Alliance Atlantis Reports Consolidated Revenue Growth of 32% to $358.0 million and Diluted EPS Growth of 100% to $0.98 For The First Quarter of 2007

Alliance Atlantis Reports Consolidated Revenue Growth of 32% to $358.0 million and Diluted EPS Growth of 100% to $0.98 For The First Quarter of 2007

www.allianceatlantis.com TSX: AAC.A, AAC.B

- Advertising revenue for Q1 increased by 16.1% to $41.9 million - Broadcasting EBITDA increased 23.9%, excluding Slice re-launch costs and digital media initiatives - CSI revenue increased 74.3% to $162.3 million for Q1 due to continued strong international licensing arrangements - CSI direct profit increased 79.0% to $62.3 million for Q1 - Net earnings increased 91.6% to $41.2 million for Q1 - Subsequent to quarter end, Alliance Atlantis shareholders approved the Arrangement whereby a corporation wholly owned by CanWest MediaWorks Inc. will acquire all of the outstanding shares of Alliance Atlantis for $53.00 cash per share

TORONTO, May 15 /PRNewswire-FirstCall/ -- Alliance Atlantis Communications Inc. (the "Company") reported strong revenue and earnings growth for the quarter ended March 31, 2007, driven by growth in broadcast advertising sales and worldwide sales of the CSI franchise.

"We are pleased to announce that our advertising revenue increased by 16.1% due to strong audience growth and our subscriber revenue increased 8.5% due to steady gains in subscriber volumes made by all our channels," said Phyllis Yaffe, Chief Executive Officer of Alliance Atlantis. "The CSI franchise continued its exceptional performance, recording revenue growth of 74.3% during the quarter, fuelled by strong international second window sales."

First Quarter Financial Results

Broadcasting

During the quarter, Broadcasting recorded revenue growth of 11.9% to $78.0 million from $69.7 million in the prior year. Subscriber revenue grew by 8.5% to $35.7 million in the quarter as a result of steady growth in the number of subscribers across all of the Company's channels. Advertising revenue grew by 16.1% to $41.9 million in the quarter from $36.1 million in the prior year due primarily to growth in audiences.

Broadcasting operating expenses for the quarter were $23.4 million, up from $17.3 million in the prior year's period. The increase is primarily related to the re-launch of Slice (formerly Life Network) ($2.5 million) and digital media initiatives ($1.7 million).

Broadcasting EBITDA of $20.7 million increased $0.6 million or 3.0% in the quarter. Excluding the impact of the Slice re-launch and digital media expenses, Broadcasting EBITDA was $24.9 million, representing an increase of $4.8 million or 23.9%.

Entertainment

CSI revenue of $162.3 million increased by 74.3% compared to the prior year's period. The Company continued to recognize significant second window international licensing arrangements and also delivered an increased number of episodes internationally. The positive impact of foreign exchange in the current quarter was $2.3 million, as the rate for the quarter was $1.17 compared to $1.15 in the prior year.

CSI direct profit of $62.3 million increased $27.5 million or 79.0% due primarily to higher international sales as well as the positive impact of foreign exchange of $1.5 million.

Other revenue increased modestly to $8.2 million from $8.0 million in the prior year's period. This was due to higher revenue from the Company's library of film and television programs, particularly the kids and drama genres.

Other direct profit decreased $0.6 million primarily due to higher royalty and residual costs in the current quarter.

Motion Picture Distribution

Revenue was $109.5 million during the quarter compared to $100.6 million for the prior year's period, representing an increase of $8.9 million or 8.8%.

Direct profit for the quarter was $20.1 million reflecting a margin of 18.4% compared to $16.1 million or a margin of 16.0% for the prior year's period.

EBITDA increased $2.3 million during the quarter to $8.5 million.

Motion Picture Distribution LP released their first quarter results on May 9, 2007. For further information on Motion Picture Distribution LP, please refer to their press release or go to their website at www.moviedistributionincomefund.com.

Corporate and Other

Operating expenses in Corporate and Other were $18.4 million in the quarter compared to $10.5 million in the same period in the prior year. The increase is primarily due to professional fees and other expenses related to the proposed acquisition of the Company, which totaled $8.8 million in the current period. Offsetting this increase is a decrease of $1.6 million in stock based compensation costs related to lower Performance Share Appreciation Plan costs.

Amortization

Amortization was $4.2 million for the quarter compared to $2.7 million for prior year's period. The increase in the quarter is due to a write-down of intangible assets recorded by Motion Picture Distribution LP, as well as increased amortization of property and equipment due to the Company's launch of its two high-definition television channels.

Interest

Interest expense decreased $2.3 million to $4.0 million during the quarter. The decrease is the result of higher interest income earned on long-term accounts receivable balances. These decreases were partially offset by increases in the Company's average cost of borrowing, which was 6.6% during the quarter compared to 6.1% in the prior year's period.

Earnings From Operations Before Undernoted (Operating Earnings)

Operating earnings for the quarter were $60.1 million compared to $39.3 million for the prior year's period. During fiscal year 2006, the Company revised its definition of operating earnings to exclude non-controlling interest in order to enhance users' understanding of the Company's effective tax rate. As such, prior year comparatives have been adjusted.

Income Taxes

The income tax provision for the first quarter increased from $13.9 million to $20.8 million compared to the prior year's period. This represents an effective tax rate of 30.8% compared to 34.8% in the prior year's period. The increase is mainly the result of an increase in taxable earnings partially offset by the mix of earnings between different tax jurisdictions.

Net Earnings

The net earnings for the three months ended March 31, 2007 were $41.2 million compared to net earnings of $21.5 million for the three months ended March 31, 2006. On a basic and diluted basis, the net earnings per share were $1.00 and $0.98, respectively for the three months ended March 31, 2007, compared to basic and diluted net earnings per share of $0.50 and $0.49, respectively for the three months ended March 31, 2006.

Liquidity and Capital Resources

Net debt decreased by $53.8 million, from $366.4 million at March 31, 2006 to $312.6 million at March 31, 2007. The decrease results from strong free cash flow generation, which increased cash and cash equivalent balances as well as regularly scheduled term loan payments. This decrease in net debt is inclusive of $75.3 million used to repurchase shares during the last twelve months.

Net debt, excluding debt of Motion Picture Distribution LP which is non-recourse to the Company, decreased by $67.5 million, from $300.3 million at March 31, 2006 to $232.8 million at March 31, 2007.

Operating Highlights

Broadcasting

Several of Alliance Atlantis' specialty television channels delivered record Adult 25-54 audiences during the Winter 2007 season. HGTV Canada, History Television, National Geographic Channel, Discovery Health Channel, and IFC all recorded peak Adult 25-54 Mo-Su 6am-6am average minute audiences(1). Subsequent to quarter end, Food Network Canada experienced its highest weekly average minute audience since its launch in October 2000(2).

Alliance Atlantis' specialty television channels continued their strong record of top rankings for the Winter 2007 period. During the first quarter, three of the Company's established analog channels ranked in the top 10 of all Canadian English language specialty networks, with HGTV ranking 4th, History 6th and Showcase ranking 7th(3).

For Winter 2007, among the digital specialty networks launched since 2001, four of Alliance Atlantis' digital channels ranked in the top 10 for adult 25-54 audiences with Showcase Action ranking 1st, National Geographic Channel ranking 2nd, Showcase Diva ranking 5th, and IFC ranking 7th(4).

During the first quarter, the Company re-launched Life Network as Slice. Many new programs that aired on Slice during Spring 2007 have resulted in significant AMA growth compared to the corresponding time periods in Spring 2006. The time periods airing The Real Housewives of Orange County have seen 57% AMA growth for Adults 18-49 and 50% AMA growth for Women 18-49 vs. Spring 2006. The time periods airing Brat Camp have seen 107% AMA growth for Adults 18-49 and 111% AMA growth for women 18-49 vs. Spring 2006(5).

Entertainment

During the first quarter of 2007, the CSI franchise continued to deliver exceptional results. CSI: Crime Scene Investigation is currently in its 7th season and ranked the # 1 drama on U.S. television with an average of 20.5 million viewers per week. CSI: Miami is currently in its 5th season and ranked within the top 5 most watched dramas on U.S. television and the # 1 drama in syndication in the US with 17.1 million viewers per week. Finally, CSI: NY is currently in its 3rd season and remains as the # 1 series in its timeslot with an average of more than 14.0 million viewers per week(6).

Transaction Update

At a Special Meeting of Shareholders held on April 5, 2007, shareholders of Alliance Atlantis passed a special resolution approving an arrangement pursuant to section 192 of the Canada Business Corporations Act whereby AA Acquisition Corp. (formerly 6681859 Canada Inc.), a corporation wholly owned by CanWest MediaWorks Inc., will acquire all of the outstanding Class A and Class B shares of Alliance Atlantis for $53.00 cash per share. The Arrangement was approved by 99.7% of the votes cast by holders of outstanding Class A shares and 99.99% of the votes cast by holders of outstanding Class B Non-Voting shares present in person or represented by proxy at the meeting. As previously announced by Alliance Atlantis and CanWest Global Communications Corp. the Arrangement has cleared Canadian Competition Bureau review. The Arrangement remains subject to court approval as well as certain other conditions, including the receipt of certain regulatory approvals.

The Company continues to expect the Arrangement to be completed in July or early August 2007.

----------------------------
(1) Source: BBM/NMR Mo-Su 6am-6am Average Minute Audience Adults 25-54
Winter 2007 = 01/01/2007-04/01/2007 Period since launch
= October
1997-March 2007 HGTV Canada and History Television. Period since
launch = September 2001-March 2007 IFC, DHC, NGC
(2) Source: BBM/NMR: Mo-Su 6am-6am Ad 25-54 Average Minute Audience
03/26/07-04/22/07 as compared to any 4 week period October 2000-
current.
(3) Source: BBM/NMR Mo-Su 6am-6am Average Minute Audience Adults 25-54
Winter 2007 = 01/01/2007-04/01/2007
(4) Source: BBM/NMR Mo-Su 6am-6am Average Minute Audience Adults 25-54
Winter 2007= 01/01/2007-04/01/2007
(5) Source: BBM/NMR 04/10/06-07/03/06, 03/05/07-04/15/07
(6) Source: National Nielsen Ratings: Primetime Season to Date Ranking -
Regular Programming for Demographic PER2+: 09/18/06 to 05/06/07

About Alliance Atlantis Communications
--------------------------------------

Alliance Atlantis offers Canadians 13 well-branded specialty television channels boasting targeted, high-quality programming. The Company also co-produces and distributes the hit CSI franchise and indirectly holds a 51% limited partnership interest in Motion Picture Distribution LP, a leading distributor of motion pictures in Canada, with a presence in motion picture distribution in the United Kingdom and Spain. The Company's common shares are listed on the Toronto Stock Exchange - trading symbols AAC.A and AAC.B. The Company's Web site is www.allianceatlantis.com.

Forward-Looking Statements
--------------------------

This press release, in particular the "Transaction Update" section, contains forward-looking statements, which are based on certain assumptions and reflect current expectations of Alliance Atlantis Communications Inc. (collectively with its subsidiaries, the "Company"). Forward-looking statements are those that are not historical fact and include, but are not limited to, statements of the Company's expectations and intentions. The reader should not place undue reliance on them. They involve known and unknown risks, uncertainties and other factors that may cause them to differ materially from the anticipated future results or expectations expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those set forth in the forward-looking statements include: failure to comply with the terms of the arrangement agreement (the "Arrangement Agreement") dated January 10, 2007 and entered into with a new acquisition company formed by CanWest, as amended, which is available on Sedar at www.sedar.com; failure to complete, or a significant delay in completing, the transactions contemplated by the Arrangement Agreement; audience acceptance of the Company's filmed entertainment; technological change that increases competition or facilitates the infringement of the Company's intellectual property; the Company's ability to attract advertising revenue; actions of competitors; changes to the regulatory environment; cost of production financing; actions of the broadcasting distribution undertakings, or "BDUs" that distribute the Company's channels; the loss of key personnel; the Company's relationship with filmed entertainment content suppliers and changes in the general economy. Additional information about the factors listed above and information about other factors are described in materials filed by the Company with the securities regulatory authorities in Canada from time to time, including the Company's 2006 MD&A and the Company's MD&A for the quarter ended March 31, 2007. The Company undertakes no obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

This earnings release contains the unaudited interim consolidated financial statements for the three months ended March 31, 2007 and March 31, 2006.

Non-GAAP Financial Measures
---------------------------

The Company uses EBITDA, direct profit and free cash flow to gain a better understanding of the results of the business. These non-GAAP financial measures are not recognized under Canadian GAAP. These non-GAAP financial measures are provided to enhance the user's understanding of the Company's historical and current financial performance and its prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of the Company's core operating results and ongoing operations and provide a more consistent basis for comparison between years. The Company uses EBITDA, direct profit and free cash flow to measure operating performance. The Company has defined EBITDA, calculated using figures determined in accordance with Canadian GAAP, as earnings before under noted, which are earnings before amortization, interest, equity losses in affiliates, investment (gains) losses, foreign exchange gains and losses, income taxes and non-controlling interest. Direct profit is defined as revenue less direct operating expenses, as defined in note 25 of the Company's consolidated financial statements included in the Company's 2006 Annual Report. Free cash flow is defined as the total of cash and cash equivalents provided by (used in) operating activities and provided by (used in) investing activities.

Net debt is defined as the Company's revolving credit facility and term loans, net of cash and cash equivalents.

While many in the financial community consider EBITDA to be an important measure of operating performance, it should be considered in addition to, but not as a substitute for net earnings, cash flow and other measures of financial performance prepared in accordance with Canadian GAAP which are presented in the attached unaudited interim consolidated financial statements. In addition, the Company's calculation of EBITDA may be different than the calculation used by other companies and therefore comparability may be affected. A reconciliation of these non-GAAP financial measures to the most directly comparable measures calculated in accordance with Canadian GAAP is presented in the Company's MD&A.

CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended
March 31, 2007 and March 31, 2006
(Unaudited)

Management's responsibility for financial reporting

The accompanying unaudited interim consolidated financial statements and Management's Discussion and Analysis ("MD&A") of Alliance Atlantis Communications Inc. ("Alliance Atlantis", or collectively with its subsidiaries, "the Company") are the responsibility of management and have been approved by the Board of Directors.

The unaudited interim consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. When alternative methods of accounting exist, management has chosen those it deems most appropriate in the circumstances. The unaudited interim consolidated financial statements and information in the MD&A necessarily include amounts based on informed judgments and estimates of the expected effects of current events and transactions with appropriate consideration to materiality. In addition, in preparing the financial information management must make determinations as to the relevancy of information to be included, and make estimates and assumptions that affect reported information. The MD&A also includes information regarding the impact of current transactions and events, sources of liquidity and capital resources, operating trends, risks and uncertainties. Actual results in the future may differ materially from our present assessment of this information because future events and circumstances may not occur as expected.

The Company maintains a system of internal accounting and administrative controls. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and the Company's assets are appropriately accounted for and adequately safeguarded.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting, and is ultimately responsible for reviewing and approving the unaudited interim consolidated financial statements and MD&A. The Board carries out this responsibility through its Audit Committee.

The Audit Committee is appointed by the Board, and all of its members are independent directors. The Audit Committee meets periodically with management, as well as the independent external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues. The Audit Committee reviews the unaudited interim consolidated financial statements and the MD&A and reports its findings to the Board for consideration when the Board approves the unaudited interim consolidated financial statements and the MD&A for issuance to the shareholders.

May 14, 2007

Phyllis Yaffe David Lazzarato
Chief Executive Officer Executive Vice President and
Chief Financial Officer

Alliance Atlantis Communications Inc.
Consolidated Balance Sheets
(unaudited)
(In millions of Canadian dollars)

March 31, December 31, March 31,
2007 2006 2006
-------------------------------------------------------------------------
Assets
Cash and cash equivalents 121.4 114.4 68.5
Accounts and other receivables 508.7 486.4 331.3
Investment in film and television
programs (note 3) 573.5 577.1 593.9
Property and equipment 47.0 49.3 38.0
Investments (note 2) 42.1 4.7 6.8
Future income taxes 73.7 73.3 79.0
Other assets 3.8 11.5 14.8
Loans receivable from tax shelters
(note 14) 47.3 95.6 97.5
Broadcast licences 105.0 105.0 106.0
Goodwill (note 6 and 13) 179.2 179.1 204.3
--------------------------------------
1,701.7 1,696.4 1,540.1
-------------------------------------------------------------------------
Liabilities
Revolving credit facilities
(note 4) 42.0 49.0 26.5
Accounts payable and accrued
liabilities 589.2 613.5 463.7
Income taxes payable 88.2 68.4 31.4
Deferred revenue 23.9 20.4 35.7
Term loans (note 5) 392.0 398.1 408.4
Tax shelter participation
liabilities (note 14) 47.3 95.6 97.5
--------------------------------------
1,182.6 1,245.0 1,063.2

Non-controlling interest 60.2 61.0 58.7

-------------------------------------------------------------------------
Shareholders' Equity
Share capital and other (note 7) 710.0 706.0 726.7
Deficit (275.0) (312.5) (301.4)
Accumulated other comprehensive
income (loss) (note 2 and 8) 23.9 (3.1) (7.1)
--------------------------------------
458.9 390.4 418.2
--------------------------------------
1,701.7 1,696.4 1,540.1
-------------------------------------------------------------------------

Alliance Atlantis Communications Inc.
Consolidated Statements of Earnings
For the three months ended March 31,
(unaudited)
(In millions of Canadian dollars - except per share amounts)

2007 2006
-------------------------------------------------------------------------
Revenue
Broadcasting 78.0 69.7
Entertainment 170.5 101.1
Motion Picture Distribution 109.5 100.6
--------------------------
358.0 271.4

Direct operating expenses 230.6 181.6
Direct profit
Broadcasting 44.1 37.4
Entertainment 63.2 36.3
Motion Picture Distribution 20.1 16.1
--------------------------
127.4 89.8
Operating expenses
Selling, general and administrative 48.1 37.8
Transaction expenses (note 17) 8.8 -
Stock based compensation 2.2 3.6
--------------------------
59.1 41.4
Earnings (loss) before undernoted
Broadcasting 20.7 20.1
Entertainment 57.5 32.6
Motion Picture Distribution 8.5 6.2
Corporate and Other (18.4) (10.5)
--------------------------
68.3 48.4
Amortization 4.2 2.7
Interest (note 10) 4.0 6.3
Equity losses in affiliates - 0.1
-------------------------------------------------------------------------
Earnings from operations before undernoted 60.1 39.3
Foreign exchange gains (7.4) (0.7)
-------------------------------------------------------------------------
Earnings before income taxes and
non-controlling interest 67.5 40.0
Provision for income taxes 20.8 13.9
Non-controlling interest 5.5 4.6
-------------------------------------------------------------------------
Net earnings for the period 41.2 21.5
-------------------------------------------------------------------------

Earnings per Common Share (note 11)
Basic $1.00 $0.50
Diluted $0.98 $0.49
-------------------------------------------------------------------------

Alliance Atlantis Communications Inc.
Consolidated Statements of Deficit
For the three months ended March 31,
(unaudited)
(In millions of Canadian dollars)

2007 2006
-------------------------------------------------------------------------
Deficit - beginning of period, previously
reported (312.5) (310.3)
Adjustment on implementation of new accounting
standards (note 2) (3.7) -
--------------------------
Deficit - beginning of period, revised (316.2) (310.3)
Net earnings for the period 41.2 21.5
Shares repurchased and cancelled under issuer
bid (note 7) - (12.6)
-------------------------------------------------------------------------
Deficit - end of period (275.0) (301.4)
-------------------------------------------------------------------------

Consolidated Statements of Comprehensive Income
For the three months ended March 31,
(unaudited)
(In millions of Canadian dollars)
2007 2006
-------------------------------------------------------------------------
Net earnings for the period 41.2 21.5
Other comprehensive income (loss)
Unrealized gains on available-for-sale
investments, net of tax of $2.9 14.9 -
Unrealized loss on interest rate swap
designated as cash flow hedge, net of tax
of $0.5 (1.0) -
Unrealized foreign currency translation gains
(losses) on net assets of self-sustaining
foreign operations (3.6) 2.5
Unrealized foreign currency translation gains
(losses) on term loans designated as a hedge
on certain net investments in self-sustaining
foreign operations, net of tax of $0.4
(March 31, 2006 - $0.1) 1.6 (0.5)
-------------------------
11.9 2.0
-------------------------------------------------------------------------
Total comprehensive income 53.1 23.5
-------------------------------------------------------------------------

Alliance Atlantis Communications Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31,
(unaudited)
(In millions of Canadian dollars)

2007 2006
-------------------------------------------------------------------------
Cash and cash equivalents provided by (used in)
Operating activities
Net earnings for the period 41.2 21.5
Items not affecting cash
Amortization of film and television
programs (note 12) 108.0 90.1
Amortization of property and equipment 3.3 2.7
Amortization of other assets 0.2 0.6
Equity losses in affiliates - 0.1
Write down of other intangible assets 0.9 -
Non-controlling interest 5.5 4.6
Future income taxes (6.6) 8.1
Unrealized net foreign exchange gains 0.7 1.9
Non-cash stock based compensation 0.9 1.0
Investment in film and television programs
(note 12) (106.2) (103.5)
Net changes in other non-cash balances related
to operations (27.3) (33.2)
--------------------------
20.6 (6.1)
-------------------------------------------------------------------------
Investing activities
Purchases of property and equipment (1.0) (1.0)
--------------------------
(1.0) (1.0)
-------------------------------------------------------------------------
Financing activities
Repayment of revolving credit facility (7.0) (6.5)
Repayment of term loans (2.8) (2.6)
Distributions paid to non-controlling interest (6.3) (5.8)
Issue of share capital 3.7 3.7
Shares purchased and cancelled under issuer bid - (24.3)
--------------------------
(12.4) (35.5)
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and
cash equivalents (0.2) 0.5
-------------------------------------------------------------------------
Change in cash and cash equivalents 7.0 (42.1)
Cash and cash equivalents - beginning of period 114.4 110.6
--------------------------
Cash and cash equivalents - end of period 121.4 68.5
-------------------------------------------------------------------------

Source: Alliance Atlantis Communications Inc.

CONTACT: Andrew Akman, Senior Vice President, Finance - Corporate
Development & Investor Relations, Tel: (416) 966-7701,
andrew.akman@allianceatlantis.com; Nicola McIsaac, Manager, Corporate & Public
Affairs, Tel: (416) 969-4405, nicola.mcisaac@allianceatlantis.com

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