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Shaw Communications (NYSE:SJR)

Q4 2011 Earnings Call

October 20, 2011 3:00 pm ET

Executives

Peter J. Bissonnette - President and Director

Paul Robertson - President, Television

Bradley S. Shaw - Chief Executive Officer, Director and Member of Executive Committee

Jay Mehr - Group Cable VP Operations

Analysts

Glen Campbell - BofA Merrill Lynch, Research Division

Vince Valentini - TD Newcrest Capital Inc., Research Division

Gregory W. MacDonald - Macquarie Research

Phillip Huang - UBS Investment Bank, Research Division

Jeffrey Fan - Scotia Capital Inc., Research Division

Maher Yaghi - Desjardins Securities Inc., Research Division

Tim Casey - BMO Capital Markets Canada

Robert Goff - NCP Northland Capital Partners Inc., Research Division

Operator

Welcome to Shaw Communications Fiscal 2011 Fourth Quarter Conference Call. Today's call will be hosted by Mr. Brad Shaw, CEO of Shaw Communications. [Operator Instructions] And as a reminder, today's call is being recorded. Before we begin, management would like to remind listeners that comments made during today's call will include forward-looking information and there are risks that actual results could differ materially. Please refer to the company's publicly filed documents for more information on details of assumptions and risks.

Mr. Shaw, I will now turn the call over to you.

Bradley S. Shaw

Thank you, operator, and thanks to everyone for joining us today to discuss our fourth quarter and year-end results. With me today are members of our senior management team, including Peter Bissonnette, President; Steve Wilson, Chief Financial Officer; Jay Mehr, Senior Vice President of Operations; Jean Brazeau, Senior Vice President of Regulatory; Michael D'Avella, Senior Vice President of Planning; Paul Robertson, President of the Shaw Media; and Jim Cummins, Group Vice President, Shaw Satellite Operations.

Fiscal 2011 was an exciting year at Shaw as we implemented a number of strategic initiatives that were focused on providing our customers choice, flexibility and transparency, as well as the latest in technological advancement. We launched a number of innovative products and services, including the Shaw Plan Personalizer, the Shaw Gateway, and we introduced higher Internet speeds and data usage allowances for our broadband customers. We have begun the reclamation of our digital tiers, which will triple our Internet capacity. In an environment where customers are demanding higher speed and are utilizing data-intensive applications, we believe our service is truly unique versus competitive alternatives.

During the year, we completed the integration of our Media assets, and the business has proven to be a key strategic asset and a financially accretive acquisition. The division performed extremely well in fiscal 2011, as our leading portfolio of specialty channels and conventional programming benefited from the recovery in the advertising market. Based on our $2 billion purchase and the 12-month financial performance of Shaw Media for the period ending August 31, 2011, the transaction multiple represents only 6.1x consolidated EBITDA and reinforces the financial benefits of the acquisition, which closed a year ago.

Shaw is a dynamic company, a successful operator, a technology leader, and we have a proven track record of making sound financial investments for all of our stakeholders. Our decision to not pursue a conventional wireless business is consistent with our strategic DNA.

In September, we announced our plans to build a managed Wi-Fi network to extend our customers' broadband experience beyond their homes. Customers are actively seeking Wi-Fi hotspots to reduce data cost and improve their wireless broadband experience. Shaw will become the first service provider in Canada to deliver reliable wireless broadband through an extensive carrier-grade Wi-Fi network covering thousands of locations.

As we face the realities of the competitive environment within our industry, we are focused on profitability and we are very pleased to report that we delivered on our fiscal 2011 guidance. During the year, we renewed our focus on operational efficiencies and implemented restructuring initiatives. Consolidated EBITDA, including the 10-month contribution from the Media assets, exceeded $2 billion, and excluding the impact of the CRTC Part II decision in fiscal 2010, our Cable EBITDA increased by over 6% to almost $1.5 billion. Our Cable margin for the year exceeded 48%, and in the fourth quarter, our margin was one of the highest on record, whereby we achieved a Cable margin in excess of 50%.

Shaw Media had an exceptional year, and on a 12-month basis, revenue increased 7%. EBITDA increased 25% to $325 million, and free cash flow from the division was approximately $145 million for the year ending August 31. Consolidated free cash flow for fiscal 2011, which includes 10 months of the Media result, was over $600 million despite a $60 million increase in cash taxes and acceleration of certain capital investment in the fourth quarter. The accelerated investments relate mostly to our digital network upgrade, as well as deposit on the new Anik G1 satellite, which is set to launch towards the end of 2012.

The initiatives we undertook this year, the decisions we executed on, have us well positioned to move forward in this rapidly evolving landscape. We are starting the new fiscal year with a number of strategic initiatives on the agenda, including our digital network upgrade and our Wi-Fi build. We expect continued growth in revenue and EBITDA across all divisions in 2012. Investments in our various strategic priorities are expected to increase capital within our Cable business and, combined with a higher CRTC benefit obligation funding and cash taxes, we expect free cash flow to decline moderately to approximately $550 million.

We look forward to the challenges and opportunities ahead. We have the assets, resources and the creativity and the drive to successfully execute on our fiscal 2012 strategic plans. We believe we are well positioned to create value for all our stakeholders in 2012 and beyond.

Thanks to everyone for joining us today, and we would now open the phones to answer any questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Vince Valentini with TD Securities.

Vince Valentini - TD Newcrest Capital Inc., Research Division

I have 3 questions: one on Cable EBITDA, one on interest expense and one on CapEx. In terms of Cable EBITDA, I guess any wireless losses are now being included in the Cable segment and we're now at the proper run rate for what your support structure fee should be, so can you take the Q4 number as a decent run rate heading into next year? And simply doing some simple math on that, if you take Q4 x 4 and compare it to what you did for all of fiscal 2011, that's 5% growth. So is it fair to say 5% is a base line for Cable EBITDA growth for next year?

Bradley S. Shaw

Well, I understand the math you're doing, Vince, and let me just comment on the guidance. We didn't put specific numbers in for a Cable increase. We did 6% this year and certainly, our 10% in the fourth quarter is the highest in the industry, and so for next year, we will be striving to hit that by 5% to 6% Cable EBITDA growth, but when we give numbers, we like to give them as commitment, and given the amount of movement in the market and uncertainty, we've decided not to give commitment this year, but I think that your math stands up well, and certainly, that's the level that we would be targeting, again, that 5% to 6% level.

Vince Valentini - TD Newcrest Capital Inc., Research Division

Okay, that's great. In terms of interest expense, a run rate question as well. I guess there was some refinancing done late in the fourth quarter, so is it fair to say there should be a decent step down in your interest cost starting in Q1 from the Canwest refinancing?

Bradley S. Shaw

Yes, that would be offset as well by the preferred shares that we issued, so debt levels have gone up, so there'll be an offset there, Vince.

Vince Valentini - TD Newcrest Capital Inc., Research Division

Okay, and last one on CapEx. So it seems like you've got the digital network upgrade and some Wi-Fi spending both somewhat lumpy and front-end loaded in 2012. Can you give us any look, even directionally, beyond 2012 on some of those programs down as to what your CapEx might do?

Peter J. Bissonnette

Vince, it's Peter Bissonnette, and certainly, Jay can jump in here as well, but clearly, you've defined the DNU and the Wi-Fi projects as projects that have a lifespan. The DNU will be completed by next year, and so there will be – we’ll call it a positive trend in terms of CapEx going down. Wi-Fi still will have a year left, but it's more heavily weighted to have next year than it would be the following year, so I think it's fair to say that there would be a downward trend in CapEx.

Operator

Our next question comes from Jeff Fan with Scotia Capital.

Jeffrey Fan - Scotia Capital Inc., Research Division

I wanted to ask you guys about the Business segment, and perhaps you can give us a little bit of color of how much it's contributing to your business today and what your plans are with respect to expanding into that segment of the market given how attractive that opportunity could be.

Jay Mehr

Sure. Jeff, it's Jay. We continue to have good momentum on the Business side. We're seeing about 20% growth year-over-year and have had a nice start to the year in September. We are seeing the market shift a little bit up-market. For us, as you know, we've been very successful in the very small, and therefore, you've seen some very nice subscriber numbers that are included in our numbers in previous years. We started to move into the mid market space, so our growth is shifting a little bit to the revenue and EBITDA growth, a bit more so than subscriber growth, but we're certainly still headed down that path. A great example is just one of the things that we're doing on a client that we wouldn't otherwise have had access to. We just won a nice bid with the City of Calgary and have taken 8,000 DID [ph] lines with them in the 311 [ph] business. And it's an example of the kind of opportunity that's available to us today that wasn't available to us a year or 2 ago.

Jeffrey Fan - Scotia Capital Inc., Research Division

Could you give us a sense of the size of the market that's within your Cable footprint and your addressable market?

Jay Mehr

Yes, so -- I guess the challenge is the definition of addressable. The economics of the model are such that to the extent that we're close to the business, it certainly makes economic sense, so the business household past number is probably not the way to look at this. We're 220 million a year at this point, and we think we've got about 5% of the market opportunity.

Operator

Our next question comes from Glen Campbell with Merrill Lynch.

Glen Campbell - BofA Merrill Lynch, Research Division

A follow-up question on CapEx. As you look out beyond the lumpy spend you’ve got to have, can you give us a sense of what you think the Cable business would require on an ongoing basis, maybe even excluding the set-tops? And maybe just to put the set-top investment in perspective, can you talk a little bit about how much you spent in the year just completed on set-tops?

Jay Mehr

I'll take the set-top question first and then you can go, maybe we can work through your second piece. We spent on average of just over $200 million a year the last 3 years on success-based capital in the Cable side of the business. We think we're in a very good spot with our set-top box strategy. As we’ve talked in the past about our good, better, best approach, good being our Motorola DCT700; better being our DCX platform both in the HD box and the HD PVR, big parts of our plan going forward; and best being Gateway. So I think if you look at our pricing plan now that we've got all of our boxes into primetime, we're looking at a subsidy on Gateway home of certainly less than $300 and significantly less than that in the other segments.

Peter J. Bissonnette

And then, on the -- there's routine capital, as you can well imagine, and which would include new plant construction. There's still a certain amount of growth going on. There are some new subdivisions. It's not as substantial commodity 5 years ago. We also have a hub at segmentation, asset category that will continue as we have gone from 2,000 homes for an old town into the sub 700 homes per node and, of course, that all goes to the call given the services that we're able to offer our customers. It goes to the ability of providing video-on-demand with lower and lower contention because of the serving node. There is an IT comportment. As you know, we're going through a transformation within our company from an older legacy system to a new system that will provide us with the flexibility to do the kinds of things we do -- need to do in post managing wireless, the new Gateway products and the kind of packaging that becomes a part of more of à la carte packaging, so there certainly will be an ongoing need to continue to do that. There are smaller system upgrades still. We’re doing a large, I'll call it, comprehensive visual network upgrade, but beyond that, we'll call it the traditional spectrum expansion that gives us the kind of capability that we're trying to move all of our systems into that 750, 850 spectrum capacity. On a digital basis, it gives us tremendous amount of capacity to offer 100- and 250-megabit services to go well beyond the capacity of any of our IT-based competitors and -- so those are ongoing kind of capital expectations for us that will just be a part of the business, and then, as we've said, the DNU has a time frame and will be completed by the end of next year and as well as the Wi-Fi, which -- the major portion of that will be done in the next 2.

Glen Campbell - BofA Merrill Lynch, Research Division

Maybe just a quick follow-up on that. If you look at the U.S. operators, there's obviously some differences. I mean, they're all spending, say, more than 10% of sales if you include the success-based capital. If you back that out, they're spending less. So as you get through these lumpy spend projects, is there any reason to think that your core CapEx, excluding the set-top boxes, would have to be more than 10% of your Cable revenues?

Jay Mehr

Well, I think the one thing that has to be realized is that we're probably in the most competitive environment of any cable operator in North America, right here in our own backyard in Western Canada, and so there are -- the DNU, for instance, the digital network upgrade, is driven by that competitive environment, and so to the extent that we see a downward trend after those one-off and those projects are completed, I don't know that getting into a 10% round would be realistic. At this time, it would be hard to make a commitment to that, but it's going to trend downward.

Bradley S. Shaw

Well, and Glen, part of those numbers, as you know, are things like Cablevision who’s fully built out on Wi-Fi radian [ph] has taken those moves and we see advancing our capital in terms of digital penetration. And in Canada, none of the cable operators, by what we show have CapEx intensity under 20%. Everybody is over 20% at this time, so I don't think we're an outlier in the market, but we should certainly see it coming under 20% in the near future.

Peter J. Bissonnette

And prudence is also a watchword, isn't it? It will continue to be that. I think we're known for being prudent in the way we spend capital. Is you can spend a lot more than we are, we're choosing not to. We think that the reference it’s giving us competitively really match the kind of needs that we have and the means that we have.

Bradley S. Shaw

And we'll continue to do that, Peter.

Peter J. Bissonnette

Yes.

Operator

And our next question comes from Phillip Huang with UBS.

Phillip Huang - UBS Investment Bank, Research Division

I just wanted to get an update on the Plan Personalizer. I think you guys mentioned in the last quarterly call that it was a net benefit to EBITDA because even though it gives customers more flexibility to perhaps rationalize their bill, it was generating a greater reduction in programming cost. Do you still believe that this is working the way -- this is still the case? I think you mentioned in your press release that programming costs are higher, but I just want to see if you still view the Plan Personalizer as a net benefit to EBITDA.

Jay Mehr

Sure. Phillip, it's Jay. I think if you look at the impact of Plan Personalizer in customer choice, we're seeing it as really being quite flat EBITDA. There's a slight reduction in ARPU and basically, an offsetting reduction in terms of network fees, and the program’s going very well and exceeding our expectations to date.

Phillip Huang - UBS Investment Bank, Research Division

Okay, maybe just a quick follow-up on -- also on the TV side. Aside from Optik TV, have you seen any changes in terms of Bell satellite TV offering? Have they introduced more attractive promotions at all during the quarter?

Jay Mehr

No.

Bradley S. Shaw

Good answer.

Operator

Our next question comes from Tim Casey with BMO Capital Markets.

Tim Casey - BMO Capital Markets Canada

You announced yesterday, you’d completed in a long-term carriage agreement with Bell Media. I'm just wondering if you can talk a little bit about term on that deal and what the implications might be on Cable margins. I mean, I think we're all assuming that the sports channel cable fees are going to go up dramatically over the next little while. I'm just hoping you could comment on that. And another question, kind of shifting gears, just looking at your voice penetration, the number of subs you added was still quite strong and it declined over the previous year, but I'm just wondering if you can comment on how much runway there is left in that market given other things coming up, more like eventually wireless substitution in the market and things like that.

Bradley S. Shaw

So Tim, on the Bell deal, it's a substantial deal and it represents 30 programming service. They're our largest program supplier by virtue of the number of services. With respect to the term, it's a reasonable term. It's a 5-year deal, so it takes us out to 2016. It gives us sufficient flexibility in terms of packaging programming services, consistent with the theory and the practice of the Plan Personalizer, that's all good. TSN, the sports service, we're very, very comfortable with the rates that we struck. The service remains on Basic. We have the ability to offer TSN HD essentially the way we want to offer it, which is likely going to be twinned at some point in the future. At this point, it's part of a sports package in the HD package, and it just gives us long-term stability in terms of rates. It's -- from our perspective, it's a good deal.

Tim Casey - BMO Capital Markets Canada

I guess it goes without saying that's obviously factored into your guidance. Are you implying you're not expecting margin pressure from...

Bradley S. Shaw

It's factored into it. It's factored in.

Jay Mehr

And then on the voice question -- Tim, it's Jay again. I think we have seen a shift in the landscape where our competitive environment is to be the communications provider for the entire home, and so in that world, there still is significant opportunity for us to make voice gains and we're quite bullish about that side of the business. That having been said, clearly, the market has shifted from single product ads and the way the market behaved 3 or 4 years ago to a customer choosing a communications provider and we certainly believe as the leading player in the TV and Internet space, which is what matters, that we're in an ideal position to be able to offer the complete communication services to customers.

Operator

Our next question comes from Rob Goff with Northland Capital Partners.

Robert Goff - NCP Northland Capital Partners Inc., Research Division

Two questions for me, and the first would go to the pricing leverage in the marketplace. I believe you successfully put through once $2 rate increases a year ago beginning September. Were you successful this year around? And the second question would be with regards to new product rollout. We noticed where you're doing the security product into the MDU. What are your plans there or at the individual house level?

Peter J. Bissonnette

Well, let's answer the question on the security MDU. That may be somebody else. It's not something that we're doing, but we will continue to look at fresh ways of providing services. On the last call, we heard about plain ordinary telephone service, POTS. Well, there are some great things that we're looking forward to offering in a much higher-quality, high-fidelity type of phone service that will enrich, if you will, the experience the customers have, and we think that, that's -- we're excited about what can happen in regards to what was plain ordinary telephone service.

Jay Mehr

And Rob, we can certainly take the question on rates. You can't really take a rate card, a traditional rate card approach, in a world where we've got Personalizer, we've got 50-meg Internet speeds and $99 bundles, and so you need to be a little bit careful in terms of extrapolating out legacy price changes considering there's an opportunity for customers to right-size and to find the right level of customized service in a way that wasn't there before. In terms of our current change to our legacy rates, effective November 1, our Internet packages went up in essence $3, and our TV packages went up $2, and we've seen sort of the normal course kind of a response to that change in rate. Lots of opportunity for customers who want to repackage and bundle and find something that works for them.

Operator

Our next question comes from Greg MacDonald with Macquarie Capital Markets.

Gregory W. MacDonald - Macquarie Research

The company's decision to subsidize the Gateway solution made me wonder if this is still a defensive strategy or if now there is some offense to it? Can you speak to that, retention is still focused or is there some acquisition ascribed to the sound? And I have a quick follow-up on the same subject.

Bradley S. Shaw

Yes, Greg, it's -- I wouldn't read too much into what you see there. Certainly, we are marketing Gateway for the first time. While we've had the benefit of talking on this call to each of you about it for a number of months, we haven't openly talked to our customers about it. We think we're in a nice price point for our high-end product, and it continues to be a high-end product. We've been successful in getting significant price reductions from the vendor and we're certainly on a price declination path that we're quite happy with, with those so I wouldn't read anything too much into that. The subsidy that we've talked about for the whole home being well under $300 is a completely bloated rating, including installations and the remotes, and in practical terms when we’ve talked about no subsidy in the past, we've been talking about generally about the equipment cost directly, not so much loaded cost, but I don't think you'll see a big variation there, and this is clearly a high-end product. We're really excited about our Motorola PVR products that are in market at $198, and we think that will be our mainstream product. That having been said, there's a halo effect around product leadership, and so you're going to continue to hear noise about the absolute best television product in the market.

Gregory W. MacDonald - Macquarie Research

Okay, that's helpful. And the second question kind of relates to the future outlook for the Cable network as well. A lot of companies now are thinking of moving more toward an IP TV-type platform. So you've talked about your digital network upgrade. Maybe can you talk a little bit about the operating platform plan? And I guess what I'm trying to get at is, is an edge product, like the Gateway product, the solution you're looking for, for whole home PVR and/or user guides kind of for the long-term? Or are you thinking more core network upgrades like an IP TV-type solution would imply?

Peter J. Bissonnette

Greg, it's Peter Bissonnette. I was down in Cable lands [ph] recently, and so we're looking at the various different approaches that large MSOs are taking with respect to the transition to IP, and they're actually looking to us as somewhat the leader in that space because of the approach that we're taking with our IP transition, which is really to take the best of both worlds. So from an IP perspective, the look and the feel is really what makes it apparent to customers, and with the Gateway product, as well as with the Dream Part HMO5 [ph] that we're doing on the DCX product, we're benefiting right now from the look and feel that an IP product gives you, but we're also benefiting from the QAM MPEG 4 quality of the pictures that are provided over our network, and so there's absolutely no other advantage frankly at this time to be going holus-bolus from where we are right to an IP product. This is a great transition because it actually moderates the capital that's required to do the service transition and immediately gives the customers who choose to have that IP experience, a great IP experience.

Gregory W. MacDonald - Macquarie Research

And you mentioned that there was a price decrease from the vendor over the past year or 2 years or whatever it's been. Is that really weighing into the way that you think about this as well?

Jay Mehr

Well, that was an expectation over time, right? It's Jay. As we launched the new product and we were -- we're kind of the driver to this, that as there's more take-up, and as there's more, obviously, demand, that the pricing would start to reflect that and we are now starting to see that.

Bradley S. Shaw

We're absolutely serious about working the price declination curve on all of our capital items, including set-tops from all vendors, and so we've seen some good results from all of our major vendors in that area.

Jay Mehr

And I think, Greg, it's fair to say that you would -- you're going to see us do a stepped approach, which you're seeing with the Gateway towards IP TV, where some others might be taking a little bit more of a jump. It's important to manage that customer experience and that whole process as we move to that.

Operator

Our next question comes from Maher Yaghi with Desjardins.

Maher Yaghi - Desjardins Securities Inc., Research Division

I just want to maybe touch base on the Media side. It hasn’t been approached yet. I wanted to ask you if you can give some more -- maybe some updates on – I see in your note that you mentioned revenues were up 7% on a yearly basis. Could you maybe tell us what the quarterly level of growth rate was organically? And also, on the EBITDA side, it's -- there's a lot of seasonality, we understand that, however, can you maybe give us some perspective on seasonality for next year? Was this quarter affected by other effects than seasonality that had impacted EBITDA? Maybe just more clarity on that?

Paul Robertson

Sure. It's Paul Robertson here, and I'm happy to kick off, and maybe Steve will come in behind and [indiscernible]. From a revenue standpoint, the fourth quarter this year was up moderately the year ago a couple of points, and the EBITDA was $12 million compared to basically a breakeven last year. We reported in our last quarterly meeting that fourth quarter in the Broadcast business is usually a time when you can come around at breakeven at probably a fairly normal quarter, and certainly, how the seasonality works, the first quarter is the largest by far and represents maybe up to kind of 40% of the total. The second quarter is considered the low season; third quarter, stronger; and fourth quarter is our really low season. So you have this first and third high season, second and fourth low season, and when the revenue fluctuates to that extent and your cost base tends to be more even, you're going to see the differences in EBITDA. So really, for us to track a quarter compared to the previous quarter, it really doesn't make a whole lot of sense in terms of trying to follow it. I think as opposed to Cable, where you're looking at the run rate, in our case, what you’d need to do is compare it strictly to year-ago to make sense out of it. There was nothing really that unusual or surprising about the fourth quarter. The revenue came in a little better than we expected it to, and that there's always probably some program adjustments that you make in the fourth quarter to make sure your inventory is nice and clean going into the new year. We had an adjustment in the fourth quarter of F '11 and in F '10. I think they were similar in size, maybe a little less in F '11. So it was a fairly normal quarter in total, and I think we just have to start recalibrating off of the year ago number.

Maher Yaghi - Desjardins Securities Inc., Research Division

Okay, that's helpful. I didn’t catch your initial discussion about the fourth quarter year-on-year revenue growth. How much was it?

Paul Robertson

Well, the fourth quarter revenue was $210 million compared to $206 million a year ago.

Maher Yaghi - Desjardins Securities Inc., Research Division

$260 million?

Paul Robertson

$206 million.

Maher Yaghi - Desjardins Securities Inc., Research Division

Okay, and just on another topic, on the CRTC's decision to ask -- I mean, the DVD use to be more -- offering more potential products and, I mean, for consumers to have more ability to choose their own programming, how much -- I mean, if you look -- in Quebec, where I live, we can choose our channels one by one. I know you have the Personalizer there that you offer your customers, but is there -- in your guidance, do you have any sensitivities or did you leave any potential impact from -- in case the CRTC demand that you offer à la carte products to all your clients?

Bradley S. Shaw

Well, look, as a practical matter, we offer our customers a variety of choices, so they can buy the packages that they currently have, and a lot of them still love the packages that they've got because they're good value. If they want greater choice, they can move to the Shaw Personalizer, which offers a reduced entry-level service, if you will, that still has probably some of the higher-value programming services and then they can buy [indiscernible] packages. I mean, that's what choice is about. We've already met that requirement to provide greater choice. Plus, and historically, we've always offered all the new specialty services, all the ones that were licensed in sort of the last stage, whether it was a Category A or B on a purely pick-and-pay discretionary basis, so that continues, and from our perspective, we've met whatever requirements we have, not necessarily driven by Commission request, but what the market wants, and that's what we're doing now and that's what we're doing with the Personalizer, and we're going to continue to do it.

Maher Yaghi - Desjardins Securities Inc., Research Division

So in terms of offering more channels, more of your channels are like that, like it is done in Québec? So it's not something you're currently looking to do, right?

Bradley S. Shaw

No. And there's no need to do it. Nobody's asking for à la carte services other than the ones that are currently being offered. I mean, people are looking for packages.

Peter J. Bissonnette

And just to be clear, when all of those specialty services were launched, we were the only broadcast distributor that offered them on an à la carte basis, in packages that customers tailored themselves, in totality, and so the -- we've, essentially, already got à la carte and pick-and-pay programming operating and our customers seem satisfied with that.

Bradley S. Shaw

Just to finish off with the Commission, I think they were looking more on affordability and the skinny Basic, and I don't think they were really encouraging or pushing us to provide complete à la carte service that you're suggesting.

Maher Yaghi - Desjardins Securities Inc., Research Division

Okay. And maybe just come back on the Media -- sorry, to come back like this, but it seems that your year-on-year growth in the fourth quarter is below the full-year growth rate. Was there something in the fourth quarter that you noticed any deceleration in terms of advertising that could -- that is more a representation of what's going to happen next year? Or do you think that just the fourth quarter growth rate was just a blip?

Peter J. Bissonnette

Well, because the fourth quarter is really low season, it tends to have a little more variation year-to-year. It really doesn't do much for predicting the future.

Bradley S. Shaw

Yes, and bear in mind as Paul said before, on the last call, we told you to expect to break even in the fourth quarter, which is similar to the breakeven we had last year. So we're ahead of our own expectations in terms of performance in the fourth quarter and I don't think there's anything that can be drawn out from that at this point.

Operator

Thank you. Mr. Shaw, that concludes the list of questions for today. Please continue.

Bradley S. Shaw

Thank you, operator. Thank you, everyone.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for your participation. You may now disconnect your line, and have a great day.

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