The market approves, the broadcasters approve and smaller producers are cautiously optimistic, days after the merger of Alliance Communications and Atlantis Communications to form Alliance Atlantis Communications.

Industry mood is mixed at Playback press time after Alliance Chairman and ceo Robert Lantos and Atlantis Chairman and ceo Michael MacMillan unsheathed a new combined entity with a projected market capitalization of $600 million and projected combined revenues for the current fiscal year totaling $750 million. With shareholder approval expected in September and crtc approval by year's end, Alliance Atlantis Communications will become the 12th largest production and broadcasting company in North America.

On one hand is fear and trepidation on the part of some Alliance's employees who are keenly aware that what some are describing as a reverse take-over leaves Atlantis staff in a better position to remain on the payroll. Also qualifying as wary are smaller producers who are concerned about the clout the new production and broadcasting company will wield within the domestic industry.

On the other hand is sheer elation on the part of Atlantis staff to see their chairman take the reigns of Alliance Atlantis. The response was mirrored to a degree in the reaction from the street which, since the merger, pumped Alliance stock up $6.00 to $32.00 at press time and Atlantis stock up $2.00 to $16.50 on the tse.

Common through the ranks, though, is a bittersweet sense of loss as Lantos steps back from his well-earned delineation as titan of the Canadian production industry to reinvest himself in his first love, executive producing feature films.

"I feel proud of him," says Barbara Samuels, executive producer of Black Harbour and co-principle of Toronto-based Fogbound Films.

"I never use the word proud because I think it's patronizing, and he certainly doesn't need me to be proud of him. But he fears nothing and I don't know many people like that. I've seen him pull mind games with the u.s. network executives. I've seen him pull numbers and say `No. They're going to wait for me and do it my way.' If the door slams in his face, he'll kick it open or say `F*** you. I'll go through another door.' He's taken that approach to his career now and I respect that."

As for Lantos - chairman emeritus of the new company - who is in the process of setting up a new feature film production company that will operate with the financial participation of Alliance Atlantis, the decision left him overcome with emotion at an 8 a.m. meeting of staff on July 20. He cut short the conference and was unable to do a planned question and answer session with his employees.

Meeting with the press later that day, he said, "I leave the people I brought in with me with a heavy heart.

"I've assembled a great team and they built this company. If I've had any hesitation about doing this over the last few weeks it's been because they are my extended family. But I weighed that against something I was determined to do and this is the perfect opportunity. I do it with sadness but with no reservations."

Atlantis heavy

management team

Under MacMillan, the Alliance Atlantis senior management team will include Atlantis president Lewis Rose, who will become president of the new company. Atlantis' Ted Riley will head the merged company's tv distribution. Atlantis co-founder Seaton McLean will head up the new company's production operations in Canada and Atlantis' Peter Sussman will govern l.a. operations. Atlantis' Kerri Golden has been named cfo.

Alliance vice-chairman and president of distribution Victor Loewy will remain as a director of Alliance Atlantis and head up theatrical distribution domestically, internationally as well as theatrical exhibition. Alliance's Jeff Rayman will continue to oversee production financing and multimedia operations and David Ginsburg, Alliance's l.a.-based president of filmed entertainment, will remain in the same capacity.

Broadcasters like big

As for the broadcasters, reaction is largely optimistic.

"Larger stable companies are good for business," says Jim Byrd, cbc's vice-president of English Television Networks.

"The bigger the player, the more secure the deal. They have the cash resources, the credit lines, and access to the big co-production partners around the world. The deal is done faster and more efficiently. The kind of access and clout available in a company of this kind is attractive."

At ctv, Bill Mustos, vp of dramatic programming, is more reserved, saying he's glad ctv has a relationship with both companies. "But I don't know, quite frankly, what it's going to be like working with a company this size or how it will be different than working with Alliance or Atlantis individually. None of us have worked with a company on the scale of a u.s. mini-major. At this point, I have a wait-and-see attitude."

Independent producers are adopting a similar line. Broadcast windows and funding dollars could potentially be dominated by Alliance Atlantis production and cftpa chair Linda Schuyler admits the limited shelf space on Canadian broadcasting entities is a "scary" situation for smaller producers.

"But I hope that from the broadcaster's point of view, that you won't have to be an Alliance Atlantis to go on air," she says.

"There are many of us who have made a reputation of supplying broadcasters without a big company behind us. I certainly hope that broadcasters will continue to look upon smaller producers with track records as very viable ways of producing material."

Micheline Charest, chair of Cinar Films is more strongly optimistic.

"The whole planet is going through a phase," she says. "There are some new dynamics created by globalization. People feel they have to be stronger to deal with the world market. This will give them [Alliance Atlantis] the leverage to be a better company and a stronger world player. And you know what? It can only be beneficial to everybody."