05/02/2003

2002 was a good year for Italian cinema. The number of films produced rose by 27 from 103 in 2001 to 130 in 2002. The number of co-productions did not change after the significant leap forward reported in 2001. Fewer majority co-productions were made - i.e. where Italy is the biggest single contributor, dropping from 22 in 2001 to 17 in 2002. Italian minority co-productions rose from 13 to 17.
The sector that reported an authentic boom was in the investment of Italian capital in national film production: a total of Euros 277.6m (a 28.98 per cent increase on 2001).

130 films were produced in 2002, 34 of which were funded by the Guarantee Fund for Films of Cultural Interest to the Nation, three more than in 2001. These 34 films shared a total of Euros58m, compared to Euros51m in 2001. Furthermore 18 films of Cultural Interest to the Nation were funded under the terms of article 8, a special fund for first and second films. The Italian ministry for culture contributed Euros15.6m. In 2001, 11 films were produced under article 8 with the state contributing Euros8.5m. The Italian state contributed 26.5 per cent of the budgets of 52 films in 2002 (the previous year that number was 42 with a contribution of Euros60.5m)

Production	2002	Difference 2002/2001
Films produced (Italian + coprods.)	130	+27
Majority Coprods.	17	-5
Minority coprods.	17	+4

State Contribution/ Number	2002	Difference 2002/2001
Films of cultural interest financed	34	+3
Films produced with an art.8 contribution	18	+7
Total of films produced with a State contribution	52	+10

State Contribution/ Millions of Euros	2002	Difference 2002/2001
Contribution for films Of Cultural Interest to the Nation	58	+6
Contribution for films Article 8	15,6	+7,1
Total State Contribution	73,6	+13,1

Production/Investments in milions of Euros	2002	Difference 2002/2001 in percentual
Entrepreneurial investments in film sectors	204,0	+36,27
State Contribution	73,6	+13,1
Total Italian investments	277,6	+28,98

Source Anica

TV Investment in Cinema

Under the terms of Law n°122/98 (see box below), the Italian state broadcaster, RAI, must earmark part of its revenue from the licence fee (which is drawn up by the Services Contract) for the promotion of European audiovisual products. As of 1999, the quotas set down by the Services Contract cannot be less than 20 per cent.
The clauses that make up Law n° 122/98 were in part already being implemented by RAI in 1997 and 1998, based on a forecast of the Services Contract and the actual investments the broadcaster made during those two years were significantly higher than the required 20 per cent. In the exhibition sector in 1999, RAI invested a total of just under Lire500b (Euros260m circa) in Italian and European audiovisual products: around 23 per cent of their licence fee revenue and significantly higher than the 20 per cent minimum stipulated by Law n°122/98.

Law n° 122 dated 30 April 1998

The Law, which is an abridged version of d.d.l. 1138 on “guidelines for the communications system" and currently still being examined by the Italian Parliament, acted on the EU directives that had long been ignored by Italy. These directives defined the minimal programming and production quotas for European productions that state broadcasters were obliged to adhere to. The limits placed on state broadcasters were of particular interest to Italy’s independent producers because they should have guaranteed a continuous flow of money and resources.

In terms of company strategies in this sector, a policy of alliances between the leading industry operators gradually began to emerge. This strategy has already lead to perfecting agreements with operators like quali Canal+, Beta and Paramount, all of which raised the profile of RAI on the world’s audiovisual markets.

A company specialised in films, Rai Cinema, was set up on 1 December 1999. The aim of the company was to manage acquisition and sales of films and TV drama as well as other RAI film productions.
Rai Cinema’s mandate also included the development of initiatives in the film production field, using entrepreneurial techniques and also by means of joint ventures and alliances with distribution and sales, so as to guarantee Rai products a wider commercial exploitation with respect to just being included in the TV programming schedules.

Over Euros50m were invested in 2002 in Italian and European cinema. Last year, 35 films were green-lighted, the most costly one being Ermanno Olmi’s Contando sotto i paraventi, which got Euros2.7m. The average investment for a coproduction was Euros1.5m. The titles that benefited from this include Buongiorno notte by Marco Bellocchio, Il posto dell’anima di Riccardo Dilani, Il miracolo by Edoardo Winspeare and Il ritorno di Cagliostro by Ciprì and Maresco.
The total investment set aside for 2003 is the same as last year’s, and many of the projects by directors like Gianni Amelio, Giuseppe Piccioni, Marco Ponti, Oscar winner Danis Tanovic, Marco Tullio Giordana, Alex Infascelli, Alessandro D’Alatri, Silvio Soldini and Cristina Comencini are already in production.

Investment in TV Drama

TV drama production is rising with 765 hours’ worth aired in 2002 compared to 752 the previous year.
Rai passed a preliminary TV drama financing plan for 2003 with a total of Euros150m. “This is a clear sign of energy and continuity,” said Sergio Silva, the “godfather “ of La Piovra. It is also a step foward even if “the situation in RAI has not returned to normality and confusion with regards to investments is destined to continue for some time.”
This injection of cash means that the brothers Taviani will be able to produce their Tv-movie entitled Luisa Sanfelice, starring Laetitia Casta and Adriano Giannini. This international coproduction has an Euros19m, Euros8m of which contributed by RAI, and the rest from French TV and other partners. Max Gusberti, the head of Drama at RAI believes this is a sign that “despite all the tension in Rai at the moment, Drama is of fundamental importance and hugely popular with our viewers.”

Mediatrade, the drama arm of Mediaset, invested around Euros150m to produce 425 hours’ worth of drama and the forecast for 2003 is for an increase both of investments (Euros155m – Euros160m) and air-time (430-440 hours).
Guido Barbieri, the head of Mediatrade said, “There is no crisis at Mediatrade. The problems reported by APT (Italian TV Producers’ Association) regarging contracts still unsigned with production already underway, a drop in investments and in hours produced etc, are nothing to do with us. Mediatrade reported a slight increase in investments and in production which means more work for producers. Of course it is no longer possible for us to finance very high-budget mini-series on our own: quite simply, we must find new coproduction schemes, a solution to the problem much appreciated by the APT when we last met.”

The Italian film board, or Direzione Generale per il Cinema funds Italian film production by means of indirect intervention for feature-length and short films, and by direct intervention that take the form of premiums for quality and contributions to the box office takes.
Access to state funding for feature film production was regulated by Law n°1213 of 4 November 1965, and subsequently integrated and partially modified by Law n° 153 of 1 March 1994.

The size of the grant and the procedure for accessing it varies according to the whether or not the Italian film in question can be classified under one of the folowing two categories:domestic productions or productions of cultural interest to the nation.
1. Domestic productions
These productions are eligible for smaller grants – up to 70 per cent of the budget – but the procedure is much faster and depends on a decision by the Film Credit Commission. However there are a number of clauses linked to the production process (shooting in Italy or abroad, use of studios, etc.). It is also limited by the degree to which Italian companies enter into international co-productions. The money must be restored in full by the producer albeit at a favourable tax rate (around 5 per cent).
2. Films of Cultural Interest to the Nation
After getting the go-ahead from the Consultative Commission for Cinema, productions can receive funding under the following terms:

a) the Intervention Fund together with the Guarantee Fund (see Law 153/1994). A production can apply to be classified as being of cultural interest for “cultural and artistic reasons” or “artistic and entertaining reasons” and, according to the ruling of the above-mentioned Commission, these reasons must be “significative”.
The Guarantee Fund ensured that films by people like Nanni Moretti, Gabriele Salvatores, Francesca Archibugi, Marco Risi, Pasquale Pozzessere, Peter Del Monte, Mario Martone and Pappi Corsicato were made.

b) the Special Fund (see Art. 28 of Law n° 1213/1965 now modified by article 8 of Law n° 153/1994). Only first or second films need apply and they have to be acknowledged as being of cultural interest to the nation because of their “significant artistic and cultural merits.”
The following filmmakers made their debuts under the terms of article 8: Bertolucci, Bellocchio, the Taviani brothers. The state makes a financial investment in a product of a cultural nature. If the film does well, the state gets its money back, otherwise it becomes the owner of the rights to the film and can exploit it commercially.

Read the full text on the Istituto Luce web site.

In both cases, there is an upper limit on financing accorded of 90 per cent of the draft budget. The upper limit for first and second films is Euros1.291,1422. Elsewhere state funding can be up to Euros4.141.655 The Guarantee Fund can contribute up to 90 per cent of the loan for new directors and up to 70 per cent for well-known directors.

According to the terms of these laws, the State guarantees that the producer will give back the grant and obliges him or her to cover the residual 10 per cent and 30 per cent personally from the box office takes of the film(s) in question. In any case the producer must have a declared capital of at least Euros 20,000.

In both cases, there is an upper limit on financing accorded of 90 per cent of the draft budget. The upper limit for first and second films is Euros1.291,1422. Elsewhere state funding can be up to Euros4.141.655 The Guarantee Fund can contribute up to 90 per cent of the loan for new directors and up to 70 per cent for well-known directors.

According to the terms of these laws, the State guarantees that the producer will give back the grant and obliges him or her to cover the residual 10 per cent and 30 per cent personally from the box office takes of the film(s) in question. In any case the producer must have a declared capital of at least Euros 20,000.

In both cases, there is an upper limit on financing accorded of 90 per cent of the draft budget. The upper limit for first and second films is Euros1.291,1422. Elsewhere state funding can be up to Euros4.141.655 The Guarantee Fund can contribute up to 90 per cent of the loan for new directors and up to 70 per cent for well-known directors.

According to the terms of these laws, the State guarantees that the producer must give back the grant and obliges him or her to cover the residual 10 per cent or 30 per cent personally from the box office takes of the film(s) in question. In any case the producer must have a declared capital of at least Euros 20,000.