Alliance Atlantis will cut 80 staff positions ' approximately 9% of its work force -- as the Toronto-based entertainment company consolidates its television and motion picture production operations along with their attendant distribution and promotion departments. Among the high-profile employees affected are Mark Horowitz, Los Angeles-based president of Alliance Atlantis Pictures International, and John Morayniss, executive vice president of Alliance Atlantis Television Production, a 12-year veteran from pre-merger Alliance Communications.

In a statement, Michael MacMillan, AAC Chairman and CEO said the consolidation of the production businesses "allows us to reap the operating benefits and financial synergies, arising from combining the talents of people skilled in both television and motion picture development, production, financing and distribution." He added that the AAC will gain "efficiencies by eliminating overlap and duplication of skill sets." The company estimates the cuts will save it $4.3m ($C7m) a year beginning in fiscal 2003.

AAC's TV and film production operations will be folded into a new unit, the Entertainment Group, to be headed by group CEO Peter Sussman. An indication of the degree of change is the fact that Seaton McLean, formerly President of Motion Picture Production now assumes responsibility for all television production as well;. Further, McLean, who used to report directly to MacMillan will now report to Sussman along with Ted Riley, President, Distribution and Steve Ord, Executive Vice President, who will handle business and legal affairs. Sussman will report to MacMillan.

The two other core operations of the company -- the Motion Picture Distribution Group, which includes UK-based Momentum Pictures, and the Broadcast Group -- are essentially unaffected.

The cuts were expected. MacMillan announced late last year plans to scale back production of high-cost, low-margin television drama and reduce the number and size of in-house motion picture productions. Today's announcement, said MacMillan, "is the next logical step in our strategy -- creating an infrastructure that more accurately reflects the anticipated size of our production business going forward."

AAC owns or has invested in 13 of the 46 digital TV channels launched in September 2001, including the Independent Film Channel. Recent figures on the audience and take-up rate of the new channels suggest the new services face a rough ride. Only 22% of Canadian households have access to digital services; industry observers suggest that figure will need to reach 50% if the format is to be considered a success. These numbers, combined with a continuing weak advertising market will only add to the company's woes.