Tag Archives: AccessIT

Cinedigm Year-End Figures Shows Company Treading Water

Cinedigm has published its Q4 and year-end financial figures for fiscal 2009, which make for interesting reading, given that the company is the only* publicly listed third-party digital cinema operator. The good news is that the company is treading water, not drowning. The bad news is that it does so in a sea of red ink. Let’s take a closer look at the number and highlight some of the key statements in the company’s press release.

You know that the company has little to write home about when it starts off its list of achievements with the re-branding of the company from AccessIT to Cinedigm, instead of talknig about the number of screens converted, as CEO Bud Mayo does:

“The past year has been tremendously exciting for Cinedigm. Not only did we rebrand the company, but we also brought ground-breaking events to consumers and fans of college football and the NBA in the fourth quarter.”

He then goes on to acknowledge that it is a cold financial wind blowing out there, but trusts the resilience of the exhibition industry and 3D to carry the business through. So how bad are the economic conditions and what has the impact been for the company’s bottom line? First of all, let’s do way with Cinedigm’s EBITDA and the likes. Any CFO with half a brain these days will tell you, revenue is vanity, profit is sanity and cash is king, so the fact that Cinedigm’s revenue is up three per cent is of little consequence in the larger scheme of things.

Encouragingly operating losses decreased from $5.9m to $4.9m for FY09 compared to FY08, according to Cinedigm, due to “increased revenues and reduced direct operating expenses and SG&A, offset by an impairment charge and increased depreciation.” Similarly losses decreased for Q4 from $2.4m to $2.0m. But look more closely at the P&L figures lower down, particularly for the last three months. you will see that net loss was improved by $1,889,000. However, this is more than explained by the difference in interest payments of $2,378,000, which is half a million more than the difference in profit and loss for the the last three month. So the depressed interest rates is what is helping Cinedigm, rather than any management miracles.

There are also some worrying admissions that point to financial challenges in the months ahead:

Fiscal 2009 fourth quarter revenue decreased by 18%, to $17.9 million from $21.9 million in the comparable year-ago period primarily due to a contracted 16% step-down in VPF rates and seasonally fewer titles and prints in the quarter. This contracted step-down in VPF rates charged to the major studios will stabilize with just one more contracted reduction of 7% in the third quarter of fiscal 2012.

So the good news is that there will only be one more cut in the VPF rate, the bad news is that there should be any cut in the VPF rate in the first place. Remember that AccessIT (as it was then still called) got the best VPF rates that any company will ever get from the Hollywood studios in Phase 1 of its deployment – which mainly helped kit out troubled exhibitor Carmike – with VPFs currently being much lower.

It is well known that there are penalty clauses in VPF payments for entities that don’t meet their target number of screens (hello, Arts Alliance and XDC!), but that there should be automatic VPF fee cuts for entitites that came very close to meeting their full target, s AccessIT did in Phase 1, is troubling. And where does Cinedigm stand with regards to deployment for Phase 2? Mayo again:

“We are optimistic about our intensifying efforts to secure financing for Phase 2 installations through third party lenders as well as our exhibitor and vendor partners which will generate ongoing fees and other key revenue streams for Cinedigm. To date we have installed 139 Phase 2 screens and approximately 3,900 screens in total.”

139 screens is a drop in the ocean, or just over one per cent, of the planned 10,000 screens for Phase 2. Don’t expect Cinedigm to be collecting much in the way of the anyways reduced  VPF for these screens. Cinedigm aknowledges as much when it goes on to state that “All comments regarding fiscal year 2010 do not assume a large Phase 2 deployment or a large rollout by other entities, including DCIP, although the Company expects both to occur.” Though to be brutally honest, the likelihood of the latter is greater than the former.

Instead Cinedigm is pinning its hopes to a growth in DMS (digital media services) division revenue, cushioned by steady income (minus another VPF rate cut) from Phase 1. The strategy is thus to keep treading water, hope for the financial climate to improve. At leasthe amended credit facility with GM should ensure that no sharks will be circling just yet.

The situation is unlikely to be much better for the likes of AAM and XDC, though because they are not publicly listed companies, there is no way of knowing whether they are swimming, sinking or treading water nearby, waiting for rescue in the form of radically improved financial climate and/or a buy-out.

*(Companies like Dolby and Kodak are also engaged in third party deployment, but it is not their primary business, unlike Cinedigm, which we group with Arts Alliance Media and XDC)

Digital Cinema Integrators Continue to Bleed Money

There is a standing joke in the industry that to make a small fortune in digital cinema you need to start with a large fortune. Sadly, this sentiment seems to be vindicated by the latest quarterly figures from Cinedigm (formerly AccessIT). The company’s scorecard is impressive enough:

Cinedigm Digital Report Card

And the revenue has been going up year-on-year and quarter-on-quarter, as the press release proudly trumpets:

Access Integrated Technologies, now doing business as Cinedigm Digital Cinema Corp. (“Cinedigm” or the “Company”) (NASDAQ: CIDM), reported a 10% increase in year-to-date revenue to $65.1 million, and a 6% increase in revenues, to $22.7 million for the fiscal 2009 third quarter ended December 31, 2008, versus the year-ago periods. The Company posted an Adjusted EBITDA (defined below) of $11.0 million or $0.40 per share, an improvement from the fiscal 2008 third quarter of $8.4 million.

But is there any profit? No, the company is still burning through money. $17.4m in losses in the most recent quarter to be precise. What are the implications of this? The 10-Q transcript makes for grim reading; Read More »

AccessIT Signs VPF Deal With Overture Films

When it comes to virtual print fees all the talk lately has been about which studios have signed with Digital Cinema Implementation Partners, however there are other integrators signing distributors to VPF deals.  For instance, AccessIT announced on Wednesday that they had reached a ten year VPF agreement with Overture Films to show the indie distributors films in digital cinema equipped theatres that were a part of the the integrator’s Phase 1 rollout.

The two companies are far from strangers, as Overture already uses AccessIT’s distribution software and satellite delivery services.  As well, the mini-major had been distributing its films through AccessIT’s digital cinema network on a per film basis, including such titles as “Mad Money”, “Henry Pool Is Here”, “Sunshine Cleaning” and the indie hit “The Visitor”.  Overture, which was founded in 2006 by former studio execs Chris McGurk and Danny Rosett, only began releasing films this year.

Releasing films through a digital cinema network outside of a VPF agreement can often be costly because integrators usually charge a premium VPF to distributors without an ongoing deal.  Read More »

AccessIT To Beam Live 3-D Events To Theatres

AccessITHaving announced their CineLive offering at ShowEast in October of 2007, and with the success of the live 3-D broadcast of a Dallas Maverick’s basketball game, AccessIt announced on Monday that it would be beaming live events in 3-D to 150 cinemas throughout the United States. The offering will commence immediately in 50 theatres equipped with 3-D digital cinema technology and is expected to grow to the full 150 sites by the end of 2008. The Bigger Picture, AccessIT’s alternative content subsidiary, will handle the distribution of the live events.

In the press release announcing the program, Bud Mayo, the chairman and CEO of AccessIT, stated:

“By deploying these systems now, we hope to encourage more live 3-D programs to accompany our proven 2-D live broadcasts. The expansion of pre-recorded 3-D content has broadened the addressable market considerably during the past year and we are committed to providing more choices for theatre owners and content providers alike.”

CineLive is a joint venture between AcessIT, International Datacasting Corporation and Sensio Technologies Inc. AccessIT will install CineLive in the top 100 markets in the U.S. and use its proprietary satellite network to transmit the live events to digital cinema systems it has installed at customer’s theatres. Presently, AccessIT has deployed such equipment on over 3,700 screens throughout the country in its first phase and plans on entering its second phase of installations on more than 10,000 screens later this year.

With the right promotion and marketing, the concept could prove to be a winner in attracting patrons to exhibitor’s theatres on days in which attendance would otherwise be relatively low. After all, during the NBA playoffs and the recent Stanley Cup Finals sports fans ventured to arenas and stadiums to watch their teams compete in away games on jumbo screens. With a quality 3-D broadcast, exhibitors could easily woo such fans into venues that are potentially closer to their homes. Concerts for some of the hottest musical acts should also be an easy sell, what with good concert tickets being nearly impossible to obtain, not to mention prohibitively expensive.

Now all exhibitors have to do is get a liquor license so they can serve beer, and potentially spring for a few security guards to keep any rowdy fans in line after they’ve downed a few pints.

AccessIT Wins Cinema Buying Group Bid

Cinema Buying GroupAfter months of industry speculation, the Cinema Buying Group (CBG) has finally announced which digital cinema integrator they will be going with to help roll out the emerging technology to its more than 600 members in the United States and Canada. The buying program put together by the National Association of Theatre Owners (NATO) for small and independent theatre operators announced that AccessIT was their choice to provide digital cinema equipment and service to more than 8,000 screens.

When CBG initially sent out their request for proposal back in the first half of 2007 it quickly sent digital cinema integrators and equipment suppliers into a frenzy. Of the ten vendors that submitted initial proposals, CBG slimmed the list down to four finalists by November of last year; AccessIT, Digiserv, Kodak and Technicolor. Another round of information gathering occurred before CBG made their decision public earlier today.

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Disney digs ESPN sports with AccessIT

Trust Disney to have foresight and show initiative when it comes to alternative content in digital cinemas. While the NFL is sending cease and desist letters to Wisconsin cinemas showing Packer games, Disney has teamed up with AccessIT through its ESPN division to screen live HD college football games in Texas cinemas. From the press release:

This is the first time Disney, ESPN and AccessIT have joined forces to provide a live sporting event to paying audiences following tests last year. It is also the first event at which AccessIT’s CineLive(TM) technology, providing live 2-D and 3-D streaming of alternative content to theatres, will be employed for a major sports spectacle since the product was announced last fall.

“One of the many reasons we’ve supported AccessIT’s leadership in transitioning the industry to digital cinema is to be able to provide events such as this one to eager audiences,” said Chuck Viane, President, Walt Disney Studios Motion Pictures Distribution. “Fans get to enjoy the action of often sold-out games and the camaraderie of others without having to travel great distances, and each one gets the best seat in the house.”

Given Disney’s long history of digital 3D involvement – or Disney Digital 3D(TM), to give it its proper name – it should be no surprise if we are less than a year away from the first Disney/ESPN Digital 3D sporting event.

It reminds me of a digital cinema conference at least five years ago (a different eon in digital cinema terms) when I sat next to Bob Lambert, Disney’s Corporate Senior Vice President, Worldwide Media Technology and Development , listening to a panel discussion about alternative content. At one point he turned to me and said, “we’ve brought the cinema into the living room, it’s only natural that we take the living room back into the cinema now.” Surprised that a studio guy would be so cool about alternative content, I asked him if I could quote him on that. He thought about it for half a second, and said, “sure, why not.”

Now it helps that Disney happens to own ESPN, but mainly this has come about because there are a lot of very smart people working at Disney when it comes to digital. And Bob is a real mensch, as well as being one of the people who got digital cinema started way back in 1999, though like his then colleague Phil Barlow, is too modest to accept the full amount of credit that he deserves.

So a small amount of credit to Bob as well for the latest development.

DDCinema Beams Opera To European Cinemas

MefistofeleOn Sunday January 27th, Distribution Digital Cinema (DDCinema), the joint venture between XDC, Qubo and Dynamic, jump started their operations by broadcasting a live performance of composer Arrigo Boito’s opera “Mefistofele” from the Teatro Massimo in Palermo, Italy to 19 screens located in Belgium, Germany, Italy, Spain, Switzerland, The Netherlands, and the United Kingdom.

There was no official word on attendance of “Mefistofele” at any of the European theatres or how much tickets cost, but the Teatro Massimo, one of the largest opera houses in the world at 3,500 seats, was sold out with patrons paying top dollar to attend the opening night of the of the season and the first performance of a new production of Boito’s only complete operatic work. The opera, originally based on Goethe’s Faust, was beamed to cinemas via satellite and presented in high-definition.

In an oddly worded press release Elena Rasori, Project Manager of DDCinema seemed quite pleased with the event:

“‘Mefistofele’ was really fine, the singers were excellent and the image quality was really nice and colourful. The lights were modified for the video shooting and the quality was top rate. There was also an introduction by Madleyn Monti of the main artists with short interviews, as well as the plot in English and Italian.”

DDCinema joins a growing number of digital cinema service companies and alternative content distributors delivering live opera and fine arts events to motion picture theatres. AccessIT recently announced they would be simulcasting performances of San Francisco Opera productions to theatres throughout the United States and National Cinemedia started the trend in 2006 by working with the Metropolitan Opera out of New York to do the same. DDCinema seems to be the first company focusing exclusively on broadcasting European events to European cinemas.

The DDCinema partnership was only announced in late December 2007 by the trio of companies as an alternative content distribution initiative. The company will specialize in distributing between 10 and 12 recorded fine arts events to movie theatres each year with a few live broadcasts in the mix. These days that seems to be either operas or ballets filmed in HD, though DDCinema hopes to expand their offerings to sporting events, stage products, concerts, documentaries and even television programs.

While it is nice to see opera making a resurgence amongst patrons, even if it’s at the local multiplex, for such programs to be sustainable on an ongoing basis DDCinema may have to broadcast to more than 19 screens. Presumably the number of screens on which such content will grow over time along with XDC’s install base and the adoption of digital cinema.

2007 – the Year of Opera at the Movies

If there was one true surprise in the digital cinema industry this year it was that people were prepared to pay a premium for a night at the opera at their local multiplex. It was the New York Metropolitan Opera (The Met) that kicked it off in the early days of the new year with a world-wide HD transmission of The Magic Flute. And it is only set to get bigger for the Met next year, as confirmed by this interview with Peter Gelb, the general manager of the Met (High-def Opera for the Masses):

Tomorrow, The Met launches its second season of the “Metropolitan Opera: Live in High Definition” – simulcasts at the multiplexes in those cities, among more than 600 movie theaters, performing arts centers and universities worldwide.

That’s triple last year’s number.

Leading off is Charles Gounod’s sensuous “Roméo et Juliette,” starring Netrebko and tenor Roberto Alagna as the doomed lovers, with another legendary tenor, Plácido Domingo, at the podium.

As opera lovers savor the last of this season’s simulcasts April 26 – Gaetano Donizetti’s sparkling “La Fille du Régiment,” with soprano Natalie Dessay in the title role and Flórez in the part that made Luciano Pavarotti famous – “Live in HD” will reach an audience approaching 1 million.

After the Met kicked it off, the rest of the arts and cinema world followed and the phenomenon seemed to grow and grow, with non-live HD play-outs of Glyndbourne Opera in the UK and announcements of the beaming of La Scala to the US. Even other stage-related performances all across the world found favour with local audiences, be they the Royal Dramatic Theatre in Sweden or the Australian Ballet in Sydney, both going out to small towns and villages i the outback normally not touched by this sort of culture. NATO president John Fithian himself declared that he was surprised by this trend.

Rounding of this year comes a confirmation of the trend in that AccessIT has found an opera to climb into bed with by announcing a deal with the San Francisco Opera in a four-year world wide agreement. Significantly a deal with the opera’s unions finally sealed the deal. From the press release:

A landmark revenue sharing agreement with the International Alliance of Theatrical Stage Employees (IATSE), American Guild of Musical Artists (AGMA) and the American Federation of Musicians (AFM) paves the way for these digital cinema presentations and other electronic media projects. The parties have reached a tentative agreement, pending final ratification, for a four-year experimental agreement that involves a supplemental media fee to clear vastly expanded rights for up to six titles per year. In this new agreement, union members would also participate in revenue sharing on top of the supplemental fee. Earned revenue received by San Francisco Opera, less 20% to the Company as a flat all-inclusive distribution and administration fee, would be split 50/50 with the unionized groups, the conductor, and the designers. The Companys significant capital investment in technology allows for revenue sharing from the first dollar earned rather than from any calculation of net profits.

The New York Times has a very good article looking at the whole trend of operas-with-popcorn. It also nails the key differentiator between the Met and the SFO that could further spell the difference between ‘Encore!’ and ‘start sweeping up the popcorn’ for cinemas, which is that “the Met shows its operas live. San Francisco will transmit them after the fact.” While Glyndbourne found and audience, opera lovers prefer their product fresh rather than caned.

Next year we are likely to see big hitters like the Covent Garden’s Royal Opera House enter this space and with it there will be increasing segmentation between A-list and non-A-list operas. There will also be a renewed look at the exclusivity that some of these distribution deals entail for cinema chains. In the case of alternative content for digital cine,a it seem tp be that it ain’t started at your local ‘plex until the Fat Lady sings.

Nutcracker

Update: In addition to the ones above, the Washington National Opera is beaming to US college campuses (see here) while north of the border, the National Ballet of Canada is giving Cineplex patrons a taste of The Nutcracker shown live on 69 screens. Detail here.

French Servers For French D-Cinema

Doremi cinema logo Much to no-one’s surprise, French cinema chain CGR will use Doremi servers for their digital cinema deployment with Arts Alliance Media (AAM). This has less to do with both companies being French (though it doesn’t exactly hurt) than with AAM’s new found love for Doremi after the costly tech divorce from QuVis. More details on the technology providers and plans from the press release:

CGR Cinémas chose Doremi’s DCP-2000 server out of the brands evaluated and selected by AAM. Christie Digital has been chosen to provide digital cinema projectors and French cinema integration and services company Cine Digital Service will provide local installation and support services.

Two hundred screens are scheduled to be completed during the first year of the rollout that is set to begin in the first quarter of 2008. Eight screens will be equipped in December this year, in time for 3D digital cinema screenings during the Christmas holidays. In addition to the players, Doremi Cinema will also provide the Theater Management System (TMS) and the gateway integration with CGR Cinémas POS/Ticketing system developped [sic] by Monnaie Services. The Smartjog secured media delivery network will also be interfaced with the DCP2000 & TMS.

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Technicolor’s Miniscule D-Cinema Sign Up Is Still Poke In The Eye For AccessIT

Technicolor logo Sometimes companies must wish that they could gloat more in standard press releases and none more so right now than Technicolor in announcing their first three digital cinema exhibitor clients: Clearview Cinemas, iPic Entertainment, Cinemaworld. On a strictly numerical basis it is very little to crow about as between these three, two add up to less than 300 screen and one has yet to open a single cinema. But it is Clearview that is the tiny jewel in Technicolor small digital cinema crown at the moment. From the press release:

Clearview Cinemas is a Chatham, New Jersey-based exhibitor that operates 50 theatres with 254 screens, 246 of which are in the New York DMA, the countrys largest metropolitan market. Clearview also owns and operates New York Citys legendary Ziegfeld Theatre, one of the countrys most famous movie palaces and the location of countless movie premieres and red-carpet events.

Clearview Cinemas is thrilled about working with Technicolor to further deploy digital Cinema in our circuit and to bring our customers all of the benefits of this pioneering technology, said Doug Oines, senior vice president and general manager of Clearview Cinemas.

Clearview ciemas logo Had there been an ‘About Clearview Cinemas ‘ at the bottom of the press release it might have mentioned that Clearview was established by Bud Mayo, who went on to create AccessIT, before he sold it on to Cablevision. The fact that Clearview has selected to be one of the first to go with Technicolor rather than with the largest and most established digital cinema third-party operator is a clear snub to Mayo. This development did not pass un-noticed in the industry and even made it into a Yahoo! discussion forum that resulted in the following exchanges:

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