Shaw 2014 Annual Report Download - page 33

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
Broadcast rights and licenses in the cable and satellite businesses are comprised of broadcast
authorities including licenses and exemptions from licensing that allow access to homes and
subscribers in a specific area that are identified on a business combination with respect to the
acquisition of shares or assets of a BDU.
Broadcast licenses in the media business are licenses to operate conventional and specialty
services that are identified on a business combination with respect to the acquisition of shares
or assets of a broadcasting undertaking.
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 are
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. In 2013 the Company entered into an agreement with
Rogers granting Rogers an option to acquire its wireless spectrum licenses. The potential option
exercise for the sale of the wireless spectrum licenses is subject to various regulatory approvals.
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, customer
relationships as well as a trademark and brands. Software is amortized on a straight-line basis
over their estimated useful lives ranging from three to ten years. Customer relationships
represent the value of customer contracts and relationships acquired in a business combination
and are amortized on a straight-line basis over the estimated useful life of 15 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, Satellite 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.
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