TORONTO – While its CSI franchise still lead the news for Alliance Atlantis, the company’s digital specialties are contributing to earnings at the media company.
"We are exceptionally pleased with the performance of the CSI franchise, which continues to enjoy ratings successes in the U.S. and international markets," said Phyllis Yaffe, CEO. "Subsequent to the end of the quarter, we announced the sale of certain international second window rights for a total value of US$250 million. These sales demonstrate the strong interest in the re-licensing of CSI around the world.
"Our Broadcasting business recorded strong gains in subscriber revenue, and for the third successive quarter, our digital channels made a positive contribution to EBITDA," Yaffe added. "Additionally, total advertising revenue increased by 3% compared to last year’s period. Given the overall context of advertising sales in the specialty market in the quarter, we are satisfied with the growth recorded. The specialty ad market was affected by an unusually heavy season for sports this winter/spring (the return of NHL hockey) resulting in ad dollars temporarily being shifted towards sports programming."
Broadcasting revenue of $76.8 million represented an increase of 6% over the prior year’s quarter. Total subscriber revenue grew 11% over the prior year’s period reflecting strong growth in paid subscribers for Alliance Atlantis channels which include Showcase Television, Life Network, HGTV, Food Network, Fine Living, National Geographic Canada, BBC Kids and more.
During the second quarter, Broadcasting EBITDA of $26.6 million increased 7% compared to the prior year’s quarter. This represented an EBITDA margin of 35% compared to a margin of 34% in the same period last year. The increases are primarily due to higher revenue and a positive contribution from our digital channels which generated a negative EBITDA contribution in the prior year’s quarter. These increases were partially offset by higher programming and marketing costs, says the press release.
In the entertainment segment, CSI revenue of $84.7 million was up 28% from $66.2 million in the prior year’s quarter. The increase was primarily due to strength of U.S and international sales partially offset by a stronger Canadian dollar during the quarter. The negative impact of foreign exchange changes on CSI revenue in the quarter was $8.6 million. The foreign exchange rate for the second quarter of 2006 was $1.14 compared to $1.24 in the prior year’s quarter.
Entertainment EBITDA of $24.2 million represented an increase of 11% over the prior year’s period. The CSI franchise recorded direct profit of $35.2 million representing a direct profit margin of 42% during the quarter. This compares to direct profit of $22.8 million representing a direct profit margin of 34% in the prior year’s period. Results in this year’s quarter reflect the benefit from the recognition of the reimbursement of production costs which lowered the investment in film balance and amortization expense, offset in part by increased third party participation expenses. The negative impact of foreign exchange on CSI direct profit was $3.5 million during the quarter. The Other Entertainment segment recorded a direct loss of $4.7 million compared to a direct profit of $4.5 million in last year’s quarter. This decrease is due to timing of sales, higher amortization and third party participation costs, as well as the impact of the strengthening of the Canadian dollar.
The "other entertainment" segment, which primarily represents sales made from the company’s historical library of program rights, recorded $9.4 million of revenue during the quarter compared to $12.8 million in the prior year’s period. The decrease is primarily due to the timing of sales.
Motion Picture Distribution revenue of $82.3 million was down 7% from $88.4 million in the prior year’s period due to a more modest slate of theatrical and DVD releases, partially offset by strong television sales. Motion Picture Distribution EBITDA during the quarter of $5.1 million compared to EBITDA of $10.3 million in the prior year’s quarter.
