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Alliance Atlantis reports Q2 loss

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Alliance Atlantis
TORONTO - Alliance Atlantis Communications Inc. reported a net loss of $12.2 million for the second quarter 2004, $5.5 million more than the $6.7 million loss in the same period last year.

The company attributes part of its loss to a one-time lease abandonment charge of $8.3 million. This cost was absorbed when the company consolidated its head office facilities in one location in Toronto.

The company also reported that over the last four quarters it has paid off $79.5 million of its net debt, which now stands at $587.5 million.

A large part of Alliance Atlantis's revenue can be attributed to the success of its CSI: Crime Scene Investigation franchise, which is part of the Entertainment Group division of the company and a ratings leader on CBS. CSI is the number one program on U.S. television and accounts for 35% of the Entertainment Group's revenue.

Another highlight of the quarter includes $253.9 million being raised by the Movie Distribution Income Fund IPO, the net proceeds of which went towards debt repayment.

In the second quarter, revenue from the company's operating channels (it's analog specialties such as HGTV, Life Network and Historia) increased by 18.3% over the second quarter last year, from $36.6 million to $43.3 million, driven primarily by a 27.2% increase in advertising revenue compared to the previous year's period. Revenue from the company's developing channels (its digi-nets like National Geographic and Showcase Action) was $5.6 million compared to $4.8 million in the prior year's quarter, "and our seven digital channels continue to perform in line with our expectations and according to plan," says the company's press release.

EBITDA for the operating channels was $12 million compared to the prior year's period, up 6.2%. As expected, the developing channels posted an EBITDA loss of $1.9 million, compared to a corresponding $1.7 million loss in the second quarter of last year.

"Alliance Atlantis channels demonstrated significant audience growth and outpaced the specialty industry overall. Among our established analog networks, the highest year-over-year audience increases were recorded by HGTV Canada - up 31%, Showcase - up 24% and History Television - up 21%. In addition, Alliance Atlantis' seven digital channels grew an average of 53%, outpacing industry growth of 17% overall," said the release.

"Our broadcast group continues to lead the way in specialty television in Canada, with growing audiences and ad revenues that are up again this quarter by 28% and 37% in the year-to-date period," said Alliance Atlantis CEO Michael MacMillan. "Continuing a five-year trend, Alliance Atlantis channels demonstrated significant audience growth and outpaced the specialty industry overall for the broadcast year ended August 31, 2003. There is no greater evidence of this strength than the record-breaking ratings achieved by Showcase's airing of the first season of the hit HBO series Six Feet Under, which has become the highest-rated series on English specialty television for the past five years, with average weekly viewers of 604,000 and audiences as high as 735,000 for some plays."

For the full release, go to www.allianceatlantis.com.
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