Possible Digital Cinema Financing Winners (BX, JPM, AIXD)

Despite the realm of uncertainties we all face, there is one sector which has survived through the good times and bad times of the last century: movies.  Movies haven’t even been killed by the digital revolution as so many feared could happen in the 1990’s. The FT reported this morning that The Blackstone Group (NYSE: BX) and a unit of JPMorgan (NYSE: JPM) were set to announce a financing package of more than $1 billion to fund the conversion of up to 20,000 cinema screens in the US to digital projection systems.  Access Integrated Technologies, Inc.(NASDAQ:AIXD), which goes byAccessIT, would likely be one of the key beneficiaries of such a large financing package.

We previously noted AccessIT as one of the beneficiaries the of the conversion. All data including a call to the companysuggests that this would be a positive development for product line.AccessIT provides integrated solutions for digital cinema including networking, library management, theater command center,and operations for delivering movies, and content advertising.

There are no assurances that the company will hit a home runoff the financing since its technology is "developing."  Italready has its foot in the door, and this 20,000 cinemafigure would offer an even larger possible pool of revenue than the"up to 10,000" cinemas we discussed back in March. With a tiny market cap of about $40 million, AccessIT likely flies under the radar of most stock screens.

Studios have been making large bets on 3-D films, and the industrybelieves these films make more money than traditional movies.  Thiswould also cut down significantly on film printing costs, and the damage ordegradation issues would go away as well.  This financing would allowthe conversion of roughly half of US cinemas.  It would also allow formore broad arrays of live events to be more easily delivered to localin-theater audiences.

It seems that the two solid financial houses are arranging thefinancing for The Digital Cinema Implementation Partners (DCIP)consortium, made up of AMC Entertainment, Cinemark and RegalEntertainment. Lions Gate (NYSE: LGF) has also apparently joined upwith Disney (NYSE: DIS), News Corp.’s (NYSE: NWS) 20th Century Fox,Viacom Inc.’s (NYSE: VIA) Paramount, and General Electric’s (NYSE: GE) Universal Pictures.

Times are tough right now, but developments in entertainment continue.

Jon C. Ogg
October 1, 2008