JPMorgan Said to Raise Almost $700 Million for Digital Theaters
JPMorgan Chase & Co. raised almost $700 million to equip the three biggest U.S. theater chains with digital screens and projectors that can show 3-D movies, according to a person with knowledge of the plan.
Digital Cinema Implementation Partners, a collaboration between Regal Entertainment Group, AMC Entertainment Holdings Inc. and Cinemark Holdings Inc., is likely to announce the funding in about two weeks, said the person, who requested anonymity because the details are private.
The financing, delayed since 2008 because of the credit crunch, will speed theater conversions as Hollywood studios increase production of 3-D films, which command premium ticket prices. News Corp.’s “Avatar” has taken in $2.1 billion, the most of any picture, since it opened Dec. 18, according to researcher Box Office Mojo.
Brian Marchiony, a spokesman for New York-based JPMorgan, declined to comment. Dick Westerling, a spokesman for Nashville, Tennessee-based Regal, Robert Copple, a spokesman for Plano, Texas-based Cinemark, and Sun Dee Larson, a spokeswoman for AMC, didn’t immediately return calls seeking comment after business hours.
Distributing movies digitally allows studios to save money on printing shipping reels. It also enables theaters to adjust lineups more quickly based on demand. Studios will contribute funds to repaying the financing based on the number of digital films shown.
The equipment can also be upgraded to show 3-D films, which Hollywood studios are relying on to bolster revenue as DVD sales decline. At least 16 pictures are planned this year, including DreamWorks Animation SKG’s “How to Train Your Dragon,” according to researcher Hollywood.com Box-Office.
The funding will supply equipment for 12,000 screens and is awaiting sign-off by studios, the Los Angeles Times reported yesterday.
DCIP resumed its effort to raise the money last year after putting it on hold amid the credit crisis. The group was seeking $525 million in senior debt and $200 million in equity through its jointly owned Digital Cinema Implementation Partners, two people with knowledge of the situation said in September.
The plans were scaled back from August 2008, when DCIP Chief Executive Officer Travis Reid said the group aimed to raise $1 billion to refit more than 14,000 U.S. and Canadian theaters.
Regal fell 25 cents to $14.70 yesterday in New York Stock Exchange composite trading. Cinemark was little changed at $14.33. Closely held AMC is based in Kansas City, Missouri.