UPDATE 1- Regal, Real D in 3-D partnership

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By Sue Zeidler

LOS ANGELES, May 20 (Reuters) - Movie exhibitor Regal Entertainment Group (RGC.N: Quote, Profile, Research, Stock Buzz) said on Tuesday it reached a deal with privately held RealD 3D to upgrade 1,500 screens with 3-D technology in what analysts hope is a sign that theater operators' digital conversions are finally gaining momentum.

The Regal deal is the largest commitment to 3-D by any movie theater chain, the companies said, raising the number of screens running RealD's 3-D technology to over 3,500.

Terms of the deal were not disclosed. The deal hinges on the completion of the Digital Cinema Implementation Partners (DCIP) initiative, a widely anticipated $1.1 billion financing deal among three large movie chains and Hollywood studios.

Once outfitted with digital projectors, theaters can then add 3-D technology.

"We look forward to the finalization of the DCIP deals, which will allow Regal to commence the expanded 3-D roll-out," said," said Mike Campbell, Chief Executive Officer and chairman of Regal Entertainment Group, the largest movie chain operator with 6,763 screens in 551 locations.

The DCIP's members -- Regal, Cinemark Holdings Inc (CNK.N: Quote, Profile, Research, Stock Buzz) and AMC Entertainment Inc AC.N -- had hoped to finish the financing deal with studios to deploy cinema digital technology by the fourth quarter of 2007, but several issues forced the group to push back that target to the second quarter of 2008.

Some analysts have cited concerns there will not be enough 3-D screens to accommodate a huge slate of upcoming Hollywood 3-D titles beginning in 2009.