Exhibit
99.1






Management’s
responsibility for financial reporting





The
      accompanying consolidated financial statements of Corus Entertainment Inc.
      and all the information in this Annual Report are the responsibility of
      management and have been approved by the Board of
      Directors.
                
                The
      consolidated financial statements have been prepared by management in
      accordance with Canadian generally accepted accounting principles and
      include a reconciliation to U.S. 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 consolidated financial
      statements are presented fairly in all material
      respects.  Management has prepared the financial information
      presented elsewhere in this annual report and has ensured that it is
      consistent with the consolidated financial statements.
                  
                  Corus
      Entertainment Inc. maintains systems of internal accounting and
      administrative controls of high quality, consistent with reasonable
      cost.  Such systems are designed to provide reasonable assurance
      that the financial information is relevant, reliable andaccurate and that the Company’s assets are appropriately accounted
      for and adequately safeguarded.  During the past year,
      management has continued to improve the operating effectiveness of
      internal control over external financial reporting.  As at year
      end, we have determined that internal control over financial reporting is
      effective and Corus Entertainment Inc. has achieved compliance with the
      requirements set by the U.S. Securities and Exchange Commission (“SEC”)
      under Section 404 of the U.S. Sarbanes-Oxley Act
      (“SOX”).  In compliance with Section 302 of SOX, Corus
      Entertainment Inc.’s Chief Executive Officer and Chief Financial Officer
      provided to the SEC a certification related to Corus Entertainment Inc.’s
      annual disclosure document in the U.S. (Form 40-F).  The same
      certification was provided to the Canadian Securities
      Administrators.
                  
                  The
      Board of Directors is responsible for ensuring that management fulfills
      its responsibilities for financial reporting, and is ultimately
      responsible for reviewing and approving the consolidated financial
      statements.  The Board carries out this responsibility through
      its Audit Committee.
                  
                  The
      Audit Committee is appointed by the Board, and the majority of its members
      are outside unrelated directors.  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 items, to satisfy itself that each party is
      properly discharging its responsibilities, and to review the annual
      report, the consolidated financial statements and the external auditors’
      report.  The Committee reports its findings to the Board for
      consideration when approving the consolidated 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
      consolidated financial statements have been audited by Ernst & Young
      LLP, the external auditors, in accordance with Canadian generally accepted
      auditing standards and the standards of the Public Company Accounting
      Oversight Board (United States), on behalf of the shareholders. Ernst
      & Young LLP has full and free access to the Audit
      Committee.














signed
            
            signedJohn M.
      Cassaday
              President
      and Chief Executive Officer
            
            Thomas C.
      Peddie FCA
              Senior
      Vice President and Chief Financial
Officer















Report of
independent registered public accounting firm






To
the shareholders of Corus Entertainment Inc.


We have
audited the consolidated balance sheets of Corus
Entertainment Inc. as at August 31, 2008 and 2007 and the consolidated
statements of income and comprehensive income, changes in shareholders’ equity,
and cash flows for each of the years in the three-year period ended August 31,
2008.  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 consolidated 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 the Company as at August 31, 2008 and 2007
and the results of its operations and its cash flows for each of the years in
the three-year period ended August 31, 2008 in accordance with Canadian
generally accepted accounting principles.




We also have
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of Corus Entertainment Inc.’s
internal control over financial reporting as of August 31, 2008, based on
criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated November 14, 2008 expressed an
unqualified opinion thereon.






signedToronto, Canada
                November
      14, 2008
              
              Ernst
      & Young LLP
                Chartered
      Accountants
                  Licensed Public
Accountants













Report
of independent registered public accounting firm




The
Board of Directors of Corus Entertainment Inc.


We have
audited Corus
Entertainment Inc.’s internal control over financial reporting as of
August 31, 2008, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). Corus Entertainment 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’s responsibility for
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, Corus Entertainment Inc. maintained, in all material respects,
effective internal control over financial reporting as of August 31, 2008, based
onthe 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 Corus Entertainment Inc. as at
August 31, 2008 and 2007, and the related consolidated statements of income
and comprehensive income, changes in shareholders’ equity, and cash flows for
each of the years in the three-year period ended August 31, 2008 and our report
dated November 14, 2008 expressed an unqualified opinion thereon.






signedToronto, Canada
                  November
      14, 2008
                
                Ernst
      & Young LLP
                  Chartered
      Accountants
                    Licensed Public
Accountants







CORUS
ENTERTAINMENT INC.
 Consolidated
Balance Sheets
 As
at August 31
 (in
thousands of Canadian dollars)


2008
            
            
            2007ASSETS(note
      8)CurrentCash
      and cash equivalents
            
            
            19,642
            
            
            
            33,347Accounts
      receivable (notes 3 and 24)
            
            
            157,440
            
            
            
            151,380Income
      taxes recoverable
            
            
            1,615
            
            
            
            -Prepaid
      expenses and other
            
            
            10,135
            
            
            
            10,921Program
      and film rights
            
            
            131,301
            
            
            
            125,068Future
      tax asset (note 13)
            
            
            9,593
            
            
            
            13,518Total
      current assets
            
            
            329,726
            
            
            
            334,234Tax
      credits receivable
            
            
            21,952
            
            
            
            16,875Investments
      and other assets (note 4)
            
            
            93,086
            
            
            
            17,492Property,
      plant and equipment (note 5)
            
            
            73,562
            
            
            
            78,342Program
      and film rights
            
            
            103,163
            
            
            
            90,687Film
      investments (note 6)
            
            
            80,819
            
            
            
            66,593Deferred
      charges
            
            
            -
            
            
            
            4,100Broadcast
      licenses (note 15)
            
            
            533,491
            
            
            
            532,812Goodwill
      (note 15)
            
            
            797,854
            
            
            
            795,8322,033,653
            
            
            
            1,936,967LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrentAccounts
      payable and accrued liabilities (note 7)
            
            
            196,026
            
            
            
            166,083Income
      taxes payable
            
            
            -
            
            
            
            1,474Total
      current liabilities
            
            
            196,026
            
            
            
            167,557Long-term
      debt (note 8)
            
            
            692,750
            
            
            
            610,697Other
      long-term liabilities (note 9)
            
            
            59,936
            
            
            
            64,773Future
      tax liability (note 13)
            
            
            87,699
            
            
            
            102,851Total
      liabilities
            
            
            1,036,411
            
            
            
            945,878Non-controlling
      interest
            
            
            20,237
            
            
            
            15,196SHAREHOLDERS’
      EQUITYShare
      capital (note 10)
            
            
            848,257
            
            
            
            882,244Contributed
      surplus
            
            
            17,304
            
            
            
            10,250Retained
      earnings
            
            
            131,594
            
            
            
            95,568Accumulated
      other comprehensive loss (note 20)
            
            
            (20,150
            )
            
            
            (12,169
            )Total
      shareholders’ equity
            
            
            977,005
            
            
            
            975,8932,033,653
            
            
            
            1,936,967





Commitments,
contingencies and guarantees (notes 8 and 23)





See
accompanying notes





On
behalf of the Board:








John M.
      Cassaday
              Director
            
            Heather
      A. Shaw
              Director







CORUS
ENTERTAINMENT INC.
 Consolidated
Statements of Income and Comprehensive Income
 For
the years ended August 31
 (in
thousands of Canadian dollars, except per share amounts)


2008
            
            
            2007
            
            
            2006Revenues
      (notes 22 and 24)
            
            
            787,156
            
            
            
            768,743
            
            
            
            726,270Direct
      cost of sales, general andadministrative
      expenses (notes 10, 19, 23 and 24)
            
            
            535,026
            
            
            
            527,822
            
            
            
            512,151Depreciation
            
            
            22,054
            
            
            
            21,556
            
            
            
            21,302Amortization
            
            
            -
            
            
            
            1,555
            
            
            
            2,872Interest
      expense (notes 8 and 11)
            
            
            41,313
            
            
            
            35,838
            
            
            
            43,105Disputed
      regulatory fees (notes 7 and 23)
            
            
            10,936
            
            
            
            -
            
            
            
            -Debt
      refinancing loss (note 8)
            
            
            -
            
            
            
            -
            
            
            
            131,951Other
      expense, net (notes 12 and 19)
            
            
            7,853
            
            
            
            9,800
            
            
            
            11,667Income
      before income taxesand
      non-controlling interest
            
            
            169,974
            
            
            
            172,172
            
            
            
            3,222Income
      tax expense (recovery) (note 13)
            
            
            35,519
            
            
            
            59,813
            
            
            
            (36,005
            )Non-controlling
      interest
            
            
            4,620
            
            
            
            5,341
            
            
            
            3,756Net
      income for the year
            
            
            129,835
            
            
            
            107,018
            
            
            
            35,471Earnings per share(note
      10)Basic
            
            $
            1.57
            
            
            $
            1.27
            
            
            $
            0.42Diluted
            
            $
            1.54
            
            
            $
            1.23
            
            
            $
            0.41






Net
      income for the year
            
            
            129,835
            
            
            
            107,018
            
            
            
            35,471Other
      comprehensive loss, net of taxUnrealized
      foreign currency translation adjustment
            
            
            (23
            )
            
            
            (641
            )
            
            
            (1,519
            )Unrealized
      change in fair value of available-for-saleinvestments
            
            
            (1,114
            )
            
            
            -
            
            
            
            -Unrealized
      change in fair value of cash flowhedges
            
            
            (13,851
            )
            
            
            -
            
            
            
            -(14,988
            )
            
            
            (641
            )
            
            
            (1,519
            )Comprehensive
      income for the year
            
            
            114,847
            
            
            
            106,377
            
            
            
            33,952





See
accompanying notes







CORUS
ENTERTAINMENT INC.
 Consolidated
Statements of Changes in Shareholders’ Equity
 For
the years ended August 31
 (in
thousands of Canadian dollars)





2008
            
            
            2007
            
            
            2006Share
      capitalBalance,
      beginning of year
            
            
            882,244
            
            
            
            870,563
            
            
            
            885,911Issuance
      of shares under Stock Option Plan
            
            
            12,338
            
            
            
            27,676
            
            
            
            6,109Shares
      repurchased
            
            
            (46,555
            )
            
            
            (16,229
            )
            
            
            (21,687
            )Repayment
      of executive stock purchase loans
            
            
            230
            
            
            
            234
            
            
            
            230Balance,
      end of year
            
            
            848,257
            
            
            
            882,244
            
            
            
            870,563Contributed
      surplusBalance,
      beginning of year
            
            
            10,250
            
            
            
            6,878
            
            
            
            3,558Stock-based
      compensation
            
            
            7,904
            
            
            
            4,133
            
            
            
            3,448Exercise
      of stock options
            
            
            (850
            )
            
            
            (761
            )
            
            
            (128
            )Balance,
      end of year
            
            
            17,304
            
            
            
            10,250
            
            
            
            6,878Retained
      earningsBalance,
      beginning of year
            
            
            95,568
            
            
            
            51,585
            
            
            
            50,802Cumulative
      impact of accounting changes (note 2)
            
            
            (1,594
            )
            
            
            -
            
            
            
            -Adjusted
      opening balance
            
            
            93,974
            
            
            
            51,585
            
            
            
            50,802Net
      income for the year
            
            
            129,835
            
            
            
            107,018
            
            
            
            35,471Dividends
      (note 10)
            
            
            (47,326
            )
            
            
            (42,842
            )
            
            
            (19,586
            )Share
      repurchase excess (note 10)
            
            
            (44,889
            )
            
            
            (20,193
            )
            
            
            (15,102
            )Balance,
      end of year
            
            
            131,594
            
            
            
            95,568
            
            
            
            51,585Accumulated
      other comprehensive lossBalance,
      beginning of year
            
            
            (12,169
            )
            
            
            (11,528
            )
            
            
            (10,009
            )Cumulative
      impact of accounting changes (note 2)
            
            
            7,007
            
            
            
            -
            
            
            
            -Adjusted
      opening balance
            
            
            (5,162
            )
            
            
            (11,528
            )
            
            
            (10,009
            )Other
      comprehensive loss, net of tax
            
            
            (14,988
            )
            
            
            (641
            )
            
            
            (1,519
            )Balance,
      end of year
            
            
            (20,150
            )
            
            
            (12,169
            )
            
            
            (11,528
            )





See
accompanying notes







CORUS
ENTERTAINMENT INC.
 Consolidated
Statements of Cash Flows
 For
the years ended August 31
 (in
thousands of Canadian dollars)


2008
            
            
            2007
            
            
            2006OPERATING
      ACTIVITIESNet
      income for the year
            
            
            129,835
            
            
            
            107,018
            
            
            
            35,471Add
      (deduct) non-cash items:Depreciation
            
            
            22,054
            
            
            
            21,556
            
            
            
            21,302Amortization
      of program and film rights
            
            
            145,661
            
            
            
            138,711
            
            
            
            124,327Amortization
      of film investments
            
            
            28,393
            
            
            
            38,781
            
            
            
            39,450Future
      income taxes
            
            
            (7,321
            )
            
            
            16,295
            
            
            
            (74,232
            )Non-controlling
      interest
            
            
            4,620
            
            
            
            5,341
            
            
            
            3,756Stock-based
      compensation
            
            
            7,971
            
            
            
            13,066
            
            
            
            12,137Debt
      refinancing loss
            
            
            -
            
            
            
            -
            
            
            
            131,951Imputed
      interest and other
            
            
            8,593
            
            
            
            2,404
            
            
            
            5,950Net
      change in non-cash working
      capitalbalances related to
      operations
            
            
            (11,018
            )
            
            
            (27,810
            )
            
            
            (9,898
            )Payment
      of program and film rights
            
            
            (141,917
            )
            
            
            (156,220
            )
            
            
            (134,751
            )Net
      additions to film investments
            
            
            (56,293
            )
            
            
            (56,069
            )
            
            
            (44,445
            )Cash
      provided by operating activities
            
            
            130,578
            
            
            
            103,073
            
            
            
            111,018INVESTING
      ACTIVITIESAdditions
      to property, plant and equipment
            
            
            (17,552
            )
            
            
            (20,287
            )
            
            
            (23,598
            )Business
      combinations
            
            
            (774
            )
            
            
            (64,692
            )
            
            
            -Cash
      held in escrow
            
            
            (74,950
            )
            
            
            -
            
            
            
            -Net
      cash flows for investments and other assets
            
            
            (4,251
            )
            
            
            20,679
            
            
            
            15,943Decrease
      in public
      benefits associated withAcquisitions
            
            
            (3,993
            )
            
            
            (6,498
            )
            
            
            (9,594
            )Cash
      used in investing activities
            
            
            (101,520
            )
            
            
            (70,798
            )
            
            
            (17,249
            )FINANCING
      ACTIVITIESIncrease
      in bank loans
            
            
            85,594
            
            
            
            14,388
            
            
            
            592,687Notes
      repurchase and swap termination
            
            
            -
            
            
            
            (634
            )
            
            
            (727,829
            )Issuance
      of shares under stock option plan
            
            
            11,488
            
            
            
            26,915
            
            
            
            5,981Shares
      repurchased
            
            
            (91,444
            )
            
            
            (36,422
            )
            
            
            (36,789
            )Dividends
      paid
            
            
            (46,284
            )
            
            
            (44,845
            )
            
            
            (10,547
            )Dividend
      paid to non-controlling interest
            
            
            (1,742
            )
            
            
            (1,524
            )
            
            
            (5,304
            )Other
            
            
            (375
            )
            
            
            (442
            )
            
            
            (6,418
            )Cash
      used in financing activities
            
            
            (42,763
            )
            
            
            (42,564
            )
            
            
            (188,219
            )Net
      decrease in cash and cash equivalents duringthe year
            
            
            (13,705
            )
            
            
            (10,289
            )
            
            
            (94,450
            )Cash
      and cash equivalents, beginning of year
            
            
            33,347
            
            
            
            43,636
            
            
            
            138,086Cash
      and cash equivalents, end of year
            
            
            19,642
            
            
            
            33,347
            
            
            
            43,636





Supplemental
cash flow disclosures (note 18)





See
accompanying notes




CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)




1.
            Basis
      of presentation


Corus
Entertainment Inc. (“Corus” or the “Company”) is a diversified Canadian
communications and entertainment company. The Company is incorporated under the
Canada Business Corporations
Act and its Class B Non-Voting Shares are listed on the Toronto and New
York Stock exchanges.




2.
            Significant
      accounting policies


The
consolidated financial statements have been prepared by management in accordance
with Canadian generally accepted accounting principles (“GAAP”).




The
effects of differences between the application of Canadian and U.S. GAAP on the
consolidated financial statements of the Company are described in note
21.




As
noted below, on September 1, 2007, the Company adopted the new accounting
standards for financial instruments, hedges and comprehensive
income.




Basis
of consolidation


The
consolidated financial statements include the accounts of Corus and all of its
subsidiaries, all of which are wholly owned except for Country Music Television
Limited (80% interest), Telelatino Network Inc. (50.5% interest), Discovery Kids
Canada (53.6% interest), SCREAM (51% interest) and Cosmopolitan TV (54%
interest), as well as its proportionate share of the accounts of its joint
ventures. Intercompany transactions and balances have been eliminated on
consolidation. The results of operations of subsidiaries acquired during the
year are included from their respective dates of acquisition.




Use
of estimates


The
preparation of consolidated financial statements in conformity with 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 reporting periods. The most
significant assumptions made by management in the preparation of the Company’s
consolidated financial statements include future revenue projections for
investments in film and television programs, provisions for doubtful accounts to
reflect credit exposures, valuation allowances and impairment assessments for
various assets including investments in film and television programs; property,
plant and equipment; long-term investments; current and future income taxes;
broadcast licenses and goodwill. Actual results could differ from those
estimates.




Revenue
recognition


Advertising
revenues are recognized in the period in which the advertising is aired under
broadcast contracts.




Affiliate
subscriber fee revenues are recognized monthly based on subscriber
levels.




Product
and distribution revenues from the distribution and licensing of film rights are
recognized when all of the following conditions are met: (i) persuasive evidence
of a sale or licensing arrangement with a customer exists; (ii) the film is
complete and has been delivered or is available for immediate and unconditional
delivery; (iii) the license period of the arrangement has begun; (iv) the
arrangement fee is fixed or determinable; and (v) collection of the arrangement
fee is reasonably assured. Non-refundable recoupable minimum guarantees received
under licensing arrangements for home videos where film titles are
cross-collateralized are deferred and recognized as revenue over the license
term when the underlying home videos are sold as reported by third
parties.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Customer
advances on contracts are recorded as unearned revenue until all of the
foregoing revenue recognition conditions have been met.




Non-refundable
advances that are not cross-collateralized and royalties from merchandise
licensing, publishing and music contracts are recognized when the license period
has commenced and collection is reasonably assured. Advances that are
cross-collateralized are deferred and recognized as revenue over the license
term when the underlying royalties are reported as earned by third
parties.




Revenues
from the sale of books are recognized at the time of shipment, net of an
estimated provision for returns. Revenues from the sale of subsidiary book
rights, when determinable, are recorded on an accrual basis. When amounts are
not determinable, amounts are recorded on receipt of funds. Grants for specific
projects are recognized as revenue when the related expenses are
incurred.




Cash
and cash equivalents


Cash
and cash equivalents include cash and short-term deposits with maturities of
less than three months at the date of purchase.  Cash that is held in
escrow, or otherwise restricted from use, is excluded from current assets and is
reported separately from cash and cash equivalents.




Investments


Investments
in entities over which the Company exercises significant influence are accounted
for using the equity method. Investments in joint ventures and partnerships that
the Company jointly controls are accounted for using the proportionate
consolidation method of accounting. Other investments are accounted for in
accordance with the guidance on financial instruments.




Acquisitions
subject to Canadian Radio-television and Telecommunications Commission (“CRTC”)
approval are recorded at cost until approval is received and then accounted for
according to the nature of the investment made.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Property,
plant and equipment


Property,
plant and equipment are recorded at cost less accumulated depreciation.
Depreciation is recorded on a straight-line basis over the estimated useful
lives of the assets as follows:




Land
      and assets not available for use
            Not
      depreciatedBroadcasting
      equipment
            10
      yearsProduction
      equipment
            5
      yearsLeasehold
      improvements
            Lease
      termBuildings
            20-40
      yearsComputer
      equipment
            3
      yearsFurniture
      and fixtures
            7
      yearsOther
            4-10
      years




Program
and film rights


Program
and film rights represent contract rights acquired from third parties to
broadcast television programs, feature films and radio programs. The assets and
liabilities related to these rights are recorded when the license period has
begun and all of the following conditions have been met: (i) the cost of the
rights is known or reasonably determinable; (ii) the program material is
accepted by the Company in accordance with the license agreement; and (iii) the
material is available to the Company for airing. Long-term liabilities related
to these rights are recorded at the net present values of future cash flows,
using an appropriate discount rate. These costs are amortized over the
contracted exhibition period as the programs or feature films are aired. Program
and film rights are carried at the lower of cost less accumulated amortization
and net recoverable amount.




Amortization
of program and film rights is included in direct cost of sales, general and
administrative expenses and has been disclosed separately in the consolidated
statements of cash flows.




Film
investments


Film
investments represent the costs of projects in development, projects in process,
the unamortized costs of proprietary films and television programs that have
been produced by the Company or for which the Company has acquired distribution
rights, and investments in third-party-produced film projects. Such costs
include development and production expenditures and attributed studio and other
costs that are expected to benefit future periods.




The
Company accounts for projects in process and development, completed projects and
distribution rights in accordance with the American Institute of Certified
Public Accountants (“AICPA”) Statement of Position 00-2, “Accounting by
Producers or Distributors of Films” (“SOP 00-2”).




The
individual-film-forecast-computation method is used to determine amortization.
The capitalized costs and the estimated total costs of participations and
residuals, net of anticipated federal and provincial program contributions,
production tax credits and co-producers’ shares of production costs, are charged
to amortization expense on a series or program basis in the same ratio that current period actual revenue (numerator)
bears to estimated remaining unrecognized ultimate revenue as of the beginning
of the current fiscal year (denominator). Ultimate revenue is projected for
periods not exceeding ten years from the date of delivery or acquisition. For
episodic television series, SOP 00-2 requires that ultimate revenue includes
estimates of revenue over a period not to exceed ten years from the date of
delivery of the first episode or, if still in production, five years from the
date of delivery of the most recent episode, if later. Estimates of gross
revenue can change significantly due to the level of market acceptance of film
and television products. Accordingly, revenue estimates are reviewed
periodically and amortization is adjusted. Such adjustments could have a
material effect on the results of operations in future periods.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


The
Company reviews the status of projects in development quarterly. If, in the
opinion of management, any such projects will not progress toward production,
the accumulated costs are charged to direct cost of sales. Projects are written
off at the earlier of the date determined not to be recoverable or when projects
under development are abandoned, and three years from the date of the initial
investment.




Projects
in process represent the accumulated costs of television series or feature films
currently in production.




Completed
project and distribution rights are stated at the lower of unamortized cost and
estimated net realizable value as determined on a series or program basis.
Revenue and cost forecasts for each production are evaluated quarterly in
connection with a comprehensive review of the Company’s film investments, on a
title-by-title basis. When an event or change in circumstances indicates that
the fair value of a film is less than its unamortized cost, the fair value of
the film is determined using management’s estimates of future revenues under a
discounted cash flow approach. A writedown is recorded equivalent to the amount
by which the unamortized costs exceed the estimated fair value of the
film.




Investments
in third-party-produced film projects are carried at the lower of cost and
estimated net realizable value.




Amortization
of film investments is included in direct cost of sales, general and
administrative expenses.




Broadcast
licenses and goodwill


The
cost of acquiring media broadcasting, production/distribution and publishing
businesses is allocated to the fair value of related net identifiable tangible
and intangible assets acquired. Net identifiable intangible assets acquired
consist primarily of broadcast licenses. The excess of the cost of acquiring
these businesses over the fair value of related net identifiable tangible and
intangible assets acquired is allocated to goodwill.




Broadcast
licenses are considered to have an indefinite life based on management’s intent
and ability to renew the licenses without substantial cost and without material
modification of the existing terms and conditions of the license.




Broadcast
licenses and goodwill are tested for impairment annually or more frequently if
events or changes in circumstances indicate that they may be impaired. The
Company has selected August 31 as the date it performs its annual impairment
test.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Goodwill
impairment is determined using a two-step process. The first step of the process
is to compare the fair value of a reporting unit with its carrying amount,
including goodwill. In performing the first step, the Company determines the
fair value of a reporting unit by using various valuation techniques with the
primary methods employed being a discounted cash flow (“DCF”) analysis and a
market-based approach. Determining fair value requires the exercise of
significant judgments, including judgments about appropriate discount rates,
perpetual growth rates, relevant comparable company earnings multiples and the
amount and timing of expected future cash flows. The cash flows employed in the
DCF analyses are based on the Company’s budgets and business plans, and various
growth rates have been assumed for years beyond the long-term business plan
period. Discount rate assumptions are based on an assessment of the risk
inherent in the future cash flows of the respective reporting units. In
assessing the reasonableness of its determined fair values, the Company
evaluates its results against other value indicators such as comparable company
public trading values, research analyst estimates and values observed in private
market transactions. If the fair value of a reporting unit exceeds its carrying
amount, goodwill of the reporting unit is not impaired and the second step of
the impairment test is not necessary. If the carrying amount of a reporting unit
exceeds its fair value, the second step of the goodwill impairment test is
required to be performed to measure the amount of impairment loss, if any. The
second step of the goodwill impairment test compares the implied fair value of
the reporting unit’s goodwill with the carrying amount of that goodwill. The
implied fair value of goodwill is determined in the same manner as the amount of
goodwill recognized in a business combination. In other words, the estimated
fair value of the reporting unit is allocated to all of the assets and
liabilities of that unit (including any unrecognized intangible assets) as if
the reporting unit had been acquired in a business combination and the fair
value of the reporting unit was the purchase price paid. If the carrying amount
of the reporting unit’s goodwill exceeds the implied fair value of that
goodwill, an impairment loss is recognized in an amount equal to that
excess.




The
impairment test for broadcast licenses consists of comparing their carrying
amount to their fair value. Fair values for broadcast licenses are determined in
a manner similar to that described above. An impairment charge, representing the
excess of the carrying amount over the fair value, is then recognized on the
consolidated statements of income, if any.




Government
financing and assistance


The
Company has access to several government programs that are designed to assist
film and television production in Canada. Funding from certain programs provides
a supplement to a series’ Canadian license fees and is recorded as revenue when
cash has been received. Government assistance with respect to federal and
provincial production tax credits is recorded as a reduction of film investments
when eligible expenditures are made and there is reasonable assurance of
realization. Assistance in connection with equity investments is recorded as a
reduction in film investments.




Government
grants approved for specific publishing projects are recorded as revenue when
the related expenses are incurred.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Deferred
credits


Deferred
credits include (i) a provision for contributions to Canadian broadcasting
initiatives that must be made by a purchaser of specialty television, pay
television and radio undertakings in accordance with CRTC policies (“public
benefits associated with acquisitions”) associated with acquiring radio and
television businesses that will be drawn down when the Company makes eligible
payments toward meeting the conditions of license; (ii) unearned revenue from
the distribution and licensing of rights for feature films and television
programs; and (iii) other items that meet the criteria for
deferral.




Income
taxes


The
liability method of tax allocation is used in accounting for income taxes. Under
this method, future tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities, and measured using the substantively enacted tax rates and laws
that are expected to be in effect when the differences are expected to
reverse.




Foreign
currency translation


The
assets and liabilities of the Company’s self-sustaining operations having a
functional currency that is not in Canadian dollars are translated into Canadian
dollars using the exchange rate in effect at the consolidated balance sheet
date, and revenues and expenses are translated at the average rate during the
year. Exchange gains or losses on translation of the Company’s net equity
investment in these operations are recorded in other comprehensive loss for the
year.




For
integrated foreign operations, monetary items are translated into Canadian
dollars at exchange rates in effect at the consolidated balance sheet date, and
non-monetary items are translated at rates of exchange in effect when the assets
were acquired or obligations incurred. Revenues and expenses are translated at
rates in effect at the time of the transaction. Foreign exchange gains and
losses are included in net income for the year.




Other
exchange gains and losses are included in net income for the year.




Financial
instruments and hedging relationships


On
September 1, 2007, the Company prospectively adopted the recommendations of the
Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3855,
“Financial Instruments - Recognition and Measurement”, Section 3861, “Financial
Instruments - Disclosure and Presentation”, Section 3865, “Hedges” and Section
1530, “Comprehensive Income”, with no restatement of prior periods except for
the presentation of the foreign currency translation
adjustment.  These sections provide standards for recognition,
measurement, disclosure and presentation of financial assets, financial
liabilities and non-financial derivatives and the application of hedge
accounting.




The
Company has classified its cash equivalents and derivative financial instruments
that are not designated as hedges as held-for-trading.  They are
presented at their fair value and gains or losses arising on revaluation at the
end of each year are included in net income for the year. Accounts receivable
are classified as loans and receivables, which are measured at amortized
cost.  Accounts payable and accrued liabilities and certain components
of other long-term liabilities are classified as other financial liabilities and
are also measured at amortized cost.  Investments in equity
instruments are considered available-for-sale.  Available-for-sale
investments are carried at fair value on the consolidated balance sheets, with
changes in fair value recorded in other comprehensive loss, until such time as
the investments are disposed of or an other-than-temporary impairment has
occurred, in which case the impairment is recorded in net income for the year.
Long-term debt instruments have been classified as other financial liabilities
and are measured at amortized cost. Financial instruments measured at amortized
cost use the effective interest rate method of amortization.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


All
derivatives, including embedded derivatives that must be separately accounted
for, are measured at fair value, with changes in fair value recorded in net
income for the year unless they are effective cash flow hedging
instruments.  Derivative financial instruments that are designated as
cash flow hedges, such as interest rate swap agreements, are presented at their
fair value, with gains or losses arising from the revaluation at the end of each
year included in other comprehensive loss to the extent of hedge
effectiveness.




In
adopting these recommendations, the Company made the following adjustments to
the consolidated balance sheet as at September 1, 2007:





Debits
      (credits)Investments
      and other assets (a)
            
            
            8,482Program
      and film rights (b)
            
            
            (4,946
            )Deferred
      charges (c)
            
            
            (4,100
            )Long-term
      debt (c)
            
            
            4,205Other
      long-term liabilities (b)
            
            
            2,332Future
      tax liability
            
            
            (560
            )Retained
      earnings (b) (c)
            
            
            1,594Accumulated
      other comprehensive loss (a)
            
            
            (7,007
            )





(a)
            An
      increase to investments of $8,768 was booked to record unrealized gains on
      derivative contracts, and a decrease of $286 was booked to record
      unrealized losses on available-for-sale investments.  This
      resulted in a net-of-tax transition adjustment of $(7,007) to accumulated
      other comprehensive loss.


(b)
            Decreases
      to program and film rights and other long-term liabilities were booked to
      reflect the balances as if the effective interest rate method had always
      been used to record program and film rights assets and
      liabilities.  This resulted in a net-of-tax transition
      adjustment of $1,699 to retained
earnings.


(c)
            Decreases
      to deferred charges and long-term debt were booked to reflect the balances
      as if the effective interest rate method had always been used to record
      financing fees associated with long-term debt.  This resulted in
      a transition adjustment of $(105) to retained
  earnings.




With
the adoption of these standards, the consolidated financial statements now
include consolidated statements of comprehensive income.  The
comparative consolidated financial statements were restated solely to include
the translation adjustment of self-sustaining foreign operations as provided by
transition guidance.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


The
adoption of these standards did not have a significant impact on net income for
the year ended August 31, 2008.




Stock-based
compensation and other stock-based payments


The
fair value of each stock option granted is estimated on the date of the grant
using the Black-Scholes option pricing model and expensed over the option’s
vesting period. Compensation expense related to the Performance Share Units and
long-term incentive plan is accrued over the term of the service period based on
the expected total compensation to be paid out at the end of the restriction
period. Cash-settled instruments such as the Performance Share
Units are classified as liabilities and fair value is measured at each reporting
date.  Equity-settled instruments such as stock options and awards
under the long-term incentive plan are classified as equity and fair value is
measured and fixed at the date of grant. Consideration paid by the Company under
its Employee Share Purchase Plan is included in direct cost of sales, general
and administrative expenses.




Earnings
per share


Basic
earnings per share are calculated using the weighted average number of common
shares outstanding during the year. The computation of diluted earnings per
share assumes the basic weighted average number of common shares outstanding
during the year is increased to include the number of additional common shares
that would have been outstanding if the dilutive potential common shares had
been issued. The dilutive effect of stock options is determined using the
treasury stock method.




Impairment
of long-lived assets


When
events or circumstances indicate potential impairment, long-lived assets, other
than broadcast licenses and goodwill, are written down to their fair value if
the net carrying amount of the asset exceeds the net recoverable amount,
calculated as the sum of undiscounted cash flows related to the
asset.




Pending
accounting changes


In
December 2006, the CICA issued Handbook Section 3862, ‘‘Financial Instruments -
Disclosures’’ and Section 3863, ‘‘Financial Instruments - Presentation’’. These
standards enhance existing disclosures in previously issued Section 3861,
‘‘Financial Instruments - Disclosure and Presentation’’. Section 3862 places
greater emphasis on disclosures about risks related to recognized and
unrecognized financial instruments and how those risks are managed. Section 3863
carries forward the same presentation standards as Section 3861. These new
standards are effective for interim and annual financial statements relating to
fiscal years commencing on or after October 1, 2007 on a prospective basis.
Disclosures required by the new standard will be included in the Company’s
interim and annual consolidated financial statements commencing September 1,
2008.




In
December 2006, the CICA issued Handbook Section 1535, ‘‘Capital Disclosures’’.
Section 1535 establishes standards for disclosing information about an entity’s
objectives, policies and processes for managing capital. This standard is
effective for interim and annual financial statements relating to fiscal years
commencing on or after October 1, 2007 on a prospective basis. Disclosures
required by the new standard will be included in the Company’s interim and
annual consolidated financial statements commencing September 1,
2008.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


In
February 2008, the CICA issued Handbook Section 3064, “Goodwill and Intangible
Assets,” replacing Section 3062, “Goodwill and Other Intangible Assets” and
Section 3450, “Research and Development Costs”. Section 3064 addresses when an
internally developed intangible asset meets the criteria for recognition as an
asset. The CICA also issued amendments to Section 1000, “Financial Statement
Concepts”. These changes are effective for fiscal years beginning on or after
October 1, 2008, with earlier adoption permitted, and will be adopted by the
Company effective September 1, 2009.  Collectively, these changes
bring Canadian practice closer to International Financial Reporting Standards by
eliminating the practice of recognizing as assets a variety of start-up,
pre-production and similar costs that do not meet the definition and recognition
criteria of an asset. The Company is currently evaluating the effects of
adopting these changes.




3.
            Accounts
      receivable




2008
            
            
            2007Trade
            
            
            152,951
            
            
            
            143,718Other
            
            
            8,173
            
            
            
            10,534161,124
            
            
            
            154,252Less
      allowance for doubtful accounts
            
            
            3,684
            
            
            
            2,872157,440
            
            
            
            151,380




4.
            Investments
      and other assets




2008
            
            
            2007Cash
      held in escrow (a)
            
            
            74,950
            
            
            
            -Investments
      at equity
            
            
            12,506
            
            
            
            10,057Other
      (note 24)
            
            
            5,630
            
            
            
            7,43593,086
            
            
            
            17,492





(a)
            In
      fiscal 2008, the Company advanced cash into escrow to fund the purchase of
      an analog specialty service.  The transaction closed and the
      Company gained control of the acquiree in fiscal
  2009.




5.
            Property,
      plant and equipment




2008
            
            Cost
            
            
            Accumulated
      depreciation
            
            
            Net
      book valueBroadcasting
      equipment
            
            
            41,831
            
            
            
            28,798
            
            
            
            13,033Production
      equipment
            
            
            98,079
            
            
            
            85,491
            
            
            
            12,588Leasehold
      improvements
            
            
            39,575
            
            
            
            26,585
            
            
            
            12,990Buildings
            
            
            23,459
            
            
            
            10,955
            
            
            
            12,504Computer
      equipment
            
            
            63,939
            
            
            
            54,464
            
            
            
            9,475Furniture
      and fixtures
            
            
            22,803
            
            
            
            20,301
            
            
            
            2,502Land
            
            
            6,814
            
            
            
            -
            
            
            
            6,814Other
            
            
            4,833
            
            
            
            1,177
            
            
            
            3,656301,333
            
            
            
            227,771
            
            
            
            73,562


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share information)





2007
            
            Cost
            
            
            Accumulated
      depreciation
            
            
            Net
      book valueBroadcasting
      equipment
            
            
            38,135
            
            
            
            26,575
            
            
            
            11,560Production
      equipment
            
            
            95,009
            
            
            
            80,402
            
            
            
            14,607Leasehold
      improvements
            
            
            38,856
            
            
            
            23,657
            
            
            
            15,199Buildings
            
            
            23,262
            
            
            
            9,992
            
            
            
            13,270Computer
      equipment
            
            
            56,867
            
            
            
            45,812
            
            
            
            11,055Furniture
      and fixtures
            
            
            22,456
            
            
            
            19,380
            
            
            
            3,076Land
            
            
            6,814
            
            
            
            -
            
            
            
            6,814Other
            
            
            4,539
            
            
            
            1,778
            
            
            
            2,761285,938
            
            
            
            207,596
            
            
            
            78,342




6.
            Film
      investments




2008
            
            
            2007Projects
      in development and in process, net of advances
            
            
            18,285
            
            
            
            22,772Completed
      projects and distribution rights
            
            
            38,687
            
            
            
            28,874Investments
      in third-party-produced film projects
            
            
            23,847
            
            
            
            14,94780,819
            
            
            
            66,593





During
fiscal 2008, the Company reduced its investments in film and television programs
by anticipated federal and Ontario production tax credits amounting to $16,185
(2007 - $16,213).




The
Company expects that 21% and 59% of the net book value of completed projects and
distribution rights will be amortized during the year ending August 31, 2009 and
three years ending August 31, 2011, respectively. It is estimated that at least
80% will be amortized within five years.




The
Company expects that $6,121 of accrued participation liabilities will be paid
during the year ending August 31, 2009.




7.
            Accounts
      payable and accrued liabilities




2008
            
            
            2007Trade
      accounts payable and accrued liabilities
            
            
            79,066
            
            
            
            82,270Program
      rights payable
            
            
            95,059
            
            
            
            75,081Film
      investment accruals
            
            
            2,887
            
            
            
            1,696Dividends
      payable
            
            
            8,078
            
            
            
            7,036Disputed
      regulatory fees
            
            
            10,936
            
            
            
            -196,026
            
            
            
            166,083


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


In
fiscal 2006, the Company recorded restructuring expenses of $11,433 in the Radio
and Content segments related primarily to severance and other restructuring
activities.  In fiscal 2007, the Company recorded $10,393 in
restructuring expenses, related primarily to severance and other restructuring
activities in the Television segment and severances in the Montreal Radio
cluster.  In fiscal 2008, the Company recorded an additional $2,666 in
restructuring expenses in the Television segment and $3,476 in restructuring
expenses in the Radio segment.  These costs are included in other
expense, net.  To date, $24,986
has been paid in respect of these provisions and as at August 31, 2008, $2,982
remains unpaid.  The Company anticipates that these provisions will be
substantially paid in fiscal 2009.




Included
in accounts payable and accrued liabilities at August 31, 2008 is $10,936
related to regulatory fees currently being disputed by the broadcasting
industry.  No accrual was recorded at August 31, 2007.




8.
            Long-term
      debt




2008
            
            
            2007Bank
      loans
            
            
            695,767
            
            
            
            610,697Unamortized
      financing fees
            
            
            (3,017
            )
            
            
            -692,750
            
            
            
            610,697





The
Company has a credit facility with a syndicate of banks that matures on January
24, 2011.  The amount committed is $800,000, of which $300,000 is
available on a revolving basis and $500,000 on a non-revolving basis, and is
repayable at maturity.  Funds are available to the Company in both
Canadian and U.S. dollars and charge interest on a fluctuating basis plus a
margin.  As at August 31, 2008, $200,000 of the revolving facility and
all of the non-revolving facility were utilized.





Interest
rates on the balance of the bank loans fluctuate with Canadian bankers’
acceptances and LIBOR.  As at August 31, 2008, the weighted average
interest rate on the outstanding bank loans was 4.4% (2007 -
5.9%).  The Company has entered into Canadian interest rate swap
agreements to fix the interest rate at 4.13% plus a margin on $400,000 of the
non-revolving facility for the full term of the facility.  Interest on
the bank loans, including the impact of the swap, averaged 5.3% for fiscal 2008
(2007 - 5.4%).





In
fiscal 2006, the Company extinguished its Senior Subordinated Notes and
terminated the associated cross-currency agreements.  These
transactions resulted in the Company recording a $131,951 debt refinancing loss
in fiscal 2006.  The components of this loss include mark-to-market
payments on the cross-currency agreement termination, consent and tender
premiums, the write-off of deferred financing charges and underwriting and other
fees.





The
banks hold as collateral a first ranking charge on all assets and undertakings
of Corus and certain of Corus’ subsidiaries as designated under the credit
agreements.  As well, unlimited guarantees are provided by certain
subsidiaries.  Under the facility, the Company has undertaken to
maintain certain financial covenants.  Management has determined that
the Company was in compliance with the financial covenants provided under the
bank loans as at August 31, 2008.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


9.
            Other
      long-term liabilities




2008
            
            
            2007Public
      benefits associated with acquisitions
            
            
            3,467
            
            
            
            7,200Unearned
      revenue
            
            
            3,160
            
            
            
            9,403Program
      rights payable
            
            
            31,719
            
            
            
            32,079Stock-based
      compensation obligations
            
            
            1,332
            
            
            
            4,947Deferred
      leasehold inducements
            
            
            5,488
            
            
            
            5,959Derivative
      fair value
            
            
            9,381
            
            
            
            -Other
            
            
            5,389
            
            
            
            5,18559,936
            
            
            
            64,773




10.
            Share
      capital


Authorized


The
Company is authorized to issue, upon approval of holders of no less than
two-thirds of the existing Class A shares, an unlimited number of Class A
participating shares (“Class A Voting Shares”), as well as an unlimited number
of Class B non-voting participating shares (“Class B Non-Voting Shares”), Class
A Preferred Shares and Class 1 and Class 2 Preferred Shares.




Class
A Voting Shares are convertible at any time into an equivalent number of Class B
Non-Voting Shares. The Class B Non-Voting Shares are convertible into an
equivalent number of Class A Voting Shares in limited
circumstances.




The
Class A Preferred Shares are redeemable at any time at the demand of Corus and
retractable at any time at the demand of a holder of a Class A Preferred Share
for an amount equal to the consideration received by Corus at the time of
issuance of such Class A Preferred Shares. Holders of Class A Preferred Shares
are entitled to receive a non-cumulative dividend at such rate as Corus’ Board
of Directors may determine on the redemption amount of the Class A Preferred
Shares. Each of the Class 1 Preferred Shares, the Class 2 Preferred Shares, the
Class A Voting Shares and the Class B Non-Voting Shares rank junior to and are
subject in all respects to the preferences, rights, conditions, restrictions,
limitations and prohibitions attaching to the Class A Preferred Shares in
connection with the payment of dividends.




The
Class 1 and Class 2 Preferred Shares are issuable in one or more series with
attributes designated by the Board of Directors. The Class 1 Preferred Shares
rank senior to the Class 2 Preferred Shares.




In
the event of liquidation, dissolution or winding-up of Corus or other
distribution of assets of Corus for the purpose of winding up its affairs, the
holders of Class A Preferred Shares are entitled to a payment in priority to all
other classes of shares of Corus to the extent of the redemption amount of the
Class A Preferred Shares, but will not be entitled to any surplus in excess of
that amount. The remaining property and assets will be available for
distribution to the holders of the Class A Voting Shares and Class B Non-Voting
Shares, which shall be paid or distributed equally, share for share, between the
holders of the Class A Voting Shares and the Class B Non-Voting Shares, without
preference or distinction.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Effective
on February 1, 2008, the Class A Voting 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.





Issued
and Outstanding


The
changes in the Class A Voting Shares and Class B Non-Voting Shares since August
31, 2006 are summarized as follows:




Class
      A
              Voting
      Shares
            
            
            Class
      B
              Non-Voting
      Shares
            
            
            Total#
            
            
            
            $
            
            
            
            #
            
            
            
            $
            
            
            
            $Balance
      as at August 31, 2006
            
            
            3,447,858
            
            
            
            26,700
            
            
            
            80,563,058
            
            
            
            843,863
            
            
            
            870,563Conversion
      ofClass
      A Voting Shares toClass
      B Non-Voting Shares
            
            
            (2,000
            )
            
            
            (16
            )
            
            
            2,000
            
            
            
            16
            
            
            
            -Issuance
      of shares under Stock Option Plan
            
            
            -
            
            
            
            -
            
            
            
            1,997,736
            
            
            
            27,676
            
            
            
            27,676Shares
      repurchased
            
            
            -
            
            
            
            -
            
            
            
            (1,538,200
            )
            
            
            (16,229
            )
            
            
            (16,229
            )Repayment
      of executive stockpurchase
      loans
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            234
            
            
            
            234Balance
      as at August 31, 2007
            
            
            3,445,858
            
            
            
            26,684
            
            
            
            81,024,594
            
            
            
            855,560
            
            
            
            882,244Issuance
      of shares under Stock Option Plan
            
            
            -
            
            
            
            -
            
            
            
            725,384
            
            
            
            12,338
            
            
            
            12,338Shares
      repurchased
            
            
            -
            
            
            
            -
            
            
            
            (4,388,400
            )
            
            
            (46,555
            )
            
            
            (46,555
            )Repayment
      of executive stockpurchase
      loans
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            230
            
            
            
            230Balance
      as at August 31, 2008
            
            
            3,445,858
            
            
            
            26,684
            
            
            
            77,361,578
            
            
            
            821,573
            
            
            
            848,257




There
are no Class A Preferred Shares, Class 1 Preferred Shares or Class 2 Preferred
Shares outstanding at August 31, 2008.




Stock
Option Plan


Under
the Company’s Stock Option Plan (the “Plan”), the Company may grant options to
purchase Class B Non-Voting Shares to eligible officers, directors and employees
of or consultants to the Company. The number of Class B Non-Voting Shares which
the Company is authorized to issue under the Plan is 10% of the issued and
outstanding Class B Non-Voting Shares. All options granted are for terms not to
exceed ten years from the grant date. The exercise price of each option equals
the market price of the Company’s stock on the date of grant. Options vest 25%
on each of the first, second, third and fourth anniversary dates of the date of
grant.




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 option numbers as well as weighted average exercise prices and fair
values per option have been retroactively adjusted to reflect the two-for-one
stock split.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


A
summary of the changes to the stock options outstanding since August 31, 2006,
is presented as follows:


Number
      of options (#)
            
            
            Weighted
      average exercise
              price
      ($)Outstanding
      as at August 31, 2006
            
            
            6,869,284
            
            
            
            13.99Forfeited
            
            
            (98,046
            )
            
            
            15.62Exercised
            
            
            (1,997,736
            )
            
            
            13.47Outstanding
      as at August 31, 2007
            
            
            4,773,502
            
            
            
            14.18Granted
            
            
            255,800
            
            
            
            22.45Forfeited
            
            
            (434,630
            )
            
            
            19.18Exercised
            
            
            (725,384
            )
            
            
            15.84Outstanding
      as at August 31, 2008
            
            
            3,869,288
            
            
            
            13.85





As
at August 31, 2008, the options outstanding and exercisable consist of the
following:





Options
      outstanding
            
            
            Options
      exercisableRange
      of
              exerciseprice
              ($)
            
            Number
      outstanding
              (#)
            
            
            Weighted
      average remaining
              contractual
      life
              (years)
            
            
            Weighted
      average exercise price
              ($)
            
            
            Number
      outstanding
              (#)
            
            
            Weighted
      average exercise price
              ($)9.53
      - 12.48
            
            
            2,184,060
            
            
            
            2.6
            
            
            
            11.49
            
            
            
            1,972,260
            
            
            
            11.4413.50
      - 16.50
            
            
            1,130,968
            
            
            
            2.2
            
            
            
            15.45
            
            
            
            880,968
            
            
            
            15.2617.25
      - 22.65
            
            
            554,260
            
            
            
            3.5
            
            
            
            19.92
            
            
            
            288,460
            
            
            
            17.749.53
      - 22.65
            
            
            3,869,288
            
            
            
            2.6
            
            
            
            13.85
            
            
            
            3,141,688
            
            
            
            13.09





The
fair value of each option granted since September 1, 2003 was estimated on the
date of the grant using the Black-Scholes option pricing model.  The
estimated fair value of the options is amortized to income over the options’
vesting period on a straight-line basis. The Company has recorded stock-based
compensation expense for the year ended August 31, 2008 of $1,917 (2007 -
$3,003; 2006 - $2,915).  This charge has been credited to contributed
surplus.




The
fair value of each option granted in fiscal 2008 was estimated on the date of
the grant using the Black-Scholes option pricing model with the following
assumptions:





Fair
      value
            $4.32Expected
      life
            Five
      yearsRisk-free
      interest rate
            3.80%Dividend
      yield
            2.75%Volatility
            22.6%


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


On
October 22, 2008, the Company granted a further 464,500 options for Class B
Non-Voting Shares to eligible officers and employees of the
Company.  These options are exercisable at $17.62 per
share.




Dividends


The
holders of Class A Voting 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, as and when any such dividends are declared or paid. 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 Voting
Shares, an additional dividend at a rate of $0.005 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,
holders of Class A Voting Shares and Class B Non-Voting Shares participate
equally, on a share-for-share basis, on all subsequent dividends
declared.




The
total amount of dividends declared in fiscal 2008 was $47,326 (2007 - $42,842;
2006 - $19,586).





Earnings
per share


The
following is a reconciliation of the numerator and denominators (in thousands)
used for the computation of the basic and diluted earnings per share
amounts:





2008
            
            
            2007
            
            
            2006Net
      income for the year (numerator)
            
            
            129,835
            
            
            
            107,018
            
            
            
            35,471Weighted
      average number of shares outstanding (denominator)Weighted
      average number of shares outstanding - basic
            
            
            82,944
            
            
            
            84,561
            
            
            
            84,921Effect
      of dilutive securities
            
            
            1,575
            
            
            
            2,095
            
            
            
            1,572Weighted
      average number of shares outstanding - diluted
            
            
            84,519
            
            
            
            86,656
            
            
            
            86,493




Diluted
earnings per share for fiscal 2008 excluded 171,581 weighted average Class B
Non-Voting Shares (2007 - nil; 2006 - 836,262) issuable under the Company’s
Stock Option Plan because these options were not ‘in-the-money’.




Executive
stock purchase loans


In
October 2001, the Board of Directors of the Company authorized the granting of
loans to certain of its executive officers in order to finance the acquisition
of Class B Non-Voting Shares of the Company on the open market. These loans are
non-interest-bearing and are secured by a promissory note and the relevant Class
B Non-Voting Shares. Each loan has a ten-year term from December 1, 2001, with
annual installments at the greater of 10% of the original principal or 10% of
the employee’s pre-tax bonus for the most recently completed financial year of
the Company. As at August 31, 2008, the Company had loans receivable of $716
(2007 - $946) from certain qualifying executive officers. As at August 31, 2008,
the market value of the shares held as collateral for the loans was $2,015 (2007
- $2,669).


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Performance
Share Units


The
Company has granted Performance Share Units (“PSUs”) to certain
employees.  Each PSU entitles the participant to receive a cash
payment in an amount equal to the closing price of Class B Non-Voting Shares
traded on the Toronto Stock Exchange (the “TSX”) at the end of the restriction
period, multiplied by the number of vested units determined by achievement of
specific performance-based criteria.  Compensation expense related to
the PSUs is accrued over the term of the restriction period based on the
expected total compensation to be paid out at the end of the restriction period,
factoring in the probability of any performance based criteria being met during
the period.  The stock-based compensation expense recorded in fiscal
2008 in respect of this plan was $1,264 (2007 - $6,059; 2006 -
$8,689).  A reduction in the Company’s share price led to an
adjustment to the assumptions underlying the expense recognition of this plan in
fiscal 2008.  The current year’s expense includes a charge of $1,197
(2007 - income of $2,874) generated by a total return swap entered into in
fiscal 2007 in order to limit the Company’s exposure to changes in the fair
value of certain obligations under the PSU plan.




Long-term
incentive plan


In
fiscal 2006, the Company implemented a long-term plan for senior management
based on shareholder appreciation targets.  Each unit granted under
this plan entitles the participant to receive, at the Company’s option, one
Class B Non-Voting Share or a cash payment in an amount equal to the closing
price of one Class B Non-Voting Share traded on the TSX at the end of the
restriction period. The 255,390 units granted in fiscal 2006 and 209,870 units
granted in fiscal 2007 under this plan vest at the end of fiscal 2008 and 2009,
respectively.  In fiscal 2008, 156,400 units were granted, with
vesting periods between three and five years.  The stock-based
compensation expense recorded in fiscal 2008 in respect of this plan was $5,987
(2007 - $1,130; 2006 - $533). This charge has been credited to contributed
surplus.




Normal
Course Issuer Bid


On
February 13, 2008, the Company announced that the TSX had accepted the notice
filed by the Company of its intention to renew its normal course issuer bid for
its Class B Non-Voting Shares through the facilities of the TSX.  The
Company intends to purchase for cancellation a maximum of 6,000,000 Class B
Non-Voting Shares.




The
shares purchased for cancellation since August 31, 2006 are as
follows:




Fiscal
      2007
            
            
            Fiscal
      2008Normal
      course issuer bid expiry date
            
            
            #
            
            
            
            $
            
            
            Average
            
            
            
            #
            
            
            
            $
            
            
            AverageDecember
      31, 2006
            
            
            108,600
            
            
            
            2,198
            
            
            
            20.24
            
            
            
            -
            
            
            
            -
            
            
            
            -February
      14, 2008
            
            
            1,429,600
            
            
            
            34,224
            
            
            
            23.94
            
            
            
            1,570,400
            
            
            
            38,479
            
            
            
            24.50February
      14, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,818,000
            
            
            
            52,965
            
            
            
            18.801,538,200
            
            
            
            36,422
            
            
            
            23.68
            
            
            
            4,388,400
            
            
            
            91,444
            
            
            
            20.84


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


During
fiscal 2008, the total cash consideration paid exceeded the carrying value of
the shares repurchased by $44,889 (2007 - $20,193; 2006 - $15,102), which was
charged to retained earnings.




In
September and October 2008, a further 794,966 Class B Non-Voting Shares were
purchased and cancelled at an average price of $18.97 per share.




11.
            Interest
      expense




2008
            
            
            2007
            
            
            2006Interest
      on long-term debt
            
            
            33,049
            
            
            
            33,553
            
            
            
            41,383Imputed
      interest on long-term liabilities
            
            
            6,390
            
            
            
            1,307
            
            
            
            1,303Other
            
            
            1,874
            
            
            
            978
            
            
            
            41941,313
            
            
            
            35,838
            
            
            
            43,105




12.
            Other
      expense, net




2008
            
            
            2007
            
            
            2006Interest
      income
            
            
            (1,042
            )
            
            
            (841
            )
            
            
            (2,643
            )Foreign
      exchange losses
            
            
            823
            
            
            
            109
            
            
            
            487Losses
      (earnings) from equity investments
            
            
            1,343
            
            
            
            857
            
            
            
            (1,004
            )Restructuring
      charges
            
            
            6,142
            
            
            
            10,393
            
            
            
            11,433Asset
      disposal losses (gains)
            
            
            597
            
            
            
            (1,448
            )
            
            
            2,801Other
            
            
            (10
            )
            
            
            730
            
            
            
            5937,853
            
            
            
            9,800
            
            
            
            11,667




13.
            Income
      taxes


Future
income taxes reflect the net tax effects of the 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 tax liability and asset as at August 31 are as
follows:




2008
            
            
            2007Deferred
      charges deducted for tax purposes capitalized for accounting
      purposes
            
            
            681
            
            
            
            846Capital
      cost allowance in excess of book depreciation
            
            
            (570
            )
            
            
            (95
            )Deferred
      partnership income
            
            
            4,035
            
            
            
            4,611Differences
      in tax and accounting cost bases for investments
            
            
            4,300
            
            
            
            14,909Broadcast
      licenses and other intangible assets
            
            
            130,163
            
            
            
            144,804Other,
      net
            
            
            3,101
            
            
            
            2,787Total
      future tax liability
            
            
            141,710
            
            
            
            167,862Book
      depreciation in excess of capital cost allowance
            
            
            24,139
            
            
            
            27,356Loss
      carryforwards, net of valuation allowances
            
            
            14,575
            
            
            
            28,760Amortization
      deducted for accounting purposes in excess of tax purposes
            
            
            13,560
            
            
            
            1,442Differences
      in tax and accounting cost bases for investments
            
            
            2,277
            
            
            
            17,660Differences
      in revenue recognition for tax and accounting purposes
            
            
            1,471
            
            
            
            993Purchase
      price equation differences
            
            
            54
            
            
            
            56Other,
      net
            
            
            7,528
            
            
            
            2,262Total
      future tax asset
            
            
            63,604
            
            
            
            78,529Net
      future tax liability
            
            
            78,106
            
            
            
            89,333Less
      current portion of future tax asset
            
            
            9,593
            
            
            
            13,51887,699
            
            
            
            102,851


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


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





2008
            
            
            2007
            
            
            2006Current
      tax expense
            
            
            42,840
            
            
            
            43,518
            
            
            
            38,227Future
      tax resulting from temporary differences
            
            
            6,750
            
            
            
            3,189
            
            
            
            (12,978
            )Future
      tax resulting from losses
            
            
            13,074
            
            
            
            14,293
            
            
            
            (24,552
            )Future
      tax resulting from tax rate changes
            
            
            (10,266
            )
            
            
            (1,631
            )
            
            
            (11,835
            )Recovery
      of various future tax liabilities
            
            
            (12,841
            )
            
            
            -
            
            
            
            (25,187
            )Other
            
            
            (4,038
            )
            
            
            444
            
            
            
            32035,519
            
            
            
            59,813
            
            
            
            (36,005
            )





The
reconciliation of income tax attributable to operations computed at the
statutory rates to income tax expense is as follows:




2008
            
            
            2007
            
            
            2006$
            
            
            
            %
            
            
            $
            
            
            
            %
            
            
            $
            
            
            
            %Tax
      at combined federal and provincial rate
            
            
            57,744
            
            
            
            34.0
            
            
            
            61,055
            
            
            
            35.5
            
            
            
            1,133
            
            
            
            35.2Reduction
      in future taxes resulting fromstatutory rate change
            
            
            (10,266
            )
            
            
            (6.0
            )
            
            
            (1,631
            )
            
            
            (0.9
            )
            
            
            (11,835
            )
            
            
            (367.3
            )Recovery
      of various tax liabilities
            
            
            (13,302
            )
            
            
            (7.8
            )
            
            
            1,016
            
            
            
            0.6
            
            
            
            (25,187
            )
            
            
            (781.7
            )Other
            
            
            1,343
            
            
            
            0.7
            
            
            
            (627
            )
            
            
            (0.5
            )
            
            
            (116
            )
            
            
            (3.7
            )35,519
            
            
            
            20.9
            
            
            
            59,813
            
            
            
            34.7
            
            
            
            (36,005
            )
            
            
            (1,117.5
            )





The
Company recognizes as a future tax asset the benefit of capital and non-capital
loss carryforwards to the extent it is more likely than not that the benefit
will be realized. As at August 31, 2008, the Company had available loss
carryforwards of approximately $67,500. A future tax asset of $21,045 (2007 -
$37,580) has been recognized in respect of these carryforwards, net of a
valuation allowance of $6,470 (2007 - $8,820).




The
available loss carryforwards will expire as follows:




2009
            
            
            5,7002010
            
            
            2,7002011
            
            
            1,9002015
            
            
            1,1002025
            
            
            1002026
            
            
            33,4002027
            
            
            8002028
            
            
            4,600No
      expiration
            
            
            17,20067,500




14.
            Business
      segment information


The
Company’s business activities are conducted through three reportable operating
segments:




Radio


The
Radio segment consists of 53 radio stations, situated primarily in high growth
urban centres in Canada. Revenues are derived from advertising aired over these
stations.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Television


The
Television segment includes interests in several specialty television networks,
pay television, conventional television stations, a digital music service and
cable advertising services, and the Nelvana production studio. Revenues are
generated from subscriber fees and advertising.




Content


The
Content segment includes the production and distribution of television programs
and the sale and licensing of related products. Revenues are generated from
licensing of proprietary films and television programs, merchandise licensing
and publishing.  The Content segment derives programs for distribution
through two means: (1) production by the Nelvana studio, and (2) acquisition
from third-party producers.




Management
evaluates each business segment’s performance based on revenues less direct cost
of sales, general and administrative expenses. Segment profit excludes disputed
regulatory fees.





Revenues
and segment profit





Year
      ended August 31, 2008Radio
            
            
            Television
            
            
            Content
            
            
            Corporate
            
            
            Eliminations
            
            
            ConsolidatedRevenues
            
            
            286,449
            
            
            
            450,175
            
            
            
            51,959
            
            
            
            -
            
            
            
            (1,427
            )
            
            
            787,156Direct
      cost of sales, generaland
      administrative expenses
            
            
            210,945
            
            
            
            258,410
            
            
            
            44,757
            
            
            
            22,979
            
            
            
            (2,065
            )
            
            
            535,026Segment
      profit
            
            
            75,504
            
            
            
            191,765
            
            
            
            7,202
            
            
            
            (22,979
            )
            
            
            638
            
            
            
            252,130Depreciation
            
            
            6,533
            
            
            
            10,309
            
            
            
            164
            
            
            
            5,048
            
            
            
            -
            
            
            
            22,054Interest
      expense
            
            
            1,042
            
            
            
            3,765
            
            
            
            878
            
            
            
            35,628
            
            
            
            -
            
            
            
            41,313Disputed
      regulatory fees
            
            
            6,155
            
            
            
            4,781
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            10,936Other
      expense, net
            
            
            3,594
            
            
            
            4,362
            
            
            
            2,493
            
            
            
            (2,596
            )
            
            
            -
            
            
            
            7,853Income
      before income taxesand non-controlling interest
            
            
            58,180
            
            
            
            168,548
            
            
            
            3,667
            
            
            
            (61,059
            )
            
            
            638
            
            
            
            169,974





Year
      ended August 31, 2007Radio
            
            
            Television
            
            
            Content
            
            
            Corporate
            
            
            Eliminations
            
            
            ConsolidatedRevenues
            
            
            275,736
            
            
            
            436,270
            
            
            
            61,325
            
            
            
            -
            
            
            
            (4,588
            )
            
            
            768,743Direct
      cost of sales, generaland
      administrative expenses
            
            
            198,201
            
            
            
            253,822
            
            
            
            55,883
            
            
            
            24,844
            
            
            
            (4,928
            )
            
            
            527,822Segment
      profit
            
            
            77,535
            
            
            
            182,448
            
            
            
            5,442
            
            
            
            (24,844
            )
            
            
            340
            
            
            
            240,921Depreciation
            
            
            6,195
            
            
            
            10,908
            
            
            
            256
            
            
            
            4,197
            
            
            
            -
            
            
            
            21,556Amortization
            
            
            -
            
            
            
            355
            
            
            
            -
            
            
            
            1,200
            
            
            
            -
            
            
            
            1,555Interest
      expense
            
            
            1,015
            
            
            
            245
            
            
            
            496
            
            
            
            34,082
            
            
            
            -
            
            
            
            35,838Other
      expense, net
            
            
            3,911
            
            
            
            6,156
            
            
            
            2,876
            
            
            
            (3,143
            )
            
            
            -
            
            
            
            9,800Income
      before income taxesand non-controlling interest
            
            
            66,414
            
            
            
            164,784
            
            
            
            1,814
            
            
            
            (61,180
            )
            
            
            340
            
            
            
            172,172


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)





Year
      ended August 31, 2006Radio
            
            
            Television
            
            
            Content
            
            
            Corporate
            
            
            Eliminations
            
            
            ConsolidatedRevenues
            
            
            268,367
            
            
            
            401,856
            
            
            
            63,618
            
            
            
            -
            
            
            
            (7,571
            )
            
            
            726,270Direct
      cost of sales,
      generaland
      administrative expenses
            
            
            200,015
            
            
            
            236,563
            
            
            
            59,118
            
            
            
            23,998
            
            
            
            (7,543
            )
            
            
            512,151Segment
      profit
            
            
            68,352
            
            
            
            165,293
            
            
            
            4,500
            
            
            
            (23,998
            )
            
            
            (28
            )
            
            
            214,119Depreciation
            
            
            6,899
            
            
            
            10,493
            
            
            
            149
            
            
            
            3,761
            
            
            
            -
            
            
            
            21,302Amortization
            
            
            -
            
            
            
            1,065
            
            
            
            -
            
            
            
            1,807
            
            
            
            -
            
            
            
            2,872Interest
      expense
            
            
            855
            
            
            
            168
            
            
            
            8
            
            
            
            42,074
            
            
            
            -
            
            
            
            43,105Debt
      refinancing loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            131,951
            
            
            
            -
            
            
            
            131,951Other
      expense, net
            
            
            4,000
            
            
            
            901
            
            
            
            6,468
            
            
            
            298
            
            
            
            -
            
            
            
            11,667Income
      before income taxesand non-controlling interest
            
            
            56,598
            
            
            
            152,666
            
            
            
            (2,125
            )
            
            
            (203,889
            )
            
            
            (28
            )
            
            
            3,222





The
Corporate segment represents the incremental cost of corporate overhead in
excess of the amount allocated to the other operating segments.





Gross
revenues are derived from the following geographical sources, by location of
customer, as follows:


2008
            
            
            2007
            
            
            2006Canada
            
            
            738,914
            
            
            
            718,053
            
            
            
            675,199United
      States
            
            
            28,179
            
            
            
            26,708
            
            
            
            28,798International
            
            
            20,063
            
            
            
            23,982
            
            
            
            22,273787,156
            
            
            
            768,743
            
            
            
            726,270





Corus’
revenue streams for fiscal 2008 are derived primarily from three areas:
advertising (59%), subscriber fees (29%) and license fees (4%) (2007 - 57%, 29%
and 6%, respectively).





Segment
assets


2008
            
            
            2007Radio
            
            
            736,224
            
            
            
            725,410Television
            
            
            1,108,606
            
            
            
            1,065,585Content
            
            
            71,206
            
            
            
            77,453Corporate
            
            
            117,617
            
            
            
            68,5192,033,653
            
            
            
            1,936,967





Assets
are located primarily within Canada.





Capital
expenditures by segment


2008
            
            
            2007
            
            
            2006Radio
            
            
            6,900
            
            
            
            7,745
            
            
            
            11,253Television
            
            
            5,146
            
            
            
            7,522
            
            
            
            5,254Content
            
            
            311
            
            
            
            290
            
            
            
            3,289Corporate
            
            
            5,195
            
            
            
            4,730
            
            
            
            3,80217,552
            
            
            
            20,287
            
            
            
            23,598


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Property,
plant and equipment are located primarily within Canada.





Goodwill


2008
            
            
            2007Radio
            
            
            419,983
            
            
            
            417,961Television
            
            
            370,425
            
            
            
            370,425Content
            
            
            7,446
            
            
            
            7,446797,854
            
            
            
            795,832





Goodwill
is located primarily within Canada.




15.
            Business
      combinations


In
fiscal 2007, the Company completed the acquisition of an additional 10% share of
TELETOON, to increase its ownership interest in this television network from 40%
to 50%.  The total cash consideration paid was
$46,645.  This investment will continue to be accounted for as a joint
venture, and as such, the net assets acquired and results of operations are
proportionately consolidated from the date of acquisition.




In
the fourth quarter of fiscal 2007, the Company completed the acquisition of two
radio stations.  The total cash consideration paid was $18,047. The
Company had not yet finalized the valuation of intangible assets for the purpose
of allocating the purchase cost of this acquisition at the end of fiscal
2007.




These
transactions resulted in an increase to broadcast licenses of $27,600 and an
increase to goodwill of $39,094 in fiscal 2007.




During
fiscal 2008, the Company finalized the purchase equation for the acquisition of
two radio stations in fiscal 2007, and in an unrelated transaction completed the
acquisition of an additional radio station. The impact of these transactions was
to increase broadcast licenses by $679 and increase goodwill by
$2,022.




16.
            Joint
      ventures


The
following amounts, included in these consolidated financial statements,
represent the Company’s proportionate share in joint ventures:


2008
            
            
            2007Current
      assets
            
            
            31,086
            
            
            
            32,593Long-term
      assets
            
            
            38,475
            
            
            
            28,370Current
      liabilities
            
            
            28,751
            
            
            
            32,179Long-term
      liabilities
            
            
            5,900
            
            
            
            225Cash
      provided by operating activities
            
            
            3,390
            
            
            
            12,769Cash
      provided by (used in) investing activities
            
            
            (265
            )
            
            
            1,102Revenues
            
            
            52,560
            
            
            
            52,748Expenses
            
            
            36,310
            
            
            
            36,484Net
      income for the year
            
            
            16,250
            
            
            
            16,264


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


17.
            Financial
      instruments


The fair values of financial instruments have been determined as
follows:




Current
assets and liabilities


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




Investments
and other assets


The
fair value of publicly traded shares included in this category is determined by
quoted share prices in active markets.  The fair value of other
financial instruments included in this category is determined using other
valuation techniques.




Long-term
debt


The
carrying value of the Company's bank loans approximates their fair value because
interest charges under the terms of the bank loans are based on current Canadian
bankers' acceptance and LIBOR rates.




Other
long-term liabilities


The
fair values of financial instruments in this category approximate their carrying
values as they are recorded at the net present values of their future cash
flows, using an appropriate discount rate.




Derivative
financial instruments


The
fair values of derivative financial instruments are determined based on
quotations by the counterparties to the agreements.




The
estimated fair values of these agreements are as follows:





August
      31, 2008
            
            
            August
      31, 2007Carrying
              value
            
            
            Estimated
      fair value
            
            
            Carrying
              value
            
            
            Estimated
      fair valueInterest
      rate swap agreements
            
            
            (9,381
            )
            
            
            (9,381
            )
            
            
            -
            
            
            
            8,768Total
      return swap agreements
            
            
            (49
            )
            
            
            (49
            )
            
            
            (497
            )
            
            
            (497
            )





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


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


Credit
risks and concentration


Credit
risks associated with the interest rate swap agreements 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 resulting from advertising and affiliate subscriber fee revenues are
not subject to any concentration of credit risk.




Accounts
receivable from distribution and licensing of proprietary exploitation rights of
feature films and television programs are subject to credit risk. The risk is
mitigated because the Company enters into license and distribution contracts
with many major international broadcasters and distributors.




18.
            Consolidated
      statements of cash flows


Additional
disclosures with respect to the consolidated statements of cash flows are as
follows:




Net
change in non-cash working capital balances consists of the
following:





2008
            
            
            2007
            
            
            2006Accounts
      receivable
            
            
            (5,007
            )
            
            
            (10,275
            )
            
            
            14,509Prepaid
      expenses and other
            
            
            186
            
            
            
            (2,586
            )
            
            
            3,435Accounts
      payable and accrued liabilities
            
            
            3,687
            
            
            
            (9,939
            )
            
            
            (28,160
            )Income
      taxes payable
            
            
            (2,777
            )
            
            
            (3,240
            )
            
            
            1,546Deferred
      credits
            
            
            (6,881
            )
            
            
            (1,662
            )
            
            
            1,223Other
            
            
            (226
            )
            
            
            (108
            )
            
            
            (2,451
            )(11,018
            )
            
            
            (27,810
            )
            
            
            (9,898
            )





Interest
paid, interest received and income taxes paid and classified as operating
activities are as follows:




2008
            
            
            2007
            
            
            2006Interest
      paid
            
            
            35,031
            
            
            
            33,928
            
            
            
            61,025Interest
      received
            
            
            1,042
            
            
            
            841
            
            
            
            2,643Income
      taxes paid
            
            
            46,796
            
            
            
            47,646
            
            
            
            38,218




19.
            Foreign
      exchange gains and losses


The
Company has reflected certain gains and losses in its consolidated statements of
income as a result of exposure to foreign currency exchange rate
fluctuations.  A portion of these gains and losses relates to
operating activities while other portions are of a financing
nature.  Foreign exchange gains and losses are reflected in the
consolidated financial statements as follows:


2008
            
            
            2007
            
            
            2006Direct
      cost of sales, generaland
      administrative expenses
            
            
            (423
            )
            
            
            (363
            )
            
            
            (511
            )Other
      expense, net
            
            
            823
            
            
            
            109
            
            
            
            487Total
      foreign exchange losses (gains)
            
            
            400
            
            
            
            (254
            )
            
            
            (24
            )


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


20.
            Accumulated
      other comprehensive loss




2008
            
            
            2007Foreign
      currency translation adjustment
            
            
            (12,192
            )
            
            
            (12,169
            )Unrealized
      loss on available-for-sale investments, net of tax
            
            
            (1,297
            )
            
            
            -Unrealized
      loss on cash flow hedge, net of tax
            
            
            (6,661
            )
            
            
            -(20,150
            )
            
            
            (12,169
            )




21.
            Reconciliation
      of Canadian GAAP to U.S. GAAP


The
consolidated financial statements of the Company are prepared in Canadian
dollars in accordance with Canadian GAAP. The following adjustments and
disclosures would be required in order to present these consolidated financial
statements in accordance with U.S. GAAP:




Reconciliation
to U.S. GAAP


2008
            
            
            2007
            
            
            2006Net
      income using Canadian GAAP
            
            
            129,835
            
            
            
            107,018
            
            
            
            35,471Add
      (deduct) adjustments for:Discount of program and film
      rights assets andliabilities (i)
            
            
            -
            
            
            
            (499
            )
            
            
            (728
            )Deferred charges
            
            
            -
            
            
            
            251
            
            
            
            752Other
            
            
            -
            
            
            
            -
            
            
            
            447Income tax effect of
      adjustments
            
            
            -
            
            
            
            85
            
            
            
            (36
            )Net
      income using U.S. GAAP
            
            
            129,835
            
            
            
            106,855
            
            
            
            35,906Comprehensive
      income using Canadian GAAP
            
            
            114,847
            
            
            
            106,377
            
            
            
            33,952Add
      (deduct) adjustments for changes in:Net adjustments to net income
      noted above
            
            
            -
            
            
            
            (163
            )
            
            
            435Unrealized gain on investments
      classified asavailable for sale, net of tax (ii)
            
            
            -
            
            
            
            129
            
            
            
            1,235Unrealized gain on derivative
      contracts, net oftax (iii)
            
            
            -
            
            
            
            5,540
            
            
            
            69,847Comprehensive
      income using U.S. GAAP
            
            
            114,847
            
            
            
            111,883
            
            
            
            105,469Earnings
      per share using U.S. GAAPBasic
            
            $
            1.57
            
            
            $
            1.26
            
            
            $
            0.42Diluted
            
            $
            1.54
            
            
            $
            1.23
            
            
            $
            0.42





Selected
consolidated balance sheet items using U.S. GAAP




2008
            
            
            2007Canadian
              GAAP
            
            
            U.S.
              GAAP
            
            
            Canadian
              GAAP
            
            
            U.S.
              GAAPInvestments
      and other assets (ii)
            
            
            93,086
            
            
            
            93,086
            
            
            
            17,492
            
            
            
            25,974Program
      and film rights
            
            
            234,464
            
            
            
            234,464
            
            
            
            215,755
            
            
            
            210,809Broadcast
      licenses and goodwill (iv)
            
            
            1,331,345
            
            
            
            1,339,630
            
            
            
            1,328,644
            
            
            
            1,336,929Other
      long-term liabilities
            
            
            59,936
            
            
            
            59,936
            
            
            
            64,773
            
            
            
            62,441Future
      tax liability
            
            
            87,699
            
            
            
            91,226
            
            
            
            102,851
            
            
            
            106,938Retained
      earnings
            
            
            131,594
            
            
            
            136,352
            
            
            
            95,568
            
            
            
            98,627Accumulated
      other comprehensive loss (iii)
            
            
            20,150
            
            
            
            20,150
            
            
            
            12,169
            
            
            
            5,162


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


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





2008
            
            
            2007Retained
      earningsDiscount of program and film
      rights assets and liabilities (i)
            
            
            -
            
            
            
            (1,699
            )Equity in earnings of
      investees (iv)
            
            
            4,758
            
            
            
            4,758Accumulated
      other comprehensive lossUnrealized loss on investments
      (ii)
            
            
            -
            
            
            
            (183
            )Unrealized gain on derivative
      contracts (iii)
            
            
            -
            
            
            
            7,190Total
      cumulative effect of adjustments on shareholders’ equity
            
            
            4,758
            
            
            
            10,066





Areas
of material difference between Canadian GAAP and U.S. GAAP and their impact on
the consolidated financial statements are as follows:




(i)
Discount of program and film rights assets and liabilities


As
described in note 2, on September 1, 2007 the Company recorded decreases to
program and film rights and other long-term liabilities to reflect the balances
as if the effective interest rate method had always been used to record program
and film rights assets and liabilities.  This resulted in a net-of-tax
transition adjustment of $1,699 to retained earnings on September 1,
2007.  Under U.S. GAAP, a transition adjustment of $902 was made on
September 1, 2005, with reductions of $473 and $324 to net income in 2006 and
2007, respectively.  The Company believes this change is preferable as
it results in liabilities reflecting the time value of money and also eliminates
a GAAP difference.  The new method is an allowable alternative under
U.S. GAAP.




(ii)
Unrealized loss on investments


Under
U.S. 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 deferred income taxes. Prior to the
implementation of the new standards on financial instruments, under Canadian
GAAP these investments were carried at cost and written down only when there was
evidence that a decline in value that was other-than-temporary had occurred. The
Company had determined that the decline in fair value was not
other-than-temporary, based on the financial condition of the issuer and the
fact that the Company had the intent and ability to retain its investment in the
issuer for a period of time sufficient to allow for an anticipated recovery in
market value. The Company has considered evidence, such as industry analyst
reports, that supported this conclusion.




(iii)
Derivative instruments and hedging activities


Under
U.S. GAAP, all derivative instruments are to be recorded on the consolidated
balance sheets at fair value. Derivatives that are not hedges must be adjusted
to fair value through income. If the derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of derivatives will either be
offset against the change in fair value of the hedged assets, liabilities or
firm commitments through income or deferred in other comprehensive loss until
the hedged item is recognized in income.  Prior to the adoption of the
new Canadian financial instruments accounting guidance by the Company in fiscal
2008, this resulted in a GAAP difference.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


(iv)
Equity in earnings of investees


Under
Canadian GAAP, the investments in Nelvana’s 20% interest in TELETOON in fiscal
2001 and Western International Communications Ltd. (“WIC”) in fiscal 2000 were
accounted for using the cost method of accounting until CRTC approval was
received for the transactions. When the Company received CRTC approval, the
amount in the accounts under the cost method became the basis for the purchase
price allocation and equity accounting commenced. Under U.S. GAAP, equity
accounting for the investments is used from the date the Company first acquired
shares in Nelvana and WIC.




Accounting
for uncertain tax positions


Effective
September 1, 2007, the Company adopted FASB Interpretation No. 48 (“FIN 48”),
“Accounting for Uncertainty in Income Taxes”.  The implementation of
FIN 48 had no impact on net income or retained earnings in any of the periods
presented.




The
liability for unrecognized tax benefits (“UTBs”) related to permanent and
temporary tax adjustments, exclusive of interest, was $6,404 as at August 31,
2008 (2007 - $18,553).  Of this total, $4,049 of tax benefits would
favourably affect the Company’s effective tax rate if the benefits were
recognized in the consolidated financial statements.




The
net decrease in the liability of $12,150 since the date of adoption resulted
from the following:




UTB
      balance as at September 1, 2007
            
            
            18,553Gross
      decrease related to tax positions of prior years
            
            
            (115
            )Gross
      increase related to tax positions of current year
            
            
            807Reductions
      related to the lapse of statute of limitations
            
            
            (12,841
            )UTB
      balance as at August 31, 2008
            
            
            6,404




The
Company recognizes interest expense and penalties related to UTBs within the
provision for income tax expense in the consolidated statements of
income.  The liability related to interest and penalties was $1,189 as
at August 31, 2008 (2007 - $3,184).  During the year ended August 31,
2008, the Company recorded a recovery of $1,995 in respect of interest expense
and penalties related to UTBs.




The
Company believes it is reasonably possible that its UTB balance could decrease
by $2,644 in the next 12 months as a result of the potential resolution of an
ongoing tax dispute.




The
following table summarizes, by major tax jurisdiction, the tax years that remain
open to examination by the relevant taxing authorities:




Tax
      jurisdiction
            Years
      subject to examinationCanada
            2004
      - forwardIreland
            2002
      - forwardUnited
      States
            2005
      - forward




Recent
United States accounting pronouncements


In
September 2006, the FASB issued FASB Statement No. 157, “Fair Value
Measurements”. This new standard defines fair value, establishes a framework for
measuring fair value under U.S. GAAP and expands disclosures about fair value
measurements. This new standard is effective for the Company beginning September
1, 2008. The Company is currently assessing the impact of this new
standard.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


In
February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities”. This statement permits entities
the option to measure financial instruments at fair value, thereby achieving an
offsetting effect for accounting purposes for certain changes in fair value of
certain related assets and liabilities without having to apply hedge accounting.
This statement is effective for the Company beginning September 1, 2008. The
Company is currently assessing the impact of this new standard on its
consolidated financial statements.




In
December 2007, the FASB issued FASB Statement No. 141R, “Business Combinations”.
The statement will require all business acquisitions to be measured at fair
value; the existing definition of a business would be expanded; pre-acquisition
contingencies would be measured at fair value; most acquisition-related costs
would be recognized as expenses as incurred; as well as other changes. The
statement is effective for the Company beginning September 1, 2009. The Company
is currently assessing the impact of this new standard on its consolidated
financial statements.




In
December 2007, the FASB issued FASB Statement No. 160, “Non-controlling
Interests in Financial Statements”. The statement will improve the relevance,
comparability and transparency of the financial information that a reporting
entity provides in its consolidated financial statements by establishing new
accounting and reporting standards. The statement is effective for the Company
beginning September 1, 2009. The Company is currently assessing the impact of
this new standard on its consolidated financial statements.




22.
            Government
      financing and assistance


Revenues
include $1,704 (2007 - $1,708; 2006 - $2,845) of production financing obtained
from government programs. This financing provides a supplement to a production
series’ Canadian license fees and is not repayable.




As
well, revenues include $853 (2007 - $804; 2006 - $939) of government grants
relating to the marketing of books in both Canada and international markets. The
majority of the grants are repayable if the average profit margin for the
three-year period following receipt of the funds equals or is greater than
10%.




23.
            Commitments,
      contingencies and guarantees


The
Company and its subsidiaries are involved in litigation matters arising out of
the ordinary course and conduct of its business. Although 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.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


The
Company has various long-term operating lease agreements for the use of
facilities and equipment in each of the next five years and thereafter as
follows:


2009
            
            
            26,7412010
            
            
            24,8292011
            
            
            20,1082012
            
            
            15,0232013
            
            
            13,865Thereafter
            
            
            190,264290,830




Rental
expenses recognized in direct cost of sales, general and administrative expenses
totalled approximately $13,556 (2007 - $13,180; 2006 - $13,070).




The
Company has entered into various agreements for the right to broadcast or
distribute certain film and television programs in the future. These agreements,
which range in term from one to five years, generally commit the Company to
acquire specific films and television programs or certain levels of future
productions. The acquisition of these broadcast and distribution rights is
contingent on the actual delivery of the productions. Management estimates that
these agreements will result in future program and film expenditures of
approximately $300,240.




Generally,
it is not the Company’s policy to issue guarantees to non-controlled affiliates
or third parties, with limited exceptions.




Many
of the Company’s agreements, specifically those related to acquisitions and
dispositions of business assets, included indemnification provisions where the
Company may be required to make payments to a vendor or purchaser for breach of
fundamental representation and warranty terms in the agreements with respect to
matters such as corporate status, title of assets, environmental issues,
consents to transfer, employment matters, litigation, taxes payable and other
potential material liabilities. The maximum potential amount of future payments
that the Company could be required to make under these indemnification
provisions is not reasonably quantifiable as certain indemnifications are not
subject to a monetary limitation. As at August 31, 2008, management believed
there was only a remote possibility 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. The Company has acquired and maintains liability
insurance for directors and officers of the Company and its
subsidiaries.




In
fiscal 2005, Corus and a related party entered into a contra agreement for the
exchange of $2,500 in media time annually for a five-year period. The Company’s
obligation will be settled with a combination of radio and television spots. In
addition, the Company will provide a total of $1,000 annually in direct response
promotions for the related party.




On
December 14, 2006, the Federal Court of Canada ruled that the Part II license
fees paid by CRTC licensees are an unlawful tax.  Corus has paid these
fees since the Company’s inception in 1999, and in fiscal 2006 the Company
remitted approximately $5,000 in Part II license fees to the
CRTC.  The disputed regulatory fee accrual relates to the April 2008
decision of the Federal Court of Appeal to reverse the December 2006 Federal
Court decision.  The broadcasting industry is pursuing avenues of
appeal; however until such time as an appeal is heard, the regulation is in
force.  The accrual recorded in fiscal 2008 includes a balance of
$4,911 related to fiscal 2007 and $6,025 related to fiscal 2008.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


24.
            Related
      party transactions


The
Company has transacted business in the normal course with entities that are
subject to common voting control and with entities over which the Company
exercises significant influence. These transactions are measured at the exchange
amount, which is the amount of consideration established and agreed to by the
related parties and having normal trade terms.




During
the year, the Company received cable service subscriber, programming and
advertising fees of $102,415 (2007 - $104,402; 2006 - $92,837), production and
distribution revenue of $850 (2007 - $3,487; 2006 - $2,853) and administrative
and other fees of $6,403 (2007 - $5,006; 2006 - $5,968) from related parties. In
addition, the Company paid cable and satellite system distribution access fees
of $4,478 (2007 - $4,493; 2006 - $4,441) and administrative and other fees of
$2,956 (2007 - $2,604; 2006 - $2,106) to related parties. As at August 31, 2008,
the Company had $19,413 (2007 - $19,328) receivable from related
parties.




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




Included
in other investments (note 4) and share capital (note 10) are loans of $1,342
(2007 - $1,706) made to certain executive officers of the Company for housing or
investment purposes. The loans are collateralized by charges on the officers’
personal residences and/or by related investment. The loans are
non-interest-bearing and are due between December 1, 2011 and October 31,
2022.




25.
            Employee
      future benefits


The
Company has a defined contribution plan for qualifying full-time employees.
Under the plan, the Company contributes 5% of an employee’s earnings, not
exceeding the limits set by the Income Tax Act (Canada). The
amount contributed in 2008 related to the defined contribution plan was $6,195
(2007 - $5,836; 2006 - $6,016). The amount contributed is approximately the same
as the expense included in the consolidated statements of income.




In
fiscal 2008, the Company introduced a non-contributory defined benefit pension
plan for certain of its senior executives.  Benefits under this plan
are based on the employees’ highest three-year average rate of pay during their
years of service, and accrue starting from the date of the implementation of the
plan.  The Company recorded an expense of $450 in fiscal 2008 in
respect of this plan.


CORUS
ENTERTAINMENT INC.
 Notes
to consolidated financial statements
 August
31, 2008, 2007 and 2006
 (in
thousands of Canadian dollars, except share
information)


26.
            Subsequent
      event


On
September 2, 2008, the Company announced that it had completed the acquisition
of Canadian Learning Television (“CLT”) effective September 1,
2008.  The acquisition cost was approximately $75,000, including
customary closing adjustments.  The CRTC approved the acquisition on
August 22, 2008 and the Company took over ownership and operation of CLT on
September 1, 2008.




27.
            Comparative
      consolidated financial statements


The
comparative consolidated financial statements have been reclassified from
statements previously presented to conform to the presentation of the 2008
consolidated financial statements.