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New Zealand versus the Hobbits

New Zealand’s opposition party, NZ First, has demanded Warner Bros repay NZ$67 million in tax subsidies since ‘The Hobbit’ has earned more than NZ$1 billion.

Sneaky little hobbitses‘ as Gollum might say.

The first film in the Hobbit trilogy, ‘An Unexpected Journey’ is reported to have topped US$886 million worldwide, since opening in New Zealand on December 12. Warner Bros received an extra subsidy of up to US$15 million per movie from the NZ government in 2010, and labour laws were changed amid a dispute that could have seen the films moved offshore. Economists have suggested the loss of The Hobbit could have cost New Zealand as much as NZ$1.5 billion in lost revenue.

NZ First says there’s no evidence production of the film created as many jobs as the NZ government claims. Prime Minister John Key says the films have created 3,000 extra jobs, but NZ First says that number has been ‘plucked out of thin air’.

“Questions have to be answered about how many of these jobs existed prior to filming, how many of them will exist once the final film has premiered, and how many of these jobs actually went to New Zealanders,” said NZ First leader, Winston Peters.

The second movie in the trilogy, ‘The Desolation of Smaug’ is expected to be released in December 2013, while the third and final movie ‘There and Back Again’, is set for release in July 2014.

Given the unprecedented success of Peter Jackson’s ‘Lord of the Rings’ trilogy, which has garnered almost US$3 billion at box offices worldwide, the Hobbit movies look set to follow in its sequel’s footsteps.

NZ Tourism is expecting to see a lift in visitors arriving over the next two years, similar to the boost it received from the Lord of the Rings movies.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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