‘Hobbit’ will be shot in New Zealand

“The Hobbit” will remain in New Zealand, ending a short but intense drama over where the expensive two-picture production would be filmed.

After two days of talks with Hollywood executives, New Zealand Prime Minister John Key announced that his government had reached a deal with Warner Bros. to shoot the prequel to the “Lord of the Rings” films in the country.

Warner Bros. and filmmaker Peter Jackson had threatened to change locations for the planned February production of the $500 million project after a labor dispute with New Zealand Actors Equity, which was seeking to provide union benefits to actors.

Jackson, a New Zealand native, previously filmed his “Lord of the Rings” trilogy there.

As part of the agreement, the government will broaden the criteria for its film fund, entitling “Hobbit” producers to an extra rebate of as much as $7.5 million for each movie, on top of the $60 million to $75 million for which they already were eligible.

The government also said it would offset $10 million in Warner Bros.’ marketing costs as part of a “strategic partnership” with the studio to “promote New Zealand as both a film production and tourism destination.”