Key told reporters it was “still 50-50” and said there would be further consideration of the industrial relations issues which have caused concern for the films’ main producer, Warner Brothers, and New Line Cinema.
He said the NZ government would consider law changes to clear up those issues and said it was union pressure that had “without doubt” spooked the producers.
Earlier on Tuesday, Mr Key said he wouldn’t go into a “bidding war” with Warner Bros to keep the production of The Hobbit films in New Zealand.
“In the conversations I’ve had with Warner Brothers so far, I’ve made it quite clear if it comes to a bidding war, then New Zealand’s out, because I don’t think that’s the right way to run this,” Mr Key told reporters on Tuesday morning.
“We don’t want to be renegotiating with every single production company that comes to New Zealand.”
This week’s visit from Warner Bros executives was prompted by a bitter row that erupted earlier this month over the prequel to The Lord of the Rings trilogy.
The actors’ union NZ Equity – which has close ties to the Australian Media, Entertainment and Arts Alliance (MEAA) – called for a global boycott of The Hobbit while they attempted to negotiate a minimum standards agreement.
The film’s producer Sir Peter Jackson refused, saying it would set an unacceptable industry precedent and accused the unions of “bully boy” tactics.
Much of the debate has hinged on an obscure argument over whether workers on films such as The Hobbit are employees of the production company, which entitles them to minimum benefits, or independent contractors.
Mr Key said he had been assured by the NZ Council of Trade Unions that no further industrial action would take place but the issue was not resolved.
“They (Warner Bros) can’t un-see what they have now seen … I’m worried about the long-term implications for the industry.”
He said he would consider looking at changing the definition of contractors in employment legislation.
That follows a court case in which former Weta Workshop model maker James Bryson was deemed to be an employee, not a contractor. Weta is a NZ special effects and props company known for its work on the Lord of the Rings films.
“There’s no question that industrial relations issues around the definition of a contract vis-a-vis an employee run to the heart of this whole issue,” Mr Key said.
The prime minister slammed the MEAA, which the NZ Actors’ Equity union is part of.
“The Australian movie industry is in tatters … So if we want the same thing to happen in New Zealand, we should go ahead and let them run our industrial relations policy in this country.
“I for one don’t intend to let them do that.”
MEAA national director Simon Whipp said placing blame on the Aussie organisation was unfair.
“Performers in New Zealand have made a decision about how they wish to be represented, and they’ve chosen to be represented by us,” he told Radio New Zealand on Tuesday.
“They make the decisions about how their industrial interests are advanced, not me.
“I work to their instructions.”