CSI producer frugal with its success

MONTREAL — Alliance Atlantis, Canada’s leading TV producer, is kicking off the new year with a new philosophy.

The Toronto-based company is drastically cutting TV and film production to focus cash and energy on broadcasting. On Jan. 9, it announced a major restructuring and axed 80 jobs. Primetime drama production will drop from 175 hours this year to around 100 hours next year. The company will also produce fewer, cheaper pics.

The irony is that the company is riding high with its biggest TV hit ever, the CBS series “CSI: Crime Scene Investigation” — one of the highest-rated shows on U.S. network TV.

And last year it produced the Emmy-winning telepic “Me and My Shadows: Life With Judy Garland.”

But top Alliance Atlantis execs are convinced the profit margins for primetime production are too low compared to the earnings from specialty channels in the Great White North.

Film and TV production and distribution will be combined under the new Entertainment Group, headed by Los Angeles-based Peter Sussman, a seasoned Alliance Atlantis exec.

This will allow Alliance Atlantis to funnel more cash into its specialty TV operations. The company has stakes in 18 channels, including Showcase, Life Network and History Television, and the Canadian specialty webs are virtually all profitable.

“Right now, the economics of broadcasting are much better than content,” Sussman tells Variety.

Move is part of a trend that started when Alliance merged with Atlantis in 1998. At the time, the two companies combined to produce 22 primetime series.

This year, it is producing only eight primetime series. But Sussman is quick to emphasize that Alliance Atlantis is not leaving production altogether — it’s still open for business in Hollywood.

“The company is in the business of making filmed entertainment around the world,” Sussman says. “What we’ve changed is that we’re reducing our overheads to focus on the best filmed entertainment.”

Exec Shuffle

Seaton McLean, formerly head of the film production department, has been tapped president of production at the Entertainment Group, and Ted Riley, previously head of TV distribution, will be the group’s prexy of distribution. Steve Ord is exec VP, responsible for financial, legal and business affairs. Longtime Alliance Atlantis execs Victor Loewy and Patrice Theroux, who oversaw international film distribution, will focus on distribution in Canada and the U.K.

The company expects to save at least C$7 million ($4.4 million) per year, beginning in fiscal 2003. One-time severance packages will cost an estimated $2.5 million. With the savings, Alliance Atlantis expects to meet financial-analyst cash-flow estimates of $103 million-$106 million for the current fiscal year.

“We think that’s definitely a step in the right direction,” says analyst Adam Shine of CIBC World Markets in Montreal. “We think this is part of better news that we expect to be coming out of the company going forward.”

Alliance Atlantis is not scaling back its lucrative theatrical motion-picture division. It is Canada’s leading independent film distributor, largely thanks to long-term output deals with Miramax and New Line, and it has its top hit ever with “The Lord of the Rings: The Fellowship of the Ring,” which has garnered $20 million for Alliance Atlantis Releasing.

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