Aiming to Keep Cameras Rolling

In the eyes of Prime Minister Helen Clark, it seems no sum is too great to spend promoting “The Lord of the Rings.”

From her oak desk inside the starkly modern capital building here one afternoon this fall, she could see construction booming on new sound stages for movie studios. Down the street, restaurants were packed with American special-effects and movie-set professionals who had come to work for director Peter Jackson on “The Lord of the Rings: Return of the King,” the final installment of J.R.R. Tolkien’s literary trilogy.

Across town, artists and architects were finishing the estimated $4.8-million overhaul of the city’s classic Embassy Theatre, outfitting it with chic new seats and slick candy counters for the film’s world premiere last week.

Over the last five years, New Zealand has morphed into a down-under version of Hollywood -- thanks mostly to Jackson’s movies. The three “Rings” films employed 50 principal actors, hundreds of crew members and more than 15,000 extras.

The motion picture business exploded as a result. Employment multiplied from nearly 8,000 in 1999 to more than 31,000 in 2001, making the industry one of the largest employers on this craggy island nation of 4 million people. It could get bigger if cost-conscious Hollywood moguls, hungry for inexpensive venues, shift more of their work to New Zealand.

The promise of such bounty has cast the country into a frenzy, as nearly everyone, including city-savvy politicians and rural sheep farmers, clamors to keep the boom from busting. The prime minister and some of the country’s legislators are certainly willing to spend the public’s money to keep it going.

The federal government and several local agencies approved ambitious -- and controversial -- marketing campaigns to spend more than $4 million promoting the country this month as “The Return of the King” debuted. Almost $600,000 in tax revenue was spent to fly members of the international media to New Zealand and take them on tours around the countryside. An additional $600,000 in city funds paid for a weeklong celebration, including an exhibition of photographs taken by “Rings” star Viggo Mortensen.

The legislature approved a measure last month to use even more tax dollars to give movie studios production subsidies potentially worth tens of millions of dollars and made it retroactive to July 1.

“You’ve got to spend money to make money,” Clark said in an interview.

One worry is that it won’t be enough.

“We’re in this crucial moment of transition,” said Geoff Dixon, chief executive of Wellington-based Oktobor, a visual effects company. “We’re all waiting. We’re all hoping. We’re all praying that things work out and the money keeps coming.”

For many, it won’t.

The federal subsidy program will exclude most of New Zealand’s own filmmakers because their budgets are too small to qualify. Meanwhile, their costs are rising as Hollywood productions bid up salaries for local film crews.

Reina Webster, a young New Zealand director finishing her first film, discovered this when she tried to hire a gaffer and a film editor. The only ones she could find were veterans of big-budget American productions.

“They wanted the pay that they could get from the Americans,” Webster said. “I can appreciate someone wanting to make a few extra dollars, but I can’t afford to compete with the Peter Jacksons of the world.”

What New Zealand is going through today, Canada experienced nearly a decade ago. So did Australia and England. Other countries, like South Africa and South Korea, are watching New Zealand closely, hoping to learn from its achievements and mistakes.

Also eagerly watching are the actors, set designers, cinematographers and costumers from California who have become globetrotting nomads to keep working.

“You follow the interesting work, which means you often have to travel for the jobs,” said Christopher Boyes, a sound designer who worked on the three “Rings” films. Boyes also works for George Lucas’ audio production facility, Skywalker Sound, in Marin County.

“If you had to rely on local work to pay the rent,” said Boyes, whose permanent residence is in the Bay Area, “you’d be living much tighter,”

Now that “The Return of the King” has wrapped up, many of the foreigners who flocked to New Zealand are on their way home. The offices of Peter Jackson’s digital special effects and prop shops in Wellington are starting to ramp down.

The Jackson employees who remain are from New Zealand. They’re nervous about the future, and so are their colleagues in California.

Costs Play Big Role

Hollywood began aggressively exporting its work to cheaper locales in the 1990s, when studios were looking for ways to stretch their increasingly tight budgets. Foreign governments responded by offering a smorgasbord of tax incentives and other grants to lure production crews. Studios discovered that by shifting production they could save at least 30% on films, television series and TV movies.

Making a movie was no longer just about telling a compelling story. Instead, it was about piecing together a complicated formula: the right location, the best government incentives, and an economy where the U.S. dollar can pay for more catered meals and makeup artists.

“It used to be you had a script, you found a director and you made a movie,” said Danielle Dajani, general manager of Village Roadshow Production Management, a subsidiary of the Australian-based movie production company that helped finance “The Matrix” films.

“Now, I sit in these meetings that stretch out for days. We’ll figure out that we can get tax breaks from England and Australia, a cut from Romania, a rebate from Fiji. It all comes down to where we can get the money, and how much we can get the governments to pick up.”

For New Zealand, joining that global bidding war is key. The “Rings” movies have boosted the country’s already lucrative tourism industry: More than 4 million tourists have come to New Zealand since the first movie was released in December 2001, some spurred by the desire to walk in the footsteps of Frodo, the Hobbit hero of the “Rings” trilogy, according to Tourism New Zealand, an international marketing agency that promotes the country. The agency said tourism was up 4.7% for the year ended in September compared with a year earlier.

Jim Anderton, the country’s minister of economic development, wants to give film fanatics more reasons to visit.

For months, Anderton has been meeting with Hollywood executives and staff from production company Walden Media, which is planning to make five films based on C.S. Lewis’ fantasy series, “The Chronicles of Narnia,” starting with the children’s classic “The Lion, the Witch and the Wardrobe.”

Anderton’s dream is to have all five movies shot in New Zealand.

“They’re talking about a budget of $590 million for these films, with filming and the expenses spread over 10 years,” he said. “How fabulous is that?”

Government ministers aren’t alone in their desire to get a piece of the Hollywood pie.

Industry Push

Across the country, trade schools are training hundreds of new programmers and digital artists to work in the post-production industry. Young stagehands and would-be actors talk expectantly about a future in which soundstages replace grazing fields and the red carpet is always rolled out.

Local politicians who govern the agricultural lands where the “Rings” films were shot have traveled to Los Angeles to woo Hollywood producers, outbidding each other with promises of fabulous locations and cheap permits.

But what the Americans care about most, according to studio sources, is the federal subsidy program.

It’s designed to reimburse producers for 12.5% of their total expenses if they have budgets of at least $9.4 million and spend 70% of their budgeted dollars in New Zealand. If the total budget exceeds $32 million, the payments can be triggered if just a single dollar is spent there.

Although $32 million qualifies as only a modest project cost in Hollywood, it’s an enormous -- almost unheard of -- sum for a Kiwi film.

“The average New Zealand film has a budget that’s in the $1-million to $10-million range,” said Louise Baker, chief executive of Film New Zealand, which represents the country’s film locations office. “Even if a domestic film was big enough to qualify, most domestic films rely on [other] government subsidies to make ends meet, and that would prevent them from qualifying for the grant.”

Though the government has separate funds to help domestic filmmakers, people like Baker remain troubled.

For starters, payments made through the program don’t have to be spent in a way that ensures that the money stays in the country. It could be spent, for example, to pay salaries of American actors.

And although about $24 million in surplus government funds have been set aside to finance the subsidies, there is no cap on what producers might ask the country to pay out under the program.

“Our estimate is that, in a good year, we’ll have two or three big films that would qualify for the grant,” Anderton said. “We trust that the filmmakers in America will be honorable to what we’re trying to do. They need to be honorable in order for this to work.”

That sentiment makes South Pacific Pictures studio owner John Barnett grimace. Inside his modest office in Auckland, the well-worn chairs surrounding the conference table are a mishmash of leather. Here and there, movie posters hang from the cream-colored walls.

None of them is from the “Rings” films.

“I know this may come as a shock,” he said, “but there are Kiwi films other than ‘Lord of the Rings.’ ”

After more than three decades in the entertainment business, Barnett is used to working on projects big and small. His latest film, “Whale Rider,” was a $4-million sleeper that pulled in more than $20 million in box-office revenue in the U.S. alone.

Like many other local producers and directors, Barnett fears the government subsidies could hurt New Zealand’s goal of becoming a full-fledged center of movie making.

“We’re only attractive to studios because we’re cheap,” Barnett said.

The subsidies lured one high-budget production -- “The Last Samurai,” a $100-million movie starring Tom Cruise, which opened this month. Producers decided to use Taranaki Mountain and the nearby town of New Plymouth as an inexpensive stand-in for Japan’s Mount Fuji and its surrounding area after winning assurances from politicians that their film would be grandfathered into the subsidy program.

“The fact that there was an economic benefit was a factor,” said Ed Zwick, the film’s director and co-producer. “The key decision, though, was an aesthetic one.”

Filming, which began in January, wasn’t entirely smooth. Producers had to fly in several hundred extras from Japan for the battle scenes. Then they had trouble finding housing for them and the hundreds of crew members who swarmed into the hamlet of New Plymouth.

Perhaps most troubling, production officials say, is that the New Zealand government withdrew its oral promises to subsidize the movie -- citing the fact that the program was still being developed.

Warner Bros., the studio that co-produced and is distributing the film, declined to comment on the matter. Officials with the New Zealand government said they were negotiating a financial settlement with the production team but wouldn’t provide details.

“We need to do whatever we need to do in order to make the studios happy,” said Paul Voigt, an executive with Investment New Zealand, the agency that woos overseas investors and companies.

At least native son Jackson remains a happy customer. The director plans to shoot his next potential blockbuster -- a remake of the 1933 classic “King Kong” -- in New Zealand.