Saving 2009 Submitted by Nick Dager on Tue, 07/29/2008 - 16:23. Big Picture The Big Picture As exhibitors bask, at least temporarily, in the financial glow of The Dark Knight, there is now reason to be cautiously optimistic about the box office outlook for 2009. It was widely announced in recent days that Twentieth Century Fox has reached an agreement with the Digital Cinema Implementation Partners.
The news was first released during a July 24th earnings call to analysts during which Don De Laria vice president of investor relations for the Regal Entertainment Group said this:
"Now briefly turning to the digital cinema initiative, a DCIP update, last quarter we indicated that digital cinema implementation partners, or DCIP, the joint venture between Regal, AMC, and Cinemark, was finalized in agreements with the various studios to provide for the upgrade to digital cinema. I'm pleased to report that last week we achieved definitive progress toward this goal as DCIP signed the first digital deployment agreement with a major studio. We believe that this first signing is a major milestone and we are optimistic that DCIP will sign additional studios in the near-term.
"As we indicated last quarter, J.P. Morgan and the anticipated financing sources continue to be involved in the process and we expect to begin the financing process once we have finalized the agreements with the majority of the studios. At this time, we would expect the digital conversion still to commence during the latter half of the fourth quarter."
At least three other studios are close to signing as well, and all the agreements would also likely include deals with AccessIT and the Cinema Buyers Group, in addition to DCIP. Not surprisingly, all three studios have major 3D movies scheduled for release next year.
One insider with knowledge of the talks told me, off the record, "As you know, moving forward on VPF deals is challenging. I expect the financing entities to have higher standards for accepting a deal. The ‘3D' studios are the likely candidates to sign first. Fox, Disney, Paramount. The rest have less incentive to be timely, as the first installs will be for 3D, and there's a full year of 3D releases coming up in 2009. Fox tends to be the most aggressive in signing deals. They were first with Arts Alliance a year ago, if you recall. Hopefully, things will continue to move forward in a timely manner, and we'll see several deals done by ShowEast. But getting more to sign than the three 3D studios could be challenging."
Another person still closer to the talks said Warner Bros is also close to reaching an agreement with exhibitors and would be expected to followed shortly thereafter by Sony and Universal.
Assuming nothing stalls negotiations from this point and the deals are in place by ShowEast in October, the winter months will be about deploying the thousands of screens in North America that would be covered under the agreements. "Regal's got fifty to sixty contractors trained and ready to go," said the insider. He added that the other companies are similarly prepared.
"The studios that have 3D movies coming out in early 2009 will probably have more 3D screens than are out there now but not as many as they might want," he said. "The studios that release 3D movies in December 2009 should probably have as many as they want."
This is the same news that has been out for a few weeks now. Just look at how long it has taken them to get this far (years) and they still have to get other studios to sign. Then on top of it all, they will have to get the funding completed with the banks in this tight credit environment. Access Integrated already has their studios signed and are still waiting for their Phase II funding.
Do you really have any solid info on "4TH QUARTER OUTLOOK" or are you just hoping that things will magically come together them as folks have been doing for the past years.
Don't get me wrong, I would like to see this thing go but I would not get excited until something concrete happens. This is the toughest environment yet with a softening economy and difficult credit situation (just look at BTNs own illiquid investments). Please feel free to persuade me otherwise.