Wellington prepares for Hobbit movie windfall

Wellington is set to reap a windfall to match all of Bilbo Baggins' riches, thanks to Peter Jackson's new Hobbit movie deal.

Budgets of US$150 million (NZ$198 million) are expected for each of the two films, and film studio executives say it is likely Wellington will again be home base for Middle-earth.

Based on JRR Tolkien's The Hobbit, the movies will be made simultaneously and released in 2010 and 2011.

They will tell the story of hobbit Bilbo Baggins before the events of The Lord of the Rings.

Michael Lynne, co-chief executive officer of New Line Cinema, said most of the movies would be made in Wellington. It is understood sites in Queenstown and Te Anau are also being considered.

Preproduction begins next month, but no script-writing can begin till a strike by writers in Hollywood ends.

Jackson was in Wellington yesterday, back from filming The Lovely Bones in the United States, but he made no comment on the Hobbit movies.

Wellington Chamber of Commerce chief executive Charles Finny said the return to Middle-earth would be worth "many, many millions of dollars" to Wellington.

"Hopefully this will ensure continued buoyancy in the [film] industry for at least several years to come."

The movies will be also a bonanza for Jackson. The renewal of his relationship with New Line has also been lucrative, The New York Times reporting yesterday that his settlement with the company over Lord of the Rings profits was worth US$40 million.

News of the Hobbit films has sent fans into a frenzy.

Erica Challis, a founder of a popular Tolkien website, said anticipation was already growing. "We are all very excited ... It's absolutely buzzing, the e-mails are flying."

Jackson will produce the movies with his screenwriter wife Fran Walsh, but has not yet signed to direct them, citing scheduling difficulties with his other projects, including The Lovely Bones and TinTin.

However, Jackson and Walsh will have almost complete creative control over the films, with MGM chief executive Harry Sloan saying: "It's Peter's project."