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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 Principle Business Circuits
The area of business and finance is, perhaps, the most paradigmatic in the whole cinema sector. A terminal thermometer of the evolution of activity over the years – from the pressing competition of television productions to the ever increasing film consumption from individual “platforms” such as DVD players, personal computers and mobile telephones – which is exemplary of the segmentation of market supply.
Being congenial to an organizational structure in the form of a matrix which permits common managerial models as well as the capacity to plan and modulate, with discrete uniformity, the scheduling of films on even more cinema screens, has always been characterized by the formation of comprehensive circuits of more structures, geographically dislocated, also by notable distances, the one from the other. Furthermore, this almost “natural”  tendency to aggregation has had a minimal influence on the vast, indeed enormous plateau of small and very small autonomous cinema halls (of small districts, parishes or clubs often open only for one or two days of the week and, at times, not even open to all of the general public in that they are reserved only for associates or members of determinate organizations) which are found across the country.
Such fragmentation is, moreover, not only in terms of size or logistics. It is also found, for example, in terms of type of offer, in other words, in terms of the nature of the film production being proposed, in virtue of which those areas of film which are partially ignored – from so-called art house cinema or specialist films to amateur films, from documentaries to film shorts – which are also an integral part of the sector.  It can also be stated that such fragmentation is also found under the administrative and corporate profile of the sector, from the moment that the activity of each projection unit considers the management and – very often – the ownership of the halls or the edifices in which the operational structure has sites and to which, usually, are given autonomous legal status (generally under the form of srl ‘societá a responsabilitá limitata’ – in English societary law this corresponds to Ltd. or ‘Limited liability company’ (translator’s note))  typically in order to protect and increase the value of the real estate property.
For the very same reason the practice is extremely diffuse at all levels, including those at the top where the major national circuits are placed and which are constituted by multi-screen cinemas and multiplexes. As such, if on the one hand, there formally emerges a growing concentration of establishments, on the other, there remains an intense corporate fragmentation and company autonomy is increasingly becoming a reason for the subsistence of minor structures. The latter has a real estate capital which confers a greater capacity for negotiation and expenditure (in particular in terms of credit) also in periods of possible difficulty.
This also explains the elevated number – 1,815 – of active companies enrolled on the Business Register in the section on cinema projection. At the end of an analysis of the market, such as the one proposed by this report, the situation presents, nevertheless, a problematic comparison due to the fact that with the increase in the number of companies under consideration and with the contextual reduction in their scale it becomes inevitable that one is confronted with a perceptible lack of sources: for a relevant number (clearly greater than that registered for production and distribution sectors) of companies it results that financial statements have not been deposited and the same holds for recent balance sheets (indeed, the same index of companies unexpectedly reveals as empty those companies which are well noted by persons involved in the work and of those it is even difficult, at times, to find any trace); for another large amount of companies financial statements are, at times, so succinct as to appear almost incomplete.
The table below therefore corresponds to a first reconstruction of a sector which is confirmed by extra information and by boundaries which cannot be described as clear.
This classification based on economic values is only finalized to facilitate the exposition of data and has a purely approximate value, also if the sum of revenue attributed to the considered business circuits (obviously excluding those companies which are subsidiaries) is greater than the threshold of 400 million euro, corresponding to around 65% of gained takings – according to the data of ANICA in 2007 – in cinema halls and can, therefore, be considered as sufficiently representative of the general outline.



Elaborated from data and accounts of CERVED, Infocamere – Business Register and the Italian stock exchange for the quoted company Mediaset -
* These operational companies belong to the indicated groups: the economic values are relative to their management, and reported in the table, already include in the total values of the groups referred to -
** The proceeds attributed to the group Filmauro are the result of estimates based on indications contained in the financial statements; those relative to Pathe-Vis Pathe of Europalace are obtained from communications pertaining to their activity -
*** As far as Gruppo Giometti are concerned it is to be noted that the elaboration was effected only on the available balance sheets of the company managing the structures Jesi, Fano, Senigallia and Pesaro and do not include, therefore, the financial statements of Porto S.Elpidio, Ancona and Perugia. The business year of the company Giometti Holding does not coincide with the calendar year and accounts are closed on 31st August.

  • A first reading of the table confirms the operative force of foreign companies in comparison to national ones and, in particular, the notable discrepancy in terms of size between the two leaders of the sector and the other competitors. Warner Village (Warner Bros.-Time Warner) and UCI Italia (United Cinemas International – News Cooperation) claim almost half of all proceeds of the business and finance sector and have a business scale which is four or five times larger than their nearest competitors.
  • To a large measure the activities of all the principle groups of the business sector involve the management of structures of the latest generation, in other words multi-screen cinemas and multiplexes, upon which, moreover, development plans and investment in new acquisitions and openings are concentrated. Warner Village, for instance, now has 15 cinema complexes – with a total of 158 cinema screens – with the inauguration of the multiplexes of Nola in 2007 and in Lamezia Terme  and Vimercate (the latter being the unique cinema in Italy with a large format screen measuring 21 by 16 metres) in 2008. UCI, which operates through five companies (UCI Centro di Roma, Multiplex Nord, UCI Bicocca, UCI Nord Est and UCI Sud) has also consolidated its position acquiring the circuits Europlex and Cinestar and having 22 multiplexes totalling 233 cinema screens. UGC has acquired  in Europe nine cinema structures leading to a total of 240 cinemas, 60 of which are in Italy, since 2000.
  • If Warner Village and UCI are of Anglo-American origin, with head offices located in the United States and United Kingdom respectively, as well as a network of structures in diverse continents, the other two foreign circuits operating in Italy are of French origin and are only present in Europe. UGC – Union General Cinemas was formed in 1971 in Lilla on the initiative of certain business chains of a regional character and now has 48 cinemas and 576 screens in France (35-359), Spain (6-108), Italy (4-66) and Belgium (3-43). Over time UGC has extended its business range to also include production and distribution, inheriting the area from two of the most established groups in international cinema, Gaumont and Pathé, of which, for the last 30 years, the alliance Pathe-Vis Pathe has represented continuity. This circuit, today, manages 86 cinemas also including Europalace with 843 screens, 643 of which in multiplexes such as the 39 found in the three Italian centres Rome, Turin, and Florence. 
  • The model of a vertically integrated company which is active in all areas is also common to certain of the major national circuits beginning with the number one Medusa which operates through both Medusa Cinema and Medusa Multicinema. Its development has been very rapid and it now has ten multi-screen cinemas and one single-screen cinema. Producers, distributors and, at the same time, traders are also the group Filmauro – through the subsidiaries Sautec, ESI – Esercizi cinema italiani, Cinema Europa and Olimpia 80, all in Rome, and which represent 21.9% of the holding’s cinema revenue – along with Italian Int.Film with Stella Film of Naples, Italian International Movieplex of Rome and Goodwind of Benevento (80 cinemas in total and contributions to the group turnover equal to 26.1%). What is curious, moreover, is how the composition of the business set in which Filmauro is interested is to speculate on the diverse interests of Pathe’, since the moment that both include in their core business also football, owning respectively the clubs of Naples and Olympique Lione. 
  • Franco Lucisano and Aurelio De Laurentiis can be considered traders from the start of their careers. Since the founding of IIF it has managed, for example, the then Cannon circuit which was subsequently transformed into Cinema 5, then successively, in partnership with Dino De Laurentiis, a network of miniplex cinemas was created. Once the success of multiplex structures had begun the partnership was dissolved and IIF and Filmauro began to autonomously develop their own structures, principally in the regions of central and south Italy.
  • The work of the Furlan dynasty in the management of theatres and cinemas in Veneto has been continuing for over ninety years. The family also arrived at holding the fourth quota of the market with its structures in north-east Italy and with policies of large scale expansion in the multiplex sector under the title Cinecity which, in 2007, brought about a change in strategy in terms of investment plans. The structure of the subsidiary Cinecity Art & Cinema were actually demerged into the bridge company Solengo and then conferred to the Dutch holding Msref V Amber, of which the United States merchant bankers Morgan Stanley are major shareholders with 60%. The group Gruppo Furlan, which has maintained 40% of shares as well as the management of four centres in Treviso, Udine, Padua and Trieste (with a total of 45 screens), has earned from the operation 18.7 million euro, plus the exercisable right to regain cinemas before the second half of 2010 from Gianantonio Furlan. The latter has maintained ownership of the multi-screen cinemas and traditional single-screen cinemas of Venice, Mestre, Vittorio Veneto and Porto Viro (18 cinema screens in total).
  • The success of multiplex cinemas was also taken by Cinecitta Holding in 2003. They had acquired, through the subsidiary Mediaport the Cineplex circuit which was then renamed Globalmedia (with seven multiplexes and one single screen cinema). However, the public group did not manage to activate the managerial area and, in 2008, began the handover of Mediaport – including the same Globalmedia and Mediaport Cinema, owners of Cinemax in Padua – to Farvem Real Estate srl of Massimo Ferrero, an operator previously primarily involved in distribution (Elleemme Group).
  • The interests of Cinecitta in the area of film projection now remains tied to a 27% participation in the mixed public-private joint venture Circuito Cinema, originally formed to encourage the circulation of high quality films and art house films, and which includes the owned (100%) Circuito Cinema Firenze and another seven homonymous associates (with sites in Genoa, Turin, Milan, Bologna, Rome, Florence, Naples, Catania and almost all in partnership with local traders) amounting to a total of ten cinemas. The other company associates are BIM Distribuzione of Valerio De Polis (22.5%), Mikado Film of De Agostani (18%), Medusa Cinema of RTI-Mediaset (10%), White Cat of Andrea Occhipinti (9%), Greenwich of Fabio Fefe (8%) and Emme Cinematografica of Mario Fiorito (4.5%). 
  • In contrast to the territorial references considered so far, those of the other principle companies of the reference sample involve a geographical distribution which is far more regional in character or, in certain cases, inter-regional. This involves, in effect, business groups developed by managers who started their activity at a provincial level and then knew how to expand their businesses, interpreting market trends and promptly adjusting to the evolution of the activity, beginning with the conversion of single screen cinemas into multiplexes. The Quilleri circuits of Davide Quilleri in Brescia,  Giometti of Giovanni Giometti (70%) and family Massimiliano, Gianluca and Silvia (10% each) of Pesaro are, today, among the most consolidated, similarly Nexo of Anna Nove Di Sarro and Arco di Luigi, Walter and Cristina De Pedys for other areas of northern Italy.
The fragmentation of interests within the groups of numerous management companies certainly reduces the visibility, thereby indirectly limiting the area of research, however, this is not the case for the actual consistency, enhanced by the considerations shown by ‘majors’ and by the large scale groups which often entrust their agency mandates of zone and of representation to the areas under consideration.

 

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