Imax, AMC ink deal for 100 theaters in U.S.
Source: Hollywood Reporter
TORONTO -- Imax on Friday unveiled a 100-theater deal with AMC Entertainment that promises to greatly enlarge its U.S. commercial footprint.
Friday's joint venture agreement will see 100 digital-projection systems from Toronto-based Imax go into 33 AMC locations during the next three years.
An initial 50 Imax digital-projection systems will be installed from July at AMC theaters in 24 of 33 selected U.S. markets, with another 25 set for rollout in 2009 and 25 more in 2010.
Once all 100 theaters are installed, Imax said it will have doubled its 3-D large-format theater presence in North America and extended its reach in the suburban multiplex market.
"An agreement of this magnitude not only bolsters our goal of expanding the network more rapidly, it also enables us to receive a more significant part of the Imax boxoffice from the theaters, as well as a continuing piece of Imax film revenues from the studios," Imax co-CEO Bradley Wechsler told analysts during a conference call Friday.
Wechsler also touted the AMC deal as beneficial in financial and strategic terms as it coincides with the major studios embracing the 3-D format as digital cinema is rolled out.
Imax estimated that the AMC deal will annually add $30 million-$35 million in incremental cash to its bottom line once all 100 proposed theaters come on stream by 2010, as scheduled.
As part of its agreement, Kansas City-based AMC proposes to retrofit existing auditoriums with an Imax digital-projection system designed for multiplexes. This will take place, for example, in six multiplexes in Los Angeles, including the AMC Burbank 16 and the AMC Century City 15, and six more New York venues, including three in Manhattan.
Other AMC locations to receive the Imax treatment include AMC South Barrington 30 in Chicago, AMC Mesquite 30 in Dallas and AMC Neshaminy 24 in Philadelphia.
The Imax-AMC joint venture theater agreement is set to run for seven years, with an option to continue for three more years.
As part of the deal, AMC will cover the cost of retrofitting its auditorium with a bigger screen and reconfigured seats, while Imax will carry the cost of manufacturing and installing its digital-projection systems at $500,000 per theater.
Imax and AMC will then share boxoffice revenue as part of a prearranged split during the course of the joint venture agreement.
"We are committed to delivering a premium entertainment experience by offering a menu of entertainment alternatives inside our facilities," AMC Entertainment chairman and CEO Peter Brown said.
"Our expanded relationship with Imax and the deployment of its state-of-the-art, next-generation digital-projection systems is a key part of our strategy of continuing to broaden and enhance the AMC experience," he added.
The Imax digital-projection system, now in development and slated for launch in mid-2008, will enable theaters to receive movies on a hard drive for exhibition. That eliminates the need for costly and heavy Imax film prints that require loading on bulky projection systems.
Imax argues the switch to digital projection should boost profitability for studios, exhibitors and itself by cutting out costs for film prints and increasing the number of movies passing through Imax theaters.
Typically, an Imax 2-D film print costs about $25,000, and a 3-D movie runs to about $45,000 a print.
Imax is betting that eliminating film print cost for studios will sharply increase a gross margins for an Imax release of a traditional 35mm movie, as the only remaining major cost to studios will be P&A.