This article was updated at 9:01 p.m.
TORONTO — Alliance Atlantis senior execs and principal shareholders Seaton McLean and Peter Sussman are ankling the company as it plans to gut TV and movie production due to a “permanent downturn” in global demand for primetime TV series and independent films.
Canada’s leading producer shocked the local industry late Wednesday when it announced that it will pinkslip 70 of its 150 entertainment division staffers, close some international offices and refinance the company.
Alliance Atlantis, which in the last five years has slashed its TV drama production from 326 hours a year to just 77, is carrying out “a wide-ranging review” of its TV and film production business.
The wildly successful “CSI” franchise, which Alliance Atlantis co-produces with CBS, is the only show to escape the entertainment group review.
The review does not include Alliance’s broadcast group, which includes specialty networks Showcase, HGTV Canada and History Television, its movie distribution group or its new film distribution fund.
Most of the jobs are expected to be cut from the entertainment division’s Toronto office, but the company also has offices in Los Angeles; Shannon, Ireland; and Edmonton.
“We began this review in response to what we believe is a permanent downturn in domestic and international demand for primetime television series, movies of the week and miniseries as well as arthouse theatrical motion picture productions, all of which have represented a sizable portion of our production activities in the past,” said senior exec VP and chief financial officer Judson Martin.
Sussman, CEO of the entertainment group, and McLean, president of production, will continue to be major shareholders.
The two, who were unavailable for comment, will remain aboard long enough to ensure “an effective transition in the short-term and providing consulting services as required in the future.”
AA produced bigscreen winners “Bowling for Columbine”; small-screen miniseries “Nuremberg” and “Me and My Shadow”; and Canuck TV series including “This Hour Has 22 Minutes” and “Eleventh Hour.”
Move reps a huge blow for Canada’s struggling production community. It will leave a much smaller pool of producers for the creative community, such as Robert Lantos’ Serendipity Point Films and MDP in features and, in TV, a collection of smaller companies such as Portfolio and Barna-Alper.
Alliance Atlantis formed when the country’s two largest production entities, Alliance and Atlantis, both created in the mid-1980s, merged in 1998. At that time Alliance Atlantis dubbed itself Canada’s only major indie studio.
The company was burdened with debt and soon began to cut high-cost production. Most recently, the company’s shares took a hit as it posted widening losses after taking a one-time charge to consolidate its Toronto office space.
“This is the next logical step in our strategy of reducing our financial and operational exposure to the production business and focusing on the abundant growth opportunities in the broadcast and motion picture distribution sectors,” said the company’s chairman-CEO Michael MacMillan. “International television distribution remains an important part of our business and operations.”
Over the years Alliance and Atlantis have received millions of taxpayers’ dollars to sustain the indigenous production industry.
The restructuring will leave just two of the four post-merger major shareholders, MacMillan and Ted Riley, in the saddle. Based in Ireland, Riley oversees international distribution.
Announcement was made after stock markets closed Wednesday. In earlier trading, shares in Alliance Atlantis were unchanged at $15.28 on the Toronto Stock Exchange.
(Brendan Kelly in Montreal contributed to this report.)