While Italo producers managed to churn out 119 films last year, only five have grossed more than $5 million in theatrical release so far this season.

How do so many producers stay afloat, especially in a market where only 23% of ticket sales go to locally made fare?

The answer, in part, is public financing – in the form of production coin from pubcaster RAI, the state-owned Istituto Luce (which also distributes) and the Ministry of Entertainment.

VARIETY estimates the three public entities handed out $70 million to $75 million in production largesse last year.

The three RAI webs appeared as producer, co-producer or associate producer on 20 films in 1990. Istituto Luce co-produced seven debut pics, plus three other projects. The Ministry of Entertainment allocated an average contribution of $230,000 for each of 58 feature films, although only about a dozen were able to begin production in 1990 and fewer still will be distribbed. More than $28 million in ministry financing is lined up for 1991.

Aim is to support new directors, develop new talent, and, for RAI, have tv rights to a steady supply of national product.

These days, Italo film production means Penta, which generally produces the top-grossing commercial pics, and the combined forces of RAI/Luce/Ministry of Entertainment, which have uncovered most new talent.

How important are RAI and Penta in the industry? Italy’s two giants had a share (either direct financing or pre-acquisition of tv rights) in 20 of the 29 Italo films that made the 130 top-grossing films chart so far this season.

RAI is suffering a budget crunch that should last until the beginning of 1992, and has less coin to invest in film production for the time being. Most Italian producers complain about working with tv financing. But without it, directors like Giuseppe Tornatore, Marco Risi and Ricky Tognazzi might be tending bar at Cinecitta instead of making films like “Cinema Paradiso,” “Forever Mary” and “Ultras.”

Stefano Munafo, exec in charge of film production for RAI-2, predicts the channel will become more involved in production in the coming years.

“Cinema is developing into a worldwide industry that requires a big production investment. And the only industrial vehicle in Italian production are the tv networks, public and private.”

Newly appointed RAI-1 production topper Ludovico Alessandrini agreed RAI production investment would pick up again in the near future. He predicted, the pubcaster will emphasize movies and minis.

The new film law will change the way the Ministry of Entertainment finances films. Previously, the ministry contributed a little to a lot of shoestring budgets. In the future it’s likely that any producer will be able to apply for a low-interest (5.5%) loan on all types of films.

“So the small producers that used to count on ministry help will be competing with established companies like Rizzoli’s Erre Produzione and [Augusto] Caminito’s Scena,” said indie Fulvio Wetzel, a founding member of the Federation of Independent Producers.

Public funding remains essential to the Italo industry, but the climate is changing. Now public film execs like Istituto Luce chief Giuseppe Attene say his aim is to become more “market oriented.” RAI film production chiefs talk about being “the main industry force” in Italian film. Paradoxically, the big push to industrialize Italian production is coming from the public sector.

“We’ve come to the point in Italy where we are impassioned by political films but can’t make a decent thriller,” said Attene. “Luce will still invest in quality films like Gianni Amelio’s ‘Open Doors,’ and if we’re now able to bring state investment closer to the market, to film as an industry and a profession, then we will have succeeded.”

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