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Jackson said he wanted an audit to see if New Line had deprived him of money from The Lord of the Rings.
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New Line co-chairman Bob Shaye tells the Sci-Fi Channel the ongoing legal dispute over lost revenue means he won't work with Jackson.
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The Tolkein estate was asking for US$150m it said it was owed from The Lord of the Rings films.
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The union is unhappy of non-union labour on the film.
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Jackson releases a statement saying the film could move offshore, prompting Government action.
<a href="http://www.stuff.co.nz/business/4255670/Hobbit-looks-headed-overseas" target="_blank">Read story on Stuff.co.nz</a> -
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About 2000 people turned out to a rally in Wellington's Civic Square, with thousands more rallying in Auckland, Christchurch, Hamilton, Queenstown and Matamata.
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Prime Minister John Key meets with Warner Bros executives to thrash out a deal, which might include changes to industrial relations laws.
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Prime Minister John Key announces the two Hobbit movies will be made in New Zealand.Mr Key also said The Hobbit will get a $15 million tax rebate - $7.5m per film.
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