Alliance numbers fall

Canuck entertainment outfit posts earnings of $2.7 mil in Q1

MONTREAL — Net earnings were down big-time in the first quarter for Alliance Communications Corp., but execs at the Canuck entertainment company are not unduly worried by the profit dip because Alliance’s core businesses continue to perform well.

Earnings for the three months ended June 30, 1998, were C$4.1 million ($2.7 million) or C26¢ (17) per share, compared with C$7.8 million ($5.1 million) or C59¢ (39¢) per share for the same period a year earlier.

The biggest reason for the major dip in earnings was the one-time gain in the first quarter last year of $2 million from Alliance’s sale of part of its stake in Vancouver computer-animation company Mainframe.

Not counting the Mainframe sale, net earnings in the first quarter last year were $3.1 million or 24¢ per share.

The other cause of the drop in earnings was the elimination of its lucrative tax-shelter financing business. Alliance stopped providing tax-shelter financing last October following the federal government’s decision to ax the film-financing program.

In this quarter, the tax-shelter syndication business made no contribution to earnings and revenue, compared with tax-shelter revenues of $4 million and net earnings of $1 million in the first quarter of last year.

‘Growth momentum’

“This quarter’s results highlight the continued growth momentum in our core businesses,” said Alliance CEO Robert Lantos. “The results are in line with our expectations at this time of the year. If you exclude our discontinued tax-shelter business from last year’s first quarter results, the improved performance of our television, motion-picture and broadcasting businesses is crystal clear.”

Alliance and Atlantis Communications, also a Toronto-based entertainment company, recently announced that the two indie players will be merging (Daily Variety, July 21, 1998), and financial results will likely be reported under the Alliance Atlantis Communications banner by the third quarter of this year.

Revenues for Alliance Television increased by 175% to $22 million, up from $8 million a year earlier. In the quarter, 25 hours of television programming were delivered, compared with 10.5 hours the previous year. Deliveries in the three-month period included six episodes of “Sins of the City” to USA Network, six episodes of “Da Vinci’s Inquest” to CBC, four episodes of “Betaville” for the Sci-Fi Network, four installments of “Mowgli” for Fox, three episodes of “Due South” for Canuck web CTV, and one Harlequin MOW for CTV and Showtime.

Scarcity of blockbuster titles

Alliance Motion Pictures revenue and earnings were down due to the lack of delivery of any major pics in the quarter and the scarcity of blockbuster titles from Alliance Releasing, the company’s Canadian film distrib.

In the first quarter last year, Alliance delivered Atom Egoyan’s “The Sweet Hereafter,” which generated strong sales for the company.

Alliance Pictures did not complete any pics in the most recent quarter, while genre division Le Monde delivered “Hidden Agenda” and “It Came from the Sky.”

Alliance executive vice president George Burger said the feature division will deliver around $50 million worth of pics this year, compared with $15 million in all of last year. Three films — David Cronenberg’s “Existenz,” Denys Arcand’s “15 Mo-ments” and Istvan Szabo’s “The Taste of Sunshine” — will be delivered in the third and fourth quarters.

Alliance Broadcasting reported major revenue gains in the quarter thanks to the results from History Television, which was not on the air last year. Revenues from Alliance’s two Canadian specialty channels, History and Showcase Television, were up 59% to $5.9 million, compared with $3.7 million last year.

Revenues from other business decreased dramatically to $470,000, compared with $4.4 million the previous year, largely as a result of the elimination of the tax-shelter division.

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