Source : Ottawa Citizen

by Tony Atherton

The merger of Canada's two largest film and TV production companies will mean more jobs for Canadian actors and film crews, and more opportunities for smaller independent companies, the CEOs of Alliance Communications and Atlantis Communications said yesterday.

It also means the two men can pursue their personal dreams, they said at a Toronto media conference.

For Michael MacMillan, the cinematographer turned businessman who co-founded Atlantis Communications 20 years ago, it means a chance to take control of what will be the sixth-largest film production company in the world (with gross revenues just below that of Aaron Spelling's Spelling Entertainment).

For Robert Lantos, the producer turned entrepreneur who became the most powerful man in Canadian film production in the 12 years since he founded Canada's largest production company, Alliance Communications, it means returning to his first love – making movies.

Alliance, producer of such TV series as Due South and E.N.G., and such movies as The Sweet Hereafter and Black Robe, was created because making movies in Canada in the early '80s was a hardscrabble existence, said Lantos. The problem was that the industry had no business infrastructure.

"I wanted to have some real infrastructure, I wanted to have a business. I wanted to hold my head up high when I walked around the Cannes Film Festival or dealt with the Hollywood companies ... Something in my nature rebels at being a supplicant. And back when I started, if you were a Canadian in this business, you were a supplicant by definition. The plan was that ... there would be a point in time that I would pass it on to others and I would go back to telling stories."

He couldn't have picked a better time. With Alliance stock having jumped this spring, movie-making will no longer be a hand-to-mouth existence for Lantos, as it was in 1970 when he scraped together the funding for his first feature, In Praise of Older Women, or subsequently produced several steamy, low-budget tax shelter movies featuring his first wife, Jennifer Dale.

Under the terms of the merger, he'll not only have an estimated $50 million worth of stock in the new company, but also a minimum three-year deal to develop and produce movies for Alliance Atlantis, as the new company is being called. Lantos will produce movies based on Michael Ondaatje's In the Skin of a Lion and Mordecai Richler's Barney's Version, and a new Atom Egoyan film, among others.

The merger sets to rest more than a year of takeover speculation which Lantos himself helped fuel last fall when he said that consolidation in the Canadian TV and film industry was inevitable if Canadian companies hoped to compete internationally. There were rumours that Alliance would take over Baton Broadcasting (or vice-versa), that Lantos was courting Global, and that Alliance would pick up the specialty-channel broadcaster, Netstar (TSN, RDS, Discovery).

But the Alliance-Atlantis merger is the perfect fit, said Lantos.

"Its been some time that we both knew that this makes sense." Lantos said. "When did we begin to believe that we could work it out in a rational way? In the last few months."

The merger leaves Lantos with no official role in the company, though he retains the honourary title of chairman emeritus. Lantos's right-hand man at Alliance, Victor Loewy, remains as head of the new company's feature film distribution company, but all the other senior executives come from Atlantis, including MacMillan as chairman and CEO, Ted Riley as head of TV distribution, and Atlantis co-founder Seaton MacLean as head of production operations.

MacMillan said the merger means the company can focus primarily on making television and films aimed at an international market. Atlantis's Psi Factor and Earth: Final Conflict are examples of the kind of international series MacMillan might have in mind. But he said there would continue to be a place in the new company for indigenous, distinctly Canadian programming, such as Alliance's North of 60, and these would often be made in co-production with smaller independent companies.

"(The merger) will help us make better TV shows, more entertaining TV, that will attract more viewers," said MacMillan.

Shareholders will be asked to approve the deal in September. And since Alliance and Atlantis each own two specialty channels (Showcase, History, Life and HGTV), the change in ownership structure must also be approved by the CRTC.

While many observers were surprised by the merger, and Lantos's willingness to step aside from management, few had major reservations.

"Overall, it's good for (Canadian) viewers if we have more bench strength in the Canadian system," said Ian Morrison, spokesman for the nationalist consumer lobby group, Friends of Canadian Broadcasting.

"And insofar as they develop the capacity to be a large international player, that brings those resources to Canada. The challenge is to get that mega-company to do more for Canada."

Morrison said the merger raises a number of policy issues, such as whether such a mega-company should have special restrictions on its access to public program funding.

Like several other observers, Morrison noted that Atlantis has a better reputation for administration than Alliance under the mercurial Lantos. The imposition of the Atlantis management should make the joint company stronger, he suggested. "This is a one plus one equals three kind of thing."

Coopers & Lybrand broadcasting consultant Peter Lyman says both companies were likely feeling a lot of pressure to make alliances. If not, they risked being taken over in a rapidly shifting Canadian broadcasting landscape. "It seems they both decided it was better to merge with each other than with a broadcaster, or to be bought by some other company," said Lyman

Although Morrison worries about the affect the sheer bulk of the new company might have in the Canadian production industry, producer Wayne Grigsby (Black Harbour) said he didn't think it would affect small companies like his Fogbound Films. However, Grigsby, who formerly worked on Alliance's North of 60, E.N.G. and Mount Royal, admitted his personal shock at Lantos's decision to step down.

"I admire Robert so much because the conversation we've had for 10 or 12 years was that what he really wanted to do -- even as he was growing Alliance -- was go back to producing movies. I thought he meant it, but as this thing grew bigger and more complicated, how could he actually extract himself. He's such a competitive guy.

"But he said he'd do it, and now he's done it."  

Alliance, Atlantis Facts & Figures

REVENUE

Combined revenue for last fiscal year -- $597 million.

SPECIALTY CHANNELS

Current: Alliance -- Showcase and History Network; Atlantis -- Life Network and HGTV.

Applied for: Alliance -- Biography Television; Romance Television, Canal Histoire, Canal Fiction;

Atlantis -- National Geographic Channel. Canada's Health Network, Fit TV Canada, Food Network, Canada, People Channel.

TELEVISION PROGRAMMING

Current: Alliance -- Due South (CTV), Cover Me (CBC), Nothing Too Good For a Cowboy (CBC), Power Play (CTV), Harlequin Romance movies; Atlantis -- Traders (Global); The Outer Limits (Global); The Psi Factor (Global); Earth: Final Conflict (CTV); Legacy; Cold Squad (CTV).

Library: Alliance -- North of 60, E.N.G., Night Heat, ReBoot;

Atlantis -- Ray Bradbury Theatre, Alfred Hitchcock Presents, Neon Rider, Maniac Mansion.

FEATURE FILMS

Alliance : The Sweet Hereafter, Crash, When Night is Falling, Johnny Mnemonic, Black Robe.

© The Ottawa Citizen