##### 



EXHIBIT 2



managements discussion and analysis

Managements Discussion and Analysis is a review of activities and results
for the fiscal year ended August 31, 2003 as compared to the previous year,
and a review of activities and results for the fiscal year ended August 31,
2002 as compared to the previous year. Comments relate to and should be read
in conjunction with the audited consolidated financial statements.

FORWARD-LOOKING STATEMENTS

This Managements Discussion and Analysis contains forward-looking
statements. The results or events predicted in these statements may differ
materially from actual results or events. These forward-looking statements
can generally be identified by the use of statements that include phrases
such as believe, expect, anticipate, intend, plan, likely, will
or similar words or phrases. Similarly, statements that describe objectives,
plans or goals are or may be forward-looking statements.

These forward-looking statements are based on managements current
expectations and projections about future events. However, whether actual
results and developments will conform with these expectations and projections
is subject to a number of risks and uncertainties, including, among other
things: the ability to attract and retain advertising revenues; audience
acceptance of the Companys radio stations, specialty television networks and
the television programs produced; the ability to recoup production costs, the
availability of tax credits and the existence of co-production treaties; the
ability to compete in any of the industries in which it conducts business;
the opportunities (or lack thereof) that may be presented to and pursued by
the Company; conditions in the entertainment, information and communications
industries and technological developments therein; changes in laws,
regulations, policies, and copyright tariffs or the interpretation or
application of those laws and regulations; the ability to integrate and
realize anticipated benefits from acquisitions; and the ability to
effectively manage growth. These are not necessarily all of the important
factors that could cause actual results to differ materially from those
expressed in any forward-looking statements. Other unknown and unpredictable
factors could also harm the Companys results. Consequently, there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to, or effects on, the Company. Unless otherwise
required by applicable securities laws, the Company disclaims any intention
or obligation to publicly update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.

SUPPLEMENTAL EARNINGS MEASURES

In addition to providing earnings measures in accordance with Generally
Accepted Accounting Principles (GAAP), the Company presents certain
supplemental earnings measures and financial information. These are income
before depreciation, amortization, interest, other and income taxes (EBITDA)
and pro forma information. These measures and financial information do not
have any standardized meaning prescribed by GAAP and are therefore unlikely
to be comparable to similar measures presented by other companies.

EBITDA

This measure is provided to assist investors in determining the ability of
the Company to generate cash from operations to cover financial charges
before income and expense items from investing activities, income taxes and
items not considered to be in the ordinary course of business. It is also
widely used for valuation purposes. A reconciliation of EBITDA and net
income (loss) is provided in the consolidated statements of income (loss)
and retained earnings (deficit). EBITDA (which corresponds to the line item
Operating income before the following in the consolidated statements of
income (loss) and retained earnings (deficit)) is calculated as net income
(loss) before minority interest, equity earnings from investees, income tax
expense (recovery), goodwill and intangible impairment loss, asset
write-downs, hedge transaction loss, restructuring charges, other expense
(income), loss (gain) on sale of investments, interest on long-term debt,
amortization and depreciation. A listing of these items is disclosed in the
consolidated statements of income (loss) and retained earnings (deficit).
These items are excluded in the determination of EBITDA as they are non-cash
in nature, pre-tax, financing charges, income or expense from investing
activities or are not considered to be in the ordinary course of business.
EBITDA should not be considered in isolation of or as a substitute for (1)
net income or loss, as an indicator of the Companys operating performance,
or (2) cash flows from operating, investing and financing activities, as a
measure of the Companys liquidity.

4



---



##### 



PRO FORMA INFORMATION

Pro forma information (including pro forma revenues and pro forma EBITDA) is
provided to assist investors in comparing results between periods after
giving effect to significant acquisitions and divestitures. In particular,
results from the same period in fiscal 2002 have been adjusted to reflect
operating results of all businesses reporting in the current year as if the
businesses had been owned for the same number of days in the prior year. Pro
forma information is provided on the basis of the Companys reportable
business segments (Radio, Television and Content) for revenues and EBITDA 
the measure of profitability reviewed by the chief operating decision maker
of these divisions, since there were acquisitions and/or dispositions in
each of these divisions during fiscal 2002 or fiscal 2003.

PRO FORMA RESULTS RECONCILIATION

The following table reconciles pro forma revenues and EBITDA for the year ended
August 31, 2002 to actual results as reported in the consolidated statements of
income (loss) for the same period and should be read in conjunction with the
preceding comments on supplemental earnings measures:

YEAR ENDED AUGUST 31, 2002
    
    AS REPORTED
    
    ACQUISITIONS
    
    DISPOSITIONS
    
    PRO FORMA(thousands of Canadian dollars)
    
    (restated)(2)REVENUES:Radio
    
    
    211,416
    
    
    
    696
    
    
    
    (196
    )
    
    
    211,916Television
    
    
    308,529
    
    
    
    15,184
    
    
    
    (21,892
    )
    
    
    301,821ContentProduction and Distribution
    
    
    99,357
    
    
    
    
    
    
    
    
    
    
    
    99,357Branded Consumer Products
    
    
    60,558
    
    
    
    
    
    
    
    (36,356
    )
    
    
    24,202Eliminations
    
    
    (5,357
    )
    
    
    
    
    
    
    
    
    
    
    (5,357
    )674,503
    
    
    
    15,880
    
    
    
    (58,444
    )
    
    
    631,939EBITDA:(1)Radio
    
    
    52,853
    
    
    
    96
    
    
    
    140
    
    
    
    53,089Television
    
    
    99,061
    
    
    
    2,232
    
    
    
    (5,029
    )
    
    
    96,264ContentProduction and Distribution
    
    
    (28,797
    )
    
    
    
    
    
    
    
    
    
    
    (28,797
    )Branded Consumer Products
    
    
    7,843
    
    
    
    
    
    
    
    (3,291
    )
    
    
    4,552Corporate
    
    
    (4,750
    )
    
    
    
    
    
    
    
    
    
    
    (4,750
    )Eliminations
    
    
    (639
    )
    
    
    
    
    
    
    
    
    
    
    (639
    )125,571
    
    
    
    2,328
    
    
    
    (8,180
    )
    
    
    119,719




|    |  | NOTES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | EBITDA (which corresponds to the line item Operating income before the
following in the consolidated statements of income (loss) and retained
earnings (deficit)) is calculated as net income (loss) before minority
interest, equity earnings from investees, income tax expense (recovery),
goodwill and intangible impairment loss, asset write-downs, hedge transaction
loss, restructuring charges, other expense (income), loss (gain) on sale of
investments, interest on long-term debt, amortization and depreciation.
|   
|(2) |  | See note 2(b) to the consolidated financial statements which discusses the
adoption of the proportionate consolidation method of accounting for certain
investments on a retroactive basis.                                                                                                                                                                                                                                                                                                                                      

5



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##### 





| |  |  | OVERVIEW
| |  |  | --------



| |  |  | Corus Entertainment Inc. (Corus or the Company)
commenced operations on September 1, 1999. On that
date, pursuant to a statutory plan of 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, digital audio
services and cable advertising services businesses, as
well as certain investments held by Shaw.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Corus manages its business in three operating groups: Radio, Television
and Content. Generally, Corus financial results depend on a number of
factors, including the strength of the Canadian national economy and the
local economies of Corus served markets, local and national market
competition from other broadcasting stations and other advertising media,
government regulation, market competition from other distributors of
childrens animated programming and Corus ability to continue to provide
popular programming.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(A) |  | RADIO
|--- |  | -----



| |  |  | The Radio group is comprised of 50 radio stations, primarily situated in
eight of the ten largest Canadian markets by population, and in the densely
populated area of southern Ontario. Revenues are derived from advertising
aired over these stations. Corus is Canadas leading radio operator in terms
of revenues and audience reach.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(B) |  | TELEVISION
|--- |  | ----------



| |  |  | The Television group is comprised of the following: specialty television
networks YTV, W Network (formerly WTN, Womens Television Network),
Treehouse TV, Corus 80% interest in CMT (Country Music Television), 50.5%
interest in Telelatino, 50% interest in Locomotion and 40% interest in
TELETOON; Corus premium television services of Movie Central and Encore
Avenue; interests in three digital television channels; three conventional
television stations; Max Trax, a digital audio service; and Digital
ADventure, a cable advertising service. Revenues for specialty television
networks and digital television channels are generated from affiliate
subscriber fees and advertising. Revenues for premium television and digital
audio services are generated from affiliate subscriber fees. Revenues for
the conventional television stations and cable advertising services are
derived from advertising.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(C) |  | CONTENT
|--- |  | -------



| |  |  | The Content group consists of the production and distribution of television
programs and the branded consumer products business (formerly merchandise
licensing and publishing businesses) of Nelvana Limited which was acquired
in fiscal 2001. Revenues are generated from licensing of television
programs, merchandise licensing and publishing.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Corus is well diversified by revenue source with revenue streams for the
year ended August 31, 2003 derived primarily from four areas: advertising
52%, subscriber fees 26%, license fees 9% and publishing and merchandising
7%.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating, general and administrative expenses include amortization of
program and film rights (cost of programming purchased from third parties),
amortization of film investments (costs associated with internally produced
programming and acquired programming from third parties), employee
remuneration, regulatory license fees, cost of goods sold relating to
publishing, marketing (research and advertising costs), selling, general
administration and overhead costs. Cost of goods sold relating to publishing
include the material cost of the product, printing, freight, customs and
duties and royalties to authors and illustrators based upon sales and is
included in operating, general and administrative expenses. Approximately
31% and 30% of operating, general and administrative expenses in fiscal 2003
(2002  29% and 39% respectively) were comprised of employee remuneration
and programming costs respectively.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6



---



##### 



results of operations

The following table presents summary financial information for Corus operating
business segments and a reconciliation of net income (loss) to EBITDA for each
of the years ended August 31:

% INCREASE (DECREASE)(millions of Canadian dollars, except for %'s)
    
    2003
    
    %(2)
    
    2002(3)
    
    %(2)
    
    2001
    
    %(2)
    
    2003 OVER 2002
    
    2002 OVER 2001REVENUESRadio
    
    
    226.0
    
    
    
    35.1
    
    
    
    211.4
    
    
    
    31.3
    
    
    
    191.8
    
    
    
    34.4
    
    
    
    6.9
    
    
    
    10.2Television
    
    
    306.9
    
    
    
    47.7
    
    
    
    308.5
    
    
    
    45.7
    
    
    
    228.7
    
    
    
    41.1
    
    
    
    (0.5
    )
    
    
    34.9Content
    
    
    116.3
    
    
    
    18.0
    
    
    
    159.9
    
    
    
    23.7
    
    
    
    137.4
    
    
    
    24.7
    
    
    
    (27.3
    )
    
    
    16.4Eliminations
    
    
    (5.3
    )
    
    
    (0.8
    )
    
    
    (5.3
    )
    
    
    (0.7
    )
    
    
    (1.1
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    643.9
    
    
    
    100.0
    
    
    
    674.5
    
    
    
    100.0
    
    
    
    556.8
    
    
    
    100.0
    
    
    
    (4.6
    )
    
    
    21.1OPERATING, GENERAL
AND ADMINISTRATIVE EXPENSESRadio
    
    
    167.9
    
    
    
    74.3
    
    
    
    158.5
    
    
    
    75.0
    
    
    
    143.7
    
    
    
    74.9
    
    
    
    5.9
    
    
    
    10.3Television
    
    
    193.5
    
    
    
    63.0
    
    
    
    209.4
    
    
    
    67.9
    
    
    
    155.0
    
    
    
    67.8
    
    
    
    (7.6
    )
    
    
    35.1Content
    
    
    113.1
    
    
    
    97.2
    
    
    
    180.9
    
    
    
    113.1
    
    
    
    125.3
    
    
    
    91.2
    
    
    
    (37.5
    )
    
    
    44.4Corporate
    
    
    8.8
    
    
    
    1.4
    
    
    
    4.8
    
    
    
    0.7
    
    
    
    9.5
    
    
    
    1.7
    
    
    
    83.3
    
    
    
    (49.5
    )Eliminations
    
    
    (4.7
    )
    
    
    (0.7
    )
    
    
    (4.7
    )
    
    
    (0.7
    )
    
    
    (0.6
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    478.6
    
    
    
    74.3
    
    
    
    548.9
    
    
    
    81.4
    
    
    
    432.9
    
    
    
    77.7
    
    
    
    (12.8
    )
    
    
    26.8EBITDA(1)Radio
    
    
    58.1
    
    
    
    25.7
    
    
    
    52.9
    
    
    
    25.0
    
    
    
    48.1
    
    
    
    25.1
    
    
    
    9.8
    
    
    
    10.0Television
    
    
    113.4
    
    
    
    37.0
    
    
    
    99.1
    
    
    
    32.1
    
    
    
    73.7
    
    
    
    32.2
    
    
    
    14.4
    
    
    
    34.5Content
    
    
    3.2
    
    
    
    2.8
    
    
    
    (21.0
    )
    
    
    (13.1
    )
    
    
    12.1
    
    
    
    8.8
    
    
    
    (115.2
    )
    
    
    (273.6
    )Corporate
    
    
    (8.8
    )
    
    
    (1.4
    )
    
    
    (4.8
    )
    
    
    (0.7
    )
    
    
    (9.5
    )
    
    
    (1.7
    )
    
    
    83.3
    
    
    
    (49.5
    )Eliminations
    
    
    (0.6
    )
    
    
    (0.1
    )
    
    
    (0.6
    )
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    165.3
    
    
    
    25.7
    
    
    
    125.6
    
    
    
    18.6
    
    
    
    123.9
    
    
    
    22.3
    
    
    
    31.6
    
    
    
    1.4Depreciation
    
    
    24.7
    
    
    
    3.8
    
    
    
    26.0
    
    
    
    3.9
    
    
    
    20.0
    
    
    
    3.6
    
    
    
    (5.0
    )
    
    
    30.0Amortization
    
    
    9.8
    
    
    
    1.5
    
    
    
    8.6
    
    
    
    1.3
    
    
    
    45.9
    
    
    
    8.2
    
    
    
    14.0
    
    
    
    (81.3
    )Interest on long-term debt
    
    
    61.0
    
    
    
    9.5
    
    
    
    57.7
    
    
    
    8.6
    
    
    
    47.3
    
    
    
    8.5
    
    
    
    5.7
    
    
    
    22.0Loss (gain) on sale of investments
    
    
    1.0
    
    
    
    
    
    
    
    (18.2
    )
    
    
    
    
    
    
    (103.1
    )Other expense (income)
    
    
    (9.4
    )
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    (10.5
    )Restructuring charges
    
    
    5.0
    
    
    
    
    
    
    
    22.1
    
    
    
    
    
    
    
    Hedge transaction loss
    
    
    
    
    
    
    
    
    
    
    20.4
    
    
    
    
    
    
    
    Asset write-downs
    
    
    2.4
    
    
    
    
    
    
    
    15.3
    
    
    
    
    
    
    
    1.5Goodwill and intangible impairment loss
    
    
    
    
    
    
    
    
    
    
    162.8
    
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    70.8
    
    
    
    
    
    
    
    (169.4
    )
    
    
    
    
    
    
    122.8Income tax expense (recovery)
    
    
    28.6
    
    
    
    
    
    
    
    (2.3
    )
    
    
    
    
    
    
    (3.1
    )Income (loss) before equity earnings
from investees and minority interest
    
    
    42.2
    
    
    
    
    
    
    
    (167.1
    )
    
    
    
    
    
    
    125.9Equity earnings from investees
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    2.6Minority interest
    
    
    (2.2
    )
    
    
    
    
    
    
    (1.6
    )
    
    
    
    
    
    
    (0.3
    )NET INCOME (LOSS)
    
    
    40.0
    
    
    
    
    
    
    
    (168.6
    )
    
    
    
    
    
    
    128.2




|NOTES:
|------



|(1) |  | EBITDA (which corresponds to the line item Operating income before the
following in the consolidated statements of income (loss) and retained
earnings (deficit)) is calculated as net income (loss) before minority
interest, equity earnings from investees, income tax expense (recovery),
goodwill and intangible impairment loss, asset write-downs, hedge transaction
loss, restructuring charges, other expense (income), loss (gain) on sale of
investments, interest on long-term debt, amortization and depreciation.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Operating, general and administrative expenses and EBITDA for each business
segment are expressed as a percentage of revenues for the segment. Other items
are expressed as a percentage of total revenues.                                                                                                                                                                                                                                                                                                                      
|   
|(3) |  | As discussed in note 2(b) to Corus fiscal 2003 audited consolidated
financial statements, the financial results for fiscal 2002 have been restated
to reflect the proportionate consolidation of TELETOON and Locomotion and the
amended foreign currency translation standard.                                                                                                                                                                                                                                                 

7



---



##### 



quarterly consolidated financial information

EARNINGS (LOSS) PER SHARE(3)(thousands of Canadian dollars except per share amounts)
    
    REVENUES
    
    EBITDA(1)
    
    NET INCOME (LOSS)
    
    BASIC
    
    DILUTED20034th Qtr
    
    
    175,138
    
    
    
    41,737
    
    
    
    12,432
    
    
    $
    0.29
    
    
    $
    0.293rd Qtr
    
    
    155,296
    
    
    
    44,186
    
    
    
    12,265
    
    
    
    0.29
    
    
    
    0.292nd Qtr
    
    
    147,542
    
    
    
    31,431
    
    
    
    7,028
    
    
    
    0.16
    
    
    
    0.161st Qtr
    
    
    165,942
    
    
    
    47,958
    
    
    
    8,296
    
    
    
    0.19
    
    
    
    0.192002(2)4th Qtr
    
    
    171,765
    
    
    
    4,421
    
    
    
    (189,877
    )
    
    $
    (4.45
    )
    
    $
    (4.45
    )3rd Qtr
    
    
    154,875
    
    
    
    40,933
    
    
    
    (1,825
    )
    
    
    (0.04
    )
    
    
    (0.04
    )2nd Qtr
    
    
    167,682
    
    
    
    31,561
    
    
    
    19,309
    
    
    
    0.45
    
    
    
    0.451st Qtr
    
    
    180,181
    
    
    
    48,656
    
    
    
    3,746
    
    
    
    0.09
    
    
    
    0.0920014th Qtr
    
    
    166,581
    
    
    
    31,694
    
    
    
    (1,901
    )
    
    $
    (0.04
    )
    
    $
    (0.04
    )3rd Qtr
    
    
    138,031
    
    
    
    30,197
    
    
    
    103,373
    
    
    
    2.43
    
    
    
    2.412nd Qtr
    
    
    134,736
    
    
    
    25,604
    
    
    
    13,132
    
    
    
    0.31
    
    
    
    0.311st Qtr
    
    
    117,477
    
    
    
    36,421
    
    
    
    13,563
    
    
    
    0.35
    
    
    
    0.35




|NOTES:
|------



|(1) |  | EBITDA (which corresponds to the line item Operating income before the
following in the consolidated statements of income (loss) and retained
earnings (deficit)) is calculated as net income (loss) before minority
interest, equity earnings from investees, income tax expense (recovery),
goodwill and intangible impairment loss, asset write-downs, hedge transaction
loss, restructuring charges, other expense (income), loss (gain) on sale of
investments, interest on long-term debt, amortization and depreciation.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | As discussed in note 2(b) to Corus fiscal 2003 audited consolidated
financial statements, the financial results for fiscal 2002 have been restated
to reflect the proportionate consolidation of TELETOON and Locomotion and the
amended foreign currency translation standard.                                                                                                                                                                                                                                                 
|   
|(3) |  | The sums of basic and diluted earnings (loss) per share for the four
quarters differ from the basic and diluted earnings (loss) per share for the
year, due to differences in the average number of shares outstanding.                                                                                                                                                                                                                                                                                                          

8



---



##### 



fiscal highlights

2003

operations

Revenues from operations decreased by 5% to $644.0 million in 2003.

EBITDA increased by 32% to $165.0 million in 2003.

EBITDA margins were 26% in 2003 compared to 19% in 2002.

Corus Television enjoyed spectacular ratings growth in the Adult
25-54 demographic with W Network growing by 46%, CMT by 50% and YTV
by 29%. The sales team capitalized on the strong W Network ratings
and grew advertising revenues over 35% on a pro forma basis.

The Content division made great progress against its strategic
objectives during the year. The division was cash flow positive as a
result of the reduction in slate size, aggressive collection of tax
credits and various cost cutting initiatives. The success of Beyblade
added not only to the cash position but also enabled Content to
generate approximately 40% of the revenues from the Branded Consumer
Products business.

Corus Radio remained the Canadian leader in daily reach, revenue, and
share of tuning with a market share of 29% in terms of reach, 26%
ahead of the next closest competitor.

acquisitions/divestitures

There were no significant acquisitions or divestitures in fiscal
2003.

financial

Net debt to EBITDA ratio was reduced to 3.1 times at August 31, 2003 from
5.0 times at August 31, 2002.

Cash provided by operating activities, net of investing activities, was
$35.0 million.

regulatory

On March 29, 2003, The Copyright Board of Canada issued its decision on a
proposal by the Canadian Musical Reproduction Rights Agency (CMRRA) and the
Société du droit de reproduction des auteurs, and compositeurs et éditeurs au
Canada (SODRAC) for tariffs on the reproduction of musical works by
commercial radio stations. The decision requires licensees to commit up to
0.8% of revenues, retroactive to 2001, to be paid in royalties.

2002

operations

Revenues from operations increased by 21% to $674.5 million in 2002.

EBITDA increased by 1.3% to $125.6 million in 2002 after absorbing a
$40.0 million write-down in film investments.

EBITDA margins were 19% in 2002 compared to 22% in 2001.

Corus continued to be the most listened to radio company in Canada
with a cumulative weekly audience of 7.8 million listeners, 22%
ahead of the next closest competitor.

In April 2002, Corus relaunched and rebranded the Womens Television Network
(WTN) as W Network and focused on making the network more contemporary
and entertaining with an enhanced program schedule that provides a mix of
new dramas, fresher movies and lifestyle programming. Recent Nielsen
statistics indicate a 30% growth in Women 18-34 weekly viewers and a 20%
growth in Women 18-49 weekly viewers for the period April 15/02  June
30/02 compared to the prior year.

In January 2002, Corus Nelvana acquired the rights to Beyblade, the
Japanese toy and animé phenomenon. The program launched on YTV at #1 among
kids 2-11, on Cartoon Network U.K., as #1 with kids 10-15, and as the top
program in the ABC Family boys action block of programming in the U.S.

acquisitions/divestitures

Effective November 16, 2001, Corus acquired shares that increased its
total interest in Telelatino Network Inc. (Telelatino) to 50.5% from
20% for cash consideration of $11.0 million. Telelatino operates TLN
Television, a specialty ethnic channel that provides programming in
Italian, Spanish and English.

Effective November 19, 2001, Corus acquired the Womens Television
Network (WTN) for $205.0 million. The service was re-launched as W
Network on April 15, 2002.

Effective December 18, 2001, Corus disposed of a 29.9% stake in the
Comedy Network for $36.0 million.

Effective January 4, 2002, Corus acquired all of the outstanding shares
of Tri-Co Broadcasting Limited which owns and operates three radio
stations in Cornwall, Ontario for $4.3 million.

Effective March 1, 2002, Corus exchanged ownership interests with DMX
Music, Inc. of the digital music subscription services to residential and
commercial customers in Canada. The transaction resulted in Corus
acquiring ownership of the existing Canadian residential subscription
business and DMX Music, Inc. gaining ownership of the Canadian commercial
business. Corus acquired assets with an assigned fair value of
approximately $19.0 million and for which cash consideration of
approximately $11.0 million was paid.

Effective April 8, 2002, Corus sold Klutz, its U.S. publishing business, to
Scholastic Inc. for approximately $68.0 million (U.S.$43.0 million) in cash
plus a three-year earn-out based on revenue.

Effective May 17, 2002, Corus acquired a 50% interest in The Locomotion
Channel, an action-oriented animation pay-TV service targeting young adults
aged 18-35 available in over 27 countries and seven million homes throughout
Latin America and Iberia (Spain and Portugal) for a maximum consideration of
approximately $16.0 million (U.S.$11.0 million in cash) less a holdback in
the event of certain economic changes that may impact revenue projections.
The service will be operated in conjunction with the other 50% shareholder,
Hearst Corporation.

Effective May 31, 2002, Corus completed the sale of Viewers Choice to Shaw
Communications Inc. for cash consideration of $33.0 million.

financial

On March 7, 2002, Corus issued U.S.$375.0 million aggregate principal amount
of 8 3/4% senior subordinated notes due 2012 at a price of 99.186% of their
aggregate principal amount. The net proceeds of the offering were used to
repay existing bank debt.

During the year, Corus disposed of two million non-voting shares of Astral
for total consideration of $93.3 million. The proceeds were used to repay
the securitized borrowing of $89.5 million in full.

regulatory

The CRTC licensed 16 new English-language Category 1 digital Canadian
specialty services, which were launched in September, 2001. Distributors
using digital technology are required to distribute all Category 1 services
appropriate for their market. The CRTC licensed more than 270 Category 2
services, which must negotiate with each distributor for carriage. Corus, in
conjunction with its partners, launched five new digital services, two
Category 1 services: The Documentary Channel and Country Canada, which was
subsequently transferred to the Canadian Broadcasting Corporation. Corus
also launched three Category 2 services: Discovery Kids, Edge TV and SCREAM.
The Edge TV service was discontinued in fiscal 2003.

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fiscal 2003 compared to fiscal 2002

Revenues for fiscal 2003 were $643.9 million, down
5% from $674.5 million last year. The decrease in
revenues was attributable to various business
divestures in fiscal 2002 and 2003 and the planned
reduction in Nelvanas production slate. On a pro
forma basis, revenues increased 2% from $631.9
million last year reflecting strong advertising
revenue growth from the Radio and Television
divisions.

Operating, general and administrative expenses
were $478.6 million, down 13% from $548.9 million last
year primarily as a result of the $40.0 million
write-down in film investments in fiscal 2002 offset
by increased variable operating expenses in fiscal
2003 associated with increased revenues. On a pro
forma basis, operating, general and administrative
expenses decreased 7% from $512.2 million last year.

EBITDA for fiscal 2003 was $165.3 million, up 32% from
$125.6 million last year. The Radio division achieved
EBITDA of $58.1 million, an increase of 10%. The
Television divisions EBITDA of $113.4 million
represents an EBITDA growth of 14%. The Content
division earned EBITDA of $3.2 million, after
incurring a loss of $21.0 million in the prior year.
On a pro forma basis, EBITDA was up 38% from $119.7
million last year. Television and Radio achieved pro
forma EBITDA growth of 18% and 10% respectively.
EBITDA as a percentage of revenues was 26% in fiscal
2003 compared to 19% in fiscal 2002.

RADIO

Radio revenues for fiscal 2003 were $226.0 million, up
7% from $211.4 million last year. On a pro forma
basis, there was no significant increase or decrease
in revenues. According to the Trans-Canada Radio
Advertising by Market (TRAM) report for the year
ended August 31, 2003, total advertising sales for
Corus major market radio stations exceeded overall
major market growth.

Operating, general and administrative expenses
for fiscal 2003 were $167.9 million, up 6% from
$158.5 million last year reflecting increased
variable costs associated with increased revenues and
the new reproduction rights tariff established by the
Copyright Board of Canada. The tariff requires radio
licensees to commit up to 0.8% of revenues to be paid
in royalties with retroactive payments to 2001. The
impact to Corus in fiscal 2003 was a one-time
retroactive payment of approximately $2.0 million
that was charged to operations.

EBITDA was $58.1 million for fiscal 2003, up 10%
from $52.9 last year (up 14% excluding the one-time
retroactive payment of the new reproduction rights
tariff). EBITDA as a percentage of revenues was 26% in
fiscal 2003, compared to 25% in fiscal 2002.

TELEVISION

Television revenues for fiscal 2003 were $306.9
million, down from $308.5 million in fiscal 2002.
Fiscal 2003 results reflect the operations of W Network
for a full year but do not reflect the operations of
Viewers Choice which was disposed of in fiscal 2002.
On a pro forma basis, revenues were up 2% from $301.8
million last year. The Television division enjoyed
impressive audience growth in fiscal 2003. The analog
specialty television services, YTV, W Network and CMT,
posted a 40% increase in the important Adult 25-54
demographic over the previous year, outpacing the
industry trend. Advertising revenues were up 9% for
the year (or 5% for the year on a pro forma basis).
The majority of the advertising revenue gain came from
the strong performance at W Network which bettered pro
forma prior year by 36%. Subscriber revenues were flat
over the prior year on a pro forma basis. Despite
premium subscriber declines in Spring/Summer 2002 due
to pricing activity by broadcast distribution
undertakings, Movie Central, Corus western-based pay
television service, finished the year with 658,000
subscribers, up 8% from the prior year.

Operating, general and administrative expenses
for fiscal 2003 were $193.5 million, down 8% from
$209.4 million in fiscal 2002, reflecting primarily
the disposition of Viewers Choice in fiscal 2002. On
a pro forma basis, expenses are down 6% from $205.6
million last year due to cost saving initiatives in
programming and administrative expenses.

EBITDA was $113.4 million for fiscal 2003, up
14% from $99.1 million for fiscal 2002. On a pro
forma basis, EBITDA increased 18% from $96.3 million
in the prior year. EBITDA as a percentage of revenues
was 37% in fiscal 2003, compared to 32% in fiscal
2002.

CONTENT

Content revenues were $116.3 million in fiscal 2003,
down 27% from $159.9 million in fiscal 2002. Fiscal
2003 results do not reflect the operations of Klutz,
the U.S. publishing business, which was disposed of
in fiscal 2002. On a pro forma basis, revenues
decreased 6% from $123.6 million in the prior year.
The production and distribution revenues for fiscal

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2003 were $70.5 million, down 29% reflecting lower
planned production in the current year (140 episodes
compared to 252 episodes in fiscal 2002).

For the branded consumer products business,
revenues for fiscal 2003 were $45.8 million, down 24%
for the year (up 89% on a pro forma basis excluding
Klutz). The tremendous growth in revenues was
primarily due to the strong merchandising sales from
Beybladeand Rescue Heroes.

Operating, general and administrative expenses
for fiscal 2003 were $113.1 million, down 37% from
$180.9 million in the prior year. On a pro forma
basis, expenses are down 23% from $147.8 million in
the prior year reflecting the $40.0 million write-down
in film investments in fiscal 2002 offset by a higher
rate of amortization of film investments and higher
cost of sales associated with increased merchandising
revenues in fiscal 2003.

EBITDA for fiscal 2003 was $3.2 million,
compared to a loss of $21.0 million in the prior year
(loss of $24.2 million in the prior year on a pro
forma basis). EBITDA as a percentage of revenues was
3% for fiscal 2003, compared to a negative margin on
a pro forma basis last year.

CORPORATE

The Corporate segment results represent the
incremental cost of corporate overhead in excess of
the amount allocated to the other operating divisions.
Corporate overhead in fiscal 2003 was $8.8 million, up
from $4.8 million in fiscal 2002. This was a planned
increase due to the centralization of functional
departments such as Human Resources, Communications
and Business Affairs, as well as the introduction of
the Performance Share Units (PSU) program. The PSU
program is designed to restrict and reduce the number
of stock options issued. Payment is linked to
prescribed share growth, and a stock purchase and
retention requirement.

DEPRECIATION

Depreciation expense was $24.7 million for 2003, down
from $26.0 million in 2002. The decrease was the
result of various business divestitures, offset by a
higher capital base in the remaining operations.

AMORTIZATION

Amortization expense was $9.8 million for 2003, up
from $8.6 million last year. The increase is the
result of a write-off of approximately $1.0 million
of deferred financing charges related to a credit
facility that was cancelled in fiscal 2003.

INTEREST ON LONG-TERM DEBT

Interest expense was $61.0 million, up from $57.7
million last year reflecting higher interest expense
associated with a full years inclusion in fiscal
2003 of the senior subordinated debt issued in
fiscal 2002. The effective interest rate for fiscal
2003 was 8.7% compared to 7.7% in the prior year.

LOSS (GAIN) ON SALE OF INVESTMENTS

The loss on sale of investments of $1.0 million in
fiscal 2003 relate to the disposition of the
Companys 70% interest in the digital channel Country
Canada and the sale of the Companys 100% interest in
Sound Products Limited. The prior years gain of
$18.2 million resulted from the disposal of the
Companys interests in The Comedy Network, Klutz, and
Viewers Choice, and the sale of Astral Media Inc.
shares.

OTHER EXPENSE (INCOME)

Other income for the year was $9.4 million, compared
to an expense of $0.3 million in the prior year. This
increase is the result of foreign exchange gains on
U.S. dollar denominated bank debt in the current year.

RESTRUCTURING CHARGES

In response to the weakened world market for film
production and distribution, Corus continued to
streamline operations to ensure the Companys
profitability and competitive positioning in all
divisions. Accordingly, restructuring charges of $5.0
million were recorded in the year, representing
primarily workforce reductions in the Content
division. This reduced workforce is reflective of the
reduced level of production slated in the current and
future years. The results for fiscal 2002 included
restructuring charges of $22.1 million.

HEDGE TRANSACTION LOSS

The hedge transaction loss of $20.4 million in fiscal
2002 reflects the non-cash expense associated with
unwinding U.S.$147.0 million of cross-currency
interest rate swaps.

ASSET WRITE-DOWNS

Non-core assets were written down in fiscal 2003 in
the amount of $2.4 million. Asset write-downs of
$15.3 million in fiscal 2002 relate primarily to the
discontinuation of the operations of Balmur Corus
Music Inc., a music

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and television production business, and the write-down
of the Companys investments in Liberty Digital Inc.
and Local Media Internet Venture (LMIV) to net
realizable value.

GOODWILL AND INTANGIBLE IMPAIRMENT LOSS

During fiscal 2002, as a result of the adoption of
the new accounting pronouncements and annual
impairment testing, Corus recorded a non-cash charge
for goodwill and intangible impairment of $162.8
million primarily in the Content division associated
with the production and distribution business.

INCOME TAXES

The effective tax rate for the year ended August 31,
2003 was 40.3% compared to the statutory rate of
37.5% primarily due to the difference between tax and
accounting treatment of the business divestitures
during the year.

NET INCOME (LOSS)

Net income for fiscal 2003 was $40.0 million,
compared to a loss of $168.6 million in the prior
year. Earnings (loss) per share were $0.94 basic
($0.94 diluted) compared with a loss per share of
$3.96 basic ($3.96 diluted) last year.

fiscal 2002 compared to fiscal 2001

Revenues for fiscal 2002 were $674.5 million, up 21%
from $556.8 million in fiscal 2001. Through
acquisition and organic growth, all divisions
contributed to the strong growth in revenues. On a pro
forma basis, revenues increased 7% from $628.4 million
last year.

Operating, general and administrative expenses were
$548.9 million, up 27% from $432.9 million last
year. Expenses were also impacted by the Companys
acquisitions during the year. Fiscal 2002 results
include a write-down of film investments in the
Content division of $40.0 million. On a pro forma
basis, operating, general and administrative
expenses increased 12% from $490.1 million last
year. The increase is due to the film investments
write-down, increased revenues and higher
programming costs associated with specialty/pay
television.

EBITDA was $125.6 million, after
absorbing the $40.0 million write-down of film
investments in the Content division, compared to
$123.9 million last year. The Radio and Television
divisions achieved EBITDA growth of 10% and 35%
respectively. The Content division incurred an
EBITDA loss for fiscal 2002. On a pro forma basis,
EBITDA was down 9% from $138.3 million last year.
EBITDA as a percentage of revenues was 19% in
fiscal 2002 (24% excluding the write-down) and 22%
in fiscal 2001.

RADIO

Radio revenues for fiscal 2002 were $211.4 million,
up 10% from $191.8 million in fiscal 2001, reflecting
an increase from 49 stations at the end of fiscal
2001 to 52 stations at the end of fiscal 2002. On a
pro forma basis, revenues were up 1% for the year.
Despite a soft advertising market during the year,
the West and Ontario stations delivered revenue
growth over the prior year. In particular, revenue
growth of 8% was experienced in the key markets of
Toronto, Vancouver and Winnipeg. The Quebec market
was negatively impacted by the temporary drop in
revenues caused primarily by the reformat of the two
All-News radio stations as new audiences must be
developed.

Operating, general and administrative expenses
for fiscal 2002 were $158.5 million, up 10% from
$143.7 million last year. The increase was from the
acquisitions made in fiscal 2002 and full year
inclusion in fiscal 2002 of the acquisitions made in
fiscal 2001. On a pro forma basis, operating, general
and administrative expenses were down 2% from $161.3
million last year, primarily as a result of cost
saving initiatives made in first quarter fiscal 2002.

EBITDA was $52.9 million for fiscal 2002, up 10%
from $48.1 million for fiscal 2001. EBITDA as a
percentage of revenues was 25% in fiscal 2002,
compared to 25% in fiscal 2001 and 23% in fiscal 2001
on a pro forma basis. Excluding the reformatted
stations, EBITDA as a percentage of revenues was 30%
for fiscal 2002.

TELEVISION

Television revenues for fiscal 2002 were $308.5
million, up 35% from $228.7 million in fiscal 2001.
There was $64.6 million (28%) of growth in revenues
resulting from acquisitions made in fiscal 2002 (W
Network, Telelatino and Locomotion) and the
proportionate consolidation of TELETOON. On a pro
forma basis, revenues were up 21% from $254.7 million
last year. Growth in subscriber fee revenues
continued as a result of increased direct-to-home
satellite and digital cable
subscribers. In particular, the premium television
services Movie Central and Encore Avenue delivered
revenue growth of 29% over the prior year. At the end

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of fiscal 2002, Movie Central had approximately
609,000 subscribers, a 4% increase from the end of
fiscal 2001.

Operating, general and administrative
expenses for fiscal 2002 were $209.4 million, up 35%
from $155.0 million in fiscal 2001 primarily as a
result of acquisitions made in fiscal 2002, the costs
of launching five new digital networks in fiscal 2002
and increased programming costs as we continued to
invest in the promotion of the re-launch of Movie
Central and Encore Avenue.

EBITDA was $99.1 million for fiscal 2002, up 35%
from $73.7 million for fiscal 2001. EBITDA as a
percentage of revenues was 32% in fiscal 2002,
compared to 32% in fiscal 2001. Excluding the impact
of the new digital networks, EBITDA as a percentage of
revenues was 34% in fiscal 2002.

CONTENT

Content revenues were $159.9 million in fiscal
2002, up 16% from $137.4 million in fiscal 2001.
Fiscal 2001 only includes the operating results of
Nelvana since November 14, 2000. On a pro forma
basis, revenues decreased 3% from the prior year.

Revenues for the Production and Distribution
business were down 8% from the prior year on a pro
forma basis. In fiscal 2002, Nelvana produced 252
episodes compared to 242 episodes in fiscal 2001,
increasing its program library to over 2,100 half-hour
equivalent episodes. Despite an increase in
production, the decrease in revenues reflect the
decline in the German market and the overall downward
pressure on license fees as current revenue per
episode decreased from $295,000/episode in fiscal 2001
to $206,000/episode in fiscal 2002. Unfortunately, the
erosion of the production and distribution market has
negatively impacted the value of Corus investment in
Nelvana. As a result, the Company wrote down its
investment by $200.0 million with $40.0 million for
film investments, reflected in operating, general and
administrative expenses, and $160.0 million for
goodwill and other intangibles.

Revenues for the Branded Consumer Products businesses
were up 8% over the prior year and up 4% over the
prior year on a pro forma basis. In April 2002, Corus
disposed of the U.S. publishing business Klutz. The
increase in revenues was primarily attributable to
strong merchandising revenues from Rescue Heroes,
Little Bear, Franklin, Medabots, Babarand Beyblade
products. The Companys Canadian publishing business
Kids Can Press continues to be impacted by the
consolidation of the Canadian book retailing
environment as a result of the merger of Chapters and
Indigo.

Operating, general and administrative expenses
for fiscal 2002 were $180.9 million, after absorbing
the $40.0 million write-down of film investments
mentioned above. Excluding the write-down, operating,
general and administrative expenses were up 16% over
the prior year and down 3% over the prior year on a
pro forma basis. The decrease, on a pro forma basis,
is primarily due to lower amortization expense
associated with lower production and distribution
revenues for the year.

EBITDA for fiscal 2002 was a loss of $21.0
million, after absorbing the write-down in film
investments, compared to EBITDA of $12.1 million last
year and $19.5 million on a pro forma basis last
year. EBITDA as a percentage of revenues was negative
for fiscal 2002 (12% excluding the write-down of film
investments) compared to 9% last year and 12% on a
pro forma basis last year.

CORPORATE

Corporate overhead in fiscal 2002 was $4.8 million,
down from $9.5 million in 2001. Corporate overhead is
the incremental cost that is not allocated to the
operating divisions. The decrease is due to
approximately $2.5 million in incremental one-time
costs for recruitment and professional fees incurred
in fiscal 2001.

DEPRECIATION

Depreciation expense was $26.0 million, up from
$20.0 million in 2001. The increase was due to an
increase in the capital asset base from acquisitions
made in fiscal 2000 and 2001.

AMORTIZATION

Amortization expense was $8.6 million, down from $45.9
million last year. The decrease was due to the Company
not amortizing broadcast licenses and goodwill as a
result of adopting the new accounting standards for
fiscal 2002.

INTEREST ON LONG-TERM DEBT

Interest expense was $57.7 million, up from $47.3
million last year. The effective interest rate for
fiscal 2002 was 7.7% compared to 8.72% in the prior
year reflecting lower interest rates in the current
year.

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LOSS (GAIN) ON SALE OF INVESTMENTS

For the year ended August 31, 2002, the pre-tax gain
on sale of investments of $18.2 million resulted
primarily from the disposal of Corus interest in the
Comedy Network, Astral Media Inc. non-voting shares,
Klutz and Viewers Choice. In the prior year, the
pre-tax gain of $103.1 million resulted primarily
from the disposal of Corus interest in The Family
Channel Inc. and the television station CHAU-TV.

OTHER EXPENSE (INCOME)

Other income was $0.3 million, down from $10.5 million
last year primarily due to higher interest income from
short-term investments and dividend income earned in
fiscal 2001.

RESTRUCTURING CHARGES

In light of the current economic climate, the Company
has taken proactive steps to reduce debt and improve
operating margins by streamlining operations through
workforce reductions and implementing cost control
initiatives. Restructuring charges of $22.1 million
were recorded during the year, representing workforce
reductions of approximately 410 positions, lease
terminations and settlement of contracts relating to
activities which will no longer be continued. Through
these initiatives, the Company is estimating that it
will capture annual cost savings of approximately
$10.0 to $15.0 million.

HEDGE TRANSACTION LOSS

The hedge transaction loss of $20.4 million reflects
the non-cash expense associated with unwinding
U.S.$147.0 million of cross-currency interest rate
swaps during the third quarter of fiscal 2002.

ASSET WRITE-DOWNS

Asset write-downs of $15.3 million relate primarily to
the discontinuation of the operations of Balmur Corus
Music Inc., a music and television production
business, and the write-down of the Companys
investments in Liberty Digital Inc. and LMiV to net
realizable value. The prior year includes an asset
write-down of $1.5 million for the investment in
COOLeh!

GOODWILL AND INTANGIBLE IMPAIRMENT LOSS

During the year, as a result of the adoption of the
new accounting pronouncements and annual impairment
testing, Corus recorded a non-cash charge for
goodwill and intangible impairment of $162.8 million
primarily in the Content division associated with the
Production and Distribution business. Such a change
is non-operational in nature.

INCOME TAXES

The income tax recovery in fiscal 2002 was $2.3
million, down from $3.1 million last year. Fiscal 2002
reflects a benefit on the tax loss realized from the
sale of Klutz; however, there was not a corresponding
accounting loss as the investment was written down in
a prior period. Fiscal 2001 included a $42.3 million
future tax recovery which reflected a decrease in tax
rates applicable to certain future tax assets and
liabilities.

EQUITY EARNINGS FROM INVESTEES

Equity earnings from investees were $0.1 million,
down from $2.6 million last year. The decrease
results from a change to proportionate consolidation
for the Companys interest in TELETOON from the date
that CRTC approval was obtained for the purchase of
Nelvanas 20% interest in TELETOON. This approval was
effective September 1, 2001.

NET INCOME (LOSS)

Net income (loss) for fiscal 2002 was a loss of
$168.6 million, compared to income of $128.2 million
last year. Loss per share are $3.96 basic ($3.96
diluted) compared with earnings per share of $3.09
basic ($3.06 diluted) in fiscal 2001.

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risks and uncertainties

IMPACT OF REGULATION ON CORUS RESULTS OF OPERATIONS

RADIO AND TELEVISION

Corus Radio and Television business activities are
regulated by the CRTC under the Broadcasting Actand,
accordingly, Corus results of operations may be
adversely affected by changes in regulations, policies
and decisions by the CRTC. The CRTC, among other
things, issues licenses to operate radio and
television stations and regulates the rates Corus may
charge for its specialty television services if such
services are distributed as part of the basic service
by a cable distributor. Corus radio stations must
also meet technical operating requirements under the
Radiocommunication Actand regulations promulgated
under the Broadcasting Act. Changes in the regulation
of Corus business activities, including decisions by
the CRTC affecting Corus operations (such as the
granting or renewal of licenses, decisions as to the
subscriber fees Corus may charge its customers, or the
granting of additional distribution, broadcasting or
programming licenses to competitors in Corus markets)
or changes in interpretations of existing regulations
by courts or the CRTC, could materially adversely
affect Corus business and results of operations.

In addition, in order to maintain eligibility
under the Broadcasting Actand the Radiocommunication
Act, there are limitations on the ownership by
non-Canadians of Corus Class A Voting Shares. Under
certain circumstances, Corus Board of Directors may
refuse to issue or register the transfer of Corus
Class A Voting Shares to any person that is a
non-Canadian or may sell the Corus Class A Voting
Shares of a non-Canadian as if it were the owner of
such Corus Class A Voting Shares.

Corus radio, conventional television, specialty
television, pay television, and digital audio
undertakings rely upon licenses under the Copyright
Act(Canada) in order to make use of the music
component of the programming distributed by these
undertakings. Under these licenses, Corus is required
to pay royalties established by the Copyright Board
pursuant to the requirements of the Copyright Actto
collecting societies which represent the copyright
owners in such music component. These royalties are
paid by these undertakings on a monthly basis 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 Actto implement Canadas
international treaty obligations and for other
obligations and purposes. Any such amendments could
result in Corus broadcasting undertakings being
required to pay additional royalties for these
licenses.

CONTENT

Corus licenses a significant portion of its
programming to Canadian conventional television
stations, specialty and premium television networks,
which are required by the CRTC to devote a certain
portion of their programming schedules to Canadian
productions. In addition to these scheduling
requirements, the CRTC generally requires Canadian
specialty services to devote a certain amount of their
revenues to certified Canadian programming. There can
be no assurance that such policies will not be
eliminated or scaled back, thereby reducing the
advantages that they currently provide to Corus as a
supplier of such programs. Also, there can be no
assurance that programming will continue to qualify as
certified Canadian programming. If Corus programming
fails to so qualify, Canadian broadcasters would not
be able to use the programs to meet their Canadian
programming obligations and, as a result, license fees
paid to Corus by Canadian broadcasters would not
reflect the current premium paid for certified
Canadian programs and Corus would not qualify for
certain Canadian tax credits and industry incentives.
Canadian Heritage, the Canadian ministry that oversees
the tax credits, has conducted a review of the
definition of Canadian content, as it applies to film
and television production, but no formal changes to
the definition have been announced.

COMPETITION

Corus encounters aggressive competition in all
areas of its business. Corus failure to compete in
these areas could materially adversely affect
Corus results of operations.

The television production industry, specialty and
pay television channel broadcasting and radio
broadcasting have always involved a substantial degree
of risk. There can be no assurance of the economic
success of radio stations, television programs or
specialty television channels as revenue derived depends on audience acceptance of
other competing programs released into, or channels
existing in, the market place at or

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near the same time, the availability of alternative
forms of entertainment and leisure time activities,
general economic conditions, public tastes generally
and other intangible factors. All of which could
change rapidly and many of which are beyond the
Companys control. The lack of audience acceptance
for Corus radio stations, television programs,
specialty and pay television channels would have an
adverse impact on its businesses, results of
operations, prospects and financial condition.
Canadian Heritage will be providing its comments on
the definition to Parliament in November, 2003.

RADIO

The financial success of each of Corus radio stations
is dependent principally upon its share of the overall
advertising revenue within its geographic market, its
promotional and other expenses incurred to obtain the
revenue and the economic strength of its geographic
market. Corus radio advertising revenues are, in
turn, highly dependent upon audience share. Other
stations may change programming formats to compete
directly with Corus stations for listeners and
advertisers or launch aggressive promotional campaigns
in support of already existing competitive formats. If
a competitor, particularly one with substantial
financial resources, were to attempt to compete in
either of these fashions, ratings at Corus affected
station could be negatively impacted, resulting in
lower net revenues.

Radio broadcasting is also subject to
competition from electronic and print media.
Potential advertisers can substitute advertising
through broadcast television, cable television
systems (which can offer concurrent exposure on a
number of cable networks to enlarge the potential
audience), daily, weekly, and free-distribution
newspapers, other print media, direct mail, and
on-line computer services for radio advertising.
Competing media commonly target the customers of
their competitors, and advertisers regularly shift
dollars from radio to these competing media and vice
versa. Accordingly, there can be no assurance that
any of Corus radio stations will be able to maintain
or increase their current audience share and
advertising revenue share.

TELEVISION

The financial success of Corus specialty television
business depends on obtaining revenue from advertising
as well as from subscription fees. Numerous broadcast
and specialty television networks competed with Corus
for advertising revenue, and a failure by Corus to
obtain its necessary share of such revenue, could
materially adversely affect Corus results of
operations. Corus services also compete with a number
of foreign programming services such as A&E and CNN
which have been authorized for distribution in Canada
by the CRTC. Moreover, increasingly Corus specialty,
pay and conventional television services are competing
with alternative forms of entertainment which are not
regulated by the CRTC, such as the Internet and video
and DVD rentals. In addition, competition among
specialty television services in Canada is highly
dependent upon the offering of prices, marketing and
advertising support and other incentives to cable
operators and other distributors for carriage so as to
favorably position and package the services to
subscribers. As well, the CRTC has licensed a number
of specialty services for digital distribution which
increases competition. Any failure by Corus to compete
effectively in the area of specialty television
services could materially adversely affect Corus
results of operations.

Corus pay television services are exclusive
providers of premium movies and series, as well as
classical movie offerings to western Canadian
subscribers. These services compete with pay-per-view
movie offerings as well as video-on-demand offerings.

CONTENT

The production and distribution of childrens
television, books and other media content is very
competitive. There are numerous suppliers of media
content, including vertically integrated major motion
picture studios, television networks, independent
television production companies and childrens book
publishers around the world. Many of these competitors
are significantly larger than Corus and have
substantially greater resources, including easier
access to capital. Corus competes with other
television and motion picture production companies for
ideas and storylines created by third parties as well
as for actors, directors and other personnel required
for a production.

Further, vertical integration of the television
broadcast industry and the creation and expansion of
new networks, which create a substantial portion of
their own programming, have decreased the number of
available time slots for programs produced by third
party production companies. There can be no assurances
that Corus will be able to compete successfully in the
future or that the Company will continue to produce or
acquire rights to additional successful programming or
enter into agreements for the financing, production,
distribution or licensing of programming on

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terms favorable to the Company. There continues to be
intense competition for the most attractive time slots
offered by those services. There can be no assurances
that Corus will be able to increase or maintain its
penetration of broadcast schedules.

RISKS ASSOCIATED WITH PRODUCTION OF FILM AND TELEVISION PROGRAMS

Each production is an individual artistic work and
its commercial success is determined primarily by
audience acceptance, which cannot be accurately
predicted. The success of a program is also dependent
on the type and extent of promotion and marketing
activities, the quality and acceptance of other
competing programs, general economic conditions and
other factors, all of which can change rapidly and
many of which are beyond Corus control.

Production of film and television programs require a
significant amount of capital. Factors such as labour
disputes, technology changes or other disruptions
affecting aspects of production may affect Corus or
its co-production partners and cause cost overruns
and delay or hamper completion of a production.

Financial risks exist in productions relating to
tax credits and co-production treaties. The aggregate
amount of government tax credits a project may receive
can constitute a material portion of a production
budget and typically can be as much as 20% of total
budgeted costs. There is no assurance that government
tax credits and industry funding assistance programs
will continue to be available at current levels or
that Corus production projects will continue to
qualify for them. As well, the majority of Corus
productions are co-productions involving international
treaties which allow Corus to access foreign financing
and reduce production risk as well as qualify for
Canadian government tax credits. If an existing treaty
between Canada and the government of one of the
current co-production partners were to be abandoned,
one or more co-productions currently underway may also
need to be abandoned. Losing the ability to rely on
co-productions would have a significant adverse effect
on Corus production capabilities and production
financing.

Results of operations for the production and
distribution business for any period are dependent on
the number, timing and commercial success of
television programs and feature films delivered or
made available to various media, none of which can be
predicted with certainty. Consequently, current
revenue from production and distribution may
fluctuate materially from period to period and the
results of any one period are not necessarily
indicative of results for future periods. Cash flows
may also fluctuate and are not necessarily closely
correlated with revenue recognition.

Library revenue from production and distribution
can vary substantially from year to year, both by
geographic territory and by year of production. The
timing of Nelvanas ability to sell library product
in certain territories will depend on the market
outlook in the particular territory and the
availability of product by territory which depends on
the extent and term of any prior sale in that
territory.

INTELLECTUAL PROPERTY RIGHTS

Corus trade-marks, copyrights and other proprietary
rights are important to the Companys competitive
position. In particular, the Content group must be
able to protect its trade-marks, copyrights and other
proprietary rights in order to competitively produce,
distribute and license its television programs and
published materials, and market its merchandise.
Accordingly, Corus devotes the Companys resources to
the establishment and protection of its trade-marks,
copyrights and other proprietary rights on a worldwide
basis. However, from time to time, various third
parties contest or infringe upon the Companys
intellectual property rights. The Company reviews
these matters to determine what, if any, actions may
be required or should be taken, including legal action
or negotiated settlement. There can be no assurance
that the Companys actions to establish and protect
its trade-marks, copyrights and other proprietary
rights will be adequate to prevent imitation or
unauthorized reproduction of the Companys products by
others or prevent third parties from seeking to block
sales, licensing or reproduction of these products as
a violation of their trade-marks, copyrights and
proprietary rights.

Moreover, there can be no assurance that others
will not assert rights in, or ownership of, the
Companys trade-marks, copyrights and other
proprietary rights, or that the Company 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 or Canada.

TECHNOLOGICAL DEVELOPMENTS

New or alternative media technologies and business
models, such as digital radio services, direct-to-home
satellite, wireless and wired cable television and
Internet programming, satellite radio and video
programming, have recently begun to compete for
programming, audiences and

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advertising revenues. These technologies and business
models may increase audience fragmentation, reduce
ratings or have an adverse effect on advertising
revenues from local and national audiences. These or
other technologies and business models may have a
material adverse effect on the business, results of
operations or financial conditions.

GOODWILL AND OTHER INTANGIBLE ASSETS

In fiscal 2002, Corus adopted new rules for measuring
the impairment of goodwill and indefinite life
intangible assets (see Impact of New Accounting
Pronouncements). Under the new standards, the Company
is required to perform impairment tests of goodwill
and indefinite life intangible assets at least
annually but more frequently if indications of
impairment exist. Any impairment losses after adoption
of the new standards are recorded in net income for
that period. The fair value of the Companys
intangible assets, including goodwill, is exposed to
future adverse changes if the Company experiences
declines in operating results or experiences
significant negative industry or economic trends or if
future performance is below historical trends.
Accordingly, impairment losses could result in a
significant charge to Corus reported earnings in the
future.

FOREIGN EXCHANGE RISK

A significant portion of revenues and expenses for
the Content business is in currencies other than
Canadian dollars and, therefore, is subject to
fluctuations in exchange rates. Approximately 15% of
Corus total revenues were in foreign currencies, the
majority of which were in U.S. dollars. The foreign
exchange risk is mitigated as the net cash flow from
operations acts as a natural hedge against interest
on unhedged U.S. denominated debt. Also, the unhedged
U.S. denominated debt acts as a natural hedge against
U.S. denominated receivables.

INTEREST RATE RISK

Interest rate risk arises from fluctuations in
interest rates on drawings under the Companys senior
revolving credit facility. As at August 31, 2003, 93%
of the interest expense relating to total long-term
debt is fixed. Corus does not engage in a speculative
trading program.

CONTROL OF CORUS BY THE SHAW FAMILY

JR Shaw and members of his family and the corporations
owned and/or controlled by JR Shaw and members of his
family (the JR Shaw Group) currently own
approximately 84% of the outstanding Corus Class A
Voting Shares. The Corus Class A Voting Shares are the
only shares entitled to vote in all circumstances. As
long as the JR Shaw Group owns a majority of the Corus
Class A Voting Shares, the JR Shaw Group will continue
to be able to elect Corus entire Board of Directors
and to remove any director, with or without cause, at
a special meeting. In addition, the concentration of
ownership and voting power may have the effect of
delaying or deterring a change of control of Corus
that could be otherwise beneficial to holders of Corus
Voting and Non-Voting Shares. As a result, the JR Shaw
Group will control matters affecting Corus and the
composition of Corus Board of Directors and, through
it, any determination with respect to Corus business
direction and policies, including the appointment and
removal of officers.

The JR Shaw Group may exercise their control over
Corus according to interests that are different from
the interests of other investors. In addition to their
interest in Corus, the JR Shaw Group controls Shaw
Communications Inc., a cable operator and its
wholly-owned subsidiary, Star Choice Communications
Inc., a direct-to-home satellite operator.

All of the Corus Class A Voting 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 Corus Class A Voting
Shares are exercised by the representative of a
committee of five trustees.

Actions by Corus Board of Directors may
delay or prevent an acquisition of Corus, which
could decrease the value of Class B Non-Voting
Shares.

Corus Board of Directors has the authority to
issue shares and to determine the designation, rights,
conditions, restrictions and limitations including
dividend rights, without any further vote or action by
shareholders, which could be used to dilute the share
ownership of a potential hostile acquirer. The rights
of the holders of Corus Non-Voting Shares will be
subject to, and may be adversely affected by, the
rights of the holders of any preferred shares that may
be issued.

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liquidity and capital resources

CASH FLOW

Overall, the Companys cash position increased
$17.2 million in the fiscal year.

Cash provided by operating activities for fiscal 2003 was $64.6
million, up from $27.9 million last year. The increase was due primarily to
lower net additions to film investments as a result of a reduced production
slate in the Nelvana operations. This was offset by a decrease in non-cash
working capital balances primarily as a result of a lower accounts payable
balance at August 31, 2003.

Cash used in investing activities was $29.3 million for fiscal year 2003
(2002  cash provided of $49.9 million). Cash usage consisted primarily of
capital asset additions, deferred charges, business acquisitions and
investments as described below:



| |  |  | Capital expenditures amounted to $14.9 million in fiscal year 2003
(2002  $28.2 million) reflecting a planned reduction of capital
expenditures throughout the year.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | There were no significant additions to deferred charges in fiscal
2003. Additions to deferred charges in fiscal year 2002 include $17.8
million related to financing costs incurred for issuance of the senior
subordinated notes.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cash usage for material business acquisitions and investments in
fiscal year 2002 was $117.6 million which consisted of WTN,
Telelatino, Locomotion, and increase interests in The Comedy Network
and DMX Music. There were no material business acquisitions and
investments in fiscal 2003.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cash usage in fiscal year 2002 was partially offset by net proceeds
received from business divestitures and sale of investments. Fiscal
year 2002 included $229.8 million from the disposition of interests in
The Comedy Network, Astral Media Inc. shares, Klutz and Viewers
Choice.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cash used in financing activities in fiscal year 2003 was $18.1 million
(2002  $51.2 million) reflecting managements effort to reduce debt during
the year. Fiscal year 2002 reflected a significant repayment of long-term
debt as a result of proceeds from the disposition of non-core assets.

BANK LOANS

During the year the Company cancelled its revolving credit facility of $150.0
million, which was undrawn at the time of cancellation. At August 31, 2003,
the Company had available a $25.0 million revolving operating loan facility
and a senior revolving credit facility of $240.0 million, of which
approximately $201.0 million was undrawn. Interest rates on the bank loans
fluctuate with Canadian bankers acceptances and LIBOR and averaged 4.8% for
fiscal 2003 and 6.7% in fiscal 2002.

SENIOR SUBORDINATED NOTES

On March 7, 2002, Corus issued U.S.$375.0 million aggregate principal amount
of 8 3/4% senior subordinated notes (the Notes) due 2012 at a price of
99.186% of their aggregate principal amount.

The Company has entered into cross-currency interest rate agreements to
fix the liability for interest and principal payments on the Notes. The
agreements have resulted in an effective interest rate of 9.33% on the
Canadian dollar equivalent of the U.S. debt. The exchange rate applicable to
the principal portion of the debt has been fixed at Cdn.$1.6107 or
Cdn.$604.0 million.

The net proceeds from this offering were used to repay existing
indebtedness including the permanent repayment in full of the Companys
reducing term loans of Cdn.$294.0 million due August 31, 2007.

Consequently,
the Company unwound U.S.$147 million of cross-currency interest rate swaps
relating to the reducing term loan that had fixed the interest rate at 11.4%
and liability for interest and principal payments at Cdn.$212.0 million.

NET DEBT TO EBITDA

At August 31, 2003, net debt (long-term debt net of cash) was $514.6 million,
down from $622.4 million in the prior year. Adjusting for the foreign
currency hedge on the senior subordinated notes, net debt at August 31, 2003
was $599.0 million, down from $641.8 million in the prior year.

The ratio of net debt to EBITDA (excluding the write-down to film
investments in fiscal 2002) at August 31, 2003 is 3.1 times. Adjusting also
for the foreign currency hedge on the senior subordinated notes, the ratio of
net debt to EBITDA at August 31, 2003 is 3.6 times, down from 3.9 times at
August 31, 2002. Management considers the current level of net debt to EBITDA
of 3.6 times to be reasonable as the Company works towards improving this
multiple.

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impact of new accounting pronouncements adopted in 2003

FOREIGN CURRENCY TRANSLATION

The Company has retroactively adopted with restatement Section 1650, Foreign
Currency Translation, of the CICA Handbook which eliminates the unique
Canadian treatment of deferring and amortizing unrealized translation gains
and losses on long-term monetary items. The new recommendations require that
these unrealized translation gains and losses be included in the
determination of net income as they arise.

The retroactive adoption of this
accounting policy resulted in an increase of $2.6 million to fiscal 2002
opening retained earnings and a decrease of $2.6 million to fiscal 2002 net
income.

STOCK-BASED COMPENSATION

In December 2001, the CICA issued Handbook Section 3870, effective for fiscal
years beginning on or after January 1, 2002. This pronouncement established a
new standard for the recognition, measurement and disclosure of stock-based
compensation and other stock-based payments made in exchange for goods and
services provided to a company by both employees and non-employees.

The standard requires that, for all stock-based payments to
non-employees and to employees where the stock-based awards call for
settlement in cash or other assets, including stock appreciation rights, a
compensation expense be recognized in the consolidated statements of income
(loss), determined using a fair value based method of accounting. The
standard was adopted by the Company for its fiscal year beginning September
1, 2002 and has been applied to stock-based awards granted on or after that
date.

The Company adopted the new standard on September 1, 2002, and includes
the compensation costs associated with such payments and awards in its
consolidated statements of income (loss).

Additionally, for stock options
granted to its employees, the new standard permits the Company to continue
its existing policy of recognizing no compensation expense. Consideration
paid by employees on the exercise of stock options is recorded as an increase
in the Companys cash and share capital accounts.

recent accounting pronouncements

HEDGING RELATIONSHIPS

In December 2001, the CICA issued Accounting Guideline-13, Hedging
Relationships(AcG-13). AcG-13 establishes new criteria for hedge
accounting and will apply to all hedging relationships in effect for the
Companys fiscal year commencing on September 1, 2003 under Canadian GAAP.
To qualify for hedge accounting, consistent with U.S. GAAP, the hedging
relationship must be appropriately documented at the inception of the hedge
and there must be reasonable assurance, both at the inception and throughout
the term of the hedge, that the hedging relationship will be effective.
Effectiveness requires a high correlation of changes in fair values or cash
flows between the hedged item and the hedge. The Company currently documents
all hedging relationships on an ongoing basis. The Company plans to comply
with the requirements of AcG-13 such that all of its current hedges will
continue to qualify for hedge accounting.

ASSET RETIREMENT OBLIGATIONS

In March 2003, the CICA issued Handbook Section 3110, Asset Retirement Obligations, which establishes standards for the recognition,
measurement and disclosure of asset retirement obligations and the related
asset retirement costs. This new Section replaces the requirements in Section
3061, Property, Plant And Equipment, and Section 4430, Capital Assets Held By
Not-For-Profit Organizations, concerning future removal and site restoration
costs. The Section harmonizes Canadian requirements with the provisions of
FASB Statement No. 143, Accounting for Asset Retirement Obligations.

Section 3110 applies to obligations associated with the retirement of
property, plant and equipment when those obligations result from the
acquisition, construction, development or normal operation of the assets. The
Section requires the recognition of all legal obligations associated with the
retirement of a tangible long-lived asset. Retirement includes the sale,
abandonment, recycling or other disposal of an asset, but not its temporary
idling.

This new Section is effective for fiscal years beginning on or after
January 1, 2004, although earlier application is encouraged. The Section is
applied on a retroactive basis with restatement of prior periods, but is

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based on the fair value of asset retirement obligations at the beginning of
the fiscal year in which the requirements are first applied. The Company
plans to comply with the requirements of Section 3110 for its fiscal year
commencing on September 1, 2004.

IMPAIRMENT OF LONG LIVED ASSETS

In December 2002, the CICA issued Handbook Section 3063, Impairment of
Long-Lived Assets, thereby replacing the write-down provisions of Section
3061, Property, Plant and Equipment. This new Section establishes standards
for the recognition, measurement and disclosure of the impairment of
long-lived assets by profit-oriented enterprises and harmonizes Canadian
requirements with the U.S. impairment provisions of FASB Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets.

Under the new Section, an impairment loss is measured as the amount by
which the long-lived assets carrying amount exceeds its fair value. This
represents a significant change to Canadian GAAP, which previously measured
the amount of the impairment as the difference between the long-lived assets
carrying value and its net recoverable amount (i.e. undiscounted cash flows
plus residual value).

Section 3063 is effective for fiscal years beginning on or after April
1, 2003, with prospective application. The Company plans to comply with the
requirements of Section 3063 for its fiscal year commencing on September 1,
2003. The Company does not expect that this Section will have a material
impact on the consolidated financial statements.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In an effort to expand on and strengthen existing accounting guidance that
addresses when a company should include in its financial statements the assets,
liabilities and activities of another entity, the CICA has issued Accounting
Guideline No. 15, Consolidation of Variable Interest Entities. Although
initially intended to cover special-purpose entities (SPEs) or off-balance
sheet structures, AcG-15 takes an approach of setting out criteria for
identifying variable interest entities (VIEs) and then further criteria for
determining what entity, if any, should consolidate them.

The Accounting
Standards Board (AcSB) decided to defer the effective date of the Guideline
to annual and interim periods beginning on or after November 1, 2004, except
for certain disclosure requirements. The AcSB decided that enterprises should
provide disclosures about VIEs in which they hold significant variable
interests for periods beginning on or after January 1, 2004. The Company will
be following the guidelines in AcG-15 after January 1, 2004. The Company has
not estimated the impact that this Guideline will have on its consolidated
financial statements.

ACCOUNTING FOR SEVERANCE AND TERMINATION BENEFITS

The CICA recently issued EIC-134, Accounting for Severance and Termination
Benefits. The guidelines require that severance benefits that do not accumulate
or vest should be accrued as a liability and expensed when the event that
obligates the entity occurs. Those benefits that accumulate or vest should be
accrued and expensed in the period in which the employees render services to
the entity, provided payment of the benefits is probable and the amount can be
reasonably estimated. The liability should be measured at its actuarial present
value. The Company will be following the guidelines in EIC-134 for severance
benefits, if any, that it initiates after March 31, 2003.

ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT AND DISPOSAL ACTIVITIES (INCLUDING
COSTS INCURRED IN A RESTRUCTURING)

The CICA recently issued EIC-134, Accounting for Costs Associated with Exit
and Disposal activities (Including Costs Incurred in a Restructuring).The
guidelines require that liability for a cost associated with an exit or
disposal activity should be recognized and measured initially at its fair
value in the period in which the liability is incurred. A liability is
incurred when an obligation arises from a past transaction or event, the
settlement of which may result in the transfer or use of assets, provision
of services or other yielding of economic benefits in the future. An
entitys commitment to an exit or disposal plan, by itself, is not the
requisite past transaction or event for recognition of a liability. In
subsequent periods, changes to the liability should be measured using the
discount rate that was initially used to measure the liability. EIC-135
applies to exit or disposal activities initiated after March 31, 2003. The
Company will be following the guidelines in EIC-135 for exit or disposal
activities, if any, that it initiates after March 31, 2003.

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critical accounting policies

Management believes that the application of the following accounting
policies, which are important to the Companys financial position and results
of operations, requires significant judgments and estimates on the part of
management. For a summary of Corus accounting policies, including the
accounting policies discussed below, see note 2(a) to the consolidated
financial statements.

FILM INVESTMENTS

The Company capitalizes costs of production, and distribution of film and
television programs to film investments. These costs are amortized to direct
operating expenses in accordance with SOP 00-2. These costs are stated at the
lower of unamortized film or television program costs or fair value. These
costs for an individual film or television program are amortized in the
proportion that current period actual revenues bear to managements estimates
of the total revenue expected to be received from such film or television
program over a period not to exceed ten years from the date of delivery. As a
result, if revenue estimates change with respect to a film or television
program, the Company may be required to write-down all or a portion of the
unamortized costs of such film or television program. No assurance can be
given that unfavourable changes to revenue estimates will not occur, which
may result in significant write-downs affecting Corus results of operations
and financial conditions.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
Canadian GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting periods. The most significant assumptions made by management in the
preparation of the Companys consolidated financial statements include future
revenue projections for investments in film and television programs,
provisions for doubtful accounts to reflect credit exposures, valuation
allowances and impairment assessments for various assets including investment
in film and television programs, property and equipment, long-term
investments, current and future income taxes and broadcast licenses and
goodwill. Actual results could differ from those estimates.

BROADCAST LICENSES AND GOODWILL

The cost of acquiring media broadcasting, production/distribution and
publishing businesses is allocated to the fair value of related net
identifiable tangible and intangible assets acquired. Net identifiable
intangible assets acquired consist primarily of broadcast licenses. The
excess of the cost of acquiring these businesses over the fair value of
related net identifiable tangible and intangible assets acquired is
allocated to goodwill. Prior to September 1, 2001, amounts allocated to
broadcast licenses and goodwill were amortized on a straight-line basis over
twenty to forty years. Broadcast licenses and goodwill will be tested for
impairment annually or more frequently if events or changes in circumstances
indicate that they may be impaired.

22