IMAX makes a dramatic comeback

Indiana Jones, Batman and The Mummy may be the characters that come to mind when you think of movie icons angling to make a comeback at theaters this summer.

But the biggest marquee name promoting a sequel isn't fictional.

It's IMAX.

The company known for its giant movie screens and rib-rocking sound has begun a construction boom that will increase the number of IMAX imax venues in North America nearly 80% by the end of 2009 as it outfits new and old theaters alike with its proprietary digital projectors.

That's part of a larger plan to win back the confidence of investors, theater owners, Hollywood studios and consumers following a period marked by steep losses, a failed effort to sell itself, and questions about the integrity of its financial reports when a Securities and Exchange Commission inquiry led to restatements.

"Some people wrote us off as a dinosaur," says co-CEO Richard Gelfond. "They said, 'Until we see where IMAX is going, we don't want to do business with them.' "

The campaign by Gelfond and fellow co-CEO Bradley Wechsler will hit its stride in July when AMC Entertainment theaters in Baltimore and Washington, D.C., open IMAX venues that will be the first to deploy its new digital projectors.

If the digital theaters appeal to the popcorn crowd — people typically pay an additional $3 per ticket for an IMAX film — then Hollywood studios likely will make more big releases available to IMAX. They likely will find it especially appealing for the growing number of flicks being made in 3-D.

Potential blockbusters that will appear in IMAX this year include Speed Racer, Kung Fu Panda, The Dark Knight, and Harry Potter and the Half-Blood Prince (which will include some scenes in 3-D). Next year's slate includes a 3-D version of DreamWorks Animation's Monsters vs. Aliens.

IMAX also is talking to sports leagues — executives declined to say which ones — about beaming live broadcasts on the supersize screens.

"IMAX has developed a differentiated experience, which we like," says AMC chief executive Peter Brown. "We'd like to have it be that you could come in to one of our (multiplexes) and have a variety of experiences at all sorts of different price points."

Gelfond and Wechsler hope other theater owners will share that view: Their company can grow only if exhibitors cut deals to have them build new IMAX theaters or retrofit existing ones.

It will take time to convince some skeptics that IMAX can pull off its ambitious transition to digital.

IMAX paid $17.1 million last year in interest on $160 million in long-term debt, which must be refinanced at the end of 2010. Those payments contributed to the 61% growth in its 2007 net loss vs. 2006 to $26.9 million on revenue of $115.8 million, down 9.3%.

"Solvency questions are the thrust of the bear story on the stock," says Roth Capital Partners analyst Richard Ingrassia, who had soured on the company until last August. "They still have a couple of quarters of hangover from the period when exhibitors weren't ordering anything and IMAX didn't have a digital product to offer them."

IMAX may quell some of those concerns today when it unveils two deals providing access to as much as $36 million in additional funds, bringing its total spending power to about $55 million.

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