Shaw 2011 Annual Report Download - page 36

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2011
combination. For presentation and disclosure purposes, non-controlling interests are classified
as a separate component of shareholders’ equity. In addition, net income and comprehensive
income is attributed to the Company’s shareholders and to non-controlling interests rather than
reflecting the non-controlling interests as a deduction to arrive at net income and
comprehensive income.
Adoption of accounting policies for Shaw Media
The following accounting policies have been adopted for the Company’s new television
broadcasting operations (Shaw Media).
Revenue
Subscriber revenue is recognized monthly based on subscriber levels. Advertising revenues are
recognized in the period in which the advertisements are broadcast and recorded net of agency
commissions as these amounts are paid directly to the agency or advertiser. When a sales
arrangement includes multiple advertising spots, the proceeds are allocated to individual
advertising spots under the arrangement based on relative fair values.
Program rights and advances
Program rights represent licensed rights acquired to broadcast television programs on the
Company’s conventional and specialty television channels and program advances are in respect
of payments for programming prior to the window license start date. For licensed rights, the
Company records a liability for program rights and corresponding asset when the license period
has commenced and all of the following conditions have been met: (i) the cost of the program is
known or reasonably determinable, (ii) the program material has been accepted by the Company
in accordance with the license agreement and (iii) the material is available to the Company for
telecast. Program rights are expensed on a systematic basis generally over the estimated
exhibition period as the programs are aired and are included in operating, general and
administrative expenses.
CRTC benefit obligations
The fair value of CRTC benefit obligations committed as part of business acquisitions are
initially recorded, on a discounted basis, at the present value of amounts to be paid net of any
expected incremental cash inflows. The obligation is subsequently adjusted for the incurrence
of related expenditures, the passage of time and for revisions to the timing of the cash flows.
Changes in the obligation due to the passage of time are recorded as accretion of long-term
liabilities in the income statement.
Asset retirement obligations
The Company recognizes the fair value of a liability for an asset retirement obligation in the
period in which it is incurred, on a discounted basis, with a corresponding increase to the
carrying amount of property and equipment. This cost is amortized on the same basis as the
related asset. The liability is subsequently increased for the passage of time and the accretion
is recorded in the income statement as accretion of long-term liabilities. Revisions due to the
estimated timing of cash flows or the amount required to settle the obligation may result in an
increase or decrease in the liability. Actual costs incurred upon settlement of the obligation are
charged against the liability to the extent recorded.
32