Tag Archives: Cinedigm

The Real Reason That Carmike Bought Digiplex

Bud Mayo opportunist

Is A. Dale (“Bud”) Mayo the savviest man in US exhibition? One thing is for sure, after Carmike’s acquisition of Digiplex he is one of the country’s richest cinema entrepreneurs, with a hat-trick of deals in the last 15 years. So what lies behind this merger and what were the true reasons for it?

The deal itself is relatively straightforward: Carmike Cinemas is acquiring Digital Cinema Destinations Corp. (“Digiplex”) in an all-shares deal that will see each of Digiplex’s 7.93 million shares exchanged for 0.1775 shares of Carmike common stock. The deal is valued at around USD $64 million, of which USD $45 million is in stock and USD $19 million in assumed debt and obligations. Mayo has thrown his 39.5% voting stock behind the deal and the FCC and other regulatory bodies are unlikely to raise any objections or even require any screen sell-off.

Digiplex currently operates 206 screens across 21 locations and is in the process of acquiring another 5 theatres with 53 screens, for a total of 26 cinemas with 259 screens. Once the deal goes through Carmike will have grown to 280 cinemas with 2,936 screens across 41 US states. Significantly Digiplex brings four new states to the Carmike fold where previously it had no presence: Arizona, Connecticut, Maryland and New Hampshire.

What’s In It For Carmike

There is a two-fold reason for Carmike to do this deal. Inorganic growth (i.e. mergers and acquisitions) was the only way that Carmike could achieve the goal announced by its head last year.

Carmike Cinemas President and Chief Executive Officer David Passman stated, ”Carmike continues actively expanding our growing circuit, on our way to 300 theatres and 3,000 screens through selective acquisitions and the addition of multiple new-build theatres in promising locations like Decatur, across `Hometown America.`

Carmike has already acquired Muvico Entertainment with its nine cinemas with 147 screens in Florida, California and Illinois  for around USD $31.8 million late last year. Prior to this it purchased 16 multiplexes from Rave Review Cinemas (including seven IMAX screens) and three multiplexes from Cinemark (one Imax theater) for a total of eight Imax screens. There was also two theaters with a total of 16 screens in Kentucky and Tennessee bought from Phoenix Big Cinemas in 2012.

Carmike Cinema logo

So the deal to buy Digiplex is only the latest but largest in a series of acquisitions that total 30 multiplexes even prior to Digiplex in the last couple of years. While there is consolidation in the cinema industry both in the US and beyond, there is thus a clear roadmap that Carmike is following.

But these numbers, either multiplexes, screens, dollars or shares don’t tell the full story for Carmike – whereas a single digit does: 4.

The Lonely #4

Carmike likes to describe itself as “one of the nation’s largest motion picture exhibitors” and as “America’s Hometown Theatre Chain” but no matter which way you look at it, the chain is only the fourth largest circuit and a lonely fourth at that.

Why ‘lonely’? Consider who the top three circuits are, as well as who is fifth.

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Daily Cinema Digest – Thursday 20 March 2014

Ceasar's Palace Las Vegas

CinemaCon is just around the  corner. The biggest annual get-together of cinema owners and operators from all over the world takes place 24-27 March and Celluloid Junkie will be there.

Please note that there will be NO Daily Cinema Digest next week. Instead we will try to bring you breaking news and analysis as and when it happens. 

If you would like to arrange a meeting with us to tell us what you are up to (or discuss sponsorship opportunities) drop us a line. 


NCR/Movio: As you would expect, the CinemaCon press releases are coming in fast and furious.

NCR Corporation (NYSE: NCR), the global leader in consumer transaction technologies, and Movio, the global leader in marketing data, analysis, insights, and campaign creation and management for theatrical exhibitors and distributors, announced today that the two companies will enable integration between NCR’s cinema point-of-sale (POS) and loyalty software and Movio’s data analytics and campaign management platform. This agreement will provide a seamless data flow and management between both platforms.

“In the cinema space, having all marketing campaign data seamlessly filter into one system will ultimately allow operators to make smarter business decisions and forge deeper connections with their customers,” said Peter Beguely, chief solution officer, Movio. “Additionally, the enhanced loyalty integration is an especially appealing feature as it offers their customers the ability to enroll, earn points, and even use their phone as a loyalty card.”  LINK

Doremi: More pre-CinemaCon press releases, this one about Dolby’s new acquisition Doremi.

The world’s third largest theater chain, Cinemark USA, Inc., continues to see outstanding performance as it leverages a comprehensive set of cinema technologies provided by industry leader Doremi Labs. As 2014 progresses the actual numbers continue to stay extremely high. In approximately six (6) million performances in 2013, Doremi’s servers have delivered 99.992% uptime for Cinemark and its customers.

“The reliability of Doremi systems is extremely valuable to our operations” said Damian Wardle, SVP. Global Theatre Technology & Presentation, Cinemark Theatres. As a pioneer in the theatrical exhibition industry, Cinemark has used Doremi technology to take the cinema entertainment experience to outstanding levels of performance within our 298 theatres and 3,916 screens in 40 states.  LINK

Vista: Not really announcing any new technologies, Vista instead “welcomes” delegates to CinemaCon.

As one of the premiere exhibitors at CinemaCon, Vista Entertainment Solutions, the world leader in creating cinema management software solutions for the global cinema exhibition industry, will welcome their worldwide clientele to the four day event. In 2012 Vista received both the Exporter of the Year to the USA $500,001 – $5m’ category, followed by the “Supreme Award” at the New Zealand 2012 AmCham-DHL Express Success & Innovation Awards.

Vista software is installed in cinemas in 63 countries around the world (and counting) and currently holds an estimated 35% global market share in their sector. The growth of Vista in the US market since their Los Angeles office was established in 2009 has been meteoric and Vista has confirmed a technology partnership with a number of high profile American cinema chains since.  LINK

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Is Cinedigm A Digital Cinema Bellwether?

The time before, during and after any motion picture industry trade show is one filled with an endless stream of press releases. Any journalist covering the space receives dozens, if not hundreds, of emails from marketing departments and publicists during these periods filled with press releases. At some point, it becomes easy to read between the lines of such press releases, to determine which ones are truly important. But if one were to take a step back, it can also be easy to spot industry trends through the releases certain companies publish.

This was certainly the case at CinemaCon this past March, especially when it came to press releases distributed by Cinedigm. In the weeks leading up to the conference, the digital cinema deployment entity announced agreements with such exhibitors as Cinemaworld and B&B Theatres. AMC Theatres chose the company’s exhibition management system to help run their North American venues.

Then, during CinemaCon, announcements came that Goodrich Quality Theatres, Guzzo Cinemas, and Wehrenberg Theatres were all entering into deployment agreements with Cinedigm. This was interspersed with news about deals with Sonic Equipment Company and content distribution in Latin America. Shortly after the convention Cinedigm reported they had also signed Clearview Cinemas up to a deployment agreement.

Earlier this week Cinedigm thankfully aggregated much of the news about their deployment agreements into a single press release so that folks like me could keep all the information straight. It turns out I had good reason to take notice of how busy Cinedigm’s PR department has been lately – during the last quarter they signed deployment agreements with 32 exhibitors accounting for 1,402 screens at 142 sites. This is the largest number of exhibitors and screens signed during any quarter of the company’s history.

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Chris McGurk Says Cinedigm’s Future Is In Software And Content

Chris McGurk

Cinedigm's Chris McGurk

Not sure if you noticed, but over the past week Cinedigm’s stock price jumped over 33% from USD $1.50 to USD $2.00. It closed Friday out at USD $1.88. The sudden price increase in Cinedigm’s stock is likely due to a number of factors, rather than a single reason.

It has been a busy year so far for North America’s largest digital cinema deployment entity. In January industry veteran Chris McGurk (formerly with Overture Films and MGM) joined Cinedigm as it’s new chairman and CEO. In February the company announced improved financial results for the third quarter for fiscal 2011, hired back David Gajda as the chairman of their software division and signed Southern Theatres to a d-cinema deployment contract.

Last week AMC, the second largest U.S. theatre chain, selected Cinedigm’s Exhibition Management Solution to handle such head office tasks as film rental and revenue auditing. This was a day after the third annual Gabelli & Company Movie Industry Conference, where Cinedigm was represented by McGurk, whose presentation on maintaining theatrical film windows was reportedly well received.

In the following conversation, which took place on the eve of the first annual CinemaCon convention in Las Vegas, McGurk openly discusses the company’s stock price, digital Cinema, and most importantly, Cinedgim’s future business direction.

Celluloid Junkie: So, as someone who has attended ShoWest in the past as a studio executive, how does it feel to be heading to Las Vegas for CinemaCon as the head of a digital cinema deployment entity?

Chris McGurk: There’s a little bit of a difference but I think it’s kind of great because we’re positioned right in the middle. We’re not on the studio side and we’re not on the exhibition side, but we’re basically a facilitator for what both sides are trying to do and right now that’s a great position to be in. I was just at the Gabelli Conference last week in New York where we presented and listened to everyone talk for six hours. It seems the level of tension that exists between studios and exhibitors right now is higher than it’s ever been, primarily because of windowing. But I think a company like Cinedigm, a digital services provider, a provider of alternative content and software solutions, I think we’re in kind of a unique position to sort of get in the middle of all that and help find some solutions to make things work.

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Why Cinedigm Hired Chris McGurk As CEO

Chris McGurk

Chris McGurk

Okay, I admit that the headline of this post is pure click bait. But did you really want to read another story headlined “Chris McGurk Named Cinedigm CEO”? Truth is I wasn’t in Cinedigm’s board room when they offered Chris McGurk their Chairman and CEO positions, and thus I have no “inside” information. However, from the moment Cinedigm announced McGurk as their new CEO earlier this week my inbox has been flooded with emails from those asking about my own thoughts on the news.

Rather than take the usual Internet approach of writing up an analytical post before the ink was dry on Cinedigm’s press release, I chose gather my thoughts about the news for a couple of days. While it may seem at first that McGurk is an odd choice to head a digital cinema deployment entity, upon reflection one can see the benefits Cinedigm gains with the hire.

As the press release trumpeting the hire so diligently pointed out, McGurk has a ton of film industry experience. Every story reporting McGurk’s new role at Cinedigm recounted his lengthy professional history. Still I feel compelled to do it here. I first became aware of McGurk in the early 1990′s while working as an intern at Walt Disney Studios. At the time McGurk was President of the Walt Disney Motion Picture Group and it was hard to find anyone who had a bad word to say about him. Quite the opposite in fact. McGurk’s tenure at Disney from 1988 to 1996 included a stint as Chief Financial Officer on the studio side, among several other roles. He held similar senior titles (President and Chief Operating Officer) during his three year stay at Universal Pictures from 1996 to 1999.

McGurk is probably most associated with his last two companies Metro-Goldwyn-Mayer, where he was Vice Chairman and COO from 1999 to 2005, as well as Overture Films, where he served as founder and Chief Executive Officer from 2006 to 2010. This may have more to do with the current state of those companies than McGurk’s actual achievements, but more on that later.

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Cinedigm Topper Adam Mizel Provides Industry and Company Update

Cinedigm LogoAs Show East got underway back in October North America’s largest digital cinema integrator, Cinedigm, published a press release that was meant to serve as an industry update on the digital rollout in the territory. According to Cinedigm there were 12,802 digital screens in North America out of approximately 39,000 screens (not counting IMAX screens). That’s an increase of 65 percent.

I wondered where some of the figures Cinedigm was sighting came from and the company’s Co-CEO, Adam M. Mizel, was kind enough to speak with me at the beginning of November. Our conversation took place a week before Cinedigm announced second quarter revenues of USD $18.9 million. This was a 7.8 percent increase over the same quarter from last year, though the company suffered a net loss for the quarter of USD $9.4 million from continuing operations. The net loss for the first six months of Cinedigm’s fiscal year was USD $16.3 million.

Such losses might sound dire; however these figures are a 19.5 percent and 12.2 percent improvement over Cinedigm’s second quarter and first six months from last year and reflect non-cash depreciation charges. A true testament to the uptick in digital cinema rollout activity is the 13.3 percent increase in Cinedigm’s revenue to USD $38.2 million, which has helped make the company cash flow positive.

The same day as their second quarter earnings announcement Cinedigm revealed their Phase 2 financing entity had landed up to USD $86 million in senior credit from Societe Generale and Natixis. An additional USD $23 million in junior capital will come from Macquarie Equipment Finance.

What exactly does all this mean? Well, now Cinedigm has the ability to offer exhibitors non-recourse financing to deploy digital cinema equipment. Because the loans are being offered to Cinedigm as non-recourse, Macquarie will hold onto the title for the equipment. Cinedigm will continue to do what it always has; deploy, manage, bill and monitor digital cinema systems, work with content providers and be responsible for all the administrative work to service the debt.

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Goooaal! Cinedigm Scores With 3D FIFA World Cup Final

YouTube Preview Image

This past Sunday Cinedigm, a leading North American digital cinema deployment entity, achieved another live event milestone and I was there to witness it first hand. As we reported back in June, Cinedigm partnered with Sensio Technologies to bring the FIFA World Cup Final live and in 3D to theatres throughout the United States and Canada.

Event Details
At the time there was some uncertainty as to how many theatres were to show the FIFA World Cup matches and where they would be located. In total 25 FIFA World Cup matches were shown live in 3D at 475 venues in 33 different countries accounting for 4,500 screenings.

Cinedigm was given permission directly from FIFA to show the matches at 15 locations and theatres in Arizona, California, Florida, New Jersey, New Mexico, New York, Ontario Texas and Virginia were selected. Another 15 locations were allocated to NCM Fathom.

Originally Cinedigm intended to show both the semi-final matches as well as the championship game, which pitted Spain against The Netherlands. Instead they chose to hold screenings only for Sunday’s final in order to have one marquee event. The feed for the event was supplied by ESPN, which was capturing the match in 3D for its new 3D network.

From what I was told ESPN wasn’t too pleased about the final being broadcast in cinemas.

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Cinedigm and Unique Digital Release TMS Upgrades

Theatre Command Center Screenshot.png

Screenshot of Cinedigm's Theatre Command Center

Timed to coincide with this year’s Cinema Expo conference being held in Amsterdam through Thursday two well known integrators have released enhanced versions of their theatre management systems (TMS). North American deployment entity Cinedigm has included centralized management features in their Theatre Command Center TMS and Norway’s Unique Digital is making the next version of their RosettaBridge software available.

A TMS is software that enables a multiplex to manage all of their digital cinema servers, projectors, content, security keys and logs within a given theatre, all from a central location. It is often attached to a library management server where d-cinema content is stored.

Theatre Command Center
Cinedigm was one of the first companies to develop a working TMS which they named Theatre Command Center. Their initial version was integrated with Christie projectors and Doremi servers. It’s key features were:

  • Management of all content including MPEG, JPEG, trailers, preshow and alternative content.
  • Ingest of content via any delivery method including USB, satellite and fiber optic wire.
  • Remote operation of servers and projectors.
  • Automated scheduling of playlists that allowed for the transfer of content to the correct screen.
  • Integration with some point-of-sale systems as well as Cinedigms head office software.
  • Web access allowed users to log in from any computer connected to the Internet.
  • Real-time monitoring of d-cinema systems with system status alerts and notifications.
  • System log management.
  • Multi-language support.

Some of this functionality, such as content management and ingest, would be considered basic requirements for any TMS, no matter the manufacturer. Most of those who have been using the software that I’ve spoken with have had positive things to say about the software. The only consistent criticism I’ve heard is about the systems graphical user interface (GUI). I’m not familiar enough with Cinedigm’s TMS to add my own thoughts.

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Cinedigm’s Partnership For FIFA World Cup Makes Sensio

Cinedigm Sensio World Cup.jpgLast week Cinedigm announced a partnership with Sensio that will allow them to bring the FIFA World Cup Soccer Tournament being held in South Africa this month to theatres all over the world. What’s more, the matches will be shown live and in 3D.

The press release sent around to promote the partnership was was pretty standard, but there was one sentence that raised a question for me:

“To kick things off, the companies will use Sensio’s technology and Cinedigm’s theatre technology design to bring select matches from this year’s FIFA World Cup Soccer Tournament in Live 3D to hundreds of theatres around the world.”

My curiosity wasn’t necessarily stirred over which of the matches would be shown, because the release goes on to mention they’ll start with the quarterfinals. Instead, I was left wondering what “Sensio’s technology” actually was and how Cinedigm, a leading North American digital cinema integrator, would utilize it to project a live broadcast of a World Cup Soccer game in 3D. The rest of the press release only served to make me even more inquisitive, especially upon reading:

“…Cinedigm’s extensive experience in bringing live 3D sporting events to U.S. theatres through Sensio 3D format and CineLive technology.”

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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)