM’s impending bankruptcy hanging like an axe over the project.
MGM, who owns the rights to the films is still headed towards chapter 11 bankruptcy unless investor Carl Icahn’s offer to buy up the company’s debt for 53 cents (Reuters reports it as 50 cents) on the dollar is accepted. He wants to buy up $1.6 billion and secure a 51% stake in the company.
The condition is that creditors reject chapter 11 bankruptcy and don’t hand over control to Spyglass Entertainment, the company that backed Star Trek and Wanted. If successful, Icahn’s deal could give more muscle to Lionsgate’s recent move to buy MGM.
According to Dorothy Pomerantz, writing for Forbes on 26 October
Icahn is Lionsgate’s largest shareholder and he’s been a vocal proponent of merging the two companies. According to a press release, creditors have until Friday to take Icahn up on his offer.
At stake is the future of two big franchises: James Bond and The Hobbit.
Producers on both franchises are waiting anxiously for MGM to work out its problems so that new films can go into production. The Hobbit, now in pre-production in New Zealand under director Peter Jackson, is also dealing with a labor dispute that threatens to further delay production on the picture which is slated for release in December 2012. The filmmakers could soon decide if they need to move filming to a different country.
Depending on the outcome of the proposal, the risk is that the recently struck deal with NZ over The Hobbit films could be thrown back into turmoil, with a possibility that New Zealand may be asked to provide more ‘incentives’ to keep the film, or it could even be dealing with whole new set of criteria.
After Keys government’s ‘no haggling on the hobbit’ rhetoric (read No Bidding War on The Hobbit – “we don’t want to be renegotiating with every single production company that moves here“) they’re in a more difficult position to be able to stand up to any future requests for ‘additional support,’ wherever they may come from.
The question is – how long will New Zealand be prepared to dip into its coffers and use tax payer dollars to fund films that offer no guarantee of a return on their investment?
* for an explanation of the propsed legislation read The Hobbit Law – what does it mean for workers. One can only hope that ‘Hobbit‘ law doesn’t become a byword for either hastily drawn or anti-rights legislation