Universal Pictures and Walt Disney Co. have agreed to throw their backing behind the rollout of digital cinema equipment in U.S. theaters, according to people familiar with the matter, moves that should finally allow exhibitors to proceed with an aggressive plan to replace old-fashioned film reels with digital technology.

The transformation to digital projection in theaters has been discussed for a decade. Digital projection would cut millions of dollars in annual costs for the studios by eliminating the need for film prints. It would give theater owners more flexibility to move films on and off the screens they operate. Digital projectors are also crucial to the rollout of equipment needed for 3-D movies, which Hollywood is increasingly planning to produce.

Until recently, just two studios -- News Corp.'s Twentieth Century Fox and Viacom Inc.'s Paramount Pictures -- had agreed to participate. Now, General Electric Co.'s Universal is set to throw its support behind the consortium as soon as this week, people close to the situation say. And Disney has separately made its own deal to support the consortium.

Two other studios, Time Warner Inc.'s Warner Bros. and Sony Corp.'s Sony Pictures, say they are also interested in participating, but aren't ready to immediately sign on. Currently, just 5,000 of the 40,000 or so screens in the U.S. and Canada sport digital gear in the projection booth. Some 1,200 screens support 3-D.

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