Acquisition & Production: Leone Gets Lion's Share.

To explain the rather complex new production and acquisition developments at RAI, Video Age had to call upon an industry heavyweight: Giancarlo Leone, the 44-year-old president and CEO of RAI Cinema, a fully-owned subsidiary of RAI. Leone was most recently the president of RAI International, the satellite radio-TV service outside Europe. He also happens to be the son of Italy's former head of state, the sixth President of the Republic Giovanni Leone.

Incorporated in 1999 with seed capital of $125 million, RAI Cinema became fully operational this year after assuming the functions of TV rights acquisition, production (theatrical, experimental film ventures under the banner New Cinema Projects, animation, TV series and MOWs) and domestic theatrical distribution. All the above divisions fall under the command of COO Carlo Macchitella who, in turn, reports to Leone. Also reporting directly to Leone is the Marketing and Strategy division managed by Adriano Coni.

RAI plans to float RAI Cinema on the Italian stock exchange by relinquishing up to 49 percent of its ownership. This soon-to-be-implemented strategy also holds for RAI's other holdings, such as: RAI Net (Internet), RAI Sat, RAITrade (international sales), RAI Way (digital transmissions), Serra Creativa (format development unit) and SIPRA (advertising representative).

According to Leone, RAI Cinema will operate on an annual budget of $250 million. Approximately $200 million will go toward program acquisition and $50 million toward production. Although RAI has appointed RAI Cinema its exclusive acquisition agency (for a fee) to supply its three broadcast networks, each of the networks can produce directly or co-produce domestic drama series.

In effect, RAI Cinema will supply 30 percent of the 8,000 annual hours of film and drama aired by RAI's three over-the-air TV channels.

Considering the library of programs that RAI transferred to RAI Cinema, the RAI subholding company holds program rights estimated to be worth $115 million. Leone valued RAI Cinema's all-digitized library by monetizing its 28,000 available airings. All this plus the operating fund makes RAI Cinema a $490 million enterprise in its first year. As far as production is concerned, Leone is looking for TV movies with $3 million budgets. He will then turnaround the TV rights of those movies to RAI for $1.5 million each. The deficit will be recouped first from the international market (through sales and/or co-productions) and then in the domestic syndication market. RAI Cinema will sell its products internationally both directly and through agreements with other distributors, including RAI's other subsidiary RAITrade (see accompanying story). Domestically, RAI Cinema will market its products in all media, including home video and theatrical distribution.

RAI Cinema employs some 60 people and has seven board members including Leone, RAI president Pierluigi Celli and RAITre managing director Giuseppe Cereda (a former RAI acquisition executive). Giuliano Montaldo chairs the board.