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» Report 2008
Part Three - ARTISTS AND THE MARKET
WORK AND CAPITAL
Chapter 4 - Companies and private enterprise
Research of Economic Data
As difficult as it is, the possibility of accessing various aspects of reliable, statistical data directly takes one to the possibility of using homogenous and linear measures concerning all of the various activities of the whole sector and of the identifying elements that permit the analysis of the dynamics and values of the market in relation to the specific sectors and their respective employment staff, and, above all, to judge their economic results in relation to their nature, origin, characteristics and the company typology of the various groups and business categories rather than the single reality of the companies and of the most important operators with the greatest strategical influence.
In this direction the richest and most complete source to draw on for research into the evaluation of economic and financial results offered by the companies and firms of every system of production in the country is found on the database of Cerved Business Information. On this database both material documents of the Italian Chamber of Commerce  (statistical data and annual balance sheets) as well as the reclassification and elaboration carried out by Cerved on that data are memorized on the databank ‘Infocamera-Telemaco’.
The trade names of all the companies found on national territory are subdivided into groups of ten ‘macro sectors’  on the basis of their activity. Incorporated into each ‘macro sector’ are various other sectors similar to diverse and more homogenous operative sectors which are, in turn, subdivided into still more specific sectors. On the basis of this classification, which was given the title ‘Ateco’ and in operation up until 2008, the macro sector being referred to is number 92 “Attività ricreative, culturali e sportive” (“Recreational, cultural and sports activity”) in which are included the companies of the cinematography sector – to be more precise “Produzione e distribuzioni cinematografiche e di video” (“Production and circulation of film and video”) with code 92.1 (given that 92.2 is dedicated to television “Attività televisive”) – divided, in turn, on the basis of the purposes and aims indicated in their respective social statutes into:
  • Cinematographical production and video (92.11);
  • Cinematographical circulation and video (92.12);
  • Cinema projection (92.13).
It appears that this registration could only be adapted in part to the realities of the Italian film industry, in virtue of the interrelations which have developed in time – above all with the influence of technological developments -  with other “adjoining” activities, just as the same cinematic service-products can have diversified uses often linked to other types of business, to the point of falling into diverse categories. In large measure pre-production and post-production services provided by companies, considered, for example, by Enpals as falling within the cinema category, do not fall within the classification of Italian Chamber of Commerce code 92.1.  The fact that a part of the companies of the sector 92.1 do not carry out only activity of production, edition, and circulation but also work in other colligated markets: in particular in terms of general video products, is also not excluded.
For this reason, in the same ATECO cataloguing it occurs that the total number summarized in section 92.1 never exactly corresponds – always in excess – to the numerical sum reported in the corresponding entries of the three single sub sectors.  It is always for this same reason that the ATECO classification of economic activities was recodified in conformity with the statistical classification of economic activities in the European Community commonly referred to as NACE and in effect from 1st January 2009. Thereby a new macro sector 59 “Servizi di informazione e comunicazione” (Information and communication services) was created and in which are found sector 59.1 “Attività di produzione cinematografica, di video e di programmi televisivi, di registrazione musicale e sonore” (Cinema production, video, television programme, musical and audio recording activities) which now refers to five different sectors:
  • Film, video and television production activity (59.11);
  • Cinema, television and video post-production activity (59.12);
  • Film, video and television circulation activity (59.13);
  • Film projection activity (59.14);
  • Audio recording and musical publishing activity (59.20).
In all likelihood the announced reform will have little prospective for improving the transparency of  the actual ‘core business’ of the companies (the sector of activity to which they belong, the type and destination of the products and the services), nevertheless, it has been evident for some time that a large number of companies set up to work in the cinema sector have preferred to work with clients from the television system.
The picture that emerges on the basis of the ATECO codification , in force up until 2008, substantially remains the basis for studies which are useful for clarifying, with a satisfactory level of reliability, the confines, dimensions, economic value and operational segments linked to the sector and which function to evaluate the real protagonists. It represents a starting point, a first step (worth repeating) with the objective of defining the market supply and productive system of the film industry in Italy; valid - before a process of multimedia integration in full course and with the evolution of digital technology reaching maturity – for elaborating also the role, contents, and new values that the national cinema is starting to represent.
The first element of analysis of the actual state of the sector and of the classification of its general magnitude is summarized in the table below. .



Elaborated from data of Infocamere-Cerved -
* As already shown, the values calculated by Cerved and referring to the whole sector do not express – due to the objective difficulty in classifying certain activities – the numerical sum of the specific data that the same Cerved attributes to three single ………… .

At first glance the magnitude of the numbers is surprising (almost 9.9 thousand registered companies and a further 9000 companies active in the sector). However, they do necessarily demand  profound consideration, in common with the whole company base of economic activity in the country. In general, a large part of the company names registered by the Italian Chamber of Commerce, are not companies with continuous activity. This circumstance is well adapted to the particularities of film production; above all to that of smaller companies, as demonstrated by the alternation of works carried out over time by the thousands of companies proposing themselves for public financing, a fact affirmed in the documentation of FUS (Fondo Unico per lo spettacolo).
Almost always, from the moment that new entrepreneurial initiatives are started,  the foundation of the companies destined to carry out those initiatives is formalized; often, however, the project remains on paper – for relatively long periods and sometimes even permanently – and therefore the formal registration of the company is requested by its promoters and is invalidated or autonomously becomes null and void (and the same cancellation request is, in turn, ratified and dealt with years later). Very often then, after an initial operational period, a large number of companies drastically reduce their commercial commitment, for a host of diverse reasons, or literally enter into a state of dormancy, waiting  (according to the best intentions and hopes of their founders) to once again become operative. It would therefore appear comprehensible that enrolment on the register, to avoid repeating in future the administrative and bureaucratic practices that legally serve for setting up an activity, continues to be renewed in the majority of cases.
These circumstances entail that the Chamber of Commerce census (relative only to acts of enrolment) normally shows a relatively  broad overestimation of company names actually operating in the sector3.
This phenomenon principally refers to those companies which are not limited companies – generally smaller companies – but to those that correspond to two typologies found in the civil code: partnerships and sole traders, into which merge 51.5% of the entire ‘corporate population’, equal to 4,671 company trade names (in the new companies registered in later years the percentage rises by as much as 70%).
To a lesser extent the phenomenon regards another of the legal forms defined by the civil code – in this case for the 4,400 limited companies – which registers, in this case, a high number of companies including those of extremely small structure: the private limited companies (in Italian S.r.l. or “Società a responsabilità limitata”) which, on their part, amount to 40% of the corporate total. This is not necessarily equivalent to claiming that these enterprises are by now finished. The MiBac report on the use of FUS for example, testifies that it is in fact the partnerships (società di persone) that access  73.1% of the funding of the sector as opposed to 26.9% of that destined for limited companies, with an allocation of the latter of 24.4% regarding the S.r.l (private limited companies) and a mere 2.5% the S.p.A.(4)  (“Società per Azione” – a joint stock company similar to a Public Limited Company in the United Kingdom).
This is why the composition of  cinematographical companies in terms of legal form is significant.4.



Data provided by Cerved up until 30th September 2007.

These terms of division between the various legal forms are equivalent, as stated, to those of all the other sectors of activity, without particular fluctuations. Furthermore, the same mobility of the companies, both large and small, is confirmed in line with the general trend of national entrepreneurial productivity.




Data provided by Cerved at start of 2007 -
* The values calculated by Cerved and referring to the whole sector do not express – for the objective difficulty of classifying certain activities – the numerical sum of the specific data that the same Cerved attributes to single considered sectors and the figures always result in excess of the arithmetical total..





Data from Cerved January 1st 2007 – the macro sector of reference (Ateco) is “Attività ricreative culturali e sportive” (Recreational, Cultural and Sports Activities).

In the same measure also the indices of the longevity of the active cinematographical companies result in line with the average of all Italian companies. Indeed, for reasons already explained – and even if in counter-tendency to how much one would think – all companies in the cinema sector that have been operating on the market for over a year tend to have a higher survival rate not only than those generally in industry and services of the country, but also to those belonging to the macro sector  “Attività ricreative culturali e sportive” (Recreational, cultural and sports activities).


3 They are not joint stock companies the individual proprietorships and partnerships. An individual proprietorship has a juridical subject which is a physical person who answers to the eventual company shortages with their own assets. Such a company, therefore, does not enjoy patrimonial autonomy: if it is declared a failed company, also its management are considered failed. As far as fiscal taxes are concerned, the income of the company is subject to IRAP (Imposta regionale sulle attività produttive – Regional Tax on Productive Activity) and IRPEF (Imposta sul reddito delle persone fisiche – Income Tax on Individual Persons). There exists, furthermore, simplifications relative to the accounting that financial administrations concede: for example, the simplified accounting which consists solely of VAT. These are conceptually similar to the individual proprietorships of family businesses (formed by 51% family heads and 49% relatives) and those which are conjugal (formed only by husbands and wives). Partnerships are characterized by an imperfect patrimonial autonomy, that is in which the property of the company is not perfectly distinct from that of the associates, against which creditors may take legal action (if the company property is not sufficient) also from the property of an associate. One can have a ‘simple company’ in the case in which it is not necessary to perform commercial activity, however, there is the necessity to manage an activity (agricultural or professional, such as, for example, an associated studio); an unlimited partnership in which all of the associates are equally responsible and with all of their patrimony of obligations of the company or a limited partnership in which the associates who are general partners respond in the same foreseen measure for the company in the name of all associates, whereas the associates which are limited partners respond, in a limited sense, to conferred capital. In all three cases there is no need to enter a minimum of capital, however, it is necessary to arrange a constitutive act and to draw up a balance sheet (which, however, need not necessarily be deposited – as occurs in the vast majority of cases – in the register of companies).
The joint stock companies, however, are subject to their own juridical person and enjoy perfect  patrimonial autonomy (their property is distinct from that of their associates). The recognised forms from Italian rights are: società a responsibilità limitata (private limited company), società per azione (a joint stock company similar, in the United Kingdom, to a public limited company) and società in accomandita per azioni (a hybrid form involving two categories of shareholders, some with and some without liability).  In the latter, the general partner associate (administrator) responds in an unlimited sense with his or her property to the company obligations if the patrimony of the company is not sufficient. Joint stock companies have the obligation to deposit a minimum capital and to approve the annual balance  which is given to the register of the Italian Chamber of Commerce in which the company has a legal site. They are, therefore, subjects obliged to edit and publish their financial balance sheets or their patrimonial situation: the limited or joint stock companies (article number 2423 of the Civil Code); the società in accomandita per azioni (article 2454), the private limited companies (article 2478), the co-operative companies (article 2519) andtheir consortiums; the mutual insurance companies (article 2547); the so-called GEIE or European Groups of Economic Interests (decree number 240 of 1991); the consortiums of foreign activity (art.2615); the consortium companies of limited responsibility (article 2615); the autonomous lyrical organizations, the concert institutions and all the other institutions operating in the music sector, the theatre, dance, which have been transformed into foundations of private rights (article 16, paragraph 5 of the decree number 367 of 1996 like article 6 of legal decree n.134 of 1998). For the joint stock companies there remains the obligation to make public – through the deposit of the register of the Italian Chamber of Commerce – the true patrimonial, financial and economic situation. (Source: Italian Chamber of Commerce).
4 The percentage subdivision of funds refers to both the number of contributions deposited as well as the value of the conceded finances. These proportions change solely as far as the incidence of collected requests in comparison to those presented: to the specific entries of direct sustenance for production the met requests correspond to 40% of those advanced for the non-limited companies, and 50% for public limited companies and a mere 10% for private limited companies.

 

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