SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  FORM
40-F
  o                        Registration
statement pursuant to Section 12 of the Securities Exchange Act of
1934
 or
 þ                        Annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934
  For the Fiscal year
ended:              August
31, 2008
  Commission File
number:              001-14992
  CORUS
ENTERTAINMENT INC.
 (Exact
name of registrant as specified in its charter)
   Canada
                (Province
      or other jurisdiction of incorporation or
organization)
              4832,
      4833
                (Primary
      standard industrial classification code number, if
      applicable)
              Not
      Applicable
                (I.R.S.
      employer identification number, if
  applicable)
  Brookfield
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
8th
Avenue, 13th
Floor
 New
York, New York  10011
 (212)
894-8700
 (Name,
address and telephone number of agent for service in the United
States)
  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: None
  For
annual reports, indicate by check mark the information filed with this
form:
 Securities
registered pursuant to Section 12(b) of the Act:
  þ           Annual
Information
Form                                                                þ           Audited
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 Voting
      Shares
                    3,445,858 As of August 31,
      2008B
      Non-Voting Shares
                    77,361,578
      As of August 31,
2008
  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.
  Yes  o                                                      No  þ
 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.
  Yes  þ                                                     
No  o






















































RENEWAL
ANNUAL INFORMATION FORM





Fiscal
year ended August 31, 2008











Corus
Entertainment Inc.


























November
27, 2008











RENEWAL
ANNUAL INFORMATION FORM - CORUS ENTERTAINMENT INC.







Table of ContentsFORWARD-LOOKING
      STATEMENTS
                        3INCORPORATION
      OF CORUS
                        3Organization
      and Name
                        3Subsidiaries
      and Affiliates
                        4GENERAL
      DEVELOPMENT OF THE BUSINESS
                        5Historical
      Background
                        5Significant
      Acquisitions and Divestitures
                        5DESCRIPTION
      OF THE BUSINESS
                        6Radio
                        6Description
      of the Industry
                        6Business
      Overview
                        6Operating
      Strategy
                        9Competition
      Conditions
                        9Television
                        10Description
      of the Industry
                        10Business
      Overview
                        12Operating
      Strategy
                        15Competition
      Conditions
                        17ADDITIONAL
      INFORMATION CONCERNING CORUS’ BUSINESSES
                        17Intangible
      Properties
                        17Seasonality
      and Cycles
                        18Economic
      Dependence
                        18Environmental
                        19Employees
                        19Foreign
      Operations
                        19Lending
                        19Bankruptcy
                        19Reorganizations
                        19Social
      or EnvironmentalPolicies
                        19Risk
      Factors
                        20Control
      of Corus by the Shaw family
                        20CANADIAN
      COMMUNICATIONS INDUSTRY - REGULATORY ENVIRONMENT
                        20Canadian
      Radio-television and Telecommunications Commission
                        20Industry
      Canada
                        21Restrictions
      on Non-Canadian Ownership
                        21Broadcasting
      Services
                        21Radio
      Undertakings
                        22Specialty
      and Premium Television Undertakings
                        22Local
      Television Undertakings
                        23Pay
      Audio Services
                        23Cable
      Advertising Services
                        23Canadian
      Content Requirement for Broadcasters
                        24Film
      and Television Tax Credits and Grants
                        24International
      Treaty Co-Productions
                        24Competition
      Act Requirements
                        24Investment
      Canada Act
                        25Copyright
      Act Requirements
                        25CAPITAL
      STRUCTURE
                        25Description
      of Capital Structure
                        25Share
      Constraints
                        29





2








Table of
      ContentsRatings
                        30MARKET
      FOR SECURITIES
                        30Marketplaces
                        30Trading
      Price and Volume
                        30DIVIDEND
      POLICY
                        31NORMAL
      COURSE ISSUER BID
                        32DIRECTORS
      AND OFFICERS
                        32AUDIT
      COMMITTEE
                        34Charter
                        34Composition
      of the Audit Committee
                        34Principal
      Accounting Fees and Services - Independent Auditors
                        34LEGAL
      AND REGULATORY
                        35INTERESTS
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
                        36TRANSFER
      AGENTS
                        36MATERIAL
      CONTRACTS
                        36Senior
      Secured Credit Facility
                        36Cross
      Currency Interest Rate Swaps
                        37INTERESTS
      OF EXPERTS
                        37ADDITIONAL
      INFORMATION
                        37CORPORATE
      GOVERNANCE PRACTICES
                        37SCHEDULE
      A - AUDIT COMMITTEE CHARTER
                        38





FORWARD-LOOKING
STATEMENTS





To
the extent any statements made in this report contain information that is not
historical; these statements are forward-looking statements and may be
forward-looking information within the meaning of applicable securities laws
(collectively, “forward-looking statements”).  These forward-looking
statements related to, among other things, our objectives, goals, strategies,
intentions, plans, estimates and outlook, including advertising, program,
merchandise and subscription revenues, operating costs and tariffs, taxes and
fees. and can generally be identified by the use of the words such as "believe",
"anticipate", "expect", "intend", "plan", "will", "may" and other similar
expressions.  In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements.  Although Corus believes that the
expectations reflected in such forward-looking statements are reasonable, such
statements involve risks and uncertainties and undue reliance should not be
placed on such statements.  Certain material factors or assumptions
are applied in making forward-looking statements, including without limitation
factors and assumptions regarding advertising, program, merchandise and
subscription revenues, operating costs and tariffs, taxes and fees and actual
results may differ materially from those expressed or implied in such
statements.  Important factors that could cause actual results to
differ materially from these expectations include, among other things: our
ability to attract and retain advertising revenues; audience acceptance of our
television programs and cable networks; our ability to recoup production costs,
the availability of tax credits and the existence of co-production treaties; our
ability to compete in any of the industries in which we do business; the
opportunities (or lack thereof) that may be presented to and pursued by us;
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; our ability to
integrate and realize anticipated benefits from our acquisitions and to
effectively manage our growth; our ability to successfully defend ourselves
against litigation matters arising out of the ordinary course of
business;  and changes in accounting standards. Additional information
about these factors and about the material assumptions underlying such
forward-looking statements may be found in this Annual Information
Form.  Corus cautions that the foregoing list of important factors
that may affect future results is not exhaustive.  When relying on our
forward-looking statements to make decisions with respect to Corus, investors
and others should carefully consider the foregoing factors and other
uncertainties and potential events. Unless otherwise required by applicable
securities laws, we disclaim any intention or obligation to publicly update or
revise any forward-looking statements whether as a result of new information,
events or circumstances that arises after the date thereof 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.  It also amended its articles on January 9, 2008 to
implement at two-for-one stock split of its Class A Voting Shares and Class B
Non-Voting Shares (each such term as defined below under the heading “Capital
Structure”), effective February 1, 2008.








3





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.





Corus
commenced trading on the Toronto Stock Exchange (CJR.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 - 3rd Avenue
S.W., Calgary, Alberta, T2P 4L4.  A second executive office is located
at Brookfield Place, Bay-Wellington Tower, Suite 1630, 181 Bay Street, P.O. Box
767, Toronto, Ontario, M5J 2T3.





Subsidiaries





The
following table describes the significant operating subsidiaries of Corus as at
August 31, 2008, their jurisdiction of incorporation or organization, and the
percentage of voting and non-voting securities owned by Corus directly or
indirectly.





Subsidiary
                        Jurisdiction
                        Percentage
      of securities
                          owned
      by the Company591987
      BC Ltd.
                        British
      Columbia
                        100%591989
      BC Ltd.
                        British
      Columbia
                        100%Corus
      Audio & Advertising Services Ltd.
                        Alberta
                        100%Corus
      Premium Television Ltd.
                        Canada
                        100%Corus
      Radio Company
                        Nova
      Scotia
                        100%Encore
      Avenue Ltd.
                        Alberta
                        100%Max
      Trax Music Ltd.
                        British
      Columbia
                        100%Metromedia
      CMR Broadcasting Inc.
                        Canada
                        100%Movie
      Central Ltd.
                        Alberta
                        100%Nelvana
      Limited
                        Ontario
                        100%TELETOON
      Canada Inc.
                        Canada
                        50%W
      Network Inc.
                        Canada
                        100%YTV
      Canada Inc
                        Canada
                        100%





The
Corporation has other subsidiaries but they have been omitted as each represents
10% or less of total consolidated assets and 10% or less of total consolidated
revenues.  These omitted subsidiaries together represent less than 20%
of total consolidated assets and revenues.


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 53 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, the largest Canadian-owned
English language publisher of children’s books; three broadcast television
stations; a cable advertising service; and 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.





On
September 3, 1999, the Corus Class B Non-Voting Shares were listed and posted
for trading on the Toronto Stock Exchange (CJR.B).  On May 10, 2000,
Corus Class B Non-Voting Shares were listed for trading on the New York Stock
Exchange (CJR).





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:





TELETOON
acquisition




In the
first quarter of fiscal 2007, the Company completed the acquisition of an
additional 10% share of TELETOON, to increase its ownership interest in this
television network from 40% to 50%.  The total cash consideration paid
was $46.6 million.




Radio
station acquisitions and disposals




In the
fourth quarter of fiscal 2007, the Company completed the acquisition of two
radio stations.  The total cash consideration paid was $18.0
million.  In fiscal 2008, the Company acquired an additional station
for approximately $1.1 million, and disposed of another station.




Sale
of Controlling Interest in The Documentary Channel




In the
last quarter of fiscal 2007, the Company completed its sale of its controlling
interest in The Canadian Documentary Channel Limited Partnership to the Canadian
Broadcasting Corporation.




Acquisition
of Canadian Learning Channel




In the
first quarter of fiscal 2009, the Company completed the acquisition of Canadian
Learning Television. The total cash consideration paid was approximately $75.0
million, including customary closing adjustments.








5


DESCRIPTION
OF THE BUSINESS
 
 Through
fiscal 2008, Corus’ principal business activities were conducted through three
operating groups: Radio, Television and Content.  Commencing in fiscal
2009, the Content group has been integrated with the Television group, 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, 2007, there were 619 commercial radio stations in
Canada of which approximately 72%were
FM stations and 28% were AM stations.





The
industry is dependent upon advertising revenues for economic performance and
growth. According to the CRTC, the industry generated over $1.5 billion in
revenues in 2007 up 6.2% versus last year. 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 $14.2 billion spent on advertising in Canada, compared to the
newspaper and television industries, which capture approximately 18%and
23% of the total, respectively. According to the CRTC, in 2007, local
advertising and national advertising represented 75% and 25%, 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 websites 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.





Advances
in digital technology have now made subscription radio a reality. Subscription
or Satellite radio provides a number of channels of programming to listeners for
a flat monthly fee. Three licenses were approved by the CRTC in 2004 to
distribute digital radio signals across Canada.  Two of these licenses
were launched in 2005 and now distribute digital signals via
satellite.  The third license has not been pursued to date on the
basis of existing license conditions. Results to date indicate some minor
penetration in the market place.




Business
Overview


Corus’
radio group (“Corus Radio”) comprises 52 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 second largest radio operator in Canada in terms of audience reach
and tune-in. According to BBM’s Survey 1 2008 (“S1 ’08”), Corus had a market
share of 27.5% in terms of audience reach, just slightly behind the market
leader Astral Media which had market share of 29.1%.  Rogers Media and
CTVglobemedia fell close behind with market shares of 18.5% and 15.2%,
respectively, in terms of reach, during that same period. Corus Radio reaches
one in four Canadians on a weekly basis.





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 nineout of Canada’s 10
largest markets by population (Vancouver, Calgary, Edmonton, Winnipeg, Hamilton,
London, Toronto, Quebec City and Montreal).  Corus is well positioned
in the Toronto market through its three stations that focus on adults 18 to 49:
Q107, 102.1 The Edge and AM 640.  Corus Radio news & talk stations
continue to be the most listened to AM stations in Calgary, Edmonton, Vancouver
and Winnipeg, measured by audience tuning.








6





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, 2008:





Location
              Call
      letter
              Frequency
              Format
              Target
              Rank
              Audience
                share
      (i)B.C.Vancouver
              CKNW
      (CKNW 980)
              AM
              News/Talk
              A35+
              1
              14.8CFOX
      (The Fox)
              FM
              Active
      rock
              M18-34
              1
              20.8CFMI
      (Rock 101)
              FM
              Classic
      rock
              M25-54
              3
              9.6CHMJ
      (AM 730)
              AM
              Traffic
              M25-49
              13
              0.9AlbertaCalgary
              CKRY
      (Country 105)
              FM
              Country
              A35-54
              3
              9.2CHQR
      (QR77)
              AM
              News/Talk
              A35+
              1
              10.8CFGQ
      (Q107)
              FM
              Classic
      rock
              M25-49
              7
              6.0Edmonton
              CHED
      (630 CHED)
              AM
              News/Talk
              A25+
              2
              13.1CKNG
      (JOE)
              FM
              80’s/90’s
              A25-49
              3
              11.0CISN
      (CISN Country)
              FM
              New
      country
              F35-54
              1
              21.9CHQT
      (i880 News)
              AM
              News
              A25-54
              13
              1.8ManitobaWinnipeg
              CJOB
      (CJOB 680)
              AM
              News/Talk/Sports
              A35+
              1
              20.3CJGV
      (Groove FM)
              FM
              Smooth
      adult jazz
              A35-64
              10
              2.2CJKR
      (Power 97)
              FM
              Rock
              M18-34
              1
              28.9OntarioBarrie
              CIQB
      (B101)
              FM
              Hot
      adult contemporary
              A25-54
              3
              10.1CHAY
      (The New CHAY)
              FM
              Adult
      contemporary
              A25-54
              5
              6.2Burlington
              CING
      (Country 95.3)
              FM
              Country
              A25-49
              3
              5.8Cambridge
              CJDV
      (DAVE)
              FM
              80’s/90’s
              A25-49
              3
              10.8Collingwood
              CKCB
      (The Peak)
              FM
              Adult
      contemporary
              A25-54
              NA
              NACornwall
              CFLG
      (Variety 104.5)
              FM
              Adult
      contemporary
              A25-49
              1
              29.2CJSS
      (Rock 101.9)
              FM
              Rock
              M25-54
              2
              17.2CJUL
      (AM1220)
              AM
              News/Talk/Oldies
              A35-64
              5
              5.7Guelph
              CJOY
      (1460 CJOY)
              AM
              Oldies
              A35+
              1
              10.1CIMJ
      (Magic 106.1)
              FM
              Adult
      contemporary
              A25-49
              1
              19.4Hamilton
              CJXY
      (Y108)
              FM
              Rock
      hits
              M25-49
              2
              10.0CHML
      (AM 900)
              AM
              News/Talk
              A35+
              2
              7.3Kingston
              CFMK
      (JOE)
              FM
              80’s/90’s
              A25-49
              4
              7.4CFFX
      (Lite 104.3)
              FM
              Adult
      contemporary
              F35-54
              6
              6.9Kitchener
              CKBT
      (91.5 The Beat)
              FM
              Contemporary
      hit
              A25-44
              4
              8.0London
              CFPL
      (FM 96)
              FM
              Rock
              M18-49
              1
              29.1CFPL
      (AM 980)
              AM
              News/Talk
              A35+
              7
              4.8St.
      Thomas
              CFHK
      (Fresh FM)
              FM
              Contemporary
      hit
              A18-34
              2
              16.2Peterborough
              CKWF
      (The Wolf)
              FM
              Rock
              A25-49
              1
              28.2CKRU
      (980 Kruz)
              AM
              Oldies/Sports
              A35+
              2
              15.2





7








Location
              Call
      letter
              Frequency
              Format
              Target
              Rank
              Audience
                share
      (i)Toronto
              CFNY
      (102.1 The Edge)
              FM
              New
      rock
              M18-34
              1
              12.9CILQ
      (Q107)
              FM
              Classic
      rock
              M25-49
              1
              12.4CFMJ
      (AM 640)
              AM
              News/Talk
              M25-49
              12
              2.7Woodstock
              CKDK
      (The Hawk)
              FM
              Classic
      rock
              M25-49
              6
              6.8QuebecGatineau
              CJRC
              FM
              News/Talk
              A35+
              2
              10.9Montreal
              CFQR
              FM
              Adult
      contemporary
              F25-54
              2
              24.7CKOI
              FM
              Contemporary
      hit
              A25-54
              5
              8.6CKAC
              AM
              Sports
              A35+
              7
              3.2CINW
      (940 News)
              AM
              News/Talk
              A35+
              5
              5.0CHMP
              FM
              News/Talk
              A25-54
              4
              10.0CINF
      (Info 690)
              AM
              News
              A35+
              9
              1.1Quebec
      City
              CFOM
              FM
              Adult
      contemporary
              A25-54
              5
              10.8CFEL
              FM
              Soft
      rock
              A25-54
              10
              0.1Saguenay
              CKRS
              FM
              News/Talk
              A35+
              2
              17.0St.
      Jerome
              CIME
              FM
              Adult
      contemporary
              A25-54
              1
              19.0Sherbrooke
              CHLT
              FM
              News/Talk
              A35+
              3
              11.0CKOY
              FM
              Contemporary
      hit
              A25-34
              3
              9.5Trois
      Rivieres
              CHLN
              FM
              News/Talk
              A35+
              4
              10.0





(i)
      Sources:
            S2’08
      - Vancouver, Calgary, Edmonton, Winnipeg, Hamilton, Toronto, Gatineau,
      Montreal, Quebec City,  S4’07 - Cornwall, Guelph, Peterborough,
      Woodstock; St. Jerome,  S1’08 - All other
  markets





Corus
Radio derives the majority of its revenues from advertising sales. Revenues for
fiscal 2008 and 2007 were $286 million and $276 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 2008,
approximately 73% of Corus Radio’s advertising 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).  Websites 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 websites.  With approximately 1,434,000 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 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.








8


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.
 
 During
fiscal 2008, Corus concluded the purchase of CKOY-FM in Sherbrooke from Groupe
Generation Rock Inc., an independent operator.  The transaction closed
on January 27, 2008.  Corus Radio also completed the sale of CHRC-AM
in Quebec City.  The sale closed on September 1,
2008.


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 2008,
Corus’ recently reformatted stations continued to gain traction with their
targeted demographics.





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. In
addition, Corus Radio operates Group Force Radio, a joint venture with Cogeco.
Group Force Radio focuses on developing and delivering increased National
revenues specific to the province of Quebec.





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





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 Astral Media,
Rogers Media and CTVglobemedia, 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.








9


TELEVISION
 
 Corus’
television group (“Corus Television”) comprises specialty television networks,
premium pay television services, three local television stations, other media
services and the Content group which consists of the production and distribution
of television programs and the merchandising of related products and
rights.
 
 Description
of the Industry
 According
to the CRTC Communications Monitoring Report 2008, there were approximately 10.7
million subscribers to television programming services in 2007. There were
approximately 7.7 million cable subscribers and 2.631 million direct-to-home
(“DTH”) satellite and multipoint distribution systems (“MDS”) subscribers. Total
digital subscribers were approximately 6.2 million, up from 5.8 million a year
earlier.





Specialty
and Premium Pay Television Networks


Specialty
and premium pay television networks generated $2.7 billion of combined
advertising and subscriber revenues in 2007. 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 discretionary tier of
digital-only theme packages, as a stand-alone digital offering, or as part of
individual premium services provided to digital subscribers [need to update for
digital basic].  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 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 DTH satellite operators. According to
the CRTC, television advertising in 2007 totaled approximately $3.3 billion in
Canada.  Specialty television networks received a 29% share of total
television advertising revenues, or approximately $994 million, up from $882
million or a 27 % share of total television advertising revenues in
2006.





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 December 2007,
only approximately 81 Category 2 digital networks are in operation.





Production
and Distribution


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.  Corus’ content is seen in more than 190 countries on
over-the-air, analog and digital platforms.





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 favorable.  Future
growth in the sector is being fueled by:





10








•
            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.
      video on demand, subscription video on demand, 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$85.9 billion in 2007 to
US$111.2 billion in 2012.
 
 The home
entertainment market is a US$58.5 billion industry worldwide, and includes DVD
& VHS sales and in-store rental and online rental subscription
revenues.  Growth is expected to continue due to two factors: (1) increased
penetration of HD TV systems, which in turn will spur DVD sell-through as
customers upgrade their DVD collections to HD, (2) the launch of new digital
download-to-own and subscription streaming services, which make available a
broader selection of content to customers.
 
 Merchandising
 According
to industry sources, in 2007 licensed retail sales in the United States and
Canada were approximately US$68.7 billion. All of Corus’ character brands fall
into the entertainment/character property type category, which, according to
industry sources, accounted for US$12.2 billion of retail sales in the United
States and Canada in 2007. The entertainment/character property type category
accounts for 18% of total licenses retail sales in the United States and Canada
in 2007.
 
 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.  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 other than in the peak
viewing periods of 7 p.m. to 11 p.m. where the limit was raised to 14 minutes an
hour beginning September 1, 2007.  The commercial message limit
increased to 15 minutes an hour for all viewing periods effective September 1,
2008 and will be eliminated all together effective September 1,
2009.  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.





11








New
Products


The trend
in the television sector is in 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.




•
            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, 2008:





Network
                          Description
      of programming
                          InterestYTV
                          Children/Family
                          100%Treehouse
      TV
                          Preschool
      children/Parents
                          100%W
      Network
                          Lifestyle
      and entertainment geared to women
                          100%Country
      Music Television
                          Country
      music/Country lifestyle
                          80%Telelatino
                          Canadian-Italian
      and Spanish
                          50.5%TELETOON
                          Children/Family/Adult
      animation
                          50%The
      Food Network Canada
                          Food
      related
                          20%Movie
      Central
                          Premium
      movies and series
                          100%Encore
      Avenue
                          Classic
      movies
                          100%Discovery
      Kids (Digital Service)
                          Children/Family
                          53.6%SCREAM
      TV ( Digital Service)
                          Horror
      and thriller movies and series
                          51%Canadian
      Learning Television
                          Formal
      and informal educational programming
                          100%Cosmopolitan
      Television
                          Lifestyle
      and entertainment geared to working women aged 18 to 34
                          54%





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.  Our television networks, W Network, YTV and Treehouse are
all ranked among the top three analog television networks based on targeted
demographics.
  YTV
is a specialty television network dedicated to programming for children and
teens aged two to 17. YTV has the highest average weekly reach of any Canadian
specialty network for Kids 2-11 based on the BBM NMR 07/08 broadcast year
data.  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 a 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.  Treehouse TV broadcasts
all of the top 50 preschool shows in Canada, based on BBM NMR 07/08 broadcast
year data.





12








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, BBM NMR statistics show that W Network has achieved a 117% growth
in its average audience for 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 women 25 to 54 with an 18% lead over its
nearest competitor.





Country
Music Television (“CMT”) is a specialty service dedicated to exhibiting country
music videos, a prime-time lineup of comedy and drama series, movies and
specials, music programming and daily entertainment
news.    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 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.




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.





Canadian
Learning Television was acquired by Corus on September 1, 2008.  The
service was rebranded in November 2008 and will focus on boomer women,
women 35 to 54.





Currently,
Corus offers three digital specialty television networks:


(1)
            Discovery
      Kids which offers children informative and entertaining programming with
      an emphasis on action, adventure and the
  environment;


(2)
            SCREAM
      TV, which offers
      horror and thriller theme through a movie-rich schedule of classic and
      modern thrillers, cult favorites and popular series;
  and


(3)
            Cosmopolitan
      Television, which offers lifestyle and entertainment programming, geared
      towards women 18 to 34.





Discovery
Kids and SCREAM TV were launched in September 2001.  Cosmopolitan
Television was launched in February 2008.





Corus
also holds interests in the following specialty television
networks:





•
            A
      50% 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. In 2007 Corus increased its ownership interest
      from 40% to 50%. TELETOON launched a new English language digital
      channel, TELETOON
      Retro in October 2007.  TELETOON Retro French, launched in
      September 2008.





•
            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 2008, subscriber fees accounted for
89% and advertising accounted for 59% of total revenues from the specialty
television networks.





Premium
Television Networks


Movie
Central and Encore Avenue provide premium television services in western Canada,
featuring blockbuster movies, series and specials from diverse genres on six
channels. Each channel broadcasts commercial-free 24 hours a day, seven days a
week. The Movie Central
brand consists of four channels standard definition channels and two high
definition channels and the Encorebrand consists of two
standard definition channels.





Revenues
from premium television networks have experienced significant growth over the
past three years as a result of increased direct-to-home satellite and digital
cable subscribers. As at August 31, 2008, Corus’ Movie Central service had
891,000 subscribers, a 1% increase in year-over-year subscribers, representing
penetration of approximately 42% of digital cable and direct-to-home satellite
subscribers in western Canada.  The subscriber growth slowed in 2008
due in part to the writer’s strike which delayed the launch of several key
series.  These series returned in 2009.


13








Production
and Distribution


Nelvana
Enterprises distributes programming that has been developed and produced by the
Nelvana Studio.  Nelvana Enterprises distributes programming to
broadcasters in over 190 countries, including some of the world’s leading
networks, such as Nickelodeon, the Disney Channel, HBO, ITV in the United
Kingdom and France 3. There are 79 television programs licensed in Canada, and
41 in the United States.  Programming is distributed through three
sales and distribution offices located in Toronto, Canada, Shannon, Ireland and
Paris, France.





At August
31, 2008, Nelvana Enterprises’ program library totaled over 3,000 half-hour
equivalent episodes, comprising 87 animated television series, 18 specials, 19
animated feature length films and 9 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. International television markets outside of the United States
and Canada are Nelvana Enterprises’ largest source of revenue, accounting for
40% of production and distribution revenues in fiscal 2008, compared to 33% from
the Canadian market and 27% from the United States.
 
 Merchandising
 Television’s
merchandising business contains some of Nelvana’s most popular characters,
including Bakugan,
Franklin, Babar,andBackyardigans, which have achieved recognition and popularity worldwide
and have become valuable long-term merchandising brands. Nelvana Enterprises’
merchandising efforts focus on marketing its most popular brands and
co-coordinating with retailers to promote its character merchandise in North
America and around the world. Nelvana Enterprises 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
for brands produced by the studio or acquired from third parties. Highlights in
fiscal 2008 include the launch of Bakugan, as well as the
ongoing rollout of Backyardigans in key
international markets.


Publishing


Television’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:





•
            Franklin - more than 61
      million books sold worldwide.


•
            Scaredy Squirrel - this
      charming worrywart has sold almost 500,000 books
      worldwide.  Scaredy arrived in 2006.  With the
      publication of the third book in the series, it has become a publishing
      phenomenon - making it the number one selling series for Kids Can
      Press.  This series now includes Scaredy Squirrel, Scaredy Makes
      a Friend, Scaredy at the Beach with Scaredy at Night launching in Spring
      2009.  With the forthcoming television series in production, we
      anticipate even greater sales.





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 2008, national agency
directed clients and local advertisers accounted for a combined 84% of
revenues.  CBC network affiliate payments amounted to 12% of revenues,
with the remaining 4% originating from a variety of other sources.





Other
Media Services


Corus
Custom Networks (“CCN”) 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.





14








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. [May need to update prior to
release]





Operating
Strategy


Corus has
reorganized its television division to focus on two strategic portfolios. The
kids’ portfolio includes YTV, Treehouse TV, TELETOON, Discovery Kids,the Nelvana
Studio and Nelvana Enterprises.  The consolidation of the kids assets
will allow for shared programming, a streamlined development process, the
ability to create and maintain multi-platform rights in Canada and ensure stable
output with cost certainty for the studio.  The Lifestyle, Drama and
Movies portfolio includes the operations of W Network, CMT, Telelatino, Movie
Central, Encore Avenue, CLT, Cosmopolitan TV and SCREAM
TV.   Management is responsible for generating program buying
synergies, developing strategies for integrating operations where possible, as
well as consolidating cross-promotion and marketing opportunities and joint
sales initiatives.





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
Corus brands.





Corus
will continue to focus on managing and growing its core business.  The
Company will continue to explore new platform opportunities and make investments
to test where appropriate.





Kids


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 broadcast
properties.





The
integration of the Content business maximizes new platform efforts, an
increasingly important segment of the kids market.  The consolidation
of the development streams ensures that Corus continues to create superior
content which will drive ratings.  The studio will continue to provide
content to Teletoon to meet that networks unique needs.





The kids’
market and new media provide growth opportunities.  Corus Television
will capitalize on the growth in the home entertainment industry, both
domestically and internationally, by constructing and investing in the new media
platforms such as VOD, SVOD, mobile and interactive games) to create new revenue
streams.  .  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.  Corus
Television has concluded transactions or is in dialogue with all of the major
strategic players in the On-Demand space including Comcast, Microsoft, Hewlett
Packard and Sony in order to determine the best fit for Corus’
properties.





Corus
Television owns a 12.5% interest in qubo, a kids channel in the United
States.  Corus launched this channel in partnership with ION Networks,
Entertainment Rights, Scholastic and NBC Universal.  The channel,
which focuses on educational and entertaining programming, provides another
outlet for Nelvana shows and is currently in approximately 8 million
homes.





Corus
Television is also using its programming library to help launch new linear
broadcast channels internationally.  One such channel initiative,
Kidsco, was launched in fiscal 2007 to help increase the profile of the Nelvana
brands. Corus Television owns one third of the channel in partnership with NBC
Universal and Cookie Jar.  Kidsco is targeted to preschoolers, kids
aged 6 to 11 and their families.  Kidsco is currently carried in 40
counties across Asia, Europe and Africa.





This ever
growing number of outlets for the distribution of children’s content creates a
need for Corus Television to be focused on rights management.  By
identifying and properly tracking the full spectrum of rights attached to
Nelvana properties, we are better able to optimize current deal structures.
Corus Television ensures that it licenses only those specific rights required by
its current customers, and retains unrelated, neighboring rights for future
exploitation.   This in turn will enable us to monetize emerging
distribution platforms that have yet to appear in today’s
marketplace.





15








Lifestyle,
Drama and Movies


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 117% since the 2001-2002 season, making W Network one
of the leading specialty service for women.  In fiscal 2008, W Network
had the highest average minute audience of all Canadian specialty networks for
women 25-54, with an 18% lead over its nearest competitor.  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, lifestyle shows and drama and comedy
series.  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.





Corus
Television will broaden its position with women by expanding its
portfolio.  Cosmopolitan TV, a channel for women 18 to 34 was launched
in February 2008.  The channel features content about relationships
and sex and is currently being previewed in 5 million
households.  Corus Television also added CLT to its portfolio in
September 2008.  This channel will be rebranded to target Boomer
women, aged 35 to 54.
 
 Corus
Premium Television will continue to operate under two separate licenses (Movie
Central and Encore Avenue). Corus Premium will continue to focus on delivering
high quality programming and investing in marketing to promote 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. 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.  In September 2008,
Movie Central reached an agreement with HBO to launch HBO Canada on October 30,
2008.  Available through all major cable and satellite affiliates, HBO
Canada is a multiplex channel that will be offered as part of our Movie Central
package in western Canada.  Astral’s The Movie Network will offer the
same HBO Canada package in eastern Canada.
 
 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
Subscription Video on Demand product in Canada. Movie Central SVOD offers Movie
Central subscribers more than 90 hours of unique programming each week including
feature films from five major Hollywood studios and high-profile US series.
 In conjunction with Shaw’s VOD service, this service is offered to current
subscribers for a separate monthly subscription.
 
 Movie
Central has two dedicated high definition channels showcasing an unparalleled
lineup of new releases in true high definition format.One of the
high definition channels will be re-branded HBO Canada. Encore Avenue HD, which
launched in April 2008, offers subscribers re-mastered library features in true
HD.
 
 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
 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. CCN  is also investigating new types of
advertising-related businesses that are complementary to its core competencies
including a long form infomercial channel, Eyes On which has launched and an on
demand offering, Eyes On Demand expected to launch by the end of the
year.  Corus Custom Networks has streamlined operations by creating
regional hubs to service advertisers.


16








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 networks like YTV, W, CMT, CLT the local stations
and digital channels compete for audience, advertising revenues, and programming
with other broadcast networks such as CBC, CTV, Global, Rogers, 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
CTVglobeMedia, Canwest Global, Allarco Limited and Astral. According to the
CRTC, in 2007, the Canadian specialty television and premium television network
industries generated $2.7 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.
 
 In June
2006, the CRTC licensed a national pay television service which will compete
directly with Corus’ premium television networks.  The service
launched in the fall of 2007.


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 Studio B Productions.





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 depend upon the Company’s efforts to use and protect these and
Corus does so vigorously.





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.





17








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 licenses from the owners.  A key element of contracts
for copyright works is the term or time period of the license 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.





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 obligation to the Company.





Corus
Television’s premium pay television services are solely dependent on subscriber
fees.  The major BDUs 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.








18


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, 2008, Corus had approximately 1,972 full-time employees.  The
Company operates in a non-union environment except for: 152 employees in
specialty and conventional television and radio and 26 employees in its Quebec
radio operations who are members of the Communications, Energy and Paperworkers
Union of Canada; 65 employees in Quebec radio operations who are members of the
Syndicat Général de la Radio; 6 employees in Quebec radio operations who are
members of the Centrale Syndicat Nationale; 10 employees in Quebec radio
operations who are members of the Independent Syndicat; and 26 employees in
Quebec operations who are members of the Syndicat Canadien de la Fonction
Publique.





There are
117 Corporate employees, 1,117 Radio employees of which 155 are unionized, 653
TV employees of which 130 are unionized and 85 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 6% of Corus’ consolidated revenues for the year
ended August 31, 2007 were derived from foreign operations.





g)
Lending





Corus
does not have any lending operations as a distinct or significant business.
Corus has, however, provided financing through loans to its digital channels and
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 chief executive
officer (“CEO”) or the chief financial officer (“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.





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





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 is
available on the Corus Entertainment website at www.corusent.com under “Investor
Information.”








19


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, 2008, as contained in the Company’s 2008 Annual
Report, which discussion is incorporated by reference herein.  In
addition, the Company is subject to the risks and uncertainties set forth below
in the discussion of the Canadian communications industry regulatory
environment.
 These
descriptions of risks do not include all possible risks, and there may be other
risks of which the Company is currently not aware.





l)
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 a
majority 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 five
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 Corus’ 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.  The regulations, policies and decisions of the CRTC can
be found at www.crtc.gc.ca.





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 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.





The CRTC
“3-Year Work Plan - 2008-2011” included priorities for the communications sector
which expand upon the aforementioned Vision Statement:




•
            a
      more focused regulatory approach;


•
            greater
      outreach to stakeholders; and


•
            an
      improved organization




In
support of these priorities, the CRTC stated that the principles of
transparency, fairness, predictability, and timeliness would be continually
upheld.  The CRTC defined its outcomes as:




•
            a
      strong Canadian presence on all
platforms


•
            a
      globally strong and competitive communications sector;
  and


•
            informed
      Canadians participating in the communications
  system










20





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 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
is in material compliance with conditions of license and regulatory
requirements. 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.








21





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.





On
December 15, 2006, the CRTC released its most recent review of radio
policy.  The new policy maintained current levels of Canadian Content
music required of broadcast licensees.  The contributions required of
licensees to Canadian Talent Development was renamed to Canadian Content
Development, the amounts payable were slightly increased, and the list of
eligible recipients was amended.





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
approved an extension before that date.  Since then, the Commission
has licensed many new Category 2 services while at the same time allowing
for carriage of new foreign services, especially those in third
languages.







22








In the
fall of 2006, the Commission started a policy review for over-the-air
broadcasting stations.  Key issues include the imposition of a fee for
carriage of broadcast stations, the introduction of high definition television
technology, transfer of ownership benefits payments, and closed captioning
regulations.  It is expected that this will be followed by a review of
policies regarding pay and specialty services and broadcasting distribution
undertakings.





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.





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.








23


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 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.








24


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 Actto 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.





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, 2008, there were
3,445,858 Class A Voting Shares, 81,024,594 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.





25








(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 $0.005 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.





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;





26








“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 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.





27








(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 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.





28








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 therefore 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.





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 license 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.





29








Ratings





As a
result of the successful tender offer and consent solicitation for Corus’ Senior
Subordinated Debt, completed in January 2006, the ratings previously assigned by
Standard & Poor’s and Moody’s Investors Service, Inc. for Corus were
withdrawn.





MARKET
FOR SECURITIES





Marketplaces


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





Security
                        Exchange
                        SymbolClass
      B Non-Voting Shares
                        Toronto
      Stock Exchange (“TSX”)
                        CJR.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, 2008.





TSX
      - CJR.BMonth
                                                        High
                                                        Low
                                                        Close
                                                        Average
      Daily
                                                          VolumeSeptember
      2007
                                                        25.10
                                                        23.28
                                                        23.54
                                                        170,849October
      2007
                                                        25.38
                                                        23.19
                                                        24.88
                                                        155,991November
      2007
                                                        25.92
                                                        23.76
                                                        24.78
                                                        158,869December
      2007
                                                        25.00
                                                        23.56
                                                        24.16
                                                        105,700January
      2008
                                                        24.26
                                                        20.43
                                                        21.77
                                                        148,221February
      2008
                                                        23.98
                                                        19.13
                                                        20.16
                                                        168,828March
      2008
                                                        21.50
                                                        17.70
                                                        18.01
                                                        198,003April
      2008
                                                        19.70
                                                        17.33
                                                        19.35
                                                        207,155May
      2008
                                                        21.36
                                                        19.00
                                                        19.50
                                                        384,574June
      2008
                                                        20.25
                                                        17.50
                                                        18.19
                                                        218,325July
      2008
                                                        18.31
                                                        15.59
                                                        18.14
                                                        320,822August
      2008
                                                        20.21
                                                        17.80
                                                        19.53
                                                        199,484
  30
   NYSE
      - CJRMonth
                                                          High
                                                          Low
                                                          Close
                                                          Average
      Daily
                                                            VolumeSeptember
      2007
                                                          24.53
                                                          22.25
                                                          23.73
                                                          29,589October
      2007
                                                          26.52
                                                          23.28
                                                          26.38
                                                          32,365November
      2007
                                                          27.09
                                                          23.91
                                                          24.67
                                                          31,019December
      2007
                                                          25.12
                                                          23.22
                                                          24.54
                                                          24,650January
      2008
                                                          24.52
                                                          20.02
                                                          22.02
                                                          29,162February
      2008
                                                          23.88
                                                          19.80
                                                          20.31
                                                          32,490March
      2008
                                                          21.71
                                                          17.24
                                                          17.63
                                                          34,420April
      2008
                                                          19.49
                                                          17.03
                                                          19.30
                                                          29,259May
      2008
                                                          21.01
                                                          18.80
                                                          19.62
                                                          24,805June
      2008
                                                          20.03
                                                          17.27
                                                          17.90
                                                          39,281July
      2008
                                                          17.84
                                                          15.71
                                                          17.62
                                                          77,268August
      2008
                                                          18.94
                                                          16.58
                                                          18.17
                                                          65,930





All price
and volume information is from independent third-party sources.







DIVIDEND
POLICY





(a)
Dividend Policy





The
Company’s dividend policy is reviewed on a quarterly basis by the Board of
Directors.  Shareholders are entitled to receive dividends only when
any such dividends are declared by the Company’s Board of Directors, and there
is no entitlement to any dividend prior thereto.





As
described above, the dividends (other than stock dividends) declared and paid on
the Class A Voting Shares shall be $0.005 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 lenders, as amended and
restated on January 23, 2006, 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.





(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, 2008, as well as the annual dividend payments for
the past three fiscal years, are set forth in the tables
below.  Amounts have been adjusted to reflect the dividend per share
after giving effect to the two-for-one stock split which occurred on February 1,
2008.





Fiscal
      2008 dividends paid per shareDate
      paid
                    Class
      A Voting Shares
                    Class
      B Non-Voting SharesAugust
      29, 2008
                    $0.049585
                    $0.050000July
      31, 2008
                    $0.049585
                    $0.050000June
      30, 2008
                    $0.049585
                    $0.050000May
      30, 2008
                    $0.049585
                    $0.050000April
      30, 2008
                    $0.049585
                    $0.050000March
      31, 2008
                    $0.049585
                    $0.050000February
      29, 2008
                    $0.049585
                    $0.050000January
      31, 2008
                    $0.041250
                    $0.041665December
      28, 2007
                    $0.041250
                    $0.041665November
      30, 2007
                    $0.041250
                    $0.041665October
      31, 2007
                    $0.041250
                    $0.041665September
      28, 2007
                    $0.041250
                    $0.041665








Annual
      dividend payments per shareFiscal
      2008
                        Fiscal
      2007
                        Fiscal
      2006Class
      A Voting Shares
                        $0.553345
                        $0.5250
                        $0.120Class
      B Non-Voting Shares
                        $0.558325
                        $0.5308
                        $0.125








31








NORMAL
COURSE ISSUER BID





On
December 15, 2005 Corus announced its intention to make a Normal Course Issuer
Bid for its Class B Non-Voting Shares.  The TSX subsequently accepted
the notice filed by Corus. Under the bid Corus could purchase for cancellation
up to a total of 6,000,000 Class B Non-Voting Shares during the 12 month period
commencing January 1, 2006 and ending December 31, 2006.  To December
31, 2006 Corus purchased 2,178,000 shares at an average price of $17.90 per
share.





On
February 12, 2007, the Company announced that the TSX had accepted the notice
filed by the Company of its intention to renew its normal course issuer bid for
its Class B Non-Voting Shares through the facilities of the TSX.  The
Company intends to purchase for cancellation a maximum of 3,000,000 Class B
Non-Voting Shares.  To December 31, 2007 Corus purchased 3,000,000
shares at an average price of $24.23 per share.





On
February 13, 2008, the Company announced that the TSX had accepted the notice
filed by the Company of its intention to renew its normal course issuer bid for
its Class B Non-Voting Shares through the facilities of the TSX.  The
Company intends to purchase for cancellation a maximum of 6,000,000 Class B
Non-Voting Shares.  To August 31, 2008 Corus purchased 2,818,000
shares at an average price of $18.80 per share.





DIRECTORS
AND OFFICERS





The
following are the names and municipalities of residence of the directors and
executive officers of the Company as of November 28, 2008 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 occupationPierre
      Béland
                          Montréal,
      Québec
                        Director
                        President,
      Métromédia PlusJohn
      M. Cassaday
                          Toronto,
      Ontario
                        Director
      and Officer
                        President
      and Chief Executive Officer,
                          Corus
      Entertainment Inc.Dennis
      Erker
                          Edmonton,
      Alberta
                        Director
                        Partner,
      Fairly Erker Advisory GroupCarolyn
      Hursh
                          Calgary,
      Alberta
                        Director
                        Chairman,
      James Richardson & Sons, LimitedWendy
      A. Leaney
                          Toronto,
      Ontario
                        Director
                        President,
      Wyoming Associates Ltd.Ronald
      D. Rogers
                          Calgary,
      Alberta
                        Director
                        Corporate
      director/trusteeCatherine
      Roozen
                          Edmonton,
      Alberta
                        Director
                        Director
      and Corporate Secretary, Cathton Holdings Ltd.Terrance
      Royer
                          Calgary,
      Alberta
                        Director
                        Chairman,
      Royco Hotels Ltd.Heather
      A. Shaw
                          Calgary,
      Alberta
                        Director
      and Officer
                        Executive
      Chair,
                          Corus
      Entertainment Inc.Julie
      M. Shaw
                          Calgary,
      Alberta
                        Director
      and Vice Chair
                        Vice
      President, Facilities, Design and Management, Shaw Communications Inc; and
      Secretary, Shaw FoundationThomas
      C. Peddie FCA
                          Toronto,
      Ontario
                        Officer
                        Senior
      Vice President and Chief Financial Officer,
                          Corus
      Entertainment Inc.John
      R. (Jack) Perraton
                          Calgary,
      Alberta
                        Officer
                        Corporate
      Secretary
                          Corus
      Entertainment Inc.
                          Senior
      Partner, Perraton LawPaul
      W. Robertson
                          Toronto,
      Ontario
                        Officer
                        President,
      Television
                          Corus
      Entertainment Inc.Doug
      Murphy
                          Toronto,
      Ontario
                        Officer
                        Executive
      Vice President and General Manager, Corus Kids
                          Corus
      Entertainment Inc.Scott
      Dyer
                          Toronto,
      Ontario
                        Officer
                        Chief
      Technology Officer
                          Corus
      Entertainment Inc.Gary
      Maavara
                          Toronto,
      Ontario
                        Officer
                        Vice
      President, General Counsel
                          Corus
      Entertainment Inc.David
      Spence CA
                          Markham,
      Ontario
                        Officer
                        Vice
      President, Controller
                          Corus
      Entertainment Inc.Hal
      Blackadar
                          Oakville,
      Ontario
                        Officer
                        Vice
      President, Human Resources
                          Corus
      Entertainment Inc.Susan
      Ross
                          Toronto,
      Ontario
                        Officer
                        Executive
      Vice President, General Manager, Corus Lifestyle, Drama and
      Movies
                          Corus
      Entertainment
Inc.








32








Each
director named above was appointed a director on January 9, 2008 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.





The Board
of Directors has four committees made up of the following members:





Committee
                      MembersExecutive
      Committee
                      Heather
      A. Shaw - Chair
                        John
      M. Cassaday
                        Terrance
      Royer
                        Dennis
      Erker
                        Ronald
      D. RogersAudit
      Committee
                      Ronald
      D. Rogers - Chair
                        Wendy
      A. Leaney
                        Catherine
      RoozenHuman
      Resources Committee
                      Terrance
      Royer - Chair
                        Pierre
      Béland
                        Dennis
      ErkerCorporate
      Governance Committee
                      Dennis
      Erker - Chair
                        Carolyn
      Hursh
                        Julie
      Shaw





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:


•
            Prior
      to July 2004, Ronald D. Rogers was Senior Vice President and Chief
      Financial Officer of Shaw Communications
Inc.;


•
            Prior
      to September 2006, Doug Murphy was Executive Vice President, Business
      Development, Nelvana, and prior to December 2002 he was Principal, Doug
      Murphy and Company;


•
            Prior
      to September 2006, Scott Dyer was Executive Vice President, Production and
      Development, Nelvana;


•
            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.;


•
            Prior
      to February 2005, David Spence was Corporate Controller, Corus
      Entertainment Inc.


•
            Prior
      to September 2006, Susan Ross was Executive Vice President and General
      Manager, Specialty Television, Corus Entertainment
  Inc.





As of
October 31, 2008, the directors and executive officers of the Company
beneficially owned, directly or indirectly, or exercised control or direction
over 1,824,632 Class A Voting Shares and 3,003,814 Class B Non-Voting Shares,
representing 53.0% and 3.9% of the issued and outstanding Class A Voting Shares
and Class B Non-Voting Shares, respectively.





33








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 for The Brick Group Income Fund, Transforce Income
Fund, Pizza Pizza Royalty Income Fund and Parkland 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 also
serves as a Director for Melcor Developments Ltd.  Ms. Roozen serves
on the Alberta Cancer Board as well as on a number of charitable
boards.





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, 2008 and 2007 totaled $1,846,500 and $1,696,355,
respectively, as detailed in the following table.  All funds are in
Canadian dollars:





Fiscal
      year ended August 31,2008
                                          2007Audit
      fees
                                          1,648,000
                                          1,333,000Audit-related
      fees
                                          103,000
                                          266,500Tax
      fees
                                          85,500
                                          96,855All
      other fees
                                          10,000
                                          -Total
                                          1,846,500
                                          1,696,355





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 Company’s annual financial statements and services provided in
connection with statutory and regulatory filings or engagements.





34








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, non-statutory audits of wholly-owned subsidiaries,
assistance with the Company’s compliance with Section 404 of the Sarbanes-Oxley Act of 2002,
and system conversion audits.





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.





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
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 fiscal 2008, 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.







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 and acts
for defamation. 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 in a material way. 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.


35





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





In
Canada, CIBC Mellon Trust Company acts as Corus’ transfer agent.  In
the United States, The Bank of New York Mellon acts as Corus’ transfer
agent.




MATERIAL
CONTRACTS





Senior
Secured Credit Facility





A
syndicate of lenders has provided Corus with a senior secured revolving term
credit facility (the “Revolving Facility”) and a senior secured non-revolving
term credit facility (the “Term Facility”) under the Amended and Restated Credit
Agreement dated as of January 23, 2006 (the “Credit Agreement”).





The
Revolving Facility consists of a committed credit of $300 million that matures
January 24, 2011. As a revolving facility, amounts borrowed may be repaid and
re-borrowed as required through the term of the Revolving 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, 2008, $135 million was drawn against the Revolving
Facility.





The Term
Facility amounts to $500 million and matures January 24, 2011. Any amounts
repaid before the maturity date may not be re-borrowed. 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, 2008 $500 million was drawn against the Term Facility.





Advances
under the Credit Agreement 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
Credit Agreement 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  Credit Agreement 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 (excepting residual
senior subordinated notes outstanding subsequent to the January 2006 completion
of the tender offer and consent solicitation).





The  Credit
Agreement 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 Credit Agreement 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.





36








Interest
Rate Swaps





Corus has
entered into Canadian interest rate swap agreements with certain Canadian banks
(that are also lenders under the Credit Agreement) to fix the interest rate at
4.13% plus a margin on $400 million of the Term Facility for the full term of
the facility. These swap agreements are considered senior debt and are subject
to the same covenants and security as available to the lenders under the Credit
Agreement.




INTERESTS
OF EXPERTS





The
Company’s auditors are Ernst & Young LLP.  The Company’s audited
consolidated financial statements for the year ended August 31, 2008 have been
filed under National Instrument 51-102 - Continuous Disclosure
Obligations.  Ernst & Young LLP has communicated to the
Company that, in their opinion, they are independent of the Company within the
meaning of the Securities Act and the applicable rules and regulations adopted
by the U.S Securities and Exchange Commission and Public Company Accounting
Oversight Board (United States).




ADDITIONAL
INFORMATION





The
Company’s financial information is provided in the audited annual financial
statements and notes and management’s discussion and analysis for the year ended
August 31, 2008.  These documents and additional information relating
to Corus may be found on SEDAR at www.sedar.com and may also be obtained
upon request from the Secretary of the Company at its Corporate office at Suite
501, 630 3rd Avenue
S.W., Calgary, Alberta, T2P 4L4.




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.





37





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
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 Company 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 Company 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 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.





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.





38








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
      bi-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 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 and disclosure, 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).





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.





39








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, 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 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, 2006, 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


(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.





40








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
            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.











41








































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.
    
  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 27,
      2008
                        By:
                        /s/ THOMAS
      PEDDIEName:
      Thomas C. PeddieTitle: Senior
      Vice President and Chief Financial Officer
    
  EXHIBIT
INDEX
  
 99.1
                          Comparative
      consolidated financial statements for the year ended August 31, 2008,
      together with the auditors’ reports thereon99.2
                          Management’s
      Discussion and Analysis of Operating Results and Financial
      Position99.3
                          Consent
      of auditors - Ernst & Young LLP dated November 14,
    2008.99.4
                          Officers’
      certifications required by Rule 13a-14(a) or Rule
    15d-14(a).99.5
                          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