Subsidies

The Hobbit Got a Cool $120 Million in Subsidies From New Zealand

Because Warner Bros. could never foot the bill itself, right?

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The much-anticipated first film of "The Hobbit" trilogy has its U.S. premiere on Dec. 14. If the series matches the performance of "The Lord of the Rings" trilogy, it will gross about $3 billion.

So how much taxpayer money, would you guess, did Warner Bros. Entertainment Inc. need to produce the films based on the J.R.R. Tolkien book? The answer is zero. The studios are investment companies, and the films are almost certain to be immensely profitable.

But now you aren't thinking like a studio. The real question is: How much taxpayer money can Warner Bros. demand from the government of New Zealand to keep production there (rather than, say, in Australia or the Czech Republic)? That answer turns out to be about $120 million, plus the revision of New Zealand's labor laws to forbid collective bargaining among film-production contractors, plus the passage of three-strikes Internet-disconnection laws for online copyright infringement, plus enthusiastic and, it turns out, illegal cooperation in the shutdown of the pirate-friendly digital storage site Megaupload and the arrest of its owner, Kim Dotcom.