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Budget Note

There is some dispute over the actual budget of The Hobbit. Based on MGM's bankruptcy filing, which noted that the company had allocated $265m-$270m to co-finance production of the Hobbit films, which was presumably 50% of an overall $530m-$540m budget, we can assume that the first film in the trilogy was originally budgeted at $265m-$270m. However, sources close to production put the final cost of two films at about $315 million each.

The calculation is complicated by the fact that the films were eventually divided into a trilogy. The studio says the total cost was "closer to $200 million a movie" after "significant production rebates from New Zealand" (see 'The Hobbit:' Inside Peter Jackson and Warner Bros.' $1 Billion Gamble, Hollywood Reporter, 10/26/2012), but it's not clear whether they are referring to two or three films in this case. New Zealand grants approximately 15% in rebates for production and special effects work, which suggests a total budget for each film of around $250 million, using the studio figure. If that is in reference to three films, it seems reasonable to assume that costs had risen to $630 million at the point that two films were split into three, which corresponds to the $315 million-per-film number reported by insiders. We will therefore use $250 million as the budget for each film.

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