Giancarlo Leone, Head of Italy’s TV Producers’ Association, on New ‘Rules of Engagement’ With Streamers (EXCLUSIVE)

The Hunter Italian TV series
Courtesy Cross Productions

Ahead of the start of Rome’s film and TV market MIA on Wednesday, Variety spoke exclusively to Giancarlo Leone, the head of Italy’s TV producers’ association APA, about the issues producers in Italy face, including COVID production protocols, a drop in TV ad revenue, and establishing new rules of engagement with the streamers.

Italy, after being among countries hardest hit by the coronavirus crisis, is now among territories coping quite well with the impact of the pandemic, as reflected by its relatively robust TV production output. Though sets shut down between March and June, since July cameras have been rolling again across Italy on dozens of TV series, including the 5th, and final, season of “Gomorrah” for Sky; Netflix’s “Zero,” about present-day lives of Black Italian youths; and pubcaster RAI’s anti-Mafia drama “The Hunter” (pictured).

However, the challenges faced by TV producers in Italy are many. For starters RAI, after driving Italy’s TV production sector for years, is suffering from less resources due to shrinking advertising. And while Netflix and – to a lesser degree – Amazon are commissioning more content, some Italian producers aren’t happy about doing deals with the streamers where they feel they don’t hold on to enough backend.

Excerpts from the conversation with Leone follow.

How badly has the pandemic impacted TV production in Italy?

Between July and December we expect the value of production spend in Italy to total roughly €120 million ($141 million). There are currently dozens of open sets.

The huge effort that everyone has made – starting from producers and their willingness to take the risk and also thanks to an increased tax credit (for production) that basically went from 30% to 40% – means that this year the production volume in terms of spend will not be inferior to last year. Total 2020 spend (for scripted TV production) will amount to be at least €300 million ($354 million).

The forecast for next year is to raise that to €350 million, barring Covid complications.

That’s pretty amazing. What’s the picture in terms of TV drama commissions from linear TV broadcasters?

In the free-TV realm we are worried about a drop in investments. Mediaset has decreased investments this year, and there is the risk that RAI will do so next year. We know that advertising revenue will be down…As far as pay-TV goes, we are seeing more or less the same level of investment, even though the forecast for them is of a slight reduction in subscribers.

What about the streamers which are led by Netflix?

At the moment we estimate the total investment from streaming platforms in Italian scripted content is worth roughly €70 million ($82 million) a year. But it will grow in the next few years and that growth will be exponential. From 2023 onwards we estimate that the investment from OTTs in Italy will be equal, if not more, that RAI.

How is the EU’s recently approved Audiovisual Media Service Directive (AVMS) that sets a 30% local product quota for all streamers going to impact what they do in Italy?

It’s clear that this growth will have to go hand in hand with the certainty of investment obligations and also with rules of engagement. The Italian Culture Ministry has opened a new negotiation table to revise mandatory production quotas for all players, based on the directive, which parliament will soon turn into law. It’s clear that we will push for more investments from everyone and for clear and certain rules pertaining to OTTs.

Separately we are in discussions with them (the streamers) about some of the principles pertaining to the rules of engagement.

What are the main points of these discussions?

We have to avoid the perpetuation of practices that we consider incorrect. Among these is the incongruity of the value of rights that currently remain in the hands of independent producers.

Can you explain?

The current model these days is that OTTs when they invest on a project, they finance it and basically the producer ends up getting a producer fee. This is obviously not okay. And we’ve told all the OTTs that we’ve spoken with that the rules of engagement have to change when it comes to the value of rights. Producers can’t just be getting a producers’ fee in exchange for what they do, otherwise they become executive producers, not independent producers who have to hold on to IP.

What’s the response from the streamers?

It’s not negative. They are listening very carefully, but we still don’t know what their position is.

Can the business model between Italy’s producers and Netflix and other streamers be dictated by the way the Italian parliament implements the AVMS directive?

The answer is yes. Even current Italian legislation has some rather vague rules regarding rules of engagement. We expect that the new legislation will also provide clear guidelines on the new rules of engagement.

When do think these new rules of engagement regarding Italian independent producers and streamers will be operational?

We’ve been told that the Italian parliament will have new legislation in place by year’s end. But I hope that we will reach a separate agreement with them before that.