The Alliance has obtained legal advice that there are a variety of lawful means which could be used to establish the minimum wages, working conditions and residuals for performers on the production. A copy of this advice has been provided to the lawyers for the producer.

What is the current situation?

SAG, Equity UK and the Alliance have made contact with their performer members who are either rumoured to be involved in the film or to whom offers of involvement have been made. These performers have indicated strong support for the FIA position. The producers have indicated that, notwithstanding the request to meet and discuss the terms of engagement of performers on the production, they intend to make imminent offers to performers. In addition, they have now advised that they propose to pay some performers “residuals” on the production.

What would these residuals be?

These residuals are significantly less than the Alliance’s usual agreements in every respect. The producers have offered 2% of distributors gross receipts to commence for exploitations 2 years after the first US theatrical release of the film. However, it is unclear on what they would be based (for example what about sales which occur before the 2 years relating to use after the two year period), how these residuals would be divided between the performers and how they would be enforceable. It is not clear which performers may be offered this arrangement.

How does this compare to residuals under other Alliance agreements?

The Alliance agreement for large budget international studio films (such as Mad Max 4 aka Fury Road and Happy Feet 2) provides for residuals that are equivalent to those under the SAG Agreement. The residuals proposed by the producers of The Hobbit are less in every respect.

Under all Alliance agreements all performers are entitled to share in residual payments and there is no uncertainty about how each performer’s share is calculated or about enforceability.

What about other conditions?

The producers have advised they do not intend to negotiate with the union. Consequently the usual provisions of the New Zealand contract would apply. These include a provision which permit the producer to terminate the contract at any time without obligation to pay out the performer’s contract. This provision could also be used to justify non-payment of any residual obligation which may have been agreed above (even after the performer has performed all their work on the film and even if the performer’s work is used in the film).

This clause alone makes the residual offer above meaningless. Under an Alliance agreement this would not be the case.

Where to from here?

In accordance with the resolution of FIA performers are advised not to work on The Hobbit unless and until the production enters into an agreement with the Alliance protecting the wages and working conditions of performers on the production.

If you are contacted to work on the production please make immediate contact with your local union to establish the current position.

All unions remain hopeful that this situation can be resolved with goodwill on all sides.

Many thanks for your support.

Peter Jackson's response:
Statement regarding The Hobbit and claims by the Australian Media Entertainment and Arts Alliance (MEAA):

The Australian Labour Union, the MEAA is using our production The Hobbit in an attempt to widen it's membership, and power within the New Zealand film industry. As a New Zealand filmmaker, who has nothing to hide or be ashamed about, I'm not going to see this threatening behaviour continue without some form of sensible discussion about the "facts" and "truth" behind their various allegations.

It's incredibly easy to wave the flag on behalf of workers and target the rich studios. It's not hard to generate an emotive response, nor is it hard to sway public opinion, since nobody seems to like the facts to get in the way of a good story in these situations.

Behind the claims of exploiting actors who are cast in the "non-Union" Hobbit production, and claims that various high-profile stars will refuse to take part in the films, there are clear agendas at work. As usual with these agendas, they are based on money and power.