Technicolor Acquiring Cinedigm's Digital Cinema Delivery Assets

Deal grows Technicolor's satellite delivery business in North America by about 40%.

In a sweeping digital cinema delivery deal, Technicolor is acquiring the assets of Cinedigm Digital Cinema that are specific to physical and electronic distribution of content to movie theaters in North America. The deal is expected to close in September; financial details were not disclosed.

With the deal, Technicolor continues to grow its footprint in both physical and satellite delivery. For Cinedigm, it allows the company to sell the assets of a "noncore" business while growing support of its key areas of alternative content and digital cinema operational software, chairman and CEO Chris McGurk told The Hollywood Reporter.

Technicolor already controls an estimated 58% of the North American market for mastering and digital cinema delivery, said Claude Gagnon, president of Technicolor Creative Services.

Technicolor will acquire Cinedigm's physical and electronic distribution assets, including replication equipment and hard-drive inventory as well as a minimum of 300 satellite roof rights in the U.S. and Canada, resulting in an increase of about 40% in Technicolor's North American satellite footprint, which now will include some 1,100 locations.

Technicolor will become Cinedigm's preferred content servicing partner for postproduction through distribution services. That now includes exclusive satellite distribution of Cinedigm's alternative content business.

"The market will migrate, probably quickly, to satellite distribution," Gagnon said. "It is much quicker, much easier for the studios, the exhibitors and the content providers. We are migrating from film to digital, and the physical to electronic distribution — both at the same time."

As part of the deal, Technicolor will work with Cinedigm to support the development by Cinedigm of entertainment industry software as well as license Cinedigm’s CineSuite digital production tool and CineXpress trailer distribution software.

"We’re really looking at the future of the company and its growth businesses," said McGurk, noting that its growth areas are alternative content and digital cinema operational software. He described the Technicolor agreement as the "perfect strategic deal" in that it allows Cinedigm to sell a noncore business and forge agreements that support its core business. He added that Technicolor's international reach is a plus.

With the Technicolor deal, Cinedigm effectively exits the physical digital cinema delivery business. "We were No. 3 behind Technicolor and Deluxe," he told THR. "And it is capital intensive.

In related news, Technicolor on Wednesday inked a deal to acquire Hollywood post house Laser Pacific. Technicolor also is selling its New  York assets to PostWorks while entering into a licensing agreement with that company to effectively share resources in New York.

Last week, Technicolor and Deluxe entered into three-year subcontracting agreements related to film services. Per the agreements, Technicolor will subcontract its 35mm bulk release printing business to Deluxe in North America, while Deluxe will subcontract its 35mm print distribution business in the the U.S. to Technicolor. Additionally, Deluxe will subcontract its 35mm/16mm color negative processing business to Technicolor in London.