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This topic comprises 3 pages: 1 2 3
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Author
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Topic: Loews/AMC merger
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John T. Hendrickson, Jr
Jedi Master Film Handler
Posts: 889
From: Freehold, NJ, USA
Registered: Apr 2001
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posted 06-22-2005 06:02 PM
I think Bobby Henderson's comments are right on the money. Two big chains with wide geographic coverage could simply tell a distrib "we will not comply with your terms, and we will not play this picture." Question becomes, are there enough independents left to override this tactic? The distributors better hope so, because I'm betting that this merger makes them nervous.
Second point. Yes, there will have to be some divestitures, especially in big markets, to satisfy the anti-trust laws, so Stephen LaPadula's comments are on the money with this issue.
I'll play devils's advocate. What if these two biggest chains target a specific release to make a point? Here's a hypothetical situation. Let's say it's November and Warner Bros. is throwing out off the wall terms for Harry Potter. The big boys say, "okay, to hell with your terms, we aren't going to play your picture." ![[Eek!]](eek.gif) What then? Makes for an interesting scenario, doesn't it? Also makes me damned glad I'm not a theater owner. I'll leave this to the heavyweights to sort out. ![[Confused]](confused.gif)
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Joseph L. Kleiman
Master Film Handler
Posts: 380
From: Sacramento, CA
Registered: Apr 2005
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posted 06-22-2005 06:59 PM
Back in 2001, the "old" Regal Cinemas circuit threatened not to show "Rush Hour 2" or the second "Lord of the Rings" film because New Line was switching to a "firm-term" release model, rather than the traditional ad-hoc, performance related profit split. If I recall, Regal, which at the time controlled 18% of the screens in the US, came to a resolution on only one of the two films.
Another issue that hasn't been brought up is the effect the mergers will have on digital system deployments. A number of analysts I've spoken with have pointed out that in the past week, we not only have seen the US and Canadian mergers, but two major announcements by digital cinema companies as well. Yesterday AIX and Christie announced a joint venture to install 2500 digital systems in the US within two years, with the first 200 installed by the end of this year. Today, Barco and Kodak announced a joint deal. As with most equipment purchases, the more a company buys, the lower per unit price they are able to leverage. This means that because AMC and Galaxy have increased their number of screens, they can obtain a lower per-screen price for transitioning to digital. On top of that, the more projectors that are manufactured means the overall cost for everyone will reduce, thereby benefiting other circuits wanting to transition.
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Darryl Spicer
Film God
Posts: 3250
From: Lexington, KY, USA
Registered: Dec 2000
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posted 06-22-2005 07:21 PM
Reuters
LOS ANGELES (Reuters) - Two movie industry companies on Tuesday unveiled a plan to finance digital projectors for cinemas, offering a potential break in a stalemate between theater owners and movie studios over who will pay for the expensive new technology.
Distribution software maker Access Integrated Technologies Inc and projection equipment provider Christie Digital Systems formed Christie/AIX to offer digital projection systems to theaters that pay the cost of installation and sign a long-term contract for maintenance and service.
Movie studios would pay Christie/AIX a "virtual print fee" for every digital film file the new venture releases to the digitally-equipped theaters.
For theater owners, the cost of the 10-year contract would be roughly equal to installation and maintenance for a current film projector, and for studios the "virtual print" expense for a digital movie would be about the same as a film print, the companies said.
"The design is to make this essentially cost neutral" for theater owners and studios, said Bud Mayo, chief executive of Access Integrated Technologies.
Fees from installation and maintenance contracts and from the virtual prints would give Christie/AIX a return on its investment, Mayo said.
For several years, the roll-out of new digital projection systems has stalled over technology specifications and the issue of who would pay the $100,000 or more per system to install digital projections in theaters. Technology standards are mostly complete, but funding remains a sticking point.
For consumers, digital cinema offers a better picture over a movie's run in theaters. Studios save on their distribution costs and theaters might make money from national advertising and alternative uses for theaters.
Mayo said Christie/AIX has backing from large institutions. "More than one" major studio has agreed to term sheets and several national theater chains had signed agreements in principle for system deliveries, the companies said.
However, Mayo would not disclose financial backers, studios or theater chains until agreements were final.
Industry sources looked on with interest, but awaited more details.
Charles Swartz, executive director of the Entertainment Technology Center at the University of Southern California, said there are still some technology issues to be worked on for computer network servers needed for digital cinema systems.
quote:
and for studios the "virtual print" expense for a digital movie would be about the same as a film print
How can this save the studios any money if the cost is going to be about the same as a film print.
Even if theatres installed these units I still don't see how it's going to increase attendance anymore than it is now unless Hollywood stands up and stops making shit. People don't pay attention to what is projecting the image to the screen when it comes to making a decision on what movie to see and what not to see. They base it on what the movie is and if it is any good or not.
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Darryl Spicer
Film God
Posts: 3250
From: Lexington, KY, USA
Registered: Dec 2000
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posted 06-22-2005 08:00 PM
Reuters
BRUSSELS (Reuters) - Belgium's Barco (BARBt.BR: Quote, Profile, Research) and Eastman Kodak (EK.N: Quote, Profile, Research) have formed a strategic alliance to sell digital projection systems to movie theaters and seek to capture a big part of a new market potentially worth billions of euros.
Barco and Kodak will sell, install and service the systems, which are set to replace 35-mm film projectors and revolutionise the way movies are screened, they said in a joint statement on Wednesday.
Barco will provide the projectors, while Kodak will offer the servers and software.
"We want to be ready for when the digital cinema market starts to explode," Barco Chief Executive Martin De Prycker told a news conference.
Citing industry figures, De Prycker valued the market's potential at 5 billion euros ($6.1 billion).
"For us, this is a huge opportunity."
Stephan Paridean, general manager at Barco's division responsible for digital cinema, expected demand for the technology to rise as more movies are made in the format.
"By 2007, it should really take off," he told reporters.
Kodak shares were up 0.16 percent at $27.77 in New York, while Barco ended up 0.33 percent at 61.65 euros in Brussels.
Digital projection promises better picture quality for movie-goers and lower distribution costs for studios.
But roll-out of the technology has been slow, because the industry has yet to agree on a common standard as well as a business model to help theaters cover the purchasing costs.
POTENTIAL BOOST TO REVENUES
Kodak is undergoing a dramatic transition toward digital cameras and services as it moves away from its traditional film business, which is in decline. Its officials were not available for further comment on this latest initiative.
As one of three licensees of DLP Cinema, a projection system based on a microchip made by U.S. semiconductor maker Texas Instruments (TXN.N: Quote, Profile, Research) , Barco has a 45 to 50 percent share of the new market worldwide, according to De Prycker.
It is already working with Kodak at three multiplexes in the United States, and its projectors are being used at European theaters to show the latest instalment of the "Star Wars" series.
Christie and NEC (6701.T: Quote, Profile, Research) are the other DLP Cinema licensees.
De Prycker forecast Barco's market share would fall to 30 to 35 percent in the long run, which could still lead to annual revenues of up to 200 million euros ($244 million).
Barco's digital projection division currently makes up about 2 percent of its total annual revenues of more than 600 million euros.
De Prycker said Barco and Kodak would still be able to sell their products and services separately despite the alliance.
quote: Joseph L. Kleiman
Yesterday AIX and Christie announced a joint venture to install 2500 digital systems in the US within two years, with the first 200 installed by the end of this year
No where in these two articals does it get spacific about theatre install numbers.
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Martin Brooks
Jedi Master Film Handler
Posts: 900
From: Forest Hills, NY, USA
Registered: May 2002
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posted 06-22-2005 08:08 PM
quote: Stephen LaPadula
I'm wondering what this means in terms of a monopoly on some markets. For example, between AMC and Loews on Manhattan alone they own about 75% of the screens (there are 11 Loews, including the Michael Johnson totaling just under 100 screens and the 25 screens from AMC) With only 29 Regal/UA screens and a hand full of much smaller companies, most or which aren't 1st run so they don't count anyway. I imagine that either the Empire or E-Walk, probably E-Walk would have to be sold, possibly others??
Since there is only one AMC theater in Manhattan and one in the Bronx (although no Loews in the Bronx), I doubt whether the NY State Attorney General, Elliot Spitzer, will get involved like he did when Loews and Cineplex merged.
The AMC Empire 25 and the Loews E-Walk have always played different pictures and they can continue to do so. IMHO, AMC would be nuts to convert the Loews theatres to AMC...it's not worth the cost. Sony started changing the names of Loews theatres to Sony, realized it was a mistake and changed them back.
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Joseph L. Kleiman
Master Film Handler
Posts: 380
From: Sacramento, CA
Registered: Apr 2005
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posted 06-22-2005 08:52 PM
Darryl,
The first paragraph of the AIX/Christie press release states the numbers.
"MORRISTOWN, NJ, and CYPRESS, CA, June 21, 2005 — In a major move designed to accelerate the long-awaited implementation of Digital Cinema nation-wide, Access Integrated Technologies, Inc. (“AccessIT”) (AMEX: AIX) and Christie Digital Systems, USA (Christie) today jointly announced a preliminary agreement to create the movie industry’s first practical Digital Cinema funding framework. The plan satisfies the diverse concerns of movie studios and exhibitors by standardizing content format, delivery and presentation. It minimizes financial risks for studios and exhibitors by establishing an innovative template that allows private investment in the burgeoning Digital Cinema industry. The agreement includes a two-year plan for a 2,500-screen rollout, with over 200 screens to be operational by the end of 2005."
You can find the complete press release on the Christie site:
http://www.christiedigital.com/corporate/news/pressRelease/2005/June/accessIT_DCrollout/digitalCinemaRollout.asp
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Joseph L. Kleiman
Master Film Handler
Posts: 380
From: Sacramento, CA
Registered: Apr 2005
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posted 06-22-2005 08:56 PM
Darryl,
The first paragraph of the AIX/Christie press release states the numbers.
"MORRISTOWN, NJ, and CYPRESS, CA, June 21, 2005 — In a major move designed to accelerate the long-awaited implementation of Digital Cinema nation-wide, Access Integrated Technologies, Inc. (“AccessIT”) (AMEX: AIX) and Christie Digital Systems, USA (Christie) today jointly announced a preliminary agreement to create the movie industry’s first practical Digital Cinema funding framework. The plan satisfies the diverse concerns of movie studios and exhibitors by standardizing content format, delivery and presentation. It minimizes financial risks for studios and exhibitors by establishing an innovative template that allows private investment in the burgeoning Digital Cinema industry. The agreement includes a two-year plan for a 2,500-screen rollout, with over 200 screens to be operational by the end of 2005."
You can find the complete press release on the Christie site:
http://www.christiedigital.com/corporate/news/pressRelease/2005/June/accessIT_DCrollout/digitalCinemaRollout.asp
I believe that when it states "The Christie/AIX plan will be in effect through 2018. Term sheets have already been signed by key Hollywood studios, and substantive agreements in principle have been established with national exhibitors for delivery of a large, undisclosed number of systems. Funding for the first 200 screens will be implemented by Christie/AIX immediately upon the signing of definitive agreements with the studios that have signed term sheets." it is refering to what is now a five studio alliance that began with Disney, WB and SONY and now includes Universal and Fox.
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![[dlp]](graemlins/dlp.gif)
is going to be the same as that of 35mm, then what would be the point of installing it, especially since long-term reliability and maintenance issues (as well as availability of program material) are unknowns?
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