JPMorgan (NYSE:JPM) Raises Close to $700 Million for Movie Theaters to go Digital

Someone close to the situation said that J.P. Morgan Chase (NYSE:JPM) has raised around $700 million of the purpose of the largest theater chains in America to equip themselves with digital projectors and screens which can play movies with 3-D.

The insider said the major theater chains, Cinemark, AMC Entertainment Holdings and Regal Entertainment Group are working together as Digital Cinema Implementation Partners, which will supposedly announce the financing from J.P. Morgan sometime in the next couple of weeks.

Even though Hollywood has been touting record-breaking numbers, the truth is actual people seeing movies is down, and the numbers are from the theaters raising prices.

With an inevitable resistance to raising prices too high, and people returning to other activities once the recession is over, Hollywood studios have been looking for 3-D to be one of the answers to the flat attendance and price barriers they face with regular movies.

The reason 3-D is desired so strongly by the studios is it gives them the opportunity to price movies higher, as movie-goers are willing to pay higher prices for the experience.

What is holding back studios from even more success is the relatively few theaters having the ability to show 3-D movies in comparison to the overall number of screens out there.

The digital movie component is valuable as theaters are empowered to adjust movie lineups very quickly if there is surprising demand for a particular film. There are also savings costs from studios not having to print shipping reels.

Hollywood studios are going to pay part of the digital change, as they also have a vested interest as the lucrative DVD market continues to decline in revenue, and which 3-D film revenue should help make up for.

Studios haven’t signed off on it yet, but they are expected to, and when it’s all over there should be financing in place to turn 12,000 theater screens digital.
 
While that’s impressive, it’s actually less than the original plans to raise about $1 billion to transform 14,000 theaters in the United States and Canada with digital 3-D technology.

The primary reason the financing is happening now is the credit crunch which dried up funding over the last couple of years.