INVESTOR PRESENTATION TABLE OF CONTENTS I. Investor Highlights II. Strategic Focus SHAW COMMUNICATIONS INC. III. Operating Performance Digital TV Internet INVESTOR UPDATE Phone Shaw Direct MAY 2012 IV. Review of F2011 Financial Results & F2012 Guidance V. Shaw Media VI. Leverage Review VII. Conclusion | 1 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION TABLE OF CONTENTS I. Investor Highlights II. Update on Shaw’s Strategic Initiatives III. Financial Information IV. Conclusion | 2 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION 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 almost 3.4 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. | 3 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION 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 3.4 million customers which 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 Shaw has a proven track record of prudently managing capital on behalf of our stakeholders | 4 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION I. INVESTOR HIGHLIGHTS Shaw has a substantial subscriber base in some of the most attractive economies in North America The Western Canadian economy continues to be strong and growing Subscriber Base as @ February 29, 2012 2,500,000 2,257,061 1,925,518 1,906,597 2,000,000 1,500,000 1,283,083 910,688 1,000,000 500,000 0 | 5 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION I. INVESTOR HIGHLIGHTS Our FCF profile remains robust and we have returned substantial capital to shareholders via dividends In conjunction with our Q1/12 earnings release we announced a 5% increase to our dividend At our current dividend rate ($0.97/share), Shaw shares yield 4.8% (based on a $20.00 share price) Since 2007, Shaw has returned almost $2 billion to shareholders through dividends and share repurchases Dividend Payments $500 $1.20 Dividend Payments to Shareholders $0.97 $0.92 $0.88 $1.00 $400 Effective Annual Dividend Rate $0.82 $415 $0.71 $0.80 $391 $300 $372 ($MM) $352 per Share $304 $0.60 $0.16 $200 $0.40 $201 $100 $0.20 $0 $0.00 2007A 2008A 2009A 2010A 2011A 2012E Total Annual Dividend Payments Effective Dividend/Class B Share at end of fiscal year | 6 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION II. UPDATE ON SHAW'S STRATEGIC INITIATIVES Cable Overview: We continue to make progress with respect to our technology initiatives, including our Wi-Fi and Digital Network Upgrade (“DNU”) projects, and we are excited about some new product launches (i.e. Motorola DreamGallery guide) We believe these initiatives will support and increase the value proposition of our existing products and services Specifically we continue to focus on Broadband leadership and we believe that pricing power within this product remains strong due to the differentiated experience Shaw’s Internet service provides Shaw EXO, and the rebranding of our network, will help position and maintain Shaw’s technology superiority in the consumer market The issues and disruptions to our customer care centers are largely behind us and we have begun delivering an experience that Shaw customers expect Shaw’s reputation of customer service has always been one of our key competitive advantages Delivering an exceptional customer experience will be the foundation to our future success | 7 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION II. UPDATE ON SHAW'S STRATEGIC INITIATIVES Cable Overview: The competitive environment has changed significantly over the last several years, as Telco’s continue to build out their IPTV addressable market and technology trends & consumer demands continue to evolve We face a highly competitive environment in North America with respect to IPTV overlap TELUS has rolled out their Optik TV product across our major Western Canadian markets (i.e. Vancouver, Calgary, Edmonton and Victoria) utilizing fibre-to-the- node (“FTTN”) technologies while MTS has had a competing TV service in Winnipeg, and the surrounding area, since 2003 However, while facing significant competition we continued to grow our cable business, and in fact F2011 was the first year we actually lost cable subscribers Cable Revenue & EBITDA Subscribers - Net Additions (2009-2011) (2009-2011) 450,000 $3,500.0 5.6% 11.3% 400,000 $3,000.0 10.8% 350,000 $2,500.0 Cdn $ million's 300,000 Net Additions 250,000 $2,000.0 6.2% 200,000 10.8% 10.1% $1,500.0 150,000 100,000 $1,000.0 50,000 $500.0 0 FY09 FY10 FY11 (50,000) $- FY09 FY10 FY11 (100,000) Revenue EBITDA Basic Digital TV Phone Internet % Represents annual revenue & EBITDA growth respectively Note: F10 excludes impact of CRTC Part II Fee | 8 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION II. UPDATE ON SHAW'S STRATEGIC INITIATIVES Cable Overview: Convergence of offerings has lead to aggressive price competition as providers compete for customers with the goal of “owning -the- home” We now have over 70% of our customers bundled in a triple or double-play package Competition is not just within our own backyard as consumers are embracing innovation/technology (i.e. Netflix and similar OTT-like services) and demanding greater flexibility and value with respect to their telecommunication and entertainment services Creative bundling packages have been a tool that we have utilized to meet the demands of our customers TELUS continues to focus on market share objectives and has employed a typical new entrant approach through free and subsidized equipment (i.e. HDPVR/tablet/laptop offers) and aggressive promotional pricing offers TELUS launched their Optik TV product, utilizing the Microsoft Media platform, in 2009 and they now have over 500,000 TV customers This represents a 22% market share, based on their addressable market of 2.3 million households (source: Telus recent Q4 conference call) TELUS wireline profitability has been impacted, but the market continues to overlook financial dilution of their TV strategy as TELUS’ wireless business continues to generate significant profits to fund IPTV losses | 9 | INVESTOR PRESENTATION | MAY 2012 |
INVESTOR PRESENTATION II. UPDATE ON SHAW'S STRATEGIC INITIATIVES Cable Overview: Recent quarterly subscriber results have been pressured and core RGUs slowed in Q1/12 (note: core RGUs = the summation of basic, Internet and phone customer additions) We believe this is attributable to a number of factors, including: Western Pay TV market is highly penetrated – however modest growth opportunities still exist as housing market remains positive Customer service disruptions that we encountered late in the fall TELUS promotional tactics (note: mainly free hardware offers) continue to have an impact | 10 | INVESTOR PRESENTATION | MAY 2012 |
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