Montreal: Alliance Atlantis Releasing has completed the first of a two-step process as it reconsolidates its uncontested position as Canada's top distributor. The Toronto-based distributor has signed an extension to the year 2005 of its all-rights output agreement with Miramax Films, a unit of Walt Disney Company, and has confirmed motion-picture division chairman Victor Loewy is actively pursuing talks with aar's other major output partner, New Line Cinema/Fine Film Features, units in the Time Warner empire.

Both output deals are vital to aar's money-making, 100-film-a-year pipeline, but the possibility the distributor is looking to secure other studio business, beyond the so-called "mini-majors," should not be discounted.

The three-year agreement with New Line ends at the end of '99. And while parent company Alliance Atlantis Communications isn't likely to say much about the talks until there's a deal, New Line/Fine Line is apparently in a renewing frame of mind, tying the knot on as many as a dozen international output agreements (all slated to terminate at the end of '99) in recent months.

aar also has active agreements with Artisan Entertainment, October Pictures (through aac subsidiary Odeon Films) and Film Four.

aar has about 35 Miramax/Dimension Films titles slated for release this year including The Castle, Besieged, Outside Providence, Happy Texas, The Cider House Rules, Scream 3 and Reindeer Games.

The distributor pulled in a 16% to 17% share of the theatrical box office market in calendar '98 while distributing over 90 pictures. The company ranked third overall in Canada last year, second only to Paramount (with big-skewer Titantic) and Sony Pictures. The aar share does not include Odeon Films, which distributed over 30 films in the period, a 50% hike over 1997's performance.

"The relationship has worked very well for Alliance Atlantis and for Miramax and certainly they have some glorious successes this year," says Michael MacMillan, aac's chairman and ceo. MacMillan says one of the stronger attractions of last fall's merger, from a personal perspective, was "the leadership role Alliance had established over the years in motion pictures. So we are very enthusiastic about the renewal. This extension and other initiatives I think will put some flesh on that statement."

Rumors `comical'

Jim Sherry, aar vp and gm, says the distributor had heard "the rumors of the potential of losing franchises." But Sherry says "those rumors were comical" in light of the negotiations and the fact the existing agreement with Miramax was only slated to end in 2002.

"The second part of the rumor," he says, "[is] that it's difficult to make money with the Miramax franchise. And that is absolutely not the case."

aar isn't divulging financial details of the deal with Miramax, but Sherry says the distributor recoups on both a commission and performance basis against its Canadian rights investment. "Based on the cost of the film, we're recouping at certain thresholds," he says.

Revenues for aac's motion picture division in the first nine months (ending Dec. 31, 1998) increased by 13% to $113.9 million compared to $101.2 million last year. The figure represents distribution sales in all sectors including theatrical, home video, both rental and sell-through, international and library sales, and sales to television.

`Gigantic' 4th quarter

Sherry says fourth-quarter distribution revenues have been "gigantic, in excess of $30 million gross sales [to date], just theatrical."

aar's market share is over 20% for the period ending March 31.

"We had Shakespeare in Love, which has grossed in excess of $10 million, as well as Life is Beautiful, which has grossed in excess of $7 million to date - it's amazing considering the subtitled record in Canada [was] $2.3 million."

Adding to aar's boom at the box office, Sherry says there is matching action in home video with titles such as Pleasantville and American History X, which has moved over 20,000 units."

Sherry, who joined aar in March 1998, says Odeon Films topper Bryan Gliserman can take a bow for their handling of Francois Girard's The Red Violin, at close to $3 million nationwide, and Don McKellar's Last Night, over $375,000 at the box office.

Sherry says he expects aar to again be among the top three distributors in '99, although 20th Century Fox's new Star Wars release could obviously skew the outcome.

With no ties to American sources for volume product to feed their pipelines, no other Canadian-based distributor had more than a 1% share of the theatrical market in '98.

Major push for eXistenZ

Alliance Atlantis and Miramax in the u.s. are in prep for a major simultaneous April 23 North American release of the Serendipity Point Films science-fiction thriller eXistenZ. Director/writer David Cronenberg will be crisscrossing the continent in support of the release throughout April, and Sherry says aar has planned a wide 125-screen release with an up-front p&a budget of over $1 million.

"We think the marketing is dead on," says Sherry. "The thing with eXistenZ is a lot of this [money] is up front, and both major exhibitors, Cineplex Odeon and Famous Players, have agreed to use Canadian film marketing funds to back the release.

"It's the first time in history both major competitors have put aside differences to support a Canadian film not only with capital but with an enormous in-theater presence like popcorn bags and the trailer playing on all screens."

'99 release highlights

aar is currently in release on the animation feature Babar (Nelvana), with Tony Goldywn's A Walk on the Moon (shot in Montreal last year for Dustin Hoffman's Punch Productions) slated to open in the three major Canadian keys April 9.