The UK Digital Funding Group today announced plans to establish itself as a separate legal entity, as plans to strike a deal on digital cinema for small and medium-sized UK cinema operators continued to progress.

Boosted by positive discussions with both major studios and third party integrators, the UK Digital Funding Group (UKDFG) – established in Autumn 2009 to negotiate financial support for small and medium-sized UK cinema operators to convert to digital cinema technology – today announced plans to establish itself as a separate legal entity.

This move will allow it to consolidate negotiations to attract revenue funding in the form of ‘Virtual Print Fees’ (VPFs).

At present some 500 independent screens form the UKDFG and it is expected that these cinemas will become shareholders in the new company, which will be owned and run by the exhibitors themselves with a representative board of directors determining its ongoing strategy. When appropriate, this single entity will also sign contracts with relevant partners and/or financial institutions.

Commenting on the move, Steve Perrin, UKDFG Chief Executive, said:

“The last three months have seen significant progress in attracting the support of the distribution community for the independent cinema sector in its endeavours to move ahead with digital cinema installation. Now is the time to consolidate this support with the formation of a legal entity that can drive these negotiations forward in a formal and structured manner”.

Phil Clapp, Chief Executive of the Cinema Exhibitors’ Association (CEA), in supporting this development, commented:

“Most industry professionals anticipate that significant progress in the digitisation of UK cinemas will be seen during 2010, particularly amongst the major circuits. The CEA position has remained that we need to do all we can to ensure that the independent cinema sector is not left behind in this period. The progress that this new development represents in this direction is there therefore fully supported by the Association.”

Extensive negotiations will continue throughout 2010 with a view to determining the best possible financial arrangements for independent operators in accessing and deploying digital cinema projection and related equipment.