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Q&A on The Hobbit – Part 2

Written By: - Date published: 1:30 pm, November 3rd, 2010 - 51 comments
Categories: business, capitalism, john key, Unions - Tags: , ,

Q. So how exactly did NZ taxpayers end up handing over tens of millions of dollars to Warner Brothers?

A. After the actor’s dispute had been settled, but not publicly announced, Sir Peter Jackson put out a press release claiming that Warner Brothers were going to move the production overseas. A day later, Warner Brothers themselves said yes, they were sending their people over to make arrangements to send the production overseas. Why they would come all the way to New Zealand to do this was not explained.

The Government duly announced that they would meet with these representatives and try to negotiate some arrangement so the films would stay in NZ. Our sunny and optimistic PM gave only a 50/50 chance of the films staying here. This despite a long list of solid reasons why the films weren’t going anywhere:

• The actor’s union dispute was settled, the blacklist was called off, and once actors sign up to a contract, they have to honour it, i.e. no strikes during filming.
• Warners had already spent $100 million renovating the Hobbiton sets in Matamata. They couldn’t uproot the hills and take them overseas.
• Peter Jackson wanted to film in New Zealand and keeping their star director happy would be a big priority, especially since the previous director walked.
• Moving locations would mean a delay while new sets were built and new logistics arrangements were made, and this in a project already beset by delays.
• NZ’s labour laws are actually attractive to Warners, because our workers aren’t locked into strictly defined roles they can’t step outside of as is the case overseas. That means Warners can hire fewer people and get more out of them.
• If they shifted to higher-wage economies like the UK or Ireland, they would have to pay more to the local crew and actors.
• The LOTR was filmed in NZ and getting that same look for Hobbiton again to make the movies consistent would be desirable.
• NZ was clearly Warner Brothers’ preferred location to make the films

Warners had the scent of blood, and they knew there was a deal to be done. The NZ public had been stirred into a frenzy – people marching in the streets and directing vitriol at union leaders and any actors who dared speak out. NZ had let them know that we would do anything to ‘save’ the production.

Not ones to waste a good opportunity, they demanded ‘a lot’ in John Key’s words. They gambled on the fact that Key wouldn’t call their bluff – and he didn’t.

As Helen Kelly pointed out on Radio New Zealand, John Key consistently undermined New Zealand’s negotiating position prior to and during the talks with his anti-union rhetoric.

The Government’s first mistake was taking sides in the dispute. From the very first they made no bones about their anti-union, pro-studio stance. An opportunity to bash unions and have the public thank you for it is too great a temptation for almost any right-wing leader to ignore. Key got stuck in and had a great time.

But this is the very behaviour that came back to bite NZ later around the bargaining table.

Because when it was time to strike a deal with Warners, Key was already painted into the ‘evil unions’ corner. Not exactly an uncomfortable position for him, admittedly. But negotiations-wise it presented a problem. If Key’s sole aim was to retain the production for NZ, then he should have been doing his damndest to reassure Warners that the union action was over and there would be no more problems.

But he couldn’t do that when he’d been the one stirring up anti-union fervour from the beginning.

Instead, he kept up the attacks on the unions, emphasizing that in his view there was a problem and implying that Warners would be justified if they walked out on NZ.

In other words, he was asking to get done over.

Key had thrown away NZ’s negotiating position early on, but it wasn’t all bad news for him. He could be assured of ‘saving’ The Hobbit if he gave Warners what they really wanted, which was more money. He could come up with a way to save face by ‘clarifying’ a law to make it look like employment issues of some sort were still a factor, and by getting an ad put on some DVDs. And he could continue to gain long-term political mileage going into election year by bashing the unions and pretending it was all their fault.

While this issue has caused a lot of upset to a lot of Kiwis, for John Key it has been like all his Christmases come at once.

The deal looks expensive if it’s just to retain two movies. But to retain two movies and buy an election result, it’s a great deal.

-Blue

51 comments on “Q&A on The Hobbit – Part 2”

  1. Roflcopter 1

    Failed from the first line. We aren’t handing over anything.

    • Failed in the one and only line. No matter how you want to dress it up Warners are richer and New Zealand is poorer.

      Good analysis Blue.

      • The Baron 1.1.1

        What are you smoking Greg, you silly little lap dog.

        We are richer by about $600 million, and we only have to give up about $30m in tax credits that we wouldn’t have otherwise earned to get it.

        Ooooh I understand – you would rather have a minor union have a win than thousands of real workers actually having jobs… “the many not the few” huh, looks like you’re off message.

        • bbfloyd 1.1.1.1

          Baron,,,, childish behavior is a poor substitute for real comment.. accuracy is to be desired also… “we are richer by $600m”? who’s we then?

          • The Baron 1.1.1.1.1

            NZ?

            • Colonial Viper 1.1.1.1.1.1

              OK, Jackson and Jackson’s companies and inner circle take $300M. Who else?

              • Speaking Sense to Unions

                “Who else?”

                actors for one.

                who will also get residuals, ie money every year for the rest of their lives – what other jobs give people that and certainly the film techs don’t, as negotiated by Peter Jackson with the studios well before the unions targeted him.

                then there’s lots of trades people as well as other film workers – the lynch mob as some unionists like to call them.

                I see you still haven’t been able to come to terms wih Ireland having a summer. Is that some sort of season denial thing?

                • Colonial Viper

                  Be surprised if the budget for film set staff and non-headline actors/extras, contractors or employed, exceeds $50-60M for the 2 entire films.

                  I see you still haven’t been able to come to terms wih Ireland having a summer. Is that some sort of season denial thing?

                  Oh yes Ireland will have a summer around May next year. Jackson happy to wait till then to start filming is he? He’ll miss the 2012 Christmas release dates he promised Warner of course *shrug*

                  • Speaking Sense to Unions

                    “start filming”?

                    ah, have you heard of “studios”? – they have what are called “rooves”. Keeps the rain out.

                    It’s proabably all a bit complicated for you but LOTR production was done in Wellington in summer AND winter. It’s quite common. Film people are used to dealing with the weather.

                    A few exterior scenes requiring summer can easily be done to meet the deadlines – in the Irish summer which they do have.

                    Still you asked who else benefits. You were provided with the example of actors who will get more because of Peter Jackson.

                    “Be surpised” – since you know nothing about film production yes you would be surprised, or perhaps you have some experience with film budgets.

                    • Colonial Viper

                      I guess you think The Hobbit would look good filmed in a dismal cold Irish sun but you’re the only one.

                    • Speaking Sense to Unions

                      Ireland has what is called a “summer” where they have what is called “sunshine”. It’s actually very pretty. And film directors employ and pay a lot money for what are called “DOPs” who are paid a lot of money to make things look like what the director wants. Irrespective of the weather in many instances. (hint: a lot of what appears in a film is an illusion – day for night etc etc).

                      But if you talk to people who have been to Ireland you might find that the summers are not uniformly “dismal”. Google pitures of Irish landscapes – not hard to do.

                    • Lanthanide

                      CV – post production work.

                  • Colonial Viper

                    Yes I think Jackson and his companies will score a large portion of that budget.

                • jason rika

                  Residuals are what the union was fighting about. See they were to be reclassified as contractors of which residual payments would not be a part of their contract. Read and learn about the entire problem not just the sound bites comrade.

        • Adrian 1.1.1.2

          600 million my arse, the total spend on FILM MAKING is about $170 million for both. and we are paying $90 mil of that. It’s not the 2-day Irish summer that’s the problem it’s the sky full of vapour trails and noise.

          • Colonial Viper 1.1.1.2.1

            So does that much touted US$500M / NZ$600M figure include both production budget and marketing budget rolled into one?

            If so thats pretty damn sneaky.

            • Adrian 1.1.1.2.1.1

              And Warners commision of about 20% of the money they organise, say $150mil and 10-15% for points for principals another $60-90mil paid when you sue them.Warners don’t spend ANY of their own money.

              • Colonial Viper

                Wow. Thanks. Joe Public knows sweet FA about all this stuff. Bet Jackson works the system like a pro these days though. Ran rings around the National Govt.

    • Colonial Viper 1.2

      Only handing over our self respect and constitutional sovereignty. But sure I agree with you ROFL, NAT doesn’t consider that to be anything special.

      • grumpy 1.2.1

        We are just getting a little bit less of something we would not have got anything of, if the government had not intervened.

        If it was only about money, the film would have been made offshore. Some people think that keeping people employed and collecting taxes that would not have been obtained otherwise is a bad thing??????

        • Colonial Viper 1.2.1.1

          Ah yes, Jackson was always willing to film The Hobbit in the frigid Irish sleet instead of NZ summer sunshine, and to live in Ireland for the next 2 years out of an hotel. Good luck to him.

          • grumpy 1.2.1.1.1

            but if what you guys are saying that it was all about WB getting the best financial deal possible, then it would have gone to Ireland.

            In effect NZ did quite well then didn’t we?

            • bbfloyd 1.2.1.1.1.1

              Grumpy… do you know jackson well enough to argue his position for him? if you don’t, then maybe a little thought about continuing to argue for the sake of it might save us all a bit of time through not having to repeat the truth just for your benifit.

        • felix 1.2.1.2

          grumpy you’re a dumbass, it was always going to be made here. No-one seriously ever believed otherwise.

  2. MikeE 2

    Except taxpayers aren’t handing over anything to Warners, it is Warners who are handing LESS to the government than they might of (where the alternative was to be handing over NOTHING if they left the country) due to the extra negotiating power they had after the union actions.

    Paying less tax doesn’t mean taxpayers are paying you something.

    • Colonial Viper 2.1

      Jackson was never leaving we got conned into paying more out, and selling out our legislative process, for nothing.

      • grumpy 2.1.1

        Mike E is right, if the union hadn’t barged in with a pre-emptive boycott, we would have had the lot.

        So, blame Actor’s Equity and the CTU if you feel you need to blame someone for a slightly reduced tax take.

        • Colonial Viper 2.1.1.1

          The tax take is one issue, but OK its just a few mill realistically; HOWEVER its the selling out of our democratic legislative process to a one man charge led by Jackson, and by foreign commercial interests which is the most disturbing.

          • The Baron 2.1.1.1.1

            And who opened the door to that? The stupid f*cking unions, with the most retarded campaign ever.

            I find it incredible that Blue, CV and Greg can see nothing wrong with how the Unions operated here, and continue to see this as some paranoid fantasy about long range mastermind plans from HoRRIBLE MULTINATIONALS!

            Oh look here comes Draco “Lets make them ourselves” T. Bastard; and Irish “the Unions are like fucking Santa” Bill.

            • mickysavage 2.1.1.1.1.1

              Yeah it was all the Unions fault. All of them. They should have sat meekly by and been grateful for the bones thrown at them by the massah.

              The person most to blame was Gerry Brownlee. Why this was not sealed up months ago is beyond me.

            • Colonial Viper 2.1.1.1.1.2

              Dude why keep blaming the Union cup of water for the flood, blame the cunning rainstorm named Jackson-Warner Bros.

              And by the way, plenty of us have criticised the performance of the unions as you well know; please don’t be even more disingenuous with your BS.

              see this as some paranoid fantasy about long range mastermind plans from HoRRIBLE MULTINATIONALS!

              Hardly a paranoid fantasy any more if we wake up in a world where we have sold out our legislative sovereignty for REAL. Oh yeah, that just happened.

    • The Voice of Reason 2.2

      Semantics, MikeE, and not even convincing. We are gifting Warners $100 million and handing over our sovereignty as the cherry on top. That’s $100 million that could go on essential stuff like health, education and, er, cycleways. All gone because our PM can’t negotiate for shit. Hell, as the saying goes, Key couldn’t find his own arse with both hands on a moonlit night, so why would we expect him to do anything other than be relaxed with our money?

      • grumpy 2.2.1

        Rubbish, we are not paying over anything and the only soveriegnty lost is when the union called in a dodgy Australian outfit who was only interested in getting the movie shifted to Aussie.

        • mickysavage 2.2.1.1

          Yeah Warners filmers are not doing the following:

          1. Flying in using our airports.
          2. Driving on our roads.
          3. Using our climate data to work out when to film.
          4. Using our broadband network to receive/send email and data.
          5. Using our Kiwi trained and kiwi educated workers.

          They owe nothing to us. Maybe we should tell them to pay no tax and offer them some money as well.

    • marsman 2.3

      The poor subsidising the rich,nothing changes. ‘It’s not fair’ the rich sceaming ‘we are subsidising the poor.’

    • RedLogix 2.4

      Paying less tax doesn’t mean taxpayers are paying you something.

      Try that line with IRD sometime. We’ll all be interested to know how you get on.

    • Bright Red 2.5

      MikeE, you and me will be the ones paying more tax (and paying for higher government debt) because of this.

      Warners is better off becuase of this deal. That wealth didn’t come from thin air, it came from the government and, ultimately, from us taxpayers.

      the sad part is you’re defending the person who took our money. guess that’s why they call it mugging – it happens to mugs.

      • TightyRighty 2.5.1

        never seems to bother you having higher tax and debt when that money is spent on the black hole of welfare? this is an investment, remember when you crowed about how the govt should have borrowed to invest in super? this is more relevant

  3. Sanctuary 3

    Just one more (last) comment on the Hobbit. As a result of the GFC and the clear failure of “third way” identity politics as a response to neo-liberalism the left is in the process of, well, basically re-discovering the left. Issues of income inequality, wealth distribution and ideas around real alternative economic programs are back on the agenda. There seems to be a growing feeling that the pink liberal takeover of change agents like the NZLP and the Trade Union movement – just possibly useful in curbing some of the excesses of new right dogma when it was in full, near unstoppable cry in the twenty or so years prior to 2000 – can now be judged to be past its use by date. Much, for example, was made of the enthusiasm of the party faithful at the recent NZLP conference with this newly re-discovered economic leftism – a clear indicator that the left wants to re-discover its roots.

    It seems to me you cannot possibly make sense of the vehemence of the whole Hobbit controversy without putting it into this context above, and recognising that it quickly became part of a wider catharsis, part of the beginning of the left’s intellectual rejection of the exclusively petit-bourgeois agenda of the last thirty odd years.

    • Colonial Viper 3.1

      And don’t leave out the return to class struggle, which the Left relaxed on and forgot about, but which the Right never did.

  4. James 4

    Oh, I was rather hoping you might go back and clarify some of the errors that were made in the first one. Bummer.

  5. Lanthanide 5

    “• The actor’s union dispute was settled, the blacklist was called off, and once actors sign up to a contract, they have to honour it, i.e. no strikes during filming.”
    I thought no strikes applied to employees? The whole deal with this is that they’re contractors, so I don’t think they are actually legally prevented from striking? Also, this was an international boycott, and that was the problem. Perhaps labour laws in NZ say they can’t strike, but that doesn’t mean they can’t get the international unions to strike again should they have reason to.

    “• Warners had already spent $100 million renovating the Hobbiton sets in Matamata. They couldn’t uproot the hills and take them overseas.”
    I’ve seen this repeated many times. Can someone link to an actual authoritative source? Seems like a huge amount of money to spend on an individual set (entire movies are made for much less), especially one that showed up for maybe 30 minutes in the original trilogy and will probably show up for about the same in the new movies too.

    Also special effects these days are quite amazing in what they can do. Voldemort in the Harry Potter films for example is just Ralph Finnes – the funny mouth business is all added in post-production special effects. See also: Avatar. There’s no reason they *need* to film these scenes in NZ to replicate the same look.

    “• Moving locations would mean a delay while new sets were built and new logistics arrangements were made, and this in a project already beset by delays.”
    Yeah, so what’s another few months worth of delays on this project? Especially if the delays are all fully known and the company concludes it can save $$$ by delaying it for a few months to move overseas. As people like to keep saying, “follow the money” – if lots of money could be saved by moving overseas despite the delays, then the delays themselves aren’t really a reason not to move overseas.

  6. Sean Brooks 6

    Well they have paid 24 million for three seasons of Outrageous Fourtune, 250 thousand dollars so scribe can do a rap video, who knows how much for shortland street????, the arts have always got a huge boost from the labour party.

    So why not to multi international project that will actually be seen and heard outside our country.

    • grumpy 6.1

      Really?????? $24m on “Outrageous Fortune”?????? The only reason Labour would waste that amount of money would be if it starred a Labour and/or Union activist ……. oh wait………..

      “Outrageous Fortune” indeed!

    • $24 mil on 3 seasons of Outrageous Fortune? You mean $8 mil a series or about $1 mil a 40 minute program? Or $600 mil for a 3 hour movie??

      I actually prefer Outrageous Fortune. At least they use real people.

  7. gn 7

    “Well they have paid 24 million for three seasons of Outrageous Fourtune”….are you serious??? Is that information correct? What is your source, I’d like to know. $24million?? For that crap?

  8. Sean Brooks 8

    gn:

    $8 Million a season, my source is the NZONAIR website.

  9. Carol 9

    One ofthe recent panelists on Afternoons with Mora, referred to a Peter Jackson incident in the past, that he thought showed a bit of a MO of Jackson’s in brinkmanship. It was incident I had also remembered reading about, when the Hobbit debates were raging last week, but couldn’t remember the details. It might have been David Slack on Tuesday’s Panel. I can’t fully remember the details, but it involves Jackson bluffing and lying, in order to increase his bargaining position and get the deal he wanted.

    But the panelist said he recently read about this incident, when Jackson was trying to do a deal with, I think, New Line. It goes something like this: Jackson didn’t have much to bargain with, but he had a 5pm meeting to finalise some negotiations with New Line. He contacted the people he was set to met, calling the meeting off, and saying he had some other people to talk to about an alternative deal. It was a bluff that paid off, because ultimately Jackson got the deal he wanted with New Line.

    If I get time in the near future, I’ll check the Panel audios for the details.

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