Strong 'CSI' solves all for Alliance

TV franchise leads way as Canada firm boosts Q1 profit, revenue

Stepped-up worldwide sales of its "CSI" franchise helped Canadian broadcaster Alliance Atlantis Communications nearly double its first- quarter earnings. That's good news for Wall Street powerhouse Goldman Sachs & Co., which shortly will take ownership of a half stake in the "CSI" franchise as part of its $1.96 billion takeover of Alliance with CanWest Global Communications Corp.

Alliance said Tuesday that it saw revenue from the "CSI" shows rise 74.3% year-over-year to CAN$162.3 million ($146 million) during the latest quarter, citing "significant" second-window licensing arrangements with foreign broadcasters and a great number of episodes delivered internationally.

The direct profit from "CSI" rose 79% to CAN$62.3 million ($56 million), again on higher international sales, combined with a foreign-exchange gain of CAN$1.5 million ($1.35 million).

Alliance CEO Phyllis Yaffe told analysts Tuesday that the "CSI" franchise was showing "exceptional performance." CBS Prods. owns the other half stake.

Overall, Alliance posted earnings of CAN$41.2 million ($37 million), nearly double the year-ago profit of CAN$21.5 million.

The bottom line also was buoyed by higher TV airtime sales, with cable channel revenue reaching CAN$78 million ($70.3 million), up from CAN$69.7 million. TV advertising revenue jumped 16.1% to CAN$41.9 million ($37.8 million).

In all, first-quarter revenue came to CAN$358 million ($322.5 million), compared with CAN$271.4 million in 2006.

Alliance shareholders already have signed off on the CAN$53 ($47.75)-per-share sale of the company, as has the federal Competition Bureau. The next big hurdles for the deal — which will hand CanWest Global 13 cable channels and give Goldman a half-stake in the "CSI" franchise and a 51% stake in independent film distributor Motion Picture Distribution Llp. — include regulatory approval from the Canadian Radio-television and Telecommunications Commission.

The CRTC will consider whether sufficient safeguards have been put in place by CanWest to ensure that Goldman does not exercise effective control over MPD or Alliance's cable channels as Canadian broadcasters and movie distribution firms are considered culturally sensitive entities.

Another hurdle for Alliance is Movie Distribution Income Fund, which owns the remaining 49% stake in MPD. The company will argue in court that it has veto power over the proposed sale.

Executives at Alliance, looking ahead to the scheduled June 15 court date, reiterated Tuesday that the trust's consent is not required to conclude the $1.96 billion takeover deal.

Movie Distribution's legal gambit also is thought to be a maneuver aimed at extracting a higher takeover price from the Wall Street investment bank for its 49% stake in MPD, above the $9-per-unit value already placed by Goldman on Alliance's controlling 51% stake.