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S
haw
C
ommunications Inc
.
MANA
G
EMENT’
S
DI
SCUSS
I
O
N AND ANALY
S
I
S
August
,
The sect
i
ons below
i
nclude a more deta
i
led d
i
scuss
i
on o
f
var
i
ous re
g
ulator
y
matters and recen
t
d
evelopments specific to Shaw’s businesses.
L
icensin
g
and ownershi
p
F
or each of its cable, DTH and SRDU undertakin
g
s, the Cor
p
oration holds a se
p
arat
e
broadcast
i
n
g
l
i
cense or
i
s exem
p
t
f
rom l
i
cens
i
n
g
. In November
2010
, the ma
j
or
i
t
y
o
f
cable
u
ndertakings owned and operated by the Corporation were renewed by the CRTC for a five-yea
r
period ending August 31, 2015. Two cable licenses are scheduled for renewal in 2014. The
l
i
censes o
f
the
C
or
p
orat
i
on’s DTH and
S
RDU undertak
i
n
g
s were recentl
y
renewed b
y
the
C
RT
C
f
or a seven year period ending August 31, 2019. Shaw has never failed to obtain a license
renewal for its cable, DTH or SRDU undertakings
.
The
C
ompany also holds a separate l
i
cense
f
or each o
fi
ts convent
i
onal
O
TA telev
i
s
i
on stat
i
on
s
and each Specialty service. These CRTC broadcasting licenses must be renewed from time t
o
ti
me and cannot be trans
f
erred w
i
thout re
g
ulator
y
a
pp
roval. The ma
j
or
i
t
y
o
f
the
C
or
p
orat
i
on’
s
l
i
censes
f
or
i
ts
O
TA telev
i
s
i
on stat
i
ons and spec
i
alty serv
i
ces were renewed
f
or a
fi
ve-year term
ending August 31, 2016. The renewal decision implemented an expenditure-based regulatory
re
gi
me, whereb
y
the
C
or
p
orat
i
on must ex
p
end a certa
i
n
p
ercenta
g
eo
fi
ts
p
r
i
or-
y
ear revenues
f
rom
i
ts convent
i
onal
O
TA and spec
i
alty serv
i
ces on
C
anad
i
an content, and also on spec
ifi
c
categories of Canadian programs defined as “programs of national interest”. These obligations
are
i
m
p
osed on an
i
nd
i
v
i
dual l
i
cense bas
i
s. W
i
th certa
i
n restr
i
ct
i
ons, the
C
or
p
orat
i
on ma
y
shar
e
t
hese regulatory obl
i
gat
i
ons between and among
i
ts var
i
ous convent
i
onal
O
TA and spec
i
alt
y
licenses.
The potential for new or increased fees through regulation
Eff
ect
i
ve
S
e
p
tember
1
,
2009
, each l
i
censed BDU was re
q
u
i
red to contr
i
bute
1
.5
%
o
fi
ts
g
ross
revenues der
i
ved
f
rom broadcast
i
ng to the Local Programm
i
ng Improvement Fund
(“
LPIF”
)
t
o
support local television stations operating in non-metropolitan markets. Exempt systems were
n
ot re
q
u
i
red to contr
i
bute to the LPIF. In Jul
y 2012
, the
C
omm
i
ss
i
on determ
i
ned that
i
twa
s
i
nappropr
i
ate to ma
i
nta
i
n the LPIF
i
n the long term and that
i
t would phase out the LPIF over
t
he two subsequent broadcast years. Accordingly, for the 2012-2013 broadcast year, the LPIF
contr
i
but
i
on rate was reduced
f
rom
1
.5
%
to
1
.
0%
. For the
2013
-
201
4 broadcast
y
ear, the
L
PIF contr
i
but
i
on rate
i
s
f
urther reduced to
0
.5
%
.Aso
fS
eptember
201
4, the LPIF w
i
ll be
d
iscontinued.
I
n October 2008 the CRTC announced a change in its policy regarding the delivery of distan
t
signals by licensed BDUs. Under the new policy, licensed cable BDUs must obtain the consen
t
of
an
O
TA broadcaster to del
i
ver
i
ts s
ig
nal
i
nad
i
stant market. DTH d
i
str
i
but
i
on undertak
i
n
g
s
can distribute a local over-the-air television signal without consent within the province of origin,
but must obtain permission to deliver the over-the-air television signal beyond the province o
f
o
r
igi
n unless the DTH d
i
str
i
but
i
on undertak
i
n
gi
sre
q
u
i
red to carr
y
the s
ig
nal on
i
ts bas
ic
se
rvi
ce.
I
nMa
y 2011
the
C
RT
C
released
i
ts new DTH satell
i
te d
i
str
i
but
i
on
p
ol
i
c
y
,
p
ursuant to wh
i
ch
it
requires Shaw Direct to distribute, in standard definition, all conventional OTA stations tha
t
conform to LPIF eligibility requirements. The CRTC did not introduce any specific rules with
res
p
ect to the
p
erm
i
tted sco
p
eo
f
d
i
str
i
but
i
on o
f
local stat
i
ons or an
y
new r
ig
hts o
f
remuneration. Shaw Direct met these requirements during 2013
.
I
n March
2010
the
C
RT
Ci
ntroduced a new value
f
or s
ig
nal
(“
VF
S
”
)
re
gi
me to allow
p
r
i
vatel
y
-
o
wned local television stations to negotiate a value for the distribution of their programmin
g
16