Shaw 2014 Annual Report Download - page 43

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
In Media one of the most significant expenses is also programming costs. Increased
competition in the television broadcasting industry, developments affecting producers and
distributors of programming content, changes in viewer preferences and other developments
could impact both the availability and cost of programming content. Although the Corporation
has processes to effectively manage these costs, programming content may be purchased for
broadcasting one to two years in advance, making it more difficult to predict how such content
will perform.
viii) Unionized labour
Approximately 50% of the Media division employees are employed under one of five collective
agreements represented by three unions. If labour disruptions occur, it is possible large
numbers of employees may be involved and that the Media business may be disrupted. Shaw is
currently negotiating one collective agreement and the remaining four agreements have been
renewed and are in effect for the next one to three years.
ix) Holding company structure
Substantially all of Shaw’s business activities are operated by its subsidiaries. As a holding
company, the Company’s ability to meet its financial obligations is dependent primarily upon
the 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
Company through the issuance of equity and the incurrence of debt, and from proceeds
received on the sale of assets. The payment of dividends and the making of loans, advances
and other payments to the Company by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those subsidiaries and are subject
to various business and other considerations.
x) Control of the Company by the Shaw family
As at October 31, 2014, JR Shaw and members of his family and the corporations owned and/
or controlled by JR Shaw and members of his family (the “Shaw Family Group”) own
approximately 79% of the outstanding Class A Shares of the Company. The Class A Shares are
the only shares entitled to vote in all shareholder matters. All of the Class A Shares held by the
Shaw Family Group are subject to a voting trust agreement entered into by such persons. The
voting rights with respect to such Class A Shares are exercised by the representative of a
committee of five trustees. Accordingly, the Shaw Family Group is, and as long as it owns a
majority of the Class A Shares will continue to be, able to elect a majority of the Board of
Directors of the Company and to control the vote on matters submitted to a vote of the
Company’s Class A shareholders.
xi) Information systems and internal business processes
Many aspects of the Company’s business depend to a large extent on various IT systems and
software and internal business processes. Shaw also undertakes ongoing initiatives to update
and improve these systems and processes. Although the Company has taken steps to reduce
these risks, there can be no assurance that potential failures of, or deficiencies in, these
systems, processes or change initiatives will not have an adverse effect on the Corporation’s
business and operating results.
xii) Dividend payments
The Company currently pays monthly common share dividends in amounts approved on a
quarterly basis by the Board of Directors. At the current approved dividend amount, the
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