Shaw 2015 Annual Report Download - page 35

Shaw Communications Inc.
Management’s Discussion and Analysis
August 31, 2015
Company on an unprotected, non-preemptible basis, in both the case of the Anik F2 transponders that are owned by Shaw and
the Anik F1R, Anik F2 and Anik G1 transponders that are secured through capacity service agreements. The Company has
priority access to spare transponders on Anik F1R, Anik F2 and Anik G1 in the case of interruption, subject to availability. In
the event of satellite failure, service will only be restored as capacity becomes available. Restoration of satellite service on
another satellite may require repositioning or re-pointing of customers’ receiving dishes, an upgrade of their video terminal or
customers may require a larger dish. The Anik G1 satellite has a switch feature that allows whole channel services (transponders
and available spares) to be switched from extended Ku-band to Ku-band, which provides the Company with limited back-up to
restore failed whole channel services of Anik F1R. Satellite failure could negatively affect levels of customer service and
customer relationships and may have a material adverse effect on Shaw, its operations and/or its financial results.
Network failure
Shaw’s business may be interrupted by network failures, including those caused by fire damage, natural disaster, power loss,
hacking, computer viruses, disabling devices, acts of war or terrorism and other events. Shaw protects its network through a
number of measures including physical and information technology security, ongoing maintenance and placement of insurance
on our network equipment and data centres. The Company self-insures the plant in the hybrid fibre-coax network as it believes
the premium costs are uneconomic relative to the risk of failure. The risk of loss is mitigated as most of the hybrid fibre-coax
network is located underground. In addition, it is likely that network damage caused by any one incident would be limited by
geographic area and therefore resulting business interruption and financial damages would be limited. Further, the Company
has back-up disaster recovery plans in the event of network failure and redundant capacity for certain portions of the network.
In the past, the Company has successfully recovered from network damage caused by natural disasters without significant cost
or disruption of service. Although Shaw has taken and continues to take steps to reduce the risk of network failure, network
failures may occur, and such failures could negatively affect levels of customer service and customer relationships and may
have a material adverse effect on Shaw, its operations and/or its financial results.
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 on internal business
processes. Shaw regularly undertakes initiatives to update and improve these systems and processes. Although the Company
has taken steps to reduce the risks of failure of these systems and processes, 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 Shaw, its operations
and/or its financial results.
Reliance on suppliers
Shaw is connected to or relies on other telecommunication carriers and certain utilities to conduct our business. Any disruption
to the services provided by these suppliers, including labour strikes and other work disruptions, bankruptcies, technical
difficulties or other events affecting the business operations of these carriers or utilities may affect Shaw’s ability to operate
and, therefore have a material adverse effect on Shaw, its operations and/or its financial results.
The Company sources its customer premise and capital equipment, capital builds as well as portions of its service offerings
from certain key suppliers. While the Company has alternate sources for many of these purchases, the loss of a key supplier
may adversely affect the Company’s ability to operate, and therefore have a material adverse effect on Shaw, its operations
and/or its financial results.
Programming expenses
Expenses for Consumer and Business Network Services video programming continue to be one of our most significant single
expense items. Costs continue to increase, particularly for sports programming. In addition, as we add programming or
distribute existing programming to more of our subscriber base, programming expenses increase. Although we have been
successful at reducing the impact of these cost increases through sale of additional services or increasing subscriber rates,
there can be no assurance that we will continue to be able to do so and may have a material adverse effect on Shaw, its
operations and/or its financial results.
Programming costs are also one of the most significant expenses in our Media division. Increased competition in the television
broadcasting industry and with online video providers for content, developments affecting producers and distributors of
2015 Annual Report Shaw Communications Inc. 33