Alliance Atlantis Bullish On Digital Future.

Business Editors

TORONTO & OTTAWA--(BUSINESS WIRE)--Aug. 14, 2000

Michael MacMillan, Chairman and Chief Executive Officer, ALLIANCE ATLANTIS COMMUNICATIONS INC. (TSE:AAC.A.) (TSE:AAC.B.) (NASDAQ:AACB), today opened the Canadian Radio-television and Telecommunications (CRTC) hearings for new digital specialty channels in Ottawa with a bullish vision of the future of the digital landscape in Canada and around the world.

Leading his Company's presentation for four new category one digital specialty services, Mr. MacMillan outlined why the licensing and launch of exciting new program services that are responsive to Canadians' interests will take digital technology to the next level.

ALLIANCE ATLANTIS' presentation today, supported by research from Environics Research Group, indicated that Canadians are open to adopting new technologies such as digital set-top boxes which are able to access hundreds of television channels. Mr. MacMillan said that these digital boxes will only be truly accepted when compelling new program services offer the content to Canadian viewers that they want to watch.

"By adding new program services, and stimulating demand, the digital set-top box has the potential to be as ubiquitous as the VCR, the CD, or the cell phone," Mr. MacMillan added earlier today. "In the new world of unlimited choice that's being offered not only by television, movies, books and now through the Internet, new services must be attractive enough and exciting enough to viewers to get them to watch. We believe our four applications presented here today do just that -- they are distinctive, appealing, affordable and uniquely interesting to Canadians. They are simply part of giving viewers more choice."

Accompanying Mr. MacMillan in today's presentation of ALLIANCE ATLANTIS' four applications -- The Independent Film and Documentary Channel; Signature Television (programming of a biographical nature); Health Network Canada; and The Book Channel was a team from ALLIANCE ATLANTIS BROADCASTING led by its President, Phyllis Yaffe.

Ms. Yaffe further outlined the Company's digital plans which proposed that, if licensed, these new channels would have an extensive online presence as well as an interactive component that allows them to take advantage of the unique opportunities inherent in digital technology.

"Alliance Atlantis has already been aggressively exploring on-line opportunities with its existing specialty services," Ms. Yaffe said earlier today. "The combination of these new services with our existing group of channels will add special synergies that will help all of the services to succeed. All of our networks will be compatible with interactive television and that will be a strong component of the digital future."

Each of ALLIANCE ATLANTIS' four applications offers significant commitments for original programming throughout their licence. These programs will only be available on the new services, thus making them fresh compelling viewing choices. As the largest Company in the Canadian film industry, ALLIANCE ATLANTIS proposes to make an unprecedented new commitment for the benefit of the independent production industry. If the Company's Independent Film and Documentary Channel is licensed, ALLIANCE ATLANTIS will invest at least $140 million over the seven year licence term on the financing of new Canadian films and documentaries made by non-affiliated Canadian companies. All of ALLIANCE ATLANTIS' other applications also contain multi-million dollar commitments to fund original programming in each of the channels' genres.

To conclude ALLIANCE ATLANTIS' presentation before the CRTC today, Mr. MacMillan asked the Commission to embrace the integration of digital and interactive elements with any new service they are considering licensing in order to increase the likelihood of its success. "We are in this for the long haul," said Mr. MacMillan, "and we see these new services as being central to our strategy for entering the digital age."

ALLIANCE ATLANTIS COMMUNICATIONS INC. is a leading broadcaster, creator and distributor of filmed entertainment with significant ownership interests in eight Canadian specialty television networks. The Company's principal business activities are conducted through three operating groups: Broadcasting, Television and Motion Pictures. Headquartered in Toronto, ALLIANCE ATLANTIS operates offices in Los Angeles, Montreal, London, Sydney and Shannon. The Company's common shares are listed on The Toronto Stock Exchange - trading symbols AAC.A, AAC.B and on NASDAQ - trading symbol AACB. The Company's web site is www.allianceatlantis.com.

Please see attached remarks from Michael MacMillan, from the August 14, 2000 CRTC Hearing.

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Remarks by Michael MacMillan, Chairman and CEO,
Alliance Atlantis Communications Inc., to the CRTC in Ottawa
August 14, 2000

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Alliance Atlantis Communications Inc.
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Alliance Atlantis Broadcasting Inc.
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Remarks by Michael MacMillan, Chairman and CEO, Alliance Atlantis Communications Inc., to the CRTC in Ottawa August 14, 2000

"This hearing is a watershed. It puts Canada at the forefront of the development and launch of new digital programming services. We hope that Canadians will watch these hearings on CPAC. If they do, they will get a unique window into an exciting digital future. Over the next few weeks, we think that Canadians will be frankly amazed at what is in store for them, through our company and many others.

As we speak today, there are already 1.4 million digital subscribers to multichannel television in Canada. That is about 14% of TV households. By digital subscribers, I mean people with an addressable digital set-top box in their home, able to access hundreds of channels. So, we have already entered the digital world.

But the digital boxes out there today are still like the early VCRs. When VCRs first became available in the mid-80's, they were high cost and relatively few movie titles were available for rent or sale. Once these issues were addressed, look what happened to VCR penetration over the next few years!

Today, digital set-top boxes offer quality reception, and a much better program guide, but the list of program services they offer - specialty, pay and pay-per-view - is still largely a carry-over from the analog era. What is holding digital boxes back from real growth is simple. We lack a critical mass of exciting new program services that are responsive to Canadian interest and demand, and that will take digital box penetration to a whole new level.

With this hearing, all that changes. There are program services being applied for in this hearing, including our own, that we think will drive digital box penetration steadily upwards. If all goes well, by the end of year 7, we expect that over half of Canadian homes will have a digital set-top box. By adding new program services, and stimulating demand -- the digital set-top box has the potential to be as ubiquitous as the VCR. Or the CD. Or the cell phone.

Madam Chair, we thought long and hard about what kind of services would work in a digital environment. We know that this will be a more challenging environment for new services than has ever been the case before. When you come to licensing services that will survive in that environment, we think you need to ask five hard questions:

The first question relates to wholesale rate. Has the service built its business plan around as low a rate as possible, to make it possible for it to be included in affordable, high penetration digital packages? Our average wholesale rate in packages is only 30 cents, markedly lower than the rate proposed by many others.

A second question is how much original programming is proposed? To succeed with a digital service, we cannot focus on "more of the same"; we need services that will show programs that you cannot see anywhere else. In all of our services, we have significant commitments for original programming in each year; programs that will only be available on the new service. This is there for a reason - to drive digital box penetration.

A third question is how will your service be synergistic with existing services? To minimize risk, it will be important to be able to build on existing infrastructures. In our case, we have purposely chosen services that grow out of our existing channels: services where we have unique experience in terms of programming access, and services where cross-promotion will work particularly well. And we have taken a conservative approach to budgeting to ensure that we achieve our financial plan.

The fourth question: Will your services be integrated with interactive websites to increase the likelihood of success? In our case, we have developed an unique website strategy for each of our services - Canada's Book Club for the Book Channel, the Canadian Family Album for Signature, WebMD.Canada for Health Network Canada and Indie Cafe.Com for the Independent Film and Documentary Channel. All of our services will be compatible with interactive television and that will be a strong component of the digital future.

Fifth and finally, the most important question: Will this service be an attractive, distinctive and popular service, not just to the general population but particularly for those that are digital box subscribers? In our case, we have done the research to demonstrate that this is true for all four of our services.

So, we have asked the hard questions. We have not shied away from addressing them in our applications. There is a reason for that, Madam Chair and members of the Commission. We are believers in the specialty programming business. We are in it for the long haul. Coming out of this hearing, what we are all seeking is to give Canadians a group of distinctive and attractive services that will be uniquely interesting and which will be an incredible value.

We think the services we have proposed will do just that. They are services that will make Canada proud, and will truly launch our digital future."