Shaw 2010 Annual Report Download - page 25

Commission approval of Shaw’s acquisition of Canwest
On October 22, 2010 the CRTC approved Shaw’s acquisition of control of Canwest’s broadcasting
business (now referred to as Shaw Media) and its OTA stations and Specialty services. In issuing its
approval, the Commission approved the Corporation’s proposed tangible benefits package of
$180.1 million on a transaction valued at approximately $2.0 billion. The Corporation’s benefits
commitment will be directed primarily to the production of Canadian television and new media
content (including new local news in several markets) for use by Shaw Media services, as well as
conversion of Shaw Media’s broadcast transmitters to digital in small markets.
Limits on non-Canadian ownership and control for broadcasting undertakings
Non-Canadians are permitted to own and control, directly or indirectly, up to 33.3% of the voting
shares and 33.3% of the votes of a holding company that has a subsidiary operating company
licensed under the Broadcasting Act. In addition, up to 20% of the voting shares and 20% of the
votes of the licensee may be owned and controlled, directly or indirectly, by non-Canadians. As well,
the chief executive officer (CEO) and not less than 80% of the board of directors of the licensee
must be resident Canadians. There are no restrictions on the number of non-voting shares that may
be held by non-Canadians at either the holding company or licensee level. Neither the holding
company nor the licensee may be controlled in fact by non-Canadians, a question of fact that is
under the jurisdiction of the CRTC.
The same restrictions apply to Canadian carriers pursuant to the Telecommunications Act and
associated regulations, except that there is no requirement that the CEO be a resident Canadian.
The same restrictions are also contained in the Radiocommunication Act and associated
regulations. Shaw must file a foreign ownership compliance report annually with the CRTC
confirming that it meets the Canadian ownership requirements for Canadian carriers.
The Corporation’s Articles contain measures to ensure the Corporation is able to remain compliant
with applicable Canadian ownership requirements and its ability to obtain, amend or renew a
license to carry on any business.
In June 2010 the Minister of Industry initiated a public consultation on foreign investment
restrictions in the telecommunications sector with the goal of encouraging investment, innovation
and competition. The consultation paper released presented three options for consideration:
(1) increase the limit for direct foreign investment in broadcasting and telecommunications
carriers to 49 percent; (2) lift restrictions on telecommunications carriers with a 10-percent
market share or less, by revenue, or (3) remove telecommunications restrictions completely. Shaw
participated in the consultation and has expressed support for an increase of direct foreign
investment limits for broadcasting undertakings to 49% in order to ensure competitive parity
among all participants in the broadcasting and telecommunications industries. The Minister of
Industry is expected to report on the result of the consultation. It is possible that the consultation
and report could lead to proposed legislative changes.
F. Key performance drivers
Shaw measures the success of its strategies using a number of key performance drivers which are
outlined below, including a discussion as to their relevance, definitions, calculation methods and
underlying assumptions.
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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2010