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Banking on a future in online film distribution, former CAA exec and Web site developer Mark Patricof has formed KPE Films to produce a series of pics to which he would retain the Internet broadcast rights.

Patricof, who served a six year stint with Creative Artists Agency, co-founded Kaufman Patricof Enterprises, the parent company of KPE Films, in 1996 to serve as an Internet incubator and venture capital firm to develop new entertainment Web-based startups.

Patricof is CEO of the New York-based firm, which has helped design and launch several Web sites for ABC, Showtime, “The Oprah Winfrey Show,” Hasbro, e-tailer Bluefly.com, Princess Cruises, Variety and extreme travel magazine Blue (of which it is an investor).

“I started a company on the Internet because I liked the fact that distribution was filterless,” Patricof told Daily Variety. “Content is judged on its own merit. There’s no middleman. The hope was to create content and migrate that to other platforms. It was only logical to go into features.”

KPE will utilize the film division to create and produce pics to be distribbed theatrically and on the Internet, as well as through other platforms, including cable modem networks, vidgame consoles, enhanced TV, broadband and digital set top boxes.

KPE Films, with offices in New York, Los Angeles and London, plans to produce pics in the $2 million-$10 million range, some financed fully by KPE through its $25 million in reserves, others produced with backing from co-financing deals with studios or other production companies.

“We have enough capital to make pay or play deals with talent,” Patricof said. “We’re not stuck with a first look deal. … We pay our bills doing Web sites. We’re going to take the capital we’ve raised and apply that to the publishing and movie industry.”

KPE Films will retain digital distribution rights to all pics produced and use its inhouse Web design team as marketing muscle to promote the pics online.

“As broadband comes, we’ll own a library of content,” Patricof said. “When convergence hits, we’ll be ahead of the game.”

KPE has already optioned “The Pickpocket,” a script by commercial director Jerry Shore described as a drama about a pickpocket turned high-profile businessman who, after falling in love with a beautiful young thief in Europe, finds himself returning to old tricks.

Lead KPE Web site producer Dan Abrams has been tapped to head the New York office. He will scour the Gotham market for new material and help control the online distribution rights to the films it produces.

Abrams worked for Walter Cronkite’s docu film company, Cronkite Ward, prior to joining KPE in 1996. He oversaw production of KPE’s client services, including handling high profile projects as ABC Sports’ College Football site, Variety.com and the site for producer Cary Woods’ Independent Pictures.

Creative executive Jeremy Kleiner has been tapped to handle the L.A. operations, whose 10 employees will work with KPE’s 50 other staffers there. The company has 60 employees in New York. Kleiner was a creative exec for indie producer Carol Baum.