For the three months ended December 31, 2000, gross profit increased 30% to $67.0 million on increased revenue of $247.3 million – up 18% as compared to the prior year’s period. EBITDA for the period increased 29% to $43.1 million. Net earnings for the period were $15.8 million or $0.50 per basic share compared to $0.46 per basic share last year. Fully diluted earnings per share for the period of $0.49 increased 9% over the $0.45 per share recorded last year.
Revenue for the Broadcast Group increased by 27% to $32.5 million in the third quarter of this year. Paid subscriber revenue increased 22% to $18.0 million compared to the same period in the prior year, while advertising revenue increased by 34% to $14.5 million. Revenue contribution during the quarter from the Broadcast Group was buoyed by the launch of Series+ and Historia in February 2000 and Food Network Canada in October 2000. These channels were not in operation in the prior year’s quarter.
Gross profit grew to $18.1 million, an increase of 13% over the same period in the prior year. Gross margin was 56% compared to 63% in the prior year’s third quarter as a result of the current Development Channels Séries+ and Historia continuing to operate at lower margins as they build subscriber penetration, ratings growth and gain advertiser recognition.
The Broadcast Group generated $12.2 million of EBITDA this quarter from its Operating Channels Life Network, Showcase, HGTV Canada, History Television and Food Network Canada an increase of 21% over the comparable period in the prior year. After accounting for the current Development Channels Series+ and Historia EBITDA was $10.8 million versus $10.1 million one year ago.
During the quarter, the parent company of Headline Sports The Score completed its previously announced reverse takeover transaction and became a publicly traded company named Headline Media Group Inc. This transaction will grow the network by enhancing its ability to compete for broadcast rights and other sports properties. The Score may now devote up to 15% of its programming schedule to live sports, allowing for up to 25 hours of live programming per week. In June 2000, The Score acquired the Canadian broadcast rights to most regular season Major League Baseball games, as well as the league championship series and World Series. In November 2000, The Score acquired exclusive broadcast rights to two highly-rated WWF properties, WWF Smackdown! and WWF Metal. At the same time, The Score acquired exclusive Canadian broadcast rights to the XFL, a new professional football league that launched on February 3, 2001. In November 2000 the CRTC awarded the parent company of Headline Sports – The Score a Category 1 licence for Pride Vision and recently approved the transfer of this licence to Headline Media Group Inc. Pride Vision is a must-carry digital specialty television channel and is expected to launch in Fall 2001. Currently, Alliance Atlantis owns approximately 40% of Headline Media Group Inc.
Subsequent to the end of the quarter, the Company announced an agreement to acquire Salter Street Films Canada’s foremost comedy producer and owner of the rights to the Independent Film Channel Canada, a new Category 1 digital specialty television channel as well as licences for 20 new Category 2 digital networks. Pending approval from Salter Street shareholders, expected around mid-April 2001, and change in control approval from the CRTC, Alliance Atlantis will own direct interests in two Category 1 licences Health Network Canada and The Independent Film Channel Canada. Alliance Atlantis will also have interests in over 50 Category 2 licences such as BBC Canada and BBC Kids, National Geographic Canada and National Geographic Adventure One, Do It Yourself, Fine Living and a trio of movie networks Romance, Action and Nostalgia. A significant amount of programming for the Company’s current and future Development Channels as well as its established Operating Channels will be provided by Alliance Atlantis’ 16,000 hour motion picture and television library.
Revenue for the Motion Picture Group was $64.9 million in the third quarter compared to $54.8 million for the same period last year. This increase of 18% or $10.1 million is mainly attributable to growth at Momentum Pictures in the U.K. driven by strong DVD sales, the international release of Second Skin and strong Canadian video and DVD releases including titles such as Scary Movie, The Cell, and Frequency.
EBITDA for the Motion Picture Group was $8.3 million compared to $8.2 million for the same period last year, due primarily to increased operating expenses resulting from the ramp-up of Momentum Pictures.
During the quarter Alliance Atlantis and Artisan Entertainment renewed their Canadian output agreement for an additional three years. The agreement also included the Canadian rights to Artisan’s vast library for another five years. Also during the quarter Alliance Atlantis received three Golden Globe nominations for its acclaimed motion picture Sunshine including one for Best Picture. Subsequent to the end of the quarter Maelström received five Canadian Genie awards including Best Film and a prize at the Berlin Film Festival. Earlier this month, motion pictures distributed by Alliance Atlantis in Canada received a total of 17 Academy Award nominations.
The Television Group’s revenue in the third quarter was $144.5 million compared to $122.6 million in the prior year’s period despite deliveries of fewer television hours in this year’s quarter compared to last. During the quarter, the Television Group delivered 86 hours of television series, television movies and mini-series and children’s programming compared to 107 hours in the prior year’s period. Additionally the Television Group delivered 16 hours of fact-based programming compared to none in the same period last year.
Gross profit for the Television Group in the third quarter was $31.6 million compared to $21.9 million last year representing a gross margin of 22% compared to 18% in the same period last year. Higher margin shows delivered this quarter include The Associates, In a Heartbeat, 2Gether, Starhunter and the U.S. ratings success CSI: Crime Scene Investigation.
The Television Group contributed $26.7 million to consolidated EBITDA compared to $18.3 million in the prior year as a result of higher gross margins.
CSI: Crime Scene Investigation has been, on average, the fourth highest rated series on U.S. television after Survivor on CBS and E.R. and Friends on NBC. CSI: Crime Scene Investigation was also the only new show to earn a Golden Globe nomination for best series.
