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Movie Theater Chains Trade Higher on 3-D Expansion News

Published: Friday, 11 Sep 2009 | 5:02 PM ET

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By: Julia Boorstin
Correspondent

At long last 3-D is finally rolling out to more theaters, which means great news for movie theater chains and studios who, with the technology, can charge more for tickets and pack theaters.

Friday Regal Entertainment [RGC Loading... () ] closed 6.6 percent higher, while Cinemark Holdings [CNK Loading... () ] added 6.4 percent. This comes on the news that JP Morgan will finance up to 15,000 digital cinema installations over the next five years at the three biggest theater chains, Regal, Cinemark, and AMC, which is private. Next week JP Morgan is sending out the briefing books for the $525 million financing - $325 million bank syndication and $200 million in equity from private equity funds and the theater chains themselves.

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The digital systems will enable movies to be sent digitally, saving studios the hefty cost of the prints and shipping them around the country. In turn the studios have agreed to "virtual print fee deals," which effectively allows the studios to put their savings on print fees towards helping the theaters cover the costs of the new systems.

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This is a long time in coming: DCIP (Digital Cinema Implementation Partners), had planned to roll out the new systems at the beginning of 2009 but the credit crunch made that an impossibility. It's a huge deal: now there may not even be 2,000 3-D theaters in North America. If all goes as planned this new injection of cash will ensure that there are 2,500 screens by the debut of much-anticipated "Avatar" from 20th Century Fox in December.

Next week there's a big 3-D Entertainment Summit in Universal City (right in the back yard of our Los Angeles Bureau) and we can expect to hear more then about the rollout of 3-D and what it means for the industry. Also next week, Technicolor is introducing a new way to turn traditional celluloid film into 3-D, which should be a cost-saving from the digital systems 3-D usually requires.

On CNBC.com

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