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Katzenberg Starting To Worry About Digital Rollout

In a break from his usual sunny demeanor of the digital cinema rollout, DreamWorks Animation CEO Jeffrey Katzenberg said he was disappointed at the way things have been progressing, per VARIETY.

On Tuesday's earnings call with investors, he said in response to an analyst's question, " "In the last 30 days, things have not progressed as well as I had hoped, expected and, quite frankly, been committed to, by all the parties involved. It's ongoing as we speak literally now, but in terms of getting the big three (exhibitors: Regal, Cinemark and AMC) on board and actively moving forward, I feel as though things have dragged along, and it's been pretty disappointing."

Major studios and the top three exhibitors have been trying to work out the amount of a "virtual print fee" that the studios will pay to distribute their pictures digitally. Exhibitors will use the fee to help pay for digital projector installations.

Regal, Cinemark and AMC is attempting to secure a $1.1 billion line of credit to convert screens to digital, but the virtual print fee agreement must be in place beforehand. Another round of talks should commence in the next two weeks.

DreamWorks' MONSTERS VS. ALIENS, in digital 3-D, is heavily dependent on getting some 5,000 screens up and running by March 2009. Katzenberg said that's been his goal all along, but that chances of that happening are dimming. Just 1,000 screens are operating in the U.S. today.

"If these guys don't get their act together very quickly in the next 30 days, they're not going to be able to achieve that goal," Katzenberg said. "Every week that goes by, it'll be several hundred less screens that manage to be rolled out in the time frame."

It's costing DreamWorks between $10 million and $15 million to produce their films in digital 3-D starting with MONSTERS, but Katzenberg said on the call he is still confident they will get their money back on the investment.

A few weeks ago, the National Association of Theater Owners President John Fithian made similar remarks from his side during the Digital Cinema Summit at NAB. "If the studios want this to happen in time for 2009, the deals have to be struck, and they have to be struck right now," he said then.

DreamWorks has the most stake in digital 3-D,as Katzeberg has been its most vocal proponent, but many big films next year are counting on it: James Cameron's AVATAR and ICE AGE: DAWN OF THE DINOSAURS from Fox, Disney/Pixar's UP and Disney's A CHRISTMAS CAROL.

Despite the uncertainty, the rest of the call was very positive.DreamWorks did well in the first quarter of 2008, with revenue up 67 percent and net income rising 69 percent over last year.