As Jack Benny used to say: Whell~!
One would have thought that there would be announcements and angst. Announcements for 1,000s of systems per month, and angst for supply problems…can’t get that many lenses that quickly, can’t get that many engineers and technicians that quickly.
What we get is an announcement for a 137 here, and a 180 there. Congratulations are actually in order, that anyone has gotten even that far in this environment. It is not surprising that it is the old hands, XDC and the newly named Cinedigm (formally AccessIT), who were trusted enough to get the cash, which in turn, allowed the orders. Fortis Bank has gone through a lot of troubles in the last few months, but XDC and Fortis were able to put a deal together that puts 100 million euros into the hands of XDC. And Cinedigm got 8.9 million dollars from un-named sources.
Reading through press releases is an imprecise art, but I stare at the Cinedigm numbers and am agok. The release <http://investor.accessitx.com/releasedetail.cfm?ReleaseID=351951> says that the credit facility will be used to fund the launch of 137 systems for Premiere Cinema. Good for them and good luck to us all. But as much as 8.9 million dollars is, that is less than $65,000 per system; all of Cinedigm’s overhead for getting this loan and the next, all the overhead of site surveys, plus the paperwork and drawings which follow, the communications with each cinema, checking and ‘discussing’ with each cinema – making certain that the changes get done – power and air conditioning, new audio wiring, the famous telephone line and aDSL line which the cinema has to get installed, all of the technician time and the organization to get the techs and the equipment there on the right day…Oy~!
And, that doesn’t mention the equipment. Wow. $65,000 for less than 150 systems. Imagine the meeting at the vendor’s places after those requests are made. Cinedigm will be asking for prices that were probably talked about when 10,000 piece orders were contemplated. This will have to include the projector, the server, a central server no doubt and the Cinedigm Theater Management System. The freight bills alone will be significant.
One presumes that 3D equipment is an additional expense borne by the cinema, along with such items a the BluRay devices (when will the first professional units show up?) and back-up satellite equipment, and matrix systems to put any signal on any projector.
One presumes that Cinedigm will welcome the deal, regardless of how much it actually cost. Their profit is in the back-end, especially in the alternative entertainment which they are put together through their associated companies’ efforts. One notices a recent Turner Sports/NBA announcement on their site , promising live 3D NBA action on Saturday nights in 80 cinemas or 160 screens.
The XDC announcement is just as opaque, except that they are clear that the process is; get the VPF agreements, get some cinemas interested and signed or close to signed, then go to the bank with that deal in hand. Then, like Cinedigm, make an announcement about the money. A small difference between the two; Cinedigm says they have the money deal signed, XDC says that the ink on the paper is drying, but that the deal needs a few more approval steps.
But the deal says that Fortis is keen on the deal and the more recent announcement from XDC is a deal for 180 sets of DCinema systems with the Portuguese chain Zon Lusomundo (an implication that the money came through), and 193 screens for the Cineplexx Chain in Austria. (N.B.–contract value is 24 million euros, which is $32.4 million…over 3 times the $9.8 million value of the Cinedigm financing. Granted, these are not similar deals and no one knows what kind of back-end XDC has in the profits of the Cineplexx deal…though, they have been known for back-end profits on other deals. Still…)
Just a slightly tangential note on the banking situation that stands like a ghost behind all this. Fortis is a surprise player, only because they have been involved in a bit of a snag these last few months. Fortis was a Belgium/Netherlands bank, formed during a brief post-Napoleonic moment when these countries were joined. Fortis had recently bought the bank group ABN Amro, along with Spain’s Banco Santander and the Royal Bank of Scotland. They divided the assets and went their merry way. Now that some parts of the ponzi scheme known as modern banking have been exposed, it appears that Santander got the more stable bits and RBOS and Fortis got the adventurous but unstable bits. As Fortis started to buckle under the load, the Netherlands nationalized the Fortis Bank portion that was in Netherlands (for 26 billion euros) and the Paris bank BNP took over the Belge and Luxembourg parts of Fortis (for 14 billion euros.)
All this took place during the week before 6 October, and the Fortis/XDC release is dated the 13th…and is now followed by the action in Portugal. So it looks like people kept their eye on the ball and made it happen regardless. This is in contrast to the DCIP/Hollywood Studios deal which was announced and then got lost in the financial malaise that is now the US.
As a last side note, I am unable to wrap my head or enough time into figuring out the Bank of Scotland/Royal Bank of Scotland situation…and which one did the financing of some dcinema systems…all which seem to be stalled for the last few months. Both banks were in severe trouble and needed government help recently. The google record is confusing and without inside info, I am confused.