Shaw 2014 Annual Report Download - page 29

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
customer (e.g., hospitals, hotels or retail franchises) that is receiving at a minimum, basic cable
service, is counted as one subscriber. Internet customers include all modems on billing and
Digital Phone lines includes all phone lines on billing. All subscriber counts exclude
complimentary accounts but include promotional accounts.
Shaw Direct measures its count of subscribers in the same manner as Cable counts its Video
customers, except that it also includes seasonal customers who have indicated their intention to
reconnect within 180 days of disconnection.
RGUs represent the number of products sold to customers and includes Video (Cable and DTH
subscribers), Internet customers, and Digital Phone lines. As at August 31, 2014 the Company
had approximately 6.1 million RGUs.
Subscriber counts, or RGUs, and penetration statistics measure market share and also indicate
the success of bundling and pricing strategies.
F. Critical accounting policies and estimates
The Company prepared its Consolidated Financial Statements in accordance with IFRS as
issued by the International Accounting Standards Board (“IASB”). An understanding of the
Company’s accounting policies is necessary for a complete analysis of results, financial
position, liquidity and trends. Refer to Note 2 to the Consolidated Financial Statements for
additional information on accounting policies. The following section discusses key estimates
and assumptions that management has made under IFRS and how they affect the amounts
reported in the Consolidated Financial Statements and notes. Following is a discussion of the
Company’s critical accounting policies:
i) Revenue and expense recognition
Revenue is considered earned as services are performed, provided that at the time of
performance, ultimate collection is reasonably assured. Such performance is regarded as having
been achieved when reasonable assurance exists regarding the measurement of the
consideration that will be derived from rendering the service. Revenue from cable, Internet,
Digital Phone and DTH customers includes subscriber service revenue when earned. The
revenue is considered earned as the period of service relating to the customer billing elapses.
The Company has multiple deliverable arrangements comprised of upfront fees (subscriber
connection fee revenue and/or customer premise equipment revenue) and related subscription
revenue. The Company determined that the upfront fees charged to customers do not constitute
separate units of accounting; therefore, these revenue streams are assessed as an integrated
package.
With Shaw Media, subscriber revenue is recognized monthly based on subscriber levels.
Advertising revenues are recognized in the period in which the advertisements are aired or
displayed on the Company’s digital properties 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.
Subscriber connection fee revenue
Connection fees have no stand alone value to the customer separate and independent of the
Company providing additional subscription services, therefore the connection fee revenue must
be deferred and recognized systematically over the periods that the subscription services are
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