The gulf between rich and poor in the Italian film industry is growing wider.

Two significant factors have transformed the business over the past year: the emergence of Penta Film as a genuine “major” and the realization that the only alternative struggling indies have is public funding.

The one hope for the indies, trying to assemble talent as Penta waves its checkbook and swallows up money-making directors and actors, is a proposed film law likely to go before Parliament this month.

Producers are hoping the law, widely believed to be passed early this year, will make low-interest loans available to all. It is not yet clear what restrictions will be applied.

Public funds for film production currently are available from the Banca Nazionale del Lavoro as loans at 5.5% or 14%, some of which need not be paid back if the film doesn’t make money.

“We hope the law will be approved,” says producer Augusto Caminito. He calls the possibility of financing up to 80% of his budgets (currently in the $3.5 to $5 million range) with low-interest loans a godsend.

“The film law will be of enormous importance in letting us produce without being forced to turn to television for money,” says AMA’s Gianni Minervini. “It will let Italian cinema be reborn.”

In 1990,119 features were completed, almost the same as in 1989, when 117 films wrapped. Yet as many as 50 – many shoestringers financed with a never-repaid government loan – remained on the shelf without a distributor.

The average budget rose modestly, from $2.4 million in 1989 to $2.5 million in 1990, while foreign investment held steady in a dozen films a year. At least 66 firms made just one film last year, while another dozen managed two each.

Pentafilm, set up in October 1989 as a 50-50 venture between producers Mario and Vittorio Cecchi Gori and media baron Silvio Berlusconi, has become the undisputed leader in Italo film production.

The 12 films the company made in 1990 include most of the big locally produced Christmas hits: “The Comics,” “Tonight At Alice’s,” “Fantozzi Strikes Back” and “Billions.” But Penta’s ability to dominate stems from its distribution and exhibition subsidiaries.

Penta’s Cinema 5 programs 42 key theaters throughout Italy, and its appetite has only been whetted. Should Penta get control of Rome’s 25-screen Mondialcine chain, it would have a stranglehold on exhibition.

Producers have mixed reactions to such a development. Penta has a practice of farming out its productions to local producers, bringing them into the Penta fold.

This system undoubtedly has benefited many indie Italian producers who signed with Penta to co-produce and especially line produce their films.

And the system may prove even more attractive. According to Penta m.d. Carlo Bernasconi, the company soon will begin production in Los Angeles through its U.S. branch Penta Pictures.

Penta also can use its powerful subsid, Penta Distribuzione, and exhib chain to boost smaller films. “Mediterranean,” for example, co-produced by Gianni Minervini’s A.M.A. Film, has just made a record-breaking opening in Penta’s choice Milan theaters.

Penta also holds many of the country’s top money-making actors and directors under contract, out of reach of other producers.

But a few names are emerging at the second tier on the Italian movie ladder. Erre, Titanus and Scena, with their four-to seven-picture slates, are Penta’s closest rivals. Both Erre and Titanus have fledgling distribberies and interests in exhibition.

Erre Produzioni chief Angelo Rizzoli has made a difficult comeback to production after years of inactivity. He is one of the few Italian producers who always has risked his own money in production. He is also one of the few who doesn’t turn to the Banca Nazionale del Lavoro for financing.

“I’ve invested millions in this sector,” says Rizzoli with some justifiable pride. “We risk our own money, paying today and recouping who knows when. Interest destroys the profits.”

“Italian films cost more than they can recoup on the domestic theatrical market. The problem is there’s no pay-tv, cable or satellite, all the media that could cover the costs of filmmaking.”

Tv finance is enormously important for many small indie producers like Antonio Avati, who has produced his brother Pupi’s pics.

Pupi Avati is a drawing card on Italian tv, a fact that translates into presales to RAI-1 for up to 70% of the budget. Costs are generally low, in the $1.3 million to $1.5 million range, and DueA, the Avati company, is proud to list cost containment as its prime reason for its solvency. Their co-producers – there is almost always one – have never lost a lira and sometimes even make some money, suggests Antonio.

Although the practice of distribberies advancing minimum guarantees to production companies has practically disappeared in Italy, SACIS still gives the Avatis a minimum guarantee on foreign sales, which have been going very well lately.

The cash that is most at risk for indie producers usually is startup money to nurse a script along and sign a couple of actors while they look for money. Few today are as willing to risk seeing their homes and bank accounts confiscated as the heroic producers of yore.

Enzo Porcelli, producer for 23 years, is as tenacious as he is eclectic in his methods. Now working as a line producer for Rizzoli, he still is paying off bank debts for his 1984 production of Marco Bellocchio’s critically acclaimed “Enrico IV.”

And what about foreign markets? For almost all, they represent icing on the cake. While a few producers still make films aimed at the American market, like Scena’s all-Yank production “The King Of New York” or Rizzoli’s “The Comfort Of Strangers,” most have given up their illusions after unsuccessful bids.

But if the Yank market does continue buying films like “Cinema Paradiso,” “Open Doors,” “The Icicle Thief” and “The Station,” another source of finance could give small, intimately Italian pics a new lease on life.

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