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Report 2009

Part One - THE EVOLUTION OF A WORLD

Part Two - CINEMA AND ITS RESOURCES

Part Third - ALL THE MARKETS OF THE FILM SECTOR

Part Fourth - PROTAGONISTS GREAT AND SMALL

APPENDICE

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» Report 2009
Part Third - ALL THE MARKETS OF THE FILM SECTOR
FROM PRODUCTION TO CONSUMPTION
Chapter 5 - The Supply Chain
Brave Investors and the New Mix of Resources

Italian investors who physically gather the primary resources - largely drawing from the original source of bank credit - can be considered as the actual cinema entrepreneurs, that is the shareholders of the production houses, distinguished as direct producers, that personally run the making of the films, and in indirect producers or co producers (Italians or foreigners), that support the financial commitment of the initiative, of which the executive running however depends on another partner of the initiative.
Among the private investors that nourish the sector also a part of foreign capital must be included that joins in the investments of Italian films. Those - very few - financed and organized by subsidiary companies of international groups , with offices in Italy and that are therefore considered of national origin, and those - more numerous and of higher influence - produced under co production, that is in co partnership with national production houses and foreign operators.
From 2004 until 2008, as seen from the table, the amount of private investments for the total of Italian productions shows a trend of gradual growth, whereas the total amount of the resources follows a less consistent performance, due to the fluctuating revenue of public funds. From a little more than a quarter in 2002, these contributions passed to over a third in the two year period that followed, then fell to less than a sixth and a little more than a fifth compared to 2007 and 2008, and finally plunged to 12,8%: less than an eighth.

PRIVATE RESOURCES
According to the drop or the increase of the state funds, also the private investments registered drop or increase, changing or inverting their trend line. On the contrary a lower influence of contributions by FUS in coproduction was shown, with a basically irrelevant contribution, in terms of gaps in the flow of resources by private Italian producers. The global extent of investments for Italian films coproduced resulted on the other hand considerably superior to the total budget for 100% national films and the sequence of medium investments (see previous table) shows moreover the constancy of the Italian investment, that gives the co productions financial resources almost similar in quantity to those devised for entirely domestic productions. For the first time however in 2009 private investment moved almost independently, coping with the vertical drop of the allocation of ministerial funds. Compared to 2008 their amounts- assigned for produced and coproduced films - ceded just 0,38%, while the FUS allocation lost 46,47%. In light of the depressing atmosphere of the international markets and of the problems faced by all sectors in the period following the financial crisis in 2008, this is (it seems correct to repeat it) a performance that deserves consideration.
Considering the matter again, when faced with a process of real change or of momentary adaptation, some circumstances can be detected. For example the consideration of credit and financial institutions towards film activity seems to increase, with a higher influx of resources for the industry. A phenomenon that is not measurable at the moment, but detectable also from the initiative of Cinecittà Luce, that became active with the ABI - Associazione bancaria italiana - that represents the 733 company banks in the country - opening the way to a greater collaboration and beginning a series of match - making between the workers of both industries.

SHARE HOLDERS AND FINANCIAL PARTNERS
The bank Intesa Sanpaolo, the first group at national level, already credit partner of Mondo TV with Mediocredito Italiano del fondo TorinoFilmLab designated in particular to sustain the companies in the post-production phases, invested 5 million euros in the promotional project perFiducia to produce three promotional short films of 10 minutes assigned to Ermanno Olmi, Gabriele Salvatores and Paolo Sorrentino shown in 300 cinema halls and in the 3 minute versions also on TV. The minority shareholder Lux Vide, controlled by the Bernabei family and by Tarak Ben Ammar (head of Eagle Pictures), the bank also gave a bond issue convertible from 8,5 million euros to strengthen the capital and sustain new investments, finalized in particular to develop the growth of the Asian markets.
It was also central to two of the most important works of the year. First as a partner with 10% of the Cattleya production house, that in January 2009 sold 20% of its shares to the Universal was the leading company in the initial investment directed by a USA major in an Italian production company. Then financing together with Unicredit, for 50 million euros, the acquisition by the private equity company 21 Partners SGR, which belongs to the Benetton family, of 51% of the stock package of Medusa Cinema and Medusa Multicinema (Mediaset- R.T.I. group) and then through these the owner of Warner Village Cinema (controlled by the US corporate Time Warner), creating the largest circuit of national cinema halls with 15% of the market share of the year (30% only in the multiplex segment), 25 structures in all Italy, 257 screens and 125 milion in annual revenue. Then the new Space Cinema, of which Mediaset now possesses 49%, sold five of these structures to the real estate investment fund Delta, that belongs to FIMIT SGR (national leader, run by Massimo Caputi and shared by social security institutions Inpdap with 30,72%, ENPALS with 19,0%, ENASARCO with 10,0% and INARCASSA with 5,0%). The operation cost 65,199 million euro and was financed by Unicredit and IMI Immobiliare- Intesa Sanpaolo through a credit line of 39 million euros.
BNL-BNP Paribas gave its support with a 4 million euro bond issue to Film Master, controlled by IEG-Italian Entertainment Group, in closing the privatization process that brought to the attention of Cinecitta' Luce (January 2009) its two former subsidiaries Cinecittà Studios and Cinecittà Entertainment. Entirely financed by banks it was also another step to the privatization led by the Cinecittà Holding and that concerned the multiplex Mediaport- Globalmedia, purchased for 59 million euros by Farvem Real Estate , operational arm of the FG Holding of Massimo Ferrero and Laura Sini; whereas another credit consortium assisted Mik Holding of Franco Tatò and Sonia Raule in the taking over of the majority of Mikado Film of De Agostini Communications (the value of the transaction has not been announced).
Other financial realities have moved closer to the world of the celluloid. Goldman Sachs is a shareholder of Endemol-Mediaset; Interbanca and Ge Capital are historically involved with Eagle Pictures and Film Master Group's operations; the trust company Eurofinleading is 25% partner of the group Film Participation of Ernesto Tabarelli; 4,9% of the capital of the public Mondo TV goes to Symphonia SICAV; the Dutch fund Cyrte, third partner of Endemol and that has amongst its investors the De Agostini group, boasts an important presence also in the independent English producer RDF; Banca Sella, through EasyNolo, invested in the agency QMI, specialized in the direct film cinema.
And fuerthermore: two of the major European banks, the French BNP Paribas and the Belgian subsidiary Fortis, formed, in a Joint venture, a fund called "Global Export & Project" to finance the digitalization of the multiplexes of the continent with an initial supply of 100 million euros for the first thousand interventions;
The English fund Cambria bought 33% of the Palomar of Carlo Degli Esposti production house; Lafitrade BV, a Dutch society whose is controlled by Lafico (Libyan Arab foreign investment company), took over 10% of Quinta Communications for 19 million, the holding of which Tarak Ben Ammar controls all its film-television activities and group leader of Eagle Pictures; the investment bank Morgan Stanley bought from the Furlan Family - historical dynasty of business in Veneto - a further 10% of the Cinecity Art & Cinema circuit, after having already acquired the majority holding in 2007.

 

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