Shaw 2012 Annual Report Download - page 31

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2012
The Company has concluded that the broadcast rights and licenses have indefinite useful lives
since there are no legal, regulatory, contractual, economic or other factors that would prevent
the Company’s license renewals or limit the period over which these assets will contribute to
the Company’s cash flows. Goodwill and broadcast rights and licenses are not amortized but
assessed for impairment on an annual basis in accordance with IAS 36 “Impairment”.
The Company also owns AWS licenses that are required to operate a wireless system in Canada.
The AWS licenses have indefinite lives and are subject to an annual review for impairment by
comparing the estimated fair value to the carrying amount. In late 2011 Shaw decided not to
pursue a conventional wireless build. The Company continues to hold its wireless spectrum
while it reviews all options.
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.
Other intangibles include software that is not an integral part of the related hardware as well as
a trademark and brands. Software is amortized on a straight line basis over their estimated
useful lives ranging from four to ten years.
vi) Asset impairment
The Company tests goodwill and indefinite-life intangibles for impairment annually (as at
March 1) and when events or changes in circumstances indicate that the carrying value may be
impaired. The recoverable amount of each cash-generating unit (“CGU”) is determined based
on the higher of the CGU’s fair value less costs to sell and its value in use. A CGU is the
smallest identifiable group of assets that generate cash flows that are independent of the cash
inflows from other assets or groups of assets. The Company’s cash generating units are
consistent with its reporting segments, Cable, DTH and Satellite Services and Media. Where the
recoverable amount of the CGU is less than its carrying amount, an impairment loss is
recognized. Impairment losses relating to goodwill cannot be reversed in future periods. The
results of the impairment tests are provided in Note 10 to the Consolidated Financial
Statements.
vii) Employee benefit plans
As at August 31, 2012, Shaw had an unfunded defined benefit pension plan for key senior
executives and various funded defined benefit plans for certain unionized and non-unionized
employees. The amounts reported in the financial statements relating to the defined benefit
pension plans are determined using actuarial valuations that are based on several assumptions
including the discount rate, rate of compensation increase and the expected return on plan assets
(for funded plans). While the Company believes these assumptions are reasonable, differences in
actual results or changes in assumptions could affect employee benefit obligations and the
related income statement impact. The Company accounts for differences between actual and
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