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» Report 2008
Part Four - INTEGRATED AND CONCENTRATED
THE FORCE OF A CLASS
Chapter 6 - Groups and companies: the principle organisations
The Major Distribution Companies
Under the profile of distribution channels the cinema industry in Italy has remained loyal to its original configuration.  The ANICA data on national activity registers, for example, for 2007 the activity of 52 companies which are responsible for circulating 108 films: 39 for a single film and 13 for more than one. Last year the number of companies rose to 59 and films to 121, however, the proportions have remains more or less unvaried: only 17 companies have in fact distributed more than one title, against 42 which distributed only one single title. In respect to the theoretical total of 111 companies which, in the two year period, distributed 229 films (of the 261 materially produced) in question, it, nevertheless, results that those which are effective amount to 94, given that 17 (equal to 18%) were active both years and the remaining 77 (82%) limited their intervention to a single season.
Among the 17 companies which have distributed at least two films there are, however, seven which have limited their involvement to a single title a year. The Italian companies which can be considered actually present, with a significant continuity, on the market can, therefore, be reduced to just 10 (10.6% of the total) and to these can be ascribed the promotion and circulation of 129 titles on the market (equivalent to 53.7% of national productions which arrived to the general public in the two year period). In summary, the cinema sector shows, as protagonists, the “branches” of the major foreign companies, primarily involved in adjusting to the Italian market the distributive policies and strategies organized at the international level by the parent companies.



Source: Elaborated from CERVED data, Infocamere – Business Register and financial statements of the Italian stock exchange for the companies of the quoted groups Rai (01 Distribution), Mediaset (Medusa) and Mondo TV -
* Sony P. Home and Sony P. Releasing close business on 31st March each year; 20th Century Fox Home and Fox-Italy, however, on 31st May; Filmauro 30th June -
** The values indicated are the result of estimates on how much the company is active in both production and distribution - *** The reported data only refer to cinema activities.


Firstly, it should be pointed out that as well as the distinction between revenue resulting from production activity and from distribution activity  not being, as stated, easily ascertained, the results are also open to diverse and debatable interpretations. The same holdings and companies which operate on both fronts qualify as such in diverse ways, the one from the other, the actual origins of such revenue and both follow dissimilar attributions.  Neither, on the other hand, does the end result or the relations which accompany the indications, reveal the resources generated by produced works or co-produced works, distributed by the companies themselves or through other companies (at the same time they omit to mention, rather frequently – according to a practice which is, unfortunately, common in almost all other sectors – the information, which moreover is necessary, regarding consistency or the composition of personnel involved).
As far as the reports of the object of analysis are concerned, those companies which are outside of the norm include only 11 Marzo and Tangram of Roberto Levi, Eagle-Prima-Quinta Communications of Tarak Ben Ammar, Rodeo Drive and R.D.Home of Poccioni-Valsania and Dania di Luciano and Sergio Martino, who note down even the amount of all the minimum guaranteed concessions, receipts and owned royalties in concession or licensed for around 840 diverse films. It can, therefore, be verified (involving eight annual reports out of the whole reference sample) how, in practice, the quota of companies which signal in their documents the effective results achieved from single titles and their various channels of “exploitation” is less than 3%.4
There are, furthermore, companies which among their activities also include that of territorial agents – for one or two reasons – of the major distribution companies, without signalling in their accounts the relative posts (often considered under the general title of “other proceeds”), also because in the vast majority of cases of such commercial agreements no communication is given. Seven of the first 11most important  positions in the ranking of distribution companies demonstrate the importance of the foreign ‘majors’ on the market. The resources of Walt Disney and Warner Bros. appear, above all, clearly superior to those of the other competitors, so much so that it would be necessary to total the proceeds of another ten companies in order to obtain the revenue-amount equal to that of the ‘majors’ totalled.
As can be seen in the production sector, only Mediaset and Rai among Italian companies, maintain an elevated market presence. Medusa is the first to come near to the foreign ‘majors’ and jointly considered, the two companies Medusa Film and Video have 128.9 million euro in revenue, whilst 01 Distribution of Rai maintains its position also if it accumulates the turnover of the two companies The News Corporation of Rupert Murdoch (20th Century Fox and Fox-Italy), whereas the two subsidiaries Sony Pictures Home and Releasing, in total bring to their group 61.9 million euro. The group Mediaset is, moreover, also active in Spain with the subsidiary Telecinco which, in 2007, distributed 11 films with a turnover of 19 million euro (such films, furthermore, brought in a total income of 34 million euro).
On the other hand, 01 Distribuzione and Medusa, in the last two year period, released onto the market, according to the reports of ANICA, respectively 42 and 31 of the 229 Italian titles thereby representing 31.8% of all national production. Mikado stopped at 10; BIM Distribuzione, Lucky Red and Warner at 6, Eagle Pictures at 5 and Filmauro at 4.
Indeed, it is these last two companies which are those that managed to be inserted among the foreign and domestic ‘majors’. Eagle, indubitably in virtue of an large amount of experience and credentials acquired in numerous years of activity. It was formed in 1986 when the Dammicco brothers (already  protagonists in the 1970s of the musical scene with their group ‘Daniel Sentacruz  Ensemble’ and for the composition of successful, international hits such as When a Child is Born and Solendo) left their second career as producers and television entrepreneurs, undertaken in 1980 and culminating with the creation of the network Videomusic. It was after they had consolidated the area of home video that the Dammicco brothers began, in 1995, to develop their company in all areas of production and distribution, with exclusive agreements with other national producers they arrived at releasing onto the market around 20 titles a year; target put forward again recently after passing the majority of their capital to Tarak Ben Ammar.  On its  part, Filmauro represents a continuity of the De Laurentiis dynasty in international cinema. In 2007 the revenue from distribution amounted to 22.5 million euro for the theatrical division, 6.3 million for home video and 3.9 million for television circulation. Other operators which make use of other structures for the distribution of their productions – separating the television market from the home video market – include Mondo TV with over 31 million euro in revenue (between Mondo spa, Moviemax  and Mondo Home Ent.), Film Participation with 10.3 million income, between Mediafilm and Mediafilm Cinema, and IIF with Italian International Entertainment and the smaller Keimos which also operates with the title IIF-Homevideo (the modest amount of 3.3 million euro reported in the table must be considered as purely indicative in absence of a secure division of proceeds which enter into the group leader’s accounts). Franco Lucisano was, among other things, the first Italian film maker to subscribe, beginning in the 1960s, to collaboration agreements with international holdings, such as the then American International Pictures, Cannon, MGM, Polygram Film International, Columbia Tristar and the more recent Buena Vista (Disney).
The following can all be considered as distributors in their own right (as well as for third parties): Lucky Red of Andrea Occhipinti, BIM of Valerio De Polis, Fandango of Domenico Procacci, Ripley’s of Angelo Salvatore Draicchio, Rodeo Drive of Marco Poccioni and Marco Valsania, Colorado of Maurizio Totti, which also has internal corporate and not autonomous divisions, and Dania of the Martino brothers, associates also of VIP Media (19.9%), Surf Film (7.3%) and Movie 90 (25%).
 Almost exclusively active in distribution are, for their part, Artech Video Record, Emme Cinematografica and Teodora. The first is a company of Cologno Monzese (Milan) founded by Luciano Porilli and concentrated on the replication of DVDs and CDs for the home video sector. Emme Cinematografica of Rome, formed by Mario Fiorito, operates primarily with tender contracts with Universal (also including the management of the cinema hall ‘Tibur’ in Rome) and representation for other Italian film studios; such as Teodora Film of Ceare Petrillo, which is also located in Rome.


3 Over time only a few co-production agreements have been registered. Only Columbia, after taking  Tri-Star from its partnership, has created certain small scale companies for the production of films outside the United States, such as: Nelson Entertainment in joint venture with British and Canadian partners, Triumph Films co-owned by the French studio Gaumont and Castle Rock Entertainment.
4 It is not uncommon, however, to find in accounts relations detailed information on distribution agreements stipulated in the course of the year (and, therefore, with effects on successive accounts), also foreseeing the specific nature of due income, to testify to the efficiency of undertaken initiatives and in support of the results – more or less exalted – presented in the balance sheets of the last year.

 

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