Shaw Communications Inc.€¦ · Shaw Cable Classic Cable Digital TV HDTV Shaw Internet High-Speed Lite High-Speed Internet High-Speed Extreme High-Speed Warp High-Speed Nitro Shaw

November 2010

Shaw Communications Inc.Investor Update

Certain statements included in this presentation may constitute forward-looking statements,

including, without limitation, those appearing under "F2011 Guidance". Such forward-

looking statements involve risks, uncertainties and other factors which may cause actual

results, performance or achievements of the Company to be materially different from any

future results, performance or achievements expressed or implied by such forward-looking

statements.

The discussion of risk factors and the discussion under the heading “Caution Concerning

Forward-Looking Statements” contained in the Company's Management’s Discussion and

Analysis for fiscal 2010 and for Q4 2010 (see our fiscal 2010 Annual Report and Q4 2010

MD&A, filed by the Company with the U.S. Securities and Exchange Commission, under

Forms 40-F and 6-K, respectively, and with the Canadian securities commissions; also

available at www.shaw.ca) state material factors that could cause actual results to differ

materially from the conclusion, forecast or projection in the forward-looking statements and

state material factors and assumptions that were applied in drawing conclusions or making

forecasts or projections set out in the forward-looking statements. This discussion of factors

and assumptions is expressly incorporated by reference in this document and should be

read in conjunction with this document.

Forward Looking Disclaimer

2

Table of Contents

3

I. Investor Highlights

II. Fiscal 2011 Guidance

III. Canwest Acquisition

IV. Wireless Discussion

V. Leverage Discussion

VI. Conclusion


4

A Leading Communications and Entertainment Provider

Conventional Broadcasting

Specialty Broadcasting

Channels Operated by Shaw Media

(67%)

(50%)

(49%)

(67%) (58%)

(65%) (50%) (50%) (50%)

(68%)

(50%) (50%)

(49%)(38%)

Shaw holds approximately 20 MHz

of AWS spectrum across Western

Canada

Consumer

Shaw CableClassic Cable

Digital TV

HDTV

Shaw Internet

High-Speed Lite

High-Speed Internet

High-Speed Extreme

High-Speed Warp

High-Speed Nitro

Shaw Home PhoneHome Phone

Home Phone Lite

Home Phone Basic

Basic

High Definition

Advanced HDPVR

Channels Not Operated by Shaw Media

To Be Launched in Late 2011

Business SolutionsSOHO

Business


• Our current market capitalization is approximately C$10 billion and in 2010 Shaw became the

largest cable company in Canada with over 2.3 million basic customers

• Including satellite, we distribute video to over 3.2 million Canadian consumers

• This represents approximately 30% of the Canadian pay-TV market

• As of August 31, 2010 we had an internet penetration rate of 78%, maintaining the highest

Internet penetration of our Canadian peers and we were the first company in North America to

introduce DOCSIS 3.0

• We are currently in the testing phase of a usage based billing model for our Internet service,

which follows the launch of similar plans in the Canadian market

• We are currently notifying customers who are exceeding their usage cap

• This will be followed by a monthly charge and/or the purchase of additional data

packages

• Customers who are significantly over their current usage cap are encouraged to

upgrade tiers to properly reflect their usage level while improving their Internet speeds

• In the future, we believe our usage based billing plan will enable the further

monetization of our Internet business as data usage becomes more prevalent and

common amongst our customer base (ie. streaming of video)

• Our reliable and robust network of over 625,000 kilometers of fibre is more than any other cable

company in North America and provides Shaw with the bandwidth capacity to offer a wide range

of high quality, compelling applications5

Highlights


• We have exceeded 1 million Digital Phone customers since our launch in 2005 and have consistently

added 50K new customers every quarter

• Over 45% of our basic customers now take our home phone service

• Since the launch of our digital rental program in October 2009, we have increased our digital

penetration from 40% at the beginning of F2009 to over 70% as at August 31, 2010

• Management targeted 80% digital penetration by the end of F2011 and we believe we are on

track to deliver

• As of August 31, 2010 we have over 725K HD cable customers (almost 45% of our digital base)

• We continue to expand our HD line-up and at any time our customers now have access to at

least 500 HD services

• Our satellite business continues its strong performance

• The focus on profitable growth and free cash flow generation has not changed

• In F09 Star Choice was rebranded as Shaw Direct to strengthen the Shaw brand

• We now have over 900K satellite subscribers, our margin is approximately 35% and our satellite

business now contributes approximately 30% of our consolidated FCF

• In March 2010, we announced that we had entered into agreements with Telesat to acquire

capacity on a new satellite that is expected to be available in late 2012

• This additional capacity will increase Shaw Direct’s satellite television services by 30%

through 16 new transponders6

Highlights


• In F10 we generated over $3.7 billion in revenue, EBITDA of $1.7 billion and FCF in excess of

$500 million

• F10 revenue and EBITDA increased 10% and 9% respectively driving sustainable and

profitable growth (excludes the impact of CRTC Part II fee recovery)

• Following the close of Canwest (Shaw Media) we will generate annual consolidated revenue

of approximately C$5 billion

• Shaw continues to be recognized as one of the best operators in North America and maintains

superior margins which exceeded 45% on a consolidated basis and 48% for cable for FY 2010

• Shaw has a strong and proven track record of returning capital to shareholders as over $2 billion

in dividends and share repurchases have been completed since 2005

• Our shares represent a unique investment opportunity of both growth and yield (4.1% yield

based on a $21.50 share price)

7

Highlights


• We continue to invest in our wireless initiative and plan to launch the service by the end of

calendar 2011

• We selected Nokia Siemens Networks to provide the radio access network and core

equipment for our next generation network

• During F10, we spent approximately $100 million and we will continue our build in F11 by

investing an additional $200 million on our wireless initiatives

• We continue to focus on the Home Office and Small Office business consumers

• We believe that this is a natural extension of our residential business and we have the

products and services that meet the needs and demands of these business owners (this

includes Internet, phone and cable services)

• We recently realigned some our business units to form Shaw Business

• As we continue to develop our strategic plans and sales force to grow this segment of our

business, we believe this simplified organizational structure will enable us to focus and

capitalize on opportunities within the small and medium enterprise market in Western

Canada

• With our $2.0 billion Canwest acquisition and a new wireless product on the horizon, we believe

Shaw is positioned to be one of the leading Entertainment and Communications Companies in

Canada

8

Highlights


• We continued to grow our customer base during F2010 despite facing increased competition

• Shaw achieved some significant milestones during the year, including surpassing 1 million

Digital Phone customers as well as 1 million High Definition (“HD”) television subscribers

• With the acquisition of Mountain Cablevision, Shaw is now the largest cable provider in Canada

with over 2.3 million basic subscribers

9

Substantial Subscriber Base

2,333

1,797

1,651

1,084906

727

395

0

500

1,000

1,500

2,000

2,500

Basic Internet Digital Digital Phone Shaw Direct HD

(Th

ou

sa

nd

s)

Summary of Shaw's Customer Base(as at August 31, 2010)

Satellite HD Cable HD


• In F10 EBITDA we experienced EBITDA growth of 14% compared to 2009

• Excluding the impact of Part II Fees, EBITDA growth was over 9%

• Shaw is recognized as one of the best operators in North America due to our superior margins

and disciplined business acumen

• Our consolidated operating margin remained stable at approximately 45% in F10

10

Consolidated Financial Review

$2,459

$2,774

$3,105

$3,391

$3,718

$1,078$1,240

$1,408$1,539

$1,685

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2006 2007 2008 2009 2010 *

$C

DN

MM

Consolidated Annual Revenue and EBITDA(Fiscal Year Ending August 31)

Revenue EBITDA* Note: 2010 EBITDA excludes CRTC Part II fees


• FCF has grown substantially over the last number of years and was over $515 million in F10 which is

comparable to FCF in F09

• However, in F09 we were only partially cash taxable compared to a full year in F10

• Excluding the impact of cash taxes and the CRTC Part II fees, our untaxed FCF grew by

13%

• Our growth in FCF has been achieved in conjunction with substantial continued investment in our

network and infrastructure, which will enable us to better serve our customers and yield future growth

opportunities

• Over the last three years we have generated almost $1.5 billion in FCF while reinvesting $2

billion back into our core businesses

11

Free Cash Flow

$356

$453

$504 $515

$0 $0

$528

$600

$0

$100

$200

$300

$400

$500

$600

$700

$800

2007A 2008A 2009A 2010A

(C$

mil

lio

ns

)

Review of Shaw Communications FCF(2007A - 2010A)

FCF Adjusted Untaxed FCF

Note: FCF figures exclude wireless and 2010 untaxed FCF is adjusted to exclude CRTC Part

II fees


• We have led the industry in dividend policy and have been rewarded for our focus on returning

capital to shareholders

• Since 2005, Shaw has returned over $2 billion to shareholders through dividends and share

repurchases

• At the current dividend rate, Shaw shares yield 4.1% (based on $21.50 share price) and remains

in the top quartile for dividend paying companies on the TSX60

12

Dividends

$71

$103

$201

$304

$352

$372

$0.16

$0.24

$0.47

$0.71

$0.82$0.88

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

$0

$50

$100

$150

$200

$250

$300

$350

$400

2005A 2006A 2007A 2008A 2009A 2010A

Eff

ecti

ve A

nn

ual

Div

iden

d R

ate

per

Sh

are

Div

iden

d P

aym

en

ts t

o S

hare

ho

lders

($M

M)

Dividend Payments

Total Annual Dividend Payments Effective Dividend per Class B Share at end of fiscal year


• Over the last several years our share price performance has been strong as we continue to

execute our business plan

13

Share Price Performance

$10

$12

$14

$16

$18

$20

$22

$24

$26

$28

Sh

are

Pri

ce

Date

Shaw 5-Year Share Price Performance(Oct. 28, 2005 - Oct. 29, 2010)

CAGR = 13% (excluding dividends)

II. Guidance

• The competitive environment continues to intensify and we do not expect this to moderate

significantly over the coming year

• Considering the competitive environment, a certain level of promotional activity within our

industry is expected

• However, we continue to believe that our products and services provide value to our

customers

• This includes our focus on customer service which is a key differentiating factor

• Looking forward to fiscal 2011, we expect continued growth in our core Cable and Satellite

business

• Taking competitive market pressures and increased programming costs into consideration,

we expect that the growth rate of core consolidated EBITDA will decline modestly compared

to F10’s organic growth rate of 7.5%

• However, we still expect to generate substantial free cash flow of approximately $550 million

which represents a 20% growth rate (excludes CRTC Part II fee recovery in 2010)

• Note: the guidance information does not include our new media assets which will be

immediately accretive to free cash flow

• We believe that capital investment will drive growth in our business and allow for the continued

launch of new innovative products for our customers

• However, for F11, we do anticipate the rate of capital investment to decline from 2010 levels

• We also plan to continue our wireless build and we anticipate investing approximately $200

million on this strategic initiative in F1114

Fiscal 2011 Guidance


• Further to our May 3, 2010 announcement to buy 100% of a Restructured Canwest, the CRTC

issued its decision approving our acquisition of all of the broadcasting assets of Canwest on

October 22, 2010

• This represents the final step of the process and the transaction closed on October 27, 2010

• The total consideration for the transaction was approximately $2.0 billion which includes the debt

outstanding at the CW Media Group (“CWMG”) subsidiary

• The acquisition includes the entire economic interest of the CWMG subsidiary, which held

the former Alliance Atlantis channels

• The transaction was financed with cash on hand (in excess of $700 million) and our $1 billion

operating facility

• In May we paid over $700 million (including legal fees) relating to Goldman Sach’s 65%

economic stake in CWMG

• We paid another $500 million to fund the remaining payments on close of the transaction

• This includes US$440 million to the bondholders, C$38 million to other affected

creditors, C$12 million to shareholders of Canwest (includes legal fees) and other

transaction costs

15

Transaction Details


• The debt outstanding at the CWMG subsidiary includes;

• US$335 million 13.5% high-yield PIK notes outstanding with a maturity of August 2015

• US$400 million high-yield term loan outstanding which matures in February 2015 and is

swapped at an exchange rate of 1.064 and an effective interest rate of 8.7%

• In conjunction with the close, we refinanced the CWMG term loan and the associated swaps

• The refinancing of this facility and the swaps, which totaled approximately $500 million, will

generate substantial interest savings

• In aggregate, we required $1 billion to fund the payments required to the close the transaction and

refinance the CWMG term loan

• This was financed by our existing credit facility and we also established a $500 million

backstop facility to provide additional liquidity

• In F10, Canwest’s consolidated revenue and EBITDA from the broadcasting assets exceeded $1

billion and $260 million respectively

• Represents growth of 9% and 18% respectively compared to 2009 results

• On a proportionate basis, the transaction multiple we paid based on F2010 actual results is 8.5X

versus the pending Bell/CTV transaction which was valued at 9.9X

• We believe our acquisition represents good value as comparable media companies (i.e.

Astral & Corus) are currently trading at 9.4X 2010 consolidated EBITDA

• Note: Canwest previously paid a multiple of 17X EBITDA relating to their acquisition of

Alliance Atlantis in 2007

16

Transaction Details


• Canwest broadcasting assets are comprised of two main subsidiaries, including Canadian

Television LP, which includes the conventional over-the-air Global assets, and the specialty

business in the CWMG subsidiary (formerly known as Alliance Atlantis)

• CWMG has the leading portfolio of profitable specialty television assets including HGTV,

Food and Showcase

• The broadcasting assets are well positioned to benefit from the improving economy and

strengthening advertising market with significant restructuring completed17

Overview of Acquired Assets


• Global TV is the second largest broadcast network in Canada and reaches over 98% of the

broadcast market (32 million Canadians)

• Global currently has a significant market share and can provide Shaw with an effective

promotional vehicle, which is an important consideration as “brand” marketing becomes

more important across our various product platforms

• Over the years, Global has substantially improved its programming line-up maintaining or gaining

market share due to hit shows such as Glee, Big Brother, Survivor and bringing highly anticipated

new Fall hits such as Rookie Blue and Hawaii Five-O

• Global is particularly strong in local news programming in western Canadian markets which aligns

well with our footprint

18

Overview of Acquired Assets


• As the competitive environment intensifies and viewership habits evolve, we believe that

ownership of content and various broadband and mobile rights will become more important in the

future

• Customers are trending towards watching and purchasing content across a variety of media

platforms (broadband and mobile devices) that fit with their schedules

• We believe a greater percentage of traditional programming will be viewed in a video-on-

demand (“VOD”) format and therefore ownership and access to these rights will be a

valuable asset

• Rights to US network programming is key in developing the business models for these

platforms (i.e. VOD) and with the recent regulatory changes in VOD, we will have an

opportunity to generate incremental ad or transaction revenue

• Over-the-top applications (i.e. Global TV website, Hulu etc.) relating to the viewing of

traditional broadcasting will become more common in the future and management of content

will help mitigate this risk to our core business

• We believe we can manage the rights to content and create value for all

Canadians through innovation and technology advancements

• We are excited about the acquisition and we believe the combination of content with our cable

and satellite distribution network, and soon to be wireless service, will position us to continue to

be one of the leading entertainment and communications company in Canada

19

Strategic Rationale


• In July 2008 we acquired 20 MHz of spectrum across our cable operating footprint for a total of

$190 MM

• With the exception of 10 MHz in Saskatchewan and Northern Ontario

• The purchase price represented less than 5% of the total auction proceeds

• We believe that the ownership of spectrum is an important strategic asset for Shaw that provides

future flexibility and growth potential

• Shaw was able to acquire this spectrum at $1.00/MHz/Pop which is a significant discount

compared to an auction average of $1.54/MHz/Pop

• The incumbents paid between $1.65-$1.90/MHz/Pop

20

AWS Spectrum Auction

Rogers24%

Telus21%

Bell Mobility18%

Videotron13%

Globalive11%

DAVE6%

Shaw4%

Bragg1%

SaskTel1%

MTS Allstream1%

Others0%

AWS Auction % of Total Expenditures

Note: Totals exclude PCS spectrum proceeds


• During F10, we confirmed that we are advancing our strategy to offer a competitive wireless

service and plan an initial launch in late 2011

• Capital spend has been accelerated for 2010 and we invested approximately $100 million

during the year

• We expect to spend $200 million of wireless capital in F2011

• Our entry into wireless will be prudent and measured and economic targets will be set

• We announced our selection of Nokia Siemens Networks to provide the radio access network and

core equipment for our next generation wireless network

• The equipment from Nokia will be fully 3G and LTE capable, giving us a variety of options to

deliver broadband wireless service to customers using the Advanced Wireless Services

band as well as future frequency bands

• The network designs are substantially complete and site acquisitions are underway

• Standalone sites require city approvals and we are working through the process

• Site acquisition and construction initiatives are the key activities that will drive overall project

timing

• As with all Shaw products, our focus is to deliver the highest quality and reliable service

• We believe we will have the most impact on the market by selling this service to our existing

customers, enabling a quadruple play offering

21

Wireless Strategy


• Investment grade ratings assisted us in raising a total of $2.5 billion in debt since March 2009

• All proceeds were secured at attractive long-term rates during periods of volatile credit

market conditions and continue our track record of reducing our weighted average cost of

long-term debt

• In March 2009, Shaw raised C$600 million in a 5-year C$ issue at 6.50%

• The proceeds from this debt issue were used to for debt repayment and redemption,

including our credit facility and our $130 million Videon Cablesystems Inc. 8.15% Senior

Debentures that were due April 26, 2010

• In September 2009, we raised C$1.25 billion in a 10-year C$ issue at a rate of 5.65%

• This debt is now the lowest priced component of our long-term capital structure and is the

largest 10-year BBB issue ever completed in Canada

• These funds enabled us to complete a significant refinancing of our more expensive US$

denominated debt in October 2009 and also allowed us to eliminate most refinancing risk

through the end of calendar 2012

• We generated approximately $35 million of annual interest savings through these

refinancing transactions

• In November 2009, we raised C$650 million in a 30-year issue at a rate of 6.75%, taking

advantage of capital market interest in long-term debt at attractive rates

• Due to the duration of the bond, we view this instrument as a quasi-equity component of our

capital structure22

Past Bond Issues


• Over the last five years we have completed seven new issues, redeemed eight Notes and have

reduced our long-term cost of debt by over 160 bps to 6.2%

23

Weighted Average Cost of Debt

7.80% 7.84%

7.33%7.14%

7.07%6.94%

6.21%

6.0%

6.5%

7.0%

7.5%

8.0%

F2004 F2005 F2006 F2007 F2008 F2009 F2010

Co

st

of

Deb

t

Weighted Average Cost of Long-Term Debt*

Key Financing: - Issued $1.25Bn (5.65%) Oct

09 Notes- Issued $600MM (6.7%) Nov 09 Notes

- Take-out of US$440 MM(7.88%),US$225 MM

(7.68%), US$300 MM(7.61%) Notes

- Issued $600MM (6.5%)

Mar 09 Notes- Take-out ofVideon $130MM (8.15%)

Notes in Mar09

- Maturity of$300 MM

(7.4%) Oct07 Notes- Take-out of$100 MM

(8.54%)COPrS in Dec07

- Issued $400MM (5.7%)

Mar 07 Notes

- Issued $450MM (6.1%)

Nov 05 and$300 MM(6.15%) May06 Notes

- Take-out of$150 MM (8.88%)in Jun 06 and US$172.5 MM

(8.5%)COPrS inNov 05

- Maturity of$275 MM

(7.05%) Apr05 Notes- Take-out of US$142.5

MM (8.45%)COPrS in Dec04

* Note: As at August 31; excludes draw on operating facility or excess cash on balance sheet


• Including Canwest, we have outstanding debt of approximately $5.4 billion and a debt-to-EBITDA

ratio of 2.8X (based on 2010PF proportionate EBITDA)

• Our pro forma debt figure for 2010 includes the full impact of the Canwest acquisition

• Shaw has maintained its investment grade ratings even after consideration of the Canwest

transaction, which was effectively 100% debt financed

24

Net Debt

$3,359$3,227

$3,144

$5,400

2.7x

2.3x

2.0x

2.8x

-

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2007A 2008A 2009A 2010PF

Net D

eb

t/E

BIT

DA

(C$

millio

ns

)

Review of Shaw Communications Leverage Statistics(2007A - 2010PF)

Net Debt (inc. COPrS & hedge)

Note: 2010 leverage ratios exclude $75 million related to the CRTC Part II fee recovery (includes Shaw Media proportionate EBITDA f or F10)


• We continue to have approximately $500 million of available liquidity, however we are exploring

the possibility of refinancing some of our debt that is currently drawn on our operating facility (i.e.

$1 billion)

25

Maturity Profile

7.50% C$ Notes11/2013

$350

6.50% C$ Notes6/2014

$600

6.10% C$ Notes11/2012

$450

6.15% C$ Notes5/2016

$300

5.70% C$ Notes3/2017

$400

5.65% C$ Notes10/2019

$1,250

33.3% BurrardLanding (Manulife)

1/2015 $21

Swap Liability12/2011

$162

6.75% C$ Notes11/2039

$650

CW Media13.5% US$

PIK Notes

8/2012

C$3352

OperatingFacility

$1 Bn1

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2039 Total

Deb

t C

$ M

M

Calendar Year

Shaw Communications - Pro Forma Maturity Profile (Includes Shaw Media)

Liquidity Facility Total CW Media 13.5% US$ PIK Notes (Aug 15/12)2

Operating Facility Cdn 6.75% Snr notes (Nov 09/39) Swap Liabilities (Dec 15/11)

33.3% Burrard Landing (Manulife) Cdn 5.65% Snr notes (Oct 01/19) Cdn 5.70% Snr notes (Mar 02/17)

Cdn 6.15% Snr notes (May 09/16) Cdn 6.10% Snr notes (Nov 16/12) Cdn 6.50% Snr notes (Jun 02/14)

Cdn 7.50% Snr notes (Nov 20/13)

Notes:1. We utilize our operating facility to fund cash taxes ($180 MM), the remaining Canwest purchase ($500 MM) and retire CWMG credit facility ($500 MM)

2. CW Media PIK Notes have no hedge (assumed exchange rate at parity) ) - assumes we call early at Aug 15/11

3. Weight Average Interest Rate and Life excludes operating facility

Total MaturingDebt: $5.4 Bn

Weighted Average

Interest Rate3: 6.21%

VI. Conclusion

• The execution of our business plan relating to our core business and the completion of the recent

strategic initiatives have position Shaw as a leader within the Canadian Communications and

Entertainment Industry

• We believe our portfolio of assets will enable us to withstand competitive threats from existing

competition and new technologies (ie. over-the-top applications) and allow us to capitalize and

monetize on other growth opportunities in the future

• We are recognized for our disciplined operating focus and capital management efficiencies

• Capital allocation decisions prioritized in a return focused manner

• Strength of customer service and technology platform is a competitive advantage

• Shaw Wireless provides new growth opportunities and allows us to offer quadruple play packages

to our customers - strengthening the position of all services

• We have a significant opportunity to further leverage our fibre infrastructure and the addition of

wireless services to accelerate growth of Shaw Business

• Additional opportunities to monetize our broadband business through speed and product

differentiation and the introduction of a usage based billing model

• Shaw has a proven track record of returning capital to shareholders, with over $2 billion paid out

in dividends over the last five years and a commitment to the growth of our dividend

• Maintaining a strong balance sheet and metrics that support investment grade ratings and

maintain flexibility to capitalize on opportunities

• Currently investment grade by all three debt rating agencies

• Strong track record of reducing our weighted average cost of long-term debt

26

Shaw Highlights

Documents

Shaw Communications Inc.€¦ · Shaw Cable Classic Cable Digital TV HDTV Shaw Internet High-Speed Lite High-Speed Internet High-Speed Extreme High-Speed Warp High-Speed Nitro Shaw