ShoWest: DCI looks at use of 3rd-party financier

LAS VEGAS — Digital cinema proponents have finally started talking moolah.

Chuck Goldwater, chief exec of Digital Cinema Initiatives, Wednesday confirmed the studio consortium is studying ways to use a third-party financier to facilitate the rollout of d-cinema systems to movie theaters (Daily Variety, March 24).

Though Goldwater declined to specify potential partners in such an initiative, it’s known DCI reps have held substantive talks with execs at JPMorgan about acting in such a capacity.

Whomever is chosen — and Goldwater said he expects further details on the plan to take shape within six months — the third-party entity would use anticipated studio savings from electronic distribution to fashion investment instruments for Wall Street.

Proceeds would pay for the incremental rollout of digital projectors and file servers to exhibs nationwide, with studios likely shouldering most of the cost burden by paying a premium to use the d-cinema systems. For now, DCI refers to such a mechanism only as an unspecified “subsidy” to help pay for the equipment.

Over time, the costs distribs pay to the third-party financier to use the d-cinema systems would be reduced and studios would reap great savings over current print costs. Exhibs, who might be asked to kick in a small portion of the rollout costs, would likely get to own the equipment once it’s paid for.

Goldwater wouldn’t address the ownership question or other details of the funding plan. But National Assn. of Theater Owners prexy John Fithian made it clear that’s what exhibs expect.

“It is fundamentally important to exhibitors to own and control the equipment in their theaters,” Fithian said. “That’s a very encouraging part of this business plan.”

Three years ago at ShoWest, Technicolor Digital had suggested exhibs pad ticket prices to pay for d-cinema installations that they might not control. The plan went nowhere, largely over the control issue.

Similarly, NATO has been pressing for clarification of recently defined engineering standards for d-cinema to ensure studios won’t use the transition to electronic distribution as a cover for asserting more control over where and how movies are screened within multiplexes.

DCI aims “to respect the current business relationships that exist in the marketplace,” Fithiansaid.

Goldwater, who said a final draft on engineering specs will be distributed in April, delivered his d-cinema update at a ShoWest 2004 session here dovetailing with a seminar on exhib measures to fight pic piracy.

Exhibition execs and others detailed means of patrolling theaters for illegal camcording of movies. Loews Cineplex U.S. prexy Michael Norris noted his circuit rewards employees for catching miscreants with a $100 cash bonus.

ShoWest concludes today with activities including a 20th Century Fox luncheon and an evening awards gala.

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