SHAW COMMUNICATIONS INC.

Transcription

1 SHAW COMMUNICATIONS INC. ANNUAL GENERAL MEETING JANUARY 12, ANNUAL GENERAL MEETING

2 FORWARD LOOKING DISCLAIMER Certain statements included in this presentation may constitute forward-looking statements, including, without limitation, those appearing under "F2012 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 2011 and for Q (see our fiscal 2011 Annual Report and Q 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 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. 2 ANNUAL GENERAL MEETING

3 TABLE OF CONTENTS I. Investor Highlights II. Strategic Focus III. Operating Performance Digital TV Internet Phone Shaw Direct IV. Review of F2011 Financial Results & F2012 Guidance V. Shaw Media VI. Leverage Review VII. Conclusion 3 ANNUAL GENERAL MEETING

4 Shaw Communications Inc. is a diversified communications and media company, providing consumers with broadband cable television, High- Speed Internet, Home Phone, telecommunications services, satellite direct-to-home services and engaging programming content. Shaw serves 3.2 million customers, through a reliable and extensive fibre network. Shaw Media operates one of the largest conventional television networks in Canada, Global Television, and 18 specialty networks including HGTV Canada, Food Network Canada, History Television and Showcase. 4 ANNUAL GENERAL MEETING

5 I. INVESTOR HIGHLIGHTS Shaw s portfolio of assets cements our status as one of the leading entertainment and communications companies in Canada and as such, we believe that we are well positioned in a highly competitive environment We are the largest video distributor in Canada and we continue to have some of the most profitable cable operations in North America Including Shaw Direct, we distribute video services to almost 3.2 million customers Represents approximately 30% of the Canadian Pay-TV market Shaw Media operates Global Television, reaching over 98% of Canadians, and 18 of the country s most popular specialty channels Ownership of content provides diversification benefits, helps protect profitability of video services (i.e. hedge against programming cost inflation) and enables the creation of innovative services for our customers (i.e. online and VOD opportunities, mobile application etc.) Competition and convergence within our core cable business has intensified over recent years However, the current duopoly structure within the Canadian communications industry remains attractive for companies and investors 5 ANNUAL GENERAL MEETING

6 I. INVESTOR HIGHLIGHTS In fiscal 2011 ( F11 ), we launched a number of initiatives that were focused on providing customers with more choice, flexibility and transparency as well as the latest in technological advancements Our strategy is to differentiate our services and increase the value proposition of our products and bundled offers with; Shaw Plan Personalizer ( SPP ) Easy Own Financing options Shaw Gateway Shaw Wi-Fi Our focus on Broadband Leadership differentiates us from our competition and provides continued growth opportunities for our business Ownership of over 625,000 kilometers of fibre continues to provide us with a competitive and technological advantage We offer speeds and usage allowances that cannot be easily replicated by our competitors Base Internet product is Broadband 50 (50 Mbps and 400 GB of usage) 6 ANNUAL GENERAL MEETING

7 I. INVESTOR HIGHLIGHTS Shaw Media delivered strong financial results and we continue to believe that there are strategic benefits from being a vertically integrated company The ownership of content has also provided us negotiating leverage in discussion with other broadcasters and helps to protect profitability of our distribution business In F11, we achieved consolidated revenue of $4.7 billion and EBITDA exceeded $2 billion (Note: figures include 10-months contribution from Shaw Media) Core EBITDA growth (cable and satellite) of 5.6% met our 2011 guidance and is one of the highest EBITDA growth rates among our peers We have been able to maintain our best-in-class industry margins, even as the competitive environment intensified In F11 our cable margin exceeded 48% Shaw continues to generate substantial FCF, which provides flexibility for strategic investments and enables us to capitalize on growth opportunities and return capital to stakeholders Consolidated FCF of +$600 million achieved our F11 guidance Shaw Media contributed approximately $145 million in FCF (on a 12-month basis) and almost $100 million for the 10-month period in F11 Note: The acquisition of the Canwest broadcasting assets, which were subsequently rebranded as Shaw Media, closed on October 27, ANNUAL GENERAL MEETING

8 I. INVESTOR HIGHLIGHTS The business market provides attractive growth opportunities and we have recently realigned some of our business units to form Shaw Business There will be more focus on this opportunity in fiscal 2012 ( F12 ) We also announced our intentions to build an extensive Wi-Fi network commencing in F12 We have already launched a trial of our Wi-Fi Network on December 6 in select locations Our goal is to extend the Shaw broadband experience beyond the home and create a compelling value proposition for our Internet customers The official launch in scheduled for spring of 2012 We continue to believe that our products maintain pricing power as we introduce more transparent, flexible and innovative services Financing during F11 included a total of $1.3 billion in new debt and $300 million in preferred shares Opportunistic refinancing continues to lower our overall cost of capital and approximately 25% of our outstanding debt does not mature until 2039 F11 year-end leverage metric of 2.5x 1 and we maintain investment grade ratings from all three debt rating agencies 8 1 Leverage metric includes swap liability, as well as 50% treatment of outstanding preferred shares as debt and is based on 12-months contribution from Shaw Media ANNUAL GENERAL MEETING

9 Dividend Payments to Shareholders ($MM) Effective Annual Dividend Rate per Share ANNUAL GENERAL MEETING I. INVESTOR HIGHLIGHTS We continue to lead the industry in dividend policy and have been rewarded for our focus on returning capital to shareholders During the year, Shaw returned almost $400 million in dividends and at our current dividend rate of $0.92, Shaw shares yield 4.6% (based on a $20.00 share price) Since 2007, Shaw has returned almost $2 billion to shareholders through dividends and share repurchases $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Dividend Payments $0.82 $0.88 $0.92 $1.00 $0.90 $0.71 $0.80 $391 $0.70 $372 $352 $0.16 $304 $0.60 $0.50 $0.40 $201 $0.30 $0.20 $0.10 $ A 2008A 2009A 2010A 2011A Total Annual Dividend Payments Effective Dividend/Class B Share at end of fiscal year 9 ANNUAL GENERAL MEETING

10 (Thousands) ANNUAL GENERAL MEETING II. STRATEGIC FOCUS Bundling to own the home is key and we now have almost 35% of our customers subscribing to a triple-play bundle and approximately 70% of our customers take more than one Shaw service Subscriber growth for our industry will become more challenging due to product maturity, high penetration levels and competition We lost approximately 50K basic customers in F11, or approximately 2% of our customer base, while the remainder of our subscriber statistics (i.e. Digital, Internet and Phone) continue to be positive 2,500 Summary of Shaw's Customer Base (as at August 31, 2011) 2,000 1,500 1, ,290 1,877 1,819 1, Basic Internet Digital Digital Phone Shaw Direct HD Satellite HD Cable HD 10 ANNUAL GENERAL MEETING

11 II. STRATEGIC FOCUS Our goal is to own the home and in 2011 we launched a number of new products and services which provide our customers greater choice and flexibility, transparency and technology options Customer service remains a priority and strategic advantage for our Company In March, we launched the Shaw Plan Personalizer, which enables Shaw customers to customize their bundle of home entertainment services (TV, Internet & Phone) This tool has been effective since its launch and we are experiencing an upward migration of customers into higher Internet service packages and an increase in HD penetration In May, the Shaw Gateway box was launched in Calgary and is now currently available in all of our major markets Shaw is the first significant North American MSO to launch this hybrid technology, which brings together the power of DOCSIS 3.0 broadband and our superior high definition technologies to bring our customers a premium entertainment experience that enables 6 simultaneous HD streams, IP-based content, a whole-home PVR solution and a powerful user interface 11 ANNUAL GENERAL MEETING

12 II. STRATEGIC FOCUS Shaw s extensive fibre network, investments in DOCSIS 3.0 and ongoing digital network upgrade ( DNU ) initiatives strongly positions our Internet service packages compared to competitive alternatives in Western Canada We commenced our DNU project in May, which involves the conversion of our analog-tiered services to an all-digital format, on a market-by-market basis, and will be substantially complete by August 31, 2012 The digital conversion allows us to triple our Internet capacity and enable further innovation of our broadband services in the future such as speeds ranging from 50 to 250 Mbps with unlimited data options Our standard Internet service provides 50 Mbps and 400 GB of data capacity ( Broadband 50 ) Recovering network capacity creates further opportunities to offer additional HD and VOD services 12 ANNUAL GENERAL MEETING

13 II. STRATEGIC FOCUS Upon completion of a strategic review of the wireless opportunity in September, we announced that we will not build a traditional wireless new entrant network A number of considerations factored into the decision to forgo a traditional wireless build including the unattractive economics of building a wireless network Shaw has a proven track record of efficiently managing capital and making financially sound investments for all our stakeholders and therefore we have decided not to proceed with a traditional wireless network build We believe a managed, reliable and secure Wi-Fi product further strengthens our core business and leverages our media and programming assets to support our leadership position in broadband and video (i.e. TV Everywhere) We can establish many of the similar attributes a traditional wireless network would provide with Wi-Fi at a substantially lower cost Additional strategic opportunities could include the monetization of the network for non-shaw customers, wholesale cellular data off-loading and extension of Shaw Wi-Fi for public services Strategy is consistent with other MSOs in North America 13 ANNUAL GENERAL MEETING

14 II. STRATEGIC FOCUS Wi-Fi as a broadband technology is evolving rapidly with significant improvements in throughput, coverage and reliability Wi-Fi technologies are now capable of providing seamless hand-off and extensive metropolitan area coverage and is enabled in virtually all portable consumer devices (i.e. tablets, smartphones and laptops) The focus of our Wi-Fi network will be to extend Shaw services beyond the home by delivering an exceptional broadband wireless experience (i.e. unsurpassed value, speed and capacity) A Wi-Fi service enhances the strong value-proposition of Shaw s products, which we believe will help mitigate churn and drive pricing power Network coverage will be focused on where people congregate within Shaw s footprint Access and authentication will be simple and transparent and our customers can connect up to 8 devices The portability provided by a ubiquitous network still achieves our wireless objectives without risking a significant amount of capital on a traditional wireless network build 14 ANNUAL GENERAL MEETING

15 Digital TV Cusomters (000's) Digital Penetration as % of Basic Cusomters ANNUAL GENERAL MEETING III. OPERATING PERFORMANCE DIGITAL TV Since the launch of our digital rental program in October 2009, we have doubled our digital penetration from 40% at the beginning of F09 to 80% at the end of F11 We now have over 1.8 million digital customers We continue to expand our HD line-up and at any time our customers have access to over 1,300 HD services As of August 31, 2011 we have 900K HD customers (~ 50% of our digital base) 2,000 1,800 1,600 1,400 1,200 1, % % 909 Digital TV Customers 71% 57% 1,651 1,298 80% 1,819 90% 80% 70% 60% 50% 40% 30% 20% % A 2008A 2009A 2010A 2011A 0% Note: Adjusted for cable acquisitions Digital TV Basic 15 ANNUAL GENERAL MEETING

16 Internet Subs as % of Basic Customers ANNUAL GENERAL MEETING III. OPERATING PERFORMANCE INTERNET Broadband is becoming the most important component of the residential bundle and we have a differentiated and superior product, which is reflective in our industry leading penetration rate (>80%) The speed of our service remains a competitive advantage to the Telco s (i.e. Broadband 50 ) Shaw was the first Company in North America to deploy DOCSIS 3.0 which has allowed us to continuously increase available speeds and capacity We have a strong commitment to customer technical support (at no charge) New product launches provide even more options for our customers (i.e. Wi-Fi Gateway, Gigabyte Internet Technology and an enhanced version of Webmail) 100% Internet Penetration 80% 60% 90% 82% 82% 80% 77% 71% 68% 40% 20% 0% Cablevision SHAW TWC Comcast Rogers Videotron Cogeco (CDN) 16 ANNUAL GENERAL MEETING Source: Company's most recent Quarterly Reports

17 Digital Phone Lines (000's) Penetration as % of DP Ready Basic Cusomters ANNUAL GENERAL MEETING III. OPERATING PERFORMANCE PHONE Our digital phone product has had tremendous success since it was launched in February 2005 In F11, we surpassed 1.2 million customers and reached a significant milestone whereby over 50% of our basic customers now take our phone service During the year, we added over 130K phone customers and we continue to focus on the Business market where we believe we have significant growth opportunities Digital Phone Subscribers 1,400 54% 60% 1,200 1, % % % % 1,084 1,233 50% 40% 30% 20% 10% A 2008A 2009A 2010A 2011A Year 0% Digital Phone Basic Penetration 17 ANNUAL GENERAL MEETING

18 (000's) C$ millions ANNUAL GENERAL MEETING III. OPERATING PERFORMANCE SHAW DIRECT Our satellite business continues to contribute profitable growth and strong free cash flow Rebranded as Shaw Direct in F09 and we now have over 900K satellite subscribers In F11, Shaw Direct contributed $288 million in EBITDA or ~14% of consolidated EBITDA Our satellite margin was almost 35% and we generated over $100 million in free cash flow 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 This additional capacity will increase Shaw Direct s satellite television services by 30% through 16 new transponders 880 Shaw Direct Customers Fiscal Year (Ending August 31) ANNUAL GENERAL MEETING A 2008A 2009A 2010A 2011A $350 $300 $250 $200 $150 $100 $50 $- $119 Shaw Direct EBITDA & FCF Trend Fiscal Year (Ending August 31) $244 $255 $147 $165 $273 $152 $280 $288 $ A 2008A 2009A 2010A 2011A FCF EBITDA Note: 2010 EBITDA adjusted for CRTC Part II Fee Recovery

19 IV. REVIEW OF F2011 FINANCIAL RESULTS & F2012 GUIDANCE In F11 we generated over $4.7 billion in revenue, EBITDA exceeded $2.0 billion and FCF was in excess of $600 million (Note: figure excludes the impact of wireless) Achieved core (cable and satellite) EBITDA growth rate of 5.6% Shaw Media exceeded 2011 EBITDA guidance and contributed over $250 million to consolidated EBITDA and approximately $100 million in FCF (Note: figures are based on 10- months of Media) Shaw Media contributed $325 million in EBITDA and $145 million in FCF on a 12-month basis During the year, we executed on various initiatives to achieve more efficiencies and streamline our organization In Q2, we completed a significant restructuring of approximately 550 employees which resulted in over $50 million of annual savings Total cost related to the restructuring was approximately $30 million We introduced innovative offers, such as Shaw Plan Personalizer, which has had a neutral impact on margins to-date We are focusing on the appropriate balance between profitability and customer growth Shaw Business has aggressive growth targets to increase our market share in this high margin space 19 ANNUAL GENERAL MEETING

20 $CDN MM ANNUAL GENERAL MEETING IV. REVIEW OF F2011 FINANCIAL RESULTS & F2012 GUIDANCE $4,500 Consolidated Annual Revenue and EBITDA (Fiscal Year Ending August 31) $4,741 $4,000 $891 $3,500 $3,000 $2,500 $2,774 $3,105 $3,391 $3,718 $3,850 $2,031 $2,000 $252 $1,500 $1,000 $1,240 $1,408 $1,541 $1,685 $1,779 $500 $ * 2011A** Core Revenue Core EBITDA Media Revenue Media EBITDA Notes: Figures exclude wireless investments *2010 figures exclude CRTC Part II Fee recovery **2011 figures reflect 10-months impact of Shaw Media 20 ANNUAL GENERAL MEETING

21 (C$ millions) ANNUAL GENERAL MEETING IV. REVIEW OF F2011 FINANCIAL RESULTS & F2012 GUIDANCE In 2012, we expect continued growth in revenue and EBITDA across all our divisions and we will continue to invest in strategic initiatives, which is expected to increase capital spend over 2011 levels Combined with higher CRTC benefit funding obligations and cash taxes (due to recent tax change with respect to partnership deferrals), FCF is expected to decline moderately to approximately $550 million vs. +$600 million in F11 $900 Consolidated Free Cash Flow (ex. wireless) (2007A E) $800 $700 $843 $600 $500 $400 $451 $505 $529 $514 $601 $603 $300 $355 $200 $100 $0 2007A 2008A 2009A 2010A 2011A* FCF Adjusted Untaxed FCF *2011A FCF includes 10-months of Media contribution 2010 adjusted for CRTC Part II Fee Recovery 21 ANNUAL GENERAL MEETING

22 V. SHAW MEDIA We believe that ownership of content provides financial and strategic benefits to Shaw s stakeholders and that by leveraging this content effectively we can continue to grow our Company and offer innovative products and services to our customers across Canada Shaw benefited from the timing of the Canwest acquisition being at, or close to, the bottom of the cycle and we were able to purchase the assets at an attractive valuation Compares favorably to other transactions including Canwest s original purchase of Alliance Atlantis (17x) and the BCE/Bell Globemedia transaction (9.5x - based on consolidated EBITDA) Shaw Media (former Canwest Broadcasting Assets) Purchase Price Multiples all figures in millions unless otherwise denoted May 2010 (transaction announcement) Actual 2010 Results Actual 2011 Results Consolidated LTM EBITDA Purchase Price Multiple $215 $260 $ x 7.7x 6.1x Purchase Price (as at October 27, 2010) $2,000 Shaw Media was immediately accretive to FCF and in F11 contributed approximately $100 million to consolidated FCF on a 10-month basis and approximately $145 million on a 12-month basis 22 ANNUAL GENERAL MEETING

23 Cdn$ millions Cdn$ millions ANNUAL GENERAL MEETING V. SHAW MEDIA Since acquiring the broadcasting assets, Shaw Media has delivered solid financial results including over 7% increase in revenue and 25% increase in EBITDA, based on 12 months, for F11 $1,100 Revenue Comparison (F10 - F11A) $350 EBITDA Comparison (F10 - F11A) $1,050 +7% $1, % $300 $325 $1,000 $1,003 $250 $260 $ A 2011A (based on 12-months Media) $ A 2011A (based on 12-months Media) 2010A 2011A (based on 12-months Media) 2010A 2011A (based on 12-months Media) Vertical integrated companies are better positioned to negotiate stable and profitable carriage of their respective television services and are more sheltered from the economic volatility of the broadcasting business due to our more stable distribution assets and largely subscription based business models We believe that there are synergies between the content and distribution businesses As TV Everywhere is being adopted and embraced by the majority of consumers and companies in the industry we have seen our internet data usage increase with the primary driver being video content streaming 23 ANNUAL GENERAL MEETING

24 (C$ millions) Net Debt/Consol. EBITDA ANNUAL GENERAL MEETING VI. LEVERAGE REVIEW At the end of F11, we had approximately $5.3 billion of net debt outstanding Leverage metric of 2.5x (based on F11 Consolidated EBITDA), down from 2.8x upon completion of the Canwest acquisition Review of Shaw Communications Leverage Statistics (2007A A) $6, x 2.8x 2.5x 3.0x $5,000 $4, x 2.0x 2.3x $3,966 $5,358 $5, x 2.0x $3,000 $3,359 $3,227 $3, x $2, x $1, x $0 2007A 2008A 2009A 2010A* Post-Canwest (Q1 2011) 2011A** - Net Debt (inc. swap liability) *2010 leverage ratio exclude $75 million related to the CRTC Part II fee recovery **2011A leverage ratio includes 12-months of Media contribution and 50% of outstanding preferred shares as debt 24 ANNUAL GENERAL MEETING

25 VI. LEVERAGE REVIEW During F2011, we raised a total of $1.3 billion in debt and issued $300 million in preferred shares December 2010: Issued C$900 million - comprised of $500 million of 5.50% 10-year senior unsecured notes as well as an additional $400 million from the reopened 6.75% senior unsecured notes due 2039 Net proceeds were used to repay debt incurred under our credit facility to complete the acquisition of the Shaw Media February 2011: Reopened the 6.75% senior unsecured notes due 2039 for an additional C$400 million Total debt from this issue is now $1.45 billion and approximately 25% of our outstanding debt matures in 2039 May 2011: Completed a public offering of 12 million Series A Preferred Shares yielding 4.5% resulting in gross proceeds of $300 million August 2011: Redeemed all of the outstanding 13.5% PIK notes due 2015, which had a total accrued value of US$282 million We have a $1 billion credit facility which is currently undrawn, therefore ample liquidity As at August 31, 2011, we held ~$400 million of cash-on-hand and we utilized some of this cash balance to fund a $162 million swap liability due on December 15, ANNUAL GENERAL MEETING

26 Debt C$ MM ANNUAL GENERAL MEETING VI. LEVERAGE REVIEW Maturity profile of outstanding debt is well positioned Approximately 25% of our outstanding debt does not mature until 2039 Weighted average life of debt is 12 years with an average interest rate of approximately 6.20% $1,600 $1,400 Shaw Communications - Consolidated Maturity Profile Total Debt: Net$5.8 Bn 3 Net Debt: $5.8 $5.5 $5.3 Bn Bn 4 Weighted Average Interest Interest Rate Rate 3 : 6.21% 6.18% 1 : 6.23% Weighted Average Weighted Life 3 : Average years Life 3 : 12.2 years $1, % C$ Notes 10/2019 $1, % C$ Notes 11/2039 $400 2 $1,000 $ % C$ Notes 11/2039 $400 2 $600 $400 $200 $0 Swap Liabilities 12/2011 $ % C$ Notes 11/2012 $ % C$ Notes 11/2013 $ ANNUAL GENERAL MEETING % C$ Notes 06/2014 $ % Burrard Landing (Manulife) $ % C$ Notes 05/2016 $ % C$ Notes 03/2017 $ % C$ Notes 12/2020 $ % C$ Notes 11/ $ % Preferred Share Cdn $ Total Calendar Year Notes: 1. Weight Average Interest Rate and Life excludes credit facility and Preferred Shares 2. Includes intial $650MM, reopened in December 2010 for an additional $400MM and again in February 2011 for an additional $400MM for a total of $1.45BN 3. Total debt includes Preferred Shares (100%) 4. Net debt assumes approximately $350MM in cash as at Aug 31/11

27 VII. CONCLUSION Shaw is recognized for our disciplined operating focus and capital management stewardship Capital allocation decisions prioritized in a return focused manner We believe our strong portfolio of assets and recent product introductions will enable us to withstand competitive threats from existing competition and new technologies, such as over-the-top applications, and allow us to monetize future growth opportunities We have a significant opportunity to further leverage our fibre infrastructure to accelerate the growth of Shaw Business Shaw maintains a strong balance sheet with metrics that support investment grade ratings while maintaining the 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 We continue to generate significant amounts of free cash flow even after continued investment in our Company Proven track record of returning capital to shareholders via dividends The execution of our strategic initiatives relating to our core business have positioned Shaw as a leader within the Canadian Communications and Entertainment Industry 27 ANNUAL GENERAL MEETING

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