Shaw 2014 Annual Report Download - page 48

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
ŠDuring 2013, the Company entered into a number of transactions with Corus,
a related party subject to common voting control. In a series of agreements to
optimize its portfolio of specialty channels, Shaw agreed to sell to Corus its
49% interest in ABC Spark and 50% interest in its two French-language
channels, Historia and Series+. In addition, Corus agreed to sell to Shaw its
20% interest in Food Network Canada. Shaw received net proceeds of
$93 million from these transactions. The ABC Spark and Food Network
Canada transactions closed during 2013 while Historia and Series+ closed in
2014.
ŠIn 2013, the Company acquired Envision, a company providing leading
telecommunication services to Calgary business customers, for approximately
$225 million.
ŠDuring 2013, the Company established a notional fund, the accelerated capital
fund, of up to $500 million with proceeds received, and to be received, from the
aforementioned strategic transactions with each of Rogers and Corus. Accelerated
capital initiatives are being funded through this fund and not cash generated from
operations. Key investments include the completion of the Calgary internal data
centre, further digitization of the network and additional bandwidth upgrades,
development of IP delivery of video, expansion of the WiFi network, and additional
innovative product offerings related to Shaw Go and other applications to provide an
enhanced customer experience. Approximately $110 million was invested in fiscal
2013, $240 million in fiscal 2014, and $150 million is expected to be invested in
fiscal 2015.
ŠThe Company continued to expand on its TV Everywhere content strategy launching
Global Go and a number of Shaw Go apps during fiscal 2014, giving subscribers
on-the-go access to their favorite programming. Shaw also continued to invest in
and build awareness of Shaw Go WiFi and as at August 31, 2014 had over 45,000
hotspots and 1.25 million devices registered on the network, reflecting the value of
the service to customers.
Revenue and operating expenses
Consolidated revenue of $5.24 billion and operating income before restructuring costs and
amortization of $2.26 billion both improved 1.9% over 2013. Revenue growth in the Cable
division, primarily driven by pricing adjustments and growth in Business, was partially reduced
by lower video subscribers, increased programming costs and higher employee related amounts.
The marginal revenue decline in the Media division, primarily due to reduced advertising
revenues partially offset by increased subscriber revenues as well as the favorable impact of a
retroactive adjustment related to distant signal retransmission royalties, was offset through
various expense reductions. Revenue growth in the satellite division, primarily due to pricing
adjustments, was more than offset by higher programming expenses and increased operating
costs related to the new Anik G1 satellite which launched in the third quarter of fiscal 2013.
Within all segments, the prior year benefited from a one-time adjustment to align certain
broadcast license fees with the CRTC billing period totaling approximately $14 million.
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