Shaw 2014 Annual Report Download - page 47

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
ŠOn January 28, 2014 the Company issued $500 million senior unsecured notes at
a rate of 4.35% due January 31, 2024 and $300 million floating rate senior
unsecured notes due February 1, 2016. The floating rate senior notes bear interest
at an annual rate equal to three month CDOR plus 0.69%. The net proceeds from
the issuances were used to redeem the $600 million senior unsecured notes due
June 2, 2014 and for working capital and general corporate purposes.
ŠIn April 2014 the Company announced changes to the structure of its operating
divisions to improve overall efficiency while enhancing its ability to grow as the
leading network and content experience company. Commencing in fiscal 2015,
Shaw’s residential and enterprise services are reorganized into new Consumer and
Business units, respectively, with no changes to the Media division. In connection
with the restructuring of its operations, the Company recorded $58 million primarily
in respect of the approximate 400 management and non-customer facing roles
which were affected by the organizational changes. The anticipated annual savings,
net of hires to support the new structure, is approximately $50 million.
ŠDuring 2014 Shaw entered into a marketing, content and promotion partnership
with Rdio, Inc. (“Rdio”) a leading digital music service with a catalog of over
20 million songs. The service allows users to listen anywhere – the web, phone, or
offline – and complements Shaw’s broadband and Shaw Go WiFi services. As part of
the arrangement Shaw made a financial investment in Rdio’s holding company,
Pulser Media Inc. (“Pulser”). In addition, Shaw also made a minority investment in
SHOP.CA, one of Canada’s leading on-line ecommerce destinations.
ŠDuring fiscal 2014 and 2013, the Company entered into a number of transactions
as follows:
ŠIn late fiscal 2014, the Company announced it had entered into agreements
to acquire 100% of the shares of ViaWest for an enterprise value of
US $1.2 billion. ViaWest is headquartered in Denver, Colorado and has
27 data centres in 8 key Western U.S. markets providing collocation, cloud
and managed services. On September 2, 2014, the Company closed the
acquisition which was funded through a combination of cash on hand,
assumption of ViaWest debt and a drawdown of US $330 million on the
Company’s credit facility. The ViaWest acquisition provides the Company with
a growth platform in the North American data centre sector and is another
step in expanding technology offerings for mid-market enterprises in Western
Canada.
ŠDuring the current year, the Company partnered with Rogers to form shomi, a
new subscription video-on-demand service having the latest most exclusive
shows and selections personalized for viewers. The service was launched in
beta in early November 2014.
ŠDuring 2013, the Company entered into agreements with Rogers to sell to
Rogers its shares in Mountain Cable and grant to Rogers an option to acquire
its wireless spectrum licenses; and, to purchase from Rogers its 33.3%
interest in TVtropolis General Partnership (“TVtropolis”). The sale of Mountain
Cable and the purchase of TVtropolis closed during 2013, after the respective
regulatory approvals were received. The potential option exercise for the sale
of the wireless spectrum licenses is still subject to various regulatory
approvals. The net proceeds of these transactions approximates $700 million.
43