Alliance Atlantis Communications Inc. Announces $400 Million Financial and Operating Partnership with Kinowelt Medien AG Of Germany and Its Major Shareholders.

TORONTO and MUNICH, Germany--(BUSINESS WIRE)--July 30, 1999--

Alliance Atlantis Co. (Nasdaq:AACB)(TSE:AAC.A.)(ME:AAC.A.)(TSE:AAC.B.) (ME:AAC.B.)

--   Kinowelt's major shareholders to acquire 6.276 million ALLIANCE
     ATLANTIS shares at $21 per share (for net proceeds of $130
     million or approximately 20 percent of common equity)

--   U.S. $150 million joint venture production fund over 3 years to
     be established to jointly fund, produce and acquire motion
     pictures for international distribution

--   Kinowelt to acquire 50 percent of Alliance Atlantis' U.K. motion
     picture distribution business with joint commitment to fund U.S.
     $25 million motion picture development and acquisition per annum

Alliance Atlantis Communications Inc. (TSE, ME:AAC.A, AAC.B, Nasdaq:AACB) and Kinowelt Medien AG ("Kinowelt") have signed a substantial financial and operating agreement whereby the major shareholders of Kinowelt Medien AG will acquire approximately 6.276 million non-voting shares of ALLIANCE ATLANTIS COMMUNICATIONS INC. ("ALLIANCE ATLANTIS") from treasury at a price of $21 each, subject to certain conditions including regulatory approval.

In addition, Kinowelt and ALLIANCE ATLANTIS have agreed to establish a US$150 million fund to develop, produce and/or acquire motion pictures for international distribution. As well, Kinowelt will acquire 50 percent of ALLIANCE ATLANTIS' U.K. motion picture distribution business, and the partnership will commit US$25 million per annum for the development, production and/or acquisition of motion pictures for exhibition in the United Kingdom.

With market capitalization of almost DM 3 billion (CAN$2.4 billion), Kinowelt is the largest independent motion picture distribution company in Germany and one of the largest in Europe. Kinowelt has access to approximately 4,300 cinema screens (including 40 owned directly). Founded in 1984, Kinowelt is a vertically integrated media group involved in theatrical distribution, television licensing and production, home entertainment, cinemas, film production, music rights, in-flight entertainment, and merchandising. The Kinowelt film library consists of over 9,000 titles. Kinowelt is one of the top 50 companies listed on the Neuer Markt in Frankfurt, Germany under the symbol KNMG.F.

The share purchase will result in net proceeds to ALLIANCE ATLANTIS of approximately $130 million, which will be used to repay shorter term indebtedness and fund future growth opportunities. As part of this transaction, the purchasers will be entitled to nominate two directors to the Board of ALLIANCE ATLANTIS, subject to certain conditions.

Closing is expected to occur on or about Friday August 20, 1999. In addition, the purchasers have agreed to acquire a further 1.5 million Class B Non-Voting ALLIANCE ATLANTIS shares (approximately 4.8 percent of the common equity) in the market during the 12 month period following closing.

ALLIANCE ATLANTIS and Kinowelt engage in similar businesses and have a long standing relationship spanning over 12 years, which includes an output arrangement whereby Kinowelt acquires a number of ALLIANCE ATLANTIS produced and/or acquired motion pictures. In addition, for example, both ALLIANCE ATLANTIS and Kinowelt have output agreements with the successful U.S. studios Miramax Films, New Line Cinema and October Films.

Dr. Rainer Kolmel, Chairman and Chief Executive Officer of Kinowelt said, "We see significant immediate and long term value in our investment in ALLIANCE ATLANTIS. In the shorter term, our operational agreements to create a motion picture production fund together with our joint investment in the UK motion picture distribution business will immediately benefit our company. We are pleased with our strategic investment in ALLIANCE ATLANTIS whereby we will acquire approximately 20 percent of this world renowned international producer, distributor and broadcaster of filmed entertainment."

A significant part of the strategic relationship between ALLIANCE ATLANTIS and Kinowelt will be the establishment of a motion picture development, acquisition and production fund of up to US$150 million. The fund will give ALLIANCE ATLANTIS and Kinowelt the ability to pursue the production and acquisition of a greater number of high-quality, commercially attractive motion picture projects than either company could previously pursue on its own. The production fund will have an initial term of three years and will be operated jointly. Funding of the development, acquisition and production will come from each of ALLIANCE ATLANTIS and Kinowelt, pre-sales, third party financing and other funding sources as appropriate in the circumstances.

Mr. Michael MacMillan, Chairman and Chief Executive Officer of ALLIANCE ATLANTIS said, "This strategic relationship with Kinowelt will leverage our respective strengths in Canada and Germany and will jointly expand our UK motion picture distribution business. These three key territories provide an excellent platform for our companies from which to acquire and exploit motion pictures for worldwide distribution. We are also very pleased to have a growth oriented strategic financial investor who brings significant knowledge and industry experience to our Board."

The films to be produced or acquired through the fund will be distributed in Germany, German speaking Europe and Switzerland by Kinowelt and in Canada by ALLIANCE ATLANTIS. Alliance Atlantis Releasing UK will distribute in the United Kingdom. Additionally, Kinowelt will acquire a 50 percent interest in Alliance Atlantis Releasing UK.

This business was launched in September 1997 and currently releases approximately 18 to 24 motion pictures per year. Its most successful release to date was ALLIANCE ATLANTIS' eXistenZ, which grossed 1.7 million theatrically in the UK and opened at the box office in the number three position.

ALLIANCE ATLANTIS and Kinowelt will each fund up to US$12.5 million per year, for three years, for motion picture development, production and acquisitions for the UK market. Thereafter, funding requirements will be reviewed and decided upon annually by the parties. Funding of the U.K. development, acquisition and production will come from each of ALLIANCE ATLANTIS and Kinowelt, pre-sales, third party financing and other funding sources as appropriate in the circumstances.

"We have been pleased with the performance of our UK motion picture distribution business to date," said Victor Loewy, Chairman of Alliance Atlantis Motion Pictures. "Our partnership with Kinowelt in the UK and our joint financing commitment will give this business the critical mass it requires to propel it into the next phase of its growth. I have known and respected Kinowelt and the Kolmel brothers for many years and I am excited about our future partnership which brings the Kolmel brothers together with ALLIANCE ATLANTIS."

ALLIANCE ATLANTIS COMMUNICATIONS INC. is a leading international creator, distributor and broadcaster of filmed entertainment with significant ownership of six Canadian television networks: HGTV (Home & Garden Television) Canada, History Television, Life Network, Showcase, Canal Fiction and Canal Histoire. Headquartered in Toronto, ALLIANCE ATLANTIS operates offices in Los Angeles, Montreal, Vancouver, London, Sydney, and Shannon. The Company's shares trade on the Toronto and Montreal exchanges under the symbols AAC.A, AAC.B and on NASDAQ under AACB.

Structure of the Share Purchase Transaction

The major shareholders of Kinowelt, Dr. Rainer Kolmel and Dr. Michael Kolmel whom together own over 50 percent of the common shares of Kinowelt, together with Mr. Eduard Unzeitig, Kinowelt's Chief Financial Officer (the "Purchasers"), will purchase the shares from treasury.

The Purchasers will acquire special warrants which, subject to applicable AAC shareholder approval to be sought at the Annual and Special Meeting scheduled for September 23, 1999, are exercisable into ALLIANCE ATLANTIS Class B Non-Voting shares and one new Class D Special Non-Voting share. The Class D Special Non-Voting share will have the same rights and privileges as the Company's current Class B Non-Voting shares, except that the new Class D share will be entitled to appoint two members to the ALLIANCE ATLANTIS Board of Directors as long as the Purchasers own at least 20 percent of the common equity of ALLIANCE ATLANTIS, or one Director if they own at least 10 percent. If ALLIANCE ATLANTIS shareholder approval to issue the new Class D share is not received, the Purchasers will purchase a total of 6.276 million Class B Non-Voting shares at $19 per share. The Class D Special Non-Voting Share will not be transferable except to certain related parties of the Purchasers, and will not be listed.