After the New Zealand parliament passed a law today clarifying that film industry workers are independent contractors rather than employees in the Kiwi nation, Warner Bros. finally commented on the delicate political situation.

"New Line, Warner Bros and MGM are pleased to have concluded successful discussions with the New Zealand government this past week.  We'd like to thank Prime Minister Key, his Cabinet and the other dedicated New Zealand officials for their support and cooperation, which helped assuage our concerns and enabled us to keep The Hobbit in its proper home of New Zealand.  

We'd also like to express very special appreciation to Peter Jackson, Fran Walsh and the people of New Zealand for their tireless support of 'The Hobbit' and their commitment to maintain and grow their vibrant film industry. Filming is scheduled to begin in February 2011 and we look forward to returning to Middle-earth. "

The filming of "The Lord of the Rings" prequel was always intended to occur in New Zealand until International labor unions threatened to boycott the production over actor's wages in the film.  The situation was serious enough that Warner Bros. threatened to move the filming to London, Canada or Eastern Europe.  That caused a public uproar and forced the Prime Minister to negotiate directly with the studio.  Budgeted at approximately $380 million for both films, having "The Hobbit" leave the country was deemed to great an economic risk and a settlement was reached with the new law.

"The Hobbit, Part 1" is scheduled for release sometime in Dec. 2012.