Lionsgate high-fives AccessIT

Deal with studio gives digital screen firm critical mass to pitch banks

Lionsgate has inked a pact with AccessIT to help fund thousands of additional digital screen conversions, becoming the fifth studio to sign aboard for the digital-cinema integrator's next wave of system rollouts.

AccessIT already has virtual print fee agreements in place with Disney, Fox, Paramount and Universal. So with Lionsgate now aboard for its Phase 2 deployment of digital theater systems, AccessIT boasts the same group of five studios backing another systems integrator — Digital Cinema Implementation Partners — and will turn its attention to securing bank loans needed to back up the studio funding and get hardware rolling into the marketplace. AccessIT helped implement an earlier round of about 4,000 screen conversions.

The integrator's Phase 2 agreement with Lionsgate was announced at the ShowEast exhibition confab here, where earlier Tuesday a panel of d-cinema proponents hashed through the challenges of waging the digital revolution. Chief among them: an almost complete absence of bank credit. In their favor, both AccessIT and DCIP have a couple of blue-chip investment firms representing them in their search for bank loans, and execs at both integrators suggest the turmoil on Wall Street will delay their rollout plans only a matter of weeks or at most a few months.

But most industryites believe AccessIT might encounter a longer wait for lender support than DCIP, as the latter represents the three largest U.S. circuits — Regal, AMC and Cinemark, for which it plans to convert about 14,000 screens to movie-quality digital projection during the next few years.

AccessIT's key relationship is with the Cinema Buying Group, a d-cinema consortium for smaller circuits who are members of the National Association of Theatre Owners.

"AccessIT has been a leader in shaping the digital-cinema era of our industry," Lionsgate distribution president Steve Rothenberg said. "Digital cinema brings the highest-quality viewing experience to audiences and provides the platform for 3-D movies like Lionsgate's 'My Bloody Valentine.' "

The extra-dimensional horror film is set to unspool Jan. 16 in 2-D and 3-D venues. Distributors hope for a rapid acceleration in the rate of digital conversions so that exhibs can take the next step of funding 3-D installations and make it possible to release films like "Valentine" entirely in 3-D venues.

"We're at the 1-yard line, but nobody is getting anything done until the credit crisis is over," AccessIT chief Bud Mayo said during the d-cinema panel discussion. "That includes us, but my advice is to get in line now so that you're not left out."

Indeed, Fox's d-cinema chief Julian Levin said there's no time to waste for any exhibs thinking of joining the CBG to tap into AccessIT assistance for screen conversions.

"I don't know how long you have, but it may be only a month," Levin said. "And if you don't have something in place by then, you may be left off the train."

CBG hopes to assist in the conversion of as many as 10,000 screens in Phase Two of the AccessIT rollout. Representatives of Sony and Warners are in talks with AccessIT and DCIP, with those studios also expected to join in Hollywood funding of the digital revolution.

The various studios' VPF agreements collectively will result in distributors paying for about 75% of the costs of participating in exhibitors' digital conversions, Paramount exec vp operations Mark Christiansen estimated.

Studios eventually will see great costs savings by the move to digital distribution. But through VPFs, they agree to keep paying the equivalent of film print costs for several years so that the money can be used to fund screen conversions.

DCIP and AccessIT seek bank loans simply to keep conversion capital flowing and to allow for the most rapid deployment of digital systems as possible. DCIP chief Travis Reid said his group expects to implement about 600 d-cinema systems per month once bank funding is secured.

DCIP and AccessIT also have plans to assist in overseas digital conversions, and the spread of d-cinema and 3-D projections has been even slower in many international markets, noted members of the panel moderated by The Hollywood Reporter's Matthew Belloni.

"The number of 3-D screens internationally is about 200 — very low," Christiansen said.

That's not a happy situation for Hollywood, which plans to release at least a dozen 3-D movies in 2009.
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