The managing director of Istituto Luce talks to Melanie Rodier about the company's changing objectives.

What are Istituto Luce's ties to the state and what is the company's budget'

We are a joint stock company owned by Cinecitta Holding and funded by the Italian government. The cultural ministry gives us $8.7m-$9.5m (L20bn-L22bn) every year. Of this, $434,000-$650,000 goes to Istituto Luce's exhibition branch; about $1.7m is used to reconvert our library; a further $434,000 is used for our three-year-old Classic Cinema programme, which offers twice-a-week screenings of US and Italian classic films in Rome, Bologna and Milan. The remainder of our budget is spent on film acquisitions and distribution.

How has Istituto Luce turned itself into one of Italy's leading distributors'

Our current success is based on two factors: we have concentrated on building new screens and on finding high-quality films that have strong commercial potential. For example, we have had Lars von Trier's Dancer In The Dark, Samira Makhmalbaf's Blackboards and Silvio Soldini's Bread And Tulips. The result of our policy is that we are out of the red, and have actually tripled our revenue to $26m over the course of the last three years.

What about Istituto Luce's focus on exhibition'

In 1995, we owned six or seven screens. Five years on, we have 100. With Germany's Kieft & Kieft Filmtheater, we recently set up a new company called Cinestar, which aims to build 30 multiplexes across Italy by 2002. Obviously, having our own theatres means being able to control how long our films stay in those cinemas.

How do you explain the success of a small film, such as Bread And Tulips, which so far has made $5.3m'

It is a fresh film. It is introspective, without being melancholic. It is also about women and revenge. It touched on certain points that had never been addressed previously. Our distribution policy was also important. We started with 30 copies, then increased to 50 just before the Davide di Donatello Italian film awards, and finally reached 180 copies. Part of its success was also because we launched it in March, at the end of the season when it's quiet.

What about Istituto Luce's role in helping new talent'

We have a contract with the state to distribute a certain number of films by first-time film-makers every year. Right now, we also have an accord with Fabrica - which produced Roger Gnoan M'Bala's debut title Adanggaman and Makhmalbaf's Blackboards - whereby Rai Cinema takes TV rights and covers post-production costs, and Istituto Luce takes care of distribution. We are also handling a $434,000 government scheme for the development of new projects, which enables us to finance 70% of a production company's costs on selected screenplays.

What are your future objectives'

To concentrate on boosting the success of films in smaller towns. A commercial hit in Italy makes 51% of its takings in 14 key cities. That means 49% must be made in 300 towns. So it is important that films do much better outside Rome and Milan. As such, we are building more regional cinemas and multiplexes, and also want to get directors and actors to do more promotional touring across Italy.

After a career in the industrial and financial sectors, 56-year-old Roberto Patruno joined RCS Produzione TV. From 1989-1994, as managing director, he teamed up with former Rai executive Sergio Silva to create several big-audience television drama series such as Octopus (La Piovra) and Cane Sciolto. He joined Istituto Luce in 1994 and took up his current position in January 1999.