Shaw 2013 Annual Report Download - page 41

S
haw
C
ommunications Inc
.
MANA
G
EMENT’
S
DI
SCUSS
I
O
N AND ANALY
S
I
S
August
31
,
2013
n
etwork
f
a
i
lure and redundant ca
p
ac
i
t
y
w
i
th res
p
ect to certa
i
n
p
ort
i
ons o
f
the s
y
stem. In th
e
past, the Company has successfully recovered from network damage caused by natural disaster
s
without significant cost or disruption of service. Although the Company has taken steps t
o
reduce th
i
sr
i
sk, there can be no assurance that ma
j
or network d
i
sru
p
t
i
ons w
i
ll not occur.
v
i) Reliance on su
pp
lier
s
Shaw’s distribution and call center network is connected to or relies on other
t
elecommun
i
cat
i
on carr
i
ers and certa
i
n other ut
i
l
i
t
i
es. An
y
o
f
the events descr
i
bed
i
n the
preceding paragraph, as well as labour strikes and other work disruptions, bankruptcies,
t
echnical difficulties or other events affectin
g
the business o
p
erations of these carriers o
r
u
t
i
l
i
t
i
es ma
y
have an adverse e
ff
ect on the
C
om
p
an
y
’s bus
i
ness and o
p
erat
i
n
g
results.
The Company sources its customer premise and capital equipment and capital builds from
certain key suppliers. While the Company has alternate sources for most of its purchases, the
loss o
f
ake
y
su
pp
l
i
er could adversel
y
a
ff
ect the
C
om
p
an
yi
n the short term.
vii)
Pro
g
ramm
i
n
g
ex
p
ense
s
Shaw’s programming expenses for cable and DTH continue to be one of the most significant
s
i
n
g
le ex
p
ense
i
tems.
C
osts cont
i
nue to
i
ncrease,
p
art
i
cularl
yf
or s
p
orts
p
ro
g
ramm
i
n
g
.In
add
i
t
i
on, as the
C
ompany adds programm
i
ng or d
i
str
i
butes ex
i
st
i
ng programm
i
ng to more o
f
the
subscriber base, programming expenses increase. Although the Company has been successful
at reduc
i
n
g
the
i
m
p
act o
f
these
i
ncreases throu
g
h sale o
f
add
i
t
i
onal serv
i
ces or
i
ncreas
i
n
g
subscr
i
ber rates, there can be no assurance that the
C
ompany w
i
ll cont
i
nue to be able to do s
o
and operating results may be impacted.
I
n Med
i
a one o
f
the most s
ig
n
ifi
cant ex
p
enses
i
s also
p
ro
g
ramm
i
n
g
costs. Increased
competition in the television broadcasting industry, developments affecting producers and
d
istributors of
p
ro
g
rammin
g
content, chan
g
es in viewer
p
references and other develo
p
ments
could
i
m
p
act both the ava
i
lab
i
l
i
t
y
and cost o
fp
ro
g
ramm
i
n
g
content. Althou
g
h the
C
or
p
orat
i
o
n
h
as processes to effectively manage these costs, programming content may be purchased for
broadcastin
g
one to two
y
ears in advance, makin
g
it more difficult to
p
redict how such conten
t
w
i
ll
p
er
f
orm.
v
iii) Unionized labour
A
pp
roximatel
y
50% of the Media division em
p
lo
y
ees are em
p
lo
y
ed under one of five collective
a
g
reements re
p
resented b
y
three bar
g
a
i
n
i
n
g
un
i
ts. I
f
labour d
i
sru
p
t
i
ons occur,
i
t
i
s
p
oss
i
bl
e
large numbers of employees may be involved and that the Media business may be disrupted.
Shaw is currentl
y
ne
g
otiatin
g
one collective a
g
reement and the remainin
g
four a
g
reements hav
e
been renewed and are
i
ne
ff
ect
f
or the next one to two
y
ears.
ix) Holdin
g
com
p
an
y
structur
e
Substantially all of Shaw’s business activities are operated by its subsidiaries. As a holding
com
p
an
y
, the
C
om
p
an
y
’s ab
i
l
i
t
y
to meet
i
ts
fi
nanc
i
al obl
ig
at
i
ons
i
sde
p
endent
p
r
i
mar
i
l
y
u
p
o
n
t
he receipt of interest and principal payments on intercompany advances, management fees,
cash dividends and other payments from its subsidiaries together with proceeds raised by the
C
om
p
an
y
throu
g
h the
i
ssuance o
f
e
q
u
i
t
y
and the
i
ncurrence o
f
debt, and
f
rom
p
roceeds
received on the sale of assets. The payment of dividends and the making of loans, advance
s
and other payments to the Company by its subsidiaries may be subject to statutory o
r
contractual restr
i
ct
i
ons, are cont
i
n
g
ent u
p
on the earn
i
n
g
so
f
those subs
i
d
i
ar
i
es and are sub
j
ec
t
to
v
a
ri
ous bus
in
ess a
n
dot
h
e
r
co
n
s
i
de
r
at
i
o
n
s
.
37