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TOPIC: VPF's Directly to Independents?

VPF's Directly to Independents? 06 Feb 2010 13:29 #33282

  • Quasimodo
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Are any distributors paying VPF's directly to theatres who've financed/installed their own DCI compliant equipment?
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Re:VPF's Directly to Independents? 06 Feb 2010 19:31 #33283

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ONLY if you are a full-time first-run theater. I beleive you would use Cinedigm for the administrative of. Call mark at 904-810-0732.
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Re:VPF's Directly to Independents? 07 Feb 2010 20:16 #33291

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Thanks for the tip.
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Re:VPF's Directly to Independents? 08 Feb 2010 08:23 #33293

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rufusjack wrote:
ONLY if you are a full-time first-run theater. I beleive you would use Cinedigm for the administrative of. Call mark at 904-810-0732.

Rufus is correct; the Cinedigm contact I was given was Mark Kamiyama.

His email address is mkamiyama AT cinedigm DOT com.

Once you get in touch with Cinedigm, their rep should send you an Excel spreadsheet for you to fill out that asks for some background info about your theatre, such as:

1) how many films opened there last year
2) how many films played there last year
3) # of screens
4) theatre type (full-time first run, art house, etc)
5) whether or not you are in a competitive booking zone

(as well as a few more)

Once you send it back to Cinedigm, they review your location and see if it fits their eligibility profile for the upgrade to digital cinema.
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Re:VPF's Directly to Independents? 09 Feb 2010 04:10 #33302

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rufusjack wrote:
ONLY if you are a full-time first-run theater. I beleive you would use Cinedigm for the administrative of. Call mark at 904-810-0732.

Just to clarify, there are no VPFs given directly to any theatre without the presence of an integrator between the studio and the theatre, such as Cinedigm or DCIP.

The studios will not provide a VPFs without going through through the integrator.

Rick
"As long as there are sunsets and stars at night, there will always be drive-in movies."
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Re:VPF's Directly to Independents? 09 Feb 2010 06:23 #33303

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Rick hit the nail on the head re: VPFs needing an integrator.

DCIP (Digital Cinema Implementation Partners) is the funding vehicle for the top 3 national chains (Regal, AMC, and Cinemark).

Cinedigm is the preferred integrator for NATO's Cinema Buying Group (CBG), which is basically going to be as many independents as they can upgrade given their funding availability.

The studios haven't to-date and likely are not going to create separate VPF agreements with multitudes of independent operators. They are only working within group frameworks to stay efficient in paying out VPFs, hence their preference for DCIP (~15,000+ screens possible between the top 3 chains) or CBG (potential for 8,000-10,000+ independent screens depending on final funding amounts).

The studios' goal is to get digital rolled out as soon as possible to as many screens as possible so they can stop spending ~$7-$10 million per film in distribution costs to print, secure and ship celluloid out on wide release films.
Last Edit: 09 Feb 2010 12:00 by BWT.
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Re:VPF's Directly to Independents? 09 Feb 2010 09:23 #33304

does anyone know which distributors are paying vpf's to cbg members via cinedigm?
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Re:VPF's Directly to Independents? 09 Feb 2010 17:42 #33306

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john williams wrote:
does anyone know which distributors are paying vpf's to cbg members via cinedigm?

All of the major studios have long-term VPF agreements in place with Cinedigm, and the smaller studios make VPF agreements on a picture-by-picture basis.

Basically, any wide release (2,000 prints and up) from any studio is going to have a VPF attached to it for d-cinema, as long as you are going through Cinedigm.
"As long as there are sunsets and stars at night, there will always be drive-in movies."
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Re:VPF's Directly to Independents? 09 Feb 2010 19:16 #33308

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Keep in mind you have to arrange your own financing, not use any financing from Cinedigm as I believe there is none?? at least that is what I was led to believe.
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Re:VPF's Directly to Independents? 09 Feb 2010 23:10 #33313

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rufusjack wrote:
Keep in mind you have to arrange your own financing, not use any financing from Cinedigm as I believe there is none?? at least that is what I was led to believe.

There is financing available through Cinedigm for a limited number of "qualified" independent theatres. Seasonal and second-run theatres will not qualify for financing through Cinedigm, but if you are a full-time first-run operation, and meet other financial stipulations, you may qualify for the Cinedigm financing deal. If you have questions regarding Cinedigm's financing plan, you should get your information directly from Cinedigm.

Rick
"As long as there are sunsets and stars at night, there will always be drive-in movies."
Last Edit: 09 Feb 2010 23:10 by Transit Drive in.
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Re:VPF's Directly to Independents? 10 Feb 2010 00:15 #33314

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Rufus is right again.

Under the original Cinedigm Phase I deployment (which lasted from mid-2005 through the end of 2007) the company had a credit facility with Bear Stearns that would finance the upgrade from analog celluloid to digital cinema for up to 4,000 screens in the US.

Carmike Cinemas was one of the early adopters under the Phase I roll-out, and that chain upgraded ~2,200 screens to digital (the company's entire first-run screen count) from Jan 2006 through Oct 2007. Cinedigm basically bankrolled almost all of the upgrade cost for Carmike's digital screen installations to the tune of ~$63,000 per screen (90% of the total cost) financed via Cinedigm's bank facility and Carmike chipping in the remaining ~$7,000 per screen in cash upfront. Cinedigm then simply takes the VPFs as they roll in from the studios and credits it to the amount outstanding related to Carmike's installation balance. The Phase I program officially closed sometime in Dec 2007.

Phase II Deployment Program (which began in early 2008) is the current stage of Cinedigm's digital roll-out. Cinedigm's Phase II program will be in effect for an additional 10,000 screens in the US. The financing for Cinedigm's Phase II deployment (up to $100 million) was arranged through some 5-year notes issued to GE Capital and Societe Generale. The Phase II program technically has 3 different options to go digital, including:

1) Exhibitor As Buyer Option -- basically theater owners purchase their own DCI-spec compliant digital projection equipment from approved vendors (Christie, NEC, Barco). Exhibitors then sign a 10-year VPF administration agreement with Cinedigm in order to get access to studio VPF payments.

2) Exhibitor As Senior Lender Option -- theater owners raise their own funding from whatever sources they can, then enter into an ~8-10 year lease-to-own agreement with Cinedigm for appropriate digital cinema equipment packages. Cinedigm will lease you a complete DCI-compliant cinema system under vendor-specific packages (Christie, NEC, Barco). Cinedigm also signs a 10-year VPF administration agreement with operators under this option.

3) Cinedigm Financed Option -- Cinedigm will theoretically bankroll a portion of an exhibitor's upgrade and installation of approved digital cinema packages from previously mentioned vendors. Since Cinedigm uses its Phase II funding to basically seller-finance the equipment to you, they will simply keep any VPFs they receive and credit your outstanding debt balance related to screen upgrades. Exhibitors using this option will have to put up a cash down payment on the total upgrade, likely a majority of the total deployment cost. (If you assume that Cinedigm actually upgrades all 10,000 screens under Phase II out of their own pocket, then each screen will only get ~$10,000 in Cinedigm-backed financing, meaning that exhibitors could be responsible for $50,000-$60,000 per screen out-of-pocket)

Now that I've outlined the technical options, I will say that the word on the street from folks I've spoken to within NATO, Cinedigm, and on the exhibitor side appears to be that the only Phase II deals that are currently being done are solely the #1 option (Exhibitor As Buyer). With the debt markets still very tight and Cinedigm still seemingly unable to turn a net profit, the company just doesn't appear to be really taking any chances with exhibitors. No matter what the press releases from Cinedigm say, they are just a fancy way of stating that Cinedigm probably isn't going to give you any upfront funding to help upgrade your screens. That is what is making the digital upgrade process progress at such a snail's pace even though the economy is supposedly so much better compared to 2008 and 2009. I know that the top 3 chains (Regal, AMC, Cinemark) are still waiting on the final announcement on the DCIP funding to come through; that should start to get digital cinema (and 3D) out to a much bigger audience if that funding can get done during 1Q 2010.

As a reminder, with any upgrade/integrator agreement with Cinedigm, exhibitors will have to sign a 10-year VPF administration agreement. Once you get the contract with Cinedigm in place, they will process, track and pass on (or credit to your account) VPFs from the studios after they take a "nominal" cut for providing said back-office service. Additionally, Cinedigm (courtesy of NATO's CBG agreement) will make theater owners sign a long-term service agreement with whomever you buy the projector equipment from, which will entail a per screen semi-annual payment and provides ongoing technical support, warranty and service for the projection equipment.

Cinedigm has already signed Phase 2 upgrade contracts with several independent theatre chains, including Emagine Entertainment (56 screens; based in MI), Georgia Theatre Company (257 screens; based in GA), Premiere Cinemas (180 screens; based in TX), Great Escapes Theatres (277 screens; based in IN), and R/C Theatres (based in MD) -- to name a few.

Phase III details have yet to be announced but my guess is that it will further remove Cinedigm from possibly bankrolling any part of the digital upgrade process.
Last Edit: 10 Feb 2010 00:18 by BWT.
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Re:VPF's Directly to Independents? 10 Feb 2010 21:22 #33319

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My point was that there is some financing available through Cinedigm, I did not say it was easy to qualify for, or that is was a good deal. If you can obtain your own financing, and use Cinedigm strictly for the VPF pass-through via options 1 & 2 as you mentioned, that is a more advantageous route to travel.

I intend to participate via option 1, at some point in time, probably within the next 2-3 years.

Rick
"As long as there are sunsets and stars at night, there will always be drive-in movies."
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Re:VPF's Directly to Independents? 11 Feb 2010 14:55 #33336

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I have been watching this topic with great interest. BWT, nice posts that are very well written and to the point. As many of you are aware I am a member of option 1 presently and am eagerly awaiting the call/e-mail from Cinedigm/CBG about the Phase II Deployment Program being signed and my first VPF check to come. I have been told that day is soon but nothing more definitive than that. The lack of communication from both CBG as well as Cinedigm regarding this issue has been a great disservice and has led to the rampant speculation and rumors floating around. I wish that one or both of those entities will take notice and put pen to paper and let people know the official line and put a definitive timeline together and maintain it when the inevitable slips to the schedules occur. I love this business but jeez it can be maddeningly frustrating at times.

That said, I love being digital and am really glad I switched over.
"What a crazy business"
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Re:VPF's Directly to Independents? 11 Feb 2010 21:00 #33338

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I do not believe the studios will offer VPFs to seasonal 1st-run, move-over theaters, or discount theaters. why?

It is not in their financial best interest. Therefore it would be out of the kindness of their heart.

In the KC district (using Rentrak's website) the full-time 1st run theaters accounted for over 90% of the ticket sales of the bigger releases(2012, Old Dogs, Alvin, Holmes, Tooth Fairy, and princess Frog) the last 3 mos. Many times it was over 95%.

CBG is positive on this beacuse this about the only issue to keep them relevant. The time to strike this deal was when the deal for the 1st runs was struck.

There is little financial incentive for the studios to give VPFs to non-full-time 1st run. NONE!
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Re:VPF's Directly to Independents? 11 Feb 2010 22:01 #33340

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Mike, on this issue we disagree. There is financial incentive that theaters like mine give to the studios, not as much, I'll agree but then again, they aren't proposing to pay me a full VPF anyway, only a partial. My one screen is more relevant then every other single screen in my area and more relevant then many other single screens of a multiplex in bigger towns. I pay the studios thousands upon thousands of dollars every year and therefore I am relevant to the situation. They strike prints for more than just the multiplexes but for the entirety of the run.

Only time will tell if the studios turn their backs on theaters like mine or not. But I find flaw with your analysis of the situation.
"What a crazy business"
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