Italian producers should seek private financial partners - or risk extinction.

That was the thunderous message delivered this weekend by Giampaolo Sodano, head of UNIDIM, Italy's national distributors' union at a conference near Rome. He revealed that more than 70% of Italian film companies have equity capital of less than Euros25,000, and only 2% have a capital of more than Euros500,000 and said that Italian producers need to adopt a more industrial - and less craft-driven - approach to cinema.

"Italian companies need the know-how of banks and other financial institutions or they will have no future," said Sodano, who is also president of Eagle Pictures, a dynamic local production and distribution outfit. Its investors include Interbanca and B&S Private Equity Group.

The conference, held during Italy's bi-annual Screenings, comes as Italian producers and distributors are being hard hit by a cutback of film rights acquisitions by free TV broadcasters and a complete freeze in financing from pay-TV. This has already forced several local outfits to look for new investors.

Recent examples include indie stalwart Mikado Film, which was bought out by multimedia giant De Agostini, and local production outfit Urania Pictures which has joined forces with Studio Canal to form a new joint production venture in Rome.

Meanwhile, an executive at Banca Nazionale del Lavoro, the only Italian bank to be consistently involved in film financing, urged producers to regain authority over Italian directors, who often hold the reins in local film-making.

Carlo Bernaschi, head of national multiplex association ANEM also joined in the call for a more commercial approach to local film.

"When the worldwide film industry started, Italy become one of its leaders thanks to the creative genius of its professionals. But at that time, film didn't need many financial resources, the magic lay in the innovation of cinema itself," he said.

"Italian cinema gradually became less competitive as cinema throughout the world became more industrial than craft-based.' At last, that is now changing."

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