**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      40-F**




o
            Registration
                statement pursuant to Section 12 of the Securities Exchange Act of
                1934orþ
            Annual
                report pursuant to Section 13(a) or 15(d) of the Securities Exchange
                Act of 1934




**For
                the Fiscal year ended:**
            August
                31, 2005**Commission
                File number:**
            001-14992





**CORUS
      ENTERTAINMENT INC.**


(Exact
      name of registrant as specified in its charter)




**Canada**
            
            **4832,
                4833**
            
            **Not
                Applicable**(Province
                or other jurisdiction of
              incorporation
                or organization)
            
            (Primary
                standard industrial classification
              code
                number, if applicable)
            
            (I.R.S.
                employer identification
              number,
                if applicable)





**BCE
      Place**


**181
      Bay Street, Suite 1630**


**P.O.
      Box 767**


**Toronto,
      Ontario**


**M5J
      2T3 Canada**


**(416)
      642-3770**


(Address
      and telephone number of registrant's principal executive office)




**CT
      Corporation System**


**111
      8** **th** **Avenue, 13** **th** **Floor**


**New
      York, New York 10011**


**(212)
      894-8700**


(Name,
      address and telephone number of agent for service in the United
      States)




Securities
      registered pursuant to Section 12(b) of the Act:





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





Securities
      registered or to be registered pursuant to Section 12(g) of the Act: **None**


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


**83⁄4%
      Senior Subordinated Notes due 2012**


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




þAnnual
                Information Form
            þAudited
                Annual Financial Statements




Indicate
      the number of outstanding shares of each of the issuer’s classes of capital or
      common stock as of the close


of
      the period covered by the annual report:




**Class
                A Shares**
            **1,724,929
                As of August 31, 2005****Class
                B Non-Voting Shares**
            **41,078,119
                As of August 31, 2005**




Indicate
      by check mark whether the registrant by filing the information contained in
      this
      form is also thereby


furnishing
      the information to the Commission pursuant to Rule12g3-2(b) under the Securities
      Exchange


Act
      of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the file number
      assigned to the


registrant
      in connection with such rule.




Yeso
            Noþ




Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13(d) or 15(d)


of
      the Exchange Act during the proceeding  12 months (or for such shorter
      period that the registrant has been


required
      to file such reports); and (2) has been subject
      to such filing requirements in the past 90 days.




Yesþ
            Noo
















































**RENEWAL
      ANNUAL INFORMATION FORM**





**Fiscal
      year ended August 31, 2005**











**Corus
      Entertainment Inc.**








**October
      31, 2005**












**RENEWAL
      ANNUAL INFORMATION FORM - CORUS ENTERTAINMENT INC.**




**Table
                of Contents****FORWARD-LOOKING
                STATEMENTS**
            
            
            **3****INCORPORATION
                OF CORUS**
            
            
            **3**Organization
                and Name
            
            
            3Subsidiaries
                and Affiliates
            
            
            4**GENERAL
                DEVELOPMENT OF THE BUSINESS**
            
            
            **5**Historical
                Background
            
            
            5Significant
                Acquisitions and Divestitures
            
            
            5**DESCRIPTION
                OF THE BUSINESS**
            
            
            **6**Radio
            
            
            6Description
                of
                the Industry
            
            
            6Business
                Overview
            
            
            7Operating
                Strategy
            
            
            9Competition
                Conditions
            
            
            10Television
            
            
            10Description
                of
                the Industry
            
            
            10Business
                Overview
            
            
            12Operating
                Strategy
            
            
            14Competition
                Conditions
            
            
            15Content
            
            
            16Description
                of
                the Industry
            
            
            16Business
                Overview
            
            
            16Operating
                Strategy
            
            
            18Competition
            
            
            18**ADDITIONAL
                INFORMATION CONCERNING CORUS’ BUSINESSES**
            
            
            **19**Intangible
                Properties
            
            
            19Seasonality
                and
                Cycles
            
            
            19Economic
                Dependence
            
            
            20Environmental
            
            
            20Employees
            
            
            20Foreign
                Operations
            
            
            20Lending
            
            
            20Bankruptcy
            
            
            21Reorganizations
            
            
            21Social
                or Environmental Policies
            
            
            21Risk
                Factors
            
            
            21**CANADIAN
                COMMUNICATIONS INDUSTRY - REGULATORY ENVIRONMENT**
            
            
            21Canadian
                Radio-television and Telecommunications Commission
            
            
            21Industry
                Canada
            
            
            22Restrictions
                on
                Non-Canadian Ownership
            
            
            22Broadcasting
                Services
            
            
            22Radio
                Undertakings
            
            
            23Specialty
                and
                Premium Television Undertakings
            
            
            23Local
                Television Undertakings
            
            
            24Pay
                Audio Services
            
            
            24Cable
                Advertising Services
            
            
            25Canadian
                Content Requirement for Broadcasters
            
            
            25Film
                and Television Tax Credits and Grants
            
            
            25International
                Treaty Co-Productions
            
            
            25Competition
                Act
                Requirements
            
            
            25Investment
                Canada Act
            
            
            26Copyright
                Act
                Requirements
            
            
            26**DIVIDEND
                POLICY**
            
            
            **27****CAPITAL
                STRUCTURE**
            
            
            **28**Description
                of
                Capital Structure
            
            
            28Share
                Constraints
            
            
            32









2













**Table
                of Contents**Ratings
            
            
            32**MARKET
                FOR SECURITIES**
            
            
            **33**Marketplaces
            
            
            33Trading
                Price and Volume
            
            
            33**DIRECTORS
                AND
                OFFICERS**
            
            
            **35****AUDIT
                COMMITTEE**
            
            
            **36**Charter
            
            
            36Composition
                of
                the Audit Committee
            
            
            36Principal
                Accounting Fees and Services - Independent Auditors
            
            
            36**LEGAL
                AND REGULATORY**
            
            
            **38****INTERESTS
                OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**
            
            
            **38****TRANSFER
                AGENTS**
            
            
            **38****MATERIAL
                CONTRACTS**
            
            
            **38**Senior
                Secured Credit Facility
            
            
            38Trust
                Indenture for 83⁄4% Senior Subordinated Notes due 2012
            
            
            39Cross
                Currency Interest Rate Swaps
            
            
            39**ADDITIONAL
                INFORMATION**
            
            
            **39****CORPORATE
                GOVERNANCE PRACTICES**
            
            
            **40****SCHEDULE
                A - AUDIT COMMITTEE CHARTER**
            
            
            **41**





**FORWARD-LOOKING
      STATEMENTS**





*This
      Annual Information Form contains forward-looking statements. The results or
      events predicted in these statements may differ materially from actual results
      or events. These forward-looking statements can generally be identified by
      the
      use of statements that include phrases such as “believe”, “expect”,
“anticipate”, “intend”, “plan”, “likely”, “will” or similar words or phrases.
      Similarly, statements that describe Corus’ objectives, plans or goals are or may
      be forward-looking statements.*





*These
      forward-looking statements are based on Corus’ current expectations and its
      projections about future events. However, whether actual results and
      developments will conform with the Company’s expectations and projections is
      subject to a number of risks and uncertainties, including, among other things:
      its ability to attract and retain advertising revenues; audience acceptance
      of
      Corus’ television programs and cable networks; the ability to recoup production
      costs; the availability of tax credits and the existence of co-production
      treaties; the ability to compete in any of the industries in which the Company
      does business; conditions in the entertainment, information and communications
      industries and technological developments therein; changes in laws or
      regulations or the interpretation or application of those laws and regulations;
      the ability to protect the Company’s trade-marks, copyrights and other
      proprietary rights; and changes in accounting standards. These are not
      necessarily all of the important factors that could cause actual results to
      differ materially from those expressed in any of the forward-looking statements.
      Other unknown and unpredictable factors could also harm Corus’ results.
      Consequently, there can be no assurance that the actual results or developments
      anticipated by Corus will be realized or, even if substantially realized, that
      they will have the expected consequences to, or effects on, the Company. Unless
      otherwise required by applicable securities laws, Corus disclaims any intention
      or obligation to publicly update or revise any forward-looking statements
      whether as a result of new information, future events or
      otherwise.*





**INCORPORATION
      OF CORUS**





**Organization
      and Name**





Corus
      Entertainment Inc. (“Corus” or the “Company”) is a Canadian based media and
      entertainment company with interests in radio broadcasting, television
      broadcasting, and the production and distribution of children’s media content.
      The Company was originally incorporated under the *Canada
      Business Corporations Act* as 3470652 Canada Inc. on March 3, 1998. Corus amended its articles to change
      its name to Corus Entertainment Inc. on May 28, 1999 and subsequently amended
      its articles on August 26, 1999 to create additional classes of shares.




Corus
      commenced operations on September 1, 1999. On that date, pursuant to a statutory
      plan of arrangement (the “Arrangement”), Corus was separated from Shaw
      Communications Inc. (“Shaw”) as an independently operated, publicly traded
      company, and assumed ownership of Shaw’s radio broadcasting, specialty
      television programming, digital audio services and cable advertising services
      businesses, as well as certain investments held by Shaw.








3





Corus
      commenced trading on the Toronto Stock Exchange (CJR.NV.B) on September 3,
      1999
      and on the New York Stock Exchange (CJR) on May 10, 2000.





Corus’
      registered office and an executive office is located at 501, 630 - 3 rd Avenue S.W., Calgary, Alberta, T2P 4L4. A second executive office is located
      at
      BCE Place, Bay-Wellington Tower, Suite 1630, 181 Bay Street, P.O. Box 767,
      Toronto, Ontario, M5J 2T3.





**Subsidiaries
      and Affiliates**





The
      following table describes the significant operating subsidiaries and affiliates
      of Corus as at August 31, 2005, their jurisdiction of incorporation or
      organization, the percentage of voting and non-voting securities owned by Corus
      directly or indirectly and the nature of the business in which each subsidiary
      or affiliate is engaged.


**NAME**
            
            **JURISDICTION
                - INCORPORATION/**
              **ORGANIZATION**
            
            **%**
              **OWNED**
              **VOTING**
            
            **%**
              **OWNED**
              **NON-**
              **VOTING**
            
            **NATURE
                OF BUSINESS****Radio**
              Corus
                Radio Company
              Metromedia
                CMR Broadcasting Inc.
              Corus
                Premium Television Ltd.
              591989
                B.C. Ltd.
              591991
                B.C. Ltd.
              CKIK-FM
                Limited
              Canadian
                Broadcast Sales
              Partnership
            
            Nova
                Scotia
              Canada
              Canada
              British
                Columbia
              British
                Columbia
              Alberta
              Ontario
            
            100%
              100%
              100%
              100%
              100%
              100%
              50%
            
            100%
              N/A
              100%
              100%
              100%
              N/A
              N/A
            
            Radio
                Broadcasting
              Radio
                Broadcasting
              Radio
                Broadcasting
              Radio
                Broadcasting
              Radio
                Broadcasting
              Radio
                Broadcasting
              Radio
                Airtime Sales**Television**
              YTV
                Canada Inc.
              YTV
                Productions Inc.
              W
                Network Inc.
              Country
                Music Television Ltd.
              591987
                B.C. Ltd.
              Movie
                Central Ltd.
              Encore
                Avenue Ltd.
              Corus
                Audio and Advertising
              Services
                Ltd.
              Max
                Trax Music Ltd.
              
              Telelatino
                Network Inc.
              TELETOON
                Canada Inc.
            
            Canada
              Ontario
              Canada
              British
                Columbia
              British
                Columbia
              Alberta
              Alberta
              Alberta
              
              British
                Columbia
              
              Ontario
              Canada
            
            100%
              100%
              100%
              90%
              100%
              100%
              100%
              100%
              
              100%
              
              50.5%
              40%
            
            100%
              N/A
              100%
              68.5%
              100%
              N/A
              N/A
              N/A
              
              N/A
              
              N/A
              N/A
            
            CRTC
                License Holder (YTV and Treehouse TV)
              Television
                Production
              CRTC
                License Holder (W Network)
              CRTC
                License Holder (CMT)
              CRTC
                License Holder (Ontario Television)
              CRTC
                License Holder (Premium Television)
              CRTC
                License Holder (Premium Television)
              Advertising
                Services (Corus Custom Networks)
              
              CRTC
                License Holder - Residential Pay Audio
              Services
                (Max
                Trax)
              CRTC
                License Holder (TLN Television)
              CRTC
                License Holder (TELETOON)**Content**Nelvana
                Limited
              Nelvana
                Marketing Inc.
              Nelvana
                Enterprises Inc.
              Nelvana
                Communications Inc.
              Nelvana
                International Limited
              Nelvana
                Enterprises (U.K.) Limited
              Kids
                Can Press Limited
            
            Ontario
              Ontario
              Ontario
              United
                States
              Ireland
              United
                Kingdom
              Ontario
            
            100%
              100%
              100%
              100%
              100%
              100%
              100%
            
            100%
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
            
            Animated
                Television Program Production
              Merchandising
                and Consumer Products
              Sales
                and Distribution of Television Programs
              Sales
                and Development of Television Programs
              Sales
                and Distribution of Television Programs
              Sales
                and Distribution of Television Programs
              Children’s
                Book Publishing




N/A
      - subsidiary has no non-voting shares outstanding





4




**GENERAL
      DEVELOPMENT OF THE BUSINESS**





Corus
      is an integrated Canadian media and entertainment company with an established
      global distribution network for the programming the Company produces. Corus
      has
      strong established brands in each of its businesses: Radio, Television, and
      Content. The principal assets consist of 51 radio stations; a variety of
      specialty television networks focused on children and adult genres; western
      Canada’s premium television services; Nelvana Limited, an international producer
      and distributor of children’s programming and merchandise products; Kids Can
      Press, Canada’s largest publisher of children’s books; three broadcast
      television stations; a cable advertising service (Corus Custom Networks); and
      Max Trax, a digital audio service.





**Historical
      Background**





Certain
      of the businesses of Corus were operated by Shaw prior to September 1, 1999.
      On
      that date, the shareholders of Shaw approved the Arrangement which had the
      effect of creating Corus as an independently operated, publicly traded company.
      Under the Arrangement, the assets of Shaw were separated into two distinct,
      publicly traded corporations: one continued under the name Shaw Communications
      Inc. and the other one became Corus Entertainment Inc. Shaw continues to carry
      on Shaw’s cable television, Internet access, telecommunications and satellite
      businesses. Corus now owns and operates the media businesses which had
      previously been carried on by Shaw.





Pursuant
      to the Arrangement, Class A shareholders of Shaw received one Class A
      participating share (“Shaw Class A Share”) of Shaw and one-third of a Class A
      participating share of Corus (“Corus Class A Voting Share”) for each Shaw Class
      A Share previously held by them. Class B non-voting shareholders of Shaw
      received one Class B non-voting participating share of Shaw (“Shaw Class B
      Share”) and one-third of one Class B non-voting participating share of Corus
      (“Corus Class B Non-Voting Share”) for each Shaw Class B Share previously held
      by them.





Pursuant
      to the Arrangement, 1,907,665 Corus Class A Shares and 28,492,618 Corus Class
      B
      Shares were issued. On September 3, 1999, the Corus Class B Shares were listed
      and posted for trading on the Toronto Stock Exchange (CJR.NV.B) and commenced
      trading at $18.90 per share. On May 10, 2000, Corus Class B Shares were listed
      for trading on the New York Stock Exchange (CJR) and commenced trading at US
      $26.125 per share.





**Significant
      Acquisitions and Divestitures**





Since
      September 1, 1999, Corus has become one of Canada’s leading media and
      entertainment companies and one of the largest radio broadcasters and specialty
      and premium television operators in Canada. Corus’ radio and television
      divisions have expanded through a number of acquisitions. As well, Corus
      expanded its business to include production and distribution of television
      programs, merchandise licensing and publishing. The most significant
      acquisitions and divestitures in the past three fiscal years include the
      following:




***Sale
      of Locomotion***





On
      January 18, 2005, the Company sold its 50% share in the assets of the Locomotion
      Channel to a wholly-owned subsidiary of Sony Pictures Inc. for an aggregate
      $6,200,000 purchase price.





***Astral/Corus
      Radio Asset Exchange***




On
      May 26, 2004 the Company and Astral Media Inc. (“Astral”) entered into an
      agreement to swap certain assets, being radio stations located in the Province
      of Quebec. The transaction was reviewed and approved by the Canadian
      Radio-television and Telecommunications Commission (“CRTC”) on January 21, 2005.
      See *Broadcasting
      Decision CRTC 2005-15* .
      A labour union associated with one of the swapped stations appealed the decision
      to the federal Cabinet pursuant to the appeal provisions in the *Broadcasting
      Act* .
      Cabinet released its decision on April 21, 2005, finding that the CRTC’s
      decision was sound and met the objectives of the *Broadcasting
      Act* .
      As a result the transaction closed on May 29, 2005.







5





***Red
      Deer Radio Sale***




The
      Company entered into an agreement in January 2005 with Newfoundland Capital
      Corporation (“NewCap”) to sell two radio stations located in Red Deer, Alberta.
      On August 10, 2005 the CRTC approved the application to transfer the Red Deer
      assets (CIZZ-FM and CKGY-FM) to NewCap. *See
      Broadcasting Decision CRTC 2005-390.* The
      transaction was closed on September 25, 2005.





**DESCRIPTION
      OF THE BUSINESS**





Corus’
      principal business activities are conducted through three operating groups:
      Radio, Television and Content, as described below.





**RADIO**





**Description
      of the Industry**


The
      Canadian radio industry has historically been fragmented, with most stations
      being owned locally and oriented towards local advertisers and markets. In
      April
      1998, the CRTC adopted a new radio multiple ownership policy. In any market
      where there are at least eight commercial radio stations in English or French,
      a
      single owner can own as many as two AM and two FM stations in that language.
      Since then, there has been a significant amount of consolidation of ownership
      within the radio industry.





According
      to the CRTC, as of August 31, 2004, there were 544 commercial radio stations
      in
      Canada of which approximately 66%  were
      FM stations and 34% were AM stations.





The
      industry is dependent upon advertising revenues for economic performance and
      growth. According to the CRTC, the industry generated over $1.22 billion in
      revenues in 2004. Radio stations compete for advertising dollars with other
      radio stations and many other forms of media. According to industry sources,
      the
      radio industry captures approximately 10% of an estimated $12 billion spent
      on
      advertising in Canada, compared to the newspaper and television industries,
      which capture approximately 22%  and
      25% of the total, respectively. According to the CRTC, in 2004, local
      advertising and national advertising represented 78% and 22%, respectively,
      of
      total radio advertising revenues.





Radio
      is an efficient, cost-effective medium for advertisers to reach specific
      demographic groups. Stations are typically classified by their on-air format,
      such as classic rock, country, adult contemporary, oldies and news/talk. A
      station’s format and style of presentation enables it to target certain
      demographics. By capturing a specific share of a market’s radio listening
      audience, with particular concentration in a targeted demographic market, a
      station is able to market its broadcasting time to advertisers seeking to reach
      that specific audience demographic. Advertisers and stations utilize data
      published by audience measuring services, such as Bureau of Broadcast
      Measurement (“BBM”), to estimate how many people within particular geographical
      and demographic markets listen to specific stations. The number of
      advertisements that can be broadcast without jeopardizing listening levels,
      and
      the resulting ratings, is determined primarily by the format of a particular
      station and the local competitive environment. The number of advertisements
      that
      can be broadcast is not regulated.





Radio
      broadcasters are continuing to see the importance of new media outlets to work
      in tandem with the traditional radio stations. There is a growing need to ensure
      that strong local website s
      exist for each station to offer advertisers an opportunity to complement on-air
      campaigns with an interactive element not previously possible through radio
      streaming alone. A successful combination of on-air and on-line streaming will
      lead to increased brand awareness for the radio broadcaster and the advertiser
      and should translate to a rise in ratings and advertising revenues.





The
      industry may experience new methods of distribution in the future as three
      licensees have been approved by the CRTC to distribute digital radio signals
      across Canada. Two of these licenses intend to distribute digital radio signals
      via satellite while the other group intends to distribute its digital radio
      signals via a network of terrestrial signal repeaters. All three licensees
      intend to charge a monthly subscription fee varying from $9.95 to $14.99 per
      month.





6








**Business
      Overview**


Corus’
      radio group (“Corus Radio”) comprises 51 radio stations situated primarily in
      nine of the 10 largest Canadian markets by population and in the densely
      populated area of southern Ontario.





Corus
      Radio is the largest radio operator in Canada in terms of advertising revenues
      and reach. According to BBM’s Survey 1 2005 (“S1 ’05”), Corus led the industry
      with a market share of 32.0% in terms of reach, compared to its closest
      competitors, Standard Radio and Rogers Media, which had market shares of 23.8%
      and 18.8%, respectively, in terms of reach, during that same period. Corus
      Radio
      reaches one in three Canadians. In terms of audience tuning, Corus Radio’s share
      was 34% larger than its next competitor.





Corus
      Radio operates stations primarily in urban centres in Canada, including
      Montreal, Quebec City, Toronto, Hamilton/Burlington, Winnipeg, Edmonton, Calgary
      and Vancouver, and in the densely populated area of southern Ontario. Corus
      Radio operates news/talk stations in nine **** out
      of Canada’s 10 largest markets by population (Vancouver, Calgary, Edmonton,
      Winnipeg, Hamilton, London, Toronto, Quebec City and Montreal). Corus leads
      the
      Toronto market through its three stations that focus on adults 18 to
      49 : Q107, 102.1 The Edge and AM 640. According to BBM’s Survey 2 2005 (“S2 ’05”),
      Q107 was the #1 station for M25-54 and the #2 station for A25-54. 102.1 The
      Edge
      was the #1 station with A18-34. As well, according to the S1 ’05 and S2 ’05,
      Corus’ news/talk stations were the most listened to AM stations in Calgary,
      Edmonton, Vancouver and Winnipeg, measured by audience tuning.





Corus
      Radio’s primary method of distribution is over-the-air, analog radio
      transmission. Each radio station’s content is available to audiences through
      traditional analog radio receivers at the particular station’s licensed
      frequency on the AM or FM band. The following table sets out particulars of
      Corus’ radio stations as at October 31, 200 5:


**Location**
            
            **Call
                letter**
            
            **Frequency**
            
            **Format**
            
            **Targeted**
              **demographic**
            
            **Rank
                within**
              **demographic**
            
            **Audience**
              **share
                within**
              **total
                market****(1)****B.C.**Vancouver
            
            CKNW
                (CKNW 980)
            
            AM
            
            News/Talk
            
            A35+
            
            1
            
            15.7CFOX
                (The Fox)
            
            FM
            
            Active
                Rock
            
            M18-34
            
            1
            
            17.6CFMI
                (Rock 101)
            
            FM
            
            Classic
                Rock
            
            M25-54
            
            2
            
            11.3CHMJ
                (MOJO 730)
            
            AM
            
            Sports
            
            M25-49
            
            15
            
            0.8**Alberta**Calgary
            
            CKRY
                (Country 105)
            
            FM
            
            Country
            
            A35-54
            
            2
            
            13.6CHQR
                (QR77)
            
            AM
            
            News/Talk
            
            A35+
            
            2
            
            12.4CFGQ
                (Q107)
            
            FM
            
            Classic
                Rock
            
            M25-49
            
            4
            
            8.2Edmonton
            
            CHED
                (630 CHED)
            
            AM
            
            News/Talk
            
            A25+
            
            1
            
            15.5CKNG
                (JOE)
            
            FM
            
            80’s
                90’s
            
            A25-49
            
            1
            
            13.7CISN
                (CISN Country)
            
            FM
            
            New
                Country
            
            F35-54
            
            2
            
            15.1CHQT
                (Cool 880)
            
            AM
            
            Oldies
            
            A35-54
            
            7
            
            4.5**Manitoba**Winnipeg
            
            CJOB
                (CJOB 680)
            
            AM
            
            News/Talk/Sports
            
            A35+
            
            1
            
            22.6CJKR
                (Power 97)
            
            FM
            
            Rock
            
            M18-34
            
            1
            
            29.4








7








**Location**
            
            **Call
                letter**
            
            **Frequency**
            
            **Format**
            
            **Targeted**
              **demographic**
            
            **Rank
                within**
              **demographic**
            
            **Audience**
              **share
                within**
              **total
                market****(1)****Ontario**Barrie
            
            CIQB
                (B101)
            
            FM
            
            Hot
                Adult Contemporary
            
            A25-54
            
            3
            
            11.9CHAY
                (The New CHAY)
            
            FM
            
            Adult
                Contemporary
            
            A25-54
            
            2
            
            12.2Burlington
            
            CING
                (Country 95.3)
            
            FM
            
            Country
            
            A25-49
            
            3
            
            5.6Cambridge
            
            CJDV
                (DAVE)
            
            FM
            
            80’s/90’s
            
            A25-49
            
            3
            
            9.5Collingwood
            
            CKCB
                (The Peak)
            
            FM
            
            Adult
                Contemporary
            
            A25-54
            
            NA
            
            NACornwall
            
            CFLG
                (Variety 104.5)
            
            FM
            
            Adult
                Contemporary
            
            A25-49
            
            1
            
            31.6CJSS
                (Rock 101.9)
            
            FM
            
            Rock
            
            M25-54
            
            2
            
            12.3CJUL
                (Jewel 1220)
            
            AM
            
            Oldies
            
            A50+
            
            2
            
            16.1Guelph
            
            CJOY
                (1460 CJOY)
            
            AM
            
            Oldies
            
            A35+
            
            1
            
            11.5CIMJ
                (Magic 106.1)
            
            FM
            
            Adult
                Contemporary
            
            A25-49
            
            1
            
            17.7Hamilton
            
            CJXY
                (Y 108)
            
            FM
            
            Rock
                Hits
            
            M25-49
            
            1
            
            13.2CHML
                (AM 900)
            
            AM
            
            News/Talk
            
            A35+
            
            2
            
            10.9Kingston
            
            CFMK
                (JOE)
            
            FM
            
            80’s
                90’s
            
            A25-49
            
            4
            
            7.7CFFX
                (Oldies 960)
            
            AM
            
            Oldies
            
            A35+
            
            5
            
            5.5London
            
            CFPL
                (FM 96)
            
            FM
            
            Rock
            
            M18-49
            
            1
            
            21.9CFPL
                (AM 980)
            
            AM
            
            News/Talk
            
            A35+
            
            9
            
            3.3St.
                Thomas
            
            CFHK
                (Fresh FM)
            
            FM
            
            Contemporary
                Hit Radio
            
            A18-34
            
            3
            
            12.0Peterborough
            
            CKWF
                (The Wolf)
            
            FM
            
            Rock
            
            A25-49
            
            1
            
            29.0CKRU
                (980 Kruz)
            
            AM
            
            Oldies/Sports
            
            A35+
            
            4
            
            10.8Toronto
            
            CFNY
                (102.1 The Edge)
            
            FM
            
            New
                Rock
            
            M18-34
            
            1
            
            19.4CILQ
                (Q107)
            
            FM
            
            Classic
                Rock
            
            M25-49
            
            1
            
            14.1CFMJ
                (AM 640)
            
            AM
            
            News/Talk
            
            M25-49
            
            14
            
            1.7Woodstock
            
            CKDK
                (The Hawk)
            
            FM
            
            Classic
                Rock
            
            M25-49
            
            1
            
            16.7**Quebec**Gatineau
            
            CJRC
            
            AM
            
            News/Talk
            
            A35+
            
            3
            
            13.0Montmagny
            
            CFEL
            
            FM
            
            Soft
                Rock
            
            A25-54
            
            NA
            
            NAMontreal
            
            CFQR
            
            FM
            
            Adult
                Contemporary
            
            F25-54
            
            1
            
            29.9CKOI
            
            FM
            
            Contemporary
                Hit Radio
            
            A25-54
            
            3
            
            11.7CKAC
            
            AM
            
            News/Talk
            
            A35+
            
            4
            
            8.8CINW
                (940 News)
            
            AM
            
            News/Talk
            
            A35+
            
            5
            
            3.3CHMP
            
            FM
            
            News/Talk/Sports
            
            A25-54
            
            5
            
            7.1CINF
                (Info 690)
            
            AM
            
            News/Talk
            
            A35+
            
            9
            
            1.3Quebec
                City
            
            CHRC
            
            AM
            
            News/Talk
            
            A35+
            
            4
            
            8.7CFOM
            
            FM
            
            Adult
                Contemporary
            
            A25-54
            
            1
            
            9.8Saguenay
            
            CKRS
            
            AM
            
            News/Talk
            
            A35+
            
            1
            
            33.5St.
                Jerome
            
            CIME
            
            FM
            
            Adult
                Contemporary
            
            A25-54
            
            1
            
            14.1Sherbrooke
            
            CHLT
            
            AM
            
            News/Talk
            
            A35+
            
            1
            
            12.1CKTS
            
            AM
            
            News/Talk
            
            A35+
            
            NA
            
            NATrois
                Rivieres
            
            CHLN
            
            AM
            
            News/Talk
            
            A35+
            
            2
            
            16.7


(1) Sources: S2’05
      - Vancouver, Toronto, Montreal; BBM’s Survey Fall ’04 - Cornwall, Guelph,
      Peterborough,Woodstock; S1’05 - All other markets





Corus
      Radio derives the majority of its revenues from advertising sales. Revenues
      for
      fiscal 2005 and 2004 were $253 million and $228 million , respectively.





Revenues
      from Corus Radio are derived mainly from two types of advertising: (a)
      advertising by local advertisers who are generally local merchants and who
      operate in the trading area encompassed by the station’s signal; and (b)
      advertising by national businesses such as automotive manufacturers, breweries,
      banks, fast food chains and similar operations which develop national
      advertising campaigns. The extent to which Corus’ advertising revenues are from
      local or national advertising depends on the given market. In 2005,
      approximately 75% of Corus Radio’s revenues were derived from local
      advertising.





In
      addition to advertising revenues, Corus Radio derives a smaller portion of
      its
      revenues through non-traditional revenue sources (non-airtime). Website s
      have proven to be extremely popular with audiences and advertisers and are
      a
      growing source of revenue. Corus Radio has very loyal listeners that continue
      to
      be connected to the station for the music, the hosts, the events and
      information-entertainment that is present on Corus website s.
      With close
      to 650,000
      people registered to Corus Radio’s stations’ web-clubs and permission-based
      e-mail, the stations are able to develop one-to-one relationships and connect
      audiences with advertisers in





8





areas
      that meet their needs. Other sources of non-traditional revenue include
      sponsorships, concerts and other events that allow Corus Radio to diversify
      its
      revenue streams and reach more potential listeners.





**Operating
      Strategy**


Corus
      Radio has a focused strategy for the coming fiscal year. It will continue to
      emphasize growth in the listener and advertising base in the top 10 markets
      in
      Canada. It will strengthen core competencies of both sales management and
      programming. Corus will seek to dominate its target demographics. The Company
      will leverage new media to connect audiences with advertisers.





As
      part of its ongoing strategy of focusing on Canada’s top 10 markets, Corus
      entered into an agreement to sell its two FM stations (CKGY and CIZZ) in Red
      Deer, AB to Newfoundland Capital Corporation. The CRTC approved the transaction,
      and the transaction closed on September 30, 2005. In addition, Corus Radio
      closed on May 29, 2005 its swap of radio assets in the province of Quebec with
      Astral. Corus Radio transferred its ownership of FM stations in regional Quebec
      to Astral for seven AM stations and one FM station, including the heritage
      AM
      station in Montreal (CKAC) and an FM station in Quebec City (CFOM). This swap
      allows Corus to enter into the larger Quebec City market, and allows the Company
      to strengthen its current position in the Montreal market.





Corus
      Radio is committed to providing the best quality in programming for the
      listener. Corus Radio stations boast key proprietary personalities that are
      both
      highly recognized in their communities and dedicated to Corus programming
      standards. The Company is committed to reformatting stations when research
      shows
      that there is a need. In fiscal 2005,
      Corus’ reformatted stations (five reformatted during fiscal 2004) gained much
      traction with their targeted demographics, and were significant drivers of
      profitability for the Company. Included in this reformatting exercise was
      CKOO-FM in Montreal, which was reformatted from a Rock format to
      News/Talk/Sports CHMP-FM, Canada’s first private radio News/Talk/Sports FM
      station. In addition, JOE-FM (CKNG) in Edmonton rose to #1 in the market A25-49
      in less than one year.





Corus
      Radio aims to be rated by audience measuring services, such as BBM, as number
      one or two in the targeted demographic for their relevant markets, by continuing
      to provide attractive programming. Corus Radio has a clustering strategy pairing
      AM and FM radio stations to the limits allowed by the CRTC for the given market.
      Such clustering improves operating performance by expanding demographic coverage
      of the market, thereby providing local and national advertisers with an
      attractive and efficient medium with which to allocate their advertising
      dollars. Clustering also provides opportunities to share costs between radio
      stations, thereby improving operating margins.





Corus
      Radio is also committed to having the best radio sales force in the industry.
      In
      2002, Corus launched Corus Radio Sales University, an internal training course
      designed to provide the sales team with the tools to succeed. Stage one is
      an
      80-hour on-line training session that
      is an orientation to customer-focused selling. Stage two involves on-site
      training and customer calls with the trainer who visits every major market
      cluster at least twice a year. To date, all of the Corus radio sellers and
      managers in the major markets have completed both stage one and two of the
      training. All new sales representatives and managers hired by Corus must
      participate in the training.





Corus
      owns a 50% stake in Canadian Broadcast Sales (“CBS”), in partnership with Rogers
      Media. CBS is Canada’s leading national sales representation firm.





Corus
      Radio will continue to leverage new media to expand its audience and give new
      opportunities to advertisers through a series of strong local website s
      to complement Corus’ radio stations. On-line audio streaming through website s
      affords the broadcaster and advertiser a more personal connection with the
      listener not available through traditional radio.








9





**Competitive
      Conditions**


Radio
      stations compete for advertising dollars with other radio stations in their
      respective market areas as well as with other forms of media such as
      conventional television, specialty television networks, daily, weekly, and
      free-distribution newspapers, outdoor billboard advertising, magazines, other
      print media, direct mail marketing, and the Internet. In each market, Corus’
radio stations face competition from other stations with substantial financial
      resources, including stations targeting the same demographic groups. In markets
      near the U.S. border, such as Kingston, Corus also competes with U.S. radio
      stations. On a national level, Corus competes generally with Standard Radio,
      Rogers Media, CHUM Radio and Astral, each of which owns and operates stations
      across Canada.





Factors
      that are material to competitive position include the station’s rank in its
      demographic, market share of audience, authorized power, assigned frequency,
      audience characteristics, local program acceptance and the number and
      characteristics of stations in the market area.





**TELEVISION**





Corus’
      television group (“Corus Television”) comprises specialty television networks,
      premium pay television services, three local television stations, and other
      media services.





**Description
      of the Industry**


According
      to the Canadian Cable Television Association, as of September 2004, the Canadian
      television industry served approximately 12.1 million homes with televisions,
      of
      which 98.3% are passed by cable. Also as of September 2004, there were
      approximately 7.9 million cable subscribers and 2.3 million direct-to-home
      satellite subscribers. Total digital subscribers were approximately 4.3 million,
      up from 3.8 million a year earlier. In 2004, the four largest cable operators
      controlled approximately 95.0% of total cable subscribers in
      Canada.





*Specialty
      and Premium Pay Television Networks*




Specialty
      and premium pay television networks generated $2.0 billion of combined
      advertising and subscriber revenues in 2004. Specialty and premium television
      networks are available to those Canadians who subscribe to the service package
      of a particular broadcasting distribution undertaking (“BDU”) (i.e. cable
      television, direct-to-home satellite and multipoint distribution systems).
      Specialty television networks provide special interest, news, sports, arts
      and
      entertainment programming, while premium television networks provide
      commercial-free movies, series and special event programming.





Specialty
      and premium pay television networks each obtain revenues by charging a monthly
      subscriber fee to cable and direct-to-home satellite operators. Subscriber
      fees
      are the sole source of revenues for licensed premium television services, while
      specialty services can also generate advertising revenue. The CRTC regulates
      the
      maximum subscriber fee if the network is included as part of the basic cable
      service of a large cable operator, but not if the network is carried on a
      discretionary tier. Regardless, the amount of the subscriber fee is specified
      in
      the network’s agreement with the BDU. Digital specialty services are carried on
      a new discretionary tier of digital-only theme packages, as a stand-alone
      digital offering, or as part of individual premium services provided to digital
      subscribers. Specialty and premium television networks benefit from these
      subscriber fees, which are supported by the high level of cable and satellite
      penetration in Canada. Subscribers to discretionary tiers pay monthly fees
      to
      their BDU that reflect an amount for the basic service, plus an additional
      amount for specialty and premium television networks for which they subscribe
      on
      discretionary tiers.





Because
      all subscribers receive at least basic service, specialty television networks
      that are carried on a basic tier typically have a much higher number of
      subscribers. The number of subscribers for a cable network in a discretionary
      tier depends primarily upon pricing and subscriber preference. A specialty
      television network’s subscriber penetration will also benefit to the extent it
      is packaged or tiered with other popular specialty television networks. As
      a
      consequence, discretionary specialty television networks that are popular (or
      are otherwise packaged with popular specialty television networks) can generally
      be priced at rates above those for specialty television networks on basic
      service.





Unlike
      premium television networks, which are prevented by CRTC regulations from
      obtaining advertising revenues, specialty television networks may obtain both
      subscriber and national advertising revenues. Specialty





10





television
      networks appeal to advertisers seeking highly targeted markets. The CRTC limits
      national advertising to 12 minutes an hour but does not regulate advertising
      rates, and specialty television networks are not required to share a portion
      of
      their advertising revenues with the cable and direct-to-home (“DTH”) satellite
      operators. According to the CRTC, television advertising in 2004 totaled
      approximately $2.5 billion in Canada. Specialty television networks received
      a
      29% share of total television advertising revenues, or approximately $707
      million, up from $606 million or a 25% share of total television advertising
      revenues in 2003.




Canadian
      specialty and premium television networks have experienced subscriber growth
      over the past decade due to the advances in cable-based delivery systems and
      the
      growth of DTH satellite services. In November 2000, a number of new digital
      specialty television network licenses were awarded by the CRTC for launch
      commencing September 2001. Of these licenses, 21 were “Category 1” and 262 were
“Category 2”. Since the initial awarding of 262 Category 2 licenses, additional
      Category 2 licenses have been granted. However, as of August 2005, approximately
      76 Category 1 and 2 digital networks are in operation. It remains unclear how
      many of the remaining Category 2 networks will be launched in the future.





*Local
      Television*





Local
      television stations are licensed by the CRTC and provide over-the-air broadcast
      television signals to viewers within a local geographical market or on a network
      basis. The CRTC has licensed three English-language television networks, two
      private commercial networks and one public network. The private commercial
      networks are operated by CTV Television Network Inc. (“CTV”) and Global
      Television Network (“Global”) with the Canadian Broadcasting Corporation (“CBC”)
      operating the public broadcasting network. In addition to receiving conventional
      television signals off-air, the majority of Canadian viewers have access, either
      directly or through a BDU, to the television signals of U.S. border stations
      which are generally affiliated with one of the four U.S. commercial networks
      (ABC, NBC, CBS and Fox) and a Public Broadcasting Service station. Canadian
      conventional television stations generate revenue from advertising and receive
      no subscription revenues. The number of commercial messages that a station
      may
      broadcast is restricted to 12 minutes an hour and in some instances, as in
      the
      case of Corus’ Oshawa television station, is dependent on the production of
      local programming. The success of conventional television is dependent on the
      quality of programming which results in audience ratings that in turn attract
      advertisers to a station or network. In the case of stations affiliated with
      the
      CBC, the local, private affiliated station receives a fee from the CBC to air
      or
      broadcast CBC national programming at certain designated times, in addition
      to
      being able to generate advertising revenues.





*Other
      Media Businesses*





Digital
      audio services distribute music in a digital mode to homes served by BDUs.
      A
      digital stream is delivered via cable or satellite to a “set top” box and
      converted to a signal that a residential customer’s television or audio system
      can understand. A variety of music formats are available, including channels
      devoted exclusively to classical, rock, jazz, country and many other music
      genres. Residential digital audio services are subject to licensing requirements
      by the CRTC.





Cable
      advertising services provide commercial customers with wide coverage,
      high-frequency advertising at rates that are competitive with other forms of
      media. The business is exempt from licensing or regulatory requirements. An
      access fee is paid to the cable provider.





*New
      Products*





The
      trend in the television sector is on innovative new products and services in
      the
      digital environment. The emphasis on instant gratification for consumers is
      dominating the industry. New product offerings will fuel growth in the digital
      sector, reduce churn and contribute to incremental revenue growth.
      Video-on-demand (“VoD”); Subscription video-on-demand (“SVoD”); High Definition
      Television (“HDTV”); and Personal Video Recorders (“PVR”) all provide greater
      choice in delivery to the consumer and increase the amount of digital
      subscriptions for the provider. A description of these new digital products
      is
      as follows:




•
            VoD
                provides an alternate method for the supply of video and related
                content
                material over cable and telecommunications networks. For broadcasters
                it
                represents a fundamental shift from a linear program service to the
                consumer having complete control over the programming segment.







11










•
              SVoD
                  is a video-on-demand service offered at a flat subscription price
                  that
                  provides viewers with unlimited access to select programs from
                  the
                  libraries of featured cable networks.


•
            HDTV
                is a high-resolution digital television service combined with Dolby
                Digital surround sound. This combination creates an unparalleled
                combination of sound and image. HDTV requires new production and
                transmission equipment at the HDTV stations, as well as new equipment
                for
                reception by the consumer. The higher resolution picture is the main
                selling point for HDTV.




•
            A
                PVR is a Personal Video Recorder or an interactive television recording
                device. Like the VCR, a PVR records and plays back television programs,
                but unlike the VCR, it stores the programs in digital as opposed
                to analog
                form, allowing the user the ability to watch what they want when
                they
                want.





**Business
      Overview**


Corus
      had the following interests in specialty and premium television networks in
      Canada as at October 31, 2005:


**NETWORK**
            
            **DESCRIPTION
                OF PROGRAMMING**
            
            **INTEREST**YTV
              Treehouse
                TV
              W
                Network
              Country
                Music Television
              Telelatino
              TELETOON
              The
                Food Network Canada
              Movie
                Central
              Encore
                Avenue
              Discovery
                Kids (Digital Service)
              SCREAM
                TV (Digital Service)
              The
                Documentary Channel (Digital Service)
            
            Children/Family
              Preschool
                Children/Parents
              Lifestyle
                and Entertainment geared to women
              Country
                Music/Country Lifestyle
              Canadian-Italian
                and Spanish
              Children/Family/Adult
                Animation
              Food
                Related
              Premium
                Television - Premium Movies and Series
              Premium
                Television - Classic Movies
              Children/Family
              Horror
                Movies and Series
              Documentaries
            
            100%
              100%
              100%
              80%
              50.5%
              40%
              20%
              100%
              100%
              53.6%
              51%
              53%





*Specialty
      Television Networks* ****





Corus
      Television’s group of specialty television networks appeal particularly to kids,
      teens and women, much-coveted target groups among Canadian marketers. Corus
      Television’s specialty networks have a 54% higher cumulative average minute
      audience (2-54 demographic) than its nearest competitor, based on Nielsen Media
      Research 04/05 broadcast year surveys. Each of the analog specialty television
      networks is ranked among the top three analog television networks that compete
      within its genre, based on targeted demographics.





YTV
      is a specialty television network dedicated to programming for children and
      youth aged two to 17. YTV broadcast 15 of the top 20 children’s shows in Canada
      in the Kids 2-11 genre, based on the Nielsen 04/05 broadcast year survey. This
      network reaches children beyond the television with interactive events and
      initiatives including *ytv.com,* a
      top Canadian kids’ website. YTV is generally carried on the basic
      tier.





Treehouse
      TV is the only specialty service in Canada dedicated to preschoolers (aged
      two
      to five). Treehouse TV operates on a 24-hour basis offering a commercial-free
      television environment in its preschool programming that reflects the interests
      and developmental levels of young children.





W
      Network is a specialty television service dedicated to serving the needs and
      interests of women. On April 15, 2002, the service, which was previously known
      as WTN, was rebranded, reformatted and relaunched as W Network. Since the
      relaunch, W Network has achieved a 69% growth in its core demographic of women
      25-54. Recent Nielsen statistics indicate that W Network has the highest average
      minute audience of all Canadian specialty networks for W25-54 and is watched
      by
      over 10.6 million Canadians in an average month.





Country
      Music Television (“CMT”) is a specialty service dedicated to exhibiting country
      music videos, music programming and daily entertainment news. CMT also offers
      a
      prime-time lineup of comedy and drama series, movies and specials. In 2000,
      the
      network established the Video Advantage Program to support the development
      and
      production of original Canadian music videos for emerging artists. Corus has
      a
      90% voting





12





interest
      and an 80% equity interest in CMT *.* The remaining 10% voting interest and 20% equity interest is held by Country
      Music Television Inc., the operator of a similar service in the United States.
      According to recent Nielsen statistics, CMT has seen a 75% increase in the
      adult
      25-54 demographic over the past three years and the network has more than
      doubled its prime time audience in the same time period.





Telelatino,
      in which Corus acquired a controlling interest in November 2001, is an ethnic
      specialty service that offers general interest domestic and international
      programming in the Italian, Spanish and English languages.





Currently,
      Corus offers three digital specialty television networks: The Documentary
      Channel, featuring documentaries from Canada and around the world; Discovery
      Kids *,* which offers children informative and entertaining programming with an emphasis
      on action, adventure and the environment; and SCREAM TV *,* which offers a horror theme through a movie-rich schedule of classic and modern
      thrillers, cult favorites and popular series. These services were launched
      in
      September 2001. Corus also holds interests in the following specialty television
      networks:




• A
      40% interest in TELETOON *,* which is a Canadian specialty service featuring a wide range of animation
      programming in all forms. TELETOON is available in both an English language
      version and a French language version.




• A
      20% equity interest in The Food Network Canada *,* a
      specialty service which provides information and entertainment programming
      related to food and nutrition.





Revenues
      from Corus’ specialty television networks are derived primarily from subscriber
      fees and advertising. In fiscal 2005, subscriber fees accounted for 53% and
      advertising accounted for 44% of total revenues from the specialty television
      networks.





*Premium
      Television Networks*





Movie
      Central and Encore Avenue are the exclusive licensed providers of premium
      television services in western Canada, featuring blockbuster movies, series
      and
      specials from diverse genres on six distinct channels. Each channel broadcasts
      commercial-free 24 hours a day, seven days a week. *The
      Movie Central* brand consists of four thematic channels: Movie Central, Adrenaline Drive,
      Shadow Lane and Heartland Road. *The*  *Encore* brand
      consists of two thematic channels: Encore Avenue and Comic Strip.





Revenues
      from premium television networks have experienced significant growth over the
      past two years as a result of increased direct-to-home satellite and digital
      cable subscribers. As at August 31, 2005, Corus’ Movie Central service had over
      748,000 subscribers, a 6% increase in year-over-year subscribers, representing
      penetration of approximately 54% of digital cable and direct-to-home satellite
      subscribers in western Canada.





*Local
      Television*





Corus
      owns three local television stations - one in each of Kingston, Peterborough
      and
      Oshawa, Ontario. Each is an affiliate of the CBC. These were acquired in April
      2000 as part of the Power Broadcasting acquisition.





Revenues
      are almost exclusively derived from advertising. In fiscal 2005, national agency
      directed clients and local advertisers accounted for a combined 82% of revenues.
      CBC network affiliate payments amounted to 12% of revenues, with the remaining
      6% originating from a variety of other sources.








13





*Other
      Media Services*





Corus
      Custom Networks primarily operates TV listings channels, providing viewers
      with
      current and easily accessible listings for the local cable television program
      lineup. Revenues for Corus Custom Networks are derived through advertising.





Max
      Trax is a residential digital audio service launched in the spring of 1997.
      Max
      Trax is a partner in a joint marketing agreement with CBC to offer a 40 channel
      service package. Max Trax is carried by cable operators and direct-to-home
      satellite operators. Revenues from Max Trax are earned through subscriber
      fees.





**Operating
      Strategy**


To
      allow for strategic development and integration, the various television assets
      are internally organized under two categories. The adult television group
      includes the operations of W Network, CMT, Telelatino, The Documentary Channel,
      SCREAM TV *,* the
      local television stations, Corus Custom Networks and Max Trax. Management is
      responsible for adult-targeted programming, developing strategies for
      integrating operations where possible, as well as cross-promotion and marketing
      opportunities and joint sales initiatives. The kids’ television group includes
      YTV, Treehouse TV, TELETOON and Discovery Kids *,* allowing management to consider shared programming, cross-promotion and
      value-added content opportunities.





Corus
      Television’s operating strategy remains focused on four key areas: (i)
      increasing its position in the kids’ and women’s genres, (ii) leveraging the
      competitive position of Corus Premium Television, (iii) building key
      relationships with BDUs and (iv) maximizing operational synergies across all
      of
      Corus brands.





*Kids
      and Women*





Corus
      Television continues to lead the kids’ entertainment marketplace in Canada
      through programming on YTV, Treehouse TV, TELETOON and Discovery Kids. Corus
      Television intends to drive revenue growth in the kids sector by building
      program ratings, building the kids market by attracting new advertisers and
      building new revenue sources. Corus Television will also focus on programming
      and operational synergies across its properties.





The
      kids’ market and new media provide growth opportunities. Corus Television will
      capitalize on the growth in the home entertainment industry by constructing
      and
      investing in the new media platforms such as VoD, SVoD and interactive games
      to
      create new revenue streams. Sales of branded DVDs, CDs and other merchandise
      will also fuel revenue growth in the kids’ area.





Corus
      Television has achieved a leadership position in the women’s genre with its W
      Network targeting women aged 25-54. The viewing audience in this demographic
      has
      increased 69% since the 2001-2002 season, making W Network the #1 ranked
      specialty service for women. In fiscal 2005, W Network held the highest average
      minute audience of all Canadian specialty networks for women 25-54. W Network
      intends to invest in its programming to maximize audience growth and revenue
      potential. W Network is building an outstanding programming schedule anchored
      on
      movie blocks and design shows. The Company will focus on new media opportunities
      and platforms to deliver the programming that the target audience wants, in
      the
      format they want it in through the wnetwork.com website and other merchandise
      offerings.





*Premium
      Television*





Corus
      Premium Television services, operating in western Canada under two separate
      licenses (Movie Central and Encore Avenue), will continue to focus marketing
      effort on customer acquisition and retention. Having established a track record
      of successful direct marketing campaigns, undertaken with the cooperation of
      key
      cable and satellite providers, Corus will continue to capitalize on the growth
      in the number of digital households in western Canada as well as up-selling
      current digital households. Demand for movies and new original dramatic series
      continue to fuel strong interest in the service’s programming. To this end,
      Movie Central has secured output agreements with major Hollywood studios for
      exclusive programming, such as first windows on blockbuster feature films and
      new HBO and Showtime products. These agreements allow Movie Central to premiere
      HBO series on Movie Central at the same time as they debut in the United States.








14





Corus
      Premium Television is also leading with innovative new digital product offerings
      which will fuel digital growth, reduce churn and contribute incremental
      revenues.  In this regard, Corus Premium Television established the first
      SVoD product in Canada, Movie Central Express.  Movie Central Express
      showcases programming from five major Hollywood studios with up to 90 hours
      of
      unique programming each week. In conjunction with Shaw’s VoD service, this
      service is offered to current subscribers for a separate monthly subscription.
      In April the service launched with telecommunications supplier SaskTel. In
      this
      system, SVoD is included in the subscription offer for all Movie Central
      subscribers.





In
      the past year Movie Central also launched a dedicated high definition channel
      offering an unparalleled lineup of new releases, original series and re-mastered
      library features all in true high definition format.





In
      addition to the growth of digital products, opportunities are developing on
      two
      mainstream platforms, broadband and mobile, that are creating new revenue
      opportunities for Corus Premium Television. Although the products are still
      quite nascent, Corus believes the potential is substantial and is actively
      exploring and developing these opportunities with the BDUs now.





*Other
      Media Services*





The
      CBC-affiliated local television stations improved operating efficiencies by
      consolidating with Corus’ local market radio stations. Revenue growth is being
      achieved through an improved program schedule, expansion of news service and
      joint selling of radio and television. Each of the stations represents the
      only
      local television broadcaster in their respective communities.





Corus
      believes cable advertising services such as Corus Custom Networks are a
      cost-effective advertising vehicle for national accounts and local merchants,
      particularly in areas where there are no local television stations. Corus’
operating strategy involves optimizing existing products and services through
      product quality enhancements. Corus Custom Networks is also investigating new
      types of advertising-related businesses that are complementary to its core
      competencies. Corus Custom Networks has streamlined operations by creating
      regional hubs to service advertisers.





**Competitive
      Conditions**


The
      television broadcast environment is highly competitive. The principal methods
      of
      competition in broadcast television are the development and acquisition of
      popular programming and the development of audience interest through programming
      and promotion, in order to sell advertising at profitable rates. Broadcast
      specialty networks like YTV, W, CMT, the local stations and digital channels
      compete for audience, advertising revenues, and programming with other broadcast
      networks such as CBC, CTV, Global, specialty networks owned by Alliance Atlantis
      Communications Inc. (“AAC”) and other digital channels, independent television
      stations, basic cable program services as well as other media, including DTH
      television services, videocassettes, DVDs, print and the Internet.





Television
      stations compete for programming, audiences and advertising revenues with other
      stations and cable networks in their respective coverage areas and, in some
      cases, with respect to programming, with other station groups, and in the case
      of advertising revenues, with other local and national media.





Because
      conversion to digital television broadcasting has begun, current and future
      technological and regulatory developments may affect competition within the
      television marketplace.





Corus
      Television’s specialty and premium television networks compete for subscriber
      fees with other specialty and premium television network operators, including
      Bell Globemedia, AAC, CHUM Limited and Astral. According to the CRTC, in 2004,
      the Canadian specialty television and premium television network industries
      generated $2.0 billion of combined advertising and subscriber revenues. Corus’
specialty services also compete directly for advertising revenues with the
      operators of cable networks listed above and with broadcast networks, including
      Global, CBC and CTV, and with other advertising media. Corus’ conventional
      television stations compete principally for viewers and advertisers with other
      television stations that broadcast in central and eastern Ontario.











15





**CONTENT**





**Description
      of the Industry**


In
      recent years the launch of numerous segmented networks in the North American
      television broadcasting industry has provided viewers with greater channel
      selection. There are now numerous television networks around the world that
      program dedicated children’s blocks and other programming exclusively for
      children. Nelvana’s content is seen in more than 180 countries on over-the-air,
      analog and digital platforms.





However,
      over the past few years, the children’s television market has fundamentally
      changed. Demand for production has slowed due to consolidation and vertical
      integration of U.S. production studios and television networks.





Despite
      the current environment, the long-term outlook for the worldwide animation
      business and the children’s entertainment sector is favourable. Future growth in
      the sector is being fueled by:





• the
      growth of the 3D animation market;


• the
      shift of audiences from traditional broadcast networks to cable
      networks;


• the
      growth of digital television services, providing a new platform for additional
      cable and satellite services and thereby new programming
      opportunities;


• the
      continued international expansion by all types of programming services,
      including major U.S. broadcasters and domestic children’s services;


• the
      growth in demand for content featuring recognizable characters on the Internet;
      and


• the
      emerging platforms for content distribution (i.e. VoD, SVoD, broadband, cell
      phones and video games).





According
      to industry sources, total spending on filmed entertainment, which includes
      feature films, video, television shows, animation and other programming
      worldwide is expected to grow from an estimated US$84.2 billion in 2003 to
      US$118.9 billion in 2009. In part due to the proliferation of cable and
      satellite services, channels targeting children have increased substantially
      in
      recent years. ****





Merchandising
      has grown from the popularity of toys that are associated with movies, books
      and
      television characters. According to industry sources, in 2004 licensed retail
      sales in the United States and Canada were approximately US$71 billion. All
      of
      Nelvana’s character brands fall into the entertainment/character property type
      category, which, according to industry sources, accounted for US$13.4 billion
      of
      retail sales in the United States and Canada in 2004. The
      entertainment/character property type category is the second largest category
      of
      licensed retail products, accounting for 19% of total sales in the United States
      and Canada in 2004.





The
      home entertainment market is a huge market and continues to grow. In 2004,
      the
      estimated worldwide market for home entertainment is expected to be approaching
      $47.3 billion marketwide. There has been a purchasing shift from VHS to DVD
      as
      the advancement of DVD technology has made it more user friendly and more
      affordable. Unit growth for DVD was up 26% in 2004, with a corresponding unit
      decline of 20% for VHS. In the United States, the market for children’s
      non-theatrical DVDs is growing substantially faster than the overall DVD
      market.





**Business
      Overview**


The
      Content group consists of the operations of Corus’ wholly-owned subsidiary,
      Nelvana, an integrated children’s production and distribution company that
      develops, produces, markets and distributes quality animated branded media
      content and related products for children worldwide. Its brand portfolio
      includes internationally recognized animated characters such as *Babar,
      Franklin, The Backyardigans, Miss Spider’s Sunny Patch Friends,* and *The
      Berenstain Bears* .
      Kids Can Press, a Canadian publisher of children’s books, is a wholly-owned
      subsidiary of Nelvana. Nelvana’s operations consist of the production and
      distribution of film and television programs, and the sale and licensing of
      related products.








16





*Production
      and Distribution*




Nelvana
      is an animation production and distribution company specializing in children’s
      and youth programming for television. Nelvana distributes programming to
      broadcasters in over 180 countries, including some of the world’s leading
      networks, such as Nickelodeon, the Disney Channel, HBO, ITV in the United
      Kingdom and France 3. Nelvana has 72 television programs licensed in Canada,
      and
      54 in the United States. Nelvana’s production facility in Toronto houses
      state-of-the-art 2D and 3D digital animation technology as well as traditional
      animation capabilities. Programming is distributed internationally through
      five
      sales and distribution offices.





In
      2002, in response to a leaner marketplace, Nelvana committed to reducing cash
      flow requirements with the goal of achieving operating cash flow neutrality
      within one year while continuing to grow its library. This was successfully
      achieved. In the last three years, Nelvana’s production slate has ranged between
      110 to 150 new episodes, well below the 252 episodes peak reached in fiscal
      2002. This amount of production maintained Nelvana’s leadership position in the
      industry while reducing cash flow requirements to produce the year’s slate.
      Following are some highlights from the production and distribution business
      in
      fiscal 2005:





•
            Launched
                Vortex on Demand, a VOD service for Kids 6-12, on Comcast ON
                DEMAND


•
            Produced
                14 episodes of*The
                Backyardigans*,
                a series which airs on Nickelodeon in the United States and on Treehouse
                TV in Canada


•
            Produced
                21 episodes of*Jacob
                Two Two,*which airs on YTV, bringing the total to 52
                episodes


• Produced
      25 episodes of *6Teen,* which air on TELETOON  in Canada


•
            Produced
                a second*Care
                Bears*CGI direct-to-video,*The
                Big Wish*,
                which is being distributed by Lions Gate
                Entertainment


•
            Launched
                the*Treehouse
                Presents*and*Teletoon
                Presents*,
                home entertainment series in Canada





At
      August 31, 2005, Nelvana’s program library totaled over 2,770 half-hour
      equivalent episodes, comprising 67 animated television series, 18 specials,
      17
      animated feature length films and 12 live action series. Children’s animated
      programs generally have longer life spans than those of live action programs
      because they can typically be resold continually to new generations of audiences
      around the world. The United States is the biggest market, accounting for 31.8%
      of production and distribution revenues in fiscal 2004, compared to 26.6% from
      the Canadian market and 41.6% from other countries.





*Merchandising*





Nelvana’s
      merchandising business contains some of Nelvana’s most popular characters,
      including *Beyblade,
      Rescue Heroes, Babar, Miss Spider’s Sunny Patch Friends* and *Franklin* ,
      which have achieved recognition and popularity worldwide and have become
      valuable long-term merchandising brands. Nelvana’s merchandising efforts focus
      on marketing its most popular brands and co-ordinating with retailers to promote
      its character merchandise in North America and around the world. Nelvana
      acquires brands from which it produces media content and becomes either the
      licensor or agent, on behalf of the owner of the property, for most product
      categories, including toys, plush, apparel, gifts, book publishing and
      interactive products. Highlights in fiscal 2005 include the
      following:





•
            *Franklin*merchandise sold well in France in fiscal
                2005


•
            Nelvana
                signed several new licensing deals for*Miss
                Spider’s Sunny Patch Friends*which will hit store shelves for Christmas
                2005





*Publishing*





Nelvana’s
      publishing business is conducted through its subsidiary Kids Can Press, acquired
      in 1998. Kids Can Press is the largest Canadian-owned English language publisher
      of children’s books with a broad and growing backlist of titles. Highlights of
      the Kids Can Press catalogue include:





17








• *Franklin* -
      more than 60 million books sold worldwide. *Franklin* is
      taking Europe by storm. New and recent product lines launched in North America
      include *Franklin
      First Readers* and *Franklin
      Workbooks* which focus on the educational market;





• *The
      Plague* -
      the second book in the trilogy, *Feather
      and Bone: The Crow Chronicles* ,
      was released in August 2005. The first book in the trilogy, *The
      Mob* ,
      is also being developed into an animated feature with award-winning animator
      Chris Landreth and will be produced by Nelvana.





**Operating
      Strategy**


The
      operating strategy for Nelvana is based on the diversification of revenue
      streams. In a marketplace where dependence on worldwide broadcast license fees
      is no longer viable, Nelvana is seeking to maximize revenue from all streams
      including:





• Broadcasting
      (traditional and new platforms);


• Merchandise
      licensing;


• Publishing;


• Home
      entertainment;


• Interactive;
      and


• Music





To
      capitalize on the dominance that Nelvana enjoys in the kids broadcast market
      in
      Canada, Nelvana is putting a “Made in Canada” strategy into effect. This
      strategy will see Nelvana covering the hard costs of production in Canada.
      Nelvana will optimize brand success by aligning all of Corus’ resources, both
      broadcasting and merchandising, to establish great ratings which will drive
      strong consumer product performance. The success in Canada can then be used
      to
      roll the brand out worldwide.





Nelvana
      will focus on the strong near-term revenue growth potential of the home
      entertainment market. With the worldwide DVD business expected to double by
      2008, Nelvana is in a perfect position to exploit this market with a strong
      catalogue of existing titles and titles in production. As well, home
      entertainment products will drive significant merchandise sales in North
      America’s major retailers.





Many
      existing outlets are expanding and new markets are emerging for branded
      children’s content. As the marketplace changes with new distribution platforms,
      Nelvana is investigating how this new technology can benefit the Corus stable
      of
      shows. Many of these distribution platforms - VoD, SVoD, cell phones and
      broadband - are in the early stages and are not expected to generate significant
      revenue for at least five years. Nelvana is in dialogue with all of the major
      strategic players in the On-Demand space including Comcast, Microsoft, Yahoo
      and
      Sony in order to determine the best fit for Corus’ properties.





This
      ever growing number of outlets for the distribution of children’s content
      creates a need for Nelvana to be focused on rights management. We need to ensure
      that the best deals are being made for Corus to protect Nelvana and allow us
      to
      explore and exploit all of the new emerging distribution platforms that are
      arising.




**Competition**


The
      business of producing and distributing children’s television programs is highly
      competitive. We compete with a variety of international companies, including
      HIT
      Entertainment, DIC, 4KIDS, and several U.S. studios such as the Walt Disney
      Company, Warner Bros., and Nickelodeon (a division of Viacom International
      Inc.). These U.S. studios are substantially larger, and have greater financial
      resources. Many have their own television networks on which their in-house
      productions are aired. In Canada, Corus also competes with several domestic
      producers and distributors such as Cookie Jar Corp. and Decode Entertainment
      Inc.











18





**ADDITIONAL
      INFORMATION CONCERING CORUS’ BUSINESSES**





*a)*  *Intangible
      Properties*





Corus
      uses a number of trademarks, service marks and official marks for its products
      and services. Many of these brands and marks are owned and registered by Corus,
      and those trademarks that are not registered are protected by common law. Corus
      also licenses certain marks from third parties. Corus has taken affirmative
      legal steps to protect its owned and licensed trade marks, and Corus believes
      its trademark position is adequately protected. The exclusive rights to
      trademarks depends upon the Company’s efforts to use and protect these and Corus
      do so vigourously.





Distribution
      rights to television programming and motion pictures as well as ancillary rights
      are granted legal protection under the copyright laws and other laws of Canada,
      the United States and most foreign countries. These laws impose substantial
      civil and criminal sanctions for the unauthorized duplication and exhibition
      of
      television programming. Corus believes that it takes, and plans to continue
      taking, all appropriate and reasonable measures to secure, protect and maintain
      or obtain agreements from licensees to secure, protect and maintain copyright
      and other legal protections for all of the television programming produced
      and
      distributed by Corus under the laws of all applicable
      jurisdictions.




Corus
      can give no assurance that its actions to establish and protect Corus trademarks
      and other proprietary rights will be adequate to prevent imitation or copying
      of
      its filmed and animated entertainment by others or to prevent third parties
      from
      seeking to block sales of its filmed and animated entertainment as a violation
      of their trademarks and proprietary rights.





Moreover,
      Corus can give no assurance that others will not assert rights in, or ownership
      of, its trademarks and other proprietary rights, or that Corus will be able
      to
      successfully resolve these conflicts. In addition, the laws of certain foreign
      countries may not protect proprietary rights to the same extent as do the laws
      of the United States and Canada.





Corus
      also licenses copyright materials either by way of direct contracting or through
      blanket licensing regimes. The tariffs for blanket licenses are established
      by
      the Copyright Board in Canada. Although the amount of a blanket license is
      set
      by this third party regulator, the system provides certainty as to cost and
      also
      a modicum of immunity from claim for innocent infringements due to the
      presumptions of right to use works that flow with the imposition of these
      tariffs.





The
      Company operates a comprehensive clearance and rights management system to
      both
      protect its rights and to ensure that works that Corus uses have the requisite
      clearances or licences from the owners. A key element of contracts for copyright
      works is the term or time period of the licence granted which in the
      broadcasting sector can vary but usually is or for a time period such as one
      to
      three years. In some circumstances the time period is combined with a right
      to
      only a certain number of “plays” or broadcasts.





*b)
      Seasonality and Cycles*





Corus’
      operating results are subject to seasonal fluctuations that can significantly
      impact quarter-to-quarter operating results. Accordingly, one - quarter’s
      operating results are not necessarily indicative of what a subsequent quarter’s
      operating results will be. Corus’ broadcasting businesses (Radio and Television)
      and the Content business each has unique seasonal aspects.





For
      the Company’s broadcasting businesses, operating results are dependent on
      general advertising and retail cycles associated with consumer spending
      activity. Accordingly, operating results for the first quarter tend to be the
      strongest, reflecting pre-Christmas advertising activity, and the second quarter
      tends to be the weakest, consistent with lower consumer spending in winter
      months.





For
      Corus’ Content business, operating results are dependent on the timing and
      number of television programs made available for delivery in the period, as
      well
      as timing of merchandising royalties received, none of which can be predicted
      with certainty. Consequently, Content’s operating results may fluctuate
      significantly from quarter to quarter. Cash flows may also fluctuate and are
      not
      necessarily closely related to revenue recognition.





19








*c)
      Economic Dependence*





Corus’
      operating results for the Company’s broadcasting businesses are not dependent
      upon any single customer or upon a few customers with respect to revenues from
      advertisers.





Corus’
      broadcasting businesses are dependent upon on-air talent to provide quality,
      consistent programming to attract advertisers. All on-air talent is under
      contractual obligations to the Company.





Corus
      Television’s premium television services in the West are solely dependent on
      subscriber fees. The major Broadcast Distribution Units are Rogers, Shaw,
      Cogeco, BEV, Videotron and Star Choice.





The
      Company’s regulated properties operate in a competitive environment with both
      regulated and unregulated competitors. Although entry by new competitors into
      the Company’s markets is slowed by the regulatory process, new competition
      always poses a risk to the Company’s revenue streams. The regulatory environment
      is more fully explained below.





*d)
      Environmental*





Corus’
      operations do not have any significant impact on the environment. Corus has
      not
      made, and does not anticipate making, any significant capital expenditures
      to
      comply with environmental regulations.





*e)
      Employees*





As
      at August 31, 2005, Corus had approximately 2,086 full-time employees.  The
      Company operates in a non-union environment except for: 178 employees in
      specialty and conventional television and radio and 58 employees in its premium
      television operations who are members of the Communications, Energy and
      Paperworkers Union of Canada; 38 employees in Quebec radio operations who are
      members of the Syndicat Général de la Radio; 12 employees in Quebec radio
      operations who are members of the Centrale Syndicat Nationale; six employees
      in
      Quebec radio operations who are members of the Independent Syndicat; and 32
      employees in Quebec operations who are members of the Syndicat Canadien de
      la
      Fonction Publique.





There
      are 136 Corporate employees, 1,140 Radio employees of which 158 are unionized,
      496 TV employees of which 166 are unionized and 314 Content
      employees.





*f)
      Foreign Operations*





A
      significant portion of the revenues in the Content division are in currencies
      other than Canadian dollars and therefore subject to fluctuation in exchange
      rates. Approximately 9% of Corus’ consolidated revenues for the year ended
      August 31, 2005 was derived from foreign operations.





*g)
      Lending*





Corus
      does not have any lending operations as a distinct or significant business.
      Corus does, however, provide financing through loans to its digital channels,
      loans to privately owned Canadian media companies and has outstanding loans
      to
      executive officers. Corus may make loan investments in companies involved in
      the
      media sector of up to $5 million with the approval of the CEO or the CFO and
      more than $5 million with the approval of the Executive Committee of the Board
      of Directors. Outstanding loans to executive officers were granted prior to
      July
      31, 2002.





20








*h)
      Bankruptcy*





There
      have been no bankruptcies, receiverships or similar proceedings against Corus
      or
      any of its subsidiaries within the past three years.





*i)
      Reorganizations*





There
      have been no material reorganizations at Corus or any of its subsidiaries within
      the past three years.





*j)
      Social or Environmental Policies*





**Code
      of Ethics**


Corus
      is committed to fair dealing, honesty and integrity in all aspects of its
      business conduct. The Company takes its responsibility to its employees,
      shareholders and other stakeholders very seriously. The Company’s Code of
      Business Conduct (the “Code”) aims to demonstrate to its stakeholders and the
      public the Company’s commitment to conduct itself ethically.





The
      Code applies to all employees and members of the Board of Directors of Corus
      and
      its subsidiary companies. For purposes of rules promulgated under Section 406
      of
      the *Sarbanes
      Oxley Act of 2002* ,
      portions of this Code shall comprise the Company’s “code of ethics” for senior
      executives and financial officers. The Code of Ethics is available on the Corus
      Entertainment website at www.corusent.com under “Investor
      Information.”





*k)
      Risk Factors*





A
      discussion of risk affecting the Company and its business is set forth under
      the
      heading “Risks and Uncertainties” in the Management’s Discussion and Analysis
      for the year ended August 31, 2005, as contained on pages 32-36 of the Company’s
      2005 Annual Report, which discussion is incorporated by reference herein. In
      addition, the Company is subject to the risks and uncertainties set forth below.





This
      description of risks does not include all possible risks, and there may be
      other
      risks of which the Company is currently not aware.





*Control
      of Corus by the Shaw family*





JR
      Shaw and members of his family and the corporations owned and controlled by
      JR
      Shaw and members of his family (the “JR Shaw Group”) currently own 84.2% of the
      outstanding Class A participating shares in the capital of Corus. The Class
      A
      participating shares are the only shares entitled to vote in all circumstances.
      All of the Class A participating shares held by the JR Shaw Group are subject
      to
      a voting trust agreement entered into by such persons. The voting rights with
      respect to such Class A participating shares are exercised by the representative
      of a committee of three trustees. Accordingly, the JR Shaw Group is, and as
      long
      as it owns a majority of the Class A participating shares will continue to
      be,
      able to elect a majority of the Board of Directors of Corus and to control
      the
      vote on matters submitted to a vote of Shaw’s Class A participating
      shareholders.





**CANADIAN
      COMMUNICATIONS INDUSTRY**


**REGULATORY
      ENVIRONMENT**





**Canadian
      Radio-television and Telecommunications Commission**





Under
      the *Broadcasting
      Act* (Canada), the CRTC is responsible for regulating and supervising all aspects
      of
      the Canadian broadcasting system with a view to implementing broadcasting policy
      objectives set forth in the *Broadcasting
      Act* .





Changes
      in the regulation of Corus’ business activities, including decisions by
      regulators affecting the Company’s operations (such as the granting or renewal
      of licenses; decisions as to the rights to programming licenses to competitors
      in the Company’s markets) or changes in interpretations of existing regulations
      by courts or





21





regulators,
      could adversely affect the Company’s results of operations. The Company’s CRTC
      licenses must be renewed from time to time and cannot be transferred without
      regulatory approval.





Since
      1996, the CRTC has been implementing a competitive policy framework and has
      focused its attention on strengthening the creation of Canadian content and
      programming.





The
      current objectives of the CRTC, as articulated in its 1997 Vision Statement
      and
      revised in May 1998, are to:





• promote
      an environment in which existing and new communications services are available
      to Canadians;


• ensure
      a strong Canadian presence in content that fosters creative talent and reflects
      Canadian society, including its linguistic duality and cultural
      diversity;


• promote
      choice and diversity of high-quality communications services; and


• to
      foster strong competitive and socially responsive communications
      industries.





On
      April 1, 2004, the CRTC issued its so-called “CRTC 3-Year Work Plan” which
      included four objectives for the broadcasting sector which expand upon the
      aforementioned Vision Statement:





1.
            Increased
                availability of Canadian content and programming that reflects Canadian
                creative talent and Canada’s linguistic duality, cultural diversity and
                social values, as well as its national, regional and community
                characteristics.


2.
            Increased
                access to a variety of innovative, high-quality communications services,
                at reasonable prices, that meet consumers’ needs and reflect their
                values.


3.
            A
                sustainable competitive Canadian communications
                industry.


4.
            Commission
                processes that are fair, transparent and
                effective.





**Industry
      Canada**





The
      technical aspects of the operation of radio and television stations in Canada
      are also subject to the licensing requirements and oversight of Industry Canada,
      a Ministry of the Government of Canada.





**Restrictions
      on Non-Canadian Ownership**





The
      legal requirements relating to Canadian ownership and control of broadcasting
      undertakings are embodied in a statutory order (the “Order”) from the Governor
      in Council (i.e. Cabinet of the Canadian federal government) to the CRTC. The
      Order is issued pursuant to authority contained in the *Broadcasting
      Act* .
      Under the Order, non-Canadians are permitted to own and control, directly or
      indirectly, up to 33 1/3% of the voting shares and 33 1/3% of the votes of
      a
      holding company which has a subsidiary operating company licensed under the *Broadcasting
      Act* .
      In addition, up to 20% of the voting shares and 20% of the votes of the
      operating licensee company may be owned and controlled, directly or indirectly,
      by non-Canadians. The Order also provides that the Chief Executive Officer
      and
      80% of the members of the board of directors of the operating company must
      be
      Canadian. In addition, where the holding company is less than 80%
      Canadian-owned, the holding company and its directors are prohibited from
      exercising any control or influence over the programming decisions of a
      subsidiary operating company. There are no restrictions on the number of
      non-voting shares that may be held by the non-Canadians at either the holding
      company or licensee operating company level. The CRTC, however, retains the
      discretion under the Order to determine as a question of fact whether a given
      licensee is controlled by non-Canadians.





The
      Company’s articles currently give its Board of Directors the authority to
      restrict the issue, transfer and voting of its Class A participating shares
      and
      the transfer of its Class B non-voting participating shares for the purpose
      of
      ensuring that Corus remains qualified to hold or obtain licenses to carry on
      any
      broadcasting or programming business.





**Broadcasting
      Services**





Corus’
      radio stations and local television undertakings, specialty and premium
      television networks and pay audio services are subject to licensing and
      regulation by the CRTC. The *Broadcasting
      Act* gives the CRTC the power to issue and renew broadcasting licenses for a maximum
      term of seven years. Historically, all licenses issued by the





22





CRTC
      have been consistently renewed except where there have been serious breaches
      of
      license conditions or regulations, in which case the licenses have been renewed
      for less than seven years, or, in a very limited number of instances, not at
      all. In order to conduct its business, Corus maintains its licenses in good
      standing and are in material compliance with conditions of license and
      regulatory requirements. All licenses held by Corus are in good standing and
      the
      CRTC has never declined to renew a license held by any broadcasting undertaking
      in which Corus holds an ownership interest.





Licenses
      issued by the CRTC generally sets out the terms and conditions of the
      broadcaster’s program offering, including Canadian content expenditures,
      Canadian exhibition requirements and signal delivery terms for Corus’ specialty,
      premium television and pay audio services. The CRTC also imposes restrictions
      on
      the transfer of ownership and effective control of all licensed broadcasting
      undertakings. Transferees of ownership or control of a licensed undertaking
      must
      demonstrate to the CRTC that the transfer is in the public interest, and the
      purchaser is required, in most instances, to provide a specific package of
      tangible benefits designed to benefit the Canadian broadcasting system. For
      transfer of ownership applications involving profitable radio stations, tangible
      benefits are required to represent a financial contribution equal to 6% of
      the
      purchase price and for acquisitions of television, or specialty or premium
      television network services, a financial contribution of 10% of the value of
      the
      transaction is expected.





The
      CRTC’s regulations that apply to radio, conventional television and specialty
      and premium television services require these broadcasting undertakings to
      obtain the prior approval of the CRTC in respect of any act, agreement or
      transaction that, directly or indirectly, would result in (i) a change in the
      effective control of a broadcasting undertaking; or (ii) a person together
      with
      any associate acquiring control of 30% or more of the issued voting securities,
      or 50% or more of the common shares, of a broadcasting undertaking or (iii)
      of a
      person that has, directly or indirectly, effective control of that broadcasting
      undertaking.





**Radio
      Undertakings**





The
      CRTC no longer regulates the formats of commercial FM radio stations except
      in
      the case of “specialty” radio licenses which, by definition, requires that (i)
      the language of broadcast is neither French nor English; (ii) more than 50%
      of
      the programming is spoken word; or (iii) less than 70% of the musical selections
      broadcast are not pop, rock, dance, country or country-orientated selections.
      For non-specialty format FM stations, the CRTC continues to require that less
      than 50% of the musical selections broadcast each week be “hits” which are
      defined in English markets as any selection which, prior to December 31, 1980,
      achieved a Top 40 position in any of the charts recognized by the CRTC. Each
      commercial station is required to make a contribution to Canadian talent
      development initiatives ranging from an annual payment of $27,000 for major
      market stations to $400 for small market stations.





On
      April 30, 1998, the CRTC announced certain changes to its commercial radio
      policy. By regulation, the CRTC increased Canadian popular music content levels
      broadcast to 35%. For French-language radio stations, at least 65% of popular,
      vocal music selections must be in the French language. The CRTC also changed
      ownership restrictions on the number of stations that could be owned within
      a
      particular market. The ownership changes allow a single owner to operate up
      to
      three stations provided only two are in the same band, in a given language
      in
      smaller markets and, in markets with eight or more commercial stations in a
      given language, one owner may hold up to two AM stations and two FM stations.
      In
      assessing transactions involving a change in control or ownership, the CRTC
      has
      stated it will examine the impact on diversity of news voices, the level of
      competition and, if the applicant has equity holdings in other local radio
      stations or media, cross-media ownership levels in a given market. Under its
      new
      policy, the CRTC also stated that it would no longer apply market entry criteria
      in assessing applications for new radio services in a particular market. Radio
      broadcasters derive substantially all of their revenues from advertising
      revenues. There is no regulatory limit on the number of commercials that can
      be
      broadcast. In markets with more than one commercial FM station, FM licensees
      are
      required to broadcast at least 42 hours per week of local programming in order
      to access local advertising. The CRTC will be conducting a review of its 1998
      commercial radio policy in 2005 following its consideration of applications
      seeking a license to operate a satellite radio service in Canada.








23





**Specialty
      and Premium Television Networks Undertakings**





Specialty
      and premium television networks each have varying Canadian programming and
      expenditure requirements set by a condition of license. These requirements
      depend on a number of factors, including the nature of the service and the
      types
      and availability of programming offered. The Canadian content conditions of
      license are reviewed by the CRTC at the time that the networks renew their
      licenses. Licensees are also required to make financial contributions to the
      creation of Canadian programming which is imposed by condition of
      license.





Specialty
      television networks derive substantially all of their revenues from subscription
      and advertising revenues. Premium television networks derive their revenues
      from
      subscriptions and by regulation are required to be commercial free. The CRTC
      generally requires cable and DTH satellite distributors to carry all licensed
      specialty and premium television networks appropriate to the markets in which
      they are distributed with the exception of Category 2 digital services as
      described below. The maximum wholesale subscriber fee that can be charged to
      subscribers for the carriage of the service is regulated if it is carried as
      part of the basic service, but is not regulated if it is carried on an extended
      or discretionary tier. Subscriber fees payable to premium television network
      licensees are not regulated by the CRTC.





On
      November 24, 2000, the CRTC announced that it would license 16 new
      English-language and five French-language digital programming services for
      mandatory distribution on a digital basis known as Category 1 services. The
      CRTC
      stated that all Category 1 services must commence operation on or before
      November 24, 2001, but subsequently extended this date until September 30,
      2002
      for certain of the French-language Category 1 services. An additional 262
      Category 2 digital services were also approved by the CRTC for distribution
      on a
      digital basis and continue to be licensed by the CRTC. Category 2 services
      may
      be competitive with one another but may not be directly competitive with an
      existing licensed analog specialty or premium television network or a Category
      1
      digital service. Category 2 services have no guaranteed distribution rights
      except that, if a cable or DTH satellite operator carries a Category 2 service
      in which it or an affiliate owns more than 10% of the issued equity, it must
      distribute at least five non-related Category 2 services for each related
      service carried. The Category 2 services licensed in the fall of 2000 were
      required to implement service no later than November 24, 2004, unless the CRTC
      approves an extension before that date.





New
      applications for Category 2 services are considered on an ongoing
      basis.





**Local
      Television Undertakings**





The
      CRTC reviewed its policies and regulations pertaining to Canadian television,
      primarily as they affect local broadcasters, and, on June 11, 1999, issued
      a new
      policy entitled “Building on Success - A Policy Framework for Canadian
      Television”. This policy introduced changes to the regulatory environment in an
      attempt to provide more flexibility and diversity for broadcasters while still
      providing a predominant amount of Canadian programming content.





Under
      this new policy, Canadian content levels for conventional private television
      broadcasters will remain at 60% overall and 50% in prime time. As part of its
      new policy, the CRTC also announced that it would not require licensees to
      make
      quantitative commitments to local news programming but would require licensees
      to demonstrate how they intend to respond to the demands of local viewers as
      part of a license renewal application. The CRTC retained its policy of requiring
      the provision of local programming in order to access local advertising. The
      CRTC also retained the existing 150% dramatic programming credit for stations
      not part of a large multi-stations group applicable to Canadian programming
      in
      the calculation of Canadian content requirements. As of September 1, 2000,
      the
      CRTC eliminated the Canadian programming expenditure requirements and the
      expectations that had been imposed on stations. As well, in a departure from
      past practice, the renewal of all conventional television licenses held by
      an
      ownership group is considered at the same hearing.





**Pay
      Audio Services**





Pay
      audio musical programming services provided to residential Canadian subscribers
      by broadcast distribution undertakings are licensed and regulated by the CRTC.
      The CRTC has established an open licensing framework and has imposed identical
      requirements on each licensee regarding Canadian content and French-language
      selection requirements. Canadian-originated pay audio channels may be linked
      on
      a 1:1 basis with foreign-originated channels.








24





The
      CRTC has also imposed access requirements in the *Broadcasting
      Distribution Regulations* for third party pay audio services. If a Class 1 cable licensee distributes
      a
      pay audio service in which it or an affiliate controls 30% or more of the issued
      shares of the pay audio licensee, the Class 1 cable licensee is required to
      distribute at least one other third party pay audio service.





**Cable
      Advertising Services**





Still
      image and teleshopping advertising services are exempted from having to hold
      a
      CRTC license. If the CRTC is satisfied that the licensing of an undertaking
      will
      not contribute in a material manner to the implementation of the broadcasting
      policy outlined in the *Broadcasting
      Act* ,
      it shall exempt such undertaking from licensing requirements. The CRTC has
      issued a number of exemption orders which allow an undertaking to be operated
      without a license, provided it satisfies any terms and conditions contained
      in
      the particular order. Still image and teleshopping cable advertising services
      operate under the terms of exemption orders.





**Canadian
      Content Requirement for Broadcasters**





As
      mentioned previously, Canadian conventional television services, specialty
      television networks and premium television networks are required to devote
      a
      certain amount of their programming schedules to Canadian productions. These
      requirements provide support to the market for Canadian programs (such as the
      ones produced through Nelvana) as long as they qualify as Canadian programs
      for
      purposes of the Canadian Audio Visual Certification Office (“CAVCO”) as an
      officially recognized co-production or the CRTC.





CAVCO
      and the CRTC determine the criteria for qualification of a program as
“Canadian”. Generally, a program will qualify if it is produced by an individual
      Canadian producer with the involvement of individual Canadians in principal
      functions, and where a substantial portion of the budget is spent on Canadian
      elements. In addition, the Canadian producer must have full creative and
      financial control of the project.





**Film
      and Television Tax Credits and Grants**





Nelvana
      generally receives various federal and provincial tax credits on its television
      series and feature films, which typically provide benefits of between 10% and
      25% of the Canadian production budget. These tax credits are calculated on
      the
      basis of each individual production.





Nelvana
      is also eligible to receive additional funding for its productions from various
      Canadian industry funding sources including the Canadian Television Fund and
      Telefilm Canada in respect of feature films. However, given the limited
      resources of these programs, Nelvana has no assurance that it will obtain these
      funds for future productions.





**International
      Treaty Co-Productions**





Canada
      is a party to co-production treaties with many countries throughout the world,
      excluding the United States. These international co-production treaties allow
      for the reduction of the risks of production by permitting the pooling of
      creative, technical and financial resources of Canadian producers with
      non-Canadian producers under prescribed conditions. Canadian co-production
      treaty partners include China, France, Great Britain, Germany, New Zealand
      and
      Australia. A production that qualifies as a co-production for treaty purposes
      is
      considered to be a domestic product in each of the participating countries
      and,
      as such, is entitled to many aspects of national treatment in each country.
      More
      specifically, the co-production usually qualifies for domestic treatment under
      applicable broadcasting legislation and certain government subsidies. The
      co-producers jointly hold the copyright in the production. Sharing of foreign
      revenues is based on the respective contribution of each co-producer, subject
      to
      negotiation between the co-producers and approval by the appropriate government
      authorities. Many of Nelvana’s productions are produced through international
      treaty co-productions.





**Competition
      Act Requirements**





The
      Commissioner of Competition has the authority pursuant to the *Competition
      Act* (Canada) to inquire into mergers and apply to the Competition Tribunal for
      remedial orders, including an order blocking a merger, where





25





the
      Commissioner determines the merger is or will likely prevent or lessen
      competition substantially in a market. To facilitate the Commissioner’s review
      of mergers, parties to a merger transaction are required to pre-notify the
      Commissioner of Competition prior to completing the transaction when specified
      party and transaction-size thresholds are satisfied. For example, in the case
      of
      an asset purchase, a transaction is notifiable if the parties to the
      transaction, together with their affiliates, have assets in Canada or annual
      gross revenues from sales in, from or into Canada that exceed $400 million
      and
      if the aggregate value of the Canadian assets to be acquired or annual gross
      revenues from sales in or from Canada generated from those assets exceed $50
      million.





Ownership
      transfers of licensed broadcasting undertakings exceeding these financial
      thresholds thus require the approval of both the CRTC and the Commissioner
      of
      Competition according to their respective statutory mandates. The two
      authorities could come to different conclusions on a given transaction. For
      example, the CRTC could approve a broadcasting company’s acquisition of radio
      stations as being in accordance with its commercial radio policy whereas the
      Commissioner of Competition might conclude that the acquisition would
      substantially lessen competition in the market or markets under consideration.





**Investment
      Canada Act**





Under
      the *Investment
      Canada Act* (“ICA”), certain transactions which involve the acquisition of control of a
      Canadian business by a non-Canadian require the approval of the Canadian
      government. The Ministry of Industry (Canada) is responsible for reviewing
      proposed acquisitions of control of Canadian businesses by non-Canadians.
      However, where the Canadian business is a “cultural business”, the proposed
      acquisition would also be subject to review by the Minister of Canadian
      Heritage. Cultural businesses include those involved in the publication,
      distribution or sale of books, magazines, periodicals and newspapers, as well
      as
      businesses involved in the production and distribution of film and video
      recordings, audio and video music recordings. Radio, television and cable
      television broadcasting undertakings are also considered “cultural businesses”
under the ICA, but they are also the subject of other, more stringent, Canadian
      ownership and control regulations under the *Broadcasting
      Act,* as discussed above.





Before
      an acquisition of a “cultural business” by a non-Canadian can be completed, the
      non-Canadian must be able to demonstrate that the proposed acquisition is likely
      to be of “net benefit to Canada”. In determining whether this test has been met,
      the Minister of Canadian Heritage is required to take into account a number
      of
      factors outlined in the ICA, including compatibility with Canada’s cultural
      policy objectives, as well as any applicable government policies and any written
      undertakings that may have been given by the non-Canadian investor.





**Copyright
      Act Requirements**





Corus’
      radio, conventional television, specialty television, premium television and
      pay
      audio service undertakings rely upon licenses under the *Copyright
      Act* (Canada) in order to make use of the music component of the programming and
      other uses of works used or distributed by these undertakings. Under these
      licenses, Corus is required to pay a range of royalties established by the
      Copyright Board pursuant to the requirements of the *Copyright
      Act* to
      collecting societies (which represent the copyright owners) and individual
      copyright owners. These royalties are paid by these undertakings in the normal
      course of their business.





The
      levels of the royalties payable by Corus are subject to change upon application
      by the collecting societies and approval by the Copyright Board. The Government
      of Canada may, from time to time, make amendments to the *Copyright
      Act* to implement Canada’s international treaty obligations and for other purposes.
      Any such amendments could result in Corus’ broadcasting undertakings being
      required to pay additional royalties for these licenses. **








26





**DIVIDEND
      POLICY**





*(a)
      Dividend Policy*





The
      Company’s dividend policy is reviewed regularly by the Board of Directors of
      Corus. In general, subject to the rights of any preferred shares outstanding
      from time to time, 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, if, as and when any such
      dividends are declared and paid. In accordance with the terms and conditions
      of
      such shares, the dividends (other than stock dividends) declared and paid on
      the
      Class A Voting Shares shall be $0.01 per share per annum less than the dividends
      declared and paid to holders of the Class B Non-Voting Shares. See the
      information under the heading “Capital Structure - Description of Capital
      Structure - Class Voting A Shares and Class B Non-Voting Shares”.





*(b)
      Restrictions on Payment of Dividends*





Covenants
      under Corus’ credit agreement with a syndicate of Canadian banks, as amended and
      restated on January 31, 2005, may restrict Corus’ ability to pay dividends
      should Corus fail to achieve certain financial ratios and/or financial
      performance or if an event of default has occurred and is continuing or would
      result from the payment of the dividend.





A
      covenant under the indenture pursuant to which Corus’ 83⁄4% Senior Subordinated
      Notes due 2012 were issued also restricts Corus’ ability to pay dividends. The
      covenant, referred to as the “Restricted Payments Covenant”, limits dividends
      (and other Restricted Payments as defined in the indenture) to a cumulative
      amount that does not exceed the greater of US$ 10.0 million or the sum of,
      among
      other things, 50% of the cumulative Consolidated Net Income of Corus and its
      Restricted Subsidiaries from the beginning of the fiscal quarter beginning
      December 1, 2001 and ending on the last day of the most recent fiscal quarter
      preceding the date of the proposed Restricted Payment (or if such cumulative
      Consolidated Net Income is a loss, then 100% of such loss). As at August 31,
      2005 the US$ 10.0 million limit is in effect.





*(c)
      Distribution Rates and Payment Dates*





The
      annual distribution rates on securities of the Company and payment dates for
      the
      fiscal year ended August 31, 2005, as well as the annual dividend payments
      for
      the past three fiscal years, are set forth in the tables below.





***Fiscal
      2005 Distribution Rates and Payment Dates***





**Security**
            
            **Distribution
                Rate**
            
            **Payment
                Date**Class
                A Voting Shares
            
            
            $0.045
                  per share
            
            
            June
                30, 2005$0.020
                per share
            
            
            December
                31, 2004Class
                B Non-Voting Shares
            
            
            $0.050
                  per share
            
            
            June
                30, 2005$0.025
                per share
            
            
            December
                31, 2004




***Annual
      Dividend Payments (Fiscal 2003 - Fiscal 2005)***





**Security**
            
            **Fiscal
                2005**
            
            **Fiscal
                2004**
            
            **Fiscal
                2003**Class
                A Voting Shares
            
            $
            0.065
            
            $
            0.040
            
            
            nilClass
                B Non-Voting Shares
            
            $
            0.075
            
            $
            0.050
            
            
            nil














27





**CAPITAL
      STRUCTURE**





**Description
      of Capital Structure**





*(a)
      General*





The
      authorized share capital of Corus consists of an unlimited number of Class
      A
      participating shares (“Class A Voting Shares”); an unlimited number of Class B
      non-voting participating shares (“Class B Non-Voting Shares”) (and, together
      with the Class A Voting Shares, the “Corus Shares”); an unlimited number of
      Class 1 preferred shares (the “Class 1 Preferred Shares”), issuable in series;
      an unlimited number of Class 2 preferred shares (the “Class 2 Preferred
      Shares”), issuable in series; and an unlimited number of Class A preferred
      shares (the “Class A Preferred Shares”). As at August 31, 2005, there were
      1,724,929 Class A Voting Shares, 41,078,119 Class B Non-Voting Shares and no
      preferred shares outstanding.





*(b)
      Class A Voting Shares and Class B Non-Voting Shares*





*(i)*
            *Authorized
                Number of Shares*





The
      authorized number of Class A Voting Shares and Class B Non-Voting Shares is
      unlimited. No Class A Voting Shares, however, shall be issued unless the prior
      written consent of holders of no fewer than two-thirds of the then outstanding
      Class A Voting Shares is obtained.





*(ii)*
            *Voting
                Rights*





The
      holders of Class A Voting Shares are entitled to one vote per share at all
      meetings of shareholders. The holders of Class B Non-Voting Shares are entitled
      to receive notice of, to attend, and to speak at all meetings of shareholders
      but are not entitled to vote thereat except as required by law and except upon
      any resolution to authorize the liquidation, dissolution or winding up of Corus
      or the distribution of assets among its shareholders for the purpose of winding
      up its affairs, in which event each holder of Class B Non-Voting Shares will
      be
      entitled to one vote per share.





*(iii)*
            *Dividends*





In
      general, subject to the rights of any preferred shares outstanding from time
      to
      time, holders of Class A Voting Shares and Class B Non-Voting Shares are
      entitled to receive such dividends as the Board of Directors of Corus determines
      to declare on a share-for-share basis, as and when any such dividends are
      declared or paid, except that, during each Dividend Period (as defined below),
      the dividends (other than stock dividends) declared and paid on the Class A
      Voting Shares will always be $0.01 per share per annum less than the dividends
      declared and paid in such Dividend Period to holders of the Class B Non-Voting
      Shares, subject to proportionate adjustment in the event of any future
      consolidations or subdivisions of Corus Shares and in the event of any issue
      of
      Corus Shares by way of stock dividends. A “Dividend Period” is defined as the
      fiscal year of Corus or such other period not exceeding one year in respect
      of
      which the directors of Corus have an announced current policy to declare and
      pay
      or set aside for payment of regular dividends.





*(iv)*
            *Rights
                on Liquidation*





In
      the event of the liquidation, dissolution or winding up of Corus or other
      distribution of assets of Corus for the purpose of winding up its affairs,
      all
      property and assets of Corus available for distribution to the holders of Corus
      Shares will be paid or distributed equally, share for share, between the holders
      of Corus Shares without preference or distinction.





*(v)*
            *Conversion
                Privilege*





Any
      holder of Class A Voting Shares may, at any time or from time to time, convert
      any or all Class A Voting Shares held by such holder into Class B Non-Voting
      Shares on the basis of one Class B Non-Voting Share for each Class A Voting
      Share so converted.








28





Subject
      to certain exceptions described below, if an Exclusionary Offer is made, any
      holder of Class B Non-Voting Shares may, at any time or from time to time during
      a Conversion Period, convert any or all of the Class B Non-Voting Shares held
      by
      such holder into Class A Voting Shares on the basis of one Class A Voting Share
      for each Class B Non-Voting Share so converted. For the purpose of this
      paragraph, the following terms have the following meanings:





“Conversion
      Period” means the period of time commencing on the eighth day after the Offer
      Date and terminating on the Expiry Date;





“Exclusionary
      Offer” means an offer to purchase Class A Voting Shares that:





(A)
            must,
                by reason of applicable securities legislation or the requirements
                of a
                stock exchange on which the Class A Voting Shares are listed, be
                made to
                all or substantially all holders of Class A Voting Shares who are
                residents of a province of Canada to which the requirement applies;
                and





(B)
            is
                not made concurrently with an offer to purchase Class B Non-Voting
                Shares
                that is identical to the offer to purchase Class A Voting Shares
                in terms
                of price per share and percentage of outstanding shares to be taken
                up
                exclusive of shares owned immediately prior to the offer by the Offeror,
                and in all other material respects (except with respect to the conditions
                that may be attached to the offer for Class A Voting Shares), and
                that has
                no condition attached other than the right not to take up and pay
                for
                shares tendered if no shares are purchased pursuant to the offer
                for Class
                A Voting Shares,





and
      for the purposes of this definition if an offer to purchase Class A Voting
      Shares is not an Exclusionary Offer as defined above but would be an
      Exclusionary Offer if it were not for sub-clause (B), the varying of any term
      of
      such offer shall be deemed to constitute the making of a new offer unless an
      identical variation concurrently is made to the corresponding offer to purchase
      Class B Non-Voting Shares;





“Expiry
      Date” means the last date upon which holders of Class A Voting Shares may accept
      an Exclusionary Offer;





“Offer
      Date” means the date on which an Exclusionary Offer is made;





“Transfer
      Agent” means the transfer agent for the time being of the Class A Voting Shares;
      and





“Offeror”
      means a person or company that makes an offer to purchase Class A Voting Shares
      (the “bidder”), and includes any associate or affiliate of the bidder or any
      person or company that is disclosed in the offering document to be acting
      jointly or in concert with the bidder.





Subject
      to certain exceptions, the foregoing conversion right shall not come into effect
      if:





(A)
            prior
                to the time at which the offer is made there is delivered to the
                Transfer
                Agent and to the Secretary of Corus a certificate or certificates
                signed
                by or on behalf of one or more shareholders of Corus owning in the
                aggregate, as at the time the Exclusionary Offer is made, more than
                50% of
                the then outstanding Class A Voting Shares, exclusive of shares owned
                immediately prior to the Exclusionary Offer by the Offeror, which
                certificate or certificates shall confirm, in the case of each such
                shareholder, that such shareholder shall
                not:





a.
            tender
                any shares in acceptance of any Exclusionary Offer without giving
                the
                Transfer Agent and the Secretary of Corus written notice of such
                acceptance or intended acceptance at least seven days prior to the
                Expiry
                Date;





b.
            make
                any Exclusionary Offer;





c.
            act
                jointly or in concert with any person or company that makes any
                Exclusionary Offer; or





d.
            transfer
                any Class A Voting Shares, directly or indirectly, during the time
                at
                which any Exclusionary Offer is outstanding without giving the Transfer
                Agent and the Secretary of Corus





29





written
      notice of such transfer or intended transfer at least seven days prior to the
      Expiry Date, which notice shall state, if known to the transferor, the names
      of
      the transferees and the number of Class A Voting Shares transferred or to be
      transferred to each transferee; or





(B)
            as
                of the end of the seventh day after the Offer Date there has been
                delivered to the Transfer Agent and to the Secretary of Corus a
                certificate or certificates signed by or on behalf of one or more
                shareholders of Corus owning in the aggregate more than 50% of the
                then
                outstanding Class A Voting Shares, exclusive of shares owned immediately
                prior to the Exclusionary Offer by the Offeror, which certificate
                or
                certificates shall confirm, in the case of each such
                shareholder:





a.
            the
                number of Class A Voting Shares owned by the
                shareholder;





b.
            that
                such shareholder is not making the offer and is not an associate
                or
                affiliate of, or acting jointly or in concert with, the person or
                company
                making the offer;





c.
            that
                such shareholder shall not tender any shares in acceptance of the
                offer,
                including any varied form of the offer, without giving the Transfer
                Agent
                and the Secretary of Corus written notice of such acceptance or intended
                acceptance at least seven days prior to the Expiry Date;
                and





d.
            that
                such shareholder shall not transfer any Class A Voting Shares, directly
                or
                indirectly, prior to the Expiry Date without giving the Transfer
                Agent and
                the Secretary of Corus written notice of such transfer or intended
                transfer at least seven days prior to the Expiry Date, which notice
                shall
                state, if known to the transferor, the names of the transferees and
                the
                number of Class A Voting Shares transferred or to be transferred
                to each
                transferee; or





(C)
            as
                of the end of the seventh day after the Offer Date, a combination
                of
                certificates that comply with either clause (A) or (B) from shareholders
                of Corus owning in the aggregate more than 50% of the then outstanding
                Class A Voting Shares, exclusive of shares owned immediately prior
                to the
                Exclusionary Offer by the Offeror, has been delivered to the Transfer
                Agent and to the Secretary of
                Corus.





*(vi)*
            *Modification*





Neither
      class of Corus Shares may be subdivided, consolidated, reclassified or otherwise
      changed unless contemporaneously therewith the other class of Corus Shares
      is
      subdivided, consolidated, reclassified or otherwise changed in the same
      proportion and in the same manner.





*(vii)*
            *Offer
                to Purchase*





Corus
      may not make an offer to purchase any outstanding Class A Voting Shares unless
      at the same time it makes an offer to purchase at the same price and on the
      same
      terms as to payment an equivalent proportion of the outstanding Class B
      Non-Voting Shares.





*(viii)*
            *Redemption*





The
      Corus Shares are not redeemable at the option of either Corus or the holder
      of
      any such Corus Shares.





*(c)
      Class 1 Preferred Shares*





The
      Class 1 Preferred Shares are issuable in one or more series. The Board of
      Directors may fix from time to time before such issue the number of shares
      which
      is to comprise each series then to be issued and the designation, rights,
      conditions, restrictions and limitations attaching thereto, including, without
      limiting the generality of the foregoing, the rate of preferential dividends
      and
      whether or not such dividends shall be cumulative, the dates of payment thereof,
      the redemption price and terms and conditions of redemption, including the
      rights, if any, of the holders of Class 1 Preferred Shares of such series to
      require the redemption





30





thereof,
      conversion rights, if any, and any redemption fund, purchase fund or other
      provisions to be attached to the Class 1 Preferred Shares of such
      series.





The
      holders of Class 1 Preferred Shares of any series shall not be entitled to
      receive notice of, to attend or vote at any meeting of shareholders of Corus,
      other than a meeting of holders of Class 1 Preferred Shares, as provided by
      applicable law.





The
      shares of each successive series of Class 1 Preferred Shares shall have
      preference over the Class A Voting Shares and Class B Non-Voting Shares as
      to
      dividends of not less than 1/100th of a cent per share, and shall not confer
      upon the shares of one series a priority over the shares of any other series
      of
      the Class 1 Preferred Shares in respect of voting, dividends or return of
      capital. If any amount of cumulative dividends or any amount payable on return
      of capital in respect of shares of a series of Class 1 Preferred Shares is
      not
      paid in full, the shares of such series shall participate rateably with the
      shares of all other series of Class 1 Preferred Shares in respect of accumulated
      dividends and return of capital. The Class 1 Preferred Shares and each series
      thereof shall rank junior to and be subject to in all respects to the
      preferences, rights, conditions, restrictions, limitations and prohibitions
      attached to the Class A Preferred Shares.





*(d)
      Class 2 Preferred Shares*





The
      Class 2 Preferred Shares are issuable in one or more series. From time to time
      before any such issue, the directors may fix the number of shares which is
      to
      comprise each series then to be issued and the designation, rights, conditions,
      restrictions or limitations attaching thereto, including, without limiting
      the
      generality of the foregoing, the rate of preferential dividends and whether
      or
      not such dividends shall be cumulative, the dates of payment thereof, the
      redemption price and terms and conditions of redemption, including the rights,
      if any, of the holders of Class 2 Preferred Shares of such series to require
      the
      redemption thereof, conversion rights, if any, and any redemption fund, purchase
      fund or other provisions to be attached to the Class 2 Preferred Shares of
      such
      series.





The
      holders of Class 2 Preferred Shares of any series shall not be entitled to
      receive notice of, to attend or vote at any meeting of shareholders of Corus,
      other than a meeting of holders of Class 2 Preferred Shares, as provided by
      applicable law.





The
      shares of each successive series of Class 2 Preferred Shares shall have
      preference over the Class A Voting Shares and Class B Non-Voting Shares as
      to
      dividends in right of payment and shall not confer upon the shares of one series
      a priority over the shares of any other series of Class 2 Preferred Shares
      in
      respect of voting, dividends or return of capital. If any amount of cumulative
      dividends or any amount payable on return of capital in respect of shares of
      a
      series of Class 2 Preferred Shares is not paid in full, the shares of such
      series shall participate rateably with the shares of all other series of the
      Class 2 Preferred Shares in respect of accumulated dividends and return of
      capital. The Class 2 Preferred Shares and each series thereof shall rank junior
      to and be subject to in all respects to the preferences, rights, conditions,
      restrictions, limitations and prohibitions attached to the Class A Preferred
      Shares and the Class 1 Preferred Shares.





*(e)
      Class A Preferred Shares*





In
      accordance with the provisions of subsection 26(3) of the *Canada
      Business Corporations Act* (the “CBCA”), the directors of Corus may add to the stated capital account
      maintained for Class A Preferred Shares the whole or any part of the amount
      of
      consideration received by Corus in an exchange for property, or shares of
      another class, or pursuant to an amalgamation referred to in section 182 of
      the
      CBCA or an arrangement referred to in subsection 192(1)(b) or (c) of the CBCA.
      The Class A Preferred Shares shall be redeemed (the “Class A Redemption Amount”)
      at the amount of consideration received therefor as determined by the directors
      of Corus at the time of issuance. No Class A Preferred Shares shall be issued
      by
      Corus at any particular time if, at that time, there are Class A Preferred
      Shares issued and outstanding





The
      holders of the Class A Preferred Shares shall not be entitled to receive notice
      of, to attend or vote at any meeting of shareholders of Corus, subject to the
      CBCA.








31





When
      and if declared by the directors of Corus, the holders of Class A Preferred
      Shares shall be entitled to receive out of the net profits or surplus of Corus
      properly applicable to the payment of dividends, a non-cumulative dividend
      at
      such rate as the directors may from time to time determine. Upon the
      liquidation, dissolution or winding up of Corus, or other distribution of the
      assets of Corus or repayment of capital to its shareholders for the purpose
      of
      winding up its affairs, the holders of Class A Preferred Shares shall be
      entitled to receive for each such share, in priority of the holders of Class
      A
      Voting Shares and Class B Non-Voting Shares, the Class A Redemption Amount
      per
      share together with all declared but unpaid dividends thereon (the “Class A
      Redemption Price”). After such payment the holders of the Class A Preferred
      Shares shall have no right or claim to any of the remaining assets of Corus.
      Class 1 Preferred Shares, Class 2 Preferred Shares, Class A Voting Shares and
      Class B Non-Voting Shares shall rank junior to and shall be subject in all
      respect to the preferences, rights, conditions, restrictions, limitations and
      prohibitions attached to the Class A Preferred Shares. The Class A Preferred
      Shares are redeemable at the demand of Corus and are retractable at the demand
      of a holder of Class A Preferred Shares at the Class A Redemption
      Price.





**Share
      constraints**





The
      statutes which govern the provision of broadcasting services by Corus and its
      regulated subsidiaries impose restrictions on the ownership of shares of Corus
      and its regulated subsidiaries by persons that are not Canadian. (See
      information under the heading “Canadian Communications Industry Regulatory
      Environment - Restrictions on Non-Canadian Ownership”). In order to ensure that
      Corus and its regulated subsidiaries remain eligible or qualified to provide
      broadcasting services in Canada, the Articles of Incorporation of Corus require
      the directors of Corus to refuse to issue or register the transfer of any
“Voting Shares” (defined as the Class A Voting Shares and any other shares of
      Corus carrying voting rights under all circumstances or by reason of an event
      that has occurred and is continuing, and includes a security that is convertible
      into such a share and a currently exercisable option or right to acquire such
      a
      share or such a convertible security) to a person that is not a Canadian if
      such
      issue or transfer would result in the total number of such shares held by
      non-Canadians exceeding the maximum number permitted by applicable law. In
      addition, the directors of Corus are required to refuse to issue or register
      the
      transfer of any Voting Shares to a person in circumstances where such issue
      or
      transfer would affect the ability of Corus and its regulated subsidiaries to
      obtain, maintain, amend or renew a licence to carry on any business. The
      Articles of Incorporation of Corus further provide that if, for whatever reason,
      the number of Voting Shares held by non-Canadians or other such persons exceeds
      the maximum number permitted by applicable law or would affect the ability
      to
      carry on any licensed business, Corus may, to the extent permitted by corporate
      or communications statutes, sell the Voting Shares held by such non-Canadians
      or
      other persons as if it were the owner of such shares. The Articles of
      Incorporation of Corus also give the directors of Corus the right to refuse
      to
      issue or register the transfer of shares of any class in the capital of Corus
      if
      (i) the issue or the transfer requires the prior approval of a regulatory
      authority unless and until such approval has been obtained; or (ii) the person
      to whom the shares are to be issued or transferred has not provided Corus with
      such information as the directors may request for the purposes of administering
      these share constraints.





**Ratings**





The
      following table sets forth the ratings assigned to Corus’ senior subordinated
      debt by Standard & Poor’s (“S&P”) and Moody’s Investors Service, Inc.
      (“Moody’s”):





**Security**
            
            **S&P**(1)
            
            **Moody’s**(2)83⁄4%
                Senior Subordinated Notes
            
            
            B+
            
            
            B1Organization/Corporate
                rating
            
            
            BB
            
            
            Ba2





(1)
      S&P’s credit ratings are on a long-term debt rating scale that ranges from
      AAA to D, which represents the range from highest to lowest quality of such
      securities rated. A rating of B by S&P is the sixth highest of 10
      categories. According to the S&P rating system, debt securities rated B have
      significant speculative characteristics and are more vulnerable to non-payment
      than obligations rated BB, but the obligor currently has the capacity to meet
      its financial commitment on the obligation. Adverse business, financial or
      economic conditions will likely impair the obligor’s capacity or willingness to
      meet its financial commitment on the obligation. The addition of a plus (+)
      or
      minus (-) designation after a rating indicates the relative standing within
      a
      particular rating category.


(2)
      Moody’s credit ratings are on a long-term debt rating scale that ranges from Aaa
      to C, which represents the range from highest to lowest quality of such
      securities rated. A rating of B is the sixth highest of nine categories and
      denotes obligations considered to be speculative and which are subject to high
      credit risk. The addition of a 1, 2 or 3 modifier after a rating indicates
      the
      relative standing within a particular rating category. The modifier 1 indicates
      that the issue ranks in the higher end of its generic rating category, the
      modifier 2 indicates a mid-range ranking and the modifier 3 indicates that
      the
      issue ranks in the lower end of its generic rating category.








32





Credit
      ratings are intended to provide investors with an independent measure of the
      quality of an issue of securities. The foregoing ratings should not be construed
      as a recommendation to buy, sell or hold the securities, inasmuch as such
      ratings do not comment as to market price or suitability for a particular
      investor. There is no assurance that any rating will remain in effect for any
      given period of time or that any rating will not be revised or withdrawn
      entirely by a rating agency in the future if, in its judgment, circumstances
      so
      warrant.





**MARKET
      FOR SECURITIES**





**Marketplaces**


The
      securities of the Company are listed and posted for trading on the exchanges
      set
      forth below.


**Security**
            **Exchange**
            **Symbol**Class
                B Non-Voting Shares
            Toronto
                Stock Exchange (“TSX”)
            CJR.NV.BClass
                B Non-Voting Shares
            New
                York Stock Exchange (“NYSE”)
            CJR





**Trading
      Price and Volume**


The
      following table sets forth the monthly price range and volume traded for each
      of
      the Company’s publicly traded securities for each month during the fiscal year
      ended August 31, 2005.


**TSX
                - CJR.NV.B**
            
            **NYSE
                - CJR****September
                2004**
            
            High
            
            25.35
            
            19.80Low
            
            23.46
            
            18.15Sept-30
            
            Close
            
            23.55
            
            18.83Average
                Daily Volume
            
            70,209
            
            1,271**October
                2004**
            
            High
            
            25.75
            
            20.70Low
            
            23.40
            
            18.30Oct-29
            
            Close
            
            23.52
            
            19.23Average
                Daily Volume
            
            77,485
            
            2,428**November
                2004**
            
            High
            
            24.56
            
            20.80Low
            
            23.40
            
            19.36Nov-30
            
            Close
            
            23.50
            
            20.30Average
                Daily Volume
            
            54,177
            
            838**December
                2004**
            
            High
            
            26.00
            
            21.21Low
            
            23.76
            
            19.80Dec-31
            
            Close
            
            24.05
            
            20.75Average
                Daily Volume
            
            46,742
            
            940**January
                2005**
            
            High
            
            28.26
            
            23.43Low
            
            24.20
            
            19.86Jan-31
            
            Close
            
            24.75
            
            22.22Average
                Daily Volume
            
            119,440
            
            2,285**February
                2005**
            
            High
            
            29.80
            
            23.80Low
            
            27.50
            
            22.41Feb-28
            
            Close
            
            27.80
            
            22.91Average
                Daily Volume
            
            133,645
            
            1,984**March
                2005**
            
            High
            
            29.50
            
            24.33Low
            
            27.80
            
            22.46Mar-31
            
            Close
            
            28.02
            
            24.25Average
                Daily Volume
            
            85,795
            
            1,540**April
                2005**
            
            High
            
            31.50
            
            25.33Low
            
            28.50
            
            23.48Apr-29
            
            Close
            
            29.05
            
            24.10Average
                Daily Volume
            
            215,226
            
            4,228





33








**TSX
                - CJR.NV.B**
            
            **NYSE
                - CJR****May
                2005**
            
            High
            
            33.35
            
            26.20Low
            
            30.05
            
            24.10May-31
            
            Close
            
            30.37
            
            25.90Average
                Daily Volume
            
            150,190
            
            1,590**June
                2005**
            
            High
            
            33.00
            
            26.35Low
            
            30.82
            
            24.82Jun-30
            
            Close
            
            31.00
            
            26.00Average
                Daily Volume
            
            29,950
            
            1,468**July
                2005**
            
            High
            
            34.00
            
            27.69Low
            
            31.00
            
            25.50Jul-29
            
            Close
            
            31.41
            
            25.86Average
                Daily Volume
            
            85,872
            
            4,455**August
                2005**
            
            High
            
            33.30
            
            27.39Low
            
            29.25
            
            24.88Aug-31
            
            Close
            
            32.25
            
            27.20Average
                Daily Volume
            
            161,300
            
            3,413





All
      price and volume information is from independent third-party sources (i.e.
      TSX
      website and Yahoo Finance).








34





**DIRECTORS
      AND OFFICERS**





The
      following are the names and municipalities of residence of the directors and
      executive officers of the Company as of October 31, 2005 or as otherwise noted,
      their positions within the Company and their principal occupations during the
      last five years. The term of office for each director will be until the next
      annual meeting or until his or her successor is elected or
      appointed.


**Name
                and Municipality of Residence**
            
            **Director/Officer**
            
            **Position
                with Corus/Principal Occupation**Pierre Béland(3)
            
            Director
            
            President, Metromedia
              PlusMontreal,
              QuebecJohn M. Cassaday(2)
            
            President,
              Chief
              Executive Officer and Director
            
            President and Chief Executive
              Officer,Toronto,
              Ontario
            
            
            
            Corus Entertainment
              Inc.Dennis M.
              Erker(2)(4)
            
            Director
            
            Partner, FE Advisory Group
              (a
              financial and estateEdmonton,
              Alberta
            
            
            
            planning company)Wendy A. Leaney(1)
            
            Director
            
            President, Wyoming Associates
              Ltd.
              (a private investingToronto,
              Ontario
            
            
            
            and consulting firm)Dorothy Zolf
              McDonald,
              PhD(4)
            
            Director
            
            Corporate DirectorToronto,
              OntarioRonald D.
              Rogers(1)(3)(5)
            
            Director
            
            Corporate DirectorCalgary,
              AlbertaCatherine
              Roozen(1)(4)
            
            Director
            
            Director and Corporate
              Secretary,
              Cathton Holdings Ltd.Edmonton,
              AlbertaTerrance E.
              Royer(2)(3)
            
            Director
            
            Executive Vice Chairman,
              Royal
              Host REIT and RoyalCalgary,
              Alberta
            
            
            
            Host Corp. (a hotel and
              resort
              ownership,franchising and management
              company)Heather A.
              Shaw(2)
            
            Director
            
            Executive Chair, Corus
              Entertainment Inc.Calgary,
              AlbertaJulie M. Shaw
            
            Director
            
            Vice President, Facilities,
              Design
              and Management,Calgary,
              Alberta
            
            
            
            Shaw Communications Inc;
              and
              Secretary, Shaw FoundationThomas C.
              Peddie
              FCA
            
            Officer
            
            Senior Vice President and
              Chief
              Financial Officer,Toronto,
              Ontario
            
            
            
            Corus Entertainment
              Inc.Paul W.
              Robertson
            
            Officer
            
            President, Television,
              Corus
              Entertainment Inc.Toronto,
              OntarioJohn P. Hayes
            
            Officer
            
            President, Radio, Corus
              Entertainment Inc.Toronto,
              OntarioGary Maavara
            
            Officer
            
            Vice President and General
              Counsel,Toronto,
              Ontario
            
            
            
            Corus Entertainment
              Inc.David Spence
              CA
            
            Officer
            
            Vice President, Controller,
              Corus
              Entertainment Inc.Markham,
              OntarioHal Blackadar
            
            Officer
            
            Vice President, Human Resources,
              Corus Entertainment Inc.Oakville,
              OntarioPierre Arcand
            
            Officer
            
            President, Quebec Radio,
              Corus
              Entertainment Inc.Montreal,
              QuebecJohn R. (Jack)
              Perraton
            
            Secretary
            
            Senior
                Partner, Perraton LawCalgary,
                Alberta


(1)
            Member
                of the Audit Committee in fiscal
                2005


(2)
            Member
                of the Executive Committee in fiscal
                2005


(3)
            Member
                of the Human Resources Committee in fiscal
                2005


(4)
            Member
                of the Corporate Governance Committee in fiscal
                2005


(5)
            Mr.
                Rogers, a chartered accountant, is independent and is considered
                to be a
                financial expert for United States reporting purposes.





35











Each
      director named above was appointed a director on January 10, 2005 and will
      hold
      office until the next scheduled annual meeting of shareholders. Thereafter,
      each
      director will be elected at the annual meeting of shareholders to serve until
      the next annual meeting or until a successor is elected or appointed.





Each
      officer or director of Corus has been engaged for more than five years in his
      or
      her principal or prior occupation, as the case may be, except as follows: Pierre
      Béland was the President of Corus Radio Quebec prior to July 25, 2002 and was
      President of Metromedia CMR prior to August 31, 2000; prior to July 2004, Ronald
      Rogers was Senior Vice President and Chief Financial Officer of Shaw
      Communications Inc.; prior to July 2001, John P. Hayes was Chairman and CEO
      of
      RadioAmp and prior to 2000, he was a consultant to Goldman Sachs International;
      Gary Maavara was Vice President, Public Relations for CanWest Global
      Communications Corp. from July 2003 to September 2004, and from 2001 to 2003
      Senior Vice President, Global Television Inc. and concurrently Senior Vice
      President and Chief Operating Officer, CanWest Interactive Inc.; from 1999
      to
      2001, Gary was Director of Special Projects, CanWest Global Communications
      Corp.; Hal Blackadar was the General Manager of Corus Radio Ontario prior to
      June 2002; prior to July 2002, Pierre Arcand was Executive Vice President of
      Metromedia CMR; and prior to February 2005, David Spence was Corporate
      Controller, Corus Entertainment Inc.





As
      of October 31, 2005, the directors and executive officers of the Company
      beneficially owned, directly or indirectly, or exercised control or direction
      over 897,974 Class A Voting Shares and 1,136,774 Class B Non-Voting Shares,
      representing 52.1% and 2.7% of the issued and outstanding Class A Voting Shares
      and Class B Non-Voting Shares, respectively.





**AUDIT
      COMMITTEE**





**Charter**





The
      text of the Audit Committee’s Charter is attached as Schedule A.





**Composition
      of the Audit Committee**





The
      Company’s Audit Committee is composed of Ronald D. Rogers, Wendy A. Leaney and
      Catherine Roozen, each of whom is a financially literate, independent director
      of the Company. The relevant education and experience of each Audit Committee
      member is outlined below:





*Ronald
      D. Rogers (Chair)*





Mr.
      Rogers holds a Bachelor of Commerce degree, and is a chartered accountant.
      Mr.
      Rogers retired as Senior Vice President and Chief Financial Officer of Shaw
      Communications Inc. in August of 2004. Mr. Rogers serves as a trustee of The
      Brick Group Income Fund.





*Wendy
      A. Leaney*





Ms.
      Leaney holds a Bachelor of Arts (Hon) degree. Ms. Leaney is President of Wyoming
      Associates Ltd., a private investment and consulting firm based in Toronto.
      Prior to that, Ms. Leaney was Managing Director and Co-Head Global
      Communications Finance for TD Securities Inc. Ms. Leaney serves on the board
      of
      Canadian Western Bank. From 2001 to 2005, Ms. Leaney also served on the board
      of
      Call-Net Enterprises.





*Catherine
      Roozen*





Ms.
      Roozen is Director and Corporate Secretary of Cathton Holdings Ltd. and the
      Allard Foundation, positions she has held since 1981. Ms. Roozen serves as
      a
      board governor for the University of Alberta, as well as on a number of
      charitable boards.








36





**Principal
      Accounting Fees and Services - Independent Auditors**





Fees
      payable to the Registrant’s independent auditor, Ernst and Young LLP, for the
      years ended August 31, 2005 and 2004 totalled $1,294,100 and $1,300,549,
      respectively, as detailed in the following table. All funds are in Canadian
      dollars:


Year
                Ended August 31, 2005
            
            Year
                Ended August 31, 2004Audit
                Fees
            
            
            999,300
            
            
            926,565Audit-Related
                Fees
            
            
            237,500
            
            
            221,833Tax
                Fees
            
            
            57,300
            
            
            152,151All
                Other Fees
            
            
            -
            
            
            -Total
            
            
            1,294,100
            
            
            1,300,549





The
      nature of the services provided by Ernst and Young LLP under each of the
      categories indicated in the table is described below:





*Audit
      Fees*





Audit
      fees were for professional services rendered by Ernst and Young LLP for the
      audit of the Registrant’s annual financial statements and services provided in
      connection with statutory and regulatory filings or engagements.





*Audit-Related
      Fees*





Audit-related
      fees were for assurance and related services reasonably related to the
      performance of the audit or review of the annual financial statements and are
      not reported under “Audit Fees” above. These services consisted of employee
      benefit plan audits, assistance with the Company’s plans to comply with Section
      404 of the *Sarbanes-Oxley
      Act of 2002* ,
      and translation services in respect of the financial statements and other
      regulatory filings.





*Tax
      Fees*





Tax
      fees were for tax compliance, tax advice and tax-planning professional services.
      These services consisted of tax planning and advisory services relating to
      common forms of domestic and international taxation (i.e. income tax, capital
      tax, Goods and Services Tax, and value added tax) as well as assistance with
      various tax audit matters.





*All
      Other Fees*





Fees
      disclosed in the table above under the item “all other fees” represent products
      and services other than the audit fees, audit-related fees and tax fees
      described above. No such fees were paid in 2005 and 2004.





The
      Company’s Audit Committee has implemented a policy restricting the services that
      may be provided by the auditors and the fees paid to the auditors. Prior to
      the
      engagement of the auditors, the Audit Committee pre-approves the provision
      of
      the service. In making their determination regarding non-audit services, the
      Audit Committee considers the compliance with the policy and the provision
      of
      non-audit services in the context of avoiding impact on auditor independence.
      Each quarter, the chief financial officer (“CFO”) makes a presentation to the
      Audit Committee detailing the non-audit services performed by the auditors
      on a
      year-to-date basis, and details of any proposed assignments for consideration
      by
      the Audit Committee and pre-approval if appropriate.





As
      required by the *Sarbanes-Oxley
      Act of 2002* ,
      all audit, audit-related and non-audit services rendered by Ernst and Young
      LLP
      pursuant to engagements entered into since May 6, 2003 were pre-approved by
      the
      Audit Committee pursuant to the Company’s policy and pre-approval procedures. In
      2005, no audit-related or non-audit services rendered by the auditors were
      required to be approved by the Audit Committee pursuant to the DE MINIMIS
      exception set out in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.







37








**LEGAL
      AND REGULATORY**





Corus
      is involved from time to time in various claims and lawsuits incidental to
      the
      ordinary course of business, including intellectual property actions. Adverse
      determinations in litigation could result in the loss of proprietary rights,
      subject the Company to significant liabilities, or require Corus to seek
      licenses from third parties, any one of which could have an adverse effect
      on
      the business and results of operations. Actions which are incidental to the
      business are typically covered by insurance and management has estimated the
      potential liability and expensed the amount on its financial statements. Corus
      does not anticipate that the damages which may be awarded in any material action
      of which the Company is currently aware will exceed its insurance coverage.
      While no assurance can be given that these proceedings will be favourably
      resolved, Corus does not believe that the outcome of these legal proceedings
      will have a material adverse impact on its financial position or results of
      operations.




**INTERESTS
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**





To
      the knowledge of the Company, no director or executive officer of the Company,
      or a shareholder holding a sufficient number of securities of the Company to
      affect materially the control of the Company, is or has been, since the
      incorporation of the Company, a director or executive officer of any company
      that, while that person was acting in that capacity, (a) was the subject of
      a
      cease trade order or similar order or an order that denied the company access
      to
      any exemptions under Canadian securities legislation for a period of more than
      30 consecutive days; (b) was subject to an event that resulted, after that
      person ceased to be a director or executive officer, in the company being the
      subject of a cease trade or similar order or an order that denied the company
      access to any exemption under Canadian securities legislation for a period
      of
      more than 30 consecutive days; or (c) has, since the incorporation of the
      Company, become bankrupt, made a proposal under any legislation relating to
      bankruptcy or insolvency or become subject to or instituted any proceedings,
      arrangement or compromise with creditors or had a receiver, receiver manager
      or
      trustee appointed to hold the assets of the director, executive officer or
      shareholder.





**TRANSFER
      AGENTS**





I n
      Canada, CIBC Mellon Trust Company acts as Corus’ transfer agents. In the United
      States, Chase Mellon Shareholder Services, L.L.S acts as Corus’ transfer agents.





**MATERIAL
      CONTRACTS**





**Senior
      Secured Credit Facility**





A
      syndicate of Canadian banks has provided Corus with a senior secured revolving
      term credit facility (the “Bank Credit Facility”) under the Amended and Restated
      Credit Agreement dated as of January 31, 2005.





The
      Bank Credit Facility consists of a committed credit of $215 million that matures
      January 31, 2009. As a revolving facility, amounts borrowed may be repaid and
      re-borrowed as required through the term of the Bank Credit Facility. The
      commitment expires at the maturity date and there are no mandatory reductions
      to
      the committed amount, subject to certain covenants, during the term of the
      facility. As at August 31, 2005, the facility was not utilized.





Advances
      under the Bank Credit Facility are available in either Canadian or U.S. dollars
      at the option of Corus. Interest rates applicable to Canadian dollar advances,
      at Corus’ option, are equal to (i) the Canadian prime rate, or (ii) Bankers
      Acceptance rates for terms up to six months, plus, in each case, an applicable
      margin. Interest rates applicable to U.S. dollar advances, at Corus’ option, are
      equal to (i) the U.S. base rate, or (ii) the U.S. London inter-bank offered
      rate
      (“LIBOR”) for terms up to six months, plus, in each case, an applicable margin.
      Margins will vary based on the type of advance and debt to cash flow ratios
      achieved.





The
      Bank Credit Facility requires that Corus comply on a quarterly basis with
      certain financial covenants, including maximum debt to cash flow ratio tests
      and
      a minimum interest coverage ratio test. The Bank Credit





38





Facility
      also includes negative covenants that, subject to certain exceptions, may
      restrict or limit the ability of Corus (and its significant operating
      subsidiaries) to, among other things, incur, assume or permit to exist
      additional indebtedness or encumbrances, engage in mergers, consolidations,
      amalgamations or other reorganizations, sell or otherwise dispose of significant
      assets, make investments, declare dividends or repurchase equity securities,
      engage in activities that adversely affect the ranking or validity of the
      lenders’ security, or make optional prepayments on subordinated
      debt.





The
      Bank Credit Facility contains certain customary representations and warranties,
      positive covenants and events of default, including payment defaults, covenant
      defaults, cross-defaults to other material indebtedness or other material
      agreements, insolvency or bankruptcy defaults, material judgments, material
      breach of representations and warranties and failure to maintain security.
      If an
      event of default occurs and continues, the lenders are entitled to take all
      actions permitted to a secured creditor including the acceleration of amounts
      due.





The
      lenders under the Bank Credit Facility have a first ranking charge on the
      present and future property of Corus, including the present and future property
      of its significant operating subsidiaries. Those subsidiaries have provided
      guarantees to the lenders and securities pledge agreements have been entered
      into relative to the ownership interest in most of the significant operating
      subsidiaries.





One
      of the lenders under the Bank Credit Facility has also provided Corus with
      a
      364-day revolving operating facility with a maximum commitment amount of $25
      million. Other than the term and amount committed, the operating facility is
      subject to the same covenant pattern, defaults, remedies and security as the
      Bank Credit Facility.





**Trust
      Indenture for 83⁄4% Senior Subordinated Notes due 2012**





On
      March 7, 2002 Corus issued US$375 million in Senior Subordinated Notes bearing
      interest at 8.75% per annum and maturing on March 1, 2012 (the “Notes”). The
      Notes are governed under an Indenture with J.P. Morgan Trust Company, National
      Association, as Trustee dated March 7, 2002 (the “Indenture”). Terms of the
      Notes include those stated in the Indenture.





The
      Notes are unsecured and are subordinated to Corus’ senior indebtedness. Interest
      is due for payment semi-annually in arrears each March 1 and September 1 that
      the Notes are outstanding and otherwise accrues from the last payment date
      on a
      360-day year (consisting of 12 30-day months) basis. The Notes are redeemable
      at
      the option of Corus, in whole or in part, at any time on or after March 1,
      2007
      at specified redemption prices, plus accrued and unpaid interest
      thereon.





The
      Indenture governing the Notes contains covenants that, among other things and
      subject to exceptions and qualifications, may limit or restrict Corus’ ability
      to engage in transactions with affiliates, incur additional indebtedness, sell
      or otherwise dispose of significant assets, declare dividends or repurchase
      equity securities, make investments, engage in mergers, consolidations,
      amalgamations or other reorganizations, create restrictions on the ability
      of
      restricted subsidiaries to pay dividends, make loans or transfer assets between
      restricted subsidiaries and/or Corus, create unrestricted subsidiaries, incur
      or
      suffer to exist liens, or, in the case of restricted subsidiaries, guarantee
      indebtedness and issue or sell preferred shares.





**Cross
      Currency Interest Rate Swaps**





With
      the issue of the Notes, Corus entered into cross currency interest rate swap
      agreements with a number of Canadian banks (that are also lenders under the
      Bank
      Credit Facility) that effectively fix the Canadian dollar principal and interest
      payments on the Notes to a principal amount of $604 million and an annual
      interest rate thereon of 9.332%. These swap agreements are considered senior
      debt and are subject to the same covenants and security as available to the
      lenders under the Bank Credit Facility.





**ADDITIONAL
      INFORMATION**





Corus
      Entertainment Inc. shall provide to any person, upon request to the Secretary
      of
      the Company:





39








a)
            when
                the securities of the Company are in the course of a distribution
                pursuant
                to a short form prospectus or a preliminary short form prospectus
                has been
                filed in respect of a distribution of its
                securities:


1)
            one
                copy of the Annual Information Form of the Company, together with
                one copy
                of any document, or the pertinent pages of any document, incorporated
                by
                reference in the Annual Information
                Form;


2)
            one
                copy of the comparative financial statements of the Company for its
                most
                recently completed financial year together with the accompanying
                auditors’
                report and one copy of any subsequent interim financial statements
                of the
                Company;


3)
            one
                copy of the information circular of the Company in respect of its
                most
                recent annual meeting of shareholders that involved the election
                of
                directors or one copy of any annual filing prepared in lieu of that
                information circular, as appropriate;
                and


4)
            one
                copy of any other documents that are incorporated by reference into
                the
                short form prospectus or preliminary short form prospectus that are
                not
                mentioned in (1), (2) or (3) above.


b)
            at
                any other time, one copy of any documents referred to in (a)(1),
                (2) and
                (3) above, provided the Company may require the payment of a reasonable
                charge if the request is made by a person who is not a security holder
                of
                the Company.





Additional
      information including directors’ and officers’ remunerations and indebtedness,
      principal holders of the Company’s securities, options to purchase securities
      and interests of insiders in material transactions, where applicable, is
      contained in the Company’s Information Circular dated November 17, 2005.
      Additional financial information is provided in the Company’s consolidated
      financial statements for its most recently completed financial year. A copy
      of
      such documents may be obtained upon request from the Company.





The
      Secretary of the Company can be contacted at:





Corus
      Entertainment Inc.


501,
      630 - 3 rd Avenue S.W.


Calgary,
      Alberta


T2P
      4L4


Phone:
      (403) 444-4244





**CORPORATE
      GOVERNANCE PRACTICES**





The
      Board of Directors of the Company endorses the principles that sound corporate
      governance practices (“Corporate Governance Practices”) are important to the
      proper functioning of the Company and the enhancement of the interests of the
      shareholders.





The
      Company’s Statement of Corporate Governance Practices as they compare to the TSX
      Guidelines on Corporate Governance, a statement of the significant ways that
      the
      Company’s Corporate Governance Practices differ from the NYSE Corporate
      Governance Rules, charters of the Board of Directors and its committees, and
      the
      Code of Business Conduct may be found in the Company’s most recently filed
      Management Information Circular, as well as on the Company’s website at
      www.corusent.com.








40








**Schedule
      A**





**AUDIT
      COMMITTEE CHARTER**


**1.** **Mandate**





The
      mandate of the Audit Committee (the “Committee”) shall be to: provide assistance
      to the Board of Directors (the “Board”) of Corus Entertainment Inc. (“Corus” or
      the “Company”) in fulfilling their oversight responsibilities relating to: (i)
      the integrity of the Company’s financial statements; (ii) the Company’s
      compliance with legal and regulatory requirements; (iii) the external auditor’s
      qualifications and independence; and, (iv) the performance of the Company’s
      internal audit function and external auditors. In addition, the Audit Committee
      shall prepare the report that Securities and Exchange Commission rules require
      to be included in the Company’s annual proxy statement.





In
      fulfilling its purpose, it is the responsibility of the Committee to maintain
      free and open communication between the Committee, external auditors, the
      internal auditors, and management of the Company, and to determine that all
      parties are aware of their responsibilities.





**2.** **Composition
      and Operations**





2.1
            The
                Committee shall be composed of three or more unrelated and independent
                directors, as determined and appointed by the Board on an annual
                basis.
                “Unrelated and independent director” means a director who is independent
                of management of the Corporation and is free from any interest and
                any
                business or other relationship which could, or could reasonably be
                perceived to, materially interfere with the director’s ability to act with
                a view to the best interests of the Company. In this regard, to maintain
                their independence, members of the Committee may not accept any
                consulting, advisory or other compensatory fee (other than regular
                Board
                and Committee fees) from the Company or any of its affiliates. Members
                also may not receive any indirect payments from the Company or any
                of its
                affiliates, including payments (whether or not material) made to
                spouses
                or family members, or payments for services to law firms, accounting
                firms, consulting firms and investment banks for which the Committee
                member serves as a partner, member, managing director or executive.
                The
                members of the committee and the Chair will be appointed annually
                by the
                Board and each member shall serve until the next Annual General Meeting
                of
                the shareholders of the Corporation or until his or her earlier
                resignation or removal by the
                Board.





2.2
            Every
                Committee member must be considered financially literate and at least
                one
                Committee member must be considered a financial expert. The definition
                of
                “financial literacy” and “financial expertise”, and the determination of
                whether any given member of the Committee meets such definition,
                will be
                made by the Board, in consultation with the Corporate Governance
                Committee, in accordance with applicable laws, policies and guidelines
                of
                securities regulatory authorities.





2.3
            The
                Committee should meet at least quarterly. Special meetings should
                be
                authorized at the request of any member of the Committee or at the
                request
                of the external auditor, internal auditor (if any) or senior members
                of
                management. The external auditors should have the right to attend
                all
                meetings of the Committee.





2.4
            The
                Committee has access to Corus senior management and documents as
                required
                to fulfill its responsibilities and is provided with the resources
                necessary to carry out its
                responsibilities.





2.5
            The
                Board should be kept informed of the Committee’s activities by a report
                following each Committee meeting. The person designated to act as
                secretary should prepare minutes of all meetings, to be filed in
                the
                corporate records.





2.6
            The
                Committee may at its discretion retain the services of independent
                outside
                advisors or counsel in consultation with the Executive
                Chair.





41








2.7
            The
                secretary to the Committee shall be either the Corporate Secretary
                or a
                person delegated by the Chair and that person will be responsible
                to keep
                minutes of all meetings.





2.8
            Notice
                of each meeting of the Committee shall be given to each member of
                the
                Committee as far in advance of the time for the meeting as possible,
                but
                in any event, not later than 24 hours preceding the time stipulated
                for
                the meeting (unless otherwise waived by all members of the Committee).
                Each notice of meeting shall state the nature of the business to
                be
                transacted at the meeting in reasonable detail and to the extent
                practicable, be accompanied by copies of documentation to be considered
                at
                the meeting.





2.9
            A
                quorum for the transaction of business at a meeting shall consist
                of not
                less than a majority of the members of the Committee, which majority
                must
                include the Committee’s designated financial expert. Members of the
                Committee may participate in any meeting by means of such telephonic,
                electronic or other communication facilities as permit all persons
                participating in the meeting to communicate adequately with each
                other,
                and a member participating by any such means shall be deemed to be
                present
                at that meeting. Senior management of the Company and other parties
                may
                attend meetings of the Committee, as may be deemed appropriate by
                the
                Committee.





**3.** **Duties
      and Responsibilities**





The
      Committee has the responsibilities and powers set forth in this
      Charter:





***General***





3.1
            The
                Committee shall review and reassess the charter at least annually
                and
                obtain the approval of the Board.





3.2
            The
                Committee shall perform an evaluation of its performance at least
                annually
                to determine whether it is functioning
                effectively.





3.3
            The
                Committee shall review, at least on an annual basis, and approve
                the
                Company’s policies for hiring existing and former employees and partners
                of the external auditors.





3.4
            The
                Committee shall meet separately, periodically, as it deems appropriate,
                with management, with internal auditors (or personnel responsible
                for the
                internal audit function) and with external
                auditors.





***Financial
      and other reports***





3.5
            The
                Committee shall review the Company’s quarterly and annual financial
                statements, including Management’s Discussion and Analysis, Annual
                Information Form, Management Information Circular and annual and
                interim
                earnings press releases that require approval by the Board prior
                to their
                release and make recommendations to the Board for their approval.
                In
                addition, the Committee will review any report of management that
                accompanies published financial
                statements.





3.6
            The
                Committee’s review of the annual audited financial statements shall
                include: (i) major issues regarding accounting principles and financial
                statement presentations, including any significant changes in the
                Company’s selection or application of accounting principles; (ii) major
                issues as to the adequacy of the Company’s internal controls and any
                specific remedial actions adopted in light of material control
                deficiencies; (iii) discussions with management and the external
                auditors
                regarding significant financial reporting issues and judgments made
                in
                connection with the preparation of the financial statements and the
                reasonableness of those judgments; (iv) consideration of the effect
                of
                regulatory accounting initiatives, as well as off-balance sheet structures
                on the financial statements; (v) consideration of the judgment of
                both
                management and the external auditors about the quality, not just
                the
                acceptability of accounting principles; (vi) the clarity of the
                disclosures in the financial statements; and (vii) discussions with
                management and the external auditors regarding accounting adjustments
                that
                were noted or proposed by the external auditors but were “passed” (as
                immaterial or otherwise).





42








3.7
            The
                Committee shall review with the external auditors any audit problems
                or
                difficulties encountered during the course of the audit work, including
                any restrictions on the scope of the external auditors’ activities or
                access to requested information, and management’s
                response.





3.8
            The
                Committee shall review and discuss financial information and earnings
                guidance provided to analysts and rating agencies prior to their
                release.





3.9
            The
                Committee shall, at least on an annual basis, review and assess the
                adequacy of the Company’s procedures in place for the review of the
                Company’s public disclosure of financial information, other than the
                information referred to in subsection
                3.8.





***Risk
      Management, Internal Controls and Information Systems***





3.10
            The
                Committee shall discuss with management, the internal auditors (if
                applicable), and the external auditors the adequacy and effectiveness
                of
                internal control over financial reporting, including any significant
                deficiencies or material weaknesses identified by management of the
                Company in connection with its required quarterly certifications
                with
                securities regulatory authorities.





3.11
            Commencing
                August 31, 2005, the Committee shall review management’s assessment of the
                effectiveness of internal control over financial reporting as of
                the end
                of the most recent fiscal year and the external auditor’s report on
                management’s assessment.





3.12
            The
                Committee shall review with management, the external auditor and
                if
                necessary with legal counsel, any litigation, claim or other contingency,
                including tax assessments that could have a material effect upon
                the
                financial position or operating results of the Company, and the manner
                in
                which these matters have been disclosed in the financial
                statements.





3.13
            The
                Committee shall monitor compliance with statutory and regulatory
                observations.





3.14
            The
                Committee is responsible for establishing appropriate processes and
                procedures surrounding the receipt, retention, and treatment of
                accounting, internal controls or auditing matter complaints received
                by
                the company. In addition the Committee shall ensure that the company
                has a
                mechanism to allow employees to communicate concerns regarding
                questionable accounting or auditing matters on a confidential, anonymous
                basis without fear of reprisal.





3.15
            The
                Committee shall discuss the Company’s policies with respect to risk
                assessment and risk management, including the risk of fraud. The
                Committee
                also shall discuss the Company’s major financial risk exposures and the
                steps management has taken to monitor and control such
                exposures.





3.16
            The
                Committee shall review the process for identifying related party
                transactions.





***External
      Audit Services***





3.17 The
      external auditors will report directly to the Committee.





3.18 The
      Committee will recommend to the Board of Directors:


(a)
            the
                external auditor to be nominated for the purpose of preparing or
                issuing
                an auditor’s report or performing other audit, review or attest services
                of the Company; and


(b)
            the
                compensation of the external
                auditor.





3.19
            The
                Committee will oversee the work of the external auditor engaged for
                the
                purpose of preparing or issuing an auditor’s report or performing other
                audit, review or attest services for the Company, including but not
                limited to the following:


(a) objectives
      and scope of audit, review or attest services


(b)
            reviewing
                the results of the external audit and any changes in accounting practices
                or policies and the financial statement impact
                thereof





43








(c)
            reviewing
                any accruals, provisions or estimates that have a significant effect
                upon
                the financial statements


(d)
            resolution
                of any disagreement between management and the external auditor regarding
                financial reporting.





3.20
            The
                Committee will pre-approve all audit and non-audit services provided
                to
                the Company or its subsidiaries by the external auditors and shall
                not
                engage the external auditors to perform non-audit services proscribed
                by
                law or regulation.





3.21
            The
                Committee may delegate to one or more members of the Committee the
                authority to pre-approve any audit and non-audit services up to a
                pre-determined cap in satisfaction of the requirement under subsection
                3.20.





3.22
            The
                pre-approval of audit and non-audit services pursuant to subsection
                3.21
                must be presented to the Committee at its first scheduled meeting
                following such pre-approval.





3.23
            The
                Committee shall determine that the external audit firm has a process
                in
                place to address the rotation of the lead audit partner and other
                audit
                partners serving the account in accordance with applicable laws,
                policies
                and guidelines of securities regulatory
                authorities.





3.24
            At
                least annually, the Committee shall obtain and review a report by
                the
                external auditors describing : (i) the audit firm’s internal quality
                control procedures; (ii) any material issues raised by the most recent
                internal quality control review, or peer review, of the audit firm,
                or by
                any inquiry or investigation by governmental or professional authorities,
                within the preceding five years, respecting one or more independent
                audits
                carried out by the audit firm, and any steps taken to deal with any
                such
                issues; and (iii) all relationships between the external auditors
                and the
                Company (to assess the auditor’
independence).





**4.**
            **Committee
                Timetable**





The
      Committee shall fulfill its oversight responsibilities primarily by carrying
      out
      the activities set forth in a detailed quarterly schedule, as well as all such
      other actions which may be incidental thereto or which may be necessary for
      the
      Committee to comply with the spirit and intent of this Charter. The items
      enumerated in the schedule are not intended to be exhaustive of the duties
      of
      the Committee. The schedule is reviewed annually by the Board and may be
      supplemented and revised from time to time as may be appropriate.





**5.** **Committee
      Chair - Job Description**





At
      the time of the annual appointment of the members of the Audit committee, the
      Board of Directors shall appoint a Chair of the Audit Committee. The Chair
      shall: be a member of the Audit Committee, preside over all Audit Committee
      meetings, coordinate the Audit Committee’s compliance with this charter, work
      with management to develop the Audit Committee’s annual work-plan and provide
      reports of the Audit Committee to the Board. The Chair may vote on any matter
      requiring a vote and shall provide a second vote in the case of a tie
      vote.






44















**UNDERTAKING
      AND CONSENT TO SERVICE OF PROCESS**




**A.** **Undertaking**




Corus
      Entertainment Inc. (the “Registrant”) undertakes to make available, in person or
      by telephone, representatives to respond to inquiries made by the staff of
      the
      Securities and Exchange Commission (the “SEC”), and to furnish promptly, when
      requested to do so by the SEC staff, information relating to the securities
      in
      relation to which the obligation to file an annual report on Form 40-F arises
      or
      transactions in said securities.




**B.** **Consent
      to Service of Process**




The
      Registrant has previously filed with the SEC a written irrevocable consent
      and
      power of attorney on Form F-X in connection with the Class B Non-Voting Shares
      and 83⁄4% Senior Subordinated Notes due 2012.







**SIGNATURES**




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




**CORUS
              ENTERTAINMENT INC.**Date:November
                21, 2005
            By:
            /s/  THOMAS
                C.
                PEDDIEName:
            Thomas
                C. PeddieTitle:
            Senior
                Vice President and Chief
                Financial Officer








**EXHIBIT
      INDEX**




**Sequential**
              **Page
                No.**1.
            Comparative
                consolidated financial statements for the year ended August 31, 2005,
                together with the auditors’ report thereon
            
            •2.
            Management’s
                Discussion and Analysis of Operating Results and Financial
                Position
            
            •3.
            Consent
                of auditors - Ernst & Young LLP dated November 21,
                2005.
            
            •4.
            Officers’
                certifications required by Rule 13a-14(a) or Rule 15d-14(a).
            
            •5.
            Officers’
                certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section
                1350 of Chapter 63 of Title 18 of the United States Code.
            
            •99.6.
            Business
                Code of Conduct
            
            •