Alliance Atlantis Communications finally confirmed that it has received a ‘non-binding proposal’ from British firm Marwyn Investments for its troubled Motion Picture Distribution arm, after skirting the issue during conference calls announcing the second-quarter results for both itself and MPD earlier this month.

AAC dodged questions about recent takeover interest from Marwyn and the departure of ex-chair Victor Loewy – who reportedly quit in response to the firings of CEO Patrice Théroux and MPD general counsel Paul Laberge in July – during the calls, frustrating some analysts. At the time, MPD chair David Lazzarato would only recognize the expression of interest from Marwyn, which stated in an Aug. 11 press release that it is prepared to pay about $400 million in cash for the distrib.

‘We’ll take a look,’ said Lazzarato during the AAC Q2 call, also on Aug. 11. ‘You can expect us to read it, think about it, discuss it and, if appropriate, get back to all of our shareholders and tell them about it. If there is something we have to tell everybody, we will.’

AAC – which owns 51% of MPD, with the balance held by the Movie Distribution Income Fund – acknowledged receiving Marwyn’s proposal on Aug. 15.

The Globe and Mail reported on Aug. 12 that two other unnamed companies may also soon bid on the distrib. Lazzarato – also AAC’s EVP and CFO – says MPD would wait for the results of an ongoing strategic assessment of its future viability in the face of emerging distribution platforms. He hopes the study will be completed in September.

Marwyn says its offer would be made through its Aldgate Capital division and that, if accepted, the distrib firm would be controlled by Canadian management, whom Marwyn expects would be ‘the former executive managers of [MPD],’ seemingly implying Loewy and Théroux.

According to Marwyn, Movie Distribution Income Fund investors would receive between $10 and $10.50 per unit for their shares. Shares of the Income Fund plunged from $8.50 to about $6.30 after Loewy left, but had since risen back up to $8 by Aug. 15, uplifted by news of the potential investors.

AAC performed well in its second quarter, bolstered by its broadcast revenues and CSI franchise, which delivered 18 new episodes in the quarter and recently signed a $250-million deal for international second-window rights for all three CSI series. Its consolidated revenue for Q2 was $253 million, and EBITDA was just shy of $50 million, both numbers up 5% from the second quarter last year.

According to CEO Phyllis Yaffe, the company’s television ad revenue increased 3% for the quarter, despite heavy competition from a number of major televised sports events, including the Stanley Cup finals and the FIFA World Cup.

AAC’s Movie Distribution Income Fund didn’t fare as well in its second quarter, seeing consolidated revenues drop to $84 million in Q2, down from $89 million for the same period in 2005. Its adjusted EBITDA totaled $6 million, versus $12 million last year.

‘We are disappointed by the second-quarter performance,’ said new CEO John Bailey during an Aug. 9 MPD conference call. ‘It was a quiet slate in Canada and we had less-than-expected results from Europe.’

Alliance Atlantis operates distribs Momentum in the U.K. and Aurum in Spain, both said to be feeling the effects of the Toronto office disarray, with suppliers reportedly withholding films until a clearer picture of MPD’s future emerges. When asked about the situation, Bailey was vague.

‘I’ve had conversations with people who are interested in new deals with us, so when we say it is ‘business as usual,’ that’s what we mean,’ he said.

MPD is expecting big things from the Aug. 18 release of Snakes on a Plane to help pave the way to a more lucrative Q3. Snakes comes to MPD care of its output deal with Hollywood supplier New Line Cinema.

If Loewy is put back in charge at MPD under new ownership, it would likely keep New Line in the fold. With a ‘key man’ clause in its contract, New Line is currently believed to be within its rights to leave its output deal with MPD.

However, Jim Sherry – former New Line and Miramax executive, as well as MPD’s former head of Canadian distribution – was recently named MPD’s executive managing director, overseeing its operations in English Canada. It is believed he could strengthen MPD’s ability to renegotiate lucrative output deals with New Line and Miramax – which will see its deal expire this year – and former Miramax honchos Harvey and Bob Weinstein, now heads of The Weinstein Company.

Bob Bek, an analyst with CIBC World Markets believes, however, that New Line would more likely show loyalty to Loewy.

‘I’m not saying that New Line is leaving, but one has to suspect that they wouldn’t have [set up] a key man clause if it wasn’t about the key man for them,’ he says.

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