Broadcaster

CSI franchise helps drive Alliance Atlantis

8/27/2003

TORONTO - Alliance Atlantis Communications Inc. today reported a 23% increase in net earnings to $10.8 million for its first quarter of fiscal 2004, ended June 30, 2003.

Consolidated revenue was $164 million versus $162.6 million in the same period a year ago. Consolidated EBITDA (excluding operating losses for digital specialty channels Showcase Action, Showcase Diva, BBC Canada, BBC Kids, Independent Film Channel, Discovery Health and National Geographic Channel which the company calls its developing channels) for the first quarter was $28.5 million, down 20.6% compared to the same quarter last year. Consolidated EBITDA (including developing channels operating losses) in the current quarter was $26.7 million, after absorbing $1.8 million of developing channels losses compared to $32.6 million in the prior year's quarter, after absorbing $3.3 million of developing channels losses then.

In the first quarter, revenue from the company's operating channels (Life Network, HGTV Canada, History Television, Food Network Canada, Showcase, Historia and Series+) increased by 20% over the first quarter last year, from $38.8 million to $46.7 million, driven primarily by a 46% increase in advertising revenue compared to the previous year's period.

Revenue from the company's developing channels was $5.7 million compared to $4.2 million in the prior year's quarter.

EBITDA for the operating channels was $21.5 million, up 26% over Q2 2003.

"As expected, developing channels posted an EBITDA loss of $1.8 million, compared to a corresponding $3.3 million loss in the first quarter of last year.

Revenue from the company's motion picture distribution group for the first quarter was $59.4 million - compared to $72.9 million for the prior year's period. The decline is due primarily to the timing of theatrical and video/DVD releases which are more heavily weighted to the second and subsequent quarters in the current fiscal year, said the company. The motion picture distribution group contributed $11.3 million to consolidated EBITDA in the first quarter compared to $13.9 million in the same period last year.

Revenue for the entertainment group in the first quarter was $52.2 million compared to $46.4 million recorded in the first quarter last year. This modest increase in revenue is due to the delivery of five hours of CSI: Miami and the Hitler: The Rise of Evil miniseries in the current year's quarter compared to no deliveries in the same period last year, offset by a decline in current quarter deliveries of kids and factual productions and feature films. As well, the stronger Canadian dollar has somewhat dampened revenue and EBITDA contribution from the entertainment group on U.S. dollar denominated sales.

EBITDA for the entertainment group was $3 million - compared to $9.8 million in the prior year's period. This reduction reflects the foreign exchange effects of the stronger Canadian dollar as well as some minor provisions taken in the quarter.

The CSI franchise accounted for 47% of the entertainment group's first quarter revenue (2003 - 28%) and contributed virtually all of the group's first quarter EBITDA (2003 - 64%).

Alliance Atlantis continues to leverage the CSI franchise in the U.S. and internationally. The original CSI: Crime Scene Investigation is now the most watched series on U.S. television, while CSI: Miami is the most watched new series. Subsequent to the end of the first quarter, we confirmed that CBS has requested a full fourth season of CSI: Crime Scene Investigation and a full second season of CSI: Miami for broadcast in the new season beginning this fall. International sales of both series now stand at more than 145 territories sold.

"Following strong performance throughout fiscal 2003, our broadcast group continued to see strong ratings, which delivered impressive advertising sales again this quarter," said Michael MacMillan, Alliance Atlantis chairman and CEO, "with total advertising revenue up 45% over the first quarter last year," Mr. MacMillan said. "Our operating channels . . . showed continued strength while our developing channels . . . are progressing somewhat better than plan in terms of both subscriber levels and advertising sales."

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