Cineworld, AAM ink digital conversion deal
$44 mil deal to convert estate of cinemas to digitalLONDON -- British-based d-cinema integrator Arts Alliance Media (AAM) has sealed a £30 million ($44 million) deal with the U.K.'s second largest exhibition chain Cineworld Group to convert its entire estate of cinemas to digital over the next three years.
The parties said Monday the rollout of digital across the 790-screen circuit will be financed by Cineworld from its existing financial resources and cash flow.
AAM also said it has closed a €50 million ($61 million) financing deal with Sankaty Advisors (HR 3/16), a Boston-based fixed income and credit investor, to fund the conversion of over 1,000 screens from AAM's existing pipeline of exhibitor deals.
The estimated rollout price tag of $44 million for Cineworld is in addition to the £10 million ($15 million) already spent on digitizing a third of the chain's screens during 2009 and the first half of 2010. The majority of the total cost to Cineworld will be refunded by distributors who use the digital projection systems through AAM's "VPF" (Virtual Print Fee) contracts.
The deal means Cineworld is the first major U.K. exhibitor to commit to a timetable for complete digitization of its circuit.
Under the deal, AAM will maintain the equipment and administer the VPF agreements with distributors and also provide its theatre and library management systems to all 77 sites, as well as satellite capability in conjunction with its partner Arqiva Satellite & Media.
Cineworld CEO Steve Wiener said: "We have already seen the benefits of digital in our cinemas -- better quality, 3D, and alternative content such as opera, concerts and 3D rugby, and are looking forward to bringing these benefits to all Cineworld customers with AAM's support."
AAM CEO Howard Kiedaisch added: "These two deals mark the inflection point for digital cinema in Europe. With the financing now in place from Sankaty, we have substantial funds to offer cinemas the choice of whether to fund the equipment themselves ('exhibitor financing') or for AAM to provide the financing."