In a move that will delay the reporting of revenues from film and tv projects for up to a full year, Alliance Atlantis Communications has changed its accounting policies to more closely reflect the standards of the u.s. Financial Accounting Standards Board and minimize the differences between the u.s. and Canadian accounting standards (pb, Nov. 16).

But even with the accounting policy changes, chairman and ceo, Michael MacMillan admits that aac is not fully in line with proposed fasb changes skedded for 2001 regarding distributor costs associated with the marketing of films through promotion and advertising.

‘We believe we are onside with u.s. gap and with u.s. fasb in every respect with one exception,’ says MacMillan. ‘The only issue is p&a.’

Still subject to final approval, the new rules will prevent film distributors from spreading out advertising and promotion costs on films over a number of years. By some estimates, the new fasb rules could result in combined write-downs of us$2 billion for the major u.s. studios.

MacMillan says the fasb p&a rule change proposal has been designed from a ‘producing point of view.’ He says because so much of aac’s motion picture business revenues are derived through distribution, his company, along with a number of major accounting firms, opposes the proposed rule change

MacMillan would not estimate the cost to aac if its accounting policies were to adhere to the new rules.

As to its accounting changes, the company says the most significant shift relates to revenue recognition of filmed entertainment projects. In accordance with fasb, aac revenue for a project now will not be recognized until the licence period for the contract commences.

In a press statement, aac says it will now take a ‘significant deferral of Television and Motion Pictures revenues previously budgeted for F1999 into F2000 and from F2000 into F2001.’

The change will result in a deferal of $80 million-$90 million in the current year to 2000 and a deferal of EBITDA of approximately $15 million-$20 million and net earnings of $10 million from the current year into the next fiscal.

Also in accordance with fasb, aac has written off previously capitalized start-up costs for its four cable channels as part of the $81.4-million pretax merger and restructuring costs.

MacMillan says the company’s statutory earnings (before merger costs) of $6.5 million were on target with what analysts had expected for the 1999 second quarter ended Sept. 30. However, one-time pretax merger costs of $81.4 million resulted in a net loss of $42.5 million ($2.55 per share) for the period

In conjunction with its second quarter results, aac announced the renewal until 2003 of its exclusive representation agreement for the cbs television production slate and library.

Under the agreement, aac acts as the exclusive Canadian distributor of all current and upcoming entertainment series and specials, sports and informational programming from cbs.

In other news, u.s. netlet upn has ordered an additional six episodes of aac’s racehorse-breeding family series Legacy, bringing the total number of episodes ordered to date to 19.