DBRS Changes Trend on the Ratings of Shaw Communications Inc. to Positive

DBRS has today changed the trend of the ratings of the Senior Notes of Shaw Communications Inc. (Shaw or the Company) and the Senior Unsecured Debentures of Videon CableSystems Inc. (Videon), rated BBB (low), to Positive from Stable.

Shaw’s strong cable franchise has continued to successfully demonstrate its ability to sustain good EBITDA and subscriber growth. The Company’s core cable segment has successfully grown its basic subscriber base and used that base as a platform off which it successfully cross-sells high-speed Internet and cable telephony services. The Company typically does this by offering a bundle of the three services at a modest discount to the à la carte prices. As such, EBITDA has improved to approximately $1.1 billion for the 12 months ended November 30, 2007, and the Company has now attracted and maintains well over 2.2 million basic cable subscribers and more than 1.48 million high-speed Internet subscribers. DBRS took the above-mentioned improvements, projected at the time, into consideration when it upgraded the Company to its current level in February 2007. DBRS now sees these conditions continuing, resulting in further improvements to Shaw’s overall credit profile that could lead to a further upgrade being warranted within calendar 2008.

Additionally, the Company’s overall financial risk profile has improved; however, DBRS notes Shaw’s current dividend policy and relatively high capital expenditure undertakings have resulted in a reversal in free cash flow before working capital to slightly negative. This is largely due to the statutory tax rate that DBRS applies to the Company’s earnings.

The Company has, by all measures, executed well operationally in the last 12 months. DBRS expects this performance will continue and that the Company can improve its current rating based on the DBRS expectations for the Company’s profitability and EBITDA growth over the next year. DBRS expects Shaw to continue to demonstrate modest EBITDA growth in F2008, which should continue to result in improved key credit metrics. As a result, DBRS anticipates gross debt-to-EBITDA to improve to approximately 2.6 times (x) and cash flow-to-debt to exceed 0.25x by the end of F2008. Additionally, DBRS anticipates continued improvements to occur into 2009.

DBRS believes that Shaw can improve its rating during the period provided its business risk profile continues on its current trajectory, provided the Company continues its disciplined execution and barring any significant changes in its financial risk profile, including increased sizable share repurchases or material increases in financial leverage.

DBRS understands that Shaw is considering becoming a bidder in Canada’s upcoming wireless spectrum auction. Shaw is likely to qualify as a new entrant and would therefore benefit from the favourable new-entrant rules should they choose to pursue a wireless strategy. DBRS has not factored this possibility into the Company’s current rating. Should Shaw announce plans related to a wireless strategy, DBRS will treat such an announcement as an event and assess the impact on the Company’s overall credit profile when sufficient details become available to draw a meaningful conclusion.

DBRS notes that Shaw’s Canadian Originated Preferred Securities (COPrS) have now been entirely redeemed and are no longer present in Shaw’s capital structure.

Note:
All figures are in Canadian dollars unless otherwise noted.