Last week both the New York Times and the Wall Street Journal reported that an announcement from Digital Cinema Implementation Partners about their financing was imminent. The opportunity to play 3D content will certainly be welcomed by AMC Theatres, Regal Cinemas and Cinemark, however from the way the two newspapers covered the story you might get the impression it was the only reason. The financing would allow Hollywood studios to “roll out more 3-D movies in the wake of the success of James Cameron’s ‘Avatar’” wrote the Wall Street Journal and the New York Times said the “money would allow future 3-D film releases”.
Both media outlets seem to have gotten their hands on some internal briefings or at the very least seen an early draft of a press release as they have updated some of the details from previous reports about DCIP’s financing. A more exact figure of USD $660 million was cited by both papers which is down from the original USD $700 million rumor which was first floating around. As well, the number of screens has been upped to 14,000 from 12,000 with the Wall Street Journal putting the number of actual theatre sites being converted at 1,100. The New York Times laid out the details as follows:
According to a draft announcement making the rounds in Hollywood, the new financing, arranged by JPMorgan and Blackstone Advisory Partners, would total about $660 million. Of that, $445 million is expected to come from senior bank debt, $135 million from what is described as “junior capital” and $80 million from equity contributed by the member theater circuits. Nine banks, including Bank of America and Citibank, are part of the lending group. Blackstone raised the $135 million from other investors.
I always find it amusing to see how mainstream media covers the transition to digital cinema in reporting such news. The Wall Street Journal piece states:
In a digital conversion, theaters rip out old celluloid film projectors, and stop receiving weekly shipments of large film canisters. They instead use fiber optic lines to transfer huge digital film files.
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After completing VPF deals with six studios last June, Film & Kino has announced the selection of Unique Cinema Systems as an integrator for nine out of the ten sub-contracts it is awarding to convert cinemas across Norway to digital. Film & Kino put the contracts out to tender at the end of last year and numerous integrators, including Nordic Digital Alliance which won the tenth contract, had been vying to land a portion of the work. As well, by December of 2009 it seemed as if just about every equipment manufacturer had sent representatives to Oslo.
It was highly anticipated (at least by me) that Unique, based in Bergen, Norway and Dublin, Ireland, would wind up with a lions share of the contracts. After all, they are one of the few, if not the only, digital cinema integrators and deployment entities in Norway. According to Unique’s press release, the value of the Film & Kino contracts is estimated at NOK 300 million (EUR € 37 million or USD $50.13 million) and represents 300 screens.
Film & Kino had split the tender into ten different groups and then assigned each of Norway’s cinemas to one of the groups. Four of the groups were reserved for the four largest theatre chains in the country. Five of the groups were divvied up among each of Norway’s primary geographic regions and comprises of independent cinemas. The final group is for temporary cinemas, some of which are seasonal or travel between smaller towns. The contract for each of the groups was awarded separately by Film & Kino as well as individual committees made up of local participants with a working knowledge of the cinemas in their respective groups.
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Surely Walt Disney Studios was hoping their upcoming release “Alice In Wonderland” would generate a lot of media attention before it hits theatres on March 5th, though they probably weren’t trying to create the kind of buzz the picture received over this past week. Theatre owners in North America and Europe protested when the studio announced it would move up the DVD release of the movie to early June, just three months after Tim Burton’s adaptation of Lewis Carroll’s classic is distributed theatrically.
The announcement was made on February 8th by Disney’s CEO, Bob Iger, during an earnings call and seemed to come as a surprise to many. A surprising number of newspapers, websites and radio shows beginning running numerous stories about the dispute just two days later and through the course of last week. In fact, the Los Angeles Times managed to sum up the latest battle over movie release windows rather nicely:
The flare-up illustrates how an arcane topic once only of interest to Hollywood executives can affect moviegoers around the world.
The L.A. Times, along with The Wrap, touched on the fact that studios have been meeting with key North American exhibitors (probably Regal Cinemas, AMC Theatres and Cinemark) to negotiate a deal on shortening theatrical release windows. These meetings weren’t done surreptitiously. In January John Fithian, President of the National Association of Theatre Owners, told attendees of the International Cinema Technology Association’s tech conference that theatrical windows would be changing to help studios maximize revenues from home releases:
“As a person who represents the cinema industry I’m not going to tell you that we’re very happy that that model is going to change, but it has to. But it has to change logically and it has to change with studios and exhibitors sitting down together and analyzing the models. It’s not a great secret, this is happening. Leading studio executives, leading cinema representatives are talking about what these models should look like. The good news is we’re all at the table talking. That’s much better and much more cooperative than if studio x decided just to abandon the model and release a major picture in the cinema and in the home roughly at the same time. That’s not going to happen. What’s going to happen is some scientific thinking and some research and a deliberative process to maximize the model for the studios without killing the model for exhibition.”
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SmartJog and Ymagis issued a joint press release yesterday announcing they had reached a non-exclusive partnership agreement and will integrate their technologies to offer theatre owners a more robust digital cinema offering. The pairing seems as if it would be complimentary given that SmartJog specializes in high speed delivery of digital content and Ymagis focuses on digital cinema deployment.
What this means is that when Ymagis installs digital cinema equipment at one of their theatres, they will also be deploying SmartJog’s digital content delivery solution. During the first phase of the partnership, the SmartJog Gateway will be integrated into the Ymagis Cinema Central Server, which is a theatre management system. Content will arrive through the SmartJog Gateway and be handed off to the Ymagis TMS. This solution requires a theatre to make room for a separate piece of network connected equipment. The second phase of the partnership will integrate the software which runs the SmartJog Gateway directly into the Ymagis Cinema Central Server, allowing for content to be delivered straight to the TMS without need for additional hardware.
One bonus that comes with the partnership is that the two companies will be able to share their respective content delivery networks. This means Ymagis would be able to send content to any theatre in SmartJog’s network, even if the exhibitor wasn’t signed up with them. Both companies are based in France so it’s no shock that integration and deployment will begin in that country. Most, if not all, of the exhibitors Ymagis works with are in Europe.
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That collective sigh of relief you may have heard over this past weekend no doubt came from the North American motion picture exhibition and distribution industries. The Los Angeles Times report that investment bank JPMorgan was finally able to round up roughly USD $700 million for Digital Cinema Implementation Partners must have come as some relief.
Heaven knows we’ve been hearing about DCIP’s quest for financing for well over a year now. It seems at every ShoWest, Cinema Expo or Show East for the past 18 months we’ve been told by investment bankers that money is on the way. Though let’s face it, if the staggering amount of money being sought wasn’t enough to cause a delay, the worldwide credit crunch certainly didn’t help. Financing hasn’t been easy to come buy in any business sector and no matter how lucrative the project.
Of course, DCIP is the deployment entity founded by three of the world’s largest exhibitors; AMC Theatres, Cinemark and Regal Cinemas. With anonymous sources close to the negotiations confirming that DCIP’s financing will be announced in the next two weeks, the company can finally begin the rollout digital cinema technology on 12,000 screens across the United States and Canada.
Back in 2008 JPMorgan, armed with virtual print fee agreements from the studios, went looking for USD $1 billion for DCIP to convert 14,000 screens across all three circuits. Since then, AMC has gobbled up Kerasotes adding another 900 odd screens to the mix. There was no word on which screens or theatres will be converted or what will happen to those screens which don’t make it into the first 12,000. Nor was a time frame given to complete the transition, though it has been widely expected to take three years.
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