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» Report 2008
Part Four - INTEGRATED AND CONCENTRATED
THE FORCE OF A CLASS
Chapter 6 - Groups and companies: the principle organisations
Holding and Dominant groups
The first sketches offered are, by their very nature, as such as to connote the entire scene. In confirmation of an historical impression (in other words ‘atavistic’) which standardizes film making, resulting from the analyses of the corporate profiles carried out through the databanks of the Italian Chamber of Commerce what clearly emerges, in effect, is the force of a “class”, that is, the influence of the major operators, those at the top of the industry, and their exercise of power over the sector. In particular, thanks to the organizational and managerial models imposed on a network structure, with the presence of their own companies within the various sectors, permits complete productive autonomy as well as an extended control of the system which penetrates the market in both the phases of distribution and direct and indirect sales (this can be considered as the transfer of rights on the ownership and utility of the production).
The quota of companies belonging to the same group within the cinema sector is superior to those of other entrepreneurial sectors of the nation whether they are in industry or services.




Elaborated from CERVED data -
* The latest studies available date until the end of 2006 – The group is defined by references to the financial links subsisting between holding head groups and controlled or colligated respective, resulting from the deposited balances of the ‘Company register’ – “Attivita’ ricreative culturali e sportive” which is, according to the codification ATECO, the macro sector for the cinema industry..

Aside from the statistical studies regarding the number of companies which are under, or financially linked to the same group, it is, nevertheless, simple to reconstruct the true economic dimensions of either the phenomenon in its entirety nor of the business volume accumulated from every individual holding thanks to the activity carried out within the diverse sectors.
Only 50% of these ‘conglomerates’ of the cinema draw up, aside from accounts of the respective companies, also those which are consolidated, that is, the reports which reassume the various obtained incomes in the course of a year also considering the relations which are of economic groups, thereby rectifying eventual superimpositions or duplications. For the other 50% of the so-called universe of reference it is necessary to, as a consequence, rely upon a reworking (formally “empiric”) of the posts put on balance by the respective controlled or related companies.
The information revealed in the preceding table is, nevertheless, extremely significant and supports the research, for the first time, in offering with this an analytical outline of the principle companies represented by Italian and foreign holdings present on the national market. The following table, on the other hand, has been edited in such a way, without objective claims to exhaustiveness, through the most complete screening of company accounts possible and the successive selection of companies which are linked or financially connected to a group, therefore with the processing of data collected from the accounts available from the selected reference samples.
There is, nevertheless, a second caution: the classification order followed is principally based on an objective of expository clarity and speaking of pure ranking would appear improper. No index recapitulates the amount of turnover of every single company and it results genuinely problematic to individually compare all of the financial statements of the thousands of limited companies which are active and registered with the Italian Chamber of Commerce and then draw up an exact order according to the amounts of their respective earnings. The balance sheets and profit and loss accounts of the single companies, moreover, are not necessarily uniform: despite the presence of accounting principles fixed by law and by administrative and fiscal rules, their interpretation and application – as indicated by financial practices – are never univocal. This is particularly so as far as the proceeds indictments of the diverse activities are concerned.
Such customs of financial analysis testimony, furthermore, to how fundamental it is to construct an initial classification which is specific to the field of research (and the prospect which follows is an example application of this) in order to arrive at a further, eventual completion of research..



Elaborated from CERVED data and accounts, Infocamera – Business Register and the Italian Stock Exchange (Borsa Italiana) for the quoted companies Rai, Mediaset and Mondo TV -
* The Mediaset balance is consolidated in that of the holding Fininvest but does not draw up, in turn, a consolidated balance -
** The reported financial data correspond to those pertaining to the sole cinema activity (whereas the number of staff – where it has been found to be impossible to reconstruct the specific allocation – refers to the total activity) -
*** The business year of Sony, The News Corporation (20th Century Fox), Filmauro and Giometti do not coincide with the twelve months of the calendar year from 1st January to the 31st December and the respective balances are closed 31st March, 31st May, 30th June and 31st August of each year. The balance sheets of the Furlan Cinecity Group are relative to the year 2006..

Apart from the objective implications for employment recruiting, elaboration and the evaluation of the figures to be considered, this ranking table with its general indications furnishes a preliminary outline of the state of Italian cinema (verifying and sorting, moreover, the themes and theses principally discussed at the dialectic level) and represents a synthesis of the compositions – with relative assets – of market supply and its leaders. Principally, so far as the grades of integration and concentration are concerned, this defines the ‘upper class’ of the cinema sector, those clusters which remain at the top of the cinema industry pyramid.
It demonstrates, furthermore, a first, simple consideration: the value of production of the first 10 corporations within the field of stringently cinema activity (over 2,035 million) is greater than the volume of revenue that the usual consumer reports, in terms of performances and entertainment, credit in total, as market demand, to the cinema industry. This entails that the economic activity generated by the cinema in Italy is, indeed, physically and physiognomically a great deal greater than how much is typically claimed.
It is also necessary to point out that the group structure derives from the choices and exigencies which are, by nature, organizational, managerial and occasionally financial, but they do not necessarily coincide with the highest classes in terms of dimensional scale. In substance, they correspond to a conception of the strategy of market presence which can disregard the relative large scale of conducted business, as is the case, moreover, for the last groups indicated. In contrast, there are companies classed as no holding, without colligated and controlled businesses or subsidiaries, which, at times, feature (as can be ascertained by what follows) superior turnover; similar to a large number of the same companies which depend on a group leader often register incomes which are singularly greater – even, at times, by large amounts – than those earned by other groups in the totality of their activity.

DUOPOLY AND FOREIGN MAJORS

The significance of the term ‘conglomerate’, in any case, results in the need to state the following points.
  • Without doubt the presence of the two major, national communications companies, understood in their numerous forms (performing arts, culture, information, entertainment, artistic activity...): one in the public arena, Rai, the other private, being the group leader Mediaset which incorporates controlled companies under the trade name Medusa whose mission is to safeguard the cinema sector, is certainly a relevant point.
  • The positioning of the companies reveals two basic conditions. 1. In line with the organizational and managerial evolution which constantly innovates the production system, the most developed communications operators have progressively broadened their sphere of activity in the last ten years, searching to consolidate their presence in all areas. Following in the footsteps of the technological revolution, large editorial and cinematographical complexes (such as the legendary studios of the United States), as opposed to the giants of information technology and entertainment – such as Walt Disney and Sony – understood, very early on, the rapid integration between diverse forms of communication as well as the opportunity to exploit their specific know how within the contiguous areas of their primary social objectives. 2. As such, between acquisitions and cross mergers, incorporations or activity scales which are, more or less, friendly, the larger companies have gradually widened their interests from the initial core business to the parallel markets of communication (so-called info-entertainment) thereby realizing, in terms of financial, managerial scale, and, above all, in marketing terms the typical role of corporations which are multi-national and globalized ahead of their time – theorized by the historical gurus Joseph Schumpeter, Alfred P.Sloan, Igor Ansoff and Alfred Chandler.
  • In particular, cinema and television, together with the gradual convergence of technical standards, has resulted in their original, creative and productive concepts becoming ever closer – even if gradually. In Italy such a situation has also been accentuated by a second fundamental condition. In the case of Rai and Fininvest-Mediaset, there has existed, for about a quarter of a century, the possibility of depending upon a notable economic force which the peculiar asset of the national television system has conceded with the formation of a duopoly which constitutes a rather uncommon situation on the international scene. Their capacity to gain the resources generated by the publicity market has, in effect, created an advantageous position for financing development and, as such, has enabled them to maintain expansion which, otherwise, would have been greatly more difficult and open to risk.
  • Only in Brazil, Portugal and Poland, among the 40 most developed nations in the world, is the quota of investment in television advertising greater than that registered in Italy, equal to 53.5% of almost 8.6 billion euro which, according to the most recent surveys of Nielson corresponds to the total costs of advertising companies and announcements of all media outlets in 2008 (furthermore, this is the lowest figure of the last 25 years, in the course of which the average spending oscillated between 58% and 55%). The fifth state for which the percentage is greater than the 50% mark is Japan, whereas in the remaining 35 nations advertising costs maintained by advertisers on television networks have always been less, not only less than 50% but also less than that effected on other single means of communication, starting with the daily press and periodical press.1
In terms of absolute value the amount of Italian investments occupies seventh place in the world, only threatened today by the massive growth of China. Furthermore, as noted, in Italy over 80% (in certain years exceeding even 87%) of these advertising sector resources have been constantly destined for the six networks of the two poles – public and private – of the television sector.
  • The duopoly Rai-Mediaset excels in serving as a rival attraction to the fact that the other eight operators present in the first ten positions are under the control of shareholders and capital which is primarily foreign: six properties are of United States nationality, another is Anglo-Australian and one is Japanese. This confirms the predominance which American media groups have, for the last ten years, exercised on the European market, from the moment that the trade names and studios belong to five of these holding groups which have made the story of Hollywood and of international cinema.
  • The existence of the entity that is the business volume of the Walt Disney Company also deserves mention, this is the Italian group leader for the cinema (films, animated cartoons and documentaries of Disney Nature) which is under the direction of the international sub-holding Walt Disney Studios. With an amount of 314.15 million it was not added – due to the lack of appropriate data – any other proceeds, even though the well-known Disney Store Italia, which is occupied with merchandising for the whole group of Burbank, has, in its catalogues, a large number of products which are indubitably correlated to the production of films and cartoons. This commercial company, in 2007, has invoiced through 11 direct sales outlets 43.26 million euro with a profit of 6.2 million, furthermore, the most reliable estimates credit a value of around 17 million euro to the ‘spin off’ articles of cinema production sold in Italy. It should also be pointed out, for the record, that in completion of the Italian Disney scene, the robust turnover of the editorial and publishing division The Walt Disney Co. Italia (dependent on the other sub holding Disney Enterprises) which publishes and sells magazines and periodicals for a total amount of 239.9 million euro with a profit ratio of 8.5 million.

ORGANIZATIONAL STRUCTURE OF RAI AND FININVEST-MEDIASET

As to the specific connotations and eventual characteristics which can be associated with the various central groups of Italian cinema it would appear useful to evaluate certain other summary data. The two national leaders have given themselves an organizational structure which is in part similar and also, in part, dissimilar.




Elaborated from accounts of Rai and Fininvest 2007.

In Rai, where the organization chart is for functional planning and essentially based on types of activity carried out, there are five principle areas: television editing; radio editing; new media; advertising; transmission. The first is principally involved with concentrating business of the public holding which is under the Ministry of the Economy (only a quote equal to 0.44% is deducted by SIAE) and includes four divisions: Networks, Information, TV support, Products. To the last of these belong two dedicated companies with which Rai operates in the sector, Rai Cinema and the 100% controlled 01 Distribution, which, moreover, do not exhaust the commitments, thanks to another two entities – Sipra and Rai Trade which compose the commercial area – and to which the management of interests in terms of publicity (product placement for produced or distributed films and commercials and announcements projected onto cinema screens) as well as the sale of rights are delegated.
  • As far as Mediaset is concerned, however, the outline is more pragmatic and, it can be said, “private” for the conglomerate Fininvest (almost entirely owned by the Berlusconi family through a series of financial holdings which are distinguished only by their progressive numeration), where the expansion and diversification of activity has occurred, over time, in the acquisition and incorporation as well as the protection of every sector or area seen in corporate form.
    Controlled 39.76% and quoted on the Milan stock exchange with floating funds equal to 60.24% of shares (37% in the hands of foreign investors and 23% Italian), Mediaset is a sub holding for the television and cinema areas, in the same way as Mondadori (50% owned) for the publishing industry and Mediolanum (35%) for financial services, both quoted on the Milan stock exchange (Piazza Affari), then there is Milan football team (100%) for sports and Teatro Manzoni (100%) for the theatre. Furthermore, within the Berlusconi operative area are included five leading companies: RTI which incorporates the core institutional business of television and cine-video productions; Publitalia ’80 for local advertising shares; Telecinco (the only one which does not entirely participate, with a quota blocked at 50.13%) which is basically the photocopy of RTI for the Spanish market; then Mediaset Investments SpA (plc in English) and Mediaset Investment Sarl (Ltd. in English, more or less) as the ‘safeguards’ of all properties and participations abroad.
  • To properly individuate the cinema companies it is necessary, therefore, to descend from the second and third levels of Mediaset and RTI to the fourth level, where the truly operative companies, such as Medusa Cinema, Multicinema, Medusa Video (all 100% controlled) and Med Due s.r.l. are found. These are 75% connected, given the 25% partnership with the producer Pietro Valsecchi who, in 2008, ceded his company Tao Due – to which are collocated, at the fifth level, Cinecitta Digital Factory (15%), a recent initiative started in collaboration with the public holding, and that of Medusa Film (100%) which previously had had all cinema activities in its possession, then passing on to incorporation into RTI with an inter-group operation which has been given a memo value of 152 million euro, charged to RTI. Also in the case of Fininvest publicity and rights for the cinema screen are, in every case, entrusted to companies outside of the strict limits of the cinema industry, in other words to Pubitalia ’80 and to the same RTI. Also other companies which are active within the cinema sector are under the leadership of Mediaset, including Cinematext Media Italia (with a revenue of 535 thousand euro in 2007), the Spanish Telecinco Cinema Sau (19 million) and Cinematex Media sa (1.7 million).
  • Organizational structures aside, the business model of Rai and Fininvest-Mediaset in the cinema industry are more or less the same, in response to an analogous history which has seen them integrate film production into the institutional mission of the television, in periods of time which are rather close together: Medusa was directly acquired at the end of 1995 by the then ‘Silvio Berlusconi Communications’ directly from the founder (1988) Franco Poccioni (father of Marco, co-founder with Marco Valsania of the actual Rodeo Drive), however, it principally developed between 1999 and 2000 when numerous collaboration agreements were reached in Italy (in particular with the ex Cecchi Gori Group) as well as abroad; Rai Cinema in December 1999 and 01 Distribution in June 2001. The objectives behind such agreements were, moreover, convergent: on the one hand, to better face the European regulations concerning the amount of television programmes destined for national products; and, on the other hand, to better exploit the achievable synergy between the two audiovisual activities, from the creative point of view as well as from the commercial point of view. Fininvest-Mediaset has, if anything, progressed a step further, directly involving itself in business affairs, having ten multi-screen cinemas, also in virtue of a certain real estate know how of the parent company plus a certain territorial rootedness in certain determinate geographical areas of northern Italy.




Elaborated from accounts 2007 -
* B&D Holding does not draw up balance sheets and the revenue has been estimated on the basis of the sales revenues of the four principle sub holdings which form part of it..


ORDER AND ORGANIZATION OF THE MAJOR COMPANIES

The integration and concentration of the structures within the two national leaders is, nevertheless, attested to by a level which is even less than major foreign companies, where the cinema sector assets are not only part of a more extended production apparatus which incorporates all, or almost all, the communication and entertainment activities (Disney, AOL Time Warner, Viacom, The News Co. of Rupert Murdoch) but also a corporate agglomerate that also includes other macro sectors (Sony, General Electric) of a totality which is, at times, surprising. This is principally in light of the fact that during their progressive expansion the major American companies, for almost half a century, have maintained their studios at the head of their operations, in other words the respective companies which controlled and physically incorporated (in the sense of ‘logistically’)the making and production of films. Half way through the 1970s, however, there began a transformation – at the beginning gradually and according to industrial projects, then incrementally and inspired by the financial euphoria of the times – a transformation which constantly shifted the central activities further away. From centripetal the movement became centrifugal.
This, however, does not concern a one way system. This is because the forced growth induced by the logic of competition (and imitation), which often triggers the most relevant and delicate economic processes, obeyed the laws of attraction also at the base of the cinema system, bringing with it aggregation around the ex studios – with acquisitions, mergers and alliances of mutual interest – for a growing number of businesses, distribution companies and independent firms. Also a large number of these wanted to preserve a certain autonomy, however, they then joined together through agreements, understandings, and collaborations of various types, according to a role which in Hollywood is generally defined as ‘sub-contractors’ and which is beginning to be reproduced in Italy. It is through a series of financial joint ventures with a value of 1 billion dollars with the companies of eight Hollywood stars (among which, Smoke House Productions of George Clooney, Saturn of Nicholas Cage, JC23 of Jim Carey, and Plan B of Brad Pitt) that the Indian producer Anil Ambani is trying, for example, to conquest the international market through his Reliance company of Mumbai.2
  • These are the rules of the market. A very similar situation occurred successively in Italy; where Rai and Fininvest-Mediaset continue to employ a business concept which has its reference range in multimedia publishing and communications, without, for the time being, the prospective of involving further incorporations or diversifications (apart from certain approaches of the News Corporation of Rupert Murdoch to the Berlusconi empire).
  • The organizational plan, despite being somewhat schematic, of the current six major companies found in the following table attempts to outline the connective lines between the ‘central headquarters’ and those companies which supervise the cinema sector at the level of groups, of national and European markets, up until those which are properly operative.
  • As common as it is to identify the major companies with Hollywood, defined also as the world capital of the cinema (as well as of United States television and radio), it should be pointed out that there have remained very few true general zones of the international cinema in the suburbs north of Los Angeles – with 200 thousand inhabitants. Of the actual parent companies Sony is Japanese and The News Co. is Anglo-Australian. Of the major production companies which still genuinely make films in the area the only one is Paramount, which is also the longest standing.
    Whilst Hollywood titles remain shining examples, it is, nevertheless, difficult to retrace the tracks of the entrepreneurial heredity left behind by those who created Hollywood from the artefacts of the industry’s golden epoch. This is between the 1930s and 1950s, a period marked by The Big Five: Paramount, MGM – Metro Goldwyn Mayer, Warner Bros., RKO and 20th Century Fox for which the ‘mini-majors’ of Columbia, Universal and United Artists served as assistants. These were referred to as The Little Three, and occupied a second place position given that they did not have cinema halls and, therefore, did not control the whole industrial cycle constituted by production, distribution and the running of cinemas, a position that was occupied, practically in a monopolistic sense, exclusive to the five majors.
  • It is enough to consider the numerous handings over which have occurred over the years and the changes in corporate philosophy which have accompanied them. Before belonging to Sony, for example, Columbia actually belonged to Coca-Cola from 1982 to 1987, when it brought about, along with HBO, the company Time Inc. as well as the grand television network CBS brought about Nova Pictures which then became TriStar. United Artists, founded in February 1919, by four great actors and directors Charles Chaplin, Douglas Fairbanks, Mary Pickford and D.W.Griffith (it was the first time that artists took the reins of a company a situation which was defined as “the insane who took possession of the mental asylum”, following that it was taken over by MGM with the massive debts accumulated from the expensive 1980 flop “Heaven’s Gate” by Michael Cimino, and in the hands of Ted Turner for 74 days (in 1986) it passed, at the beginning of the 1990s, together with “Casa del Leone”, through the failure of the consortium formed by Giancarlo Parretti and Florio Fiorini, with the backing of the French bank ‘Credit Lyonnais’, before finally arriving in the hands of Sony, which has, as a minor associate, another multinational – Comcast Corporation.
    Pixar, initially formed as a division of Lucas Film of George Lucas, was acquired in 1986 by Steve Jobs, co-founder of Apple Computers, then, nine years later was given over to Walt Disney which gave everything in order to give an innovative slant to all of its productions. Furthermore, to the Burbank corporation, always in California, the company created only 14 years prior by the brothers Harvey and Robert “Bob” Weinstein, that of Miramax – taken from the name of their parents, Max and Mira, - was given over. Miramax was the protagonist of one of the last great exploits of the film industry in Hollywood in 30 years, capable of renewing the magnificence of the golden epoch (however, the Weinstein brothers, in September 2005, broke off all ties with Disney).
    A second tormented history is that of Dreamworks SKG, a studio constituted in 1994 by the director Steven Spielberg together with the ex head-animator of Disney, Jeffrey Katzenberg, the record producer David Geffen (hence the acronym SKG) and the co-founder of Microsoft, Paul Allen as financial investor. Sold in October 2003 to the Universal Group, it was then acquired in February 2006 by Paramount Pictures, controlled by Viacom, and with the management of the communications holding such divergences emerged which conducted, in only two years, Spielberg and associates to obtain a handover, with yet another turnaround, to the Indian conglomerate Reliance Big Entertainment of Anil Ambani, the third private group of the country and number one in Bollywood, in agreement, however, for distribution with Disney.




    Elaborated on data taken from the annual reports of the companies and the data of ‘Variety’. The indicated sub-contractors, moreover in continuous fluctuation, are only a select sample of those effectively linked to diverse companies.


  • This involves, however, brief suggestions to signify how, through the history of Hollywood majors, the greater part of cinema publications have been written, as such, given their more recent vicissitudes one could more appropriately and paradigmatically write manuals on the finances of Wall Street. Furthermore, the dimensions of the domestic, cinema industry, as in Europe, have become, if possible, still more distant from those assumed by the large international holdings of the film industry. This is principally because the financial propulsion which, in the last ten years, has pervaded the economy has also consolidated the constitutional nature of integrated groups which are fundamentally functional, moreover, to the process of globalization which has pervaded the market with the contextual availability, in real time, and in almost every corner of the world of products, works and technological solutions.



    Elaborated on data taken from the 2008 annual reports of the indicated groups on the basis of the euro-dollar exchange (1.35) on 1st January 2007.

  • What can be described as eloquent, in a table which is already explicit in itself, is the almost negligible weight that Universal Pictures ends up with in terms of General Electric, the number one company in the whole world with 319 thousand dependents in five continents, 18.1 billion dollars (13.4 billion euro) in gains and absolutely the largest capitalization on the stock exchange, episodically threatened by Microsoft. Also activities which are decidedly industrial carried out in Italy represent modest percentages in comparison to the group businesses. Thomson Italia represents, for example, 3.29% of world revenue and 9.11% of European revenue, carried out by the cinema parent company (Technicolor Italia in particular constitutes only 2.5% of the total turnover). Furthermore, if Kodak Italia manages to count for 4.06% of the proceeds of Kodak Entertainment Imaging, the sub-holding which includes the FSP – Film System Products division, dedicated to motion pictures for the cinema, its amount of business turnover of the principle holding, the Eastman Kodak Company of Rochester, in the state of New York, reduces to 1.47%.
  • Apart from Rai and Mediaset in the stock exchange values of Milan, also the other group leaders of the ‘top ten’ are quoted on the lists of New York, London and Tokyo. This corporate planning reflects organizational assets and managerial models of a complex nature as well as, obviously, reflecting operative sizes: it is estimated that the first ten companies total about 37% of the entire value of productions resulting from all the activities generated on the supply market by the cinema industry in Italy.
On the other part of the rating appears a unique company to have chosen to put on the market its own titles: Mondo TV spa, the third and last cinema company – of the over 9 thousand Italian companies which are active – to open its own capital to outside associates as institutional investors as opposed to private shareholders, quoting itself on the Italian ‘Expandi’ list of the Milan stock exchange. Also Mikado belongs to a group which is present on the Milan stock exchange, the De Agostini spa (plc.). However, not with its direct controlling company, De Agostini Communications (which also includes the participation of 10% of the group Cattleya, with the exception of Magnolia Productions TV of Giorgio Gori which invoices 60 million euro and the Spanish broadcasting company Antena 3) which was acquired from its founders Roberto Cicutto and Luigi Musini in 2005 and which represents 6% of the revenue; and neither with the principle holding B&D Holding (Boroli and Drago are the two families which hold the capital).
  • Mondo TV is, furthermore, the Italian group – together with Filmauro – which has a direct presence in the international field, not only through collaboration agreements or the acquisition of rights. Established by Orlando Corradi, who holds the majority with 51.4% of the shares (the second principle shareholder, with 4.9%, is the investment fund Simphonia Sicav, whilst the remaining 43.7% is distributed on the market) and controls nine principle companies of which five are located in Italy (Mondo Home Entertainment, group leader of Mondo Cinema-Moviemax and Mondo Licensing, then Mondo Distribution and Doro TV Merchandising) and four located abroad: MIM – Mondo Igel Media, Mondo Entertainment GMBH and Map Music & Picture GMBH (operating in Hamburg, Germany) as well as Mondo TV France Sasu located in Paris, France. The business activity is still principally orientated towards the Italian market (82% of revenue), however, it also includes the rest of Europe (13%), Asia (4%) and America (1%). Total revenue amounts to 21.03 million from the home video sector, 12.88 from licence concessions, 5.41 from cinema distribution and 1.12 for production services. According to the specific types of product, such income is referable to film and home video for 30.72 million and to animated cartoons for 4.23 million.
  • As far as companies quoted on the stock exchange are concerned, it has been revealed that during 2008, following the international crisis of the financial and real estate markets which hit the economies of all countries as well as the stock exchange lists, their capitalization suffered serious knockbacks in general measures and, at the end of the year, on average descended to a third of the values signalled by fixing at the end of 2007.
  • The summary outline of the principle holdings present in Italy also underlines the importance and role which companies, not meant as traditional cinema companies – that is, companies dedicated to the production, distribution and finance of films – although tightly linked to the business of the cinema and as such as that which is defined “large sector”, place on the supply market. Thomson Holding Italy, which has sites in Anagni (Frosinone) and is under Thomson Multimedia Sales International sas, is the first important protagonist of the manufacturing industry linked to the cinema, as absolute leader in production, registration and reproduction of motion pictures and videos through Technicolor of Rome and Technicolor Milan of San Giuliano Milanese. The “factory” of Technicolor and Eastman Kodak are industries which furnish what can be called the raw materials; Deluxe Holding (of the Deluxe UK Holdings Ltd. group, of London) is the most important company concerning processes of post-production with its laboratories of development and printing; Blockbuster is the trade name of the Viacom Group world leader in distributive channels for home entertainment both as far as direct sales (the ‘sell through’ sector) and rental are concerned.
  • Jointly with Rai and Mediaset there are – of the 37 companies considered in the reference sample – another three national ‘conglomerates’ which work in all fields of the sector, with structures for production and distribution as well as for screening: Cinecitta Holding, of public capital, Filmauro srl and IIH – the Lucisiano group controlled respectively by Aurelio De Laurentiis (100%) and Fulvio Lucisano (51%), undoubtedly two of the most important figures in Italian cinema productions.
  • In 2008 Cinecitta Holding began an intense phase of restructuration which resulted in the incorporation of Filmitalia, a company dedicated to the promotion of national cinema (in particular abroad), this restructuration also resulted in the handover of 100% of Mediaport and Globalmedia and 75% of Mediaport Cinema, all with sites in Rome (whose business activity is included in the consolidated financial statements of the period under consideration), and in the public sale of the participation quota of 25% and of 50.47% in Cinecitta Studios and Cinecitta Entertainment to the newly formed IEG – Italian Entertainment Group of Rome on the part of four associates Luigi Abete, Diego Della Valle, Aurelio De Laurentiis and the family Haggiag (who, due to the lack of financial data for 2007 still do not appear in this classification). In the realm of consolidation there is, therefore, only the Istituto Luce, 100% controlled, whereas Circuito Cinema di Roma (Rome Cinema Circuit)(75%) and Lumiere di Catania (50%) remain excluded. Of the latter, we can also include Cinecitta Multiplex and Cinecitta Fund because (in as much as they are 100% owned) both are in liquidation; Anteo of Milan, which manages a homonymous business, in the course of being transferred has a participation quota of 25%. In conclusion of the various operations of company reorganization public holdings have maintained, in IEG, a participation of 25%.
  • Aurelio De Laurentiis is an active operator within the whole cycle of film production, however, in the private realm. De Laurentiis’ Filmauro presents, in reality, a container company – a ‘jack of all trades’ – in which results every form of activity carried out, more than that of a group which is rigorously structured. It consolidates, in effect, 16 diverse company names: Fast Lane of Beverly Hills and Adel Productions of Rome for production (with a turnover of 13.1 million euro) and distribution (with a turnover from the theatre of 22.5 million, 6.3 from home video and 3.9 from television); Cinema Europa, Cineservices, Sautec, ESI – ‘Esercizio Schermi Italiani’ for cinema projections (13.1 million in revenue); Radiofilmusica of Rome (the use of music in cinema), CCGS (use of image rights), Auro Servizi of Rome, Olimpia 80 Immobiliare (Real Estate) and Ionio for the services sector; Auro International B.V.. Cineparco, Trastevere IG and Dinamica, all in liquidation; and even Napoli Calcio (Naples Football) (with a 2007 turnover of 16.68 million, exclusive of the amount indicated in the table) as sports entertainment activity, of which De Laurentiis is both president and first shareholder. In total Filmauro has a production value in Italy which is equal to 46.48 million (77.8%) and abroad 13.29 million (22.2%).
  • The Lucisano Group includes, for its part, under IIH – Italian International Holding eight subsidiaries (that is, with at least 50% of the quota owned by Lucisano and daughters Federica and Paola who now assist him in management) and four connected companies, without the opportunity, moreover, of distinguishing with rational certainty the activities carried out by the various trade names between production, distribution and finance, in the sense that certain companies operate in a diversified fashion in numerous sectors. For example, they operate both in production and in distribution (it has, in fact, been present on the Italian market for almost fifty years in the course of which it has produced and distributed over 500 films) and, as a guide, according to the financial balance sheets, would appear to cover with two activities 68.97% of the turnover (61.17% with IIF – Italian International Film and 7.80% with Italian International Entertainment and Keimos) and earns a further 26.16% through the projection structures Stella Film of Naples, Italia International Movieplex of Rome and Goodwind of Benevento.
  • The table also fails to include another famous “historical” name in Italian cinema, that of Cecchi Gori, however, the last living structure of the national ex number one, Cecchi Gori Home Video, only preserves the name and, from the moment that it was in extraordinary administration and entrusted to the entrepreneur Marco Duradoni of Prato, 25% shareholder, who already led his own company General Video (2.7 million revenue) which produces the DVDs of Roberto Benigni, plus another two lesser companies (DDD and Myra Film which he controls at 80% and 50%).
  • The market space which the Cecchi Gori Group had known how to conquer, also outside of Italy, is becoming, however, a part of the Rainbow company of Iginio Straffi. From 1995 to the present, the creator of the Italian cartoon fairy ‘Winx’ has created a holding which invoices, thanks to his cartoons, over 45 million euro, 12.6 of which, as producer and film distributor through the new Roman hub of activity Buffalotta which has over 100 staff and which Buffalotta has added to the original site of Loreto (Ancona) where editorial and merchandising activity is concentrated, corroborating, even more, to the development of the cinema industry.
  • In a general outline of Italian cinema it is also important to distinguish the presence of Quinta Communications Italia, a sub-holding of the international group of the producer and financer Tarak Ben Ammar, who is unique in representing the African continent, although he also has strong roots in Europe and significant activity in the United States. The group leader Prima TV spa depends on Quinta Communications (which is, in turn, under the Holland Coordinator and Services Company, Italy), furthermore, 85% control of Prima TV belongs to Imperium, group leader of the cinema sector and to which the distribution company Eagle Pictures answers. Eagle Pictures was taken over in 2007 by the brothers Ciro and Stefano Dammicco (and valued at 85 million dollars, equal to around 63 million euro) – together with the subsidiary DAT – ‘Distributore televisivi associati’ and Falcon the musical recording professionals. Prima TV – which primarily operates in the area of television, managing digital channels and pay per view of both their own channels (such as Europa 24, Sportitalia, Boing, Teleradio Padre Pio) as well as for Sky and Mediaset Premium – it also became, in 2007, the principle shareholder of the television studios Lux Vide founded by Ettore Bernabei, as well as being a 2% partner of the aforementioned Rainbow of Straffi.
  • In Tunisia Ben Ammar controls the Empire Studios, which includes three large studios in Latrach, Ben Arons and Gammarth and the post-production studio LTC-Gammarth; whilst in France, with the other local holding Quinta Communications (originally co-founded with Silvio Berlusconi and then entering into full availability) operates in production with both the authors mark Emotion and with Quinta Industries – the latter, in its time, also being the responsible for a series of acquisitions, from the Eclair Studios to the laboratories Ex Machina and Duran Duboi, both leaders in digital technology – as well as in distribution through Quinta Distribution and in digital television with Dfree, in partnership with Warner, Universal and Mediaset.
  • Ben Ammar is, moreover, the major shareholder of the first Canadian distribution company Canadian Alliance, which enjoys a optimum position in both the USA and in Europe, from where he intends to establish an independent distribution network with the foundation of Alliance Films Europe with new acquisitions in Scandinavia and Germany, thereby positioning himself in the five key countries of Europe (United Kingdom, France, Italy, Spain and Germany). Furthermore, he is joint associate of the brothers Bob and Harvey Weinstein in the new company Weinstein & Co. which the ex title holders of the hen which laid the golden egg, Miramax, formed after leaving Walt Disney, leaving in the hands of the corporate of Burbank their “creation”.
  • The selected circle of independent Italian films (indies) reveals the presence of two groupings – Cattleya and Fandango – which are in a period of gradual growth. The Cattleya Group was formed, according to the Business Register, in September 1995 (however, press releases usually put the foundation at September 1997) by Riccardo Tozzi, then head of production for Mediaset, and Marco Chimenz, ex vice-president of Medusa responsible for the representation of Medusa and Mediaset in Los Angeles. These three shareholders were joined, in 2000, by De Agostini Communications and the private equity fund IMI ‘Investimenti’ together with 10% and at the end of 2008 by Universal Pictures with 20%, for which, currently, they preserve 20% per person. Cattleya spa also has total control over Radiocattleya srl (Ltd.) and Olympia Entertainment Limited, however, it remains a company principally involved in cinema production (responsible for 98.95% of its turnover), in line with the objectives and decidedly industrial and managerial approach of its three promoters who divide the charge of company president (Tozzi) and delegated administrators.
  • Equally of relative infancy is the Fandango Group, founded in 1989 by Domenico Procacci, which, to the parent company Fandango srl has gradually offered Fandango Home Video, Fandango Australia Pty, The Works Group Plc of London, Last Kiss Pictures (all in the area of cinema), Fandango TV producer of the popular Italian entertainment programme ‘Parla con Me’ of the channel RaiTre, the Italian publishing company Fandango Libri (since 1999) in collaboration with the Italian writer Alessandro Barricco, Libri di Pietra, Radiofandango and Restorambra (restoration services connected to the Ambra Jovinelli theatre in Rome). Nevertheless, the core business remains with the cinema, with a series of productions capable of doubling their total income in 2008, this is according to the previsions already contained in their balance sheet notes of 2007 and relative to the release of some of their more recent titles (“Caos Calmo” (no English version), “Gomorra” (‘Gomorrah’ English title), “Un giorno perfetto” (no English version)).
  • A particular case is that of the Film Master Group, founded in Rome in 1976 by Sergio Castellani, Stefano Coffa and Giorgio Marino in order to operate in the field of publicity and for which it became, in time, a leader for the production of commercials and short films, however, always with a firm rootedness in the area of cinema drawing on actors, directors and employees. Today, with the recent passage to IEG, it finds itself integrated with such important groups as Cinecitta Studios and Cinecitta Entertainment, bringing about a total of ten communications companies, principally active in audiovisual productions – Clip Television, Gag, Film Master Film, K-Events, Film Master Fiction, Film Master Limited, Film Master Services, Formati Originali – with three sites in Rome, Milan and London. Valued, at the moment of acquisition at 40 million euro, the company is already involved, along with the subsidiary Edilparco, in the reconversion of the historical De Laurentiis studios, which are destined to become, under the name of Cinecitta World and an investment of 100 million euro, one of the major theme parks of the nation.
  • Also ‘Mercurio Cinematografica’ of Francesco Pistorio and Luca Fanfani has been consolidated primarily thanks to publicity films. This company has sites in Milan ad includes ‘Mercurio Spqr’ associate company which operates in Rome for the markets of central and south Italy, and ‘La Casa’ a company linked to Milan, formed in order to manage production carried out with the work associate Fabrizio Ferri, director and photographer.
  • Tutta votata al cinema è invece l’attività più che ventennela di Andrea Occhipinti, fondatore di Lucky Red, diventato produttore dopo una iniziale, fortunata carriera di attore. Sotto il suo controllo figura anche Key Films e White Cat, società cui fa capo una partecipazione del 9% nel gruppo dell’esercizio Circuito Cinema.
  • The activity of Andrea Occhipinti is all dedicated to the cinema. Occhipinti is the founder of Lucky Red and he became a producer after an initial, successful career as an actor. He also has White Cat under his control, a company which is under a participation of 9% in the business group Circuito Cinema.
  • Another film studio which has, in time, extended its activity to related sectors is Colorado Film Production (owned 100% by Iven spa), set up in 1986 following a meeting between Maurizio Totti – independent producer and theatrical agent – and the actor Diego Abbatantuono and director Gabriele Salvatores (winner of an Oscar with one of his first productions ‘Mediterraneo’ (same title in English)). In the corporate area are also included the divisions Colorado Commercials (formed in 1997 for publicity films and of which Marco Cohen and Fabrizio Convito have become directing associates) and Colorado Services (since 2000, for the management of services) then the agency Moviement, the recording studio San Isidro and the “laboratory” Colorado Cafe’ for theatrical and television productions
  • If the prize of seniority amongst current Italian operators in the sector goes to Franco Lucisano, founder, in 1958, of his company IIF, nevertheless, also the Minerva Picture Group can boast of respectable credentials in this sense having been founded in 1972 by Ermanno Curti with the title Alpharet International, which then became, in 1985, Minerva when ownership and use of the trade name were acquired, and which today also involves production, distribution and commercial activities for film and home video as a foreign sales agency. Led, since 1987, by Gianluca Curti, the original company also now includes the editorial groups Rarovideo, Edizione Serag, Finergi and Minerva Production & Marketing, whilst in 2007 Minerva International was also incorporated through a merger, this was the year in which a business volume of 8.7 million euro was earned, however, with directly attributable earnings of 6.32 million euro (of which 4.32 were for rights and royalties and 1.57 for DVDs and home video).
  • With an analogous impact in terms of business size, even if of little more or less, are certain production groups such as Sacher Film, Panorama Films of Marco Valerio Pugini and Ute Leonhardt, Poccioni-Valsania (of Marco Poccioni and Marco Valsania), Levi (of Roberto and Matteo Levi), Film Participation of Ernesto Tabarelli (owner of 75% quota) and Ripley’s of Angelo Salvatore Draicchio.
  • The first of the above includes the historical film studios of Nanni Moretti, formed with Angelo Barbagallo – which has returned in recent times to dedicate itself to other work commitments – and, among the company assets are included at 50% Sacher Distribuzione (25% each for Moretti and Barbagallo, whilst the other 50% is equally sub-divided between the two ex founders of Mikado, Roberto Ciccutto and Luigi Musini). Sacher Distribuzione has sites in Milan and manages a homonymously titled Roman cinema. The second has a small recoding label, Panorama Films Music; the third is led by the film studio Rodeo Drive (with a proceeds value of 5.9 million) and is joined by Rodeo Drive Media for the production and distribution of home videos; the fourth includes the productive structure 11 Marzo alongside the distributive structure Tangram. Film Participation includes the company for the management of rights Mediafilm (8.0 million revenue) and the film studio Mediafilm Cinema (2.2 million) which respectively cover 78% and 22% of the activity. Ripley’s is operative in home video distribution and consolidates, on its part, Ripley’s Film (1.71 million turnover), Ripley’s Home Video (3.13) and Erremme (0.1).
  • The group Artech-Aegida, however, is a company of Cologno Monzese (Milan) founded by Luciano Porilli and involved with the replication and distribution of DVDs and CDs for the home video sector of which Artech Video Record and the smaller Aegida (259.7 thousand euro income) form a part.
  • Primarily composed of active holdings in production and, still more, in distribution, the outline of the groups is completed by those of enterprise, activity to which a circuited organizational structure is natural, a structure which permits common managerial models and allows for planning and diversification with a certain regularity in scheduling on more cinema halls and screens.
    In the case of complexes exclusively dedicated to the screening (to which a paragraph is dedicated below), the business volume appears generally limited in comparison to the turnover which conglomerates active in other sectors register within their own financial accounting, just as the initial table made clear. However, this does not entail that they are of less absolute value, this is because the evaluation of the other companies has to take into consideration one particular fact.
  • Such a discrepancy, in effect, is somewhat less remarkable when one analyzes the assets of the balance sheets. If the financial property of major value for production and distribution companies is constituted by goods which are intangible, such as the so-called ‘film archives’, in other words from the archived films and the property rights of each title, for projection companies it is represented by tangible sources of income such as the real estate properties in which cinema and multi-screen centres are found. For this, in the activity of ‘mergers and acquisitions’ the parameters of annual revenue for the former groups are often valued as a unitary base, whereas for the latter companies the turnover is often valued multiplied two, three and sometimes even four times.


1 Elaborated from data of Nielson and FCP.
2 Among the companies of production and co-production directly formed by Italian artists and film makers the following can be listed: Alia Film and Achab Film of Enzo Porcelli; A Movie-Palomina of Anna and Sauro Falchi; Bess Movies of Francesca Neri; Betty Wrong of Elisabetta Sgarbi; BiBi Film of Angelo Barbagallo; Cesarea Entertainment of Luca Barbareschi; Dap of Guido and Maurizio De Angelis; Dharma of Eleonora Giorgi and Massimo Ciavarro; Devon of Luciano and Sergio Martino; Duca Film of Antonio and Pupi Avati; Film 7 of Luciano Emmer; Film Albertos of Marco Bellocchio; First Sun of Silvia Venturini Fendi; Gege Produzioni of Mimmo Calopresti; Italy Dreams Factory of Maria Grazia Cucinotta; L’Ottava of Franco Battiato; Hathor Film of Pappi Corsicato; Immagine and Cinema of Edwige Fenech; La Dolce Vita Productions of Patrizia Pellegrino; Levante Film of Leonardo Pieraccioni; Martinelli Film Company of Renzo Martinelli; Motorino Amaranto of Paolo Virzi; No Limit International of Franco Nero; On My Own of Roberto Cicutto; Opera Film of Claudio and Dario Argento; Sixteen Films of Ken Loach and Rebecca O’Brien; Titania Produzioni of Ida De Benedetto; Trio International of Marco Rissi.

 

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