Cinedigm creating new paradigm for digital movie distribution


One story depicts girls coming of age in India. Another follows a group of seniors as they compete in an international pingpong championship in Mongolia. Closer to home is the portrait of local priest Father Greg Boyle and his work with ex-gang members. Then there’s a look at “fruit detectives” from around the world in search of exotic varieties.

Those are among eight documentaries that will be shown on designated nights at two dozen theaters nationwide this spring as part of the Docurama series. It’s the latest attempt by the exhibition industry to program alternative entertainment aimed at filling theaters during the week when they’re mostly empty, while giving filmmakers a chance to screen movies that might not otherwise make it to the multiplex.

Supplying the Docurama films is Cinedigm, a Century City firm best known for helping theaters convert some 12,000 screens in the U.S. and Canada from film to digital.


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Now that most theaters in North America have completed the conversion, Cinedigm is doing its own makeover. It has embarked on an ambitious plan to transform itself into a leading digital distributor of independent movies, documentaries and TV shows — not just to theaters but a plethora of digital devices and outlets.

Cinedigm, which also has offices in New York and Woodland Hills, is seeking to capitalize on the digital transformation in Hollywood, which has created new outlets for content and made it possible for filmmakers to shoot movies and deliver them to theaters without involving costly film prints.

“We’re trying to create a complete independent studio that distributes both new product and alternative content across all media,” Cinedigm Chief Executive Chris McGurk said. “All these digital platforms have launched in the last five years and they’re all dying for content in the same way that all the cable TV pay services were in the late 1980s and 1990s. We’re really well positioned to maximize the advantages of the digital revolution.”

A former senior executive at Walt Disney Studios, Universal Pictures and MGM, McGurk is among several traditional media executives, including former Disney Chief Executive Michael Eisner, attempting to reinvent themselves in the world of new media.

Before joining Cinedigm in January 2011, McGurk was chief executive at Liberty Media’s Overture Films, which he helped launch. After nearly four years in operation, Liberty shut down the studio, which had a mixed track record at the box office and, like other independent studios, had been buffeted by declining DVD sales and a glut of titles. McGurk said his hands were tied because Liberty Chairman John Malone wanted to exit the movie business.


McGurk has had no such constraints at Cinedigm, which he has pushed on an aggressive course.

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In April, Cinedigm acquired New Video Group, a New York-based distributor of independent films, TV shows and specialty entertainment, which made Cinedigm the world’s largest rights holder for independent digital content — entertainment produced outside the major studios.

Working with emerging distributors such as Amazon, Hulu, Netflix and iTunes, Cinedigm controls the digital rights to more than 20,000 independent movies and TV shows, including titles from Sundance, Tribeca Film, Scholastic and Digimon.

Cinedigm also has acquired 15 new independent films across all genres and aims to acquire about 20 films a year. The company has assembled a team to help reach that goal, hiring Vincent Scordino, formerly of Millennium Films, to head up its acquisitions, as well Jeff Reichert, who came from IFC and Magnolia Pictures, and Tom Hassell, a veteran film distribution executive.

Recent acquisitions include “The Invisible War,” the Oscar-nominated documentary about the plight of women in the U.S. military, and “Don’t Stop Believin’: Everyman’s Journey,” about a guy discovered on YouTube who became the new lead singer for rock band Journey. Another film, “The English Teacher,” is an upcoming comedy starring Greg Kinnear and Julianne Moore.


Using its relationships with theaters and its growing library of titles, Cinedigm aims to program blocks of entertainment in theaters on different nights of the week — one night dedicated for sports programs, another to horror movies or YouTube entertainment — in much the same way that cable television offers various channels that appeal to target audiences. Each night would have a different sponsor.

Theaters are hungry for such alternative programming because their seats are less than 5% full from Monday through Thursday, McGurk said.

“There are 40,000 theaters out there and each one has their own characteristics, not only in terms of geography but in term of demographics and audience base,” McGurk said. “You’ve got this vast network that hasn’t been programmed very well because all the theaters completely depend on a limited supply of wide-release movies … blasted out to as many screens as possible without regard to the demographics of the particular theaters.”

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Founded in 2000, Cinedigm was pivotal in arranging for theaters to purchase digital projectors using so-called virtual print fees paid by studios to exhibitors. Its software, created in Woodland Hills, also is widely used to help theaters program movie bookings.

Cinedigm was an early player in producing alternative content in theaters, distributing concerts from groups like the Foo Fighters and live sporting events, such as the FIFA World Cup soccer tournament. Although its screenings were popular, the costs of producing and marketing the events proved to be too expensive to be economical, McGurk said.


The company has focused on acquiring distribution rights so it can control the so-called downstream revenues from home video and mobile sales. Cinedigm gets an undisclosed fee for each transaction.

Another priority has been to strengthen its balance sheet. In its most recent quarter, Cinedigm posted a net loss of $1.8 million, narrowing its loss of $10.6 million in the same period a year earlier, partly because of high interest on its debt.

This month the company announced a $195-million refinancing that significantly lowered interest expenses on its debt. McGurk told analysts that Cinedigm would have operating profit of as much as $50 million from its software, services and content businesses during the next four to five years.

Investors have been encouraged. Cinedigm shares, which fell 5 cents, or 3.2%, to $1.53 on Monday, are up 13% this year.


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