Boeing digital decision may give boost to Technicolor.

After 20th Century Fox pulled out of a deal to show "X-2: X-Men United" in Boeing's digital theaters after that company refused to be held liable if its equipment failed, Camarillo-based Technicolor appears poised to cash in on Hollywood's pack of digital films coming out this summer.

"It looks like Boeing dropped the ball and Technicolor is there to pick it up," said Nick Dager, editor and publisher of Digital Cinema Report, an online trade publication.

At issue is Fox's denial of Boeing's demand that it should not be held liable for lost box office revenue due to equipment failure at its digital movie theaters.

"I'm very surprised that Boeing would do that especially when you're trying to enter a market," Dager said.

Technicolor, which operates 35 digital theaters around the country under its Technicolor Digital Cinema unit, had no such exemption request to the studios and that could prompt the industry to favor its technology as a standard begins to emerge in the market, Dager said.

Although neither Technicolor nor Boeing would comment, some agree Boeing may be hurt by the incident.

"Nobody does business like that, least of all in Hollywood," said Fred Lewin, a longtime Studio city-based talent agent who does business with the major movie studios.

While Boeing's move may have been merely adherence to corporate policy, Dager said it could give Technicolor an advantage.

"Technicolor has the technology and the history behind it and has been a major player in Hollywood for years so it really does stand to benefit a great deal," Dager said, noting that studios will now look toward Technicolor for their digital releases.

A number of new digital films are slowly malting their way to theaters, including Disney's "Finding Nemo," "Terminator 3: [he Rise of the Machines," "The Hulk," and others.

Largest supplier

Although the film industry's efforts to move toward digital cinema has been slowed by lack of agreement by the major studios on a standard format for digital film equipment, Technicolor could get a boost by merely being the largest theater equipment supplier so far, with its estimated 40 screens, Dager said.

Other players with only a handful of screens include Eastman Kodak and Sony Corp.

Technicolor had been set to roll out its technology into 1,000 theaters in January 2002 when it pulled back, citing high costs and uncertainty over which company's digital system will become the industry standard.

The company had planned to pay for the outfitting of the theaters at a cost of about $150,000 per screen while recouping the costs through a flat fee that it would charge every time a film was shown.

Although that plan has been shelved, the company is slowly converting more theaters into digital through sales of its high-end digital theater equipment.

Already, Technicolor has installed its projection system, made up of a projector, software and digital storage devices, at the Loews Century Plaza 4 and at The Bridge complex at the Howard Hughes Center near Marina del Rey.

Altogether, there are. fewer than 90 movie screens using digital film technology out of an estimated 30,000 screens nationwide.

Analysts like Adi Kishore of the investment firm Yankee Group in Boston, said most theater owners, who are already facing higher costs to show films, are not embracing the expensive new technology.

But such facts aside, Dager said he expects more digital theaters to crop up in 2003.