After months of negotiations, Italy's only pay-TVplatform, Sky Italia, has signed a landmark deal with Italian producers toinvest Euros 46m in Italian cinema over the next two years.

Under thedeal, Sky will buy all Italian films whose pay-tv rights became available fromJanuary 1, 2004 and which have registered over 25,000 admissions in Italiancinemas. Such films represent 50% of all Italian pictures released and 98% ofall grosses for Italian films.

Sky CEOTom Mockridge said the broadcaster will buy up to 60 Italian pictures per year,and may also consider buying films that have not reached the mandatory 25,000admissions in order to support debut features and films that have haddistribution problems.

Acquisitionprices will range from a minimum of Euros 75,000 for films that have registered25,000 admissions, to Euros 1.8m for films that have been seen in cinemas bymore than 4m people.

Sky willalso pre-buy certain Italian films, for a minimum investment of Euros 200,000per film.

Mockridgesaid: "The only forces at work here are Italian cinema, which is among thestrongest in the world in terms of box office, and our subscribers, who haveshown they want to watch Italian films."

Aurelio DeLaurentiis, head of Italy's Unione Nazionale Produttori Film (UNPF), noted thatSky Italia's acquisition prices "are still low compared to some othercountries."

However,De Laurentiis and Angelo Barbagallo, head of Italy's Associazione Autori eProduttori Indipendenti (API), who both signed the deal, pointed out that itwas the best deal that Italian producers could hope for at this time.

"Skytold us they couldn't repeat the flop we had with Telepiu and Stream,"

said DeLaurentiis, referring to the two pay-tv platforms severe financial troubleswhich lead to their merger. "They told us they needed a solid businessplan or in one year we'd all be without any pay-tv players like we were for twoyears before the arrival of Sky Italia," De Laurentiis said.

Barbagalloalso underlined that it was a landmark deal in terms of transparency, and"the first step towards greater transparency in Italian cinema."

Negotiationsbetween Sky and Italian producers started in January 2004, after months ofaccusations from producers and distributors regarding Sky Italia's failure toearmark an investment for Italian film after its arrival on the market inAugust 2003.

Sky saidit reserves itself the right to lower its investment in Italian film shouldanother pay-tv player enter the Italian market, or if its subscriber numbersdrop from its current 2.7m to below 2.2m.