Walt Disney Co. and other Hollywood studios will join three major theater companies in a $525 million initial investment to show digital movies starting next year in half of all the screens in the U.S. and Canada.
Digital Cinema Implementation Partners a consortium that includes Regal Entertainment Group, AMC Entertainment Holdings Inc. and Cinemark Holdings Inc. announced the deal on Wednesday. A rollout to 20,000 theaters in the U.S. and Canada is expected to start early next year.
Financial details were not disclosed, but a person with knowledge of the agreement told Bloomberg News that the initial investment would be $525 million and pay for 3-D projection and other equipment needed to show the movies. The investment could eventually grow to more than $1 billion. JPMorgan Chase & Co. and the Blackstone Group are leading the financing.
To help offset the consortium's costs, which should run about $70,000 per screen, the studios will pay about $1,000 per movie per screen. That's about what they now pay to print and ship a celluloid film copy. Long term, the systems are expected to lower studio costs and enable theaters to charge 40 percent to 70 percent more for tickets to 3-D films, according to industry estimates.
Beverly Hill-based RealD, the largest maker of 3-D projection equipment, also is expected to be big winner in the deal.
In addition to Disney, studios in the deal include the corporate parents of Lionsgate, Twentieth Century Fox, Paramount Pictures and Universal Pictures. Disney alone is set to release five 3-D movies next year.
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