Source : National Post

Jobs cut, offices closed: Overhaul to deal with 'permanent downturn'

Alliance Atlantis laid off Seaton McLean, president of production, and Peter Sussman, president.

Alliance Atlantis Communications Inc. is giving up its aspirations to become the premier Canadian entertainment conglomerate.

The Toronto-based media company, which produces film and TV including the hit series CSI: Crime Scene Investigation, said yesterday it is cutting up to 70 jobs in its production business and closing several offices in reaction to what it sees as a "permanent downturn" in global demand for prime-time TV series and independent films.

The layoffs are part of the company's "wide-ranging review" of its television and film production business and some distribution operations. The company said the review will not include the company's broadcast group, which includes specialty channels Showcase, Food Network and History Television, its movie distribution group or its new movie distribution fund. The company also said CSI, a co-production with U.S. network CBS and Alliance's only recent hit series, would not be part of the restructuring.

"We began this review in response to what we believe is a permanent downturn in domestic and international demand for prime time television series, movies of the week and miniseries as well as 'art house' theatrical motion picture productions, all of which have represented a sizable portion of our production activities in the past," said Judson Martin, Alliance Atlantis chief financial officer.

As part of these changes, Peter Sussman, CEO of Alliance's entertainment group, and the group's president, Seaton McLean, are leaving the company, though they will help during the restructuring.

Both executives, along with Alliance chairman and CEO Michael MacMillan and other founders, hold a controlling stake in the company. Their resignation may call into question their willingness to vote as a group.

"The fact that the two -- Sussman and McLean -- are leaving is a surprise," said one analyst who did not wish to be named.

The latest news signals the end of an era when the company dominated indigenous Canadian film and TV production. The company is expected to turn its focus on its broadcasting business. Their production arm will be dominated by CSI.

Making TV shows has already been a business on the wane at Atlantis. The company has cut TV drama production from 326 hours in fiscal 1999 to 78 hours last year. Of those 78 hours, 43 were devoted to making CSI, its top-rated show in the U.S.

The company said there has been a slump in demand from foreign countries for "North American-style dramas" as international entertainment tastes have changed. In Europe, networks are choosing home-grown TV entertainment in their native languages to fill out their programming schedules.

Also, international audiences are less interested in Alliance's so-called "art-house" movies, which also took up a chunk of the production budget.

"There's lower demand, and we believe this downturn is permanent and requires us to take a serious look at the production business," said Alliance spokesperson Kym Robertson.

Also because of the slump, the company expects there will be a substantial writedown to the overall value of the entertainment group's library.

The company added the cuts to the production business will save costs while increasing cash flow.

© National Post