TORONTO — Executives at Alliance Atlantis Communications tersely denied rumors Monday that the company is on the verge of splitting off its motion picture business from its broadcast division.
“Our strategy remains one of vertical integration, and it would be wholly inconsistent with that to break apart our broadcast business with our content business,” said Kym Robertson, VP of corporate and public affairs.
Robertson told Daily Variety she’s echoing previous statements from company prexy-CEO Michael MacMillan. “We see these businesses as being very interrelated, and we’ve had very good year-end results that we feel underline that,” she added.
While a growing number of integrated companies, including AOL Time Warner, are abandoning their integration strategy and selling pieces off, Robertson said, “We’re not sure that the jury’s in as to whether that’s a good idea or not.”
AAC has for several years pursued a strategy that includes vertical integration and a reduction in the amount of primetime drama it produces, in favor of its more lucrative broadcasting division, which last September launched a handful of new digital networks.
The diginets, along with acquisitions such as that of Salter Street Films in spring 2001, have increased the company’s level of debt, however, which was a major concern for analysts. Robertson said the company has made “significant gains” in response. Between the fiscal first quarter and the end of the fiscal year on March 31, AAC reduced its debt level from C$730 million ($465 million) to $392 million.
In an April report from CIBC Wood Gundy, analyst Adam Shine approved of the belt-tightening measures, which included the pinkslipping of 80 staffers from the entertainment division in January and 35 more from the broadcast division in April. Shine went on to reiterate his “strong buy” recommendation, with a share target price of $15.93. AAC stock was at that time trading at just under $12.74. The price has since slipped a few Canadian dollars.