MANAGEMENT’S DISCUSSION AND ANALYSIS
and services on a timely basis, it could have a material adverse effect on
our business, financial condition and results of operations. Any
interruption in the supply of equipment for our networks could also
affect the quality of our service or impede network development and
expansion.
Organizational Structure and Talent
The industry is competitive in attracting and retaining a skilled
workforce. Losing certain employees or changes in morale due to a
restructuring or other event could affect our revenue and profitability in
certain circumstances.
Holding Company Structure
As a holding company, our ability to meet our financial obligations
depends primarily on receiving interest and principal payments on
intercompany advances, rental payments, cash dividends and other
payments from our subsidiaries, together with proceeds raised by us
through issuing debt and equity and selling assets.
Substantially all of our business activities are operated by our
subsidiaries. All of our subsidiaries are distinct legal entities that have no
obligation, contingent or otherwise, to make funds available to us
whether by dividends, interest payments, loans, advances or other
payments, subject to payment arrangements on intercompany
advances. Any of these payments must meet statutory or contractual
restrictions, are contingent on the earnings of those subsidiaries, and
are subject to various businesses and other considerations.
Increasing Programming Costs
Acquiring programming is the single most significant purchasing
commitment in our cable business. Programming costs have increased
significantly over the past few years, particularly with the recent growth
in subscriptions to digital specialty channels. Programming is also a
material cost for Media television properties. Higher programming costs
could adversely affect the operating results of our business if we are
unable to pass on these costs to subscribers.
Channel Placement
Unfavourable channel placement could negatively affect the tier status
and results of certain channels, including The Shopping Channel,
Sportsnet, SportsnetONE, Sportsnet World, and our specialty channels,
including Outdoor Life Network, The Biography Channel (Canada), G4
Canada, and FX (Canada).
Migrating from Conventional Media to New Media
Our Media business operates in many industries that can be affected by
customers migrating from conventional to digital media, which is
driving shifts in the quality and accessibility of data and mobile
alternatives to conventional media. We have been shifting our focus
towards the digital market to limit this risk. Our Media results could be
negatively affected if we are unsuccessful in anticipating the shift in
advertising dollars from conventional to digital platforms.
Our Market Position in Radi o, Television or Magazine
Readership
Advertising dollars typically migrate to media properties that are leaders
in their respective markets and categories, particularly when advertising
budgets are tight. Although most of our radio, television and magazine
properties currently perform well in their respective markets, this may
not continue in the future. Advertisers base a substantial part of their
purchasing decisions on ratings and readership data generated by
industry associations and agencies. If our radio and television ratings or
magazine readership levels decrease substantially, our advertising sales
volumes and the rates that we charge advertisers could be adversely
affected.
FINANCIAL RISKS
Capital Commitments Liquidity, Debt and Interest Payments
Our capital commitments and financing obligations could have
important consequences including:
 requiring us to dedicate a substantial portion of cash flow from
operations to pay dividends, interest and principal, which reduce
funds available for other business purposes including other financial
operations
 making us more vulnerable to adverse economic and industry
conditions