Investment increases to $65 mil

ROME — Having consolidated its position as Italy’s leading production-distribution entity with a hefty national market share this season of better than 23%, Medusa Film has announced plans to increase overall production investment for 2002 to $65 million — for the first time matching the Fininvest-owned film division’s acquisitions budget.

While Medusa has hoisted U.S. imports such as “What Women Want” and “Autumn in New York” into the season’s top 10, the distrib’s homegrown hits are perhaps even more significant.

Led by the $36 million gross of comic trio Aldo, Giovanni & Giacomo’s Christmas blockbuster “Ask Me If I’m Happy,” these include “The Last Kiss,” “Ignorant Fairies” and “Malena.”

“This year, we have outperformed all the other Italian companies combined,” says Medusa CEO Federico di Chio. “Given that a phenomenon in the Aldo, Giovanni & Giacomo league is unlikely to come along two years running, we may not match these results next year. But we will certainly remain among the top two or three distributors operating in Italy, which is in line with our objectives.”

In the six years since it formed out of the ashes of the Penta Film pact linking the film units of Fininvest and the Cecchi Gori Group, Medusa has steadily increased its market share from 8.5% to 15%-16% in recent seasons to the current high of 23% and $88 million in grosses, ahead of closest rival UIP’s 14%.

The feat was assisted in part by former market leader Cecchi Gori’s ongoing slump, as its acquisitions were put on hold due to financial difficulties. Filmauro was the second-highest-grossing Italo company, with 9% of the market.On the production front, Medusa will continue to divide its energies between three principal directions: backing two to three prestige auteur projects per year aimed at the international market; ramping up local comedies destined for the commercial mainstream; and fostering new talent through pics from young filmmakers and debuting directors.

Heading the slate of projects is Franco Zeffirelli’s biopic “Callas Forever,” about the dying days of the opera diva, starring Fanny Ardant and Jeremy Irons; and the Vanzina brothers’ London-set comedy “South Kensington,” with Rupert Everett in negotiations to head the cast. Both English-language features will shoot this summer. The outfit is also involved in films at the scripting stage from Bernardo Bertolucci and Gabriele Salvatores.

This Christmas, Medusa will release its first animated feature, Guido Manuli’s “Aida of the Trees,” budgeted at $7 million-$8 million. After buying Turin-based animation boutique Lanterna Magica late last year, the company plans to produce one toon feature per year.

Medusa’s production and acquisitions budget has increased on average by $10 million-$15 million per year. However, contrary to earlier years, the 2002 boost is being channeled entirely into production, with acquisitions remaining stable. Overall budget for next year will be $130 million.

The group also is pumping $200 million into a five-year project to strengthen its network of Italian multiplexes, with two new sites to open this year and a further four plexes in 2002. When the project is completed, Medusa anticipates being ranked alongside Warner Village Cinemas as the two largest operators in the Italian exhibition sector.

The recent defection of veteran Cecchi Gori associate Faruk Alatan to head Medusa’s acquisitions team stands to further strengthen the company’s clout in securing high-caliber indie product, even in the event CGG should emerge from slumber and start writing checks again.

Despite the new concentration on production, Medusa is hardly retrenching from acquisitions. Recent buys include two Cannes entries, the Coen brothers’ “The Man Who Wasn’t There” from Good Machine Intl., and Fine Line’s “The Anniversary Party,” co-directed by Alan Cumming and Jennifer Jason Leigh.

Other key pickups include New Line’s “Lord of the Rings” trilogy; Robert Altman’s period ensembler “Gosford Park” from Capitol. Also on the slate are three Woody Allen comedies, starting with the upcoming “Curse of the Jade Scorpion”; Barry Levinson’s “Bandits,” with Bruce Willis and Billy Bob Thornton; and “Original Sin” with Antonio Banderas and Angelina Jolie. Di Chio says increased synergy between Medusa and Mediaset rights arm Mediatrade, which up to now has negotiated TV rights independently, will make full-rights acquisitions standard for the group.

“Within the next two years, Medusa’s production and acquisitions investment will hit $150 million,” di Chio says. “Already today I believe we are Italy’s leading film buyer, but by uniting our resources with those of Mediatrade, we will be even stronger.”

He stresses, however, that the 1990s — when Italians pumped millions into risky package deals — are long gone.

With the increased popularity of reality shows and local TV drama in primetime, national television has shown a reduced appetite for firstrun features, dictating a far more selective acquisitions policy and a general drop in volume.

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