40-F

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 40-F

Check One

o Registration Statement Pursuant to Section 12 of the Securities Exchange Act of 1934

þ Annual Report Pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended August 31, 2007

Commission File Number: 001-14684

Shaw Communications Inc.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English (if applicable))

Alberta, Canada

(Province or other jurisdiction of incorporation or organization)

4841

(Primary Standard Industrial Classification Code Number (if applicable))

N/A

(I.R.S. Employer Identification Number (if applicable))

Suite 900, 630 – 3^rd Avenue S.W., Calgary, Alberta, Canada T2P 4L4
(403) 750-4500

(Address and telephone number of Registrant’s principal executive offices)

CT Corporation System, 111 Eighth Avenue, 13^th Floor, New York, NY 10011 (212) 894-8940

(Name, address (including zip code) and telephone number (including area code of agent

for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
Class B Non-Voting
Participating Shares	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

8.54% Series B Capital Securities
8.25% Senior Notes due 2010
7.25% Senior Notes due 2011
7.20% Senior Notes due 2011
6.10% Senior Notes due 2012
7.5% Senior Notes due 2013
6.15% Senior Notes due 2016
5.70% Senior Notes due 2017

(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

þ Annual information form            þ Audited annual financial statements

     The following are the number of outstanding shares of each of the issuer’s classes of capital or common stock as of August 31, 2007:

Class A Participating Shares -	22,563,064	issued and outstanding
Class B Non-Voting Participating Shares -	408,770,759	issued and outstanding

     Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the filing number assigned to the Registrant in connection with such Rule

Yes o       No þ

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ       No o

DISCLOSURE CONTROLS AND PROCEDURES

Shaw Communications Inc. (the “Corporation”) has designed disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) to ensure that material information relating to the Corporation, including its consolidated subsidiaries, is made known to the Chief Executive Officer and Chief Financial Officer by others within the Corporation, including its consolidated subsidiaries, on a regular basis, including during the period in which the Corporation’s Annual Report on Form 40-F relating to financial results for the fiscal year ended August 31, 2007 is being prepared. The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded, as of that evaluation date, that the Corporation’s disclosure controls and procedures were effective to ensure that the material information relating to the Corporation (including its consolidated subsidiaries) required to be included in the Corporation’s periodic filings under the Exchange Act, was (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Corporation’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROLS

See page 46 of Exhibit 1.

AUDITOR ATTESTATION

See page 48 of Exhibit 1.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the fiscal year ended August 31, 2007, there were no significant changes in the Corporation’s internal controls over financial reporting, or in other factors that could significantly affect such internal controls, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

IDENTIFICATION OF THE AUDIT COMMITTEE

The Corporation has a standing Audit Committee of the Board of Directors established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee consists of Michael W. O’Brien (Chair), George F. Galbraith, Gregory J. Keating and Carl E. Vogel. Each member of the Audit Committee is an independent director, as that term is defined by the New York Stock Exchange’s listing standards applicable to the Corporation.

AUDIT COMMITTEE FINANCIAL EXPERT

The board of directors of the Corporation has determined that it has two audit committee financial experts serving on its audit committee (the “Audit Committee”). Each of Michael W. O’Brien and Carl E. Vogel has been determined to be such an audit committee financial expert, within the meaning of Section 407 of the United States Sarbanes-Oxley Act of 2002. Each of Mr. O’Brien and Mr. Vogel is independent, as that term is defined by the New York Stock Exchange’s listing standards applicable to the Corporation. The Securities and Exchange Commission has indicated that the designation of Mr. O’Brien and Mr. Vogel as an audit committee financial expert does not make either of Mr. O’Brien and Mr. Vogel an “expert” for any purpose, impose any duties, obligations or liability on Mr. O’Brien and Mr. Vogel that are greater than those imposed on members of the Audit Committee and board of directors of the Corporation who do not carry this designation, or affect the duties, obligations or liabilities of any other member of the Audit Committee.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate amounts paid or accrued by the Corporation with respect to fees payable to Ernst & Young LLP, the Corporation’s principal accountant, for audit (including separate audits of subsidiary entities, financings, regulatory reporting requirements and Sarbanes-Oxley Act-related services), audit-related, tax and other services in the fiscal years ended August 31, 2007 and 2006 were as set forth below (stated in Canadian dollars).

Type of Service	Fiscal 2007		Fiscal 2006
Audit Fees	$	2,113,235	$	2,213,961
Audit-related Fees		312,075		195,457
Tax Fees		66,017		436,736
All Other Fees		—		—
Total	$	2,491,327	$	2,846,154

Fees paid for audit-related services in fiscal 2007 and 2006 were in respect of the separate audits of subsidiaries that were not required by law. The tax fees paid in fiscal 2007 and 2006 were related to linear property tax compliance; fees paid in fiscal 2006 also included tax compliance on scientific research, exploration and development tax credits, and transfer pricing.

The Audit Committee of the Corporation considered and agreed that the above fees are compatible with maintaining the independence of the Corporation’s auditors. Further, the Audit Committee determined that, in order to ensure the continued independence of the auditors, only limited non-audit related services will be provided to the Corporation by Ernst & Young LLP and in such case, only with the prior approval

of the Audit Committee. The Chair of the Audit Committee has been delegated authority to approve the retainer of Ernst & Young LLP to provide non-audit services in extraordinary circumstances where it is not feasible or practical to convene a meeting of the Audit Committee, subject to an aggregate limit of $100,000 in fees payable to Ernst & Young LLP for such services per fiscal year of the Corporation. The Chair of the Audit Committee is required to report any such services approved by him to the Audit Committee.

For the fiscal year ended August 31, 2007, none of the services described above were approved by the Audit Committee pursuant to the “de minimus exception” set forth in Rule 2-01, paragraph (c)(7)(i)(C) of Regulation S-X.

CODE OF ETHICS

The Corporation has adopted a code of ethics (the “Shaw Business Conduct Standards”) that applies to all employees and officers, including its Chief Executive Officer, Chief Financial Officer, principal accounting officer and persons performing similar functions. A copy of the Shaw Business Conduct Standards, as amended, is available on the Corporation’s website. To access the Shaw Business Conduct Standards, visit the Corporation’s website at www.shaw.ca and select “Investor Relations,” then select “Other Corporate Governance Information,” and then select “Business Conduct Standards”. Except for the Shaw Business Conduct Standards, no information contained on the Corporation’s website shall be incorporated by reference in this Form 40-F.

OFF-BALANCE SHEET ARRANGEMENTS

The Corporation has no off-balance sheet arrangements as defined in General Instruction B(11) to Form 40-F.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

See page 44 of Exhibit 1.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

The Corporation undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

The Corporation has previously filed a Form F-X in connection with each class of securities to which the obligation to file this Form 40-F arises. Any change to the name and address of the agent for service of process shall be communicated promptly to the Commission by amendment to Form F-X.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Form 40-F to be signed on its behalf by the undersigned, thereto duly authorized.

SHAW COMMUNICATIONS INC.
By:	/s/ Steve Wilson
	Steve Wilson,
	Senior Vice President and Chief Financial Officer

Dated: November 29, 2007

EXHIBITS

The following documents are filed as exhibits to this Form 40-F:

Exhibit Number	Document
1.	Annual Report for the fiscal year ended August 31, 2007.
2.	Annual Information Form for the fiscal year ended August 31, 2007.
3.	Consent of Ernst & Young LLP.
4.	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 29, 2007.
5.	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 29, 2007.

EX-1

Shaw Communications

ANNUAL REPORT

August 31, 2007

SHAW COMMUNICATIONS INC.
ANNUAL REPORT

CONTENTS	Page
Report to Shareholders	1
Management’s Discussion and Analysis	4
Management’s Responsibility for Financial Statements and Report on Internal Control over Financial Reporting	45
Independent Auditors’ Reports	47
Consolidated Financial Statements	49
Notes to Consolidated Financial Statements	52
Five Years in Review	92
Shareholders’ Information	93
Corporate Information	96

The Annual General Meeting of Shareholders will be held on January 10, 2008 at 11:00 am (Mountain Time) at the Shaw Barlow Trail Building, 2400 - 32nd Avenue NE, Calgary, Alberta.

Shaw Communications Inc.
REPORT TO SHAREHOLDERS
August 31, 2007

Dear fellow Shareholders:

For over 35 years Shaw’s business has been growing through strategic acquisitions, innovative new products and service enhancements, high quality customer service, and the careful management of our capital and operational assets. This past year was no exception and we are pleased to report to you on a year of significant accomplishments.

FINANCIAL HIGHLIGHTS

Our financial results speak for themselves:

•    Consolidated service revenue increased 13% over last year from $2.46 billion to $2.77 billion.

•    Total consolidated service operating income before amortization¹ improved 15% from $1.08 billion to $1.24 billion.

•    Funds flow from operations² was up 21% from $847 million to $1.03 billion.

•    Free cash flow¹ grew by 34% from $265 million to $356 million, despite an increase in capital investment from $558 million last year to $640 million this year.

Over the past two years Shaw’s consolidated revenues and service operating income before amortization have improved by over 25% driven by customer growth, value enhancements which support pricing, and the rapid penetration of Digital Phone.

DELIVERING OPERATIONAL EXCELLENCE

Digital phone continued to be well received by the market and in our second full year of operation, the customer base grew by 172,650 to 385,357. This success was made possible by the simplicity and value to the customer, steady expansion of our Digital Phone service area, and the addition of a Lite product to the offering as an alternative for customers who are light long distance users and do not require extensive options. In just over two years since our first launch, penetration of Digital Phone lines stands at over 20% of basic customers who have the service available to them.

Internet customers grew by 10% to 1,451,756 customers and Internet penetration of basic now exceeds 65%. Shaw continues to be one of the leading North American cable operators in this regard.

Digital customers grew 13% to 763,140 and the Digital customer base has increased from 30% of basic customers at the end of 2006 to approximately 35% at the end of 2007.

Basic cable customers increased 20,521 to 2.23 million and DTH customers grew 10,377 to 879,585.

During the year we completed the acquisition and integration into our existing systems of several small cable systems within our geographic area that complement our operations, adding approximately 20,000 cable customers.

We continue to offer value enhancing bundles to ensure that our customers can take advantage of the triple play of voice, video and data. These bundled offers help to better leverage our network and improve our customer retention metrics.

OUR STRATEGIC FOCUS IS OUR CUSTOMER

Our strategy is driven by our customer. In a capital intensive business, aggressive competition for the consumer dollar and rapidly expanding innovations in technology demand that we stay strategically and operationally focused. We continue to upgrade, improve and expand our network infrastructure ensuring the highest standards of speed, reliability, operational efficiency, value and service delivery to the

1

Shaw Communications Inc.
REPORT TO SHAREHOLDERS
August 31, 2007

customer. We also strive to improve our products and services with new innovations and technological improvements.

During the year we expanded the range and speed of our internet offers; the latest, High Speed Nitro, is one of the fastest residential internet speeds in Canada. Shaw now has four different levels of internet service, allowing customers a broad range of alternatives in speed and price tailored to their individual needs.

We have enhanced our cable service by expanding our HDTV lineup and adding new popular channels. We continue to improve our digital system infrastructure to add new products and services that are desired by customers and add to our incremental revenue. Shaw began to digitally simulcast its channel line-up in five major markets which allowed the Company to launch a new low priced digital terminal that permits access to all digital features, including the on-screen programming guide, music, and VOD and PPV movies and events.

Each innovation places pressure on our staff to expand their capabilities to serve the customer, maintain system reliability and deliver on the Shaw vision. A successful year places demands on all our 9,000 employees; they have delivered throughout 2007 on a daily basis and the only word to describe their performance, from the head office to the service vehicle, is exceptional!

STRENGTHENING OUR FINANCIAL POSITION

Our goal is to ensure that driving growth, securing financial strength and delivering solid shareholder returns are balanced so that we can power through the competition and thrive in any environment.

This year we closed a $400 million offering of 5.70% senior notes due in 2017, strengthened our credit metrics, and repurchased for cancellation 4,408,400 of our Class B Non-Voting Participating Shares for $105 million.

We also completed a two-for-one stock split of both the Company’s Class A Participating Shares and Class B Non-Voting Participating Shares that was effective July 30, 2007.

During the year we more than doubled our dividend rate and, with the most recent increase, the equivalent annual dividend rate is $0.72 on Shaw’s Class B Non-Voting Participating Shares and $0.7175 on Shaw’s Class A Participating Shares. We lead the North American cable industry in dividend yield and currently rank in the top 30 high-yielding corporations included in the S&P/TSX 300 Index.

Over the past year Shaw has provided shareholders with an annual total return in excess of 50%.

THE FUTURE LOOKS BRIGHT

In general, the future looks bright for the stakeholders of Shaw Communications Inc. The Western Canadian economy is robust and we believe that we are well positioned to continue to grow our customer base.

2

Shaw Communications Inc.
REPORT TO SHAREHOLDERS
August 31, 2007

Our strategic focus is sound and guides us from the board room table where the decisions are made to our customer’s homes touched every day with Shaw’s products and services. Thank you for being a part of this year’s success.

[Signed]	[Signed]
JR Shaw	Jim Shaw
Executive Chair	Chief Executive Officer
Shaw Communications Inc.	Shaw Communications Inc.

1	See definitions under key performance drivers in Management’s Discussion and Analysis.
2	Funds flow from operations is presented before changes in non-cash working capital as presented in the Consolidated Statements of Cash Flows.

3

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

November 22, 2007

FORWARD

Tabular dollars are in thousands of Canadian dollars, except per share amounts or unless otherwise indicated. All per share amounts reflect common per share amounts, and are based on unrounded amounts. Percentage changes are based on rounded amounts. Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements.

This report includes comparative information for 2005 and 2006. Applicable share and option amounts and all related data have been retroactively adjusted to reflect the two-for-one split of the Company’s Class A Shares and Class B Non-Voting Shares that was effective on July 30, 2007.

INDEX

CONTENTS			Page
Outline
I.		INTRODUCTION TO THE BUSINESS		6
	A.	Company overview – core business and strategies		6
	B.	Seasonality		8
	C.	Key performance drivers		9
	D.	Critical accounting policies and estimates		11
	E.	Related party transactions		16
	F.	New accounting standards		16
	G.	Known events, trends, risks and uncertainties		17
II.		SUMMARY OF QUARTERLY RESULTS		25
III.		RESULTS OF OPERATIONS		27
IV.		FINANCIAL POSITION		39
V.		CONSOLIDATED CASH FLOW ANALYSIS		40
VI.		LIQUIDITY AND CAPITAL RESOURCES		41
VII.		ADDITIONAL INFORMATION		43
VIII.		COMPLIANCE WITH NYSE CORPORATE GOVERNANCE LISTING STANDARDS		43
IX.		CERTIFICATION		44

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

Certain statements included in this Management’s Discussion and Analysis may constitute forward-looking statements. 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. When used, the words “anticipate”, “believe”, “expect”, “plan”, “intend”, “target”, “guideline”, “goal”, and similar expressions generally identify forward-looking statements. These forward-looking statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), financial guidance related to service operating income before amortization and free cash flow, business strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of Shaw’s business and operations, plans and references to the future success of Shaw. These forward-looking statements are based on certain assumptions and analyses made by Shaw in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances.

4

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

However, whether actual results and developments will conform with the expectations and predictions of Shaw is subject to a number of risks and uncertainties described in the section “Known events, trends, risks and uncertainties” included in this report. These factors include general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by Shaw; increased competition in the markets in which Shaw operates and from the development of new markets for emerging technologies; changes in laws, regulations and decisions by regulators in Shaw’s industries in both Canada and the United States; Shaw’s status as a holding company with separate operating subsidiaries; changing conditions in the entertainment, information and communications industries; risks associated with the economic, political and regulatory policies of local governments and laws and policies of Canada and the United States; and other factors, many of which are beyond the control of Shaw. Should one or more of these risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those as described herein. Consequently, all of the forward-looking statements made in this report and the documents incorporated by reference herein are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Shaw will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Shaw.

You should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement (and such risks, uncertainties and other factors) speak only as of the date on which it was originally made and Shaw expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this document to reflect any change in expectations with regard to those statements or any other change in events, conditions or circumstances on which any such statement is based, except as required by law. New factors affecting the Company emerge from time to time, and it is not possible for Shaw to predict what factors will arise or when. In addition, Shaw cannot assess the impact of each factor on its business or the extent to which any particular factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

5

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

I.      INTRODUCTION TO THE BUSINESS

A.    Company overview – core business and strategies

i)      Shaw Communications Inc.

Shaw Communications Inc. (“Shaw” or “the Company”) is a diversified Canadian communications company whose core business is providing broadband cable television, Internet, Digital Phone, telecommunications services (through Shaw Business Solutions) and satellite direct-to-home services (through Star Choice) to approximately 3.3 million customers. It provides customers with high-quality entertainment, information and communications services, utilizing a variety of distribution technologies.

Shaw’s strategy is to maximize shareholder value through the generation of free cash flow¹. The key elements of this strategy include: leveraging its network infrastructure to offer customers a wider variety of products and services; enhancing existing products to provide greater value to customers; providing best-in-class 24/7/365 service; bundling product offerings to provide value to both Shaw and the customer; and focusing on sound capital management and operational efficiencies to maintain a competitive edge.

Shaw is organized into two business segments. The relative size of each of the segments as a percentage of consolidated service revenue in fiscal 2007 is as follows: Cable – 75%; Satellite – 25%. During 2007 Shaw’s business generated consolidated service revenues of $2.77 billion.

ii)      Cable

Cable is comprised of Shaw’s cable television, Internet, Digital Phone and Business Solutions operations. Shaw is the largest cable television provider in Western Canada with over 2.2 million cable television customers in five provinces (British Columbia, Alberta, Saskatchewan, Manitoba and northwestern Ontario), representing approximately 30% of the Canadian cable television market. Through its technologically advanced broadband network, Shaw had 1,451,756 Internet customers, 763,140 digital cable customers and 385,357 digital phone lines as at August 31, 2007. Shaw’s penetration of Internet is one of the highest in North America, at over 65% of basic cable customers. Shaw Business Solutions develops and manages Shaw’s inter-city fiber network that serves as the primary Internet backbone for Shaw’s broadband Internet customers and provides Internet, data connectivity and telecommunication services to large businesses and other organizations. Shaw’s extensive fiber network provides international connections through interconnection agreements and strategic alliances with other service providers.

Shaw’s strategy is to leverage its network by providing additional services beyond traditional cable. In past years, Shaw enhanced the quality, depth and capacity of its plant and network infrastructure through significant capital investments. The plant and network is essentially fully digital and two-way capable. These investments have enabled Shaw to leverage its existing network and expand its service offerings to include digital programming, Internet, Video-on-Demand (“VOD”), High Definition Television (“HDTV”), and Digital Phone.

Shaw offers a full range of analog and digital video services ranging from a basic service to a full digital cable service with access to HDTV channels, premium and VOD channels, music channels and an interactive program guide.

Shaw Internet currently uses the DOCSIS^tm 2.0 specifications. This cable modem technology enabled Shaw to increase the capabilities and reliability of its high-speed data network by increasing the capacity and throughput in both the upstream and downstream portions of the cable plant. As a result, the network has the ability to provide up to 30 megabit per second (Mbps) capacity in both directions. The DOCSIS^tm standard is continually being improved, and Shaw plans to implement future versions on its network to

¹ See definitions and discussion under key performance drivers in Management’s Discussion and Analysis.

6

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

meet customers’ increasing speed and capacity demands. Shaw currently offers high-speed Internet service with downstream speeds from 256 Kbps to 25 Mbps, depending on the service selected.

The entry into the triple play market of voice, video and data with the launch of Digital Phone in 2005 was a significant milestone for Shaw. As at August 31, 2007, Shaw Digital Phone service is available to over 80% of homes passed. In 2005 Shaw launched the Digital Phone service in Calgary, Edmonton and Winnipeg, and since then, Shaw has expanded its Digital Phone footprint to include Vancouver, Victoria, Saskatoon, Kelowna and many other smaller centers. The Company plans to continue to expand its Digital Phone service area.

In offering Digital Phone service, Shaw is utilizing PacketCable^tm technology and DOCSIS^tm specifications. The customers’ existing phone lines are connected into a modem usually installed at the location of the central wiring in the customer’s premise. The modem converts the voice conversation (waves) into digital IP packets that are carried to an IP based telephone switch (“softswitch”). At this point the packets are transformed again into analog signals upon receipt by the public switched telephone network or may be routed through the IP network to the called party. Unlike Internet phone providers who use the Internet to route calls, Shaw’s Digital Phone service uses Shaw’s own private managed broadband network and the public switched telephone network to route calls, allowing the Company to ensure a consistent level of quality and reliability to its phone customers.

The Shaw Digital Phone service combines local, long distance and the most popular calling features into a simple package for a fixed monthly fee. The service includes a local residential line, unlimited anytime long distance calling within Canada and the U.S., 1000 international calling minutes per month to Europe, the U.K. and Asia Pacific, as well as various calling features including voicemail, call display, call forwarding, three-way calling, call return and call waiting. Professional installation, access to E-911, directory and operator services, and 24/7/365 customer support are all part of the Shaw Digital Phone service at no additional cost. In the current year Shaw introduced Shaw Digital Phone Lite, an offering tailored for light long distance users. The service includes a local phone line, popular calling features and long distance at competitive rates.

Over the past year Shaw has invested in new systems that allow the Company to operate independently as a Competitive Local Exchange Carrier (“CLEC”) using its own back office infrastructure. Shaw launched these systems late in 2007 and anticipates gaining cost efficiencies once these are fully rolled out, as well as the ability to provide an improved customer experience due to increased control over the customer order and fulfillment process. The Company also successfully implemented a Class 4 toll switch which allows for the routing of telephone traffic to the lowest cost long distance provider. As least cost routing is deployed across Shaw’s network it is anticipated that long distance wholesale costs will continue to decline. In the latter part of 2007 Shaw also started to offer a commercial voice service for small to medium sized businesses.

Shaw’s continued investment in plant infrastructure will accommodate further growth opportunities in digital programming, VOD, HDTV, and Internet, and will accelerate Digital Phone growth. The home entertainment experience continues to improve with on-demand and personalization of products and services and Shaw continues to ensure that its broadband network and interactive capabilities are being used to their full potential.

Shaw’s strategy of enhancing existing products to provide greater value to customers and providing exceptional customer service continued throughout 2007. During the year, Shaw doubled the download speed of the High-Speed Lite Internet service at no additional cost to the customer, and added a new Internet product, Shaw High-Speed Nitro that offers download speeds of up to 25 Mbps. The Company now has four levels of Internet including High Speed Nitro, High Speed Xtreme-I, High Speed Internet and High Speed Lite. Shaw continued to enhance its available programming making various channel line-up

7

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

changes during the year to strengthen analog service offerings, expand its digital sports channels, and increase HDTV offerings. Shaw also began to digitally simulcast its channel line-up in five major markets which allowed the Company to launch a new low priced digital cable terminal (“DCT”). The new terminal permits access to all digital features including the on-screen programming guide, music, and VOD and PPV movies and events. These ongoing initiatives allow Shaw to meet the needs of their customers’ home entertainment requirements and contribute to continued subscriber growth.

Shaw has a customer-centric strategy designed to deliver high-quality customer service, simplicity and value to its customers through various bundled service offerings. Delivering value to customers creates value for Shaw’s stakeholders through incremental penetration, operational efficiencies and reduced churn.

Finally, Shaw creates value through operating efficiencies. The Company continues to accomplish this through its “clustering” strategy, which involves geographical consolidation and re-alignment of its cable systems to take advantage of potential administrative, operating and marketing synergies that arise from larger, focused operations. Over a number of years, Shaw has acquired and divested various cable systems to complement its cable clusters. As a result, Shaw has consolidated its position as the dominant provider of cable television services in Western Canada. During 2007 Shaw completed acquisitions of several cable systems including Whistler Cable, Grand Forks, Wood Lake, Lumby and Pender Island, all in British Columbia, as well as Norcom Telecommunications Limited operating in Kenora, Ontario. In 2006, Shaw acquired Pemberton Cable and Saltspring Cablevision, both in British Columbia.

iii)      Satellite

Satellite is comprised of DTH (Star Choice) and Satellite Services. DTH distributes digital video and audio programming services via DTH satellite to Canadian residences and commercial establishments. It is one of two DTH satellite operators licensed by the Canadian Radio-television and Telecommunications Commission (“CRTC”) to deliver digital subscription video and audio programming services via satellite directly to subscribers’ homes and businesses. Satellite Services has two principal lines of business: (a) through Shaw Broadcast Services, redistributing television and radio signals via satellite to cable operators and other multi-channel system operators in Canada and the US, referred to as a satellite relay distribution undertaking (“SRDU”), and providing uplink and network management services for conventional, specialty and pay broadcasters on a contract basis; and b) through Shaw Tracking, providing mobile tracking and messaging services to over 550 companies in the long-haul trucking industry in Canada, with approximately 38,000 vehicles using its services.

Star Choice began the national roll-out of its digital DTH services in 1997 and, at August 31, 2007, had 879,585 subscribers across Canada. Star Choice’s customer acquisition strategy has evolved from predominantly rural households not served by cable or underserved by cable (i.e., served by cable systems that offer fewer than 80 channels) to households that have access to a full range of cable services primarily in urban areas. Star Choice broadcasts more than 400 digital video and audio channels, including 32 HDTV channels.

Star Choice and Satellite Services share a common satellite infrastructure. They each distribute largely the same digital video and audio signals to different markets (residential and business), thereby allowing Shaw to derive distinct revenue streams from different customers using a common platform.

B.       Seasonality

Although financial results of the business segments are generally not subject to significant seasonal fluctuations, subscriber activity may fluctuate from one quarter to another. For example, the Cable segment typically experiences the highest levels of subscriber growth during the first quarter as post-

8

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

secondary students return to school, customers return from vacation or reconnect cable in anticipation of the new television season. Correspondingly, subscriber growth tends to be lower or negative in the third and fourth quarters as the school year ends, vacation period begins and the television season ends. Subscriber growth in the Satellite business segment is also affected by vacation schedules as customers reconnect and disconnect DTH services at summer homes. Further, “snowbirds” (customers who vacation in warmer climates during the winter months) may also connect and reconnect DTH or cable services on a seasonal basis. In addition, new subscriber activations may also be positively affected by the Christmas holiday season. While subscriber activity is subject to seasonal fluctuations, it may also be affected by competition and varying amounts of promotional activity undertaken by the Company.

C.      Key performance drivers

Shaw measures the success of its strategies using a number of key performance drivers which are outlined below, including a discussion as to their relevance, definitions, calculation methods and underlying assumptions.

FINANCIAL MEASURES:

i)      Service revenue

Service revenue is a measurement determined in accordance with Canadian and US generally accepted accounting principles (“GAAP”). It represents the inflow of cash, receivables or other consideration arising from the sale of products and services. Service revenue is net of items such as trade or volume discounts and certain excise and sales taxes. It is the base on which free cash flow, a key performance driver, is determined; therefore, it measures the potential to deliver free cash flow as well as indicating growth in a competitive market place.

The Company’s continuous disclosure documents may provide discussion and analysis of non-GAAP financial measures. These financial measures do not have standard definitions prescribed by Canadian or US GAAP and therefore may not be comparable to similar measures disclosed by other companies. The Company utilizes these measures in making operating decisions and assessing its performance. Certain investors, analysts and others utilize these measures in assessing the Company’s financial performance and as an indicator of its ability to service debt and return cash to shareholders. These non-GAAP measures have not been presented as an alternative to net income or any other measure of performance or liquidity prescribed by Canadian or US GAAP. The following contains a listing of the Company’s use of non-GAAP financial measures and provides a reconciliation to the nearest GAAP measurement or provides a reference to such reconciliation.

ii)      Service operating income before amortization and operating margin

Service operating income before amortization is calculated as service revenue less operating, general and administrative expenses and is presented as a sub-total line item in the Consolidated Statements of Income and Deficit. It is intended to indicate the Company’s ability to service and/or incur debt, and therefore it is calculated before amortization (a non-cash expense) and interest. Service operating income before amortization is also one of the measures used by the investing community to value the business. Operating margin is calculated by dividing service operating income before amortization by service revenue.

Relative increases period over period in service operating income before amortization and in operating margin are indicative of the Company’s success in delivering valued products and services to its customers in a cost-effective manner.

9

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

iii)      Free cash flow

The Company uses free cash flow as a measure of the Company’s ability to repay debt and return cash to shareholders. Consolidated free cash flow is calculated as follows:

	2007		2006		2005
($000’s Cdn)
Cable free cash flow(1)		237,601		193,398		228,617
Satellite free cash flow(2)		118,591		72,047		48,702
Consolidated free cash flow		356,192		265,445		277,319

(1)	The reconciliation of free cash flow for cable is provided on page 32.
(2)	The reconciliation of free cash flow for satellite is provided on page 37.

Free cash flow for cable and satellite is calculated as service operating income before amortization, less interest, cash taxes paid or payable on net income, capital expenditures (on an accrual basis) and equipment costs (net). All of the line items used in the free cash flow calculation are as reported on a segmented basis in the Company’s Note 15 to the Consolidated Financial Statements. Segmented capital expenditures and equipment costs (net) exclude capital expenditures in respect of the Burrard Landing Lot 2 Partnership (the “Partnership”). The Partnership, which the Company is required to proportionately consolidate, is financed by 10 year secured mortgage bonds with no recourse to the Company. Segmented service operating income before amortization, which is the starting point of the free cash flow calculation, excludes prepayments on an indefeasible right to use (“IRU”) certain specifically identified fibers and the profit from satellite services equipment, both of which are recognized as amortization line elements in the income statement. As a result, prepayments on IRUs in amounts not exceeding the cost to build those fibers and equipment profit from satellite services are subtracted from the calculation of segmented capital expenditures and equipment costs (net).

STATISTICAL MEASURES:

i)      Subscriber counts, including penetration and bundled customers

The Company measures the count of its customers in Cable and DTH (Star Choice). Basic cable subscribers include residential customers, multiple dwelling units (“MDUs”) and commercial customers. A residential subscriber who receives at a minimum, basic cable service, is counted as one subscriber. In the case of MDUs, such as apartment buildings, each tenant with a minimum of basic cable service is counted as one subscriber, regardless of whether invoiced individually or having services included in his or her rent. Each building site of a commercial customer (e.g., hospitals, hotels or retail franchises) that is receiving at a minimum, basic cable service, is counted as one subscriber. Digital customers include the count of basic subscribers with one or more active DCTs. Internet customers include all modems on billing plus pending installations and Digital Phone lines includes all phone lines on billing plus scheduled installations due to the growth nature of these products. All subscriber counts exclude complimentary accounts but include promotional accounts.

Cable measures penetration for basic services as a percentage of homes passed and, in the case of all other services, as a percentage of basic customers.

Star Choice measures its count of subscribers in the same manner as cable counts its basic customers, except that it also includes seasonal customers who have indicated their intention to reconnect within 180 days of disconnection.

Subscriber counts and penetration statistics measure market share and also indicate the success of bundling and pricing strategies.

10

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

ii)      Customer churn

Customer churn is calculated as the number of new customer activations less the net gain of customers during the period, divided by the average of the opening and closing customers for the applicable period of calculation. Churn provides a measure of customer satisfaction and preferences.

D.      Critical accounting policies and estimates

The Company prepared its Consolidated Financial Statements in accordance with Canadian GAAP. An understanding of the Company’s accounting policies is necessary for a complete analysis of results, financial position, liquidity and trends. Refer to Note 1 to the Consolidated Financial Statements for additional information on accounting policies. The following section discusses key estimates and assumptions that management has made under GAAP and how they affect the amounts reported in the Consolidated Financial Statements and notes. It also describes significant accounting policies where alternatives exist. In addition, within the critical accounting policies and estimates, Canadian-US GAAP differences are identified where they exist. Refer to Note 21 to the Consolidated Financial Statements for a complete reconciliation of Canadian-US GAAP differences. Following is a discussion of the Company’s critical accounting policies:

i)      Revenue and expense recognition

Revenue is considered earned as services are performed, provided that at the time of performance, ultimate collection is reasonably assured. Such performance is regarded as having been achieved when reasonable assurance exists regarding the measurement of the consideration that will be derived from rendering the service. Revenue from cable, Internet, Digital Phone and DTH customers includes subscriber service revenue when earned. The revenue is considered earned as the period of service relating to the customer billing elapses.

The Company has multiple deliverable arrangements comprised of upfront fees (subscriber connection fee revenue and/or customer premise equipment revenue) and related subscription revenue. The Company determined that the upfront fees charged to customers do not constitute separate units of accounting; therefore, these revenue streams are assessed as an integrated package. Subscriber connection fees and amounts charged on customer premise equipment that have no utility to the customer separate and independent of the Company providing additional subscription services, must be deferred and recognized systematically over the periods that the subscription services are earned. As the equipment sales and the related subscription revenue are considered one transaction, recognition of the DCT, modem and DTH equipment revenue commences once the subscriber service is activated. In the case of connection fee revenue and equipment revenue from DCTs, DTH equipment and modems, there is no specified term for which the customer will receive the related subscription revenue; therefore the Company considered its customer churn rate and other factors, such as competition from new entrants in the video and Internet markets, to arrive at a period of deferral of two years. In the case of revenue from truck tracking equipment sales, revenue is recognized over the period of the related service contract for airtime, which is generally five years. The Company also receives installation revenues in its Shaw Business Solutions operation on contracts with commercial customers. This revenue is deferred and recognized as service revenue on a straight-line basis over the related service contract, which generally spans two to ten years. Direct and incremental costs associated with the service contract, in an amount not exceeding the upfront installation revenue, are deferred and recognized as an operating expense on a straight-line basis over the same period.

In conjunction with these up-front fees, the Company also incurs incremental direct costs which include, in the case of equipment revenue, the cost of the equipment and related installation costs, and in the case of connection fee revenue, certain customer acquisition costs such as selling, administrative and reconnection costs. There are two alternatives to account for these incremental direct costs. The first alternative is to

11

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

expense the costs immediately. The second alternative, as permitted by primary sources of GAAP, is to defer and amortize incremental costs directly related to the upfront revenue. Emerging Issues Committee (“EIC”) abstract 141, “Revenue Recognition” states that the costs incurred related to the acquisition or origination of a customer contract should be accounted for on a basis similar to the three criteria set forth in EIC-27, “Revenues and Expenditures during the Pre-operating Period.” The Company has determined that the aforementioned incremental costs identified above meet the criteria for deferral. First, the costs, such as the equipment and installation, are directly related to obtaining the equipment revenue or connection fee revenue from the new customer. Second, the costs are incremental in nature. Third, the costs are recoverable from the related revenues. Historically, the Company has determined that the excess cost of the equipment over the upfront equipment revenue is recoverable from the related revenues of the ongoing subscription revenue.

The Company has chosen to defer and amortize the related costs over the same period as the deferred revenue. This provides the best matching of the costs of the equipment and subscriber connection with the related up-front revenue and future revenue stream of subscription services. It is also consistent with the Canadian accounting standard “Financial Statement Concepts,” which recognizes that expenses that are linked to revenue-generating activities in a cause and effect relationship are normally matched with the revenue in the accounting period in which the revenue is recognized.

The cost of equipment and installation costs associated with DCTs, DTH equipment and modems generally exceeds the amounts received from customers on the sale of equipment (the equipment is sold to the customer at a subsidized price). The Company defers the entire cost of the equipment, including the subsidy portion, as it has determined that this excess cost will be recovered from future subscription revenues and that the investment by the customer in the equipment creates value through increased retention. Under US GAAP, the Company is required to expense this excess immediately.

The Company has limited its deferral of certain customer acquisition costs to the amount of related deferred connection fee revenue due to the non-tangible nature of these costs. Under US GAAP, subscriber connection fees are recognized as revenue when the connection is completed as it is considered a partial recovery of initial selling expenses and related administrative expenses.

Income statement classification

The Company distinguishes amortization of deferred equipment revenue and deferred equipment costs from the revenue and expenses recognized from ongoing service activities on its income statement. Equipment revenue and costs are deferred and recognized over the anticipated term of the related future revenue (i.e., the monthly service revenue) with the period of recognition spanning two to five years. As a result, the amortization of deferred equipment revenue and deferred equipment cost are non-cash items on the income statement, similar to the Company’s amortization of deferred IRU revenue, which the Company has always segregated from ongoing revenue. Further, within the lifecycle of a customer relationship, the customer generally purchases customer premise equipment infrequently, and generally at the beginning of that relationship, whereas the subscription revenue represents a continuous revenue stream throughout that customer relationship. Therefore, the segregated presentation provides a clearer distinction within the income statement between cash and non-cash activities and between up-front and continuous revenue streams, which assists financial statement readers to predict future cash flows from operations.

Subscriber connection and installation costs

The costs of physically connecting a new home are capitalized as part of the Company’s distribution system as the service potential of the distribution system is enhanced by the ability to generate future

12

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

subscriber revenue. Costs of disconnections are expensed as incurred as the activity does not generate future revenue.

ii)      Allowance for doubtful accounts

The majority of the Company’s revenues are earned from selling on credit to individual subscribers. Because there are some customers who do not pay their debts, selling on credit necessarily involves credit losses. The Company is required to make an estimate of an appropriate allowance for doubtful accounts on its receivables. In determining its estimate, the Company considers factors such as the number of days the subscriber account is past due, whether or not the customer continues to receive service, the Company’s past collection history and changes in business circumstances. The estimated allowance required is a matter of judgement and the actual loss eventually sustained may be more or less than the estimate, depending on events which have yet to occur and which cannot be foretold, such as future business, personal and economic conditions. Conditions causing deterioration or improvement in the aging of subscriber accounts and collections will increase or decrease bad debt expense.

iii)      Property, plant and equipment – capitalization of direct labour and overhead

As outlined in the recommendations of the Canadian Institute of Chartered Accountants (“CICA”), the cost of property, plant and equipment includes direct construction or development costs (such as materials and labour) and overhead costs directly attributable to the construction or development activity. The Company capitalizes direct labour and direct overhead incurred to construct new assets, upgrade existing assets and connect new subscribers. These costs are capitalized as they include the construction costs directly attributable to the acquisition, construction, development or betterment of plant through either increased service capacity or lowered associated operating costs. Repairs and maintenance expenditures are charged to operating expenses as incurred.

Direct labour and overhead costs are capitalized in three principal areas:

1.	Corporate departments such as engineering and information technology. Engineering is primarily involved in overall planning and development of the cable/Internet/Digital Phone infrastructure. Labour and overhead costs directly related to this activity are capitalized as the activities directly relate to the planning and design of the construction of the distribution system. Over the past several years the information technology department has devoted considerable efforts towards the development of systems to support Digital Phone and during 2006 began projects related to a new customer management and billing system. Labour costs directly related to these and other projects were capitalized.
2.	Cable regional construction departments, which are principally involved in constructing, rebuilding and upgrading the cable/Internet infrastructure. Labour and overhead costs directly related to the construction activity are capitalized as the activities directly relate to the construction or upgrade of the distribution system. Capital projects include, but are not limited to, projects such as new subdivision builds, increasing network capacity for internet, Digital Phone and VOD by reducing the number of homes fed from each node, and upgrades of plant capacity.
3.	Subscriber-related activities such as installation of new drops and Internet services. The labour and overhead directly related to the installation of new services are capitalized as the activity involves the installation of capital assets (i.e., wiring, filters, software, etc.) which enhance the service potential of the distribution system through the ability to earn future service revenues. Costs associated with service calls, collections, disconnects and reconnects that do not involve the installation of a capital asset are expensed.

13

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

Amounts of direct labour and direct overhead capitalized fluctuate from year to year depending on the level of customer growth and plant upgrades for new services. In addition, the level of capitalization fluctuates depending on the proportion of internal labour versus external contractors used in construction projects.

The percentage of direct labour capitalized in many cases is determined by the nature of employment in a specific department. For example, almost all labour and direct overhead of the cable regional construction departments is capitalized as a result of the nature of the activity performed by those departments. Capitalization is also based on piece rate work performed by unit-based employees (“UBs”), which is tracked directly. In some cases, the amount of capitalization depends on the level of maintenance versus capital activity that a department performs. In these cases, an analysis of work activity is applied to determine this percentage split; however, such analysis is subject to overall reasonability checks on the percentage capitalization based on known capital projects and customer growth.

iv) Property, plant and equipment – capitalization of interest

As permitted by Canadian GAAP, the cost of an item of property, plant and equipment that is acquired, constructed, or developed over time may include carrying costs, such as interest, which is directly attributable to such activity. Shaw does not capitalize interest on the construction of its own assets, with the exception of the Partnership’s construction of the office/residential tower in Vancouver. The interest was capitalized on the tower as the construction of it had taken place over a significant period of time and the interest on the Partnership construction facility was directly attributable to such activity. Capitalization of interest ceased in 2005 when the tower was substantially completed and was ready for occupancy. The alternative accounting policy is to expense interest on construction immediately, which would have resulted in additional interest expense of $0.7 million in 2005. Under US GAAP, interest costs are required to be capitalized as part of the cost of certain qualifying assets under construction for the construction period.

v) Depreciation policies and useful lives

The Company depreciates the cost of property, plant and equipment over the estimated useful service lives of the items. These estimates of useful lives involve considerable judgment. In determining these estimates, the Company takes into account industry trends and company-specific factors, including changing technologies and expectations for the in-service period of these assets. On an annual basis, the Company reassesses its existing estimates of useful lives to ensure they match the anticipated life of the technology from a revenue-producing perspective. If technological change happens more quickly or in a different way than the Company has anticipated, the Company might have to shorten the estimated life of certain property, plant and equipment which could result in higher depreciation expense in future periods or an impairment charge to write down the value of property, plant and equipment.

vi) Asset impairment

The valuations of all long-lived assets, including deferred charges, broadcast rights, goodwill, investments in unconsolidated entities and property, plant and equipment are subject to annual review for impairment. The Company compares the carrying value of long-lived assets excluding investment in unconsolidated entities (“Capital Assets”) to valuations using unlevered discounted cash flow analysis. A two-step process determines impairment of these Capital Assets. The first step determines when impairment is recognized and compares the carrying value of the Capital Assets to the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If the carrying value exceeds this sum, a second step is performed which measures the amount of the impairment as the difference between the carrying value of these Capital Assets and their fair value calculated using quoted market price or discounted cash flows. Investments are compared to quoted market values (where available) or estimated net realizable value, and

14

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

are reviewed to determine whether such impairment is other than temporary. An impaired asset is written down to its estimated fair market value based on the information available at that time. Considerable management judgment is necessary to estimate discounted cash flows. Assumptions used in these cash flows are consistent with internal forecasts and are compared for reasonability to forecasts prepared by external analysts. Changes in assumptions with respect to the competitive environment could result in impairment of assets.

vii) Employment benefit plans

Shaw has a defined benefit pension plan for key senior executives. The amounts reported in the financial statements relating to the defined benefit pension plan are determined using actuarial valuations that are based on several assumptions. The valuation uses management’s assumptions for the discount rate, rate of compensation increase, and expected average remaining years of service of employees. While the Company believes these assumptions are reasonable, differences in actual results or changes in assumptions could affect employee benefit obligations and the related income statement impact. The Company accounts for differences between actual and assumed results by recognizing differences in benefit obligations and plan performance over the working lives of the employees who benefit from the plan. The most significant assumption used to calculate the net employee benefit plan expense is the discount rate. The discount rate is the interest rate used to determine the present value of the future cash flows that is expected will be needed to settle employee benefit obligations. It is usually based on the yield on long-term, high-quality corporate fixed income investments and is determined at the end of every year. The following table illustrates the increase on the accrued benefit obligation and pension expense of a 1% decrease in the discount rate:

	Accrued Benefit
	Obligation at		Pension Expense
	End of Fiscal 2007		Fiscal 2007
Discount Rate		5.50%		5.25%
Impact of: 1% decrease ($000’s Cdn)		34,315		4,175

viii) Future income taxes

The Company has recognized future income tax assets in respect of its losses and losses of certain of Shaw’s subsidiaries. Realization of future income tax assets is dependent upon generating sufficient taxable income during the period in which the temporary differences are deductible. The Company has evaluated the likelihood of realization of future income tax assets based on forecasts of taxable income of future years and based on the ability to reorganize its corporate structure to accommodate use of tax losses in future years. Assumptions used in these taxable income forecasts are consistent with internal forecasts and are compared for reasonability to forecasts prepared by external analysts. Significant changes in assumptions with respect to internal forecasts or the inability to implement tax planning strategies could result in future impairment of these assets.

ix) Commitments and contingencies

The Company is subject to various claims and contingencies related to lawsuits, taxes and commitments under contractual and other commercial obligations. Contingent losses are recognized by a charge to income when it is likely that a future event will confirm that an asset has been impaired or a liability incurred at the date of the financial statements and the amount can be reasonably estimated. Contractual and other commercial obligations primarily relate to network fees and operating lease agreements for use of transmission facilities, including maintenance of satellite transponders and lease of premises in the

15

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

normal course of business. Significant changes in assumptions as to the likelihood and estimates of the amount of a loss could result in recognition of additional liabilities.

E. Related party transactions

Related party transactions are reviewed by Shaw’s Corporate Governance and Nominating Committee, comprised of independent directors. The following sets forth certain transactions in which the Company is involved.

Normal course transactions

The Company has entered into certain transactions and agreements in the normal course of business with certain of its related parties.

Corus Entertainment Inc. (“Corus”)

The Company and Corus are subject to common voting control. During the year, network, advertising and programming fees were paid to various Corus subsidiaries. The Company provided cable system distribution access, administrative services, uplinking of television signals and Internet services and circuits to various Corus subsidiaries. In addition, the Company provided Corus with television advertising spots in return for radio and television advertising.

Burrard Landing Lot 2 Holdings Partnership

The Company has a 33.33% interest in the Partnership. During the current year, the Company paid the Partnership for lease of office space in Shaw Tower. Shaw Tower, located in Vancouver, BC, is the Company’s headquarters for its lower mainland operations.

Other transactions

The Company has entered into the following transaction with Corus:

During 2005, the Company sold the cable television advertising business, originally acquired as part of the purchase of the Monarch cable systems to Corus.

F.  New accounting standards

Shaw has adopted or will adopt a number of new accounting policies as a result of recent changes in Canadian accounting pronouncements. The ensuing discussion provides additional information as to the date that Shaw is or was required to adopt the new standards, the methods of adoption permitted by the standards, the method chosen by Shaw, and the effect on the financial statements as a result of adopting the new policy. The adoption or future adoption of these accounting policies has not and is not expected to result in changes to the Company’s current business practices.

The following policies will be adopted in fiscal 2008:

(i) Financial Instruments

In 2008, the Company will adopt CICA Handbook Sections 3855, “Financial Instruments – Recognition and Measurement”, 3861, “Financial Instruments – Disclosure and Presentation”, 3865, “Hedges”, 1530, “Comprehensive Income” and 3251, “Equity”. These new standards address when a company should recognize a financial instrument on its balance sheet and how the instrument should be measured once recognized.

16

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

Adoption of these standards will be effective September 1, 2007 on a retrospective basis without restatement of prior periods, except for the reclassification of equity balances to reflect Accumulated Other Comprehensive Income which will include foreign currency translation adjustments.

On adoption of Section 1530, a new statement entitled “Consolidated Statements of Comprehensive Income (Loss)” will be added to the Company’s consolidated financial statements and will include net income (loss) as well as other comprehensive income (loss). Comprehensive income (loss) is comprised of net income (loss), changes in the fair value of derivative instruments designated as cash flow hedges and the net unrealized foreign currency translation gain (loss) from self sustaining foreign operations, which is currently classified as a separate component of shareholders’ equity. Accumulated other comprehensive income (loss) will form part of shareholders’ equity.

In addition, the Company will classify all financial instruments into one of the following five categories: 1) “loans and receivables”, 2) “assets held-to-maturity”, 3) “assets available-for-sale”, 4) “financial liabilities”, and 5) “held-for-trading”. Financial instruments designated as “held-for-trading” and “available-for-sale” are carried at their fair value while financial instruments such as “loans and receivables”, “financial liabilities” and “held-to-maturity” will be carried at amortized cost. Certain private investments where market value is not readily determinable will continue to be carried at cost.

All derivatives, including embedded derivatives that must be separately accounted for, will be measured at fair value in the balance sheet. The changes in fair value of cash flow hedging derivatives will be recorded in other comprehensive income (loss), to the extent effective, until the variability of cash flows relating to the hedged asset or liability is recognized in the consolidated statements of income. Any hedge ineffectiveness will be recognized in net income (loss) immediately.

The impact of recording hedging derivatives at fair value on September 1, 2007 will be recognized in accumulated other comprehensive income (loss) and is estimated to be an increase in derivative instruments of approximately $71 million and a decrease in opening accumulated other comprehensive income of $58 million, net of income taxes of approximately $13 million.

(ii) Accounting changes

In 2008, the Company will adopt CICA Handbook Section 1506, “Accounting Changes”, which prescribes the criteria for changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. The Company does not expect this standard to have a significant impact on its consolidated financial statements upon adoption.

G.   Known events, trends, risks and uncertainties

The Company is subject to a number of risks and uncertainties which could have a material adverse effect on its future profitability. Included herein is a “Caution Concerning Forward-Looking Statements” section which should be read in conjunction with this report.

The risks and uncertainties discussed below highlight the more important and relevant factors that could significantly affect the Company’s operations. They do not represent an exhaustive list of all potential issues that could affect the financial results of the Company. The principal risks include:

•    Competition and technological change, including change in regulatory risks

•    Interest rate, foreign exchange, and capital market risks

•    Contingencies

•    Uninsured risks of loss

•    Reliance on suppliers

17

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

•    Holding Company structure

•    Control of Shaw by the Shaw family

•    Information systems and internal business processes

•    Dividend payments

i) Competition and technological change

Cable providers operate in an open and competitive marketplace. Shaw’s businesses currently face competition from regulated entities utilizing existing or new communications technologies and from currently unregulated internet and illegal satellite services. In addition, Shaw may face competition in the future from other technologies being developed or to be developed.

CABLE TELEVISION AND DTH

Shaw’s cable television systems currently compete or may in the future compete with other distributors of video and audio signals, including DTH satellite services, satellite master antenna systems, multipoint distribution systems (“MDS”), other competitive cable television undertakings and telephone companies offering video service. To a lesser extent, Shaw’s cable television systems compete with the direct reception by antenna of unencrypted over-the-air local and regional broadcast television signals. As noted above, Shaw also competes with unregulated internet services, and illegal satellite services including grey and black market and modified free-to-air satellite receivers.

The Star Choice DTH business faces the same competitive environment as cable television companies. Competitors include Bell ExpressVu (the only other licensed DTH satellite service currently operating in Canada), cable television companies, grey and black market satellite service providers and other competitors such as wireless operators, telephone companies and off-air television broadcasters.

DTH delivers programming via signals sent directly to receiving dishes from medium and high-powered satellites, as opposed to via broadcast, cable delivery or lower powered transmissions. DTH services presently provide more channels than some of Shaw’s cable systems and are fully digital. Two licensed operators, Star Choice (a subsidiary of Shaw) and Bell ExpressVu, are currently providing DTH services in Canada. These DTH operators have achieved considerable customer growth and currently provide service to approximately 2.7 million Canadian households. In addition, grey and black market DTH providers (i.e., providers of US-based digital DTH programming services available in Canada without authorization from the CRTC or from the US DTH providers) also constitute competitive services. The Supreme Court of Canada has ruled that grey and black market DTH providers are violating the Radiocommunication Act (Canada), and are therefore providing an illegal service.

MDS delivers television programming by unobstructed line-of-sight microwave transmission to subscribers equipped with special antennae. Since 1995, the CRTC has approved MDS applications of distributors competing with cable television service in given service areas. In particular, the CRTC has granted licenses to Craig Wireless International Inc. (formerly Skycable Inc.) with respect to certain areas of Manitoba and British Columbia, and to Image Wireless Communications Inc. with respect to certain areas of Alberta and Saskatchewan. The CRTC has also issued a license to Look Communications Inc. to operate MDS undertakings in southern and eastern Ontario and in Quebec.

Other competitive cable television undertakings are licensed to operate within the authorized service areas of incumbent cable licensees. Novus Entertainment Inc., one of these licensed providers, operates within one of Shaw’s licensed service areas in Vancouver.

Canadian telephone companies are also licensed as broadcast distribution undertakings to provide standard and interactive television services. Telus Corporation currently offers Telus TV in select parts of Alberta and British Columbia; SaskTel offers Max TV in Saskatchewan; Manitoba Telecom Services Inc. (“MTS”)

18

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

offers viewers a competitive choice with MTS TV, primarily in Winnipeg, Manitoba, and Bell Canada offers services in parts of Ontario. SaskTel launched its service in September 2002, and as of December 31, 2006 had approximately 50,000 customers. MTS launched its service in January 2003, and as of June 30, 2007 had approximately 70,000 customers. Telus has launched service in several markets.

To date, none of these competitors has had a material impact on Shaw’s overall cable television operations. Almost all of Shaw’s cable systems are concentrated in major urban markets, having favourable demographics and growth potential, with most of the remainder in smaller clusters, linked via fiber optic distribution systems either to each other or to larger markets. Through this clustering strategy, Shaw maximizes the benefits of operating efficiencies, enabling it to be a low-cost service provider, which is a necessary component in strengthening its competitive position. In addition, Shaw plans to continue to deploy new technologies to increase channel capacity, to expand the range and quality of its services, and to enhance its programming and communication service offerings including, for example, VOD, interactive television, full digital line-ups, HDTV, and Digital Phone. The Company expects that competition will continue to increase and there can be no assurance that increased competition will not have a material adverse effect on Shaw’s results of operations.

INTERNET

There are a number of different types of Internet service providers (“ISPs”) offering residential and business Internet access services that compete with Shaw’s Internet services. These include independent basic access service providers (both national and regional), incumbent telephone companies and wireless communications companies.

Many ISPs provide telephone dial-up Internet access services with typical access speeds of up to 56 kbps. Such services are provided by incumbent telephone companies and independent ISPs (mainly through the use of the telephone companies’ facilities and services). According to a report from the CRTC dated July 2007, approximately 14% of all Internet subscribers in Canada used low-speed dial-up access services, while the other 86% used high-speed services.

High-speed Internet access services are principally provided through cable modem and digital subscriber line (“DSL”) technology. High-speed services enable users to transmit and receive text, video, voice and data in digital form at significantly faster access speeds than dial-up access through a regular telephone line. Internet access services through cable modem technology are primarily provided by cable companies, although the CRTC has also authorized third-party ISPs to access cable companies’ facilities to deliver high-speed Internet services. DSL services are principally offered by incumbent telephone companies such as BCE Inc., Telus Corporation, MTS, and Sasktel.

Internet access is also available in select cities in Western Canada through a wireless microwave technology known as WiMAX. This service requires a specialized modem and provides download speeds typically between 512 Kbps and 3 Mbps.

The ISPs have access to cable companies’ facilities to deliver competing Internet access service. Currently, competing ISPs have access to high-speed access services of Shaw pursuant to a third party Internet access tariff that came into effect on November 2, 2004 and was subsequently updated on March 20, 2006. Such third party access services are available in Vancouver, Victoria, Calgary, Edmonton, Saskatoon and Winnipeg. Currently only one ISP has subscribed to the tariff. Until such time as an ISP subscribes to the tariff, or in areas where Shaw’s third party Internet access services are not available, Shaw has been directed by the CRTC to allow ISPs to resell cable Internet services at a 25% discount from the retail rate. Currently, there are three ISPs using Shaw’s resale services at the resale discount rate.

Although operating in a competitive environment, Shaw expects that consumer desire for Internet access services, generally, and for bandwidth-intensive applications on the Internet (including streaming video,

19

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

digital downloading and interactive gaming), in particular, will lead to continued growth for high-speed Internet services, such as Shaw High-Speed Internet.

SATELLITE SERVICES

In its Canadian SRDU business, Satellite Services faces competition principally from Bell ExpressVu, which received an SRDU license from the CRTC in 1999. At present, Satellite Services and Bell ExpressVu are the only licensed SRDU operators in Canada. Satellite Services also faces competition from the expansion of fiber distribution systems into territories previously served only by SRDU operators. This expansion permits delivery of distant US and Canadian conventional television stations to more remote locations without the use of satellite transmission.

INTERNET INFRASTRUCTURE

Through its Shaw Business Solutions subsidiaries, Shaw competes with other telecommunications carriers in providing high-speed broadband communications services (data and video transport and Internet connectivity services) to businesses, ISPs and other telecommunications providers. The telecommunications services industry in Canada is highly competitive, rapidly evolving and subject to constant change. Shaw Business Solutions competitors include incumbent local exchange carriers (“ILECs”) (such as Telus Corporation and Bell Canada), competitive access providers, competitive local exchange carriers, ISPs, private networks built by large end users and other telecommunications companies. In addition, the development and implementation of new technologies by others could give rise to significant new competitors.

DIGITAL PHONE

The competitors of Shaw Digital Phone include incumbent telephone companies (such as Telus Corporation, Sask Tel, MTS, and subsidiaries or affiliates of BCE Inc.), CLECs (such as Rogers Telecom Inc., formerly Sprint Canada Inc.) and non-facilities-based Voice over Internet Protocol (“VoIP”) providers (such as Primus Telecommunications Canada Inc. and Vonage Holdings Corp.). As the market for VoIP services develops and as VoIP technology evolves, new competitors (such as IT providers, network vendors and system integrators) may emerge from companies that have not offered voice solutions in the past.

The ILECs currently control the vast majority of the local telephone services market in Canada. Several of such competitors have larger operational and financial resources than the Corporation and are well established with residential customers in their respective markets.

In April 2005, the Minister of Industry appointed a three person panel to make recommendations on the major issues and priorities for telecommunications policy and regulatory reform with a view of modernizing Canada’s telecommunications framework to the benefit of all Canadians. In March 2006, the panel issued its report. This report, which included 127 specific recommendations, called for a significant reduction in the role of the CRTC and greater reliance on market forces in the telecommunications sector.

Recent events in the local telecommunications sector are being driven by the Government’s deregulatory initiatives. Specifically, the CRTC is acting on the December 14, 2006 Governor in Council order which directed it to “rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives, and when relying on regulation to use measures that are efficient and proportionate to their purpose and that interfere with the operations of competitive market forces to the minimum extent necessary to meet the policy objectives”.

Over the past year a number of decisions are emphasizing this greater reliance on market forces as the preferred mechanism for regulating the market. For example, the CRTC determined that Internet-based

20

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

local exchange voice services (VoIP) offered by the ILECs were local services and would be regulated as such by the CRTC. On September 1, 2006, the CRTC reaffirmed its decision following a request from the Federal Cabinet to reconsider this matter. However, on November 15, 2006 the Government announced its intent to vary the decision in order to have the CRTC treat certain Internet-based VoIP services as distinct from other local services and have these ILEC VoIP services regulated in the same manner as comparable CLEC VoIP services. On November 16, 2006, the CRTC issued a circular giving immediate effect to this direction. Also in 2006, the CRTC rendered its decision on the forbearance criteria the ILECs must meet in order to have their local exchange service deregulated. The forbearance framework approved by the CRTC required a 25% market share loss threshold by the ILECs as well as several requirements and performance thresholds relating to their provision of wholesale services. The forbearance decision was appealed by the ILECs to the Federal Cabinet and in April, 2007 the CRTC’s decision was varied by substituting a facilities-based market test for the market share test. The facilities based test allows an ILEC to apply for deregulation by showing that they compete with both a wireline facilities based provider, whose service is available to 75% of the subscribers in the local exchange, and a wireless facilities provider in the exchange. This has resulted in a number of forbearance orders being granted to Telus, MTS, and Sask Tel that cover a large portion of Shaw’s operating territory.

As the Corporation continues to expand the digital phone service into new areas, it expects the ILECs will be granted forbearance in those areas as well. These developments may negatively affect the business and prospects of Shaw Digital Phone.

IMPACT OF REGULATION

Substantially all of the Corporation’s business activities are subject to regulations and policies established under various Acts (Broadcasting Act, Telecommunication Act and Radiocommunications Act). These regulations and policies are generally administered by the CRTC under the supervision of the Federal Departments of Industry and Canadian Heritage. Accordingly, the Corporation’s results of operations are affected by changes in regulations and decisions by regulators. Changes in the regulation of Shaw’s business activities, including decisions by regulators affecting the Corporation’s operations (such as the granting or renewal of licenses; decisions concerning the regulation of ILECs in the provision of local services; the granting of additional distribution, broadcasting or programming licenses to competitors in the Corporation’s markets; or the introduction of new copyright liabilities) or changes in interpretations of existing regulations by courts or regulators, could adversely affect the Corporation’s results of operations. The Corporation’s CRTC licenses must be renewed from time to time and cannot be transferred without regulatory approval.

ii) Interest rate, foreign exchange, market value and capital market risks

Shaw manages its exposure to floating interest rates and US dollar foreign exchange fluctuation through the use of interest rate and cross-currency exchange agreements or “swaps”. In order to minimize the risk of counterparty default under its swap agreements, Shaw assesses the creditworthiness of its swap counterparties. Currently 100% of the total swap portfolio is held by financial institutions with Standard & Poor’s (or equivalent) ratings ranging from AA– to A-1.

As at August 31, 2007 Shaw has the following financial exposures at risk in its day-to-day operations:

(a)  Interest rates: Due to the capital-intensive nature of Shaw’s operations, the Company utilizes long-term financing extensively in its capital structure. The primary components of this structure are:

1.  Banking facilities as more fully described in Note 9 to the Consolidated Financial Statements.

21

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

2.	Various Canadian and US denominated senior notes and debentures with varying maturities issued in the public and private markets as more fully described in Note 9 to the Consolidated Financial Statements.
3.	Canadian Originated Preferred Securities (“COPrS”) issued in Canadian dollars with an original term of 30 years as more fully described in Note 9 to the Consolidated Financial Statements.

Interest on bank indebtedness is based on floating rates, while the senior notes, debentures and COPrS are fixed-rate obligations. Shaw utilizes its credit facility to finance day-to-day operations and, depending on market conditions, periodically converts the bank loans to fixed-rate instruments through public market debt issues. Shaw also uses interest rate swap transactions to fix the interest rates on a portion of its bank debt. Until March 9, 2007, Shaw had “swapped out” $59.0 million of its Canadian floating-rate bank indebtedness by means of a Canadian interest rate swap transaction entered into with a major Canadian chartered bank. The swap fixed interest on a notional amount of bank debt of $59.0 million at an effective rate of 8.89%. The interest rate swap was fully terminated on March 9, 2007.

As at August 31, 2007, 100% of Shaw’s consolidated long-term debt was fixed with respect to interest rates.

(b)  Foreign exchange: As the Company has grown it has accessed US capital markets for a portion of its borrowings. Since Shaw’s revenues and assets are primarily denominated in Canadian dollars, it faces significant potential foreign exchange risks in respect of the servicing of the interest and principal components of its US dollar denominated debt. In view of this, the Company’s policy with respect to US debt is that at least 70% of the amounts maturing within the next ten years be hedged to protect against exchange fluctuations, and at August 31, 2007, 100% of such maturities were hedged. The Company utilizes cross-currency swaps, where appropriate, to hedge its exposures on US dollar denominated bank and debenture indebtedness.

In addition, some of the Company’s capital expenditures are incurred in US dollars, while its revenue is primarily denominated in Canadian dollars. Decreases in the value of the Canadian dollar relative to the US dollar could have a material adverse effect on the Company’s cash flows. To mitigate some of the uncertainty in respect to capital expenditures, the Company regularly enters into forward contracts in respect of US dollar commitments. In respect of 2007, the Company entered into forward contracts providing for monthly or quarterly US dollar purchases under which the Company purchased approximately US $139.0 million at an average exchange rate of 1.1397 Cdn. With respect to 2008, the Company has entered into forward contracts to purchase approximately US $99.4 million over a period of 12 months commencing in September 2007 at an average exchange rate of 1.1401 Cdn.

Further information concerning the policy and use of derivative financial instruments is contained in Note 1 to the Consolidated Financial Statements.

(c)  Capital markets: The Company requires ongoing access to capital markets to support its operations. Changes in capital market conditions, including significant changes in market interest rates or lending practices, may have a material adverse effect on the Company’s ability to raise or refinance short-term or long-term debt, and thus on its financial position and ability to operate.

22

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

iii) Contingencies

The Company and its subsidiaries are involved in litigation matters arising in the ordinary course and conduct of its business. Although such proceedings cannot be predicted with certainty, management does not expect that the outcome of these matters will have a material adverse effect on the corporation.

iv) Uninsured risks of loss

The Company presently relies on two satellites (Anik F2 and Anik F1R) owned by Telesat Canada (“Telesat”) to conduct its DTH and Satellite Services business. The Company owns certain transponders on the Anik F2 and has long-term capacity service agreements in place in respect of transponders on both Anik F1R and Anik F2. Telesat has procured insurance policies on each satellite which are in effect until mid-calendar year 2008, both subject to renewal. Shaw funds a portion of this insurance cost such that in the event Telesat recovers insurance proceeds in connection with an insured loss, Shaw will be entitled to receive certain compensation payments. The Company anticipates that the insurance policies in respect of both satellites will be renewed and that Shaw will continue to contribute to the cost of these policies.

The Company does not maintain business interruption insurance covering damage or loss to one or more of the satellites used in its DTH and Satellite Services business as it believes the premium costs are uneconomic relative to the risk of insurance failure. Transponder capacity is available to the Company on an unprotected, non-preemptible service level basis, in both the case of the Anik F2 transponders that are owned by Shaw and the Anik F1R and Anik F2 transponders that are secured through service capacity agreements. The Company has priority access to spare transponders on each satellite in the case of interruption, although there is no assurance that such transponders would be available. In the event of satellite failure, service will only be restored as additional capacity becomes available. Restoration of satellite service on another satellite may require repositioning or re-pointing of customers’ receiving dishes. As a result, the customers’ level of service may be diminished or they may require a larger dish. Satellite failure could cause customers to deactivate their DTH subscriptions or otherwise have a material adverse effect on business and results of operations.

Network failures caused by damage by fire, natural disaster, power loss, hacking, computer viruses, disabling devices, acts of war or terrorism and other events could have a material adverse affect, including customer relationships and operating results. The Company protects its network through a number of measures including physical security, ongoing maintenance and placement of insurance on its network equipment and data centers. The Company self-insures the plant in the cable and Internet distribution system as the cost of insurance is generally prohibitive. The risk of loss is mitigated as most of the cable plant is located underground. In addition, it is likely that damages caused by any one incident would be limited to a localized geographic area and therefore resulting business interruption and financial damages would be limited. Further, the Company has back-up disaster recovery plans in the event of plant failure and redundant capacity with respect to certain portions of the system. In the past, it has successfully recovered from damages caused by natural disasters without significant cost or disruption of service. Although the Company has taken steps to reduce this risk, there can be no assurance that major disruptions will not occur.

v) Reliance on suppliers

Shaw’s distribution and call center network is connected or relies on other telecommunication carriers and certain utility companies. Any of the events described in the preceding paragraph, as well as labour strikes and other work disruptions, bankruptcies, technical difficulties or other events affecting these carriers or utilities could also hurt business, including customer relationships and operating results.

23

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

The Company sources its customer premise and capital equipment and capital builds from certain key suppliers. While the Company has alternate sources for most of its purchases, the loss of a key supplier could adversely affect the Company in the short term.

vi) Holding company structure

Substantially all of Shaw’s business activities are operated by its subsidiaries. As a holding company, the Company’s ability to meet its financial obligations is dependent primarily upon the receipt of interest and principal payments on intercompany advances, management fees, cash dividends and other payments from its subsidiaries together with proceeds raised by the Company through the issuance of equity and the incurrence of debt, and from the proceeds from the sale of assets. The payment of dividends and the making of loans, advances and other payments to the Company by its subsidiaries may be subject to statutory or contractual restrictions, are contingent upon the earnings of those subsidiaries and are subject to various business and other considerations.

vii) Control of Shaw by the Shaw family

As at November 22, 2007, JR Shaw and members of his family and the corporations owned and/or controlled by JR Shaw and members of his family (the “JR Shaw Group”) own approximately 78.8% of the outstanding Class A Shares of the Company. The Class A Shares are the only shares entitled to vote in all shareholder matters. All of the Class A Shares held by the JR Shaw Group are subject to a voting trust agreement entered into by such persons. The voting rights with respect to such Class A Shares are exercised by the representative of a committee of five trustees. Accordingly, the JR Shaw Group is, and as long as it owns a majority of the Class A Shares will continue to be, able to elect a majority of the Board of Directors of the Company and to control the vote on matters submitted to a vote of the Company’s Class A shareholders.

viii) Information systems and internal business processes

Many aspects of the Company’s business depend to a large extent on various IT systems and software and internal business processes. The Company is subject to risk as a result of potential failures of, or deficiencies in, these systems or processes. Although the Company has taken steps to reduce this risk, there can be no assurance that losses may not occur.

ix) Dividend payments

The Company currently pays monthly dividends in amounts approved on a quarterly basis by the Board of Directors. At the current approved dividend amount, the Company anticipates it will pay approximately $304 million in dividends during 2008. While the Company expects to generate sufficient free cash flow in 2008 to fund these dividend payments, if actual results are different from expectations there can be no assurance that the Company will continue dividend payments at the current level.

24

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

II. SUMMARY OF QUARTERLY RESULTS

			Service				Basic
			operating income				earnings		Funds flow
	Service		before				per		from
Quarter	revenue		amortization(1)		Net income		share(2)		operations(3)
(In $000’s Cdn except per share amounts)
2007
Fourth		715,471		326,052		135,932		0.31		272,545
Third		702,238		310,748		91,658		0.21		259,470
Second		685,730		303,038		79,751		0.18		252,412
First		671,006		299,787		81,138		0.19		243,936
Total		2,774,445		1,239,625		388,479		0.90		1,028,363
2006
Fourth		631,888		275,127		210,369		0.49		220,617
Third		626,654		279,544		126,410		0.29		221,099
Second		611,197		267,924		45,790		0.11		208,273
First		589,545		255,322		75,681		0.17		197,208
Total		2,459,284		1,077,917		458,250		1.05		847,197

(1)	See key performance drivers on page 9.
(2)	Diluted earnings per share equals basic earnings per share except for total fiscal 2007 and in the fourth quarter of 2006 where diluted earnings per share is $0.89 and $0.48, respectively.
(3)	Funds flow from operations is presented before changes in net non-cash working capital as presented in the Consolidated Statement of Cash Flows.

Generally, service revenue has grown quarter-over-quarter as a result of customer growth and rate increases. Service operating income before amortization has also generally grown with a decline noted in the fourth quarter of 2006 due to growth in expenditures exceeding the growth in revenues. The increased expenses during this period were mainly due to costs related to employee growth, maintenance and related service costs for software and equipment as well as increased marketing costs.

Net income has generally trended positively quarter-over-quarter as a result of a number of factors including the growth in service operating income before amortization and during the first, third and fourth quarters of 2006, as well as the fourth quarter of 2007, the Company recorded future tax recoveries primarily related to a reduction in corporate income tax rates which contributed $31.4 million, $23.4 million, $150.0 million and $35.5 million, respectively, to net income in each of these quarters. Also, during the third quarter of fiscal 2006 the Company reported a gain on the sale of a portfolio investment which contributed $37.3 million on an after-tax basis. Net income declined by $29.9 million in the second quarter of 2006 and by $129.2 million in the first quarter of 2007 due to the tax recoveries recorded in each of the immediately preceding quarters. There was also a modest decline in net income in the second quarter of 2007.

25

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

The following factors further assist in explaining the trend of quarterly service revenue and service operating income before amortization:

Growth in subscriber statistics as follows:

	2007									2006
Subscriber Statistics	First		Second		Third		Fourth			First		Second		Third		Fourth
Basic cable customers		12,664		6,625		3,289		(2,057	)		29,429		6,838		2,248		2,766
Digital customers		25,331		28,641		20,875		15,709			28,296		18,594		14,733		9,630
Internet customers		35,877		40,694		27,873		29,857			54,724		36,296		21,654		25,907
Digital Phone Lines		38,197		41,721		51,128		41,604			34,088		28,018		50,294		43,744
DTH		2,426		928		5,337		1,686			10,199		6,843		4,283		3,221

Significant acquisitions and divestitures:

•      The acquisitions of several cable systems in British Columbia and Ontario, serving a total of approximately 22,000 customers, were completed in the fourth quarter of fiscal 2006 and during 2007. In 2007, these systems generated service operating income before amortization of approximately $7.5 million over the amounts reported in 2006.

New Product Launch:

•      The initial product launch of Shaw Digital Phone service was in Calgary on February 14, 2005 and through the remainder of 2005 the Company did additional launches in Edmonton and Winnipeg. Shaw has continued to expand its Digital Phone service area to all major markets and at the end of fiscal 2007 the service was available to over 80% of homes passed.

26

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

III. RESULTS OF OPERATIONS

OVERVIEW OF FISCAL 2007 CONSOLIDATED RESULTS

							Change
							2007			2006
	2007		2006		2005		%			%
(In $000’s Cdn except per share amounts)
Operations:
Service revenue		2,774,445		2,459,284		2,209,810		12.8			11.3
Service operating income before amortization(1)		1,239,625		1,077,917		981,993		15.0			9.8
Service operating margin(1)		44.7%		43.8%		44.4%
Funds flow from operations(2)		1,028,363		847,197		728,524		21.4			16.3
Net income		388,479		458,250		153,221		(15.2	)		199.1
Free cash flow(1)		356,192		265,445		277,319		34.2			(4.3	)
Balance sheet:
Total assets		8,163,739		7,661,543		7,430,185
Long-term financial liabilities (including current portion of long-term debt)		3,125,398		3,034,109		3,240,348
Per share data:
Income per share – basic	$	0.90	$	1.05	$	0.34
Income per share – diluted	$	0.89	$	1.05	$	0.34
Weighted average number of participating shares outstanding during period (000’s)		432,493		435,332		456,420
Cash dividends paid per share
Class A		0.462		0.235		0.153
Class B		0.465		0.238		0.155

(1)	See key performance drivers on page 9.
(2)	Funds flow from operations is presented before changes in non-cash working capital as presented in the Consolidated Statements of Cash Flows.

Highlights

•      Net income was $388.5 million for the year compared to income of $458.3 million in 2006 and $153.2 million in 2005.

•      Earnings per share were $0.90 compared to $1.05 in 2006 and $0.34 in 2005.

•      Service revenue for the year improved to $2.77 billion from $2.46 billion last year and $2.21 billion in 2005.

•      Service operating income before amortization of $1.24 billion was up over last year’s amount of $1.08 billion in 2006 and $982.0 million in 2005.

•      Consolidated free cash flow increased to $356.2 million from $265.4 million in 2006 and $277.3 million in 2005.

•      Shareholders approved a two-for-one stock split of the Company’s outstanding Class A Participating Shares and Class B Non-Voting Participating Shares which became effective on July 30, 2007.

27

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

•      During 2007, the Company increased the dividend rate on Shaw’s Class A Participating Shares and Class B Non-Voting Participating Shares to an equivalent dividend rate of $0.6575 and $0.66, respectively. Dividends paid in 2007 increased 95% over 2006. Most recently, the Company increased the equivalent annual dividend rate on its Class A Participating Shares and Class B Non-Voting Participating Shares by 9% to $0.7175 and $0.72, respectively. This new rate is effective commencing with the monthly dividend paid on December 28, 2007.

•      In March 2007, the Company closed a $400 million offering of 5.70% senior notes due March 2, 2017.

•      The footprint of Digital Phone continued to expand with the service now being available to over 80% of homes passed. During 2007 the Company added 172,650 Digital Phone lines and at August 31, 2007, the number of Digital Phone lines, including pending installations, was 385,357.

•      The Shaw customer base continued to grow with increases of 20,521 for basic cable (2006 – 41,281); 90,556 for digital (2006 – 71,253); 134,301 for Internet (2006 – 138,581); and 10,377 (2006 – 24,546) for DTH.

•      The Company repurchased for cancellation 4,408,400 Class B Non-Voting Shares for $104.8 million ($23.76 per share) during 2007.

Revenue and operating expenses

2007 vs. 2006

Consolidated service revenue of $2.77 billion for the year increased 12.8% over 2006. The improvement was primarily due to customer growth and rate increases. Consolidated service operating income before amortization was up 15.0% over the comparable period to $1.24 billion. The increases were driven by overall revenue growth, partially offset by increased costs related to the growth.

Throughout 2007, Shaw continued to see strong demand for its Digital Phone products and in just over two years from the initial launch, penetration of Digital Phone stands at over 20% of basic customers who have the service available to them. The strength of Digital Phone, the growth of other products and continued value enhancements to support pricing power have contributed to the increase in Shaw’s consolidated service revenues and service operating income before amortization of over 25% over the past two years.

2006 vs. 2005

Consolidated service revenue of $2.5 billion for 2006 improved 11.3% over 2005. The increase was primarily due to customer growth and rate increases. Consolidated service operating income before amortization increased 9.8% over 2005 to $1.08 billion. The improvement over the comparative period was primarily due to overall revenue growth and reduced costs in the satellite division. These improvements were partially offset by increased costs in the cable division, including expenditures incurred to support continued growth, deliver high quality customer service, and to launch Digital Phone in new markets.

At the end of 2006, Shaw Digital Phone service was available to approximately 2,000,000 homes, which represents 60% of homes passed. During 2006, Shaw expanded its Digital Phone footprint to include Victoria, Vancouver, Fort McMurray and other smaller areas, including the surrounding areas of Calgary and Edmonton.

28

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

Amortization

										Change
										2007			2006
	2007			2006			2005			%			%
(In $000’s Cdn)
Amortization revenue (expense) –
Deferred IRU revenue		12,547			12,546			12,999			–			(3.5	)
Deferred equipment revenue		104,997			80,256			71,677			30.8			12.0
Deferred equipment costs		(203,597	)		(200,218	)		(210,477	)		1.7			(4.9	)
Deferred charges		(5,153	)		(5,328	)		(6,595	)		(3.3	)		(19.2	)
Property, plant and equipment		(381,909	)		(385,607	)		(408,866	)		(1.0	)		(5.7	)

The increase in amortization of deferred equipment revenue of 30.8% and 12.0% in 2007 and 2006, respectively, is primarily due to the continued growth in sales of higher priced HD digital equipment as well as the impact of the price increases implemented by Shaw on this equipment in the latter part of 2006. The lower volume of DTH equipment sales, combined with the strengthening of the Canadian dollar relative to the US dollar and decreases in the cost of customer equipment, caused the majority of the 4.9% decrease in amortization of deferred equipment costs in 2006.

Amortization of property, plant and equipment decreased in both 2007 and 2006 as the impact of assets becoming fully depreciated exceeded the amortization on new capital purchases.

Interest

							Change
							2007			2006
	2007		2006		2005		%			%
(In $000’s Cdn)
Interest		245,043		254,303		262,949		(3.6	)		(3.3	)

In 2007, interest expense decreased due to lower average debt levels and interest earned on short-term investments, as a portion of the proceeds from the $400 million senior unsecured notes on March 2, 2007 was invested in short-term deposits pending the repayment of debt that matured in October 2007. Interest charges decreased in 2006 as a result of lower average cost of borrowing mainly resulting from changes in the various components of long-term debt.

Gain on sale of investments

							Increase (decrease) in income
	2007		2006		2005		2007			2006
(In $000’s Cdn)
Gain on sale of investments		415		50,315		32,163		(49,900	)		18,152

The gain on sale of investments primarily resulted from the sale of the investment in Canadian Hydro Developers, Inc. (“Canadian Hydro”) in 2006 and the settlement of the forward sale contract in respect of an investment in 2005.

29

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

Other income and expenses

									Increase (decrease)
									in income
	2007		2006			2005			2007			2006
(In $000’s Cdn)
Debt retirement costs		–		(12,248	)		(6,311	)		12,248			(5,937	)
Foreign exchange gain on unhedged long-term debt		–		5,369			40,518			(5,369	)		(35,149	)
Fair value loss on forward currency forward contracts		–		(360	)		(19,342	)		360			18,982
Other gains		9,105		6,205			9,079			2,900			(2,874	)

The debt retirement costs in 2006 and 2005 arise on the write-off of the remaining deferred financing charges associated with the redemption of the US $172.5 million COPrS and $150.0 million COPrS, respectively.

Shaw recorded foreign exchange gains on the translation of its foreign denominated unhedged long-term debt which included US dollar denominated bank loans, COPrS and a Zero Coupon Loan. Due to the strengthening of the Canadian dollar relative to the US dollar and repayment of the US denominated debt during 2006 and 2005, the Company recorded foreign exchange gains of $5.4 million and $40.5 million, respectively. As of June 2006, the Company no longer had any foreign denominated unhedged long-term debt and therefore does not anticipate recording any further exchange gains and losses.

The Company had a forward purchase contract which provided US funds required for the quarterly interest payments on the US denominated COPrS. This forward purchase contract was not designated as a hedge. Accordingly, the carrying value of this financial instrument was adjusted to reflect the current market value, which resulted in losses of $0.4 million and $23.6 million in 2006 and 2005, respectively. In addition, the forward purchase contract entered into by the Company to purchase the US funds required to redeem the Series A COPrS in February 2005 was not eligible for hedge accounting. As a result, the forward purchase contract was fair valued and resulted in a gain of $4.3 million on settlement.

The year-over-year change in other gains was mainly in respect of amounts reported on the disposal of property, plant and equipment, including the sale of residential units of Shaw Tower by the Partnership of $1.7 million in 2006 and $6.2 million in 2005.

Income tax expense

The income tax expense was calculated using current statutory income tax rates of 33.75% for each of the years 2007 and 2006 and 35.5% for 2005 and was adjusted for the reconciling items identified in Note 14 to the Consolidated Financial Statements. Future income tax recoveries of $25.5 million and $175.8 million related to reductions in corporate income tax rates were recorded in 2007 and 2006, respectively.

The significant growth in net income before taxes over the past several years has reduced the Company’s tax loss carryforwards. Shaw anticipates these will be fully utilized during 2009 and the Company will commence being cash taxable at that time.

Investment in Burrard Landing Lot 2 Holdings Partnership

As described in Note 1 to the Consolidated Financial Statements, Shaw proportionately consolidates the assets, liabilities, revenues and expenses of its interest in the Partnership. During construction, all costs, including interest were capitalized to the cost of the building. The commercial construction of the building was completed in the fall of 2004, at which time Shaw began to record revenue and expenses in respect of

30

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

the commercial activities which have a nominal impact on net income. Residential construction was completed in the second quarter of 2006. Shaw has recorded gains on the sale of residential units of $1.7 million and $6.2 million in 2006 and 2005, respectively.

Net income per share

							Change
							2007			2006
	2007		2006		2005		%			%
(In $000’s Cdn except per share amounts)
Net income		388,479		458,250		153,221		(15.2	)		199.1
Divided by weighted average number of participating shares outstanding during period (000’s)		432,493		435,332		456,420		(0.7	)		(4.6	)
Income per share – basic	$	0.90	$	1.05	$	0.34		(14.3	)		208.8
Income per share – diluted	$	0.89	$	1.05	$	0.34		(15.2	)		208.8

The percentage improvements in earnings per share in 2006 is higher than the respective percentage improvement in earnings because of the decrease in the weighted average number of outstanding shares due to ongoing share repurchases.

Net income

Net income was $388.5 million in 2007 compared to $458.3 million in 2006 and $153.2 million in 2005. The year-over-year changes are summarized in the table below. In 2007, the change in other net costs and revenue is due to the gain on sale of Canadian Hydro, partially offset by debt retirement costs on the redemption of two series of COPrS in 2006. The fluctuation in other net costs and revenue from 2005 to 2006 is mainly due to lower foreign exchange gains in 2006 on unhedged long-term debt as well as increased debt retirement costs related to the redemption of two series of COPrS in 2006 versus one series in 2005, all of which were partially offset by a higher gain on sale of investments due to the aforementioned sale of Canadian Hydro and a decreased fair value loss on forward currency forward contracts. The year-over-year change in income taxes is mainly due to the higher future tax recoveries reflected in 2006 primarily related to reductions in corporate income tax rates.

	2007			2006
(In $millions Cdn)
Increased service operating income before amortization		161.7			95.9
Decreased amortization of deferred net equipment costs and revenue and IRU revenue		21.3			18.4
Decreased amortization of deferred charges and property, plant and equipment		3.8			24.5
Decreased interest expense		9.3			8.6
Change in other net costs and revenue(1)		(39.4	)		(6.4	)
Decreased (increased) income taxes		(226.5	)		164.0
		(69.8	)		305.0

(1)  Other net costs and revenue include gain on sale of investments, debt retirement costs, foreign exchange gain on unhedged long-term debt, fair value loss on foreign currency forward contracts, equity income (loss) on investees and other gains as detailed in the Consolidated Statements of Income and Deficit.

31

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

SEGMENTED OPERATIONS REVIEW

CABLE

FINANCIAL HIGHLIGHTS

							Change
							2007			2006
	2007		2006		2005		%			%
($000’s Cdn)
Service revenue (third party)		2,082,652		1,808,583		1,598,369		15.2			13.2
Service operating income before amortization(1)		995,694		857,466		797,583		16.1			7.5
Less:
Interest		205,062		210,758		220,388		(2.7	)		(4.4	)
Cash taxes on net income		—		1,761		5,410		(100.0	)		(67.4	)
Cash flow before the following:		790,632		644,947		571,785		22.6			12.8
Capital expenditures and equipment subsidies		553,031		451,549		343,168		22.5			31.6
Free cash flow(1)		237,601		193,398		228,617		22.9			(15.4	)
Operating margin(1)		47.8%		47.4%		49.9%		0.4			(2.5	)

(1)  See key performance drivers on page 9.

2007 vs. 2006

OPERATING HIGHLIGHTS

•   Digital Phone lines grew by 172,650 to 385,357. Service expansion continued in the year with the service now being available to over 80% of homes passed.

•   Internet penetration of basic exceeds 65% and as at August 31, 2007 Shaw had 1,451,756 customers, adding 134,301 in the year. Digital customers increased by 90,556 to 763,140 and Basic cable subscribers were up by 20,521 to 2,226,841.

•   During 2007, the Company completed acquisitions of several cable systems that complement existing operations, adding approximately 20,000 cable subscribers.

•   Free cash flow for 2007 of $237.6 million compares to $193.4 million last year.

•   The Company implemented rate increases on most stand-alone services, packages, and on specialty services in September 2006 and July 2007. The increases generated additional monthly revenue of approximately $5.0 million and $6.5 million, respectively, once fully implemented.

Cable service revenue improved 15.2% over 2006 to $2.08 billion. Customer growth, rate increases and the impact of acquisitions completed since June, 2006 accounted for the increase. Service operating income before amortization increased 16.1% over the prior year to $995.7 million. The increase was mainly driven by improved revenue partially offset by costs related to the revenue growth.

In fiscal 2007, the Company completed acquisitions of several cable systems in British Columbia and Ontario that complement existing cable systems, adding approximately 20,000 cable subscribers. The systems acquired provide synergies with existing operations and represent growing markets.

32

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

During 2007, Shaw announced several additions to its channel line-up, continuing to enhance its available programming, and also added a number of new HD services including HD Net, WGN HD, Showcase HD, National Geographic HD and a second HD Movie Central channel. Shaw currently has over 200,000 HD capable cable customers.

Digital Phone service expansion continued in the year with launches in various markets including Saskatoon, Kelowna, Nanaimo, Red Deer, Medicine Hat, Lethbridge and Abbotsford, as well as certain of their surrounding areas. The Company introduced a new product to the range of service offerings, Shaw Digital Phone Lite. This service includes a local phone line, popular calling features, and long distance anytime calling at competitive per minute rates. This new service offering is tailored for light long distance users and gives customers the opportunity to customize their home phone service to meet their needs.

Over the past year Shaw invested in new systems that allow the Company to operate independently as a CLEC using its own back office infrastructure. Shaw launched these systems late in 2007 and anticipates gaining cost efficiencies once these are fully rolled out, as well as the ability to provide an improved customer experience due to increased control over the customer order and fulfillment process. The Company also successfully implemented a Class 4 toll switch which allows for the routing of telephone traffic to the lowest cost long distance provider. As least cost routing is deployed across Shaw’s network it is anticipated that long distance wholesale costs will continue to decline.

Shaw has recently launched a commercial voice service for small to medium sized businesses in Calgary Edmonton and Vancouver, and plans to continue roll-outs in its other major centres in 2008.

2006 vs. 2005

OPERATING HIGHLIGHTS

•   The Company added 43,744 Digital Phone lines and at August 31, 2006, the number of Digital Phone lines, including pending installations, was 212,707. The expansion of Shaw’s Digital Phone footprint continued with the service rolled out during 2006 in Victoria, Vancouver, Fort McMurray and other smaller areas including the surrounding areas of Calgary and Edmonton.

•   Internet penetration of basic at August 31, 2006 was almost 60%, up from 54.5% at August 31, 2005. Shaw had in excess of 1.3 million Internet customers having added 138,581 in 2006. Digital subscribers were up 71,253 and Basic cable posted a 41,281 increase.

•   Commencing in October 2005, Shaw introduced rate increases on most stand-alone services, packages, and on specialty services. The increases generated additional revenue of approximately $3.8 million per month once fully implemented in November 2005.

•   Shaw announced the acquisition of several cable systems that complement existing operations including Pemberton Cable, Saltspring Cablevision, Whistler Cable and Grand Forks, all operating in British Columbia, as well as Norcom Telecommunications Limited operating in Kenora, Ontario. These cable systems provide synergies with existing operations and represent growing markets.

Cable service revenue improved 13.2% over 2005. The increase was primarily driven by customer growth and rate increases. Service operating income before amortization increased 7.5% over the comparable year. The investment in people and services to support ongoing service and product enhancements, as well as increased marketing and maintenance related to service costs for software and equipment contributed to this reduced pace of growth.

At August 31, 2006 the Shaw Digital Phone service was available to approximately 2.0 million, representing 60% of homes passed. During 2006 Shaw expanded its Digital Phone footprint to Victoria, Vancouver, Fort McMurray, and other smaller areas including the surrounding areas of Calgary and Edmonton. In 2006 the

33

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

Company enhanced the digital phone service to offer its customers a competitive international long distance calling plan. In addition to unlimited anytime long distance calling within Canada and the U.S., Shaw Digital Phone now includes 1,000 international long distance minutes per month. Shaw Digital Phone customers can direct dial a variety of countries in Europe, the U.K. and Asia Pacific for no additional cost. Shaw is completing over 3.6 million telephone calls per day on its private managed broadband network (not the public internet) allowing Shaw to ensure customers receive a superior level of quality and reliability.

A number of customer service initiatives and enhancements were completed during 2006. Analog cable service was enhanced with the new channel launches of Turner Classic Movies, American Movie Classics (AMC) as well as the addition of Encore Avenue. This is part of the Company’s strategy to bring popular programming services to analog cable customers who represent almost 70% of Shaw’s basic subscribers. High-speed Internet was enhanced with the introduction of Shaw Photo Share and the Company increased the speed of its premier Internet service, High-Speed Xtreme-I, by over 40%. The High-Speed Xtreme-I service allows customers to download Internet files at an enhanced speed of up to 10Mb per second. Shaw has also added value and variety for digital customers by adding the NFL Network at no additional cost and carrying NHL hockey on Shaw Pay Per View (“PPV”). VOD offerings were expanded during 2006 with the addition of content from Warner Bros. International and Eurocinema. Vancouver Island was added to the VOD footprint and during 2006 over 2.4 million VOD sessions were ordered by customers. Shaw also announced the expansion of its HD offering adding TSN HD, CBC HD, Discovery HD, A&E HD and CTV HD. At the end of 2006 over 90,000 cable customers were HD capable, having purchased an HD receiver from Shaw. With the continued growth of the business, the Company increased support to ensure delivery on its commitment to provide exceptional customer service through the establishment of a new call centre located in Winnipeg. This new call centre serves as an overflow facility to handle customer calls and inquiries from across Western Canada.

CAPITAL EXPENDITURES AND EQUIPMENT SUBSIDIES – CABLE

							Change
							2007			2006
	2007		2006		2005		%			%
(In $000’s Cdn)
Capital expenditures and equipment subsidies:
New housing development(1)		90,016		79,230		79,656		13.6			(0.5	)
Success-based(2)		82,238		87,365		60,320		(5.9	)		44.8
Upgrades and enhancement(3)		254,786		192,875		140,776		32.1			37.0
Replacement(4)		44,489		38,807		30,181		14.6			28.6
Buildings and other		81,502		53,272		32,235		53.0			65.3
		553,031		451,549		343,168		22.5			31.6

Capital expenditure categories listed above include:

(1)	Build out of mainline cable and the addition of drops in new subdivisions.
(2)	Capital and equipment subsidies related to the acquisition of new customers, including installation of internet and digital phone modems, DCTs, filters and commercial drops for Shaw Business Solutions customers.
(3)	Upgrades to the plant and build out of fiber backbone to reduce use of leased circuits and costs to decrease node size and Digital Phone capital.
(4)	Normal replacement of aged assets such as drops, vehicles and other equipment.

34

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

2007 vs. 2006

Total capital investment of $553.0 million increased $101.5 million over 2006. Investment in the Upgrade and Enhancements and Replacement categories combined increased $67.6 million. These increased investments expand plant capacity to support digital phone and internet growth, as well as VOD, digital cable and HDTV initiatives. Buildings and Other spending increased $28.2 million primarily due to investments to upgrade certain corporate assets and various facilities projects. Success-based capital decreased $5.1 million on an annual basis. Internet success-based capital was up as a result of increased promotions although this was more than offset by reduced success-based capital related to sales of DCTs as a result of price increases implemented during the latter part of fiscal 2006.

2006 vs. 2005

Capital investment increased $108.4 million over 2005 as the Company undertook various projects to support growth and improvements. During 2006, Shaw invested $86.1 million of capital on Digital Phone deployment. Total spending at the end of 2006 on Digital Phone was $148.7 million. Success-based capital was up $27.0 million over 2005 due to Digital Phone customer growth. The increase over 2005 of $60.7 million in the Upgrades and Enhancements and Replacements categories combined is primarily due to spending to maintain a leading network. During 2006, the Company invested in fibre projects, node and channel expansion projects to support digital phone and internet growth, as well as headend expenditures to support VOD and digital cable improvements. Fiscal 2006 also included higher new vehicle purchases and increased spending on office equipment to support call centre expansions. Spending in Buildings and Other increased $21.0 million over the comparable period primarily due to spending commencing on a multi-year project related to a new customer management and billing system and increased facilities projects.

SUBSCRIBER STATISTICS

							2007				2006
									Change				Change
	2007		2006(1)		2005(1)		Growth		%		Growth		%
CABLE:
Basic subscribers		2,226,841		2,206,320		2,165,039		20,521		0.9		41,281		1.9
Penetration as a % of homes passed		64.6%		65.4%		66.0%
Digital customers		763,140		672,584		601,331		90,556		13.5		71,253		11.8
Digital deployment (“DCTs”)		1,016,564		856,797		743,420		159,767		18.6		113,377		15.3
INTERNET:
Connected and scheduled installations		1,451,756		1,317,455		1,178,874		134,301		10.2		138,581		11.8
Penetration as % of basic		65.2%		59.7%		54.5%
Stand-alone Internet not included in basic cable		182,569		158,475		138,154		24,094		15.2		20,321		14.7
DIGITAL PHONE
Number of lines(2)		385,357		212,707		56,563		172,650		81.2		156,144		276.1

(1)	August 31, 2006 and 2005 are restated for comparative purposes as if the acquisition of cable systems in British Columbia and Ontario had occurred on that date.
(2)	Represents primary and secondary lines on billing plus pending installs.

Digital customers increased by 90,556 in 2007 compared to an increase of 71,253 in 2006. Digital and On-Demand services continue to grow and the Digital customer base has increased from 30% of basic customers at August 31, 2006 to approximately 35% at the end of 2007. During the year, Shaw began to digitally simulcast its channel line-up in 5 major markets including Calgary, Edmonton, Vancouver, Victoria and Winnipeg which allowed the Company to launch a new low priced digital terminal. The new terminal permits access to all digital features including the on-screen programming guide, music, and

35

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

VOD and PPV movies and events. With this, and on-going demand for HD as well as enhancements and expansion of the available programming, the Company anticipates continued growth in this area.

The Internet customer base grew by 134,301 in 2007, compared to 138,581 last year. Internet penetration as a percentage of basic was 65.2% compared to 59.7% last year. Shaw continues to be one of the leading North American cable operators in this regard. The Company added a new Internet product early in the year, Shaw High-Speed Nitro that offers download speeds of up to 25 Mbps, and also doubled the download speed of the High-Speed Lite Internet service at no additional cost to the customer. The Company now has four levels of Internet including High Speed Nitro, High Speed Xtreme-I, High Speed Internet and High Speed Lite.

Each new product and product enhancement keeps Shaw competitive allowing the Company to retain existing customers and steadily add new ones. Shaw delivers high-quality customer service, simplicity and value to its customers through various bundled service offerings creating value for Shaw’s customers. This also allows Shaw to benefit through incremental penetration and operational efficiencies.

Churn(1)	2007			2006			2005
Digital customers		14.3	%		14.7	%		15.1	%
Internet customers		15.2	%		14.9	%		15.1	%

(1)  Calculated as the number of new customer activations less the net gain of customers during the period divided by the average of the opening and closing customers for the applicable period. See key performance drivers on page 9.

36

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

SATELLITE (DTH and Satellite Services)

FINANCIAL HIGHLIGHTS

							Change
							2007			2006
	2007		2006		2005		%			%
($000’s Cdn)
DTH (Star Choice)		605,176		567,807		530,729		6.6			7.0
Satellite Services		86,617		82,894		80,712		4.5			2.7
Service revenue (third party)		691,793		650,701		611,441		6.3			6.4
Service operating income before amortization(1)
DTH (Star Choice)		196,404		175,401		141,687		12.0			23.8
Satellite Services		47,527		45,050		42,723		5.5			5.4
		243,931		220,451		184,410		10.7			19.5
Less:
Interest(2)		38,563		42,100		41,384		(8.4	)		1.7
Cash taxes on net income		–		98		334		(100.0	)		(70.7	)
Cash flow before the following		205,368		178,253		142,692		15.2			24.9
Less capital expenditures and equipment subsidies:
Success-based		73,504		85,341		82,780		(13.9	)		3.1
Transponders and other		13,273		20,865		11,210		(36.4	)		86.1
		86,777		106,206		93,990		(18.3	)		13.0
Free cash flow(1)		118,591		72,047		48,702		64.6			47.9
Operating margin		35.3%		33.9%		30.2%		1.4			3.7

(1)	See key performance drivers on page 9.
(2)	Interest is allocated to the Satellite division based on the actual cost of debt incurred by the Company to repay prior outstanding Satellite debt and to fund accumulated cash deficits of Satellite Services and Star Choice.

CUSTOMER STATISTICS

	2007		2006		2005
Star Choice Customers(1)		879,585		869,208		844,662

(1)  Including seasonal customers who temporarily suspend their service.

Churn(2)	2007			2006			2005
Star Choice customers		11.3	%		11.5	%		14.6	%

(2)  Calculated as the number of new customer activations less the net gain of customers during the period divided by the average of the opening and closing customers for the applicable period. See key performance drivers on page 9.

37

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

SATELLITE (DTH and Satellite Services)

2007 vs. 2006

OPERATING HIGHLIGHTS

•    Free cash flow of $118.6 million for 2007 increased from $72.0 million in 2006.

•    During the year Star Choice added 10,377 customers and as at August 31, 2007 customers now total 879,585.

•    Rate increases were implemented on most of DTH’s programming packages. The rate increases, which were effective September 2006 for some package types and February 2007 for others, generated additional monthly revenue of approximately $1.5 million and $0.7 million, respectively, once fully implemented.

Service revenue was up 6.3% over the comparable period to $691.8 million. The improvement was primarily due to rate increases and customer growth. Service operating income before amortization was up 10.7% over the prior year to $243.9 million. The increase was driven by the growth in service revenue, lower sales related expenses and reduced bad debt. Improvements were partially offset by higher costs related to increased transponder capacity.

Capital investment of $86.8 million decreased $19.4 million over the prior year. Success-based capital decreased $11.8 million over the comparable period due to favorable pricing of receivers and reduced activations. Spending in Transponders and Other of $13.3 million decreased $7.6 million over 2006. The decline was attributable to higher spending in the prior year on facilities and investments related to additional transponder capacity.

During 2007, Star Choice started several upgrade projects to expand its HD capacity. These projects were completed early in 2008 and included moving to a more advanced technology for HD signals which allows for an increase in the number of HD channels per transponder. During 2007 Star Choice increased the number of HD channels offered from 14 to 25 and since August 31, 2007 has added an additional 7 channels to currently offer 32 HD channels. Star Choice now has over 140,000 HD capable customers.

For the second consecutive year, Star Choice was recognized by SQM Group Inc., receiving their award for customer satisfaction within the Telecommunications and TV Industry. Star Choice continues to focus on providing high quality customer service and during the year added a third call centre in Mississauga to complement the existing call centres in Calgary and Montreal.

2006 vs. 2005

OPERATING HIGHLIGHTS

•    Free cash flow for the year was $72.0 million compared to $48.7 million for 2005.

•    DTH added 24,546 customers in 2006 compared to 16,759 in the previous year.

•    Star Choice received the SQM Group Inc 2005 award for the highest customer satisfaction rating, for customer contact in a call centre, within the Telecommunications and TV Industry.

•    Rate increases were implemented on most of DTH’s programming packages. The rate increases were effective September 1, 2005 for some package types and February 1, 2006 for others. Each of the September and February rate increases generated additional revenue of approximately $0.8 million per month effective in the month implemented.

•    Customer churn decreased to 11.5% compared to 14.6% in 2005.

38

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

Service revenue improved 6.4% during 2006 as a result of rate increases and customer growth. Service operating income before amortization increased 19.5% to $220.5 million. The improvement was primarily due to the growth in service revenue, cost savings including reduced marketing and distribution related expenses, lower bad debt, and the recovery of provisions related to certain contractual matters.

Capital spending of $106.2 million in 2006 increased $12.2 million over the previous year. Spending in Transponders and Other was up $9.7 million primarily due to spending on facilities projects, uplink equipment and the purchase of a license for the Satellite Services business. Success based capital expenditures of $85.3 million increased $2.6 million over 2005 primarily due to increased shipment volumes to retailers and dealers.

During 2006, Star Choice purchased two additional Ku-band transponders on the Anik F2 satellite from Telesat. This additional capacity was used to launch three new HD channels including TSN HD, CBC HD and CTV HD. Early in 2007 it also expanded the HD offering adding Discovery HD, A&E HD and SRC HD. SRC HD is the first French HD channel to join the line-up.

Throughout 2006, Star Choice continued to improve its service offerings and its overall customer service. Star Choice added a number of new video channels, including two French-language channels, PRISE 2 and Cinépop. Other popular channels added to its growing channel line-up include Turner Classic Movies, The Fight Network, Drive-In Classics and AMC. During 2006, Star Choice was recognized by SQM Group Inc. in receiving their 2005 award for the Highest Customer Satisfaction Rating within the Telecommunications and TV industry. SQM Group awards excellence in customer and employee satisfaction for the contact centre industry. Star Choice continues to raise the bar in improving the overall customer service experience which is reflected in the reduced customer churn as outlined above.

IV.  FINANCIAL POSITION

Total assets at August 31, 2007 were $8.2 billion compared to $7.7 billion at August 31, 2006. Following is a discussion of significant changes in the consolidated balance sheet since August 31, 2006.

Current assets increased by $238.2 million due to increases in cash of $165.3 million, accounts receivable of $17.4 million, inventory of $6.6 million and future income taxes of $46.0 million. Cash increased as a portion of the proceeds from the issue of $400 million senior unsecured notes on March 2, 2007 was invested in short term deposits pending the repayment of debt that matured in October 2007. Accounts receivable were up due to customer growth, rate increases and a reduction in allowance for doubtful accounts due to lower bad debt experience, while inventories were higher due to timing of purchases and continued growth. Future income taxes increased due to the anticipated use of a higher amount of non-capital loss carryforwards.

Investments and other assets decreased by $10.1 million primarily due to the sale of an interest in a publicly traded company.

Property, plant and equipment increased by $172.8 million as current year capital investment exceeded amortization.

Deferred charges increased during the year by $16.6 million primarily due to an increase in deferred equipment costs of $15.5 million.

Broadcast rights increased by $84.6 million due to completing various cable system acquisitions.

Current liabilities (excluding current portion of long-term debt) declined by $28.2 million due to decreases in bank indebtedness of $20.4 million and accounts payable of $19.7 million, both of which were partially offset by an increase in unearned revenue of $12.4 million. Accounts payable decreased mainly due to timing of certain payments while unearned revenue increased due to customer growth and rate increases.

39

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

Total long-term debt increased by $72.2 million as a result of the issuance of $400 million senior unsecured notes, partially offset by repayment of bank borrowings and Partnership debt of $280.4 million, and a decrease of $47.4 million relating to the translation of US denominated debt. Net long-term debt, after considering the $165.3 million of cash invested in short term deposits pending the repayment of maturing debt, decreased.

Other long-term liability increased due to the current year defined benefit plan expense.

Deferred credits increased by $50.8 million principally due to higher deferred foreign exchange gains on the translation of hedged US dollar denominated debt of $47.4 million and an increase in deferred equipment revenue of $21.3 million, both of which were partially offset by amortization of deferred IRU rental revenue of $12.5 million. Future income taxes increased by $204.0 million due to the future tax expense recorded in the year and the impact of cable system acquisitions.

Share capital increased by $76.2 million due to the net impact of issuance and repurchase of Class B Non-Voting Shares. During the year, the Company issued 179,588 Class B Non-Voting Shares for $3.0 million as partial consideration in respect of a cable system acquisition and 5,678,963 Class B Non-Voting Shares were issued for $95.4 million under the Company’s option and warrant plans. In addition, the Company repurchased 4,408,400 Class B Non-Voting Shares for cancellation for $104.8 million, of which $22.1 million reduced share capital and $82.7 million increased the deficit. Also during 2007, 20,800 Class A Shares were converted into 20,800 Class B Non-Voting Shares. As of November 22, 2007, share capital is as reported at August 31, 2007 with the exception of Class B Non-Voting Shares which were 409,606,905 due to the issuance of 836,146 shares on exercise of stock options.

V.   CONSOLIDATED CASH FLOW ANALYSIS

Operating activities

										Change
										2007			2006
	2007			2006			2005			%			%
(In $000’s Cdn)
Funds flow from operations		1,028,363			847,197			728,524			21.4			16.3
Net increase in non-cash working capital balances related to operations		(28,350	)		(324	)		(86	)		(>100.0	)		(276.7	)
		1,000,013			846,873			728,438			18.1			16.3

Funds flow from operations increased year-over-year due to growth in service operating income before amortization and decreased interest expense. The year-over-year net change in non-cash working capital balances is primarily due to timing of payment of accounts payable and accrued liabilities.

Investing activities

										Increase
	2007			2006			2005			2007			2006
(In $000’s Cdn)
Cash flow used in investing activities		(719,777	)		(489,096	)		(380,032	)		(230,681	)		(109,064	)

In 2007, the primary uses of cash for investing activities were capital expenditures and equipment subsidies ($651.1 million) and cable business acquisitions ($72.4 million).

40

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

In 2006 and 2005, proceeds on the sale of investments (2006 – $88.1 million; 2005 – $79.9 million) partially offset the cash outlay required for capital expenditures and equipment subsidies (2006 – $531.8 million; 2005 – $452.6 million).

Financing activities

The changes in financing activities during the year were as follows:

	2007			2006			2005
(In $ millions Cdn)
Redemption of COPrS		–			(351.9	)		(172.4	)
Cost to terminate foreign currency forward contracts		(0.4	)		(15.8	)		(12.2	)
Repayment of $275 million Senior notes		–			–			(275.0	)
Settlement of Zero Coupon Loan		–			–			(27.9	)
Bank loans and bank indebtedness – net borrowings (repayments)		(300.4	)		(496.3	)		505.6
Purchase of Class B Non-Voting Shares for cancellation		(104.8	)		(146.6	)		(287.1	)
Dividends		(201.2	)		(103.3	)		(70.5	)
Proceeds on bond forward		0.2			2.5			–
Issuance of Class B Non-Voting Shares		92.1			2.3			0.2
Proceeds on prepayments of IRU		–			0.2			1.2
Repayment of Partnership debt		(0.4	)		(0.4	)		(8.6	)
Proceeds on $300 million senior unsecured notes		–			300.0			–
Proceeds on $450 million senior unsecured notes		–			450.0			–
Proceeds on $400 million senior unsecured notes		400.0			–			–
Repayment of long-term debt acquired on business acquisition		–			(0.2	)		–
Cash flow used in financing activities		(114.9	)		(359.5	)		(346.7	)

VI.  LIQUIDITY AND CAPITAL RESOURCES

In the current year, Shaw generated $356.2 million of consolidated free cash flow. Shaw used its free cash flow along with proceeds on issuance of Class B Non-Voting Shares of $92.1 million, the net increase in debt of $99.6 million, proceeds on the sale of various assets of $16.0 million, and other net items of $8.1 million to fund the cash component of cable systems acquisitions of $72.4 million, purchase $104.8 million of Class B Non-Voting Shares for cancellation, pay common share dividends of $201.2 million, invest in short term deposits of $165.3 million and fund the net change in working capital requirements of $28.3 million.

To allow for timely access to debt markets, Shaw filed a short form base shelf prospectus with securities regulators in Canada and the U.S. in February 2007. The shelf prospectus allows for the issue of up to an aggregate $1 billion of debt securities over a 25 month period. Pursuant to this shelf prospectus, on March 2, 2007, Shaw issued $400 million of senior unsecured notes at a rate of 5.70% due March 2, 2017. Net proceeds (after issue and underwriting expenses) of $394.8 million were used for repayment of unsecured bank loans, general working capital purposes and to invest in short-term deposits pending the repayment of maturing debt. The notes were issued at a discount of $0.9 million.

At August 31, 2007, Shaw had access to $1.0 billion of available credit facilities. Based on available credit facilities and forecasted free cash flow, the Company expects to have sufficient liquidity to fund operations and obligations during the current fiscal year. On a longer-term basis, Shaw expects to generate free cash flow and have borrowing capacity sufficient to finance foreseeable future business plans and to refinance maturing debt.

41

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

During 2006, the Company amended its existing credit facility to extend the maturity date from April 2009 to May 2011 and implement new pricing terms effective May 2007. In conjunction with the amendment, the remainder of the non-revolving term facilities, due in fiscal 2007, were repaid early. During 2007, the Company further extended the term of the credit facility to May 2012. Covenants and other material terms remain largely unchanged.

In 2006, Shaw generated $265.4 million of consolidated free cash flow. Shaw used its free cash flow along with the increase in bank indebtedness of $22.1 million, proceeds on the sale of various assets of $77.5 million, cash distributions from the Partnership of $8.5 million, and net change in working capital requirements of $32.3 million to repay $118.6 million in debt, purchase $146.6 million of Class B Non-Voting Shares for cancellation, pay common share dividends of $103.3 million, pay $21.5 million in financing costs (including debt discounts) and pay $15.8 million to terminate a foreign currency forward contract.

On May 9, 2006, Shaw issued $300 million of senior unsecured notes at a rate of 6.15% due May 9, 2016. Net proceeds (after issue and underwriting expenses) of $289.1 million were used for repayment of unsecured bank loans. The notes were issued at a discount of $5.8 million. In conjunction with the issuance of the notes, the $100 million revolving credit facility established by the Company on February 1, 2006, which had not been drawn upon, was terminated.

On November 16, 2005, Shaw issued $450 million of senior unsecured notes at a rate of 6.10% due November 16, 2012. Net proceeds (after issue and underwriting expenses) of $441.5 million were used for debt repayment, including the redemption of the Series B COPrS on December 16, 2005, the repayment of unsecured bank loans, and for working capital purposes. The notes were issued at a discount of $2.7 million.

In addition, Shaw redeemed the Cdn. $150 million 8.875% COPrS on July 17, 2006. In connection with the redemption of the two US series of COPrS, the Company paid $28.0 million to terminate the foreign currency forward contract in respect of the interest entitlements. The pre-tax termination costs of $28.0 million were recorded against the foreign currency forward contract liability. All three redemptions were financed by the Company’s revolving credit facility.

On November 15, 2007, Shaw received the approval of the TSX to renew its normal course issuer bid to purchase its Class B Non-Voting Shares for a further one year period. The Company is authorized to acquire up to an additional 35,600,000 Class B Non-Voting Shares, representing approximately 10% of the public float of Class B Non-Voting Shares, during the period November 19, 2007 to November 18, 2008.

On November 14, 2006, Shaw received the approval of the TSX to renew its normal course issuer bid to purchase up to 30,600,000 Class B Non-Voting Shares during the period November 17, 2006 to November 16, 2007. During 2007 Shaw repurchased 4,408,400 of its Class B Non-Voting Shares for cancellation for $104.8 million, which represents approximately 1.0% of the Class B Non-Voting Shares that had been outstanding at August 31, 2006.

Debt structure

Shaw structures its borrowings generally on a stand-alone basis. The borrowings of Shaw are unsecured. The borrowings of Videon are unsecured, but are guaranteed by the subsidiaries of Videon. There are no further restrictions that prevent the remaining subsidiaries of the Company from transferring funds to Shaw.

Shaw’s borrowings are subject to covenants which include maintaining minimum or maximum financial ratios. At August 31, 2007, Shaw is in compliance with these covenants and based on current business

42

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

plans, the Company is not aware of any condition or event that would give rise to non-compliance with the covenants over the life of the borrowings.

Off-balance sheet arrangement and guarantees
Guarantees

Generally it is not the Company’s policy to issue guarantees to non-controlled affiliates or third parties; however, it has entered into certain agreements as more fully described in Note 16 to the Consolidated Financial Statements. As disclosed thereto, Shaw believes it is remote that these agreements would require any cash payment.

Financial instruments

The Company uses various financial instruments to reduce or eliminate exposure to interest rate and currency risks. The majority of the fair values of these instruments are not reflected on the balance sheet and are disclosed in Note 19 to the Consolidated Financial Statements. Further information concerning policy and use of derivative financial instruments is contained in Note 1 to the Consolidated Financial Statements.

Contractual obligations

The Company also has various operating leases and purchase commitments for equipment and other network infrastructure. The amounts of estimated future payments under such arrangements are detailed in the following table.

CONTRACTUAL OBLIGATIONS

	Payments due by period
			Within						More than
	Total		1 year		2-3 years		4-5 years		5 years
(In $000’s Cdn)
Long-term debt		3,068,554		297,238		595,779		555,693		1,619,844
Operating lease obligations (maintenance and lease of satellite transponders, lease of transmission facilities and lease of premises)		942,293		109,565		200,839		191,432		440,457
Purchase obligations		8,384		4,384		4,000		–		–
Other long-term obligations		50,940		1,448		5,973		7,762		35,757
		4,070,171		412,635		806,591		754,887		2,096,058

VII.  ADDITIONAL INFORMATION

Additional information relating to Shaw, including the Company’s Annual Information Form dated November 29, 2007, can be found on SEDAR at www.sedar.com.

VIII.   COMPLIANCE WITH NYSE CORPORATE GOVERNANCE LISTING STANDARDS

Disclosure of the Company’s corporate governance practices which differ from the New York Stock Exchange (“NYSE”) corporate governance listing standards are posted on Shaw’s website, www.shaw.ca

43

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

August 31, 2007

(under Investor Relations/Corporate Governance/Other Corporate Governance Information/Compliance with NYSE Corporate Governance Listing Standards).

IX.   CERTIFICATION

The Company’s Chief Executive Officer and Senior Vice President & Chief Financial Officer have filed certifications regarding Shaw’s disclosure controls and procedures and internal control over financial reporting.

As at August 31, 2007, the Company’s management, together with its Chief Executive Officer and Senior Vice President & Chief Financial Officer, has evaluated the effectiveness of the design and operation of each of the Company’s disclosure controls and procedures and internal control over financial reporting. Based on these evaluations, the Chief Executive Officer and Senior Vice President & Chief Financial Officer have concluded that the Company’s disclosure controls and procedures and the Company’s internal control over financial reporting are effective.

There were no changes in the Company’s internal controls over financial reporting during the fiscal year that have materially affected or are reasonably likely to materially affect Shaw’s internal controls over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of certain events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

44

Shaw Communications Inc.

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS AND REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
August 31, 2007

November 22, 2007

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of Shaw Communications Inc. and all the information in this annual report are the responsibility of management and have been approved by the Board of Directors.

The financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. When alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances. Financial statements are not precise since they include certain amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material respects. Management has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with the financial statements.

Management has a system of internal controls designed to provide reasonable assurance that the financial statements are accurate and complete in all material respects. The internal control system includes an internal audit function and an established business conduct policy that applies to all employees. Management believes that the systems provide reasonable assurance that transactions are properly authorized and recorded, financial information is relevant, reliable and accurate and that the Company’s assets are appropriately accounted for and adequately safeguarded.

The Board of Directors is responsible for ensuring management fulfils its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the financial statements. The Board carries out this responsibility through its Audit Committee.

The Audit Committee is appointed by the Board and its directors are unrelated and independent. The Committee meets periodically with management, as well as the external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues; to satisfy itself that each party is properly discharging its responsibilities; and, to review the annual report, the financial statements and the external auditors’ report. The Audit Committee reports its findings to the Board for consideration when approving the financial statements for issuance to the shareholders. The Committee also considers, for review by the Board and approval by the shareholders, the engagement or re-appointment of the external auditors.

The financial statements have been audited by Ernst & Young LLP, the external auditors, in accordance with Canadian generally accepted auditing standards on behalf of the shareholders. Ernst & Young LLP has full and free access to the Audit Committee.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Also, projections of any of the effectiveness of internal control are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may deteriorate. Therefore, even those systems

45

determined to be effective can provide only reasonable assurance with respect to the financial statement preparation and presentation.

Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s system of internal control over financial reporting was effective as at August 31, 2007.

[Signed]	[Signed]
Jim Shaw Chief Executive Officer	Steve Wilson Senior Vice President and Chief Financial Officer

46

Shaw Communications Inc.

INDEPENDENT AUDITORS’ REPORT ON FINANCIAL STATEMENTS

Under Canadian Generally Accepted Auditing Standards and the Standards of the Public Company Accounting Oversight Board (United States)

To the Shareholders of

Shaw Communications Inc.

We have audited the Consolidated Balance Sheets of Shaw Communications Inc. as at August 31, 2007, and 2006 and the Consolidated Statements of Income and Deficit and Cash Flows for each of the years in the three-year period ended August 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian Generally Accepted Auditing Standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these Consolidated Financial Statements present fairly, in all material respects, the financial position of Shaw Communications Inc. as at August 31, 2007 and 2006 and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2007 in accordance with Canadian Generally Accepted Accounting Principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Shaw Communications Inc.’s internal control over financial reporting as of August 31, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 24, 2007, expressed an unqualified opinion thereon.

Calgary, Canada October 24, 2007
	Chartered Accountants

47

Shaw Communications Inc.

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Under the Standards of the Public Company Accounting Oversight Board (United States)

To the Shareholders of

Shaw Communications Inc.

We have audited Shaw Communication Inc.’s internal control over financial reporting as of August 31, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Shaw Communications Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Shaw Communications Inc. maintained, in all material respects, effective internal control over financial reporting as of August 31, 2007, based on the COSO criteria.

We also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Shaw Communications Inc. as at August 31, 2007 and 2006 and the consolidated statements of income and deficit and cash flows for each of the years in the three-year period ended August 31, 2007, and our report dated October 24, 2007, expressed an unqualified opinion thereon.

Calgary, Canada October 24, 2007
	Chartered Accountants

48

Shaw Communications Inc.

CONSOLIDATED BALANCE SHEETS

As at August 31

	2007			2006
[thousands of Canadian dollars]	$			$
ASSETS [note 9]
Current
Cash and cash equivalents		165,310			–
Accounts receivable [note 3]		155,499			138,142
Inventories [note 4]		60,601			53,994
Prepaids and other		23,834			20,870
Future income taxes [note 14]		185,000			139,000
		590,244			352,006
Investments and other assets [note 5]		7,881			17,978
Property, plant and equipment [note 6]		2,422,900			2,250,056
Deferred charges [note 7]		278,525			261,908
Intangibles [note 8]
Broadcast rights		4,776,078			4,691,484
Goodwill		88,111			88,111
		8,163,739			7,661,543
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Bank indebtedness [note 9]		–			20,362
Accounts payable and accrued liabilities [notes 13 and 17]		441,444			461,119
Income taxes payable		4,304			4,918
Unearned revenue		118,915			106,497
Current portion of long-term debt [note 9]		297,238			449
		861,901			593,345
Long-term debt [note 9]		2,771,316			2,995,936
Other long-term liability [note 17]		56,844			37,724
Deferred credits [note 10]		1,151,724			1,100,895
Future income taxes [note 14]		1,327,914			1,123,938
		6,169,699			5,851,838
Commitments and contingencies [notes 9, 16 and 17]
Shareholders’ equity
Share capital [note 11]
Class A Shares		2,473			2,475
Class B Non-Voting Shares		2,050,687			1,974,491
Contributed surplus [note 11]		8,700			5,110
Deficit		(68,132	)		(172,701	)
Cumulative translation adjustment [note 12]		312			330
		1,994,040			1,809,705
		8,163,739			7,661,543

See accompanying notes

On behalf of the Board:

[Signed]	[Signed]
JR Shaw	Don Mazankowski
Director	Director

49

Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF INCOME
AND DEFICIT

Years ended August 31

[thousands of Canadian dollars	2007			2006			2005
except per share amounts]	$			$			$
Service revenue [note 15]		2,774,445			2,459,284			2,209,810
Operating, general and administrative expenses		1,534,820			1,381,367			1,227,817
Service operating income before amortization [note 15]		1,239,625			1,077,917			981,993
Amortization –
Deferred IRU revenue [note 10]		12,547			12,546			12,999
Deferred equipment revenue [note 10]		104,997			80,256			71,677
Deferred equipment costs [note 7]		(203,597	)		(200,218	)		(210,477	)
Deferred charges [note 7]		(5,153	)		(5,328	)		(6,595	)
Property, plant and equipment [note 6]		(381,909	)		(385,607	)		(408,866	)
Operating income		766,510			579,566			440,731
Interest [notes 7, 9 and 10]		(245,043	)		(254,303	)		(262,949	)
		521,467			325,263			177,782
Gain on sale of investments [note 5]		415			50,315			32,163
Debt retirement costs [notes 7 and 9]		–			(12,248	)		(6,311	)
Foreign exchange gain on unhedged long-term debt		–			5,369			40,518
Fair value loss on foreign currency forward contracts		–			(360	)		(19,342	)
Other gains [note 1]		9,105			6,205			9,079
Income before income taxes		530,987			374,544			233,889
Income tax expense (recovery) [note 14]		142,871			(83,662	)		80,382
Income before the following		388,116			458,206			153,507
Equity income (loss) on investees [note 5]		363			44			(286	)
Net income		388,479			458,250			153,221
Deficit, beginning of year		(172,701	)		(428,855	)		(332,791	)
Reduction on Class B Non-Voting Shares purchased for cancellation [note 11]		(82,702	)		(97,056	)		(175,575	)
Amortization of opening fair value loss on a foreign currency forward contract [note 7]		–			(1,705	)		(3,195	)
Dividends – Class A Shares and Class B Non-Voting Shares		(201,208	)		(103,335	)		(70,515	)
Deficit, end of year		(68,132	)		(172,701	)		(428,855	)
Earnings per share [note 11]
Basic		$0.90			$1.05			$0.34
Diluted		$0.89			$1.05			$0.34

See accompanying notes

50

Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended August 31

	2007			2006			2005
[thousands of Canadian dollars]	$			$			$
OPERATING ACTIVITIES [note 20]
Funds flow from operations		1,028,363			847,197			728,524
Net increase in non-cash working capital balances related to operations		(28,350	)		(324	)		(86	)
		1,000,013			846,873			728,438
INVESTING ACTIVITIES
Additions to property, plant and equipment [note 15]		(554,565	)		(423,855	)		(336,888	)
Additions to equipment costs (net) [note 15]		(96,516	)		(107,929	)		(115,668	)
Net increase to inventories		(6,607	)		(8,770	)		(1,648	)
Cable business acquisitions [note 2]		(72,361	)		(5,829	)		–
Proceeds on sale of investments and other assets		15,970			88,143			79,899
Costs to terminate IRU		–			–			(283	)
Acquisition of investments		–			(9,392	)		(5,265	)
Additions to deferred charges [note 7]		(5,698	)		(21,464	)		(179	)
		(719,777	)		(489,096	)		(380,032	)
FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness		(20,362	)		20,362			(4,317	)
Proceeds on prepayment of IRU		–			228			1,216
Increase in long-term debt		460,000			1,295,000			755,566
Long-term debt repayments		(340,449	)		(1,414,067	)		(729,592	)
Cost to terminate foreign currency forward contract [note 9]		(370	)		(15,774	)		(12,200	)
Proceeds on bond forward		190			2,486			–
Issue of Class B Non-Voting Shares, net of after-tax expenses		92,058			2,274			228
Purchase of Class B Non-Voting Shares for cancellation [note 11]		(104,763	)		(146,640	)		(287,063	)
Dividends paid on Class A Shares and Class B Non-Voting Shares		(201,208	)		(103,335	)		(70,515	)
		(114,904	)		(359,466	)		(346,677	)
Effect of currency translation on cash balances and cash flows		(22	)		(24	)		(16	)
Increase (decrease) in cash and cash equivalents		165,310			(1,713	)		1,713
Cash and cash equivalents, beginning of year		–			1,713			–
Cash and cash equivalents, end of year		165,310			–			1,713

See accompanying notes

51

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

1.    SIGNIFICANT ACCOUNTING POLICIES

Shaw Communications Inc. (the “Company”) is a public company whose shares are listed on the Toronto and New York Stock Exchanges. The Company is a diversified Canadian communications company whose core operating business is providing broadband cable television services, Internet, Digital Phone, and telecommunications services (“Cable”); Direct-to-home (“DTH”) satellite services (Star Choice) and satellite distribution services (“Satellite Services”).

The consolidated financial statements are prepared by management on the historical cost basis in accordance with Canadian generally accepted accounting principles (“GAAP”). The effects of differences between the application of Canadian and US GAAP on the consolidated financial statements of the Company are described in note 21.

Basis of consolidation

The consolidated financial statements include the accounts of the Company and those of its subsidiaries. Intercompany transactions and balances are eliminated on consolidation. The results of operations of subsidiaries acquired during the year are included from their respective dates of acquisition.

The accounts also include the Company’s proportionate share of the assets, liabilities, revenues, and expenses of its interest in the Burrard Landing Lot 2 Holdings Partnership (the “Partnership”). During 2005, the Company’s interest declined from 38.33% to 33.33% upon receipt of repayment of its equity contributions and a return on capital distribution.

The Company’s interest in the Partnership and in its results of operations and cash flows are as follows:

	2007			2006
	$			$
Working capital		720			1,103
Deferred charges		139			158
Property, plant and equipment		18,808			19,495
		19,667			20,756
Debt		22,561			23,010
Proportionate share of net liabilities		(2,894	)		(2,254	)

	2007			2006			2005
	$			$			$
Operating, general and administrative expenses		1,829			1,829			1,464
Amortization		(707	)		(714	)		(579	)
Interest		(1,418	)		(1,445	)		(1,177	)
Other gains		735			2,588			7,470
Proportionate share of income before income taxes		439			2,258			7,178
Cash flow provided by operating activities		1,284			74			1,310
Cash flow provided by investing activities		–			8,848			18,023
Cash flow used in financing activities		(449	)		(422	)		(8,637	)
Proportionate share of increase in cash		835			8,500			10,696

52

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Investments

Investments in other entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company’s ability to exercise significant influence over the operating and financial policies of the investee. Equity method investments include The Biography Channel (Canada) Corp. (“The Biography Channel”) and 3773213 Canada Inc. (“G4TechTV Canada”) until June 2006, at which time these specialty channels were sold, and MSNBC Canada Holdings Corp. (“MSNBC”) in prior years until its windup in 2005. Investments of this nature are recorded at original cost and adjusted periodically to recognize the Company’s proportionate share of the investees’ net income or losses after the date of investment, additional contributions made and dividends received.

Revenue and expenses

(i)  Service revenue

Service revenue from cable, Internet, Digital Phone and DTH customers includes subscriber service revenue earned as services are provided. Satellite distribution services and telecommunications service revenue is recognized in the period in which the services are rendered to customers.

Subscriber connection fees received from customers are deferred and recognized as service revenue on a straight-line basis over two years. Direct and incremental initial selling, administrative and reconnection costs related to subscriber acquisitions, in an amount not exceeding initial subscriber connection fee revenue, are deferred and recognized as an operating expense on a straight-line basis over the same two years. The costs of physically connecting a new home are capitalized as part of the distribution system and costs of disconnections are expensed as incurred.

Installation revenue received on contracts with commercial business customers is deferred and recognized as service revenue on a straight-line basis over the related service contract, which span two to ten years. Direct and incremental costs associated with the service contract, in an amount not exceeding the upfront installation revenue, are deferred and recognized as an operating expense on a straight-line basis over the same period.

(ii)  Deferred equipment revenue and deferred equipment costs

Revenue from sales of modems, DTH equipment and digital cable terminals (“DCTs”) is deferred and recognized on a straight-line basis over two years commencing when subscriber service is activated. The total cost of the equipment, including installation, is deferred and recognized on a straight-line basis over the same period. The DCT, DTH and modem equipment is generally sold to customers at cost or a subsidized price in order to expand the Company’s customer base.

Revenue from sales of satellite tracking hardware and costs of goods sold are deferred and recognized on a straight-line basis over the related service contract for monthly service charges for air time, which is generally five years. The amortization of the revenue and cost of sale of satellite service equipment commences when goods are shipped.

Recognition of deferred equipment revenue and deferred equipment costs is recorded as deferred equipment revenue amortization and deferred equipment cost amortization, respectively.

53

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

(iii)  Deferred IRU revenue

Prepayments received under indefeasible right to use (“IRU”) agreements are amortized on a straight-line basis into income over the term of the agreement and are recognized in the Consolidated Statements of Income and Deficit as deferred IRU revenue amortization.

Cash and cash equivalents

Cash and cash equivalents include money market instruments that are purchased three months or less from maturity, and are presented net of outstanding cheques. When the amount of outstanding cheques and the amount drawn under the Company’s operating facility (see note 9) are greater than the amount of cash and cash equivalents, the net amount is presented as bank indebtedness.

Inventories

Inventories include subscriber equipment such as DCTs, internet modems and DTH receivers, which are held pending rental or sale at cost or at a subsidized price. When subscriber equipment is sold, the equipment revenue and equipment costs are deferred and amortized over two years. When the subscriber equipment is rented, it is transferred to property, plant and equipment and amortized over its useful life. Inventories are determined on a first-in, first-out basis, and are stated at cost due to the eventual capital nature as either an addition to property, plant and equipment or deferred equipment subsidies.

Property, plant and equipment

Property, plant and equipment are recorded at purchase cost. Direct labour and direct overhead incurred to construct new assets, upgrade existing assets and connect new subscribers are capitalized. Repairs and maintenance expenditures are charged to operating expense as incurred. Amortization is recorded on a straight-line basis over the estimated useful lives of assets as follows:

Asset	Estimated useful life
Cable and telecommunications distribution system	6-15 years
Digital cable terminals and modems	5-7 years
Satellite audio, video and data network equipment and DTH receiving equipment	4-10 years
Buildings	20-40 years
Data processing	4 years
Other	3-10 years

The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment is recognized when the carrying amount of an asset is greater than the future undiscounted net cash flows expected to be generated by the asset. The impairment is measured as the difference between the carrying value of the asset and its fair value calculated using quoted market prices or discounted cash flows.

Deferred charges

Deferred charges primarily include (i) equipment costs, as described in the revenue and expenses accounting policy, deferred and amortized on a straight-line basis over two to five years upon activation

54

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

of the equipment; (ii) financing costs and credit facility arrangement fees related to the issue of long-term debt, amortized on a straight-line basis over the period to maturity of the related debt; and (iii) costs incurred in respect of connection fee revenue and upfront installation revenue, as described in the revenue and expenses accounting policy, deferred and amortized over two to ten years.

Intangibles

The excess of the cost of acquiring cable and satellite businesses over the fair value of related net identifiable tangible and intangible assets acquired is allocated to goodwill. Net identifiable intangible assets acquired consist of amounts allocated to broadcast rights which represent identifiable assets with indefinite useful lives.

Goodwill and intangible assets with an indefinite life are not amortized but are subject to an annual review for impairment which consists of a comparison of the fair value of the assets to their carrying value.

Deferred credits

Deferred credits include: (i) prepayments received under IRU agreements amortized on a straight-line basis into income over the term of the agreement; (ii) foreign exchange gains on translating hedged long-term debt; (iii) equipment revenue, as described in the revenue and expenses accounting policy, deferred and amortized over two years to five years; (iv) connection fee revenue and upfront installation revenue, as described in the revenue and expenses accounting policy, deferred and amortized over two to ten years; (v) a fair value adjustment on debt assumed on an acquisition amortized on a straight-line basis over the term of the debt; (vi) proceeds on a bond forward amortized over the term of the related debt; and (vii) a deposit on a future fiber sale.

Interest capitalization

The Company does not capitalize interest on the construction of its own assets, with the exception of the Partnership’s construction of the office/residential tower in Vancouver. The interest was capitalized on the tower as the construction of it had taken place over a significant period of time and the interest on the Partnership construction facility was directly attributable to such activity. Capitalization of interest ceased in 2005 when the tower was substantially completed and was ready for occupancy. The Company capitalized interest of $656 in 2005 in respect of its proportionate share of the Partnership.

Income taxes

The Company accounts for income taxes using the liability method, whereby future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities measured using substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. Income tax expense for the period is the tax payable for the period and any change during the period in future income tax assets and liabilities.

Foreign currency translation

The financial statements of a foreign subsidiary, which is self-sustaining, are translated using the current rate method, whereby assets and liabilities are translated at year-end exchange rates and revenues and

55

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

expenses are translated at average exchange rates for the year. Adjustments arising from the translation of the financial statements are deferred and included in a separate component of shareholders’ equity.

Transactions originating in foreign currencies are translated into Canadian dollars at the exchange rate at the date of the transaction. Monetary assets and liabilities are translated at the year-end rate of exchange and non-monetary items are translated at historic exchange rates. The net foreign exchange gain recognized on the translation and settlement of current monetary assets and liabilities was $255 (2006 – $1,546; 2005 – $2,471) and is included in other gains.

Exchange gains and losses on translating unhedged long-term debt are included in the Company’s Consolidated Statements of Income and Deficit.

Exchange gains and losses on translating hedged long-term debt are included in deferred credits or deferred charges, respectively.

Derivative financial instruments

The Company uses derivative financial instruments to manage risks from fluctuations in exchange and interest rates. These instruments include cross-currency interest rate exchange agreements, interest rate exchange agreements, currency swaps, and foreign currency forward purchase contracts. Where permissible, the Company accounts for these financial instruments as hedges and as a result the carrying values of the financial instruments are not adjusted to reflect their current market value. The net receipts or payments arising from financial instruments relating to the management of interest risks are recognized as an adjustment to interest expense over the term of the instrument. Foreign exchange gains or losses arising on cross-currency agreements used to hedge US dollar denominated debt are deferred until the hedged item is settled, at which time they are offset against the gain or loss on the hedged item. Upon re-designation or amendment of a derivative financial instrument, the carrying value of the instrument is adjusted to fair value. If the related debt instrument that was hedged had been repaid, then the gain or loss is recorded as a component of the gain or loss on repayment of the debt. Otherwise, the gain or loss is deferred over the remaining life of the original debt instrument. Where hedge accounting is not permissible, the carrying values of derivative financial instruments are adjusted to reflect market value. The resulting gains and losses, in addition to the gains and losses realized on settlement of the contracts, are included in the Company’s Consolidated Statements of Income and Deficit.

Instruments that have been entered into by the Company to hedge exposure to foreign exchange and interest rate risk are reviewed on a regular basis to ensure the hedges are still effective and that hedge accounting continues to be appropriate.

Employee benefit plans

The Company accrues its obligations and related costs under its employee benefit plans. The cost of pensions and other retirement benefits earned by certain senior employees is actuarially determined using the projected benefit method pro-rated on service and management’s best estimate of salary escalation and retirement ages of employees. Past service costs from plan initiation and amendments are amortized on a straight-line basis over the estimated average remaining service life (“EARSL”) of employees active at the date of recognition of past service unless identification of a circumstance would suggest a shorter amortization period is appropriate. Negative plan amendments which reduce costs are applied to reduce any existing unamortized past service costs. The excess, if any, is amortized on a straight-line basis over

56

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

EARSL. Actuarial gains or losses occur because assumptions about benefit plans relate to a long time frame and differ from actual experiences. These assumptions are revised based on actual experience of the plan such as changes in discount rates, expected retirement age and projected salary increases. Actuarial gains (losses) are amortized on a straight-line basis over EARSL which for active employees covered by the defined benefit pension plan is 12.0 years at August 31, 2007 (2006 – 12.5 years; 2005 – 13.5 years). When the restructuring of a benefit plan gives rise to both a curtailment and a settlement of obligations, the curtailment is accounted for prior to the settlement.

August 31 is the measurement date for the Company’s employee benefit plans. Actuaries perform a valuation annually to determine the actuarial present value of the accrued pension benefits. The last actuarial valuation of the pension plan was performed August 31, 2007.

Stock-based compensation

The Company has a stock option plan for directors, officers, employees and consultants to the Company. The options to purchase shares must be issued at not less than the fair value at the date of grant. Any consideration paid on the exercise of stock options, together with any contributed surplus recorded at the date the options vested, is credited to share capital.

The Company calculates the fair value of stock-based compensation awarded to employees using the Black-Scholes Option Pricing Model. Under the transition rules pertaining to stock-based compensation, the fair value of options granted subsequent to August 31, 2003 are expensed and credited to contributed surplus over the four-year vesting period of the options. For options granted prior to August 31, 2003, the Company discloses the pro forma net income and pro forma earnings per share in note 11 as if the Company had expensed the fair value of the options over the vesting period of the options.

Earnings per share

Basic earnings per share is calculated using the weighted average number of Class A Shares and Class B Non-Voting Shares outstanding during the year. The Company uses the treasury stock method of calculating diluted earnings per share. This method assumes that any proceeds from the exercise of stock options and other dilutive instruments would be used to purchase Class B Non-Voting Shares at the average market price during the period.

Guarantees

The Company discloses information about certain types of guarantees that it has provided, including certain types of indemnities, without regard to whether it will have to make any payments under the guarantees (see note 16).

Use of estimates and measurement uncertainty

The preparation of consolidated financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

57

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Key areas of estimation, where management has made difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain, are the allowance for doubtful accounts, the ability to use income tax loss carryforwards and other future income tax assets, capitalization of labour and overhead, useful lives of depreciable assets, contingent liabilities and the recoverability of deferred costs, broadcast rights and goodwill using estimated future cash flows based on current business plans. Significant changes in assumptions with respect to the competitive environment could result in impairment of intangible assets.

Recent Canadian accounting pronouncements

(i)  Financial instruments

In 2008, the Company will adopt CICA Handbook Sections 3855, “Financial Instruments – Recognition and Measurement”, 3861, “Financial Instruments -Disclosure and Presentation”, 3865, “Hedges”, 1530, “Comprehensive Income” and 3251, “Equity”. These new standards address when a company should recognize a financial instrument on its balance sheet and how the instrument should be measured once recognized.

Adoption of these standards will be effective September 1, 2007 on a retrospective basis without restatement of prior periods, except for the reclassification of equity balances to reflect Accumulated Other Comprehensive Income which will include foreign currency translation adjustments.

On adoption of Section 1530, a new statement entitled “Consolidated Statements of Comprehensive Income (Loss)” will be added to the Company’s consolidated financial statements and will include net income (loss) as well as other comprehensive income (loss). Comprehensive income (loss) is comprised of net income (loss), changes in the fair value of derivative instruments designated as cash flow hedges and the net unrealized foreign currency translation gain (loss) from self sustaining foreign operations, which is currently classified as a separate component of shareholders’ equity. Accumulated other comprehensive income (loss) will form part of shareholders’ equity.

In addition, the Company will classify all financial instruments into one of the following five categories: 1) “loans and receivables”, 2) “assets held-to-maturity”, 3) “assets available-for-sale”, 4) “financial liabilities”, and 5) “held-for-trading”. Financial instruments designated as “held-for-trading” and “available-for-sale” are carried at their fair value while financial instruments such as “loans and receivables”, “financial liabilities” and “held-to-maturity” will be carried at amortized cost. Certain private investments where market value is not readily determinable will continue to be carried at cost.

All derivatives, including embedded derivatives that must be separately accounted for, will be measured at fair value in the balance sheet. The changes in fair value of cash flow hedging derivatives will be recorded in other comprehensive income (loss), to the extent effective, until the variability of cash flows relating to the hedged asset or liability is recognized in the consolidated statements of income. Any hedge ineffectiveness will be recognized in net income (loss) immediately.

The impact of recording hedging derivatives at fair value on September 1, 2007 will be recognized in accumulated other comprehensive income (loss) and is estimated to be an increase in derivative instruments of approximately $71 million and a decrease in opening accumulated other comprehensive income of $58 million, net of income taxes of approximately $13 million.

58

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

(ii)  Accounting changes

In 2008, the Company will adopt CICA Handbook Section 1506, “Accounting Changes”, which prescribes the criteria for changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. The Company does not expect this standard to have a significant impact on its consolidated financial statements upon adoption.

2.        BUSINESS ACQUISITIONS AND DIVESTITURE

Cable business acquisitions

	2007
			Issuance of Class B		Total
			Non-Voting		purchase
	Cash		Shares		price
	$		$		$
(i) Cable systems		72,336		3,000		75,336

	2006
					Total
					purchase
	Cash		Accounts payable		price
	$		$		$
(ii) Cable systems		5,829		25		5,854

A summary of net assets acquired on cable business acquisitions, accounted for as purchases, is as follows:

	2007		2006
	$		$
Identifiable net assets acquired at assigned fair values
Property, plant and equipment		8,232		957
Broadcast rights [note 8]		84,594		6,837
		92,826		7,794
Working capital deficiency		2,973		129
Long-term debt		–		218
Future income taxes		14,517		1,593
		17,490		1,940
Purchase price		75,336		5,854

(i)  During 2007, the Company purchased four cable systems serving approximately 20,200 basic subscribers in British Columbia and Ontario. The $3,000 value of the 179,588 Class B Non-Voting Shares, issued as partial consideration for one of the acquisitions, was determined based upon the average market price over a short period prior to the date the terms of the purchase were agreed to and announced.

59

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

(ii)  Effective June 30, 2006 and July 31, 2006, the Company purchased two cable systems serving approximately 1,800 basic subscribers in British Columbia.

Divestiture

Effective October 1, 2004, the Company sold the cable television advertising business, originally acquired as part of the purchase of cable systems from Monarch Cablesystems Ltd. (“Monarch”) in 2004, to Corus Entertainment Inc., a company subject to common voting control.

3.        ACCOUNTS RECEIVABLE

	2007			2006
	$			$
Subscriber and trade receivables		161,765			155,583
Due from officers and employees		230			339
Due from related parties [note 18]		841			1,318
Miscellaneous receivables		7,842			8,981
		170,678			166,221
Less allowance for doubtful accounts		(15,179	)		(28,079	)
		155,499			138,142

Included in operating, general and administrative expenses is a provision for doubtful accounts of $3,086 (2006 – $7,477; 2005 – $20,356).

4.        INVENTORIES

	2007		2006
	$		$
Subscriber equipment		57,628		51,203
Other		2,973		2,791
		60,601		53,994

Subscriber equipment includes internet modems, DTH equipment, DCTs and related customer premise equipment.

5.        INVESTMENTS AND OTHER ASSETS

	2007		2006
	$		$
Investments, at cost net of write-downs:
Investments in publicly traded companies (market value 2006–$9,645)		–		9,392
Investments in private technology companies		1,295		1,295
Other assets:
Employee home relocation mortgages and loans [note 18]		4,746		5,446
Other		1,840		1,845
		7,881		17,978

60

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Canadian Hydro

Canadian Hydro Developers Inc. (“Canadian Hydro”), a Canadian public corporation, develops and operates electrical generating plants. In 2006, the Company sold 12,430,364 shares of Canadian Hydro for $69,749, resulting in a pre-tax gain of $45,317.

Q9 Networks

During 2006, the Company realized a pre-tax gain of $1,690 on the sale of the remaining 277,281 shares of Q9 Networks Inc. In 2005, the Company sold 367,880 shares resulting in a pre-tax gain of $840.

Investments at equity

In 2006, the Company sold its interests in The Biography Channel and G4TechTV Canada resulting in a combined pre-tax gain of $3,180.

Equity income (loss) on investees consists of the following:

	2007		2006			2005
	$		$			$
Specialty channel networks		–		(91	)		(346	)
Other		363		135			60
		363		44			(286	)

Motorola

In 2005, the Company settled an equity forward sales contract on its Motorola, Inc. (“Motorola”) investment resulting in the realization of a $31,018 pre-tax gain. The Motorola investment had been pledged as collateral for a Zero Coupon Loan and the proceeds of settlement were used to repay the Zero Coupon Loan and accrued interest.

Other

Disposal of minor interests in various public and private companies amounted to pre-tax gains of $415, $128 and $305 in 2007, 2006 and 2005, respectively.

61

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

6.        PROPERTY, PLANT AND EQUIPMENT

	2007						2006
			Accumulated		Net book				Accumulated		Net book
	Cost		amortization		value		Cost		amortization		value
	$		$		$		$		$		$
Cable and telecommunications distribution system		3,336,559		1,562,989		1,773,570		3,046,373		1,371,765		1,674,608
Digital cable terminals and modems		283,215		153,746		129,469		410,637		303,959		106,678
Satellite audio, video and data network equipment and DTH receiving equipment		176,809		99,177		77,632		348,119		255,277		92,842
Buildings		268,475		83,141		185,334		254,048		70,068		183,980
Data processing		126,672		58,147		68,525		104,900		50,883		54,017
Other assets		195,793		105,686		90,107		187,323		104,953		82,370
		4,387,523		2,062,886		2,324,637		4,351,400		2,156,905		2,194,495
Land		34,109		–		34,109		33,112		–		33,112
Assets under construction		64,154		–		64,154		22,449		–		22,449
		4,485,786		2,062,886		2,422,900		4,406,961		2,156,905		2,250,056

Included in the cable and telecommunications distribution system assets is the cost of the Company’s purchase of fibers under IRU agreements with terms extending to 60 years totalling $61,811 (2006 – $61,811).

7.        DEFERRED CHARGES

	2007						2006
			Accumulated		Net book				Accumulated		Net book
	Cost		amortization		value		Cost		amortization		value
	$		$		$		$		$		$
Equipment costs		622,811		399,695		223,116		616,627		409,060		207,567
Financing costs and credit facility arrangement fees		56,573		21,037		35,536		66,486		29,985		36,501
Connection and installation costs		32,349		24,187		8,162		40,214		27,388		12,826
Other		11,814		103		11,711		5,370		356		5,014
		723,547		445,022		278,525		728,697		466,789		261,908

Amortization provided in the accounts on deferred charges for 2007 amounted to $222,493 (2006 – $234,056; 2005 – $242,091) of which $208,750 was recorded as amortization of deferred charges and equipment costs (2006 – $205,546; 2005 - $217,072), $1,269 was recorded as interest expense (2006 – $752; 2005 – $300), $nil was recorded as debt retirement costs (2006 – $12,248; 2005 – $6,311), $12,474 was recorded as operating, general and administrative expenses (2006 - $13,805; 2005 – $15,213) and $nil (2006 – $1,705; 2005 – $3,195) was charged to the deficit.

62

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

8.        INTANGIBLES

	Carrying amount
	2007		2006
	$		$
Broadcast rights
Cable systems		3,792,946		3,708,352
DTH and satellite services		983,132		983,132
		4,776,078		4,691,484
Goodwill – non-regulated satellite services		88,111		88,111
Net book value		4,864,189		4,779,595

The changes in the carrying amount of intangibles are as follows:

	Broadcast rights		Goodwill
	$		$
August 31, 2005		4,684,647		88,111
Business acquisitions [note 2]		6,837		–
August 31, 2006		4,691,484		88,111
Business acquisitions [note 2]		84,594		–
August 31, 2007		4,776,078		88,111

63

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

9.    LONG-TERM DEBT

		2007						2006
		Translated						Translated
		at year-end		Adjustment		Translated		at year-end		Adjustment		Translated
	Effective	exchange		for hedged		at hedged		exchange		for hedged		at hedged
	interest rates	rate		debt(1)		rate		rate		debt(1)		rate
	%	$		$		$		$		$		$
Corporate
Bank loans	Fixed and variable		–		–		–		280,000		–		280,000
Senior notes –
5.70% Senior notes due March 2, 2017	5.72		400,000		–		400,000		–		–		–
6.10% Senior notes due November 16, 2012	6.11		450,000		–		450,000		450,000		–		450,000
6.15% Senior notes due May 9, 2016	6.34		300,000		–		300,000		300,000		–		300,000
7.40% Senior notes due October 17, 2007	7.40		296,760		–		296,760		296,760		–		296,760
US $440,000 8.25% Senior notes due April 11, 2010	7.88		464,728		177,892		642,620		486,332		156,288		642,620
US $225,000 7.25% Senior notes due April 6, 2011	7.68		237,645		118,193		355,838		248,693		107,145		355,838
US $300,000 7.20% Senior notes due December 15, 2011	7.61		316,860		159,990		476,850		331,590		145,260		476,850
7.50% Senior notes due November 20, 2013	7.50		350,000		–		350,000		350,000		–		350,000
COPrS –
Due September 30, 2027	8.54		100,000		–		100,000		100,000		–		100,000
			2,915,993		456,075		3,372,068		2,843,375		408,693		3,252,068
Other subsidiaries and entities
Videon CableSystems Inc. 8.15% Senior Debentures Series “A” due April 26, 2010	7.63		130,000		–		130,000		130,000		–		130,000
Burrard Landing Lot 2 Holdings Partnership	6.31		22,561		–		22,561		23,010		–		23,010
			152,561		–		152,561		153,010		–		153,010
Total consolidated debt			3,068,554		456,075		3,524,629		2,996,385		408,693		3,405,078
Less current portion			297,238		–		297,238		449		–		449
			2,771,316		456,075		3,227,391		2,995,936		408,693		3,404,629

(1)  Foreign denominated long-term debt is translated at the year-end rate. If the rate of translation was adjusted to reflect the hedged rates of the Company’s cross-currency interest rate agreements (which fix the liability for interest and principal), long-term debt would increase by $456,075 (2006 – $408,693) representing the amount of the corresponding deferred foreign exchange gain in deferred credits (see note 10).

Interest on long-term debt included in interest expense amounted to $250,100 (2006 – $254,502; 2005 – $263,319). Interest expense is net of $5,301 interest income as a portion of the proceeds from the $400,000 Senior notes was invested in short term investments pending the repayment of maturing debt (see note 23).

Corporate

Bank loans

The Company has a $50,000 revolving operating loan facility, of which $492 has been drawn as committed letters of credit. Interest rates and borrowing options are principally the same as those contained in the credit facility described below. The effective interest rate on the facility was 6.03% for the year (2006 – 5.32%; 2005 – 4.21%).

64

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

A syndicate of banks has provided the Company with an unsecured $1 billion credit facility. During 2006, the Company amended the credit facility to extend the maturity date from April 2009 to May 2011 and implement new pricing terms effective May 2007. In conjunction with the amendment, the remainder of the non-revolving facilities, due in fiscal 2007, were repaid early. During 2007, the Company extended the term of the credit facility to May 2012. At August 31, 2007, no amounts were drawn under the facility. Funds are available to the Company in both Canadian and US dollars. Interest rates fluctuate with Canadian bankers’ acceptance rates, US bank base rates and LIBOR rates. The effective interest rate averaged 5.04% for the year (2006 – 4.38%; 2005 – 2.75%).

Until March 9, 2007, interest on $59,000 of Canadian dollar borrowings was fixed by means of an interest rate swap originally placed in April 1994 for $177,000 at 8.89%. One third of the interest rate swap matured on April 30, 2005 and 2006 and the remaining notional amount of $59,000 originally scheduled to mature on April 30, 2007 was terminated on March 9, 2007.

The US funds required for the interest payments on the US portion of the bank loans were provided by a forward purchase contract at an exchange rate of 1.4078 Cdn.

Senior notes

The senior notes are unsecured obligations and rank equally and ratably with all existing and future senior indebtedness. The notes are redeemable at the Company’s option at any time, in whole or in part, prior to maturity at 100% of the principal amount plus a make-whole premium.

On March 2, 2007 the Company issued $400,000 of senior notes at a rate of 5.70%. The effective interest rate is 5.72% due to the discount on issuance.

The Company has entered into cross-currency interest rate agreements to fix the liability for interest and principal payments over the life of the US dollar senior notes. The table below outlines the US dollar principal, the interest coupon rate, the effective interest rate on the Canadian dollar equivalent of the US debt as a result of the agreements, and the exchange rate applicable to the principal portion of the debt (“Exchange rate”):

US Senior			Effective
note principal	Coupon rate		interest rate		Exchange rate
$	%		%		Cdn $ vs US$
440,000		8.25		7.88		1.4605
225,000		7.25		7.68		1.5815
300,000		7.20		7.61		1.5895

COPrS

The COPrS rank as unsecured junior subordinated debt. The Company has the right to defer payments of interest on the securities for up to 20 consecutive quarterly periods provided that no extension period may extend beyond the stated maturity of the securities. There may be multiple extension periods of varying lengths, each of up to 20 consecutive quarterly periods, throughout the terms of the securities. During any extension period, interest will accrue but will not compound. The Company may satisfy its obligation to pay deferred interest on any applicable interest payment date through the issuance to the trustee of Class B Non-Voting Shares of the Company, in which event the holders of the securities shall be entitled to receive

65

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

cash payments equal to the deferred interest from the proceeds of the sale of the requisite Class B Non-Voting Shares by the trustee of the COPrS.

The 8.54% Series B COPrS are redeemable, at the Company’s option, in whole or in part, at any time after September 30, 2007 at a redemption price equal to 104.27% of the principal amount with the redemption price declining each year until September 30, 2017 when the series is redeemable at par plus accrued and unpaid interest thereon to the date of such redemption. The Company has the ability to satisfy redemption obligations through the issuance of Class B Non-Voting Shares.

Satellite Services

In April 2007, the Company terminated the $10,000 demand operating line of credit that was available in Canadian dollars or the US dollar equivalent. Interest rates fluctuated with Canadian prime rate and US base rates. The effective interest rate on the line of credit for the period to May 2007 was 7.25% (2006 – 6.57%; 2005 – 5.46%).

Other subsidiaries and entities

Videon CableSystems Inc. (“Videon”)

Videon issued 8.15% Senior Debentures that are due April 26, 2010. Interest is payable semi-annually.

The debentures are unsecured and are non-recourse to the parent company. The Senior Debentures are guaranteed by the subsidiaries of Videon. The effective interest rate on the debentures is 7.63% after giving effect to the fair value adjustment to the debt at the date of the Moffat acquisition. This adjustment is included in deferred credits.

Burrard Landing Lot 2 Holdings Partnership

The Company has a 33.33% interest in the Partnership which built the Shaw Tower project with office/retail space and living/working space in Vancouver, BC. The Partnership had an available construction facility of $128,500 and a letter of guarantee facility of $2,350 which were repayable no later than December 31, 2005 (if extended) and bore interest at prime plus 0.5%. Interest on $58,000 of the loan was fixed with an interest rate hedge at 5.125% plus a stamping fee from November 2003 to October 2004. In the fall of 2004, the commercial construction of the building was completed and at that time, the Partnership issued 10 year secured mortgage bonds in respect of the commercial component of the Shaw Tower. The bonds bear interest at 6.31% compounded semi-annually and are collateralized by the property and the commercial rental income from the building with no recourse to the Company. The proceeds from the bonds were used to repay a portion of the amounts outstanding under the Partnership’s construction facility. The remaining balance of the construction facility was repaid and cancelled in 2005 with proceeds from the sale of the residential units.

Debt retirement costs

On July 17, 2006, the Company redeemed its $150,000 8.875% COPrS and on December 16, 2005, the Company redeemed its US $172,500 8.50% COPrS at a cost of $201,894. In connection with the early redemptions, the Company wrote-off the remaining deferred financing charges of $12,248.

66

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

On February 1, 2005, the Company redeemed the US $142,500 8.45% Series A COPrS at a cost of $172,363. In connection with the early redemption, the Company wrote off the remaining deferred financing charges of $6,311.

The Company had purchased a foreign currency forward purchase contract to provide the US funds required for the quarterly interest payments on the 8.50% COPrS and 8.45% Series A COPrS at an exchange rate of $1.4078 Cdn. In connection with the early redemptions, the Company paid $15,574 and $12,200 to terminate the contracts in 2006 and 2005, respectively.

Debt covenants

The Company and its subsidiaries have undertaken to maintain certain covenants in respect of the credit agreements and trust indentures described above. The Company and its subsidiaries were in compliance with these covenants at August 31, 2007.

Long-term debt repayments

Mandatory principal repayments on all long-term debt in each of the next five years and thereafter are as follows:

			Exchange rate
	At year-end		adjusted for
	exchange rate		hedged rates
	$		$
2008		297,238		297,238
2009		509		509
2010		595,270		773,162
2011		238,221		356,414
2012		317,472		477,462
Thereafter		1,619,844		1,619,844
		3,068,554		3,524,629

10.   DEFERRED CREDITS

	2007						2006
			Accumulated		Net book				Accumulated		Net book
	Amount		amortization		value		Amount		amortization		value
	$		$		$		$		$		$
IRU prepayments		629,119		81,611		547,508		629,119		69,064		560,055
Foreign exchange gains on translating hedged long-term debt [note 9]		456,075		–		456,075		408,693		–		408,693
Equipment revenue		331,980		199,252		132,728		277,317		165,972		111,345
Connection fee and installation revenue		37,007		27,174		9,833		42,797		28,600		14,197
Fair value adjustment on debt assumed on acquisition		6,084		4,354		1,730		6,084		3,684		2,400
Bond forward proceeds		2,486		636		1,850		2,486		281		2,205
Deposit on future fiber sale		2,000		–		2,000		2,000		–		2,000
		1,464,751		313,027		1,151,724		1,368,496		267,601		1,100,895

67

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Amortization on deferred credits for 2007 amounted to $132,819 (2006 - $108,595; 2005 – $100,730) and was recorded in the accounts as described below.

IRU agreements are in place for periods ranging from 21 to 60 years and are being amortized to income over the agreement periods. Amortization in respect of the IRU agreements for 2007 amounted to $12,547 (2006 – $12,546; 2005 - $12,999). Amortization in respect of the fair value adjustment on debt amounted to $670 (2006 – $670; 2005 – $670) and amortization of the bond forward was $355 (2006 – $281), both of which were offset against interest expense. Amortization of equipment revenue for 2007 amounted to $104,997 (2006 - $80,256; 2005 – $71,677). Amortization of connection fee and installation revenue for 2007 amounted to $14,250 (2006 – $14,842; 2005 – $15,384) and was recorded as service revenue.

11.   SHARE CAPITAL

Authorized

The Company is authorized to issue a limited number of Class A voting participating shares (“Class A Shares”) of no par value, as described below, an unlimited number of Class B non-voting participating shares (“Class B Non-Voting Shares”) of no par value, Class 1 preferred shares, Class 2 preferred shares, Class A preferred shares and Class B preferred shares.

The authorized number of Class A Shares is limited, subject to certain exceptions, to the lesser of that number of shares (i) currently issued and outstanding and (ii) that may be outstanding after any conversion of Class A Shares into Class B Non-Voting Shares.

Effective on July 30, 2007, the Class A Shares and Class B Non-Voting Shares were split on a two-for-one basis. Accordingly, the comparative number of shares and per share amounts have been retroactively adjusted to reflect the two-for-one split.

Number of securities				2007		2006
2007	2006			$		$
22,563,064		22,583,864	Class A Shares		2,473		2,475
408,770,759		407,299,808	Class B Non-Voting Shares		2,050,687		1,974,491
431,333,823		429,883,672			2,053,160		1,976,966

Class A Shares and Class B Non-Voting Shares

Class A Shares are convertible at any time into an equivalent number of Class B Non-Voting Shares. In the event that a take-over bid is made for Class A Shares, in certain circumstances, the Class B Non-Voting Shares are convertible into an equivalent number of Class A Shares.

68

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Changes in Class A Share capital and Class B Non-Voting Share capital in 2007, 2006 and 2005 are as follows:

							Class B Non-Voting
	Class A Shares						Shares
	Number			$			Number			$
August 31, 2004		22,719,864			2,490			440,218,744			2,132,943
Class A Share conversions		(30,000	)		(3	)		30,000			3
Purchase of shares for cancellation		–			–			(23,011,000	)		(111,488	)
Stock option exercises		–			–			30,266			228
August 31, 2005		22,689,864			2,487			417,268,010			2,021,686
Class A Share conversions		(106,000	)		(12	)		106,000			12
Purchase of shares for cancellation		–			–			(10,239,800	)		(49,584	)
Stock option exercises		–			–			165,598			2,377
August 31, 2006		22,583,864			2,475			407,299,808			1,974,491
Class A Share conversions		(20,800	)		(2	)		20,800			2
Purchase of shares for cancellation		–			–			(4,408,400	)		(22,061	)
Stock option exercises		–			–			5,678,963			95,398
Issued in respect of acquisition		–			–			179,588			3,000
Share issue costs		–			–			–			(143	)
August 31, 2007		22,563,064			2,473			408,770,759			2,050,687

During 2007 the Company purchased for cancellation 4,408,400 (2006 - 10,239,800; 2005 – 23,011,000) Class B Non-Voting Shares, pursuant to its outstanding normal course issuer bid or otherwise, for $104,763 (2006 – $146,640; 2005 – $287,063). Share capital has been reduced by the stated value of the shares amounting to $22,061 (2006 – $49,584; 2005 – $111,488) with the excess of the amount paid over the stated value of the shares amounting to $82,702 (2006 – $97,056; 2005 – $175,575) charged to the deficit.

Stock option plan

Under a stock option plan, directors, officers, employees and consultants of the Company are eligible to receive stock options to acquire Class B Non-Voting Shares with terms not to exceed 10 years from the date of grant. Twenty-five percent of the options are exercisable on each of the first four anniversary dates from the date of the original grant. The options must be issued at not less than the fair market value of the Class B Non-Voting Shares at the date of grant. The maximum number of Class B Non-Voting Shares issuable under this plan and the warrant plan described below may not exceed 32,000,000. To date, 5,789,895 Class B Non-Voting Shares have been issued under these plans.

As a result of the two-for-one stock split, the number of outstanding options was adjusted in accordance with existing plan provisions. All prior period number of options as well as weighted average exercise prices and fair values per option have been retroactively adjusted to reflect the two-for-one stock split.

69

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

The changes in options in 2007, 2006 and 2005 are as follows:

	2007					2006					2005
				Weighted					Weighted					Weighted
				average					average					average
				exercise					exercise					exercise
				price					price					price
	Number			$		Number			$		Number			$
Outstanding, beginning of year		19,117,602			16.30		16,904,500			16.30		15,694,000			16.28
Granted		6,693,500			19.03		5,539,000			16.31		3,566,000			16.31
Forfeited		(2,594,140	)		17.56		(3,216,000	)		16.32		(2,355,500	)		16.19
Exercised		(5,642,161	)		16.28		(109,898	)		15.92		–			–
Outstanding, end of year		17,574,801			17.08		19,117,602			16.30		16,904,500			16.30

The following table summarizes information about the options outstanding at August 31, 2007:

	Options outstanding						Options exercisable
	Number		Weighted		Weighted		Number		Weighted
	outstanding at		average		average		exercisable at		average
	August 31,		remaining		exercise		August 31,		exercise
Range of prices	2007		contractual life		price		2007		price
$8.69		20,000		6.14	$	8.69		15,000	$	8.69
$14.85 – $22.27		16,522,801		6.27	$	16.76		8,221,935	$	16.32
$22.28 – $22.32		1,032,000		9.75	$	22.32		–		–

For all common share options granted to employees up to August 31, 2003, had the Company determined compensation costs based on the fair values at grant dates of the common share options consistent with the method prescribed under CICA Handbook Section 3870, the Company’s net income and earnings per share would have been reported as the pro forma amounts indicated below:

	2007		2006		2005
	$		$		$
Net income		388,479		458,250		153,221
Fair value of stock option grants		119		1,870		5,772
Pro forma net income		388,360		456,380		147,449
Pro forma basic earnings per share		0.90		1.05		0.32
Pro forma diluted earnings per share		0.89		1.04		0.32

The weighted average estimated fair value at the date of the grant for common share options granted for the year ended August 31, 2007 was $3.73 per option (2006 – $1.44 per option; 2005 – $2.15 per option). The fair value of each option granted was estimated on the date of the grant using the Black-Scholes Option Pricing Model with the following assumptions:

	2007			2006			2005
Dividend yield		2.79	%		1.91	%		1.47	%
Risk-free interest rate		4.12	%		3.98	%		3.54	%
Expected life of options		4 years			4 years			4 years
Expected volatility factor of the future expected market price of Class B Non-Voting Shares		26.0	%		20.4	%		36.7	%

70

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

For the purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period.

Other stock options

In conjunction with the acquisition of Satellite Services, holders of Satellite Services options elected to receive 0.9 of one of the Company’s Class B Non-Voting Shares in lieu of one Satellite Services share which would have been received upon the exercise of a Satellite Services option under the Satellite Services option plan.

At August 31, 2007 there were 37,336 (2006 – 77,672) Satellite Services options outstanding with an exercise price of $3.88 (2006 – $3.88 to $11.63). The weighted average remaining contractual life of the Satellite Services options is 0.75 years. At August 31, 2007, 37,336 (2006 – 77,672) Satellite Services options were exercisable into 33,602 (2006 – 69,904) Class B Non-Voting Shares of the Company at a weighted average price of $4.31 (2006 - $7.32) per Class B Non-Voting Share. During the year, 40,336 (2006 – 37,000; 2005 – 21,332) Satellite Services options were exercised for $367 (2006 - $244; 2005 – $84).

Warrants

Prior to the Company’s acquisition and consolidation of Satellite Services effective July 1, 2000, Satellite Services and Star Choice had established a plan to grant Satellite Services warrants to acquire Satellite Services common shares at a price of $11.25 per share to distributors and dealers. In conjunction with the acquisition of Satellite Services, the warrants became convertible into Class B Non-Voting Shares of Shaw.

No warrants remain outstanding under the plan at August 31, 2007. During the year, 500 warrants (2006 – 22,400; 2005 – 11,068) were exercised for $6 (2006 – $280; 2005 – $138).

Contributed surplus

The changes in contributed surplus are as follows:

	2007			2006
	$			$
Balance, beginning of year		5,110			1,866
Stock-based compensation		6,787			3,272
Stock options exercised		(3,197	)		(28	)
Balance, end of year		8,700			5,110

Dividends

To the extent that dividends are declared at the election of the board of directors, the holders of Class B Non-Voting Shares are entitled to receive during each dividend period, in priority to the payment of dividends on the Class A Shares, an additional dividend at a rate of $0.0025 per share per annum. This additional dividend is subject to proportionate adjustment in the event of future consolidations or subdivisions of shares and in the event of any issue of shares by way of stock dividend. After payment or setting aside for payment of the additional non-cumulative dividends on the Class B Non-Voting Shares,

71

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

holders of Class A Shares and Class B Non-Voting Shares participate equally, share for share, as to all subsequent dividends declared.

Except in certain limited circumstances, the Company may not pay or declare dividends on any of its capital stock (including capital stock classified as debt) (except by way of stock dividend) at any time when any interest on the COPrS (see note 9) is either in default or is being deferred.

Share transfer restriction

The Articles of the Company empower the directors to refuse to issue or transfer any share of the Company that would jeopardize or adversely affect the right of Shaw Communications Inc. or any subsidiary to obtain, maintain, amend or renew a license to operate a broadcasting undertaking pursuant to the Broadcasting Act (Canada).

Earnings per share

Earnings per share calculations are as follows:

	2007		2006		2005
Numerator for basic and diluted earnings per share($)		388,479		458,250		153,221
Denominator (thousands of shares)
Weighted average number of Class A Shares and Class B Non-Voting Shares for basic earnings per share		432,493		435,332		456,420
Effect of potentially dilutive securities		3,249		–		–
Weighted average number of Class A Shares and Class B Non-Voting Shares for diluted earnings per share		435,742		435,332		456,420
Earnings per share($)
Basic		0.90		1.05		0.34
Diluted		0.89		1.05		0.34

Options to purchase 17,608,403 (2006 – 19,187,506; 2005 – 17,007,704) Class B Non-Voting Shares were outstanding under the Company’s stock option plan and the Satellite Services option plan at August 31, 2007 and the Company has the right to issue Class B Non-Voting Shares in satisfaction of its redemption obligations on the COPrS included in long-term debt. In addition, warrants to issue 11,200 and 474,242 Class B Non-Voting Shares were outstanding at August 31, 2006 and 2005, respectively. In 2006 and 2005, the effect of the foregoing items is not included in the calculation of diluted earnings per share as the impact is either not dilutive or anti-dilutive (increase earnings per share).

12.   FOREIGN CURRENCY CUMULATIVE TRANSLATION ADJUSTMENT

	2007			2006
	$			$
Balance, beginning of year		330			365
Current year’s deferred translation adjustment		(18	)		(35	)
Balance, end of year		312			330

72

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

13.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	2007		2006
	$		$
Trade		41,871		63,374
Accrued liabilities		192,435		188,242
Accrued network fees		100,468		116,077
Interest		86,504		75,412
Related parties [note 18]		18,718		16,926
Current portion of pension plan liability [note 17]		1,448		1,088
		441,444		461,119

14.   INCOME TAXES

Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s future income tax liabilities and assets are as follows:

	2007		2006
	$		$
Future income tax liabilities:
Property, plant and equipment		133,225		101,670
Broadcast rights		1,015,800		1,012,448
Partnership income		281,208		259,475
		1,430,233		1,373,593
Future income tax assets:
Non-capital loss carryforwards		280,628		381,756
Deferred charges		6,691		5,335
Investments		–		1,564
		287,319		388,655
Net future income tax liability		1,142,914		984,938
Current portion of future income tax asset		185,000		139,000
Future income tax liability		1,327,914		1,123,938

Realization of future income tax assets is dependent on generating sufficient taxable income during the period in which the temporary differences are deductible. Although realization is not assured, management believes it is more likely than not that all future income tax assets will be realized based on reversals of future income tax liabilities, projected operating results and tax planning strategies available to the Company and its subsidiaries.

The Company has capital loss carryforwards of approximately $162,000 for which no future income tax asset has been recognized in the accounts. These capital losses can be carried forward indefinitely.

73

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

The income tax expense or recovery differs from the amount computed by applying Canadian statutory rates to income before income taxes for the following reasons:

	2007			2006			2005
	$			$			$
Current statutory income tax rate		33.75%			33.75%			35.50%
Income tax expense at current statutory rates		179,208			126,409			83,031
Increase (decrease) in taxes resulting from:
Large corporations tax		–			1,859			5,730
Non-taxable portion of foreign exchange gains or losses and amounts on sale/write-down of assets and investments		(95	)		(9,077	)		(9,903	)
Valuation allowance		(9,941	)		(29,091	)		–
Effect of future tax rate reductions		(25,535	)		(175,752	)		–
Originating temporary differences recorded at future tax rates expected to be in effect when realized		(3,040	)		750			(67	)
Other		2,274			1,240			1,591
Income tax expense (recovery)		142,871			(83,662	)		80,382

Significant components of income tax expense (recovery) are as follows:

	2007			2006			2005
	$			$			$
Current tax expense		–			1,859			5,744
Future income tax expense related to origination and reversal of temporary differences		178,347			119,322			74,638
Future income tax recovery resulting from rate changes and valuation allowance		(35,476	)		(204,843	)		–
Income tax expense (recovery)		142,871			(83,662	)		80,382

15.   BUSINESS SEGMENT INFORMATION

The Company provides broadband cable television services, Internet, Digital Phone and telecommunications services (“Cable”); DTH satellite services (Star Choice) and satellite distribution services (“Satellite Services”). All of these operating segments are located in Canada.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Management evaluates divisional performance based on service revenue and service operating income before charges such as amortization.

74

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

	2007
				Satellite
	Cable			DTH			Satellite Services			Total			Total
	$			$			$			$			$
Service revenue – total		2,086,066			611,713			90,117			701,830			2,787,896
Intersegment		(3,414	)		(6,537	)		(3,500	)		(10,037	)		(13,451	)
		2,082,652			605,176			86,617			691,793			2,774,445
Service operating income before amortization		995,694			196,404			47,527			243,931			1,239,625
Service operating income as % of external revenue		47.8%			32.5%			54.9%			35.3%			44.7%
Interest(1)		205,062			n/a			n/a			38,563			243,625
Burrard Landing Lot 2 Holdings Partnership														1,418
														245,043
Cash taxes(1)		–			–			–			–			–
Segment assets		6,300,834			894,893			529,411			1,424,304			7,725,138
Corporate assets														438,601
Total assets														8,163,739
Capital expenditures and equipment subsidies by segment
Capital expenditures		533,485			3,958			5,849			9,807			543,292
Equipment subsidies		19,546			76,970			–			76,970			96,516
		553,031			80,928			5,849			86,777			639,808
Reconciliation to Consolidated Statement of Cash Flows
Additions to property, plant and equipment														554,565
Additions to equipment costs (net)														96,516
Total of capital expenditures and equipment costs (net) per Consolidated Statements of Cash Flows														651,081
Decrease in working capital related to capital expenditures														(7,678	)
Less: IRU prepayments(3)														(7	)
Less: Satellite services equipment profit(4)														(3,588	)
Total capital expenditures and equipment subsidies reported by segments														639,808

See notes following 2005 business segment table.

75

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

	2006
				Satellite
	Cable			DTH			Satellite Services			Total			Total
	$			$			$			$			$
Service revenue – total		1,811,579			573,100			86,434			659,534			2,471,113
Intersegment		(2,996	)		(5,293	)		(3,540	)		(8,833	)		(11,829	)
		1,808,583			567,807			82,894			650,701			2,459,284
Service operating income before amortization		857,466			175,401			45,050			220,451			1,077,917
Service operating income as  % of external revenue		47.4%			30.9%			54.3%			33.9%			43.8%
Segment interest(1)		210,758			n/a			n/a			42,100			252,858
Burrard Landing Lot 2 Holdings Partnership														1,445
Total interest														254,303
Cash taxes(1)		1,761			n/a			n/a			98			1,859
Segment assets		5,965,103			896,941			564,044			1,460,985			7,426,088
Corporate assets														235,455
Total assets														7,661,543
Capital expenditures and equipment subsidies by segment
Capital expenditures		432,156			5,598			12,072			17,670			449,826
Equipment subsidies		19,393			88,536			–			88,536			107,929
		451,549			94,134			12,072			106,206			557,755
Reconciliation to Consolidated Statements of Cash Flows
Additions to property, plant and equipment														423,855
Additions to equipment costs (net)														107,929
Total of capital expenditures and equipment costs (net) per Consolidated Statements of Cash Flows														531,784
Increase in working capital related to capital expenditures														31,343
Less: Partnership capital expenditures(2)														(1,803	)
Less: IRU prepayments(3)														(281	)
Less: Satellite services equipment profit(4)														(3,288	)
Total capital expenditures and equipment subsidies reported by segments														557,755

See notes following 2005 business segment table.

76

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

	2005
				Satellite
	Cable			DTH			Satellite Services			Total			Total
	$			$			$			$			$
Service revenue – total		1,601,126			535,333			90,152			625,485			2,226,611
Intersegment		(2,757	)		(4,604	)		(9,440	)		(14,044	)		(16,801	)
		1,598,369			530,729			80,712			611,441			2,209,810
Service operating income before amortization		797,583			141,687			42,723			184,410			981,993
Service operating income as % of external revenue		49.9%			26.7%			52.9%			30.2%			44.4%
Segment interest(1)		220,388			n/a			n/a			41,384			261,772
Burrard Landing Lot 2 Holdings Partnership														1,177
Total interest														262,949
Cash taxes(1)		5,410			n/a			n/a			334			5,744
Segment assets		5,788,468			877,397			534,278			1,411,675			7,200,143
Corporate assets														230,042
Total assets														7,430,185
Capital expenditures and equipment subsidies by segment
Capital expenditures		313,056			2,049			6,385			8,434			321,490
Equipment subsidies		30,112			85,556			–			85,556			115,668
		343,168			87,605			6,385			93,990			437,158
Reconciliation to Consolidated Statements of Cash Flows
Additions to property, plant and equipment														336,888
Additions to equipment costs (net)														115,668
Total of capital expenditures and equipment costs (net) per Consolidated Statements of Cash Flows														452,556
Increase in working capital related to capital expenditures														4,378
Less: Partnership capital expenditures(2)														(15,045	)
Less: IRU prepayments(3)														(1,198	)
Less: Satellite services equipment profit(4)														(3,533	)
Total capital expenditures and equipment subsidies reported by segments														437,158

(1)	The Company reports interest and cash taxes on a segmented basis for Cable and combined satellite only. It does not report interest and cash taxes on a segmented basis for DTH and Satellite Services.
(2)	Consolidated capital expenditures include the Company’s proportionate share of the Partnership’s capital expenditures which the Company is required to proportionately consolidate (see note 1). As the Partnership is financed by its own debt facility with limited recourse to the Company, the Partnership’s capital expenditures are subtracted from the calculation of segmented capital expenditures and equipment subsidies.
(3)	Prepayments on IRUs in amounts not exceeding the costs to build the fiber subject to the IRUs are subtracted from the calculation of segmented capital expenditures and equipment subsidies.
(4)	The profit from the sale of satellite equipment is subtracted from the calculation of segmented capital expenditures and equipment subsidies as the Company views the profit on sale as a recovery of expenditures on customer premise equipment.

77

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

16.   COMMITMENTS AND CONTINGENCIES

Commitments

(i)

During prior years, the Company, through its subsidiaries, purchased 28 Ku-band transponders on the Anik F1 satellite and 18 Ku-band transponders on the Anik F2 satellite from Telesat Canada. In addition, the Company leases a number of C-band and Ku-band transponders. Under the Ku-band F1 and F2 transponder purchase agreements, the Company is committed to paying an annual transponder maintenance fee for each transponder acquired from the time the satellite becomes operational for a period of 15 years.

(ii)

The Company has various long-term commitments for the maintenance and lease of satellite transponders, lease of transmission facilities, and lease of premises as follows:

	$
2008		109,565
2009		103,337
2010		97,502
2011		96,773
2012		94,659
Thereafter		440,457
		942,293

Included in operating, general and administrative expenses are transponder maintenance expenses of $59,009 (2006 – $57,132; 2005 – $52,604) and rental expenses of $59,117 (2006 – $51,437; 2005 – $54,459).

(iii)  At August 31, 2007, the Company had capital expenditure commitments of $8,384 covering a three-year period.

Contingencies

The Company and its subsidiaries are involved in litigation matters arising in the ordinary course and conduct of its business. Although resolution of such matters cannot be predicted with certainty, management does not consider the Company’s exposure to litigation to be material to these consolidated financial statements.

The Company has sought and obtained Intervenor status in connection with an appeal to be heard by the Federal Court of Appeal regarding fees charged under Part II of the Broadcasting License Fee Regulations. It is possible that fees currently provided for with respect to all or part of the current year will not be required to be remitted and fees previously remitted may be recovered. The Company has not recorded a recovery for this contingency.

Guarantees

In the normal course of business the Company enters into indemnification agreements and has issued irrevocable standby letters of credit and performance bonds with and to third parties.

78

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Indemnities

Many agreements related to acquisitions and dispositions of business assets include indemnification provisions where the Company may be required to make payment to a vendor or purchaser for breach of contractual terms of the agreement with respect to matters such as litigation, income taxes payable or refundable or other ongoing disputes. The indemnification period usually covers a period of two to four years. Also, in the normal course of business, the Company has provided indemnifications in various commercial agreements, customary for the telecommunications industry, which may require payment by the Company for breach of contractual terms of the agreement. Counterparties to these agreements provide the Company with comparable indemnifications. The indemnification period generally covers, at maximum, the period of the applicable agreement plus the applicable limitations period under law.

The maximum potential amount of future payments that the Company would be required to make under these indemnification agreements is not reasonably quantifiable as certain indemnifications are not subject to limitation. However, the Company enters into indemnification agreements only when an assessment of the business circumstances would indicate that the risk of loss is remote. At August 31, 2007, management believes it is remote that the indemnification provisions would require any material cash payment.

The Company indemnifies its directors and officers against any and all claims or losses reasonably incurred in the performance of their service to the Company to the extent permitted by law.

Irrevocable standby letters of credit and performance bonds

The Company and certain of its subsidiaries have granted irrevocable standby letters of credit and performance bonds, issued by high rated financial institutions, to third parties to indemnify them in the event the Company does not perform its contractual obligations. As of August 31, 2007, the guarantee instruments amounted to $562 (2006 – $357). The Company has not recorded any additional liability with respect to these guarantees, as the Company does not expect to make any payments in excess of what is recorded on the Company’s consolidated financial statements. The guarantee instruments mature at various dates in fiscal 2008 and 2009.

17.   PENSION PLANS

Defined contribution pension plans

The Company has defined contribution pension plans for all non-union employees and contributes 5% of eligible earnings to the maximum amount deductible under the Income Tax Act. For union employees, the Company contributes amounts up to 7.5% of earnings to the individuals’ registered retirement savings plans. Total pension costs in respect of these plans for the year were $14,486 (2006 - $12,359; 2005 – $11,091) of which $8,586 (2006 – $7,139; 2005 – $6,873) was expensed and the remainder capitalized.

Defined benefit pension plan

The Company provides a non-contributory defined benefit pension plan for certain of its senior executives. Benefits under this plan are based on the employees’ length of service and their highest three-year average rate of pay during their years of service. Employees are not required to contribute to the plan. The plan is unfunded. The plan has remained unchanged since its initiation other than an amendment in 2004 to limit survivor benefits and an amendment in 2007 to reinstate the survivor benefits previously limited.

79

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

The table below shows the change in benefit obligations.

	2007			2006
	$			$
Accrued benefit obligation, beginning of year		111,086			100,004
Current service cost		2,956			2,271
Interest cost		6,129			5,088
Actuarial losses		13,881			4,811
Past service cost		25,767			–
Payment of benefits to employees		(1,328	)		(1,088	)
Accrued benefit obligation, end of year		158,491			111,086
Plan value of assets, end of year		–			–
Plan deficit, end of year		(158,491	)		(111,086	)

Reconciliation of accrued benefit obligation to Consolidated Balance	2007		2006
Sheet accrued pension benefit liability	$		$
Balance of unamortized pension obligation:
Unamortized past service costs		38,479		20,275
Unamortized actuarial loss		61,720		51,999
		100,199		72,274
Accrued pension benefit liability recognized in Consolidated Balance Sheet:
Accounts payable and accrued liabilities		1,448		1,088
Long-term liability		56,844		37,724
		58,292		38,812
Accrued benefit obligation, end of year as above		158,491		111,086

The tables below show the significant weighted-average assumptions used to measure the pension obligation and cost.

	2007		2006
Accrued benefit obligation	%		%
Discount rate		5.50		5.25
Rate of compensation increase		5.00		5.00

	2007		2006		2005
Benefit cost for the year	%		%		%
Discount rate		5.25		5.00		6.25
Rate of compensation increase		5.00		4.00		3.00

80

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

The table below shows the components of the net benefit plan expense.

	2007			2006			2005
	$			$			$
Current service cost		2,956			2,271			996
Interest cost		6,129			5,088			3,930
Past service cost		25,767			–			–
Actuarial losses		13,881			4,811			34,330
Difference between amortization of actuarial loss recognized for the year and actual actuarial loss on the accrued benefit obligation for the year		(9,721	)		(1,036	)		(32,579	)
Difference between amortization of past service costs recognized for the year and actual past service costs on the accrued benefit obligation for the year		(18,204	)		2,567			2,567
Pension expense		20,808			13,701			9,244

The actuarial losses resulted primarily from changes in interest rate assumptions, salary escalation assumptions, and changes in the mortality table. The past service costs result from amendments to the plan, including new entrants.

The table below shows the expected benefit payments in each of the next five fiscal years as actuarially determined, and in aggregate, for the five fiscal years thereafter:

	$
2008		1,448
2009		2,038
2010		3,935
2011		3,900
2012		3,862
2013 – 2017		35,757

18.   RELATED PARTY TRANSACTIONS

The following sets forth transactions in which the Company and its affiliates, directors or executive officers are involved.

Normal course transactions

The Company has entered into certain transactions and agreements in the normal course of business with certain of its related parties. These transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Corus Entertainment Inc. (“Corus”)

The Company and Corus are subject to common voting control. During the year, network fees of $108,801 (2006 – $100,046; 2005 – $94,165), advertising fees of $415 (2006 – $269; 2005 – $283) and programming fees of $1,047 (2006 – $1,116; 2005 – $1,083) were paid to various Corus subsidiaries and entities subject to significant influence. In addition, the Company provided cable system distribution access to Corus Custom Networks, the advertising division of Corus, for $258 (2006 – $253; 2005 –

81

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

$251), administrative and other services to Corus for $1,589 (2006 – $1,743; 2005 – $1,646), uplink of television signals to Corus for $4,845 (2006 – $4,845; 2005 – $4,759) and Internet services and circuits for $1,041 (2006 – $637; 2005 – $92).

The Company provided Corus with television advertising spots and uplink services in return for radio and television advertising. No monetary consideration was exchanged for these transactions and no amounts were recorded in the accounts.

Burrard Landing Lot 2 Holdings Partnership

During the year, the Company paid $9,907 (2006 – $8,560; 2005 – $7,238) to the Partnership for lease of office space in Shaw Tower. Shaw Tower, located in Vancouver, BC, is the Company’s headquarters for its Lower Mainland operations.

Other

The Company has entered into certain transactions with companies that are affiliated with Directors of the Company as follows:

The Company paid $511 (2006 – $858; 2005 – $2,506) for direct sales agent, maintenance and service agent services to a company controlled by a Director and former Director of the Company.

During the year, the Company paid $2,249 (2006 – $1,928; 2005 – $1,328) for remote control units to a supplier where a Director of the Company holds a position on the supplier’s board of directors.

Other transactions

The Company has entered into certain transactions with Directors and senior officers of the Company as follows:

During the year, the Company realized a gain of $2,680 on the sale of certain corporate assets to a company controlled by a Director of the Company. The transaction was recorded at the exchange amount, supported by independent evidence, which the parties have agreed represents the fair value of the assets.

Under a policy of supporting employee and officer relocations, the Company has granted non-interest bearing loans for a period of five years collateralized by mortgages on the personal residences. Other loans, interest and non-interest bearing, have in the past been granted to executive officers in connection with their employment for periods ranging up to 10 years. The effective interest rate on the interest bearing loan for 2007 was 4.9% (2006 – 3.8%; 2005 – 4.0%). During the year, executive officers voluntarily repaid approximately 10% (2006 – 10%; 2005 – 10%) of their original loan balances. At August 31, 2007, the total amount outstanding on all employee and officer loans was $4,746 (2006 – $5,446).

82

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

19.   FINANCIAL INSTRUMENTS

Fair values

The fair value of financial instruments has been determined as follows:

(i)  Current assets and current liabilities

The fair value of financial instruments included in current assets and current liabilities approximates their carrying value due to their short-term nature.

(ii)  Investments and other assets

a)	The fair value of publicly traded shares included in this category is determined by the closing market values for those investments.
b)	The carrying value of other investments in this category approximates their fair value.

(iii)  Long-term debt

a)   The carrying value of bank loans approximates their fair value because interest charges under the terms of the bank loans are based upon current Canadian bank prime and bankers’ acceptance rates and on US bank base and LIBOR rates.

b)   The fair value of publicly traded notes is based upon current trading values. Other notes and debentures are valued based upon current trading values for similar instruments.

(iv)  Derivative financial instruments

The fair value of interest and cross-currency interest exchange agreements and US currency contracts is based upon quotations by the counterparties to the agreements.

The carrying values and estimated fair values of long-term debt and all derivative financial instruments are as follows:

	2007				2006
	Carrying		Estimated		Carrying		Estimated
	value		fair value		value		fair value
	$		$		$		$
Long-term debt		3,068,554		3,101,732		2,996,385		3,087,729
Derivative financial instruments –
Interest exchange agreements		–		–		–		1,996
Cross-currency interest rate exchange agreements		–		510,731		–		517,121
US currency purchase and purchase option contracts		–		15,948		–		14,408
		3,068,554		3,628,411		2,996,385		3,621,254

A hypothetical one percentage point decrease in interest rates would have the effect of increasing the estimated fair value of the Company’s debt instruments to $3.8 billion at August 31, 2007 (2006 – $3.8 billion).

83

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

The maturity dates for derivative financial instruments related to long-term debt are as outlined in note 9. US currency purchase contracts related to capital expenditures mature at various dates during fiscal 2008 to 2010.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgement and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Credit risks

Credit risks associated with interest and cross-currency interest exchange agreements and US currency contracts arise from the ability of counterparties to meet the terms of the contracts. In the event of non-performance by the counterparties, the Company’s accounting loss would be limited to the net amount that it would be entitled to receive under the contracts and agreements. These risks are mitigated by dealing with major creditworthy financial institutions.

Accounts receivable are not subject to any significant concentrations of credit risk.

20.   CONSOLIDATED STATEMENTS OF CASH FLOWS

Additional disclosures with respect to the Consolidated Statements of Cash Flows are as follows:

(i)  Funds flow from operations

	2007			2006			2005
	$			$			$
Net income		388,479			458,250			153,221
Non-cash items:
Amortization –
Deferred IRU revenue		(12,547	)		(12,546	)		(12,999	)
Deferred equipment revenue		(104,997	)		(80,256	)		(71,677	)
Deferred equipment costs		203,597			200,218			210,477
Deferred charges		5,153			5,328			6,595
Property, plant and equipment		381,909			385,607			408,866
Future income tax expense (recovery)		142,871			(85,521	)		74,638
Write-down of investments		—			519			1,937
Gain on sale of investments		(415	)		(50,315	)		(32,163	)
Equity loss (income) on investees		(363	)		(44	)		286
Debt retirement costs		—			12,248			6,311
Fair value loss on foreign currency forward contracts		—			360			19,342
Foreign exchange gain on unhedged long-term debt		—			(5,369	)		(40,518	)
Stock-based compensation		6,787			3,272			1,454
Defined benefit pension plan		19,120			12,612			8,178
Other		(1,231	)		2,834			(5,424	)
Funds flow from operations		1,028,363			847,197			728,524

84

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

(ii)  Changes in non-cash working capital balances related to operations include the following:

	2007			2006			2005
	$			$			$
Accounts receivable		(16,435	)		(23,561	)		4,907
Prepaids and other		(9,563	)		(5,741	)		(2,043	)
Accounts payable and accrued liabilities		(14,435	)		22,338			(5,965	)
Income taxes payable		661			(1,348	)		690
Unearned revenue		11,422			7,988			2,325
		(28,350	)		(324	)		(86	)

(iii)  Interest and income taxes paid (recovered) and classified as operating activities are as follows:

	2007			2006		2005
	$			$		$
Interest		231,513			245,404		287,906
Income taxes		(717	)		3,203		5,091

(iv)  Non-cash transactions

The Consolidated Statements of Cash Flows exclude the following non-cash transactions:

	2007		2006		2005
	$		$		$
Class B Non-Voting Shares issued on acquisitions [note 2]		3,000		–		–

21.   UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The consolidated financial statements of the Company are prepared in Canadian dollars in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”). The following adjustments and disclosures would be required in order to present these consolidated financial statements in accordance with accounting principles generally accepted in the United States (“US GAAP”).

85

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

(a)  Reconciliation to US GAAP

	2007			2006			2005
	$			$			$
Net income using Canadian GAAP		388,479			458,250			153,221
Add (deduct) adjustments for:
Deferred charges (2)		5,672			15,362			28,371
Foreign exchange gains on hedged long-term debt (3)		47,382			78,937			121,494
Reclassification of hedge losses from other comprehensive income (8)		(47,382	)		(78,937	)		(121,494	)
Fair value loss on foreign currency forward contract (8)		–			–			(7,700	)
Capitalized interest (11)		2,244			–			–
Income taxes (12)		(10,461	)		(8,990	)		(7,375	)
Net income using US GAAP		385,934			464,622			166,517
Unrealized foreign exchange loss on translation of self-sustaining foreign operations		(18	)		(35	)		(79	)
Unrealized gains on available-for-sale securities, net of tax (7)
Unrealized holding gains arising during the year		–			–			26,923
Less: reclassification adjustments for gains included in net income		–			(29,728	)		(21,074	)
Adjustment to fair value of derivatives (8)		5,730			(62,843	)		(186,398	)
Reclassification of derivative losses to income to offset foreign exchange gains on hedged long-term debt (8)		40,215			74,632			99,930
Minimum liability for pension plan (10)		5,813			2,848			(11,433	)
		51,740			(15,126	)		(92,131	)
Comprehensive income using US GAAP		437,674			449,496			74,386
Earnings per share – basic and diluted
Earnings per share using US GAAP		0.89			1.07			0.36

86

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Consolidated Balance Sheet items using US GAAP

	2007						2006
	Canadian			US			Canadian			US
	GAAP			GAAP			GAAP			GAAP
	$			$			$			$
Property, plant and equipment (11)		2,422,900			2,425,144			2,250,056			2,250,056
Deferred charges (2) (9) (10)		278,525			170,881			261,908			164,053
Broadcast rights (1) (5) (6)		4,776,078			4,750,844			4,691,484			4,666,250
Other long-term liabilities (8) (10)		56,844			683,722			37,724			612,306
Deferred credits (3) (9)		1,151,724			687,913			1,100,895			679,652
Future income taxes		1,327,914			1,271,791			1,123,938			1,072,990
Shareholders’ equity:
Share capital		2,053,160			2,053,160			1,976,966			1,976,966
Contributed surplus		8,700			8,700			5,110			5,110
Deficit		(68,132	)		(178,652	)		(172,701	)		(280,675	)
Accumulated other comprehensive loss		–			(126,746	)		–			(117,176	)
Cumulative translation adjustment		312			–			330			–
Total shareholders’ equity		1,994,040			1,756,462			1,809,705			1,584,225

The cumulative effect of these adjustments on consolidated shareholders’ equity is as follows:

	2007			2006
	$			$
Shareholders’ equity using Canadian GAAP		1,994,040			1,809,705
Amortization of intangible assets (1)		(130,208	)		(130,208	)
Deferred charges (2)		(4,215	)		(8,171	)
Equity in loss of investees (4)		(35,710	)		(35,710	)
Gain on sale of subsidiary (5)		16,052			16,052
Gain on sale of cable systems (6)		50,063			50,063
Foreign exchange gains on hedged long-term debt (3)		386,075			345,860
Reclassification of hedge losses from other comprehensive income (8)		(386,075	)		(345,860	)
Capitalized interest (11)		1,566			–
Income taxes (12)		(8,068	)		–
Accumulated other comprehensive loss		(126,746	)		(117,176	)
Cumulative translation adjustment		(312	)		(330	)
Shareholders’ equity using US GAAP		1,756,462			1,584,225

Included in shareholders’ equity under US GAAP is accumulated other comprehensive income (loss), which refers to revenues, expenses, gains and losses that under US GAAP are included in comprehensive income (loss) but are excluded from income (loss) as these amounts are recorded directly as an adjustment

87

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

to shareholders’ equity, net of tax. The Company’s accumulated other comprehensive income (loss) is comprised of the following:

	2007			2006
	$			$
Unrealized foreign exchange gain on translation of self-sustaining foreign operations		312			330
Fair value of derivatives (8)		(57,169	)		(103,114	)
Pension liability (10)		(69,889	)		(14,392	)
Accumulated other comprehensive income		(126,746	)		(117,176	)

Areas of material difference between accounting principles generally accepted in Canada and the United States and their impact on the consolidated financial statements are as follows:

(1)  Amortization of intangible assets

Until September 1, 2001, under Canadian GAAP amounts allocated to broadcast rights were amortized using an increasing charge method which commenced in 1992. Under US GAAP, these intangibles were amortized on a straight-line basis over 40 years. Effective September 1, 2001, broadcast rights are considered to have an indefinite life and are no longer amortized under Canadian and US GAAP.

(2)  Deferred charges

Equipment subsidies are deferred and amortized under Canadian GAAP. Under US GAAP, these costs are expensed as incurred.

(3)  Foreign exchange gains on hedged long-term debt

Foreign exchange gains on translation of hedged long-term debt are deferred under Canadian GAAP but included in income for US GAAP.

(4)  Equity in loss of investees

The earnings of investees determined under Canadian GAAP have been adjusted to reflect US GAAP.

Under Canadian GAAP, the investment in Star Choice was accounted for using the cost method until CRTC approval was received for the acquisition. When the Company received CRTC approval, the amount determined under the cost method became the basis for the purchase price allocation and equity accounting commenced. Under US GAAP, equity accounting for the investment was applied retroactively to the date the Company first acquired shares in Star Choice.

(5)  Gain on sale of subsidiary

In 1997, the Company acquired a 54% interest in Star Choice in exchange for the shares of HomeStar Services Inc., a wholly-owned subsidiary at that time. Under Canadian GAAP, the acquisition of the investment in Star Choice was a non-monetary transaction that did not result in the culmination of the earnings process, as it was an exchange of control over similar productive assets. As a result, the carrying value of the Star Choice investment was recorded at the book value of assets provided as consideration on the transaction. Under US GAAP, the transaction would have been recorded at the fair value of the shares in HomeStar Services Inc. This would have

88

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

resulted in a gain on disposition of the consideration the Company exchanged for its investment in Star Choice and an increase in the acquisition cost for Star Choice.

(6)  Gain on sale of cable systems

The gain on sale of cable systems determined under Canadian GAAP has been adjusted to reflect the lower net book value of broadcast rights under US GAAP as a result of item (1) adjustments.

Under Canadian GAAP, no gain was recorded in 1995 on an exchange of cable systems with Rogers Communications Inc. on the basis that this was an exchange of similar productive assets. Under US GAAP the gain net of applicable taxes is recorded and amortization adjusted as a result of the increase in broadcast rights upon the recognition of the gain.

(7)  Unrealized gains (losses) on investments

Under US GAAP, equity securities having a readily determinable fair value and not classified as trading securities are classified as “available-for-sale securities” and reported at fair value, with unrealized gains and losses included in comprehensive income and reported as a separate component of shareholders’ equity net of related future income taxes. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The related write-downs are included in earnings as realized losses.

Under Canadian GAAP, available-for-sale securities are carried at cost and written down only when there is evidence that a decline in value, that is other than temporary, has occurred.

(8)  Derivative instruments and hedging activities

Under US GAAP, all derivatives are recognized in the Consolidated Balance Sheet at fair value. Derivatives that are not hedges are adjusted to fair value through income. Derivatives that are hedges are adjusted through income or other comprehensive income until the hedged item is recognized in income depending on the nature of the hedge. Under Canadian GAAP, only speculative derivative financial instruments and those that do not qualify for hedge accounting are recognized in the Consolidated Balance Sheet.

(9)  Subscriber connection fee revenue and related costs

Subscriber connection fee revenue and related costs are deferred and amortized under Canadian GAAP. Under US GAAP, connection revenues are recognized immediately to the extent of related costs, with any excess deferred and amortized.

(10)  Pension liability

Effective August 31, 2007, the Company adopted FASB Statement No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans”. Under Statement No. 158, the Company is required to recognize the funded status of the non-contributory defined benefit pension plan on the Consolidated Balance Sheet and to recognize changes in the funded status in the year which the changes occur through accumulated other comprehensive income. The adoption of this standard resulted in a decrease in accumulated other comprehensive income at August 31, 2007 of $61,310, net of income taxes of $26,440.

89

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

Prior to the adoption of Statement No. 158, an additional minimum liability was recorded for the difference between the accumulated benefit obligation and the accrued pension liability. The additional liability was offset in deferred charges up to an amount not exceeding the unamortized past service costs and the remaining difference was recognized in other comprehensive income, net of tax. For the year ended August 31, 2007, the Company recorded an increase of $5,813 to other comprehensive income, net of income taxes of $2,520.

Under Canadian GAAP, the over or under funded status of defined benefit plans is not recognized on the Consolidated Balance Sheet.

(11)	Under US GAAP, interest costs are capitalized as part of the historical cost of acquiring certain qualifying assets which require a period of time to prepare for their intended use. Interest capitalization is not required under Canadian GAAP.
(12)	Income taxes reflects the tax effect of the differences identified above, the impact of future income tax rate reductions on those differences and an adjustment for the tax benefit related to capital losses that cannot be recognized for US GAAP.

(b)  Stock-based compensation

For all common share options granted to employees up to August 31, 2003 the Company applied APB Opinion 25 “Accounting for Stock Issued to Employees” in accounting for common share options granted to employees and officers for US GAAP purposes. Pro forma disclosures of net income and net income per share are presented below as if the Company had adopted the cost recognition requirements under FASB Statement No. 123, “Accounting for Stock-Based Compensation”. Pro forma disclosures are not likely to be representative of the effects on reported income for future years.

		2007		2006		2005
		$		$		$
Net income, US GAAP	As reported		385,934		464,622		166,517
	Pro forma		385,815		462,752		160,745
Net income per share, US GAAP	As reported		0.89		1.07		0.36
	Pro forma		0.89		1.06		0.35

(c)  Advertising costs

Advertising costs are expensed when incurred for both Canadian and US GAAP and for 2007, amounted to $43,210 (2006 – $35,464; 2005 – $29,406).

(d)  Recent accounting pronouncements

Accounting for Uncertainty in Income Taxes

In June 2006, the FASB issued Interpretation 48 “Accounting for Uncertainty in Income Taxes” which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Interpretation 48 is effective for the Company’s 2008 fiscal year. The Company is currently assessing the impact of the adoption of this new accounting policy standard.

90

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007, 2006 and 2005
[all amounts in thousands of Canadian dollars except share and per share amounts]

22.   COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS

Certain of the comparative figures have been reclassified to conform to the presentation adopted in the current year.

Applicable share and option amounts and all related data have been retroactively adjusted to reflect the two-for-one split of the Company’s Class A Shares and Class B Non-Voting Shares that was effective on July 30, 2007.

23.   SUBSEQUENT EVENT

The Company repaid the $296,760 notes at maturity on October 17, 2007.

91

Shaw Communications Inc.
FIVE YEARS IN REVIEW
August 31, 2007

	2007		2006		2005		2004			2003
($000’s except per share amounts)
Service revenue
Cable		2,082,652		1,808,583		1,598,369		1,491,569			1,459,833
DTH		605,176		567,807		530,729		505,637			450,176
Satellite		86,617		82,894		80,712		82,543			88,412
		2,774,445		2,459,284		2,209,810		2,079,749			1,998,421
Service operating income (loss) before amortization(1)
Cable		995,694		857,466		797,583		779,579			727,458
DTH		196,404		175,401		141,687		111,150			52,814
Satellite		47,527		45,050		42,723		41,690			38,619
Corporate restructuring and inventory write-down		–		–		–		–			(13,250	)
Litigation settlements		–		–		–		(6,484	)		12,000
		1,239,625		1,077,917		981,993		925,935			817,641
Net income (loss)		388,479		458,250		153,221		70,870			(37,177	)
Earnings (loss) per share
Basic		0.90		1.05		0.34		0.16			(0.08	)
Diluted		0.89		1.05		0.34		0.16			(0.08	)
Funds flow from operations(2)		1,028,363		847,197		728,524		654,585			494,573
Balance sheet
Total assets		8,163,739		7,661,543		7,430,185		7,576,720			7,730,929
Long-term debt (including current portion)		3,068,554		2,996,385		3,199,542		3,344,258			3,635,205
Cash dividends declared per share
Class A		0.462		0.235		0.153		0.078			0.023
Class B		0.465		0.238		0.155		0.080			0.025

(1) See key performance drivers on page 9.

(2)  Funds flow from operations is presented before changes in non-cash working capital as presented in the Consolidated Statements of Cash Flows.

92

Shaw Communications Inc.
SHAREHOLDERS’ INFORMATION
August 31, 2007

Share Capital and Listings

The Company is authorized to issue a limited number of Class A participating and an unlimited number of Class B Non-Voting participating shares. The authorized number of Class A Shares is limited, subject to certain exceptions, to the lesser of that number of such shares (i) currently issued and outstanding; and (ii) that may be outstanding after any conversion of Class A Shares into Class B Non-Voting Shares. At August 31, 2007, the Company had 22,563,064 Class A Shares and 408,770,759 Class B Non-Voting Shares outstanding. The Class A Shares are listed on the TSX Venture Stock Exchange under the symbol SJR.A. The Class B Non-Voting Shares are listed on the Toronto Stock Exchange under SJR.B and on the New York Stock Exchange under the symbol SJR.

Trading Range of Class B Non-Voting Shares on the Toronto Stock Exchange

					Total
Quarter	High Close		Low Close		Volume
September 1, 2006 to August 31, 2007
First	$	18.42	$	16.11		95,738,626
Second	$	21.91	$	17.58		98,670,574
Third	$	23.15	$	20.13		69,179,760
Fourth	$	26.50	$	22.25		107,732,215
Closing price, August 31, 2007	$24.52					371,321,175

Share Splits

There have been four splits of the Company’s shares: July 30, 2007 (2 for 1), February 7, 2000 (2 for 1), May 18, 1994 (2 for 1), and September 23, 1987 (3 for 1). In addition, as a result of the Arrangement referred to in the Management Information Circular dated July 22, 1999, a Shareholder’s Adjusted Cost Base (ACB) was reduced for tax purposes. For details on the calculation of the revised ACB, please refer to the Company’s September 1, 1999 and September 13, 1999 press releases on Shaw’s Investor Relations website at www.shaw.ca.

93

Shaw Communications Inc.
CORPORATE INFORMATION
August 31, 2007

DIRECTORS

JR Shaw⁽⁴⁾

Executive Chair

Shaw Communications Inc.

Adrian L. Burns⁽³⁾

Corporate Director

James F. Dinning⁽³⁾

Non-Executive Chairman

Western Financial Group Inc.

George F. Galbraith⁽¹⁾⁽³⁾

Corporate Director

Dr. Lynda Haverstock⁽³⁾

President and Chief Executive Officer of Tourism
Saskatchewan

Ronald V. Joyce⁽⁴⁾

Corporate Director

Gregory John Keating⁽¹⁾

Corporate Director

Rt. Hon. Donald F.

Mazankowski⁽³⁾⁽⁴⁾

Corporate Director

Michael W. O’Brien⁽¹⁾

Corporate Director

Harold A. Roozen⁽²⁾

President and Chief

Executive Officer,

CCI Thermal

Technologies Inc.

Jeffrey C. Royer⁽²⁾

Corporate Director

Bradley S. Shaw

Senior Vice President,

Operations

Shaw Communications Inc.

Jim Shaw

Chief Executive Officer

Shaw Communications Inc.

JC Sparkman⁽²⁾⁽⁴⁾

Corporate Director

Carl E. Vogel⁽¹⁾

President and Vice Chairman

EchoStar Communications
Corporation

Willard (Bill) H. Yuill⁽²⁾

Chairman

The Monarch Corporation

SENIOR OFFICERS

JR Shaw

Executive Chair

Jim Shaw

Chief Executive Officer

Rhonda D. Bashnick

Vice President, Finance

Peter J. Bissonnette

President

Michael D’Avella

Senior Vice President,
Planning

Bradley S. Shaw

Senior Vice President,
Operations

Ken C.C. Stein

Senior Vice President,

Corporate and Regulatory
Affairs

Steve Wilson

Senior Vice President and

Chief Financial Officer

CORPORATE SECRETARY:

Douglas J. Black, QC

HONORARY SECRETARY:

Louis Desrochers, CM, AOE, QC, LLD

(1)	Audit Committee
(2)	Human Resources Committee
(3)	Corporate Governance Committee
(4)	Executive Committee

CORPORATE OFFICE

Shaw Communications Inc.

Suite 900, 630 – 3^rd Avenue S.W., Calgary, Alberta

Canada T2P 4L4

Phone: (403) 750-4500

Fax: (403) 750-4501

Website: www.shaw.ca

CORPORATE GOVERNANCE

Information concerning
Shaw’s corporate governance policies are contained in

the Information Circular and is also available on Shaw’s website, www.shaw.ca.

Information concerning
Shaw’s compliance with the corporate governance listing

standards of the New York Stock Exchange is available in the investor relations

section on Shaw’s website, www.shaw.ca.

INTERNET HOME PAGE

Shaw’s Annual Report, Annual Information Form, Quarterly Reports, Press

Releases and other relevant investor relations information are available electronically on the Internet at www.shaw.ca.

AUDITORS

Ernst & Young LLP

PRIMARY BANKER

The Toronto-Dominion Bank

TRANSFER AGENTS

CIBC Mellon Trust Company

Calgary, AB

Phone: 1-800-387-0825

The Bank of New York Mellon

Jersey City, NJ

Phone: 1-800-522-6645

DEBENTURE TRUSTEES

Computershare Trust

Company of Canada

100 University Avenue,

9^th Floor

Toronto, ON M5J 2Y1

service@computershare.com

Phone : 1-800-564-6253

Fax: 1-888-453-0330 or

416-263-9394

Bank of New York

101 Barclay Street, Floor 4E

New York, NY 10288

Phone 1-800-438-5473

Fax: 212-815-5802

FURTHER INFORMATION

Financial analysts, portfolio managers, other investors and interested parties may contact the Company at (403) 750-4500 or visit Shaw’s website at www.shaw.ca for further information.

To receive additional copies of this Annual Report, please fax your request to (403) 750-7469 or email

investor.relations@sjrb.ca.

For further inquiries relating to Shaw’s philanthropic practices, please call

(403) 750-7498.

All trademarks used in this annual report are used with the permission of the

owners of such trademarks.

94

EX-2

TABLE OF CONTENTS

CORPORATE STRUCTURE	1
GENERAL DEVELOPMENT OF THE BUSINESS	2
1. Cable Division	2
2. Satellite Division	4
DESCRIPTION OF SHAW’S BUSINESSES	4
1. Cable Division	4
2. Satellite Division	12
3. Additional Information Concerning Shaw’s Businesses	14
4. Risk Factors	14
CANADIAN REGULATORY ENVIRONMENT	15
1. Overview	15
2. Cable Television	15
3. New Media and Internet Access	18
4. Digital Phone	18
5. Internet Infrastructure	19
6. Satellite	19
7. Other Regulatory Matters	20
CAPITAL STRUCTURE, DIVIDENDS AND RELATED MATTERS	21
1. Description of Capital Structure	21
2. Dividends	25
3. Ratings	27
4. Market for Securities	28
5. Prior Sales	29
DIRECTORS AND OFFICERS	30
1. Directors as of November 29, 2007	30
2. Board Committee Members	31
3. Executive Officers as of November 29, 2007	32
4. Shareholdings of Directors and Executive Officers	32
5. Additional Disclosure for Directors and Executive Officers	33
AUDIT COMMITTEE	33
1. Audit Committee Charter	33
2. Audit Committee Composition and Background	33
3. Audit Fees	34
LEGAL PROCEEDINGS	34
REGISTRAR AND TRANSFER AGENT	35
INTERESTS OF EXPERTS	35
ADDITIONAL INFORMATION	35
CAUTION CONCERNING FORWARD LOOKING STATEMENTS	35
SCHEDULE A — AUDIT COMMITTEE CHARTER	A-1

i

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

CORPORATE STRUCTURE

Shaw Communications Inc. (“Shaw” or the “Corporation”) is a diversified communications company whose core business is providing broadband cable television, Internet, Digital Phone, telecommunications services (through Shaw Business Solutions) and satellite direct-to-home services (through Star Choice) to 3.3 million customers. Shaw provides customers with high quality entertainment, information and communications services, utilizing a variety of distribution technologies.

The Corporation was incorporated under the laws of the Province of Alberta on December 9, 1966 under the name Capital Cable Television Co. Ltd. and was subsequently continued under the Business Corporations Act (Alberta) on March 1, 1984 under the name Shaw Cablesystems Ltd. Its name was changed to Shaw Communications Inc. on May 12, 1993. Shaw was reorganized pursuant to a plan of arrangement under the Business Corporations Act (Alberta) effective September 1, 1999, and amended its Articles on January 28, 2004 to limit the number of Class A Voting Participating Shares that may be issued. It also amended its Articles on July 11, 2007 to implement a two-for-one stock split of each of its outstanding Class A Shares and Class B Non-Voting Shares (each such term as defined below under the heading “Capital Structure, Dividends and Related Matters/Description of Capital Structure/General”), effective July 30, 2007. The head and registered office of the Corporation is located at Suite 900, 630 – 3rd Avenue S.W., Calgary, Alberta, Canada T2P 4L4, telephone (403) 750-4500.

The following table lists certain subsidiaries and entities owned or controlled by Shaw, their jurisdictions of incorporation or organization and the nature of their operations. All of such entities are wholly-owned, directly or indirectly, by Shaw.

Entity	Jurisdiction	Nature of Operations
Shaw Cablesystems Limited	Alberta	Television Distribution and Internet Services
Shaw Cablesystems G.P.(2)	Alberta	Television Distribution and Internet Services
Videon Cablesystems Inc.	Federal	Television Distribution and Internet Services
Shaw Telecom Inc.	Alberta	Telecommunications Services
Shaw Business Solutions Inc.	Alberta	Telecommunications Services
Shaw Satellite Services Inc.	Federal	Satellite Services
Star Choice Communications Inc.	Federal	Satellite Services
Star Choice Television Network Incorporated	Federal	Satellite Services

Notes:

(1)	The above table lists subsidiaries of Shaw in accordance with National Instrument 51-102 — Continuous Disclosure Obligations, as well as certain other entities owned or controlled, directly or indirectly, by Shaw.
(2)	Shaw Cablesystems G.P. is a partnership of Shaw Communications Inc., Shaw Cablesystems Limited, Videon Cablesystems Inc. (“Videon”) and certain other subsidiaries of Shaw formed to operate the cable television systems owned by the partners.

Unless the context otherwise indicates, a reference to “Shaw” or the “Corporation” in this Annual Information Form means Shaw Communications Inc. and its subsidiaries and other entities owned or controlled, directly or indirectly, by Shaw Communications Inc.

1

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

GENERAL DEVELOPMENT OF THE BUSINESS

Shaw’s business is encapsulated within its vision statement: “We, the leading entertainment and communications company, deliver exceptional customer experience through outstanding people sharing Shaw values”.

The Corporation has two principal business divisions: (1) Cable Division — comprised of cable television, Internet, Digital Phone and Internet infrastructure service businesses; and (2) Satellite Division — comprised of direct-to-home satellite and satellite distribution service businesses. As a percentage of Shaw’s consolidated revenues for the year ended August 31, 2007, the Cable Division and Satellite Division represent approximately 75% and 25% of Shaw’s business, respectively, which is similar to last year. The general development of each of these businesses over the last three fiscal years is summarized below.

1.   Cable Division

Shaw’s Cable Division is comprised of the cable television, Internet, Digital Phone and Business Solutions operations.

(a)   Cable Television

(i)   General

The Corporation’s initial core business was, and remains, cable television services, which today provides the customer base and physical infrastructure for much of the Corporation’s distribution service businesses. Under the name Capital Cable Television Co. Ltd., Shaw acquired its first license to offer cable television services in Edmonton, Alberta and area in 1970. Over the course of the subsequent years, Shaw’s cable television operation has grown through a combination of the acquisition of new cable television licences awarded by the Canadian Radio-television and Telecommunications Commission (“CRTC”); the acquisition of existing cable companies; the exchange of cable systems and assets with other Canadian cable companies; and internally generated subscriber growth.

The Corporation is currently the second largest cable television company in Canada, and is the largest cable television provider in Western Canada. As at August 31, 2007, Shaw served approximately 2.2 million cable television customers in five provinces (British Columbia, Alberta, Saskatchewan, Manitoba and northwestern Ontario), representing approximately 30% of the Canadian cable television market.

(ii)   Acquisitions and Dispositions

The Canadian cable television industry has moved from a highly regulated environment to one based on fair and sustainable competition under the superintendence of the CRTC. In such a competitive environment, cable companies have adopted “clustering” strategies, consolidating and realigning geographically to take advantage of potential administrative, operating and marketing synergies that arise from larger, focused operations. In executing its own clustering strategy, the Corporation has consolidated its position as the dominant provider of cable television services in Western Canada, with approximately three-quarters of its subscribers clustered in five large urban markets.

During fiscal 2007, Shaw completed acquisitions of several cable systems, including Whistler Cable, Grand Forks, Wood Lake, Lumby and Pender Island, all in British Columbia, as well as Norcom Telecommunications Limited operating in Kenora, Ontario. In fiscal 2006, Shaw acquired Pemberton Cable and Saltspring Cablevision, both in British Columbia.

2

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

(b)   Internet Access

Since 1996, Shaw has provided Internet access services to residential and small business subscribers in its cable television systems via a cable connection and cable modem. It currently offers four levels of Internet service: High-Speed Internet, High-Speed Lite Internet, High-Speed Xtreme-I^tm Internet and High-Speed Nitro Internet. It commenced offering High-Speed Lite Internet service (formerly known as Lite-Speed Internet) in fiscal 2002, targeted at users who do not require the features and speed (bandwidth capabilities) of Shaw’s High-Speed Internet service but who are interested in alternatives to dial-up services. In fiscal 2004, Shaw introduced High-Speed Xtreme-I^tm, which offers significantly increased download and upload speeds, as compared to High-Speed Internet, for customers who regularly download large files or visit online gaming and content-rich multimedia sites. High-Speed Nitro Internet was launched in fiscal 2007 as one of the fastest internet services in Canada.

As at August 31, 2007, there were approximately 1,452,000 subscribers (connected and scheduled installations) to Shaw’s Internet access services, representing a penetration rate of approximately 65% of basic subscribers.

The Corporation’s Internet infrastructure is owned, managed and controlled exclusively by Shaw, as discussed below. All of the Corporation’s Internet customers use Shaw’s own network and are given “@shaw.ca” email addresses.

(c)   Digital Phone

In fiscal 2005, Shaw entered the “triple play” market of voice, video and data services with the launch of Shaw Digital Phone^tm, a reliable, fully featured and affordable residential telephone service, across certain of its cable service areas, including Calgary, Edmonton and Winnipeg. In fiscal 2006 and 2007, the Corporation expanded its Digital Phone footprint across other of its cable services areas, including Vancouver, Victoria, Saskatoon, Kelowna and various other smaller centres. As at August 31, 2007, it had approximately 385,000 Digital Phone lines (primary and secondary lines on billing plus pending installs).

During fiscal 2007, Shaw continued to invest in the deployment of Digital Phone. Over the past year, it has invested in new systems that allow the Corporation to operate independently using its own back office infrastructure. The Corporation also successfully implemented a Class 4 toll switch which allows for the routing of telephone traffic to the lowest cost long distance provider.

During fiscal 2007, Shaw launched a second tier of residential telephone service with Shaw Digital Phone Lite^tm. In the latter part of fiscal 2007, it also started to offer a commercial voice service for small to medium sized businesses.

(d)   Internet Infrastructure (Shaw Business Solutions)

The Corporation’s business solution services include Internet, data connectivity and telecommunications and are offered through it’s subsidiaries Shaw Business Solutions Inc. and Shaw Business Solutions U.S., Inc. (together, “Shaw Business Solutions”).

Shaw Business Solutions Inc. was established in 2000, under the name Big Pipe Inc., to develop and operate the fibre network that serves as the primary Internet backbone for the Corporation’s broadband Internet customers and to provide Internet and data connectivity services to large and medium businesses and other organizations.

Shaw Business Solutions has built both its fibre network and its customer base to promote future revenue growth. Its network consists of a redundant two route fibre backbone transecting Canada and the United States. The southern route consists of approximately 6,400 route kilometers (4,000 miles) of fibre located on routes between Vancouver (via Calgary, Winnipeg, Chicago, Toronto and Buffalo) and New York City. The northern route consists of approximately 4,000 route kilometers (2,500 miles) of fibre between Edmonton (via Saskatoon, Winnipeg and Thunder Bay) and Toronto. In addition, as a result of arrangements with Group Telecom, Shaw Business Solutions

3

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

has additional capacity to connect the cities of Toronto (via Montreal and Boston) to New York City, Seattle (via Victoria) to Vancouver, Edmonton and Toronto.

2.   Satellite Division

The Corporation’s satellite business is operated through its wholly-owned subsidiary, Shaw Satellite Services Inc. (“Satellite Services”), formerly known as Canadian Satellite Communications Inc., a Canadian satellite services company. Incorporated in 1980, Satellite Services provides satellite-based solutions to businesses and owns 100% of Star Choice Communications Inc. (“Star Choice”), which through its subsidiary Star Choice Television Network Incorporated, is one of two licensed direct-to-home (“DTH”) operators in Canada. The Corporation’s interest in, and eventual control of, Satellite Services was acquired through several transactions between 1997 and 2003.

On October 4, 2006, the Corporation announced the rebranding of all of its companies in the Satellite Division to leverage the Shaw name and build a consistent identity within the business. Star Choice was branded Star Choice, a Shaw Company, and the Satellite Distribution Services was branded Shaw Broadcast Services, (formerly known as Cancom Broadcast Solutions) and Shaw Tracking (formerly known as Cancom Tracking Solutions).

DESCRIPTION OF SHAW’S BUSINESSES

A description of each of the principal businesses comprising the Corporation’s Cable Division and Satellite Division, along with certain additional information, is set forth below.

1.   Cable Division

(a)   Cable Television

(i)   General

Shaw is the second largest cable television company in Canada, serving approximately 30% of the Canadian cable television market with a concentrated focus on Western Canada. Currently, over 75% of the Corporation’s cable television subscribers are clustered in and around five major urban markets in Western Canada: Vancouver and Victoria (Vancouver Island), British Columbia; Calgary and Edmonton, Alberta; and Winnipeg, Manitoba. The balance of its subscribers are mainly in smaller clusters, linked via fibre either to each other or to larger markets. These markets include the Okanagan region, British Columbia (Kamloops, Kelowna, Penticton, Vernon); Saskatoon/Prince Albert/Moose Jaw/Swift Current, Saskatchewan; and Thunder Bay/Sault Ste. Marie, Ontario.

Shaw has achieved a critical mass of subscribers in its larger markets by completing selective acquisitions, using a clustering strategy and seamlessly integrating new customers. Clustering involves consolidating and realigning geographically around a regional office to provide subscriber services to several contiguous communities, thereby creating potential administrative, operating and market synergies through shared facilities and services and reduced operating redundancies.

(ii)   Cable Network

The Corporation’s cable television business is operated through its extensive fibre optic and co-axial cable distribution network. Shaw’s fibre backbone and interconnect network links its cable systems and subscribers together. Shaw receives originating television signals at its head-end sites through satellite, transmitters, off-air antennae and microwave systems and re-transmits these signals via its network to customers’ homes in its licensed areas. Digital cable customers receive additional services via digital cable terminals (“DCTs”) which translate additional encrypted signals delivered to customers’ homes over Shaw’s network.

4

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

Shaw’s strategy is to leverage its network by providing additional services beyond traditional cable. In past years, it enhanced the quality, depth and capacity of its plant and network infrastructure through significant capital investments. The plant and network is now essentially fully digital and two-way capable. These investments have enabled Shaw to leverage its existing network and expand its service offerings to include digital programming, Internet, Video-on-Demand (“VOD”), High Definition Television (“HDTV”), and Digital Phone.

(iii)  Cable Television Offerings

Shaw offers a variety of cable television services from which its customers may choose.

(A) Basic Cable and Extended Tiers

Basic cable service in Canada consists primarily of local and national programming, as well as major U.S. networks. The number of channels offered and the monthly fee charged for basic service vary depending on the cable system in question. As at August 31, 2007, Shaw served approximately 2,227,000 basic cable subscribers.

Extended tier cable is comprised of three discretionary tiers of services that consist of Canadian and non-Canadian specialty television programming. Canadian specialty television networks carried on the various tiers include CMT, Showcase, Discovery, History, Outdoor Life Network, Teletoon and SportsNet. Foreign services represented on the tiers include TBS, Spike, CNN, TLC and A&E. Over the years, Shaw has also continued to add to its analog discretionary channel choices, including adding popular movie services such as Movie Central Encore Avenue, Turner Classic Movies and American Movie Classics.

The majority of the Corporation’s customers currently receive at least 58 analog channels on basic cable or as part of an extended tier, including the local news, sports and information programming produced by Shaw TV. Basic cable and extended tier customers can receive these analog channels using their current television tuners, so that no additional external equipment is required.

(B) Digital Cable

Digital cable significantly expands the range of services that may be offered to a subscriber and extends programming capacity. Digital cable, which is delivered by the Corporation’s network to DCTs deployed in subscribers’ premises, also enhances picture and sound quality and provides the platform from which Shaw has launched, and expects to continue to be able to launch, new revenue-generating video and interactive services.

The Corporation’s digital cable offering includes an interactive program guide, parental controls, digital music, digital channels, plus access to specialty and ethnic programming services and premium pay television, pay-per-view and HDTV programming.

Shaw carries over 45 low cost digital channels (“diginets”), including CRTC-licensed Category 1 “must carry” Canadian program services (such as Biography Channel, Documentary Channel, Fashion TV and Independent Film Channel), optional Canadian Category 2 digital services (such as BBC Canada, Dejaview and Lonestar), and non-Canadian digital services, such as HD Net and NFL Network. Digital cable customers are able to select various theme paks of digital services, including time shifted network services and HD packages. They can also create their own custom pak by selecting individual channels on a “pick and pay” manner, including the purchase of single services. There is also a digital basic tier of services that is included in the price of digital.

As of August 31, 2007, digital cable was available in almost all of Shaw’s cable systems. As at such date, it had approximately 1,017,000 DCT’s deployed in customer premises and approximately 763,000 digital subscribers, representing a penetration rate of approximately 35% of basic cable television subscribers. Of the digital customers, over 200,000 have access to HDTV programming on up to 22 featured HDTV channels.

5

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

(C) Pay Television and Pay-Per-View

The Corporation’s pay television offering consists of genre-based commercial-free movie channels (with up to five choices offered under the brand Movie Central in Western Canada and The Movie Network in Eastern Canada), up to four Superstations from the United States and certain other ethnic, premium and adult services. These pay television offerings are available to subscribers for monthly fees which vary depending on the pay television offering selected.

Shaw also offers up to 60 channels of interactive, impulse pay per view (“PPV”) to its digital subscribers. Its PPV offering allows customers to select and pay for specific programs which are available on various channels with different start times. PPV offerings include movies, sports, concerts and other special events, with the price dependent on the nature of the programming.

(D) Video-on-Demand (“VOD”)

The Corporation also offers VOD services in selected markets under the name Shaw Video-on-Demand. Its VOD service enables customers to select programming from a library of titles through an on-line ordering system or directly through the interactive program guide, and to view the programming on their television at a time of their choosing, with full digital video disk-type functionality, including pause, skip backward and skip forward. Customers have unlimited viewing of a program at their convenience for a 24 hour period.

Shaw’s VOD service is available exclusively to its digital cable customers. The Corporation offers VOD services in all of its major systems, as well as in many of its smaller systems. It had also launched on-screen ordering of VOD content in many of such systems.

As part of its VOD service, Shaw has entered into content licensing arrangements with most movie studios and content providers. These arrangements provide its VOD service with a library of current feature films, major motion pictures and other content, including VOD choices for popular television shows. The Corporation also supports subscription-based VOD services with Corus Entertainment Inc. (Movie Central on Demand and Treehouse) and with the Anime Network. Subscription-based VOD services allow a customer to access a library of films and series on a VOD basis, while paying a monthly subscription fee rather than a per-transaction fee.

(E) Bundling of Services

The Corporation offers customers attractively priced combinations of its four distinct products: analog video, digital video, Internet and Digital Phone. The benefits of bundling to customers include the convenience of “one-stop shopping” and price savings. The benefits to Shaw include retention of existing customers (churn reduction); attraction of new customers; incremental penetration as customers upgrade to additional services offered in a bundle; and operational efficiencies through centralized billing and customer care.

Shaw has also partnered with several national Canadian retailers, such as Future Shop, Visions and Best Buy, to offer Shaw products and services through point-of-purchase displays in key retail locations. The focus of such marketing efforts centers on offering Shaw cable-related and Internet products and services in attractive bundles at competitive price points.

(F) New Video Services

The Corporation anticipates that its on-going investment in network upgrades, along with advances in technology, will allow the Corporation to continue to upgrade and increase its cable television service offerings. Shaw expects to continue to roll-out digital cable services and VOD to an increased number of its subscribers, both in areas not previously able to receive such services and in areas already receiving such services. It expects that newly-launched video services (VOD and HDTV choices, in particular) will enhance its current product offerings, making them more attractive to existing and potential customers.

6

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

Shaw has launched HDTV channels and programming in most of its cable systems which offers superior picture detail and sound quality in a format that fully utilizes the capabilities of wide screen, high-definition ready televisions. In support of HDTV, Shaw offers for purchase, next-generation DCTs which support the decoding and processing of HDTV content without requiring additional digital terminals or equipment, as well as a DCT which incorporates HDTV and Personal Video Recorder (PVR) features into one box. Recently, through the introduction of new compression technologies, Shaw was able to expand its HDTV offering in its smaller satellite-fed systems from approximately 4 to over 20 channels.

(iv)   Competition

Cable providers operate in an open and competitive marketplace. Shaw’s cable television business faces competition from regulated entities utilizing existing communications technologies and from currently unregulated Internet and illegal satellite services, including grey and black market and modified free-to-air satellite receivers. In addition, it may face competition in the future from other newer technologies being developed or to be developed.

More specifically, Shaw’s cable television systems currently compete with subscription DTH satellite services, satellite master antenna systems, multipoint distribution systems (“MDS”), telephone companies offering DSL video service, Internet Protocol television providers, web-based video services and wireless mobile operators. It also competes with the direct reception by antenna of free, unencrypted over-the-air local and regional broadcast television signals.

DTH is currently the largest competitor to cable by number of subscribers, delivering programming via signals sent directly to receiving dishes from medium and high-powered satellites. DTH services presently provide more extensive channel line-ups and are fully digital. Two licensed operators, Star Choice, a Shaw Company, and Bell ExpressVu, are currently providing DTH services in Canada. These DTH operators currently provide service to approximately 2.7 million Canadian households. In addition, grey and black market satellite services (i.e. DTH programming services obtained in Canada without authorization from the CRTC or from the DTH providers) also constitute competitive services. The Supreme Court of Canada has ruled that grey and black market DTH providers are violating the Radiocommunication Act (Canada), and are therefore providing an illegal service.

MDS delivers television programming by unobstructed line-of-sight microwave transmission to subscribers equipped with special antennae. Since 1995, the CRTC has approved MDS applications of distributors competing with cable television service in given service areas. In particular, the CRTC has granted licences to Craig Wireless International Inc. (formerly Skycable Inc.) with respect to certain areas of Manitoba and British Columbia and to Image Wireless Communications Inc. with respect to certain areas of Alberta and Saskatchewan. The CRTC has also issued a license to Look Communications Inc. to operate MDS undertakings in southern and eastern Ontario and in Quebec.

Other competitive television undertakings are licensed to operate within the authorized service areas of incumbent cable licences. One of these competitive undertakings, Novus Entertainment Inc., operates within Shaw’s licensed service areas in Vancouver.

Since 1998, telephone companies have been eligible to hold full scale broadcasting distribution licences from the CRTC. To date, six telephone companies have been granted broadcasting distribution licences to provide television services: Telus Corporation currently offers Telus TV in select parts of Alberta and British Columbia; Saskatchewan Telecommunications Holding Corporation (“SaskTel”) offers Max TV in Saskatchewan; Manitoba Telecom Services Inc. offers viewers a competitive choice with MTS TV, primarily in Winnipeg, Manitoba; and Bell Canada offers services in parts of Ontario.

In Shaw’s territory, SaskTel launched its MaxTv service in September 2002, and as of December 31, 2006 had approximately 50,000 customers. Manitoba Telecom Services Inc. launched its MTS TV service in January 2003,

7

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

and as of June 30, 2007 had approximately 70,000 customers. Telus Corporation has launched its video service in several markets.

To date, none of these competitors has had a material impact on the Corporation’s overall cable television operations. However, there can be no assurance that increased competition will not have a material adverse effect on Shaw’s results of operations. Almost all of its cable systems are concentrated in major urban markets having favourable demographics and growth potential, with most of the remainder in smaller clusters, linked via fibre optic distribution systems either to each other or to larger markets. Through this clustering strategy, Shaw maximizes the benefits of operating efficiencies, enabling it to be a low cost service provider, which is a necessary component in strengthening its competitive position. In addition, Shaw plans to continue to deploy new technologies to increase channel capacity, to expand the range and quality of its services and to enhance its programming and communication service offerings, including for example, VOD, interactive television, full digital line-ups, HDTV and Digital Phone.

(b)   Internet Access

(i)   General

Leveraging off its cable television infrastructure, Shaw has provided high speed Internet access services to residential and small business subscribers since 1996. It currently offers four levels of Internet service: High-Speed Internet, High-Speed Lite Internet, High-Speed Xtreme-I^tm Internet and High-Speed Nitro Internet. Introduced during fiscal 2002, High-Speed Lite Internet service is targeted at users who do not require the features and speed (bandwidth capabilities) of Shaw’s High-Speed Internet service but who are interested in alternatives to dial-up services. Through a Shaw cable modem connection, the High-Speed Lite Internet Service features speeds up to five times faster than traditional dial-up service, an “always on” connection, one unique email address and 20 megabytes of personal web space.

Utilizing DOCSIS^tm technology (as described below), the Corporation launched High-Speed Xtreme-I^tm during fiscal 2004. Xtreme-I^tm offers significantly increased download and upload speeds, which appeals to customers who regularly download large files or visit online gaming and content-rich multimedia sites.

In providing its Internet access services, Shaw deploys an advanced generation of cable modem, based on Data Over Cable Service Interface Specification (DOCSIS^tm) 2.0 specifications. This technology has enabled it to increase the capabilities and reliability of its network by increasing the capacity and throughput in both the upstream and downstream portions of Shaw’s cable infrastructure. As a result, the capacity of the Corporation’s network in the downstream direction has increased to up to 40 megabits per second and in the upstream direction up to 30 megabits per second, representing approximately five times the capacity of pre-DOCSIS cable modems. The DOCSIS standard is continually being improved and Shaw plans to implement future versions on its network to meet customers’ increasing speed and capacity demands.

During fiscal 2007, the Corporation continued to invest in Internet value-added services and product improvements, doubling the download speed of the High-Speed Lite Internet service at no additional cost to the customer, and launched the 25 megabit per second High-Speed Nitro Internet as one of the fastest Internet services in Canada.

Shaw’s Internet services are currently available in almost all of its operating areas. As at August 31, 2007, the Corporation’s Internet services had approximately 1,452,000 subscribers (connected and scheduled installations), representing a penetration rate of approximately 65% of basic subscribers.

As at August 31, 2007, approximately 183,000 subscribers for Shaw’s Internet services did not concurrently subscribe for any of its cable television or Digital Phone services.

8

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

(ii)   Network

The fibre network that serves as the primary Internet backbone for the Corporation’s broadband Internet customers is operated by Shaw Business Solutions (see “Description of Shaw’s Businesses — Cable Division-Internet Infrastructure”). The network, which is designed with fibre optic technology and has redundant capacity, extends from Victoria to New York, with connectivity to major Internet peering points in Seattle, Washington; Palo Alto, California; Chicago, Illinois; and Ashburn, Virginia.

Shaw has made significant investments to improve the speed and performance of its Internet access services. Upgrades and enhancements of its capital infrastructure are ongoing and include building up the Corporation’s Internet backbone and decreasing the average node size.

Shaw operates two Internet data centres in Calgary, Alberta and several smaller regional centres. The data centres allow the Corporation to manage its Internet services exclusively and to provide e-mail service directly to its customers using “@shaw.ca” e-mail addresses. They also allow the Corporation to manage its own operations in terms of provisioning web space, backbone connectivity and peering arrangements into the United States. The centres also host Shaw customers’ most popular web content locally.

(iii)   Competition

There are a number of different types of ISPs offering residential and business Internet access services that currently compete, or may in the future compete, with Shaw’s Internet services. These include independent basic access service providers (both national and regional), incumbent telephone companies, wireless communications companies and electricity transmission and distribution companies.

Many ISPs provide telephone dial-up Internet access services with typical access speeds of up to 56 kilobites per second. Such services are provided by incumbent telephone companies and independent ISPs (mainly through the use of the telephone companies’ facilities and services).

High speed Internet access services are principally provided through cable modem and digital subscriber line (“DSL”) technology. High speed services enable users to transmit and receive print, video, voice and data in digital form at significantly faster access speeds than dial-up access through a regular telephone line. Internet access services through cable modem technology are currently provided by cable companies, although the CRTC has also authorized third-party ISPs to access cable companies’ facilities to deliver high speed Internet services (as discussed below). DSL services are principally offered by incumbent telephone companies, such as Bell Canada, SaskTel, Manitoba Telecom Services Inc. and Telus Corporation.

Internet access is also available in select cities in Western Canada through a wireless microwave technology known as WiMAX. This service requires a specialized modem and provides download speeds typically between 512 Kbps and 3 Mbps.

The ISPs have access to cable companies’ facilities to deliver competing Internet access service. Currently, competing ISPs have access to high speed access services of Shaw pursuant to a third party Internet access tariff that came into effect on November 2, 2004, and which has subsequently been updated on March 20, 2006. Such third party Internet access services are available in Vancouver, Victoria, Calgary, Edmonton, Saskatoon and Winnipeg. Currently, only one ISP has subscribed to the tariff. Until such time as an ISP subscribes to the tariff, or areas where Shaw’s third party Internet access services are not available, Shaw has been directed by the CRTC to allow ISPs to resell cable Internet services at a 25% discount from the retail rate. Currently, there are three ISPs using the Corporation’s resale services at the resale discount rate.

Although operating in a competitive environment, Shaw expects that consumer desire for Internet access services, generally, and for bandwidth-intensive applications on the Internet (including streaming video, digital

9

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

downloading and interactive gaming), in particular, will lead to continued growth for high speed Internet services such as Shaw High-Speed Internet.

(c)   Digital Phone

(i)   General

During fiscal 2005, the Corporation launched its fully featured residential telephone service under the brand name Shaw Digital Phone^tm. Shaw Digital Phone^tm combines local, long distance and the most popular calling features into a simple package for a fixed monthly fee. The service includes a local residential line, unlimited anytime long distance calling within Canada and the United States, 1000 international calling minutes per month to a wide variety of countries in Europe and the Asia/Pacific Region, as well as a variety of calling features, including voicemail, call display, call forwarding, three-way calling, call return and call waiting. Professional installation, access to E-911 (enhanced 911 emergency service), directory and operator services, and around-the-clock (24/7/365) customer support also form part of the Digital Phone service, at no additional cost to subscribers. With Shaw Digital Phone^tm, customers have the option of keeping their current home phone numbers and the service works with existing telephones in customers’ homes, so that no purchase of additional equipment is required. During fiscal 2007, the Corporation introduced Shaw Digital Phone Lite^tm, an offering tailored for light long distance users. The service includes a local phone line, popular calling features and long distance at competitive rates. Shaw has also recently launched a commercial voice service for small to medium sized businesses in Calgary Edmonton and Vancouver, and plans to continue roll-outs in its other major centres in fiscal 2008.

Shaw Digital Phone^tm utilizes PacketCable^tm technology and DOCSIS^tm specifications. Customers connect their existing phone lines into modems usually installed at the location of the central wiring in the customers’ premises. The modem converts the voice conversation into digital IP packets that are carried to an IP-based telephone switch (“softswitch”). At this point, the packets are transformed again to analog upon receipt by the public switched telephone network or may be routed through the IP network to the called party.

During fiscal 2007, the Corporation launched Digital Phone service in various markets including, Saskatoon, Kelowna, Nanaimo, Red Deer, Medicine Hat, Lethbridge and Abbotsford, as well as certain of their surrounding areas, which added approximately 720,000 homes passed to its footprint served with this product. As at August 31, 2007, Shaw had approximately 385,000 Digital Phone lines (primary and secondary lines on billing plus pending installs).

(ii)   Competition

The competitors of Shaw Digital Phone^tm include incumbent telephone companies (“ILECs”) (such as Telus Corporation, SaskTel, Manitoba Telecom Services Inc., and subsidiaries or affiliates of BCE Inc. such as Bell Canada), competitive local exchange carriers (such as Rogers Telecom Inc., formerly Sprint Canada Inc.) and non-facilities-based Voice over Internet Protocol (“VoIP”) providers (such as Primus Telecommunications Canada Inc. and Vonage Holdings Corp.). As the market for VoIP services develops and as VoIP technology evolves, new competitors (such as IT providers, network vendors and system integrators) may emerge from companies that have not offered voice solutions in the past.

The ILECs currently control the vast majority of the local telephone services market in Canada. Several of such competitors have larger operational and financial resources than the Corporation and are well established with residential customers in their respective markets. See “Canadian Regulatory Environment — Digital Phone” for a discussion of regulatory factors affecting competition for Digital Phone.

10

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

(d)   Internet Infrastructure (Shaw Business Solutions)

(i)   General

The Corporation’s Internet infrastructure business is principally operated through Shaw Business Solutions which was established in 2000. Shaw Business Solutions operates the national fibre network that is the primary Internet backbone for Shaw’s broadband Internet customers. This backbone network is also used to carry Shaw Digital Phone^tm capacity and video signals. In addition, Shaw Business Solutions’ facilities are available to Internet service providers (“ISPs”), cable companies, broadcasters, governments and other businesses and organizations that require end-to-end Internet and data connectivity. In particular, Shaw Business Solutions is focused on being a major account and wholesale provider offering third parties advanced high speed data connectivity and Internet services in Canada and the United States. Its offerings currently include data, voice and video transport and Internet connectivity services.

Shaw Business Solutions launched its operations in Canada in March 2000 and commenced operations in the United States in 2002. In recent years, Shaw Business Solutions continued to grow its third party revenues with a focus on the large and medium customer market. It also continues to establish public and private peering arrangements and high speed connections to major North American, European and Asian network access points and other tier-one backbone carriers. In the latter part of fiscal 2007, Shaw Business Solutions started to offer a commercial voice service for small to medium sized businesses.

(ii)   Shaw Business Solutions Network

Shaw Business Solutions’ network consists of a redundant two route fibre backbone transecting Canada and the United States, combined with numerous local access, intra-city fibre optic networks in municipalities served by Shaw Business Solutions.

The fibre network serves as a national platform for voice services, IP-based services, business-to-business Services and video. The network also extends connectivity to all major Internet national peering points in Canada, the United States and Europe.

The Shaw Business Solutions network includes multiple fibre capacity on two diverse cross-North America routes. Shaw Business Solutions’ southern route principally consists of approximately 6,400 route kilometers (4,000 miles) located on routes between Vancouver (via Calgary, Winnipeg, Chicago, Toronto and Buffalo) and New York City. The northern route consists of approximately 4,000 route kilometers (2,500 miles) of fibre between Edmonton (via Saskatoon, Winnipeg and Thunder Bay) and Toronto. This route provides redundancy for the existing southern route. The marine route consists of approximately 330 route kilometers (200 miles) located on 2 fibres on the route from Seattle to Vancouver Mainland (via Victoria). In addition, Shaw Business Solutions has secured additional capacity to connect the cities of Toronto (via Montreal and Boston) to New York City, Seattle (via Victoria) to Vancouver and Edmonton to Toronto.

(iii)   Competition

Through its Shaw Business Solutions subsidiaries, the Corporation competes with other telecommunications carriers in providing high speed broadband communications services (data and video transport and Internet connectivity services) to businesses, ISPs and other telecommunications providers. The telecommunications services industry in Canada is highly competitive, rapidly evolving and subject to constant change. Shaw Business Solutions competitors include ILECs (such as Telus Corporation and Bell Canada), competitive access providers, competitive local exchange carriers, ISPs, private networks built by large end users and other telecommunications companies. In addition, the development and implementation of new technologies by others could give rise to significant new competitors.

11

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

2.   Satellite Division

(a)   General

The Corporation’s Satellite Division is principally operated through its wholly owned subsidiaries, Satellite Services and Star Choice, and is comprised of DTH satellite and satellite distribution service businesses, as follows:

(i) Star Choice DTH — distribution of digital video and audio programming services via direct-to-home satellite to Canadian residences and businesses;

(ii) Satellite Distribution Services:

(A) Shaw Broadcast Services — uplink and redistribution of television and radio signals via satellite to cable operators and other distributors, and related network services; and

(B) Shaw Tracking — provision of satellite tracking and messaging services to the Canadian trucking industry, and integration and management of satellite data networks with land-based telecommunications.

Star Choice and Satellite Services share a common satellite infrastructure. The DTH and satellite services businesses distribute largely the same digital video and audio signals to different markets (residential and business), thereby allowing the Corporation to derive distinct revenue streams from different customers using a common platform.

(b)   Satellite Network

Satellite Services owns and leases, directly and indirectly, satellite transponders that receive and amplify digital signals and transmit them to receiving dishes located within the footprint covered by the satellite. Satellite Services’ interests in such transponders are set forth in the table below.

		Nature of Satellite Services
Satellite	Transponders	Interest
Anik F2	18 Ku-band	Owned
	4 Ku-band	Leased
Anik F1R	28 Ku-band	Leased
	2 C-band	Leased
Intelsat 1A5 (formerly known as Telstar 5)	1 Ku-band (partial)	Leased

(c)   Satellite Businesses

(i)   Star Choice DTH

Through its wholly-owned subsidiary Star Choice Television Network Incorporated, Star Choice is one of two DTH satellite operators licensed by the CRTC to deliver digital subscription video and audio programming services from satellites directly to subscribers’ homes and businesses. Star Choice began the national roll-out of its digital DTH services in 1997 and, as at August 31, 2007, had approximately 880,000 subscribers across Canada.

The market for Star Choice’s digital DTH services can be divided into three principal categories: households not served by cable and typically having access to a limited number of broadcast services; households underserved by cable (i.e. served by cable systems that offer fewer than 80 channels); and households that receive full service cable (80 or more channels), primarily in urban areas. Other potential customers include Canadian commercial, institutional and recreational facilities interested in video and audio programming.

With dual satellites (Anik F2 and Anik F1R) whose signals can be received by customers through a unique elliptical dish, as at August 31, 2007, Star Choice offered over 400 digital video and audio channels, including 25 High Definition channels, with a programming line-up that offers the vast majority of television services that are

12

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

available in Canada, including local over-the-air broadcasters, national networks, specialty channels, U.S. and foreign channels, adult programming and ethnic services. Star Choice obtains such programming from program providers whose distribution is authorized by the CRTC, in most cases pursuant to non-exclusive contracts ranging in term from three to five years. Star Choice’s subscribers have the option of choosing from a menu of programming packages designed to target and accommodate subscriber interests, primary language, income level and type of household. Such packages are primarily marketed through a nation-wide distribution network of over 3,000 retail locations, including The Source (formerly known as Radio Shack), Future Shop, Best Buy, Leon’s and The Brick.

As part of its continuing commitment to enhance its service offerings, during fiscal 2007, Star Choice added 11 High Definition channels. It also recently completed a transition to an advanced modulation technology for its HD broadcasting allowing it to further increase its High Definition channel capacity.

(ii)   Satellite Distribution Services

(A) Shaw Broadcast Services

Shaw Broadcast Services (formerly Cancom Broadcast Solutions) redistributes television and radio signals via satellite to cable operators and other multi-channel system operators in Canada and the U.S. and provides uplink and network management services for conventional and specialty broadcasters on a contract basis.

The redistribution of signals to cable companies and other operators is known in Canada as satellite relay distribution undertaking (“SRDU”) services. Shaw Broadcast Services currently provides SRDU and signal transport services to over 500 distribution undertakings, primarily cable operators, and redistributes more than 300 television signals and 125 audio signals in both English and French to multi-channel system operators. Shaw Broadcast Services also offers HITS/QT and QT Plus (Headend In the Sky/Quick Take), which allow small and medium size cable companies to offer digital signals to subscribers for a substantially reduced capital outlay. HITS/QT and QT Plus facilitate increased availability and penetration of digital services in Canada and thereby add incremental revenues to Shaw Broadcast Services from the additional services provided to smaller cable companies.

Shaw Broadcast Services’ uplink and network management services include backhaul (transport of signals to the uplink site), uplink (delivery of signal to the satellite so that it can be distributed to cable operators and other distributors), bandwidth, authorization and signal monitoring. Shaw Broadcast Services currently provides such services to approximately 125, specialty and pay services across Canada, as well as to Canadian pay audio services.

(B) Shaw Tracking

Shaw Tracking (formerly Cancom Tracking Solutions) provides asset tracking and communication services to over 550 companies in the long-haul trucking industry in Canada, with approximately 38,000 vehicles using its services. Shaw Tracking’s services capture all related information pertaining to an asset (i.e. location, performance and productivity measures) and effectively integrate into a carrier’s fleet management system. Via satellite, cellular and WiFi networks, Shaw Tracking solutions provide immediate real time visibility to a company’s fleet and freight. Shaw’s services and solutions target a wide variety of over the road segments of transportation across Canada.

(d)   Competition

The Star Choice DTH business faces much the same competitive environment as Shaw’s cable television business. Competitors include Bell ExpressVu (the only other licensed DTH satellite service currently operating in Canada), cable television companies, grey and black market satellite service providers and other competitors such as wireless operators, telephone companies and off-air television broadcasters. See “Description of Shaw’s Businesses — Cable Division — Cable Television — Competition”.

In its Canadian SRDU business, Satellite Services faces competition principally from Bell ExpressVu. At present, Satellite Services and Bell ExpressVu are the only licensed SRDU operators in Canada. Satellite Services

13

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

also faces competition from the expansion of fibre distribution systems into territories previously only served by SRDU operators. This expansion permits delivery of distant U.S. and Canadian conventional television stations to more remote locations without the use of satellite transmission.

3.   Additional Information Concerning Shaw’s Businesses

(a)   Seasonality and Customer Dependency

The Corporation’s cable television and Internet subscriber numbers are subject to seasonal fluctuations with the fall season (coinciding with the return of students to school, the return from vacations and the new television and holiday seasons) being stronger than other seasons. The Star Choice DTH subscriber activity tends to follow the cycles of the retail industry, with the greatest sales volume occurring in the four months leading up to and including the Christmas holiday season. In addition, Star Choice subscriber numbers are affected by vacation schedules (as customers reconnect and disconnect DTH services at summer homes) and by “snowbirds” (customers who vacation in warmer climates during winter months and reconnect and disconnect services accordingly). While subscriber activity is generally subject to these seasonal fluctuations, it may also be affected by competition and varying levels of promotional activity undertaken by the Corporation. Shaw’s businesses generally are not dependent upon any single customer or upon a few customers.

(b)   Environmental Matters

Shaw’s operations do not generally have a significant impact on the environment. The Corporation has not made, and does not anticipate making, any significant capital expenditures to comply with environmental regulations. Such regulations have not had, and are not expected to have, a material effect on the Corporation’s earnings or competitive position.

(c)   Foreign Operations

Shaw does not have material foreign assets or operations.

Shaw Business Solutions U.S. Inc., a wholly-owned subsidiary of the Corporation, has entered into an indefeasible right of use with respect to a portion of a United States fibre network and owns certain other fibre and facilities in the United States. Shaw Business Solutions U.S. Inc. commenced revenue-generating operations in the United States in 2002. Its revenues for the year ended August 31, 2007 were not material.

(d)   Employees

As at August 31, 2007, the Corporation employed approximately 9,000 persons.

4.   Risk Factors

A discussion of risks affecting the Corporation and its businesses is set forth under the heading “Introduction to the Business — Known Events, Trends, Risks and Uncertainties” in Management’s Discussion and Analysis for the year ended August 31, 2007, as contained on pages 17 to 24 of the Corporation’s 2007 Annual Report, which discussion is incorporated by reference herein. The description of risks does not include all possible risks, and there may be other risks of which the Corporation is currently not aware. The Corporation’s 2007 Annual Report is available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which may be accessed at www.sedar.com.

14

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

CANADIAN REGULATORY ENVIRONMENT

1.   Overview

The Canadian communications industry is regulated by the CRTC, which supervises Canadian broadcasting and telecommunications systems, including broadcasting distribution undertakings (“BDUs”) and telecommunications common carriers. The CRTC’s telecom mandate includes ensuring that Canadians have access to reasonably priced, high-quality, varied and innovative communications services that are competitive nationally. The CRTC’s broadcasting mandate includes ensuring that the system is regulated and supervised in a flexible manner, and that BDU’s give priority to the carriage of Canadian services and provide efficient delivery.

Shaw’s cable television, Internet, satellite and telecommunications businesses are subject to regulation principally by the CRTC pursuant to the Broadcasting Act (Canada) and the Telecommunications Act (Canada), as well as pursuant to certain other legislation, such as the Copyright Act (Canada) and the Radiocommunication Act (Canada). Its cable television and satellite (DTH and SRDU) businesses, in particular, are dependent upon licences granted and exemption orders issued by the CRTC and other regulatory bodies pursuant to such legislation. The Corporation’s businesses are also regulated by technical requirements and performance standards established by Industry Canada, primarily under the Radiocommunication Act (Canada) and the Telecommunications Act (Canada).

2.   Cable Television

(a)   General

CRTC regulations govern the types of services offered, packaging, and in some cases the fees that may be charged, by terrestrial BDUs such as cable television, telephone company DSL and MDS systems. Under the Broadcasting Distribution Regulations (the “Broadcasting Regulations”), there are three licensed classes of terrestrial BDU’s: (i) Class 1 systems (serving 6,000 or more subscribers); (ii) Class 2 systems (serving between 2,000 and 5,999 subscribers); and (iii) Class 3 systems (serving fewer than 2,000 subscribers or located in areas which receive not more than two Canadian television signals over the air).

There are also two classes of systems that are exempt from licensing, licensing fees, and certain regulatory requirements and operate under an exemption order. These are systems with less than 2,000 subscribers, and systems having between 2,000 and 6,000 subscribers.

Class 1 systems are subject to the most comprehensive regulation by the CRTC. Such regulations govern basic cable rates; the distribution and packaging of services (i.e. number of Canadian versus non-Canadian services per package); and priority access by Canadian television and audio services over foreign services. Only Class 1 cable systems are subject to basic rate regulation. The Broadcasting Regulations allow for basic rate deregulation of Class 1 systems once 5% of the customers within their licensed territories have chosen an alternate service provider. Most Class 1 cable systems in Canada are now rate deregulated.

Class 2 systems have fewer regulatory restrictions, while Class 3 and exempt systems having less than 2,000 subscribers enjoy the most flexibility respecting the packaging and distribution of Canadian and non-Canadian services.

Class 1, Class 2 and exempt systems having between 2,000 and 6,000 subscribers are required to contribute 5% of gross revenues to Canadian program production. Class 1 systems may devote 2% of gross revenues to community channels, while Class 2 systems and exempt systems having between 2,000 and 6,000 subscribers may devote the full 5% of gross revenues to programming on a community channel. As well, Class 1 systems having less than 20,000 subscribers may devote the full 5% to community channels.

15

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

(b)   Licensing

The Corporation holds a separate license or license exemption for each of its cable systems, upon which its cable television business is dependent. These licences have generally been issued for terms of up to seven years. The majority of Shaw’s licensed cable systems will undergo license renewals this fiscal year. Shaw has never failed to obtain a license renewal for its cable systems.

The CRTC imposes restrictions on the transfer of ownership and control of cable licences. Pursuant to regulations promulgated by the CRTC, a holder of a cable license must obtain the prior approval of the CRTC with respect to changes in the ownership of specified percentages of its voting and common shares and with respect to any act, agreement or transaction that directly or indirectly results in a material change of ownership or effective control of the licensee or of a person that has, directly or indirectly, effective control of the licensee. CRTC approval is contingent upon the purchaser demonstrating that the transfer is in the public interest. Exempt systems are not subject to the CRTC’s transfer of ownership rules.

(c)   Canadian Content

Both licensed and exempt systems are subject to priority carriage requirements for local and regional Canadian broadcast signals. As well, they are subject to a “preponderance” rule that requires these customers to receive a majority of Canadian services on both analog and digital.

The CRTC places restrictions on the distribution of non-Canadian services. For example, it generally does not permit the distribution of non-Canadian programming services that are determined to be directly or partially competitive with licensed Canadian pay television and specialty services. For that reason, certain pay movie channels and specialty programming services originating in the United States (such as HBO, Showtime, Cinemax, The Disney Channel, ESPN and Nickelodeon) are not approved for distribution in Canada.

Eligible foreign services that may be distributed in Canada include BBC World, American Movie Classics, Turner Classic Movies, The Learning Channel (TLC), Arts & Entertainment (A&E) Network, CNN, CNBC, and the “superstations” WTBS, KTLA, WGN, WSBK and WPIX. The CRTC requires that these services be sold to Canadian cable television subscribers in discretionary packages with Canadian specialty television services or with Canadian pay television services. Each non-Canadian specialty service must be linked with one Canadian specialty television service, and each Canadian pay television service may be linked with five non-Canadian services.

The CRTC has recently modified its policy to allow the distribution of general interest, non-Canadian third-language services on a digital basis, subject to certain packaging requirements.

(d)   Digital Broadcasting Services

Since 2000, the CRTC has licensed all new Canadian specialty, pay, PPV and VOD programming services only for digital distribution. There are 16 English language digital Category 1 Canadian specialty services that receive mandatory digital carriage by BDU’s that offer programming services to the public in English language markets using digital technology. There are also hundreds of digital Category 2 Canadian specialty services that have been licensed but without guaranteed distribution rights. The CRTC requires each BDU to distribute five non-affiliated Category 2 services for each affiliated Category 2 service that it distributes.

In addition, the CRTC has imposed other distribution requirements on Class 1 and 2 cable distribution undertakings that use digital distribution technology to deliver programming services to subscribers. Class 1 and 2 cable distribution undertakings using high capacity digital technology (more than 750 megahertz) are required to offer all Canadian English and French-language specialty services (other than Category 2 services), as well the English and French-language versions of CPAC (The Cable Public Affairs Channel), in analog or digital mode.

16

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

Other Class 1 and 2 cable distribution undertakings are required to distribute one minority official language Canadian specialty service for every ten majority official language services that are distributed by the undertaking.

(e)   Rate Regulation

Rates charged for basic cable service of Class 1 systems, and increases in such rates, are currently regulated by the CRTC, although a BDU may be granted rate deregulation. Rates for all other types of licensed or exempt systems are not rate regulated. As part of the basic rate, cable licensees are permitted to pass through to subscribers increases in the CRTC-authorized wholesale fees paid to licensed Canadian specialty programming services distributed as part of the basic cable service, subject to the CRTC’s power to suspend or disallow such an increase. In addition, licensees may also request a rate increase that is in excess of that which would be allowed under the foregoing, if the licensee can establish economic need by demonstrating that the licensee’s average rate of return on average net fixed assets before interest and taxes but after depreciation for its basic cable service is less than an established industry benchmark.

The CRTC also regulates the fees, on a cost recovery basis, which are charged for the connection of subscriber drop cables to a subscriber’s home. Cable television operators are required to offer to connect residences to their networks in areas serviced by municipal water or sewage systems only where the cable systems is subject to rate regulation by the CRTC. However, the CRTC may grant relief from such fee and rate regulations and Shaw has been granted relief with respect to both of these regulatory provisions.

Under the Broadcasting Regulations, basic rates cease to be regulated when two conditions are met: (i) there is evidence that 30% or more of the households in an operator’s licensed service area have access to the basic service of another BDU; and (ii) there is a loss of 5% or more of its subscribers to competitive BDUs.

All of the Corporation’s Class 1 systems have now been rate deregulated by the CRTC. All other systems owned by Shaw are also rate deregulated.

Fees charged to subscribers for (i) extended cable service, over and above basic cable service, (ii) rental of DCT’s and (iii) pay television services, including PPV and VOD programming, are not rate regulated by the CRTC.

(f)   Access Rights

Under the Telecommunications Act (Canada), if a cable television system is unable to obtain rights-of-way on any highway or other public place for the construction of transmission lines on terms acceptable to it, it may apply to the CRTC to obtain permission for such construction on terms set by the CRTC.

In January 2001, the CRTC issued a decision concerning the appropriate terms and conditions, including rates, of access to municipal property in Vancouver. As part of its decision, the CRTC limited the fees chargeable to the City of Vancouver to the recovery of its causal costs of granting access to municipal property. Although the terms of the decision are limited to the specific dispute before the CRTC, the basic principles set out in the decision, which has been upheld by the courts, are expected to apply generally.

Shaw’s cable systems also require access to support structures, such as poles, strand and conduits of telephone and electric utilities, in order to deploy cable facilities. The CRTC’s jurisdiction over support structures of telephone utilities, including rates for third party use, is well settled. Recently, however, the Supreme Court of Canada determined that the Telecommunications Act (Canada) does not give the CRTC jurisdiction to set the terms and conditions of access by cable systems to support structures of electric utilities. As a result, authority over such matters remains vested in certain provincial utility review agencies or boards, or in other provinces, and is not subject to federal regulation.

17

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

3.   New Media and Internet Access

In May 1999, the CRTC released its New Media Report which concentrated on communications products and services delivered via the Internet. The CRTC determined that it would not regulate or supervise new media services or products considered to be broadcasting pursuant to the Broadcasting Act (Canada) and has issued an exemption order in this regard. The CRTC is currently conducting another review of New Media.

With respect to regulation under the Telecommunications Act (Canada), the CRTC has also determined that it will not regulate the rates at which BDUs offer retail level Internet services. However, the CRTC will regulate the rates and terms on which BDUs provide access to their facilities with respect to competitive providers of retail level Internet services.

The CRTC has announced, as an interim measure, that the largest cable operators, including Shaw, must resell their Internet services at a 25% discount to ISPs. In December, 1999, the CRTC further decided that ISPs will be responsible for providing the cable modem and related equipment when they resell high speed Internet access to cable customers.

4.   Digital Phone

Shaw’s Digital Phone business is regulated by the CRTC pursuant to the Telecommunications Act (Canada). The Corporation, through its subsidiary Shaw Telecom Inc., is registered with the CRTC as a competitive local exchange carrier (“CLEC”). CLECs own or operate local transmission facilities.

Under the Telecommunications Act (Canada), the CRTC has the power to exempt any class of Canadian carrier from the application of the legislation if the CRTC is satisfied that such an exemption is consistent with Canadian telecommunications policy objectives. The CRTC also has the power to forbear from regulating certain services or classes of services provided by individual carriers. If the CRTC finds that a service or class of services provided by a carrier is subject to a degree of competition that is sufficient to protect the interests of users, the CRTC is required to forbear from regulating those services unless such an order would be likely to unduly impair the establishment or continuance of a competitive market for those services.

The CRTC has largely forborne from the regulation of the provision of local telecommunications services by CLECs. However, CLECs must be “Canadian carriers” as defined in the Telecommunications Act (Canada) and are therefore subject to foreign ownership restrictions. In addition, CLECs are required to file intercarrier agreements and tariffs for services provided to other local carriers, but not for services that they provide to end-users. They are also subject to certain other obligations, including the provision of 911 and message relay services, the protection of customer privacy, and the provision of information to their customers and the CRTC regarding their billing and payment policies.

Regulation of the incumbent local telephone carriers is now largely governed by the current Government’s deregulatory initiatives. Specifically, in December 2006, the Governor in Council directed the CRTC to “rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives, and when relying on regulation to use measures that are efficient and proportionate to their purpose and that interfere with the operations of competitive market forces to the minimum extent necessary to meet the policy objectives”. On April 4, 2007, a Governor in Council Order varied Telecom Decision CRTC 2006-15, which changed the forbearance decision by substituting a facilities-based market test to the market share test established by the CRTC in its decision. This has resulted in a number of forbearance orders being granted to Telus Corporation, Manitoba Telecom Services Inc. and SaskTel that cover a large portion of Shaw’s operating territory.

Included in the December 14, 2006 Governor in Council directive were instructions to the CRTC to undertake a review to determine the extent to which mandated access to wholesale services that are not essential services should be phased out. The focus of this CRTC proceeding is to define which ILEC and Cableco facilities are essential for

18

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

competition and should continue to be regulated by the CRTC. In the review that is currently underway, the CRTC must comply with the Government directive to ensure that it relies on market forces to the maximum extent feasible.

5.   Internet Infrastructure

Shaw Business Solutions’ telecommunications business in Canada is governed by the CRTC pursuant to the Telecommunications Act (Canada). Shaw Business Solutions Inc. is registered with the CRTC as a non-dominant Canadian telecommunications carrier. As such a carrier, Shaw Business Solutions Inc. operates under a significantly lessened regulatory regime (for example, no regulation of rates) as compared to incumbent telephone companies in Canada. Shaw Business Solutions Inc. has also received approval from the CRTC to transit traffic between Canada and the United States.

In the United States, Shaw Business Solutions U.S. Inc. is, or may be, subject to regulation both at the federal and state level. In this regard, in August 2001, Shaw Business Solutions U.S. Inc. received an International Telecommunications Certificate from the United States Federal Communications Commission to operate as a facilities-based carrier to transport traffic between the United States and Canada. As it expands its operations in the United States, it may be necessary to seek approval or certification from various state public utility commissions.

6.   Satellite

Certain of Shaw’s satellite businesses (Star Choice’s DTH business and Satellite Services’ SRDU business) are subject to regulation by the CRTC, as set forth below.

(a)   DTH

Generally, DTH companies, as BDUs, are subject to regulations similar to competitive cable distributors. Currently, there are only two active, licensed DTH operators in Canada, Star Choice Television Network Incorporated (“SCTN”), an indirect subsidiary of Satellite Services, and Bell ExpressVu.

SCTN’s DTH business is carried on pursuant to, and is dependent upon, a license issued by the CRTC under the Broadcasting Act (Canada). The license, which expires on August 31, 2010, authorizes SCTN to distribute a variety of television and radio services via satellite for direct-to-home reception by customers in Canada. The Broadcasting Regulations and conditions applicable to SCTN’s license govern the signals SCTN must and may distribute, require a contribution to the creation and presentation of Canadian programming of at least 5% of SCTN’s gross DTH revenues, regulate the resolution of disputes and impose certain structural separation safeguards between SCTN, Shaw Broadcast Services and the cable operations of Shaw. The rates charged by SCTN to its customers are not regulated by the CRTC.

(b)   SRDU

Satellite Services’ SRDU business is carried on pursuant to, and is dependent upon, a license issued to Satellite Services by the CRTC under the Broadcasting Act (Canada). Currently, Satellite Services and Bell ExpressVu are the only licensed SRDU operators in Canada.

The SRDU license held by Shaw Satellite, which expires on August 31, 2010, authorizes Shaw Satellite to distribute a variety of television and radio signals via satellite for reception by terrestrial distribution undertakings, such as cable systems, in Canada for retransmission to their subscribers. The conditions applicable to Satellite Services’ SRDU license govern the signals which Satellite Services must and may distribute, require a contribution to the creation and presentation of Canadian programming of at least 5% of its gross SRDU revenues, prohibit discriminatory treatment of customers, regulate the resolution of disputes and impose certain structural separation safeguards between Satellite Services, SCTN and the cable operations of Shaw. The rates charged by Satellite Services to SRDU customers are not regulated by the CRTC.

19

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

7.   Other Regulatory Matters

(a)   Restrictions on Non-Canadian Ownership and Control

The legal requirements relating to Canadian ownership and control of BDUs are embodied in a statutory order (the “Order”) from the Governor in Council (i.e. the federal Cabinet) to the CRTC, issued pursuant to authority contained in the Broadcasting Act (Canada). Under the Order, non-Canadians are permitted to own and control, directly or indirectly, up to 331/3% of the voting shares and 331/3% of the votes of a holding company which has a subsidiary operating company licensed under the Broadcasting Act (Canada). In addition, up to 20% of the voting shares and 20% of the votes of the operating licensee company may be owned and controlled, directly or indirectly, by non-Canadians. The Order also provides that the chief executive officer and 80% of the members of the board of directors of the operating company must be Canadian and that the holding company and its directors are prohibited from exercising any control or influence over the programming decisions of a subsidiary operating company in certain circumstances. There are no restrictions on the number of non-voting shares that may be held by non-Canadians at either the holding company or licensee operating company level. The CRTC retains the discretion under the Order to determine as a question of fact whether a given licensee is controlled by non-Canadians.

The Telecommunications Act also implements the Canadian government’s policy of promoting Canadian ownership and control of the country’s telecommunications infrastructure. Specifically, 80% of the voting shares of a carrier subject to the Telecommunications Act must be owned and controlled by Canadians. In the case of a company that wholly owns a carrier, not less than 62/3% of the voting shares of that company must be owned and controlled by Canadians. In addition, carriers may not “otherwise be controlled” by non-Canadians and not less than 80% of the board of directors of a company operating as a carrier must be Canadian. Shaw must report to the CRTC annually with respect to its compliance with these foreign ownership requirements.

In order to ensure that Shaw remains eligible or qualified to provide broadcasting and telecommunications services in Canada, the Articles of the Corporation require its directors to refuse to issue or register the transfer of any Shaw Class A Shares to a person that is not a Canadian, if such issue or transfer would result in the total number of such shares held by non-Canadians exceeding the maximum number permitted by applicable law. In addition, the directors of the Corporation are required to refuse to issue or register the transfer of any Shaw Class A Shares to a person in circumstances where such issue or transfer would affect the ability of Shaw to obtain, maintain, amend or renew a licence to carry on any business.

The Articles of the Corporation further provide that if, for whatever reason, the number of Shaw Class A Shares held by non-Canadians or other persons exceeds the maximum number permitted by applicable law or would affect the ability to carry on any licensed business, Shaw may, to the extent permitted by corporate or communications statutes, sell the Shaw Class A Shares held by such non- Canadians or other persons as if it were the owner of such shares. The Articles of the Corporation also give the directors of Shaw the right to refuse to issue or register the transfer of shares of any class in the capital of the Corporation if: (i) the issue or the transfer requires the prior approval of a regulatory authority, unless and until such approval has been obtained; or (ii) the person to whom the shares are to be issued or transferred has not provided Shaw with such information as the directors may request for the purposes of administering these share transactions.

(b)   Copyright

The Copyright Act (Canada) provides for the payment by BDUs of a royalty fee in respect of the retransmission of conventional radio and television broadcast signals (defined as over-the-air television signals originating more than a minimum specified distance from a cable operator’s licensed area). The amounts raised from these royalty fees are paid to copyright collectives representing the owners of the copyright in television programming, including producers, broadcasters and major league sports organizations, as well as authors, composers and publishers of the music in these programs. The level of this compulsory royalty fee is subject to the approval of the Copyright Board.

20

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

The Copyright Act (Canada) also provides for performing rights royalties that are payable in respect of the transmission of the music component of non-broadcast television and audio services, such as pay television, specialty services, pay audio and background music services. Pursuant to tariffs approved by the Copyright Board, BDUs and programmers are jointly responsible for a monthly royalty in respect of such non-broadcast television services.

(c)   Radio Apparatus

The Corporation’s satellite business employs a variety of radio apparatus, including satellite earth stations, and uses radio spectrum. Shaw requires a radio authorization from the Minister of Industry under the Radiocommunication Act (Canada) for each radio apparatus installed, operated or possessed by Satellite Services for use in its businesses unless the apparatus has been exempted from the requirement for an authorization. Shaw also requires a license from Industry Canada to utilize specified radio spectrum for Shaw Tracking.

CAPITAL STRUCTURE, DIVIDENDS AND RELATED MATTERS

1.   Description of Capital Structure

(a)   General

The authorized share capital of the Corporation consists of a limited number of Class A Participating Shares (the “Class A Shares”), which are voting, as described below; an unlimited number of Class B Non-Voting Participating Shares (the “Class B Non-Voting Shares”) (and, together with the Class A Shares, the “Shaw Shares”); an unlimited number of Class 1 Preferred Shares (the “Class 1 Preferred Shares”), issuable in series; and an unlimited number of Class 2 Preferred Shares (the “Class 2 Preferred Shares”), issuable in series. As at August 31, 2007, there were 22,563,064 Class A Shares, 408,770,759 Class B Non-Voting Shares and no preferred shares outstanding.

(b)   Class A Shares and Class B Non-Voting Shares

(i)   Authorized Number of Class A Shares

The authorized number of Class A Shares is limited to the lesser of that number of such shares (i) currently issued and outstanding; and (ii) that may be outstanding after any conversion of Class A Shares into Class B Non-Voting Shares (subject to certain conversion rights as described below under the heading “Conversion Privilege”).

(ii)   Voting Rights

The holders of Class A Shares are entitled to one vote per share at all meetings of shareholders. The holders of Class B Non-Voting Shares are entitled to receive notice of, to attend, and to speak at all meetings of shareholders but are not entitled to vote thereat except as required by law and except upon any resolution to authorize the liquidation, dissolution and winding-up of Shaw or the distribution of assets among the shareholders of Shaw for the purpose of winding up its affairs, in which event each holder of Class B Non-Voting Shares will be entitled to one vote per share.

(iii)   Dividends

In general, subject to the rights of any preferred shares outstanding from time to time, holders of Class A Shares and Class B Non-Voting Shares are entitled to receive such dividends as the Board of Directors of Shaw determines to declare on a share-for-share basis, as and when any such dividends are declared or paid, except that, during each Dividend Period (as defined below), the dividends (other than stock dividends) declared and paid on the

21

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

Class A Shares will always be $0.0025 per share per annum less than the dividends declared and paid in such Dividend Period to holders of the Class B Non-Voting Shares, subject to proportionate adjustment in the event of any future consolidations or subdivisions of Shaw Shares and in the event of any issue of Shaw Shares by way of stock dividends. A “Dividend Period” is defined as the fiscal year of Shaw or such other period, not to exceed one year, in respect of which the directors of Shaw have announced a current policy to declare and pay, or set aside for payment, regular dividends on the Shaw Shares.

(iv)   Rights on Liquidation

In the event of the liquidation, dissolution or winding-up of Shaw or other distribution of assets of Shaw for the purpose of winding up its affairs, all property and assets of Shaw available for distribution to the holders of Shaw Shares will be paid or distributed equally, share for share, to the holders of Shaw Shares without preference or distinction.

(v)   Conversion Privilege

Any holder of Class A Shares may, at any time or from time to time, convert any or all Class A Shares held by such holder into Class B Non-Voting Shares on the basis of one Class B Non-Voting Share for each Class A Share so converted. Subject to certain exceptions described below, if an Exclusionary Offer is made, any holder of Class B Non-Voting Shares may, at any time or from time to time during a Conversion Period, convert any or all of the Class B Non-Voting Shares held by such holder into Class A Shares on the basis of one Class A Share for each Class B Non-Voting Share so converted. For the purpose of this paragraph, the following terms have the following meanings:

“Class A Offeror” means a person or company that makes an offer to purchase Class A Shares (the “bidder”), and includes any associate or affiliate of the bidder or any person or company that is disclosed in the offering document to be acting jointly or in concert with the bidder;

“Conversion Period” means the period of time commencing on the eighth day after the Offer Date and terminating on the Expiry Date;

“Exclusionary Offer” means an offer to purchase Class A Shares that:

(A) must, by reason of applicable securities legislation or the requirements of a stock exchange on which the Class A Shares are listed, be made to all or substantially all holders of Class A Shares who are residents of a province of Canada to which the requirement applies; and

(B) is not made concurrently with an offer to purchase Class B Non-Voting Shares that is identical to the offer to purchase Class A Shares in terms of price per share and percentage of outstanding shares to be taken up exclusive of shares owned immediately prior to the offer by the Class A Offeror, and in all other material respects (except with respect to the conditions that may be attached to the offer for Class A Shares), and that has no condition attached other than the right not to take up and pay for shares tendered if no shares are purchased pursuant to the offer for Class A Shares, and for the purposes of this definition if an offer to purchase Class A Shares is not an Exclusionary Offer as defined above but would be an Exclusionary Offer if it were not for this sub-clause (B), the varying of any term of such offer shall be deemed to constitute the making of a new offer unless an identical variation concurrently is made to the corresponding offer to purchase Class B Non-Voting Shares;

“Expiry Date” means the last date upon which holders of Class A Shares may accept an Exclusionary Offer;

“Offer Date” means the date on which an Exclusionary Offer is made; and

22

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

“Transfer Agent” means the transfer agent for the time being of the Class A Shares.

Subject to certain exceptions, the foregoing conversion right shall not come into effect if:

(A) prior to the time at which the offer is made there is delivered to the Transfer Agent and to the Secretary of Shaw a certificate or certificates signed by or on behalf of one or more shareholders of Shaw owning in the aggregate, as at the time the Exclusionary Offer is made, more than 50% of the then outstanding Class A Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Class A Offeror, which certificate or certificates shall confirm, in the case of each such shareholder, that such shareholder shall not:

a. tender any shares in acceptance of any Exclusionary Offer without giving the Transfer Agent and the Secretary of Shaw written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date;

b. make any Exclusionary Offer;

c. act jointly or in concert with any person or company that makes any Exclusionary Offer; or

d. transfer any Class A Shares, directly or indirectly, during the time at which any Exclusionary Offer is outstanding without giving the Transfer Agent and the Secretary of Shaw written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, which notice shall state, if known to the transferor, the names of the transferees and the number of Class A Shares transferred or to be transferred to each transferee; or

(B) as of the end of the seventh day after the Offer Date there has been delivered to the Transfer Agent and to the Secretary of Shaw a certificate or certificates signed by or on behalf of one or more shareholders of Shaw owning in the aggregate more than 50% of the then outstanding Class A Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Class A Offeror, which certificate or certificates shall confirm, in the case of each such shareholder:

a. the number of Class A Shares owned by the shareholder;

b. that such shareholder is not making the offer and is not an associate or affiliate of, or acting jointly or in concert with, the person or company making the offer;

c. that such shareholder shall not tender any shares in acceptance of the offer, including any varied form of the offer, without giving the Transfer Agent and the Secretary of Shaw written notice of such acceptance or intended acceptance at least seven days prior to the Expiry Date; and

d. that such shareholder shall not transfer any Class A Shares, directly or indirectly, prior to the Expiry Date without giving the Transfer Agent and the Secretary of Shaw written notice of such transfer or intended transfer at least seven days prior to the Expiry Date, which notice shall state, if known to the transferor, the names of the transferees and the number of Class A Shares transferred or to be transferred to each transferee; or

(C) as of the end of the seventh day after the Offer Date, a combination of certificates that comply with either clause (a) or (b) from shareholders of Shaw owning in the aggregate more than 50% of the then outstanding Class A Shares, exclusive of shares owned immediately prior to the Exclusionary Offer by the Class A Offeror, has been delivered to the Transfer Agent and to the Secretary of Shaw.

(vi)   Modification

Neither class of Shaw Shares may be subdivided, consolidated, reclassified or otherwise changed unless contemporaneously therewith the other class of Shaw Shares is subdivided, consolidated, reclassified or otherwise changed in the same proportion and in the same manner.

23

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

(vii)   Offer to Purchase

Shaw may not make an offer to purchase any outstanding Class A Shares unless at the same time it makes an offer to purchase, on the same terms, an equivalent proportion of the outstanding Class B Non-Voting Shares.

(viii)   Redemption

The Shaw Shares are not redeemable at the option of either Shaw or the holder of any such Shaw Shares.

(c)   Class 1 Preferred Shares

The Class 1 Preferred Shares are issuable in one or more series. The Board of Directors may fix from time to time before such issue the number of shares which is to comprise each series then to be issued and the designation, rights, conditions, restrictions and limitations attaching thereto, including, without limiting the generality of the foregoing, the rate of preferential dividends and whether or not such dividends shall be cumulative, the dates of payment thereof, the redemption price and terms and conditions of redemption (including the rights, if any, of the holders of the Class 1 Preferred Shares of such series to require the redemption thereof), conversion rights (if any) and any redemption fund, purchase fund or other provisions to be attached to the Class 1 Preferred Shares of such series.

The shares of each successive series of Class 1 Preferred Shares shall have preference over the Class A Shares and Class B Non-Voting Shares as to dividends of not less than 1/100th of a cent per share, and shall not confer upon the shares of one series a priority over the shares of any other series of the Class 1 Preferred Shares in respect of voting, dividends or return of capital. If any amount of cumulative dividends or any amount payable on return of capital in respect of shares of a series of the Class 1 Preferred Shares is not paid in full, the shares of such series shall participate rateably with the shares of all other series of Class 1 Preferred Shares in respect of accumulated dividends and return of capital.

(d)   Class 2 Preferred Shares

The Class 2 Preferred Shares are issuable in one or more series. From time to time before any such issue, the directors may fix the number of shares which is to comprise each series then to be issued and the designation, rights, conditions, restrictions or limitations attaching thereto, including, without limiting the generality of the foregoing, the rate of preferential dividends, and whether or not the same shall be cumulative, the dates of payment thereof, the redemption price and terms and conditions of redemption (including the rights, if any, of the holders of Class 2 Preferred Shares of such series to require the redemption thereof), conversion rights (if any), and any redemption fund, purchase fund or other provisions to be attached to the Class 2 Preferred Shares of such series.

The shares of each successive series of Class 2 Preferred Shares shall have preference over the Class A Shares and Class B Non-Voting Shares (but shall rank junior to the Class 1 Preferred Shares) as to dividends and shall not confer upon the shares of one series a priority over the shares of any other series of Class 2 Preferred Shares in respect of voting, dividends or return of capital. If any amount of cumulative dividends or any amount payable on return of capital in respect of shares of a series of Class 2 Preferred Shares is not paid in full, the shares of such series shall participate rateably with the shares of all other series of the Class 2 Preferred Shares in respect of accumulated dividends and return of capital.

(e)   Share Constraints

The statutes which govern the provision of broadcasting and telecommunications services by Shaw and its regulated subsidiaries impose restrictions on the ownership of shares of the Corporation and its regulated subsidiaries by persons that are not Canadian. (See information under the heading “Canadian Regulatory Environment — Other Regulatory Matters — Restrictions on Non-Canadian Ownership and Control”). In order

24

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

to ensure that the Corporation and its regulated subsidiaries remain eligible or qualified to provide broadcasting and telecommunications services in Canada, the Articles of the Corporation require its directors to refuse to issue or register the transfer of any Class A Shares to a person that is not a Canadian if such issue or transfer would result in the total number of such shares held by non-Canadians exceeding the maximum number permitted by applicable law. In addition, the directors of Shaw are required to refuse to issue or register the transfer of any Class A Shares to a person in circumstances where such issue or transfer would affect the ability of the Corporation and its regulated subsidiaries to obtain, maintain, amend or renew a license to carry on any business. The Articles of the Corporation further provide that if, for whatever reason, the number of Class A Shares held by non-Canadians or other such persons exceeds the maximum number permitted by applicable law or would affect the ability to carry on any licensed business, Shaw may, to the extent permitted by corporate or communications statutes, sell the Class A Shares held by such non-Canadians or other persons as if it were the owner of such shares. The Articles of the Corporation also give its directors the right to refuse to issue or register the transfer of shares of any class in the capital of the Corporation if (i) the issue or the transfer requires the prior approval of a regulatory authority unless and until such approval has been obtained; or (ii) the person to whom the shares are to be issued or transferred has not provided Shaw with such information as the directors may request for the purposes of administering these share constraints.

2.   Dividends

(a)   Dividend Policy

The Corporation’s dividend policy is reviewed on a quarterly basis by the Board of Directors of Shaw. In general, subject to the rights of any preferred shares outstanding from time to time, holders of Class A Shares and Class B Non-Voting Shares are entitled to receive such dividends as the Board of Directors determines to declare on a share-for-share basis, if, as and when any such dividends are declared and paid.

In accordance with the terms and conditions of such shares, the dividends (other than stock dividends) declared and paid on the Class A Shares shall be $0.0025 per share per annum less than the dividends declared and paid to holders of the Class B Non-Voting Shares. See the information under the heading “Capital Structure, Dividends and Related Matters — Description of Capital Structure — Class A Shares and Class B Non-Voting Shares”.

25

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

(b)   Distribution Rates and Payment Dates

Set forth in the tables below are the annual distribution rates on equity securities of the Corporation outstanding as at August 31, 2007 and payment dates for the fiscal year ended August 31, 2007, as well as the amount of cash dividends declared per Class A Share and Class B Non-Voting Share for each of the past three fiscal years. Amounts have been adjusted to reflect the dividend per share after giving effect to the two-for-one stock split which occurred on July 30, 2007.

Fiscal 2007 Distribution Rates and Payment Dates

Class of Shares	Distribution Rate		Payment Dates
Class A Participating	$	0.024792	September 29, 2006
	$	0.024792	October 31, 2006
	$	0.024792	November 30, 2006
	$	0.041458	December 29, 2006
	$	0.041458	January 31, 2007
	$	0.041458	February 28, 2007
	$	0.041458	March 30, 2007
	$	0.041458	April 30, 2007
	$	0.041458	May 31, 2007
	$	0.046458	June 30, 2007
	$	0.046458	July 31, 2007
	$	0.046458	August 31, 2007
Class B Non-Voting Participating	$	0.025000	September 29, 2006
	$	0.025000	October 31, 2006
	$	0.025000	November 30, 2006
	$	0.041667	December 29, 2006
	$	0.041667	January 31, 2007
	$	0.041667	February 28, 2007
	$	0.041667	March 30, 2007
	$	0.041667	April 30, 2007
	$	0.041667	May 31, 2007
	$	0.046667	June 30, 2007
	$	0.046667	July 31, 2007
	$	0.046667	August 31, 2007

Effective Annual Dividend Payments (Fiscal 2005 — Fiscal 2007)

Class of Shares	Fiscal 2007		Fiscal 2006		Fiscal 2005
Class A Participating	$	0.462	$	0.235	$	0.153
Class B Non-Voting Participating	$	0.465	$	0.238	$	0.155

26

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

3.   Ratings

The following table sets forth the ratings assigned to the Corporation’s preferred securities, known as Canadian Originated Preferred Securities (“COPrS”), senior note obligations and unsecured debt by Dominion Bond Rating Service Limited (“DBRS”), Standard & Poor’s Rating Services (“S&P”) and Moody’s Investor Services, Inc. (“Moody’s”):

Security	DBRS(1)(2)			S&P(3)(4)	Moody’s(5)(6)
Senior Notes		BBB (low	)	BB+	Ba1
Senior Unsecured Debentures — Videon		BBB (low	)	BB+	—
COPrS (Preferred Securities)		Pfd-3 (low	)	B+	Ba2

Notes:

(1)	DBRS’ credit ratings are on a long-term debt rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. A rating of BBB by DBRS is the fourth highest of ten categories. Protection of interest and principal is considered acceptable, but the entity is fairly susceptible to adverse changes in financial and economic conditions or there may be other adverse conditions present which reduce the strength of the entity and its rates securities. The assignment of a “(high)” or “(low)” modifier within each rating category indicates relative standing within such category. The “high” and “low” grades are not used for the AAA category.
(2)	DBRS’ rating of securities and preferred shares is on a rating scale that ranges from a high of Pfd-1 to a low of Pfd-5. DBRS also applies modifiers “high”, “medium”, and “low” which indicate where the obligation ranks in its generic rating category.
(3)	S&P’s credit ratings are on a long-term debt rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. A rating of BB by S&P is the fifth highest of eleven categories. According to the S&P rating system, debt securities rated BB have significant speculative characteristics but are less vulnerable in the near term than other lower rated obligations. However, an obligor rated BB faces major ongoing uncertainties and exposure to adverse business, financial or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitments. A rating of B by S&P is the sixth highest of eleven categories. According to the S&P rating system, an obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation. The addition of a plus (+) or minus (-) designation after a rating indicates the relative standing within a particular rating category.
(4)	S&P rates preferred shares using categories from a high of ‘P-1’ to a low of ‘P-5’. Preferred securities are rated using long-term debt rating scale that ranges from a high of ‘AAA’ to a low of ‘D’.
(5)	Moody’s credit ratings are on a long-term debt rating scale that ranges from Aaa to C, which represents the range from highest to lowest quality of such securities rated. A rating of Ba is the fifth highest of nine categories and denotes obligations judged to have speculative elements and which are subject to substantial credit risk. The addition of a 1, 2 or 3 modifier after a rating indicates the relative standing within a particular rating category. The modifier 1 indicates that the issue ranks in the higher end of its generic rating category, the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
(6)	Moody’s rates securities and shares by rating categories from a high of ‘Aaa’ to a low of ‘C’. Moody’s applies modifiers 1, 2 and 3, which indicate where the obligation ranks in its generic rating category. Modifier 1 is higher end, modifier 2 is mid-range and modifier 3 is low end of the generic rating category.

Credit ratings are intended to provide investors with an independent measure of the quality of an issue of securities. The foregoing ratings should not be construed as a recommendation to buy, sell or hold the securities, in

27

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

as much as such ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if in its judgment circumstances so warrant, and if any such rating is so revised or withdrawn, the Corporation is under no obligation to update this Annual Information Form.

4.   Market for Securities

(a)   Marketplaces

As at August 31, 2007, the following securities of the Corporation were listed and posted for trading on the exchanges set forth below.

Security	Exchange	Symbol	CUSIP Number
Class A Participating Shares	TSX Venture Exchange	SJR.A		82028K101
Class B Non-Voting Participating Shares	Toronto Stock Exchange	SJR.B		82028K200
	New York Stock Exchange	SJR		82028K200

(b)   Trading Price and Volume

The following table sets forth the monthly closing price range and volume traded on a Canadian marketplace for each of the Corporation’s publicly traded securities for each month during the fiscal year ending August 31, 2007. Amounts have been adjusted to reflect prices and volumes after giving effect to the two-for-one stock split which occurred on July 30. 2007.

		TSX Venture — C$		TSX — C$
		SJR.A		SJR.B
September 2006	High		16.63		16.82
	Low		16.63		16.18
Sept-29	Close		16.63		16.74
	Volume		14,850		38,787,426
October 2006	High		19.38		18.42
	Low		16.00		16.11
Oct-31	Close		19.38		18.42
	Volume		1,280		32,152,136
November 2006	High		19.88		18.13
	Low		17.50		17.25
Nov-30	Close		17.88		17.70
	Volume		7,676		24,799,064
December 2006	High		18.38		18.69
	Low		17.88		17.58
Dec-29	Close		18.38		18.46
	Volume		1,180		22,678,672
January 2007	High		23.50		21.91
	Low		19.00		18.58
Jan-31	Close		23.50		20.90
	Volume		2,944		41,654,978
February 2007	High		24.50		21.68

28

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

		TSX Venture — C$		TSX — C$
		SJR.A		SJR.B
	Low		23.00		20.09
Feb-28	Close		24.50		20.09
	Volume		4,876		34,336,924
March 2007	High		22.00		21.81
	Low		21.00		20.13
Mar-30	Close		21.00		21.29
	Volume		2,940		22,778,616
April 2007	High		25.00		23.15
	Low		23.38		21.18
Apr-30	Close		25.00		21.46
	Volume		3,196		22,612,710
May 2007	High		24.00		22.50
	Low		23.25		20.93
May-31	Close		24.00		22.32
	Volume		1,160		23,788,434
June 2007	High		25.38		23.13
	Low		23.50		22.30
Jun-29	Close		25.38		22.51
	Volume		3,328		27,603,782
July 2007	High		34.00		26.50
	Low		24.87		22.25
Jul-31	Close		32.00		25.30
	Volume		3,810		51,014,892
August 2007	High		30.00		25.07
	Low		22.99		22.70
Aug-31	Close		29.75		24.52
	Volume		4,367		29,113,541
Notes:

(1) All price and volume information is from independent third-party sources (i.e. Toronto Stock Exchange (“TSX”) website and Bloomberg).

5.   Prior Sales

On March 2, 2007 and pursuant to a prospectus supplement dated February 27, 2007 the Corporation issued $400 million of Senior Notes. The following summarizes the details of that public offering:

Size of Offering:	$400 million
Form of Securities:	5.70% Senior Notes
Maturity Date:	March 2, 2017
Net proceeds of issue:	$395,255,500
Public Offering Price:	99.767%
Application of Proceeds:	Debt repayment, working capital and general corporate purposes.

29

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

DIRECTORS AND OFFICERS

1.   Directors as of November 29, 2007

Set forth below is a list of the directors of the Corporation as of November 29, 2007 indicating their municipality, province or state and country of residence, their principal occupations during the five preceding years and the year in which they became a director of the Corporation. Directors are typically elected at the annual meeting of shareholders to serve until the next annual meeting or until a successor is elected or appointed.

		Director
Name and Municipality of Residence	Principal Occupation Within Five Preceding Years	Since
Adrian I. Burns Rockcliffe Park, Ontario, Canada	Corporate Director; former Member of the Copyright Board of Canada; former Commissioner of the CRTC		2001
James F. Dinning Calgary, Alberta, Canada	Non-Executive Chairman, Western Financial Group Inc., a financial services company; former Executive Vice President, TransAlta Corporation, an electric industry holding company, and former Member of the Legislative Assembly of Alberta who held a number of Cabinet positions, including Provincial Treasurer, Minister of Education and Minister of Community and Occupational Health		1997
George F. Galbraith Vernon, British Columbia, Canada	Corporate Director; former President of Vercom Cable Services Ltd. which operated the cable television system serving Vernon, British Columbia		1991
Dr. Lynda Haverstock Regina, Saskatchewan Canada	President and Chief Executive Officer of Tourism Saskatchewan, a public-private partnership responsible for tourism activities		2007
Ronald V. Joyce Calgary, Alberta, Canada	Corporate Director; former Senior Chairman and Co-Founder, The TDL Group, licensee of Tim Horton’s restaurants in Canada and the United States		2000
Gregory J. Keating Porters Lake, Nova Scotia Canada	Chairman and Chief Executive Officer, Altimax Venture Capital, parent company of the Keating Group which comprises a diverse portfolio of business interests		2007
Rt. Hon. Donald F. Mazankowski Sherwood Park, Alberta, Canada	Corporate Director; former Member of Parliament who held a number of Cabinet positions, including Deputy Prime Minister and Minister of Finance		1993
Michael W. O’Brien Canmore, Alberta, Canada	Corporate Director; former Executive Vice-President, Corporate Development and Chief Financial Officer of Suncor Energy Inc., an integrated oil and gas company		2003
Harold A. Roozen Edmonton, Alberta, Canada	President and Chief Executive Officer, CCI Thermal Technologies Inc., a manufacturing company		2000
Jeffrey C. Royer Toronto, Ontario, Canada	Corporate Director and Private Investor		1995

30

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

		Director
Name and Municipality of Residence	Principal Occupation Within Five Preceding Years	Since
Bradley S. Shaw(1) Calgary, Alberta, Canada	Senior Vice President, Operations of the Corporation		1999
Jim Shaw(2) Calgary, Alberta, Canada	Chief Executive Officer of the Corporation		2002
JR Shaw(1)(2) Calgary, Alberta, Canada	Executive Chair of the Corporation		1966
JC Sparkman Englewood, Colorado U.S.A.	Corporate Director; former Executive Vice President and Executive Officer of Telecommunications Inc. (also known as TCI), one of the largest cable television operators in the United States		1994
Carl E. Vogel Cherry Hills Village, Colorado U.S.A.	President since September 2006 and Vice Chairman since June 2005, EchoStar Communications Corporation, a satellite-delivered digital television services provider in the United States; former President, Chief Executive Officer and a director of Charter Communications, a broadband service provider in the United States		2006
Willard H. Yuill Medicine Hat, Alberta, Canada	Chairman and Chief Executive Officer, The Monarch Corporation, a private holding company with investments in communications, real estate and sports-related properties		1999

Notes:

(1)	Bradley S. Shaw is the son of JR Shaw and the brother of Jim Shaw.
(2)	Jim Shaw is the son of JR Shaw and the brother of Bradley S. Shaw.

2.   Board Committee Members

The Board of Directors of the Corporation has established four standing committees: Executive, Audit, Corporate Governance and Nominating, and Human Resources and Compensation. The membership of each committee is set forth below.

The Executive Committee consists of JR Shaw (Chair), Ronald V. Joyce, Donald F. Mazankowski and JC Sparkman.

The Audit Committee consists of Michael W. O’Brien (Chair), George F. Galbraith, Gregory J. Keating and Carl E. Vogel. For further details concerning the Audit Committee, see the information under the heading “Audit Committee”.

The Corporate Governance and Nominating Committee consists of Donald F. Mazankowski (Chair), Adrian Burns, James F. Dinning, George F. Galbraith and Dr. Lynda Haverstock.

The Human Resources and Compensation Committee consists of Willard H. Yuill (Chair), Harold A. Roozen, Jeffrey C. Royer and JC Sparkman.

31

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

3.  Executive Officers as of November 29, 2007

Set forth below is a list of the executive officers of the Corporation as of November 29, 2007 indicating their municipality, province or state and country of residence and their respective positions with the Corporation. Officers are appointed annually and serve at the discretion of the Board of Directors of the Corporation.

Name and Municipality of Residence	Principal Position with the Corporation
JR Shaw(1)(2) Calgary, Alberta, Canada	Executive Chair
Jim Shaw(1)(2) Calgary, Alberta, Canada	Chief Executive Officer
Rhonda D. Bashnick Calgary, Alberta, Canada	Vice-President, Finance
Peter J. Bissonnette Calgary, Alberta, Canada	President
Douglas J. Black, Q.C. Calgary, Alberta, Canada	Corporate Secretary
Michael D’Avella Calgary, Alberta, Canada	Senior Vice President, Planning
Louis A. Desrochers, Q.C. Edmonton, Alberta, Canada	Honorary Corporate Secretary
Bradley S. Shaw(1)(2) Calgary, Alberta, Canada	Senior Vice President, Operations
Ken C.C. Stein Toronto, Ontario, Canada	Senior Vice President, Corporate and Regulatory Affairs
Steve Wilson Calgary, Alberta, Canada	Senior Vice President and Chief Financial Officer

Notes:

(1)	Jim Shaw is the son of JR Shaw and the brother of Bradley S. Shaw.
(2)	Bradley S. Shaw is the son of JR Shaw and the brother of Jim Shaw.

All of the above officers have been employed in various capacities by the Corporation during the past five years except: Steve Wilson who was Vice-President, Finance and Chief Financial Officer of Husky Injection Molding Systems Ltd. from 1997 to 2004; Douglas J. Black, Q.C., who is Vice-Chairman of Fraser Milner Casgrain LLP, Barristers and Solicitors; and Louis A. Desrochers, Q.C., who was counsel with McCuaig Desrochers, Barristers and Solicitors, until September 2003 and is now retired.

4.   Shareholdings of Directors and Executive Officers

To the knowledge of the Corporation, the directors and executive officers, as a group, beneficially own, directly or indirectly, or exercise control or direction over, 17,991,808 Class A Shares, representing, as of November 22, 2007, approximately 79.7% of the issued and outstanding shares of such class. Of such number, JR Shaw beneficially owns, controls or directs 17,784,208 Class A Shares, representing 78.8% of the issued and outstanding shares of such class. JR Shaw, members of his family and corporations owned or controlled by them are parties to a Voting Trust Agreement relating to all Class A Shares that they own, control or direct. The voting rights with respect to such shares are exercised by the representative of a committee of five trustees.

32

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

5.   Additional Disclosure for Directors and Executive Officers

To the knowledge of the Corporation, no director or executive officer of the Corporation, as of the date hereof, or a shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation, is or has been, within the ten years before the date of this Annual Information Form, a director or executive officer of any company that, while that person was acting in that capacity, (a) was the subject of a cease trade order or similar order or an order that denied the company access to any exemptions under Canadian securities legislation for a period of more than 30 consecutive days; (b) was subject to an event that resulted, after that person ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order or an order that denied the company access to any exemption under Canadian securities legislation for a period of more than 30 consecutive days; or (c) has, within the ten years before the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

AUDIT COMMITTEE

1.   Audit Committee Charter

The Audit Committee of the Board of Directors of the Corporation is responsible for overseeing the integrity of the Corporation’s financial reporting process. In this regard, the primary duties of the Audit Committee involve reviewing the Corporation’s annual and interim financial statements; monitoring the effectiveness and integrity of the Corporation’s financial reporting, internal control and related management information systems; and overseeing the audits conducted by the Corporation’s external auditors.

The Audit Committee is also responsible for overseeing the effectiveness and integrity of the Corporation’s internal controls, including information systems related thereto, and disclosure processes and controls; evaluating the qualifications and performance of the Corporation’s external auditors and implementing practices to preserve their independence; reviewing the engagements to be provided by the external auditors; and reviewing all significant auditing and accounting practices and policies and any proposed changes with respect thereto.

Further, the Audit Committee, in respect of those risk areas that the Board has assigned to it oversight responsibility, identifies and reviews with management the principal risks facing the Corporation in those areas and ensures that management has in place policies and systems to assess and manage these risks. As part of this process, the Audit Committee regularly reviews reports and discusses significant risk areas with the Corporation’s external auditors.

A copy of the charter of the Audit Committee is attached as Schedule A to this Annual Information Form.

2.   Audit Committee Composition and Background

The Audit Committee consists of Michael W. O’Brien (Chair), George F. Galbraith, Gregory J. Keating and Carl Vogel. Each member of the Audit Committee is independent and financially literate, as such terms are defined in Multilateral Instrument 52-110 — Audit Committees. In addition, Mr. O’Brien and Mr. Vogel each qualify as a “financial expert” under the Sarbanes-Oxley Act of 2002 and other applicable regulatory requirements.

In addition to each member’s general business experience, the education and experience of each member of the Audit Committee that is relevant to the performance of his responsibilities as a member of the Audit Committee are set forth below.

Michael O’Brien (Chair) served as Executive Vice-President, Corporate Development and Chief Financial Officer of Suncor Energy Inc., an integrated oil and gas company, until his retirement in 2002. He currently is a

33

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

director and member of the Audit and Board Policy and Governance Committees of Suncor Energy Inc. He received his MBA from York University.

George Galbraith is the former President of Vercom Cable Services Ltd. which operated the cable television system serving Vernon, British Columbia. He also served as chairman of Pacific Coast Public Television. He received his Bachelor of Commerce from the University of British Columbia and his MBA from York University.

Gregory Keating is Chairman and Chief Executive Officer of Altimax Venture Capital, parent company of the Keating Group which comprises a diverse portfolio of business interests, and was President of Access Communications Inc. from 1992 to 1999. He has completed the YPO Harvard School of Business CEO Program.

Carl Vogel is the President and Vice Chairman of EchoStar Communications Inc., a leading provider of satellite-delivered digital television services and operator of the DISH Network^tm, in the United States. He is a director of numerous public and private companies, a member of the Executive Committee of EchoStar Communications Inc., and a member of the Audit Committee of RGB Networks. He received his Bachelor of Science from St. Norbert College, with an emphasis in finance and accounting, and is a Certified Public Accountant.

3.   Audit Fees

The aggregate amounts paid or accrued by the Corporation with respect to fees payable to Ernst & Young LLP, the auditors of the Corporation, for audit (including separate audits of subsidiary entities, financings, regulatory reporting requirements and Sarbanes-Oxley Act-related services), audit-related, tax and other services in the fiscal years ended August 31, 2007 and 2006 were as follows:

Type of Service	Fiscal 2007		Fiscal 2006
Audit	$	2,113,235	$	2,213,961
Audit-related		312,075		195,457
Tax		66,017		436,736
All Other		—		—
Total	$	2,491,327	$	2,846,154

Fees paid for audit-related services in fiscal 2007 and 2006 were in respect of the separate audits of subsidiaries that were not required by law. The tax fees paid in fiscal 2007 and 2006 were related to linear property tax compliance; fees paid in fiscal 2006 also included tax compliance on scientific research, exploration and development tax credits, and transfer pricing.

The Audit Committee of the Corporation considered and agreed that the above fees are compatible with maintaining the independence of the Corporation’s auditors. Further, the Audit Committee determined that, in order to ensure the continued independence of the auditors, only limited non-audit related services will be provided to the Corporation by Ernst & Young LLP and in such case, only with the prior approval of the Audit Committee. The Chair of the Audit Committee has been delegated authority to approve the retainer of Ernst & Young LLP to provide non-audit services in extraordinary circumstances where it is not feasible or practical to convene a meeting of the Audit Committee, subject to an aggregate limit of $100,000 in fees payable to Ernst & Young LLP for such services per fiscal year of the Corporation. The Chair of the Audit Committee is required to report any such services approved by him to the Audit Committee.

LEGAL PROCEEDINGS

The Corporation is involved in litigation matters arising in the ordinary course and conduct of its business. Although such proceedings cannot be predicted with certainty, management of the Corporation does not expect that the outcome of these matters will have a material adverse effect on the Corporation.

34

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

In addition, Satellite Services, a subsidiary of the Corporation, is one of several defendants in an action brought by General Discovery (Canada) in the Ontario Superior Court of Justice in January, 2000 seeking general, special and punitive damages in the aggregate sum of $1.5 billion. The claim arises from Satellite Services’ involvement in a joint venture to establish a telecommunications network with Russia called Sovcan Star Satellite Communications Inc. General Discovery (Canada) alleges that the defendants wrongfully conspired to prevent the business venture from proceeding. No statement of defence has been filed to date by any of the defendants. General Discovery (Canada) was dissolved but has recently been revived. The Corporation does not believe that this claim has merit.

REGISTRAR AND TRANSFER AGENT

The registrar and transfer agent for the Class A Shares and Class B Non-Voting Shares is CIBC Mellon Trust Company at its principal offices in Vancouver, British Columbia; Calgary, Alberta; Toronto, Ontario; and Halifax, Nova Scotia. The co-registrar and co-transfer agent in the United States for the Class B Non-Voting Shares is The bank of New York Mellon at its principal office in Jersey City, New Jersey.

INTERESTS OF EXPERTS

The Corporation’s auditors are Ernst & Young LLP. The Corporation’s consolidated annual financial statements for the year ended August 31, 2007 have been filed under National Instrument 51-102 — Continuous Disclosure Obligations in reliance on the report of Ernst & Young LLP, independent chartered accountants, given on their authority as experts in auditing and accounting. As of October 24, 2007, the partners, employees and consultants of Ernst & Young LLP as a group did not beneficially own, directly or indirectly, any of the Corporation’s outstanding securities.

ADDITIONAL INFORMATION

Additional information concerning the Corporation is available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which may be accessed at www.sedar.com. Copies of such information may also be obtained on the Corporation’s website at www.shaw.ca, or on request without charge from the Vice President, Finance of the Corporation, Suite 900, 630 – 3^rd Avenue S.W., Calgary, Alberta, Canada T2P 4L4 (telephone (403) 750-4500).

Additional information including directors’ and officers’ remuneration and indebtedness, principal holders of the Corporation’s securities, and securities authorized for issuance under equity compensation plans is contained in the Corporation’s Proxy Circular dated November 22, 2007. Additional financial information is provided in the Corporation’s comparative financial statements for its most recently completed financial year, and management’s discussion and analysis thereon. Copies of such documents may be obtained in the manner set forth above.

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

Certain statements included in this Annual Information Form may constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of Shaw to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used, the words “anticipate”, “believe”, “expect”, “plain”, “intend”, “target”, “guideline”, “goal”, and similar expressions generally identify forward-looking statements. These forward-looking statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), guidance related to service operating income before amortization and free cash flow, business strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of Shaw’s business and operations, plans and references to the future success of Shaw. These forward-looking statements are based on certain assumptions and analyses made by Shaw in light of its

35

SHAW COMMUNICATIONS INC.
ANNUAL INFORMATION FORM
November 29, 2007

                 

experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform to the expectations and predictions of Shaw is subject to a number of risks and uncertainties described under “Known events, trends, risks and uncertainties” discussed on pages 17-24 of Shaw’s 2007 Annual Report. These factors include general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by Shaw; increased competition in the markets in which Shaw operates and from the development of new markets for emerging technologies; changes in laws, regulations and decisions by regulators in Shaw’s industries in both Canada and the United States; Shaw’s status as a holding company with separate operating subsidiaries; changing conditions in the entertainment, information and communications industries; risks associated with the economic, political and regulatory policies of local governments and laws and policies of Canada and the United States; and other factors, many of which are beyond the control of Shaw. Should one or more of these risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those as described herein. Consequently, all of the forward-looking statements made in this report and the documents incorporated by reference herein are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Shaw will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Shaw.

You should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement (and such risks, uncertainties and other factors) speak only as of the date on which it was originally made and Shaw expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this document to reflect any change in expectations with regard to those statements or any other change in events, conditions or circumstances on which any such statement is based, except as required by law. New factors affecting the Corporation emerge from time to time, and it is not possible for Shaw to predict what factors will arise or when. In addition, Shaw cannot assess the impact of each factor on its business or the extent to which any particular factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

36

SCHEDULE A -

AUDIT COMMITTEE CHARTER

SHAW COMMUNICATIONS INC.

This Charter of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Shaw Communications Inc. (the “Corporation”) was adopted and approved on January 21, 2004 (revised April 1, 2004, October 26, 2005 and July 12, 2007).

I.   PURPOSE

The primary function of the Committee is to assist the Board in fulfilling its oversight responsibilities with respect to the integrity of the Corporation’s financial reporting process. In this regard, the primary duties of the Committee involve reviewing the Corporation’s annual and interim financial statements; monitoring the effectiveness and integrity of the Corporation’s financial reporting, internal control and related management information systems; and overseeing the audits conducted by the Corporation’s external auditors.

The Committee will fulfill these responsibilities primarily by carrying out the activities set forth in Section IV of this Charter.

II.   COMPOSITION

The Committee shall be comprised of three or more independent directors, as appointed by the Board. A director is independent if he or she has no direct or indirect material relationship with the Corporation, as determined by the Board in consultation with the Corporate Governance Committee, in accordance with applicable laws, policies and guidelines of securities regulatory authorities.

To maintain their independence, members of the Committee may not accept any consulting, advisory or other compensatory fee (other than remuneration for acting in the capacity as a member of the Board or a committee of the Board) from the Corporation or any of its affiliates. Members of the Committee also may not receive any indirect payments from the Corporation or any of its affiliates, including payments (whether or not material) made to spouses or family members, or payments for services to law firms, accounting firms, consulting firms and investment banks for which the Committee member serves as a partner, member, managing director or executive.

All members of the Committee shall be financially literate and at least one member shall be a “financial expert” or otherwise have accounting or related financial expertise. The definitions of “financial literacy” and “financial expertise”, and the determination of whether any given member of the Committee meets such definition, will be made by the Board, in consultation with the Corporate Governance Committee, in accordance with applicable laws, policies and guidelines of securities regulatory authorities.

The members of the Committee shall be appointed by the Board annually. Each member shall serve until the next annual general meeting of the shareholders of the Corporation or until his or her earlier resignation or removal by the Board. The Chair of the Committee shall be appointed by the Board annually and shall carry out the responsibilities and duties set forth in Section V of this Charter.

III.  MEETINGS

The Committee shall meet at least on a quarterly basis, or more frequently as circumstances dictate or as requested by the Board, a member of the Committee, the Corporation’s external auditors or a senior officer of the Corporation.

The Committee shall also meet at least annually with the Corporation’s senior management (including the Chief Executive Officer and Chief Financial Officer), internal auditors and external auditors in separate sessions to discuss any matters that the Committee or any of these groups believe should be discussed privately. In addition, the Committee (or at least its Chair) should meet with the external auditors and management quarterly to review the Corporation’s interim financial statements.

A-1

Notice of each meeting of the Committee shall be given to each member of the Committee as far in advance of the time for the meeting as possible, but in any event, not later than 24 hours preceding the time stipulated for the meeting (unless otherwise waived by all members of the Committee). Each notice of meeting shall state the nature of the business to be transacted at the meeting in reasonable detail and to the extent practicable, be accompanied by copies of documentation to be considered at the meeting.

A quorum for the transaction of business at a meeting shall consist of not less than a majority of the members of the Committee. Members of the Committee may participate in any meeting by means of such telephonic, electronic or other communication facilities as permit all persons participating in the meeting to communicate adequately with each other, and a member participating by any such means shall be deemed to be present at that meeting.

Senior management of the Corporation and other parties may attend meetings of the Committee, as may be deemed appropriate by the Committee.

Minutes shall be kept of all meetings of the Committee and shall be signed by the Chair and Secretary of the meeting.

IV.   RESPONSIBILITIES AND DUTIES OF THE COMMITTEE

The Committee shall fulfill its oversight responsibilities primarily by carrying out the activities set forth below as well as all such other actions which may be incidental thereto or which may be necessary for the Committee to comply with the spirit and intent of this Charter. The items enumerated below are not intended to be exhaustive of the duties of the Committee and may be supplemented and revised from time to time as may be appropriate:

Financial Statement Review

1. Review and oversee the integrity of the Corporation’s annual financial statements (including any certification, report, opinion or review thereon rendered by external auditors) and any public disclosure documents or reports containing financial information that are submitted to any governmental body or to the public (including, in particular, management’s discussion and analysis (“MD&A”), prospectuses and registration statements).

2. Review and oversee the integrity of the Corporation’s quarterly financial statements and any public disclosure documents containing financial information that are submitted to any governmental body or to the public pursuant to applicable securities laws, and approve such quarterly financial statements for disclosure to the public (provided that such statements are subsequently tabled before, and ratified, confirmed and approved by, the Board).

3. Review earnings press releases as well as financial information and earnings guidance given to analysts and rating agencies.

4. Review the Corporation’s MD&A to ensure that it provides all material information in a fair and balanced manner, in compliance with applicable requirements.

5. Periodically consult with the Corporation’s external auditors in the absence of management concerning the fullness and accuracy of the Corporation’s financial statements.

6. Establish regular, timely and separate systems of reporting to the Committee by each of management of the Corporation and the external auditors regarding any significant judgments made in management’s preparation of the financial statements and the view of each as to appropriateness of such judgments.

7. Review any proposed changes in major auditing and accounting practices and policies, the presentation of significant risks and uncertainties and key estimates and judgments of management that may be material to financial statement presentation and reporting.

8. Obtain assurance that financial statement certifications and attestations from management of the Corporation have been completed and filed with applicable securities regulatory authorities.

9. Report to the Board on at least a quarterly basis on the results of the Committee’s activities, including the Committee’s review of the Corporation’s annual and interim financial statements.

A-2

Financial Reporting, Internal Control and Related Management Information Systems

10. In consultation with the external auditors, review the integrity of the Corporation’s financial reporting processes, both internal and external, and the Corporation’s accounting principles as applied in its financial reporting, to determine the quality and acceptability of the Corporation’s financial reporting.

11. Review the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented.

12. Receive timely reports from the external auditors concerning:

(a) all critical accounting policies and practices of the Corporation,

(b) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management; and

(c) all material written correspondence and disagreements between management and the external auditors (including any management letter or schedule of unadjusted differences).

13. Review summaries of significant, unusual or material off-balance sheet transactions to assess their impact on the Corporation’s financial reporting process and financial statements.

14. Jointly with the Human Resources Committee review pension and other post-employment benefit liabilities, including underlying assumptions, financial health of pension plans and disclosure in the Corporation’s financial statements.

15. Review the effectiveness and integrity of internal controls, including information systems related thereto, and disclosure processes and controls (as evaluated by the internal and external auditors or otherwise) and make recommendations with respect thereto.

16. Review the appointment, removal, independence and performance of the Corporation’s internal auditor.

17. Review the Corporation’s internal audit procedures, including the mandate of, and all reports issued by, the Corporation’s internal auditor and management’s response and subsequent follow up to any identified weaknesses.

18. Review and approve an annual control assurance plan.

19. Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal control or auditing matters, including a procedure for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters, and review and consider reports on the investigation and resolution of such complaints.

20. Review reports of any fraud that involves management or other employees, particularly where such individuals have a significant role in the Corporation’s internal controls.

21. Consider the implications of applicable laws and regulatory policies on the Corporation’s financial reporting process and financial statements.

22. Review the status of performance monitoring information systems which relate to disclosure of non-financial information.

23. Review major changes to management information systems that affect financial or internal control processes.

External Auditors

24. Make recommendations to the Board and the shareholders of the Corporation, on an annual basis:

(a) concerning the appointment of the external auditors (considering, in particular, their independence and effectiveness); and

(b) approve the terms of engagement and fees and other compensation to be paid to the external auditors.

A-3

25. (a) Oversee and review the qualifications and performance of the external auditors, who shall report directly and be accountable to the Committee (and ultimately, the Board), and

(b) approve any proposed discharge or change of the external auditors, or of the lead audit partner thereof, when circumstances warrant.

26. Review in advance any engagements for non-audit services to be provided by the external auditors’ firm or its affiliates, together with estimated fees, along with any other significant relationships which the external auditors have with the Corporation, and consider the impact on the independence of the external auditor and compliance with applicable laws.

Audit Process

27. Review the audit plan with the external auditors and with senior management of the Corporation.

28. Review, in the absence of management, any problems experienced by the external auditors in performing the audit, including any restrictions imposed by management or significant accounting issues on which there was a disagreement with management.

29. Review the post-audit or management letter, containing the recommendations of the external auditor and management’s response and subsequent follow up to any identified weakness.

30. Resolve disputes, if any, that may arise between the external auditors and management regarding financial reporting.

Risk Management

31. For those risk areas that the Board has assigned oversight to this committee, identify and review, with management, the principal risks in those areas facing the Corporation and ensure that management has in place the policies and systems to assess and manage these risks.

32. Review financial risks (foreign exchange risk, interest rate risk etc.) of the Corporation and the management of such risks.

33. Review the Corporation’s long term financing strategy, annual financing plan and specific proposed financings not otherwise considered in such plan.

34. Review the Corporation’s tax status and monitor its approach to tax strategy, including tax reserves and potential reassessments and audits.

35. Review, with the Corporation’s internal legal counsel and/or external counsel, any material legal matter that could have a significant impact on the Corporation’s financial reporting.

36. Review the status of the Corporation’s compliance with laws, regulations and internal policies and procedures, and the scope and status of systems designed to ensure such compliance, particularly in relation to contingent liabilities and material risks facing the Corporation.

37. Review the amount and terms of any insurance to be obtained or maintained by the Corporation and any other related risk management policies or measures.

Other

38. Engage and set the remuneration of such independent external advisors, including independent legal counsel, at the Corporation’s expense, as the Audit Committee may deem necessary or desirable to carry out its duties.

39. Review the appointment of the Chief Financial Officer and any key financial executives of the Corporation involved in the financial reporting process, and set policies for the hiring by the Corporation of employees or former employees of the Corporation’s external auditors.

A-4

40. Review policies and procedures with respect to the expense accounts and perquisites of executives and directors of the Corporation.

41. Review the succession plans for the Chair of the Committee and for Committee’s financial experts.

42. Provide orientation and training for new members of the Committee and continuing education initiatives for existing members.

43. Conduct all such investigations, or authorize others to conduct such investigations, as may be necessary or desirable with respect to matters within the Committee’s mandate.

44. Review this charter of the Audit Committee on an annual basis and suggest to the Corporate Governance Committee of the Board such revisions as the Audit Committee may believe to be required by new laws or to be prudent

45. Perform any other activities consistent with this Charter, the Corporation’s constating documents and governing law, as the Committee or the Board deems necessary or appropriate.

A-5

EX-3

CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Annual Report on Form 40-F of our reports dated October 24, 2007 on the consolidated financial statements of Shaw Communications Inc. as at August 31, 2007 and 2006 and for each of the years in the three-year period ended August 31, 2007, and the effectiveness of internal controls over financial reporting of Shaw Communications Inc. as at August 31, 2007.

Calgary, Canada	/s/ Ernest & Young LLP
November 29, 2007	Chartered Accountants

EX-4

SHAW COMMUNICATIONS INC.
CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER

I, Jim Shaw, Chief Executive Officer of Shaw Communications Inc., certify that:

1.	I have reviewed this annual report on Form 40-F of Shaw Communications Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.	The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d.	Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of issuer’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: November 29, 2007

/s/ Jim Shaw

Jim Shaw
Chief Executive Officer
Shaw Communications Inc.

SHAW COMMUNICATIONS INC.
CERTIFICATE OF THE CHIEF FINANCIAL OFFICER

I, Steve Wilson, Senior Vice President and Chief Financial Officer of Shaw Communications Inc., certify that:

1.	I have reviewed this annual report on Form 40-F of Shaw Communications Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.	The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d.	Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of issuer’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: November 29, 2007

/s/ Steve Wilson

Steve Wilson
Senior Vice President and Chief Financial Officer

Shaw Communications Inc.

EX-5

SHAW COMMUNICATIONS INC.
CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER

Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002
Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18 of the
United States Code

In connection with the annual report of Shaw Communications Inc. (the “Corporation”) on Form 40-F for the fiscal year ending August 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jim Shaw, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Dated at Calgary, Alberta, Canada this 29th day of November 2007.

/s/ Jim Shaw

Jim Shaw
Chief Executive Officer
Shaw Communications Inc.

SHAW COMMUNICATIONS INC.
CERTIFICATE OF THE CHIEF FINANCIAL OFFICER

Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002
Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18 of the
United States Code

In connection with the annual report of Shaw Communications Inc. (the “Corporation”) on Form 40-F for the fiscal year ending August 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steve Wilson, Senior Vice-President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Dated at Calgary, Alberta, Canada this 29th day of November 2007.

/s/ Steve Wilson

Steve Wilson
Senior Vice-President and Chief Financial Officer

Shaw Communications Inc.