As you read this, a new year has dawned, as has a new reality in the world of Canadian production. Or, so says Alliance Atlantis Communications. The day after we went to press – a month ago, now (one of the pitfalls of our publishing schedule during the holiday season) – AAC announced that it was eliminating up to 70 jobs due to a ‘permanent downturn’ in worldwide demand for drama.

Employing the term ‘permanent downturn’ was no accident and it’s as good a reason to cut one’s workforce as there is. But it does raise questions, particularly when you look at AAC’s production track record in recent years.

True, it produces the CSI franchise and has done well with miniseries including Hitler: The Rise of Evil, Nuremberg and Life with Judy Garland: Me and My Shadows. But on the domestic front, AAC has struggled. The Eleventh Hour has yet to find a solid viewer base and AAC’s previous one-hour drama, The Associates, was canceled after only two seasons. The feature Foolproof tanked at the box office and the AAC-backed Picture Claire never made it to the screen. Its costly experiment with interactive entertainment, U8TV, was unceremoniously pulled after a year and a half.

Ultimately, such failures led directly to more than 200 layoffs in two years.

True, the market for imported drama in Europe has collapsed. But many producers and broadcasters say the demand for reality programming and docs has peaked. Reduced funding domestically and a lack of commitment by Canadian broadcasters to support drama are also not irrevocable.

Producers and union groups were quick to take issue with the notion that the downturn will be chronic.

Alliance Atlantis has done a fantastic job of building its broadcast assets, allowing it to become a key player on the specialty and digital tiers. Also, thanks to deals with U.S. producers New Line Cinema and Miramax, AAC is the dominant domestic motion picture distributor.

What AAC is really suffering from is pressure to step out of the expensive and unpredictable production sector and focus on building its more lucrative ventures. It’s good business, but not the end of the world.

For the record, we don’t accept the argument put forth by some that if AAC was allowed to blossom for years thanks to generous federal funding, it should now not be allowed to simply fold its tent. The company has long been scaling back domestic production, and has taken to shooting miniseries and its successful CSI elsewhere. But for years AAC employed and trained thousands, many of whom went on to start their own successful ventures and are positioned to step into the void left by AAC’s departure.

At least some of the executives who left the company following the cuts, including Peter Sussman, Seaton McLean and Paul and Michael Donovan, will likely reemerge free of the constraints put on them by working for a publicly traded company. It is hoped they will experiment and innovate and take the kinds of risks impossible when forced to answer to shareholders.

Indeed, providing the federal government and CRTC act in the new year to solve some of the chronic domestic problems dragging on dramatic production, we could find a reinvigorated production reality in the wake of AAC’s cuts.