The market approves, the broadcasters approve and smaller producers are cautiously optimistic, days after the merger of Alliance Communications and Atlantis Communications to form Alliance Atlantis Communications.

Industry mood is mixed at Playback press time after Alliance Chairman and ceo Robert Lantos and Atlantis Chairman and ceo Michael MacMillan unsheathed a new combined entity with a projected market capitalization of $600 million and projected combined revenues for the current fiscal year totaling $750 million. With shareholder approval expected in September and crtc approval by year’s end, Alliance Atlantis Communications will become the 12th largest production and broadcasting company in North America.

On one hand is fear and trepidation on the part of some Alliance’s employees who are keenly aware that what some are describing as a reverse take-over leaves Atlantis staff in a better position to remain on the payroll. Also qualifying as wary are smaller producers who are concerned about the clout the new production and broadcasting company will wield within the domestic industry.

On the other hand is sheer elation on the part of Atlantis staff to see their chairman take the reigns of Alliance Atlantis. The response was mirrored to a degree in the reaction from the street which, since the merger, pumped Alliance stock up $6.00 to $32.00 at press time and Atlantis stock up $2.00 to $16.50 on the tse.

Common through the ranks, though, is a bittersweet sense of loss as Lantos steps back from his well-earned delineation as titan of the Canadian production industry to reinvest himself in his first love, executive producing feature films.

‘I feel proud of him,’ says Barbara Samuels, executive producer of Black Harbour and co-principle of Toronto-based Fogbound Films.

‘I never use the word proud because I think it’s patronizing, and he certainly doesn’t need me to be proud of him. But he fears nothing and I don’t know many people like that. I’ve seen him pull mind games with the u.s. network executives. I’ve seen him pull numbers and say `No. They’re going to wait for me and do it my way.’ If the door slams in his face, he’ll kick it open or say `F*** you. I’ll go through another door.’ He’s taken that approach to his career now and I respect that.’

As for Lantos – chairman emeritus of the new company – who is in the process of setting up a new feature film production company that will operate with the financial participation of Alliance Atlantis, the decision left him overcome with emotion at an 8 a.m. meeting of staff on July 20. He cut short the conference and was unable to do a planned question and answer session with his employees.

Meeting with the press later that day, he said, ‘I leave the people I brought in with me with a heavy heart.

‘I’ve assembled a great team and they built this company. If I’ve had any hesitation about doing this over the last few weeks it’s been because they are my extended family. But I weighed that against something I was determined to do and this is the perfect opportunity. I do it with sadness but with no reservations.’

Atlantis heavy

management team

Under MacMillan, the Alliance Atlantis senior management team will include Atlantis president Lewis Rose, who will become president of the new company. Atlantis’ Ted Riley will head the merged company’s tv distribution. Atlantis co-founder Seaton McLean will head up the new company’s production operations in Canada and Atlantis’ Peter Sussman will govern l.a. operations. Atlantis’ Kerri Golden has been named cfo.

Alliance vice-chairman and president of distribution Victor Loewy will remain as a director of Alliance Atlantis and head up theatrical distribution domestically, internationally as well as theatrical exhibition. Alliance’s Jeff Rayman will continue to oversee production financing and multimedia operations and David Ginsburg, Alliance’s l.a.-based president of filmed entertainment, will remain in the same capacity.

Broadcasters like big

As for the broadcasters, reaction is largely optimistic.

‘Larger stable companies are good for business,’ says Jim Byrd, cbc’s vice-president of English Television Networks.

‘The bigger the player, the more secure the deal. They have the cash resources, the credit lines, and access to the big co-production partners around the world. The deal is done faster and more efficiently. The kind of access and clout available in a company of this kind is attractive.’

At ctv, Bill Mustos, vp of dramatic programming, is more reserved, saying he’s glad ctv has a relationship with both companies. ‘But I don’t know, quite frankly, what it’s going to be like working with a company this size or how it will be different than working with Alliance or Atlantis individually. None of us have worked with a company on the scale of a u.s. mini-major. At this point, I have a wait-and-see attitude.’

Independent producers are adopting a similar line. Broadcast windows and funding dollars could potentially be dominated by Alliance Atlantis production and cftpa chair Linda Schuyler admits the limited shelf space on Canadian broadcasting entities is a ‘scary’ situation for smaller producers.

‘But I hope that from the broadcaster’s point of view, that you won’t have to be an Alliance Atlantis to go on air,’ she says.

‘There are many of us who have made a reputation of supplying broadcasters without a big company behind us. I certainly hope that broadcasters will continue to look upon smaller producers with track records as very viable ways of producing material.’

Micheline Charest, chair of Cinar Films is more strongly optimistic.

‘The whole planet is going through a phase,’ she says. ‘There are some new dynamics created by globalization. People feel they have to be stronger to deal with the world market. This will give them [Alliance Atlantis] the leverage to be a better company and a stronger world player. And you know what? It can only be beneficial to everybody.’

Mustos says the new company could theoretically provide the kinds of in-house development deals that are more common in the u.s., including distribution advances or significant presale opportunities. ‘I understand the concern, to a degree, but this could work across the board.’

Former ctv programming chief Arthur Weinthal, now senior programming consultant for Alliance Broadcasting, says there’s pressure on the new company to produce which will only benefit smaller indies.

‘As a studio, they’re going to need to double or triple their output to keep that size of operation going. But if you look at some of the smaller producers in the u.s. that come in and make movies for Universal or Columbia Tristar, you have to get a toe-hold, and the only way to get a toe-hold is to tuck yourself under a tent. We have a tent now, and we’ve never had one in this country.’

Worst case scenario

crossing minds

But for Samuels and many other producers, the jury is still out on what benefits the merger will bring to the rest of the industry.

‘Hopefully you don’t end up being tiny satellites where they’re paying your rent and your phones and buying your stationary and calling your dad to make sure you’re home by six,’ Samuels says. ‘Part of the reason Wayne [Grigsby] and I set up Fogbound was because we wanted to see what it was like to take the training wheels off. It’s scary, but the buck stops here. We decide what gets sacrificed and what gets championed when it comes to a budget or a show or a battle with a network.

‘If what you end up with is a bunch of producers, in name only, who are essentially being bankrolled by one studio, and they’re basically housekeeping deals, that’s a different situation.’

But Schuyler is optimistic this type of scenario won’t play out.

‘If what this company is doing is becoming a studio, then there should be some opportunity for some small and middle-size companies. I suppose the ones that they already have a relationship with are in a privileged position, but I would hope very much that the new company will be devising some policy on how they’ll be working with independent producers and that it will be a fair one.

‘Michael [MacMillan] has been a tremendous contributor, and the fact that he called me and told me about the proceedings early on and said he wants to work with the cftpa and make it successful for both sides.’

Seaton McLean, the head of production for Alliance Atlantis, says the present is an indication of what the future holds.

‘Jonathan Goodwill is producing DaVinci. Kim Todd is producing with Credo. That’s healthy. It creates a talent pool. I don’t have time to be hands-on producing television shows, so I look forward to working with more and more independent producers. Whether its the Credos or the Great Norths or the Salter Streets, I think there will just be more of that.’

On the radar going forward are both the cftpa’s position at the Canadian Television Policy Review hearings in September and the issue of access to public funds by a company the size of Alliance Atlantis.

According to Mustos and Schuyler, the issue of large companies tapping the ctcpf is cause for debate intensified by the merger.

‘There’s a side that says these companies are just too big and that they should give the smaller companies room for the dollars,’ says Mustos.

‘At the same time, it’s still incredibly difficult to finance these indigenous Canadian shows made primarily for this market. This is going to have to be one of the things the board has to look at, whether it means corporate caps or whatever is necessary in order to stretch the money yet again. The Alliance Atlantis deal has made the question that much bigger and more pressing.’

Schuyler adds that the issue of big versus small companies and their use of the funds has long been a cause for debate around the ctcpf board room table.

‘My personal feeling is that the public monies should be governed by content. The reason we had such a run on the funds this year was because the guidelines were not tight enough. We need to tighten up that money for identifiable Canadian shows. If that’s the case, frankly I don’t care whether it’s a small or large company producing it. It’s good for the Canadian public and it achieves the objectives of the fund.’

As for the television hearings, some say a united front on the part of the cftpa – which represents some 300 production companies – is clearly more difficult after a deal of this kind. ‘You’ve got a giant on one side and a whole bunch of much smaller players and its going to become much more difficult to advance with credibility that their interests are identical,’ says one participant.

The hearings will begin September 23rd. The Alliance Atlantis merger is expected to draw shareholder approval the same month.

With files from Leo Rice-Barker.