Clues point to Alliance strength

'CSI' franchise fuels 65% profit surge; revenue jumps

With its takeover by Goldman Sachs & Co. and CanWest Global Communications set to close today, Canadian broadcaster Alliance Atlantis Communications posted sharply higher second-quarter earnings Tuesday.

Alliance Atlantis said that its profit for the three months ending June 30 came to CAN$43 million ($40.9 million), up 65% year-over-year compared with the CAN$26 million recorded a year ago.

Second-quarter revenue rose from CAN$253.2 million a year ago to CAN$278.6 million ($264.7 million) as Alliance Atlantis saw broadcasting revenue jump 12% to CAN$85.9 million ($82 million).

The broadcaster's lucrative 50% stake in the popular "CSI" franchise and its entertainment division contributed another CAN$105.6 million ($100.5 million) in revenue, up 12% from a year ago.

As a measure of its value to Alliance Atlantis, the "CSI" franchise posted CAN$52.4 million ($50 million) in direct profit to the broadcaster in the latest quarter, making for a strong 52% profit margin. That compares with CAN$35.2 million in the same period a year ago, a margin of 42%.

Alliance Atlantis chalked up another CAN$87.1 million ($82.8 million) in revenue, up 6% from year-ago levels, from its controlling 51% stake in Canadian independent movie distributor Motion Picture Distribution Llp.

Looking ahead, Alliance Atlantis predicted "solid growth in advertising and subscriber revenue" at its broadcasting operation to continue for the remainder of the year.

The "CSI" franchise should continue to perform "strongly" for it, the company said, as "CSI: Crime Scene Investigation," "CSI: Miami" and "CSI: NY," starring Gary Sinise (pictured), enter their eighth, sixth and fourth seasons, respectively.

Once the CAN$2.3 billion ($2 billion) takeover deal by CanWest and Goldman Sachs is completed, the Wall Street investment bank will take possession of the 50% stake in the "CSI" franchise and Motion Picture Distribution Llp. It also will combine Alliance Atlantis' 13 cable channels with CanWest's Global Television Network to form a new broadcast entity.

The Alliance Atlantis takeover also awaits regulatory approval after public hearings scheduled to begin Sept. 5.

Goldman Sachs and CanWest this year delayed the closing of the takeover by a week — to today — to replace an abandoned high-yield debt offering with bridge financing from a banking syndicate.