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Warner Bros is warning that the Government's release of confidential documents about the Hobbit union debate would be a "major disincentive" to future film-making in New Zealand.
The New Zealand Ombudsman has ordered the Government to release documents about the deal it struck to ensure the Hobbit movies were made in the country.
The government secured the three movies by changing employment laws and beefing up the tax rebate sweetener for the productions, resulting in an additional $25 million in incentives for Warner Bros.
Unions fought the law changes and the Labour Party accused the government of chequebook legislation.
The documents, all of which opposed the 2010 unionisation attempt, include sensitive communications between Warner subsidiary New Line Cinemas, Peter Jackson's Wingnut Films and government ministers.
New Line has said that some of the documents reflect the company's "negotiations and innermost thinking, including certain strategic decisions, legal and personal opinions, offers from third party governments and other private information", according to The Hollywood Reporter.
Radio New Zealand applied for the documents in November 2010 under the Official Information Act but ministers refused on the grounds they were commercially sensitive.
The broadcaster appealed the decision and on January 31, Ombudsman David McGee ruled 18 documents, including emails between Hobbit director Sir Peter Jackson and government officials, must be released.
In his 29-page ruling McGee said the information in the documents didn't pose serious commercial risks.
But New Line warned this would affect future relations, objecting in a statement included in the ruling.
"If the government is not willing to adequately protect this sensitive information from disclosure, this will operate as a major disincentive to motion picture studios as well as local and foreign talent - to utilise New Zealand as a location for future productions."
Wingnut Films also criticised the move.
"I can categorically assure you that if the above information was released and a similar situation occur in the future, neither myself nor Wingnut Films would be inclined to help the Government again with such a candid level of advice and opinion," reported The Hollywood Reporter.
It was not clear whether the "I" referred to Peter Jackson.
Ministers must hand over the documents on or before March 1 unless the cabinet overrules McGee by invoking a veto which was introduced in 1987 but has never been used.
The first of the Hobbit trilogy, An Unexpected Journey, premiered in Wellington in November and has been a huge success internationally.
Prime Minister John Key said production generated 3000 extra jobs and New Zealand gained priceless tourism publicity.