Exhibit
99.2




Management’s
discussion and analysis of the financial position and results of operations for
the fiscal year ended August 31, 2008, is prepared at October 31, 2008. This
should be read in conjunction with the Company’s August 31, 2008 Annual Report
and audited consolidated financial statements and notes therein.




The
financial information presented herein has been prepared on the basis of
Canadian generally accepted accounting principles (“GAAP”). Please refer to note
21 of the consolidated financial statements of the Company for a summary of
differences between Canadian and United States (“U.S.”) GAAP.




All
dollar amounts are in Canadian dollars unless otherwise indicated.




Cautionary
statement regarding forward-looking statements


To
the extent any statements made in this report contain information that is not
historical, these statements are forward-looking statements within the meaning
of applicable securities laws. These forward-looking statements are related to,
among other things, our objectives, goals, strategies, intentions, plans,
estimates and outlook and can generally be identified by the use of words such
as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may” and other
similar expressions. In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements. Although Corus believes that the expectations
reflected in such forward-looking statements are reasonable, such statements
involve risks and uncertainties, and undue reliance should not be placed on such
statements. Certain material factors or assumptions are applied in making
forward-looking statements and actual results may differ materially from those
expressed or implied in such statements. Important factors that could cause
actual results to differ materially from these expectations include, among other
things, our ability to attract and retain advertising revenues; audience
acceptance of our television programs and cable networks; our ability to recoup
production costs; the availability of tax credits and the existence of
co-production treaties; our ability to compete in any of the industries in which
we do business; the opportunities (or lack thereof) that may be presented to and
pursued by us; conditions in the entertainment, information and communications
industries and technological developments therein; changes in laws or
regulations or the interpretation or application of those laws and regulations;
our ability to integrate and realize anticipated benefits from our acquisitions
and to effectively manage our growth; our ability to successfully defend
ourselves against litigation matters arising out of the ordinary course of
business; and changes in accounting standards. Additional information about
these factors and about the material assumptions underlying such forward-looking
statements may be found in our Annual Information Form. Corus cautions that the
foregoing list of important factors that may affect future results is not
exhaustive. When relying on our forward-looking statements to make decisions
with respect to Corus, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. Unless otherwise
required by applicable securities laws, we disclaim any intention or obligation
to publicly update or revise any forward-looking statements whether as a result
of new information, events or circumstances that arise after the date thereof or
otherwise.




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.





1




Through
fiscal 2008, Corus has managed its business in three operating segments: Radio,
Television and Content. The Corporate segment results represent the incremental
cost of corporate overhead in excess of the amount allocated to the other
operating divisions.  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 segment comprises 52 radio stations situated primarily in nine 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 one of Canada’s leading radio operators in terms of audience
reach and tune-in.




(b)
Television


The
Television division comprises the following: specialty television networks YTV,
W Network, Treehouse TV, Corus’ 80% interest in Country Music Television Limited
(“CMT”), a 50.5% interest in Telelatino, a 50% interest in TELETOON and a 20%
interest in Food Network; Corus’ premium television services Movie Central and
Encore; interests in three digital television channels: SCREAM, Cosmopolitan TV
and Discovery Kids Canada; Corus Custom Networks, a cable advertising service;
three local television stations; Max Trax, a residential digital music service;
and the Nelvana production studio. Revenues for premium television and digital
music 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 division participates in the distribution of television programs and the
sale and licensing of related products and rights. Revenues are generated from
licensing of television programs, merchandise licensing and publishing.
Commencing in fiscal 2009, the Content segment has been integrated into the
Television segment.


2


ANNUAL
SELECTED FINANCIAL INFORMATION


The
following table presents summary financial information for Corus for each of the
listed years ended August 31:





(in
      millions of Canadian dollars, except percentages and per share
      amounts)
            
            
            
            
            
            
            
            
            
            
            %
      Increase2008
            
            
            2007
            
            
            2006
            
            
            2008
      over
              2007
            
            
            2007
      over
              2006Revenues
            
            
            787.2
            
            
            
            768.7
            
            
            
            726.3
            
            
            
            2.4
            
            
            
            5.8Segment
      profit [1]
            
            
            252.1
            
            
            
            240.9
            
            
            
            214.1
            
            
            
            4.6
            
            
            
            12.5Net
      income
            
            
            129.8
            
            
            
            107.0
            
            
            
            35.5Earnings
      per shareBasic
            
            $
            1.57
            
            
            $
            1.27
            
            
            $
            0.42Diluted
            
            $
            1.54
            
            
            $
            1.23
            
            
            $
            0.41Total
      assets
            
            
            2,033.7
            
            
            
            1,937.0
            
            
            
            1,842.2Long-term
      debt
            
            
            692.8
            
            
            
            610.7
            
            
            
            596.4Cash
      dividends declared per shareClass
      A Voting
            
            $
            0.570015
            
            
            $
            0.501250
            
            
            $
            0.22625Class
      B Non-Voting
            
            $
            0.574995
            
            
            $
            0.506655
            
            
            $
            0.23250





Notes:


[1]
            As
      defined in “Key performance indicators - Segment profit and segment profit
      margin”.





RESULTS
OF OPERATIONS


The
following tables present summary financial information for Corus’ operating
business segments and a reconciliation
of net income to segment profit for each of the listed years ended August
31:





[in
      millions of Canadian dollars, except percentages]
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            %
      Increase [Decrease]2008
            
            
            
            %[1]
            
            
            2007
            
            
            
            %[1]
            
            
            2006
            
            
            
            %[1]
            
            
            2008
      over
              2007
            
            
            2007
      over
              2006RevenuesRadio
            
            
            286.4
            
            
            
            36.4
            
            
            
            275.7
            
            
            
            35.9
            
            
            
            268.4
            
            
            
            37.0
            
            
            
            3.9
            
            
            
            2.7Television
            
            
            450.2
            
            
            
            57.2
            
            
            
            436.3
            
            
            
            56.8
            
            
            
            401.9
            
            
            
            55.3
            
            
            
            3.2
            
            
            
            8.6Content
            
            
            52.0
            
            
            
            6.6
            
            
            
            61.3
            
            
            
            8.0
            
            
            
            63.6
            
            
            
            8.8
            
            
            
            (15.2
            )
            
            
            (3.6
            )Eliminations
            
            
            (1.4
            )
            
            
            (0.2
            )
            
            
            (4.6
            )
            
            
            (0.6
            )
            
            
            (7.6
            )
            
            
            (1.0
            )787.2
            
            
            
            100.0
            
            
            
            768.7
            
            
            
            100.0
            
            
            
            726.3
            
            
            
            100.0
            
            
            
            2.4
            
            
            
            5.8Direct
      cost of sales, general and administrative expensesRadio
            
            
            210.9
            
            
            
            73.6
            
            
            
            198.2
            
            
            
            71.9
            
            
            
            200.0
            
            
            
            74.5
            
            
            
            6.4
            
            
            
            (0.9
            )Television
            
            
            258.4
            
            
            
            57.4
            
            
            
            253.8
            
            
            
            58.2
            
            
            
            236.6
            
            
            
            58.9
            
            
            
            1.8
            
            
            
            7.3Content
            
            
            44.8
            
            
            
            86.2
            
            
            
            55.9
            
            
            
            91.2
            
            
            
            59.1
            
            
            
            92.9
            
            
            
            (19.9
            )
            
            
            (5.4
            )Corporate
            
            
            23.0
            
            
            
            2.9
            
            
            
            24.8
            
            
            
            3.2
            
            
            
            24.0
            
            
            
            3.3
            
            
            
            (7.3
            )
            
            
            3.3Eliminations
            
            
            (2.0
            )
            
            
            (0.3
            )
            
            
            (4.9
            )
            
            
            (0.6
            )
            
            
            (7.5
            )
            
            
            (1.0
            )535.1
            
            
            
            68.0
            
            
            
            527.8
            
            
            
            68.7
            
            
            
            512.2
            
            
            
            70.5
            
            
            
            1.4
            
            
            
            3.0Segment
      profit[2]Radio
            
            
            75.5
            
            
            
            26.4
            
            
            
            77.5
            
            
            
            28.1
            
            
            
            68.4
            
            
            
            25.5
            
            
            
            (2.6
            )
            
            
            13.3Television
            
            
            191.8
            
            
            
            42.6
            
            
            
            182.4
            
            
            
            41.8
            
            
            
            165.3
            
            
            
            41.1
            
            
            
            5.2
            
            
            
            10.3Content
            
            
            7.2
            
            
            
            13.8
            
            
            
            5.4
            
            
            
            8.8
            
            
            
            4.5
            
            
            
            7.1
            
            
            
            33.3
            
            
            
            20.0Corporate
            
            
            (23.0
            )
            
            
            (2.9
            )
            
            
            (24.8
            )
            
            
            (3.2
            )
            
            
            (24.0
            )
            
            
            (3.3
            )
            
            
            (7.3
            )
            
            
            3.3Eliminations
            
            
            0.6
            
            
            
            0.1
            
            
            
            0.4
            
            
            
            
            
            
            (0.1
            )
            
            252.1
            
            
            
            32.0
            
            
            
            240.9
            
            
            
            31.3
            
            
            
            214.1
            
            
            
            29.5
            
            
            
            4.6
            
            
            
            12.5Depreciation
            
            
            22.1
            
            
            
            2.8
            
            
            
            21.6
            
            
            
            2.8
            
            
            
            21.3
            
            
            
            2.9
            
            
            
            2.3
            
            
            
            1.4Amortization
            
            
            
            
            
            
            
            
            1.6
            
            
            
            0.2
            
            
            
            2.9
            
            
            
            0.4
            
            
            
            (100.0
            )
            
            
            (44.8
            )Interest
      expense
            
            
            41.3
            
            
            
            5.2
            
            
            
            35.8
            
            
            
            4.7
            
            
            
            43.1
            
            
            
            5.9
            
            
            
            15.4
            
            
            
            (16.9
            )Disputed
      regulatory fees
            
            
            10.9
            
            
            
            
            
            
            
            
            
            
            
            
            
            Debt
      refinancing loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            132.0Other
      expense, net
            
            
            7.9
            
            
            
            
            
            
            
            9.8
            
            
            
            
            
            
            
            11.6Income
      before income taxes and non-controlling interest
            
            
            169.9
            
            
            
            
            
            
            
            172.1
            
            
            
            
            
            
            
            3.2Income
      tax expense [recovery]
            
            
            35.5
            
            
            
            
            
            
            
            59.8
            
            
            
            
            
            
            
            (36.0
            )Non-controlling
      interest
            
            
            4.6
            
            
            
            
            
            
            
            5.3
            
            
            
            
            
            
            
            3.7Net
      income for the year
            
            
            129.8
            
            
            
            
            
            
            
            107.0
            
            
            
            
            
            
            
            35.5





Notes:


[1]
            Direct
      cost of sales, general and administrative expenses and segment profit for
      each business segment are expressed as a percentage of revenues for the
      segment. Other items are expressed as a percentage of total
      revenues.


[2]
            As
      defined in “Key performance indicators - Segment profit and segment profit
      margin”.


3


FISCAL
2008 COMPARED TO FISCAL 2007




Revenues


Revenues
for the fourth quarter were $185.8 million, a decrease of 1% from $187.2 million
last year.  Radio and Television revenues increased by 3% and 1%,
respectively, while Content decreased by 27% in the quarter.  For the
full year, revenues of $787.2 million represented a 2% increase over $768.7
million last year.  Radio and Television revenues increased by 4% and
3%, respectively, while Content revenues decreased by 15%.  Please
refer to the discussion of segmented results for additional analysis of
revenues.




Direct
cost of sales, general and administrative expenses


Direct
cost of sales, general and administrative expenses for the fourth quarter were
$138.5 million, down 2% from $140.8 million in the prior year.  For
the full year, expenses were $535.0 million, an increase of 1% over the prior
year.  Expense increases in Television were the result of higher
program rights and film amortization.  Expenses increased at Radio
partly as a result of having three additional stations compared to last
year.  Expenses at Content decreased as the result of lower revenues,
and decreased at Corporate as a result of the impact of a lower share price on
stock-based compensation.  Please refer to the discussion of segmented
results for additional analysis of expenses.




Depreciation


Depreciation
expense for the year was $22.1 million, an increase of $0.5 million from last
year.  This increase reflects the timing of capital expenditures and a
charge for redundant Corporate assets in the first quarter.




Amortization


The
Company adopted the new accounting standards for financial instruments in the
first quarter of fiscal 2008.  Under these standards, financing fees
are included in the carrying amount of the associated debt and amortized over
its expected life using the effective interest rate method.  The
amortization calculated under this method is now included in interest
expense.


4


Interest
expense


Interest
expense for the fourth quarter was $9.9 million, up from $8.8 million last year,
and for the year interest expense of $41.3 million represented a $5.5 million
increase over the prior year.  Interest on long-term debt is down
slightly from the prior year.  Interest rate swap agreements fix the
interest rate at 4.13% plus a margin on $400.0 million of the bank debt for the
full term of the facility.  The effective interest rate on bank loans
for 2008 was 5.3%.  Other interest, which includes imputed non-cash
interest on the discounting of financial instruments, increased by $5.1 million
from the prior year.  This is largely the result of implementing the
new financial instruments guidance in fiscal 2008.




Disputed
regulatory fees


The
disputed regulatory fee accrual relates to the April 2008 decision of the
Federal Court of Appeal to reverse the December 2006 Federal Court decision that
ruled that Part II fees paid by broadcasters to the Canadian Radio-television
and Telecommunications Commission were an unlawful tax.  The
broadcasting industry is pursuing avenues of appeal; however until such time as
an appeal is heard, the regulation is in force.  The accrual in fiscal
2008 includes a balance of $4.9 million related to fiscal 2007 and $6.0 million
related to fiscal 2008.  The balance of $3.8 million recorded at May
31, 2007 was reversed in the fourth quarter of fiscal 2007.




Other
expense, net


Other
expense for the fourth quarter was $3.9 million, compared to $2.6 million in the
prior year. For the full year, other expense of $7.9 million represents a
decrease of $1.9 million from the prior year.  The current year
includes restructuring charges of $6.1 million, incurred in the Television and
Radio segments, while the prior year includes $10.4 million in restructuring
charges, incurred in the Television, Radio and Content segments.




Income
taxes


The
effective tax rate for fiscal 2008 was 20.9%, compared to the Company’s 34.0%
statutory rate.





On
December 14, 2007, the reduction to future federal corporate income tax rates
announced in Bill C-28 on October 31, 2007 became substantively
enacted.  As a result, the Company was required to remeasure its
income tax assets and liabilities using the reduced rates.  As a
result of this change, as well as other items, the Company recorded income tax
recoveries of $13.2 million in the second quarter and $10.0 in the third quarter
of fiscal 2008.




Net
income and earnings per share


Net
income for the fourth quarter was $17.4 million, as compared to $21.2 million
last year.  Earnings per share for the fourth quarter were $0.21 basic
and diluted, compared with $0.25 basic and diluted last year.  Net
income in fiscal 2008 was $129.8, million or $1.57 basic and $1.54 diluted
earnings per share, compared to net income of $107.0 million, or $1.27 basic and
$1.23 diluted earnings per share, last year.  The weighted average
number of shares outstanding decreased in fiscal 2008 as a result of shares
acquired and cancelled by Corus under its normal course issuer bid.




Other
comprehensive loss, net of tax


Other
comprehensive loss for the quarter was $1.6 million, compared to $0.2 million in
the prior year.  For the twelve-month period, the loss in the current
year was $15.0 million compared to $0.6 million in the prior
year.  This loss is the result primarily of the change in the
unrealized fair value of the Company’s interest rate swap.  As the
Company adopted the new accounting standards for financial instruments in the
first quarter of fiscal 2008, there is no comparative figure for this change in
unrealized fair value.




5


Radio





Three
      months ended
            
            
            Year
      endedAugust
      31
            
            
            August
      31(thousands
      of Canadian dollars)
            
            2008
            
            
            2007
            
            
            2008
            
            
            2007Revenues
            
            
            68,482
            
            
            
            66,544
            
            
            
            286,449
            
            
            
            275,736Direct
      cost of sales, general and administrative expenses
            
            
            53,423
            
            
            
            49,148
            
            
            
            210,945
            
            
            
            198,201Segment
      profit
            
            
            15,059
            
            
            
            17,396
            
            
            
            75,504
            
            
            
            77,535







Revenues
for the fourth quarter were $68.5 million, representing a 3% increase over the
prior year.  Local airtime revenues were flat to the prior year and
national airtime revenues increased by 8% compared to the prior
year.  For the full year, revenues of $286.4 million represented a 4%
increase over the prior year.  Local airtime revenues increased by 1%
and national airtime revenues increased by 8% compared to the prior
year.  Other ancillary revenues also increased from the prior
year.  Strong revenue growth for the year was achieved in the Western
Canada, with low single-digit growth in Ontario and Quebec.  Corus’
expectation is that it will exceed market growth in the markets in which it
broadcasts.  This occurred in several important markets, as indicated
by the Trans-Canada Radio Advertising by Market (“TRAM”) report for the year
ended August 31, 2008.  Overall, Corus grew by 2%, compared to total
market growth of 4%; however this result is skewed somewhat by several new
competitors in Calgary, where Corus grew by 7% compared to market growth of 12%,
and a market decline in French-language Montreal.





Direct
cost of sales, general and administrative expenses for the fourth quarter were
$53.4 million, up 9% from the prior year.  For the full year, expenses
of $210.9 million represented a 6% increase over the prior
year.  Expenses increased for employee-related costs and production
and programming costs, due in part to having three additional stations relative
to last year.





Segment
profit for the fourth quarter was $15.1 million, a decrease of 13% from $17.4
million last year.  For the full year, segment profit was $75.5
million, a decrease of 3% from $77.5 million in the prior year.  This
segment profit decrease represents a slight margin decline for the Radio
segment, as revenue growth did not meet the Company’s expectations.





In
fiscal 2008, Radio recorded an accrual of $6.1 million related to disputed
regulatory fees.  These costs are excluded from segment
profit.





In
the fourth quarter, the Company announced organizational changes in its
Corporate and Montreal Radio operations.  These changes resulted in
severance expenses of approximately $3.5 million in the fourth quarter of fiscal
2008.  These costs are excluded from segment profit.  The
Company continues to assess challenges presented by the Quebec market, and may
undertake further initiatives to align the cost structure of this division with
its strategic objectives.


6


Television


Three
      months ended
            
            
            Year
      endedAugust
      31
            
            
            August
      31(thousands
      of Canadian dollars)
            
            2008
            
            
            2007
            
            
            2008
            
            
            2007Revenues
            
            
            104,838
            
            
            
            104,219
            
            
            
            450,175
            
            
            
            436,270Direct
      cost of sales, general and administrative expenses
            
            
            69,133
            
            
            
            70,166
            
            
            
            258,410
            
            
            
            253,822Segment
      profit
            
            
            35,705
            
            
            
            34,053
            
            
            
            191,765
            
            
            
            182,448





Revenues
for the fourth quarter were $104.8 million, up 1% from the corresponding period
last year, while for the full year revenues grew by 3% to $450.2
million.  Advertising revenue grew by 4% in the quarter and 3% for the
year, while subscriber revenue grew by 2% in both the quarter and
year.  Other ancillary revenues, primarily derived through service
work in the studio, were down in the quarter but up for the full
year.  Specialty advertising growth was 5% for the quarter and 4% for
the year led by strong double-digit growth at W Network. Declines in advertising
revenues were experienced in YTV and TELETOON.  The decline in both
the quarter and year came mainly from two categories, toys and
entertainment.  Movie Central finished the quarter with 891,000
subscribers, up slightly from the same period last year.





Direct
cost of sales, general and administrative expenses were $69.1 million for the
fourth quarter and $258.4 million for the year, representing a decrease of 1%
for the quarter and an increase of 2% for the year.  The decrease in
the quarter is the result of the timing of service work in the studio, while the
increase for the year was primarily due to higher programming costs, as
amortization of program rights and film investments and other cost of sales
increased by 5% over the prior year.  These costs fluctuate in
proportion to changes in subscriber levels; as a result of program supply
agreements; as a result of Canadian content requirements based on the prior
year’s revenues; as a result of conditions of license; as well as with the
volume of service work in the studio.  These increased costs were
offset by effective cost containment across all categories of general and
administrative expenses, which were flat for the quarter and decreased by 3% for
the full year relative to the same periods last year.





Segment
profit for the fourth quarter was $35.7 million, up 5% from the prior year,
while segment profit of $191.8 million for the full year also represented a 5%
increase over the prior year.





In
fiscal 2008, Television recorded an accrual of $4.8 million related to disputed
regulatory fees.  Television also incurred $2.4 million in
restructuring expenses in the first quarter, related to the Toronto
operations.  These costs are excluded from segment
profit.





7


Content





Three
      months ended
            
            
            Year
      endedAugust
      31
            
            
            August
      31(thousands
      of Canadian dollars)
            
            2008
            
            
            2007
            
            
            2008
            
            
            2007Revenues
            
            
            12,846
            
            
            
            17,653
            
            
            
            51,959
            
            
            
            61,325Direct
      cost of sales, general and administrative expenses
            
            
            10,258
            
            
            
            15,399
            
            
            
            44,757
            
            
            
            55,883Segment
      profit
            
            
            2,588
            
            
            
            2,254
            
            
            
            7,202
            
            
            
            5,442





Revenues
for the year were $52.0 million, representing a 15% decrease compared to the
prior year.  Included in Content’s revenues for the year are
intercompany revenues of $1.2 million, compared to $4.3 million in the prior
year.  These revenues are eliminated upon
consolidation.





Direct
cost of sales, general and administrative expenses for the year were $44.8
million, down 20% from the prior year.  This decrease is the result of
lower revenues in the period.





Segment
profit for the year was $7.2 million, compared to $5.4 million in the same
period last year.  In the third quarter of fiscal 2008, the division
benefited from revenues on certain high-margin library titles and a significant
music rights transaction.  The quarterly fluctuation of revenues and
segment profit is consistent with past experience in the Content
business.  The results of any one period are not necessarily
indicative of results for future periods; however, the Content division
continues to perform in line with the Company’s current expectations of modest
segment profit.


Corporate








Three
      months ended
            
            
            Year
      endedAugust
      31,
            
            
            August
      31,(thousands
      of Canadian dollars)
            
            2008
            
            
            2007
            
            
            2008
            
            
            2007Stock-based
      compensation
            
            
            1,994
            
            
            
            3,225
            
            
            
            9,168
            
            
            
            10,192Other
      general and administrative costs
            
            
            4,226
            
            
            
            4,147
            
            
            
            13,811
            
            
            
            14,652General
      and administrative expenses
            
            
            6,220
            
            
            
            7,372
            
            
            
            22,979
            
            
            
            24,844





General
and administrative expenses decreased to $23.0 million in fiscal 2008 from $24.8
million last year.





Stock-based
compensation includes the expenses related to the Company’s Performance Share
Units (“PSUs”), stock options and other long-term incentive
plans.  The expense related to stock-based compensation is lower in
the current year due to changes in the assumptions underlying the expense
recognition of certain plans.





Other
general and administrative costs are down from the prior year primarily as a
result of foreign exchange gains and lower costs related to short-term
incentive-based compensation.





8





FISCAL
2007 COMPARED TO FISCAL 2006




Revenues


For
fiscal 2007, revenues of $768.7 million represented a 6% increase over $726.3
million the prior year.  Radio and Television experienced increases of
3% and 9%, respectively, while Content decreased by 4%.  Please refer
to the discussion of segmented results for additional analysis of
revenues.




Direct
cost of sales, general and administrative expenses


For
fiscal 2007, expenses were $527.8 million, up 3% from the prior
year.  Expense increases in Television were the result of higher
program rights and film amortization, while expenses at Content decreased as the
result of lower revenues.  Included as a reduction of expenses in
fiscal 2007 is a reversal of $4.9 million in regulatory fees accrued through the
fiscal year that are now deemed not to be payable.   Had this
accrual not been reversed, expenses would have increased by 4% for the
year.  Please refer to the discussion of segmented results for
additional analysis of expenses.




Depreciation


For
fiscal 2007, depreciation expense of $21.6 million represented a $0.3 million
increase over the prior year.  These fluctuations reflect the timing
of capital expenditures and the fact that depreciation and capital expenditures
have remained fairly constant over the past several fiscal years.




Amortization


For
fiscal 2007, amortization expense of $1.6 million represented a $1.3 million
decrease from the prior year.  The decrease is a result of deferred
start-up and reformatting costs becoming fully amortized.  The
remaining $4.1 million in deferred financing charges relating to the Company’s
bank facility is being amortized over the remaining life of the
facility.




Interest
on long-term debt


For
fiscal 2007, interest expense of $35.8 million represented a decrease of $7.3
million from the prior year.  The Company refinanced its debt at the
end of January 2006, with the result that the Senior Subordinated Notes
(“Notes”), which paid interest at an effective rate of 9.33%, were replaced with
bank debt paying interest on a floating rate plus a margin.  Interest
rate swap agreements fix the interest rate at 4.13% plus a margin on $400.0
million of the bank debt for the full term of the facility.  The
effective interest rate for fiscal 2007 was 5.4% on bank loans.




Debt
refinancing loss


In
fiscal 2006, the Company purchased and cancelled U.S.$373.6 million of its
Notes.  Concurrently, the cross-currency agreements that fixed the
exchange rate on the principal and interest on the Notes were effectively
terminated.  In order to fund the purchase of the Notes, the Company
amended its credit facility with a syndicate of banks.  These
transactions resulted in the Company recording a pre-tax debt restructuring loss
of $132.0 million in fiscal 2006.  The components of this loss include
mark-to-market payments on the cross-currency agreement termination, consent and
tender premiums, the non-cash write-off of deferred financing charges related to
the Notes, and other fees.




9




Other
expense, net


For
fiscal 2007, other expense of $9.8 million represents a decrease of $1.9 million
from other expense of $11.7 million in the prior year.  The current
year includes restructuring charges of $10.4 million, incurred primarily in the
Television segment in the first quarter and Radio segment in the fourth quarter,
while the prior year includes $11.4 million in restructuring charges, incurred
primarily in the Radio and Content segments.  Interest income declined
from $2.6 million in the prior year to $0.8 million in the current year,
resulting from lower cash and cash equivalents balances.




Income
taxes


The
effective tax rate for 2007 was 34.7%, consistent with the Company’s 35.5%
statutory rate.  Income tax expense for the prior year was reduced by
approximately $37.0 million in long-term future tax rate changes and other
items.




Net
income


Net
income in fiscal 2007 is $107.0 million, or $2.53 basic and $2.47 diluted
earnings per share, compared to $35.5 million, or $0.84 basic and $0.82 diluted
loss per share, last year.


Radio


(thousands
      of Canadian dollars)
            
            2007
            
            
            2006Revenues
            
            
            275,736
            
            
            
            268,367Direct
      cost of sales, general and administrative expenses
            
            
            198,201
            
            
            
            200,015Segment
      profit
            
            
            77,535
            
            
            
            68,352




For
fiscal 2007, revenues of $275.7 million represented a 3% increase from the prior
year.  Local airtime revenues increased by 1%, while national airtime
sales were up 7% from the prior year.  Revenue growth for the year was
experienced in all regions, with Edmonton and Toronto contributing above-market
average growth in the period, as indicated by the Trans-Canada Radio Advertising
by Market (“TRAM”) report for the year ended August 31, 2007.




For
fiscal 2007, expenses of $198.2 million represented a 1% decrease from the prior
year.  In the fourth quarter, Radio reversed an accrual of $3.0
million for certain regulatory fees that are now deemed not to be
payable.  The expense related to these fees included in the results
for fiscal 2006 is $2.9 million.  If not for this adjustment, expenses
for Radio would have been up 1% for the year.  This increase over the
prior year was due largely to a modest increase in employee-related costs. Radio
incurred $3.6 million in restructuring expenses related to the Montreal
cluster.  These costs are reflected in other expense, net, and are
excluded from segment profit.




Segment
profit for fiscal 2007 was $77.5 million, an increase of 13% from the prior
year.  If not for the adjustment noted above, segment profit would
have increased by 9% for the year.  This segment profit increase
represents a slight margin improvement for the Radio segment.




10


Television


(thousands
      of Canadian dollars)
            
            2007
            
            
            2006Revenues
            
            
            436,270
            
            
            
            401,856Direct
      cost of sales, general and administrative expenses
            
            
            253,822
            
            
            
            236,563Segment
      profit
            
            
            182,448
            
            
            
            165,293




Revenues
of $436.3 million for fiscal 2007 represented a 9% increase from the prior
year.  Revenue growth was driven by advertising revenue growth of 10%
for the year and subscriber revenue growth of 8% for the year.  Other
ancillary revenues, primarily derived through service work in the studio, were
also up in the year.  Subscriber revenues in the prior year included
subscriber fee adjustments of $4.7 million.  The strong advertising
results for fiscal 2007 were driven by double-digit revenues growth in CMT and W
Network.  Specialty advertising growth was 12% for the
year.  Excluding the impact of the TELETOON acquisition, specialty
advertising revenues grew by 8% for the year.  Subscriber revenue
growth was driven by increases across all networks.  Movie Central
finished the year with 883,000 subscribers, up 7% from the same time last
year.




Direct
cost of sales, general and administrative expenses were $253.8 million for
fiscal 2007, up 7% from the prior year.  In the fourth quarter,
Television reversed an accrual of $1.9 million for certain regulatory fees that
are now deemed not to be payable.  The expense related to these fees
included in the results for fiscal 2006 is $1.8 million.  If not for
this adjustment, expenses for Television would have been up 8% for the
year.  The increase was primarily due to higher programming costs, as
amortization of program rights and film investments and other cost of sales
increased by 13% over the prior year.  These costs fluctuate in
proportion to changes in subscriber levels; as a result of program supply
agreements; as a result of Canadian content requirements based on the prior
year’s revenues; and as a result of conditions of license.  These
increased costs were offset by effective cost containment in other general and
administrative overhead.  These costs were up 2% for the
year.  This increase is due to the additional 10% of
TELETOON.  Excluding the impact of the TELETOON acquisition, other
general and administrative expenses decreased by 1% in the
year.  Television incurred $6.1 million in restructuring expenses
related to the consolidation of the Edmonton facility into the Toronto
operations.  These costs are reflected in other expense, net, and are
excluded from segment profit.




Segment
profit for fiscal 2007 was $182.4 million, a 10% increase over the prior
year.  If not for the regulatory fee adjustment noted above, segment
profit would have increased 9% for the year.  Of this growth for the
year, 3% is due to the acquisition of an additional 10% share in TELETOON in the
first quarter.


Content


(thousands
      of Canadian dollars)
            
            2007
            
            
            2006Revenues
            
            
            61,325
            
            
            
            63,618Direct
      cost of sales, general and administrative expenses
            
            
            55,883
            
            
            
            59,118Segment
      profit
            
            
            5,442
            
            
            
            4,500




Revenues
for fiscal 2007 were $61.3 million, representing a 4% decrease from the prior
year.  This decrease is due to the fact that under the new studio
structure, first Canadian windows on studio deliveries are not made available to
Content for distribution.  Included in Content’s revenues for the year
are intercompany revenues of $4.3 million.  These revenues are
eliminated upon consolidation.




11




For
fiscal 2007, expenses decreased by 5%.  Direct cost of sales were
lower than the prior year due to lower revenues, while general and
administrative expenses were down due to a restructuring undertaken in the
fourth quarter of fiscal 2006.  During fiscal 2007, Content incurred
an additional $0.7 million in expenses related to a restructuring of the
publishing business.  These costs are reflected in other expense, net,
and are excluded from segment profit.




Segment
profit for the year was $5.4 million, compared to $4.5 million last
year.  The Content division continues to perform in line with the
Company’s current expectations of modest segment profit.


Corporate


(thousands
      of Canadian dollars)
            
            2007
            
            
            2006Stock-based
      compensation
            
            
            10,192
            
            
            
            11,596Other
      general and administrative costs
            
            
            14,652
            
            
            
            12,402General
      and administrative expenses
            
            
            24,844
            
            
            
            23,998





General
and administrative expenses increased to $24.8 million from $24.0 million last
year.




Stock-based
compensation includes the expenses related to the Company’s Performance Share
Units (“PSUs”), stock options and other long-term incentive
plans.  The current year reflects the impact of Corus’ higher average
share price since the corresponding periods of fiscal 2006.  This
impact has been reduced by income generated by a derivative instrument entered
into in fiscal 2007 in order to offset the Company’s exposure to changes in the
fair value of certain obligations under the Company’s PSU plan.




Other
general and administrative costs are up from the prior year primarily as a
result of continued investment in information technology.  In
addition, the prior year includes the impact of a refund related to employee
benefits.




QUARTERLY
CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)


The
following tables set forth certain unaudited data derived from the unaudited
consolidated financial statements for each of the eight most recent quarters
ended August 31, 2008. In management’s opinion, these unaudited consolidated
financial statements have been prepared on a basis consistent with the audited
consolidated financial statements contained elsewhere in this
report.





[thousands
of Canadian dollars, except per share amounts]


Revenues
            
            
            Segment
            
            
            Net
      income
            
            
            Earnings
      per shareprofit[1]
            
            
            
            
            
            Basic
            
            
            Diluted20084th
      quarter
            
            
            185,774
            
            
            
            47,235
            
            
            
            17,406
            
            
            $
            0.21
            
            
            $
            0.213rd
      quarter
            
            
            207,819
            
            
            
            71,772
            
            
            
            37,674
            
            
            
            0.45
            
            
            
            0.452nd
      quarter
            
            
            178,738
            
            
            
            49,733
            
            
            
            35,368
            
            
            
            0.42
            
            
            
            0.411st  quarter
            
            
            214,825
            
            
            
            83,390
            
            
            
            39,387
            
            
            
            0.47
            
            
            
            0.4620074th
      quarter
            
            
            187,204
            
            
            
            46,381
            
            
            
            21,219
            
            
            $
            0.25
            
            
            $
            0.253rd
      quarter
            
            
            197,612
            
            
            
            64,811
            
            
            
            29,587
            
            
            
            0.35
            
            
            
            0.342nd
      quarter
            
            
            174,729
            
            
            
            48,349
            
            
            
            19,543
            
            
            
            0.23
            
            
            
            0.221st  quarter
            
            
            209,198
            
            
            
            81,380
            
            
            
            36,669
            
            
            
            0.44
            
            
            
            0.43





Notes:


[1]
            As
      defined in “Key performance indicators - Segment profit and segment profit
      margin”.




12




Seasonal
fluctuations


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




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




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




Significant
items causing variations in quarterly results


•
            Net
      income for the third quarter of fiscal 2008 was negatively impacted by a
      $9.7 million disputed regulatory fee
accrual.


•
            Net
      income for the third quarter of fiscal 2008 was positively impacted by
      approximately $10.0 million in income tax
items.


•
            Net
      income for the second quarter of fiscal 2008 was positively impacted by
      approximately $13.2 million in income tax rate changes and other income
      tax items.




KEY
PERFORMANCE INDICATORS


The
Company measures the success of its strategies using a number of key performance
indicators. These have been outlined below, including a discussion as to their
relevance, definitions, calculation methods and underlying assumptions. With the
exception of revenues, direct cost of sales, general and administrative expenses
and segment profit, the following key performance indicators are not
measurements in accordance with Canadian or U.S. GAAP and should not be
considered as an alternative to net income or any other measure of performance
under Canadian or U.S. GAAP.




Revenue


Revenue
is a measurement defined by Canadian and U.S. GAAP. Revenue is the inflow of
cash, receivables or other consideration arising from the sale of product and
services and is net of items such as trade or volume discounts and certain
excise and sales taxes. It is the base on which free cash flow, a key
performance indicator defined below, is determined; therefore, it measures the
potential to deliver free cash flow as well as indicating the level of growth in
a competitive marketplace.




The
primary sources of revenues for the Company are outlined in the “Overview”
section on page 1.





Corus
is well diversified by revenue source with revenue streams for the year ended
August 31, 2008, derived primarily from three areas: advertising (59%),
subscriber fees (29%) and license fees (4%) (2007 - 57%, 29% and 6%,
respectively).




Direct
cost of sales, general and administrative expenses


Consolidated
direct cost of sales, general and administrative expenses include amortization
of program and film rights (costs of programming intended for broadcast, from
which advertising and subscriber fee revenues are derived), amortization of film
investments (costs associated with internally produced and acquired television
and film programming, from which distribution and licensing revenues are
derived), 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 includes the material cost of the product, printing, freight, customs
and duties, and royalties to authors and illustrators based upon sales and is
included in direct cost of sales, general and administrative expenses.
Approximately 34% and 32% of consolidated direct cost of sales, general and
administrative expenses in fiscal 2008 (2007 - 35% and 32%, respectively) were
composed of employee remuneration and programming and film costs,
respectively.




13




Segment
profit and segment profit margin


Segment
profit is calculated as revenues less direct cost of sales, general and
administrative expenses as reported in the Company’s consolidated statements of
income and retained earnings. The Company believes this is an important measure
as it allows the Company to evaluate the operating performance of its business
segments and its ability to service and/or incur debt; therefore, it is
calculated before (i) interest expense; (ii) non-cash expenses such as
depreciation and amortization; and (iii) items not indicative of the Company’s
core operating results, and not used in management’s evaluation of the business
segment’s performance, such as debt refinancing loss, disputed regulatory fees
and other expense, net. Segment profit is also one of the measures used by the
investing community to value the Company and is included in note 15 to the
consolidated financial statements. Segment profit margin is calculated by
dividing segment profit by revenues.




Free
cash flow


Free
cash flow is calculated as cash provided by operating activities less cash used
in investing activities as reported in the consolidated statements of cash
flows. Free cash flow measures the Company’s ability to repay debt, finance the
business and pay dividends.





[thousands
      of Canadian dollars]
            
            2008
            
            
            2007
            
            
            2006Cash
      provided by [used in]:Operating
      activities
            
            
            130,578
            
            
            
            103,073
            
            
            
            111,018Investing
      activities
            
            
            (101,520
            )
            
            
            (70,798
            )
            
            
            (17,249
            )Free
      cash flow
            
            
            29,058
            
            
            
            32,275
            
            
            
            93,769




Net
debt


Net
debt is calculated as long-term debt less cash and cash equivalents as reported
in the consolidated balance sheets. Net debt is an important measure as it
reflects the principal amount of debt owing by the Company as at a particular
date.





[thousands
      of Canadian dollars]
            
            2008
            
            
            2007Long-term
      debt
            
            
            692,750
            
            
            
            610,697Cash
      and cash equivalents
            
            
            (19,642
            )
            
            
            (33,347
            )Net
      debt
            
            
            673,108
            
            
            
            577,350




14




Net
debt to segment profit


Net
debt to segment profit is calculated as net debt divided by segment profit. It
is one of the key metrics used by the investing community to measure the
Company’s ability to repay debt through ongoing operations.





[thousands
      of Canadian dollars except ratios]
            
            2008
            
            
            2007
            
            
            2006Net
      debt [numerator]
            
            
            673,108
            
            
            
            577,350
            
            
            
            552,726Segment
      profit [denominator]
            
            
            252,130
            
            
            
            240,921
            
            
            
            214,119Net
      debt to segment profit
            
            
            2.7
            
            
            
            2.4
            
            
            
            2.6




RISKS
AND UNCERTAINTIES


Impact
of regulation on Corus’ results of operations


Radio
and Television


Corus’
Radio and Television business activities are regulated by the Canadian
Radio-television and Telecommunications Commission (“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. In
fiscal 2006, the CRTC granted a pay television license to an entity allowing it
to compete with our premium television services. Corus’ radio stations must also
meet technical operating requirements under the Radiocommunications 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
Radiocommunications
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 they 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 that represent the copyright owners in such music components. 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.




15


On
October 19, 2006, the Federal Court of Appeal set aside the 2005 decision of the
Copyright Board, dealing with the Society of Composers, Authors and Music
Publishers of Canada’s (“SOCAN”) commercial radio tariff.  The
original Board decision modified the rates radio stations pay to SOCAN,
introducing a two-tier payment system based on each station’s annual revenues.
The Court ordered that the matter be referred back to the Copyright Board for
its reconsideration.  It is uncertain what impact this decision will
have on Corus’ financial results and position.




On
December 14, 2006, the Federal Court of Canada ruled that the Part II license
fees paid by CRTC licensees are an unlawful tax.  Corus has paid these
fees since the Company’s inception in 1999, and in fiscal 2006 the Company
remitted approximately $5.0 million in Part II license fees to the
CRTC.  The disputed regulatory fee accrual relates to the April 2008
decision of the Federal Court of Appeal to reverse the December 2006 Federal
Court decision.  The broadcasting industry is pursuing avenues of
appeal; however until such time as an appeal is heard, the regulation is in
force.  The accrual recorded in fiscal 2008 includes a balance of $4.9
million related to fiscal 2007 and $6.0 million related to fiscal
2008.




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 Corus 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 because revenue derived
depends on audience acceptance of other competing programs released into, or
channels existing in, the marketplace at or 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 rapidly change and many of which are beyond Corus’ control. The
lack of audience acceptance for Corus’ radio stations, television programs,
specialty and pay television channels would have an adverse impact on Corus’
businesses, results of operations, prospects and financial
condition.




16




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 stations 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 compete 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 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 that 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 favourably 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,
and offer classic movies 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.




17




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 Corus 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 terms favourable to Corus. 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 penetration
of broadcast schedules.




Risks
associated with production of film and television programs and
websites


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 rapidly change and many of which are beyond Corus’ control.




Production
of film and television programs requires 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 30% 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 that 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
Content’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.




The
production of websites related to Corus’ Television, Radio and Content brands
generates hundreds of pages of content each day. This content is in many forms
including text, graphics, databases, photographs, audio files, radio files and
interactive content such as on-line games and third party posts of content and
links. Corus takes rigorous steps to ensure that procedures are in place to
clear rights and to vet third party content. There remains a risk, however, that
some potentially defamatory or infringing content can be posted on a Corus
website. Corus carries insurance coverage against this risk but there remains a
limited risk of liability to third-party claims.




18




Intellectual
property rights


Corus’
trademarks, copyrights and other proprietary rights are important to the
Company’s competitive position. In particular, the Content group must be able to
protect its trademarks, 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 trademarks,
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 trademarks, 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
trademarks, copyrights and proprietary rights.




Moreover,
there can be no assurance that others will not assert rights in, or ownership
of, the Company’s trademarks, 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, satellite radio, direct-to-home satellite, wireless and wired cable
television, Internet programming and video programming and on-line publications
have recently begun to compete, or may in the future compete, for programming,
audiences and advertising revenues. These technologies and business models may
increase audience fragmentation, reduce the Company’s 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 Corus’
business, results of operations or financial condition.




Interest
rate and foreign exchange risk


The
Company manages its exposure to floating interest rates through the use of
interest rate agreements or “swaps.” All such agreements are used for risk
management purposes only. In order to minimize the risk of counterparty default
under its swap agreements, Corus assesses the creditworthiness of its swap
counterparties. Currently 100% of the Company’s total swap portfolio is held by
financial institutions with Standard & Poor’s ratings (or the equivalent)
ranging from A to AA-.




Corus
has the following financial exposures to risk in its day-to-day
operations:




Interest
rates


The
Company utilizes long-term financing extensively in its capital structure, which
includes banking facilities, as more fully described in note 12 to the
consolidated financial statements.




Interest
rates on the balance of the bank loans fluctuate with Canadian bankers’
acceptances and LIBOR. The Company has entered into Canadian interest rate swap
agreements to fix the interest rate of a portion of the facility.




As
at August 31, 2008, 57% of the Company’s consolidated long-term debt was fixed
with respect to interest rates.




19




Foreign
exchange


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 6% of Corus’ total revenues were
in foreign currencies, the majority of which was U.S. dollars.




Contingencies


The
Company and its subsidiaries are involved in litigation arising in the ordinary
course and conduct of its business. The Company recognizes liabilities for
contingencies when a loss is probable and capable of being estimated. As at
August 31, 2008, there were no actions, suits or proceedings pending or against
the Company or its subsidiaries which would, in management’s estimation, likely
be determined in such a manner as to have a material adverse effect on the
business of the Company.




FINANCIAL
POSITION


Total
assets at August 31, 2008 were $2.03 billion, compared to $1.94 billion at
August 31, 2007.  The following discussion describes the significant
changes in the consolidated balance sheet since August 31, 2007.




Current
assets decreased by $4.5 million.  Cash and cash equivalents decreased
by $13.7 million.  Please see the discussion of cash flows
below.  Accounts receivable increased by $6.1 million from year end,
and decreased by $14.7 million from the end of the previous
quarter.  The accounts receivable balance typically grows in the first
and third quarter as a result of the broadcast revenue cycle.  The
Company carefully monitors the aging of its accounts receivables.




Non-current
assets increased by $101.2 million.  Tax credits receivable increased
as a result of accruals related to film production, offset by tax credit
receipts.  Investments and other assets increased by $75.6 million,
due to the $75.0 million acquisition cost of an analog specialty
service.  The cash was held in escrow until the closing date in
September 2008.  Program and film rights (current and non-current)
increased by $18.7 million, as additions of acquired rights of $160.0 million
were offset by amortization of $145.7 million as well as a transition adjustment
related to the implementation of new financial instruments
standards.  In particular, investments in programming were made
relating to the launch of the Cosmopolitan TV digital channel in the second
quarter.  Film investments increased by $14.2 million as net film
spending of $56.3 million was offset by film amortization and accruals for tax
credits.  The Nelvana studio is in a relatively stable state of
production, and film spending is consistent with the prior year; however the
broadcast business made significant investments in third-party produced feature
films in the fourth quarter.




Current
liabilities increased by $28.5 million.  Accounts payable and accrued
liabilities increased by $29.9 million and income taxes payable decreased by
$1.5 million.  Accounts payable and accrued liabilities balance
increased as a result of an accrual of $10.9 million for disputed regulatory
fees as well as an increase in accrued program rights payable.  Income
taxes payable decreased due to the timing of income tax
installments.




Non-current
liabilities increased by $62.1 million.  Long-term debt increased by
$82.1 million, as the Company used its credit facility to finance its Normal
Course Issuer Bid and advance the acquisition cost for the purchase of an analog
specialty service.  Other long-term liabilities decreased by $4.8
million primarily as a result of recognizing previously deferred revenue as
revenue in the third quarter of fiscal 2008.  The fair value of $9.4
million of the interest rate swap was recognized as an increase to other
long-term liabilities, while a decrease to the long-term portion of certain
stock-based compensation obligations reduced the liability
balance.  The long-term portion of program rights payable was affected
by a transition adjustment related to the implementation of the new financial
instruments standards. Net future tax liability (including current future tax
asset) decreased by $11.2 million primarily due to a change in the long-term
future tax rates and other items in the second and third quarters.




20




Share
capital decreased by $34.0 million as a result of the repurchase and
cancellation of shares with a book value of $46.6 million under the Company’s
Normal Course Issuer Bid, offset by the exercise of employee stock
options.  Contributed surplus increased by $7.1 million as a result of
expensing stock-based compensation for the period.




LIQUIDITY
AND CAPITAL RESOURCES


Cash
flows


Overall,
the Company’s cash and cash equivalents position decreased by $13.7 million in
fiscal 2008, compared to a decrease of $10.3 million in the prior
year.  Free cash flow for fiscal 2008 was $104.0 million, after adding
back cash advanced into escrow for business combinations, compared to $97.0
million in the prior year.  This increase is derived largely from
operating activities.




Cash
provided by operating activities in fiscal 2008 was $130.6 million, compared to
$103.1 million last year.  This increase is a result of higher
operating and net income and lower payments for program and film rights as well
as a positive variance in non-cash working capital changes. The lower payments
for program and film rights are considered a timing issue and will reverse in
the first quarter of fiscal 2009.




Cash
used in investing activities in fiscal 2008 was $101.5 million, compared to cash
used of $70.8 million last year. The prior year includes $64.7 million in cash
outflow related to the TELETOON and CanWest radio acquisitions.  In
the current year, the Company advanced $75.0 million into escrow to fund the
estimated purchase price of an analog specialty service.  This
acquisition closed in early September 2008.  Capital expenditures are
$2.7 million lower than in the prior year, as the Company looks to minimize
capital expenditures ahead of its move to the Toronto waterfront
development.




Cash
used in financing activities in fiscal 2008 was $42.8 million, compared to $42.6
million in the prior year.  In the current year, the Company drew on
its credit facility in order to finance its Normal Course Issuer Bid and advance
the cash on an analog specialty service acquisition.  The Company
continued purchasing its own shares under an ongoing issuer bid that was renewed
in the second quarter of fiscal 2008.  In fiscal 2008, 4,388,400
shares were purchased and cancelled at an average price of $20.84 per share for
cash consideration of $91.4 million.  The exercise of employee stock
options resulted in $11.5 million in cash receipts, while $46.3 million in
monthly dividends were paid.




Liquidity


As
at August 31, 2008, the Company has available $100.0 million under a revolving
term credit facility that matures on January 24, 2011. Interest rates on the
Company’s facilities fluctuate with Canadian bankers’ acceptances and
LIBOR.




These
borrowings combined with cash generated from operations have been the primary
funding sources for operations over the last several years. The nature of the
Company’s business is such that significant expenditures are required to acquire
program rights for the Television business and to produce and acquire film
assets for the Content business. For the past three years, these expenditures
have been financed from cash generated from operations. Historically, the
Company has had no significant commitments related to the acquisition of
property, plant and equipment; however, the Company will incur capital costs
related to the Toronto waterfront lease signed in fiscal 2007.  These
costs will not be incurred until towards the end of fiscal 2009. The Company
continues to maintain a positive working capital position.




21




As
at August 31, 2008, the Company has a cash balance of $19.6 million and a
working capital balance of $92.8 million. Management believes that cash flow
from operations and existing credit facilities will provide the Company with
sufficient financial resources to fund its operations for fiscal
2009.




Net
debt to segment profit


As
at August 31, 2008, net debt was $673.1 million, up from $577.4 million at
August 31, 2007.  This increase in net debt is a result of the cash
outflows incurred by the Company’s Normal Course Issuer Bid and cash advanced
into escrow for the acquisition of an analog specialty service.  Net
debt to segment profit at August 31, 2008 was 2.7 times, up from 2.4 at August
31, 2007.  This ratio remains below management’s stated guidance range
of 3.0 to 3.5 times.




Off-balance
sheet arrangements and derivative financial instruments


The
Company has guarantees and general indemnification commitments to
counterparties. Historically, the Company has not made any significant payments
with respect to these guarantees and indemnification provisions, and management
believes that the risk of loss is low.




The
Company uses derivative financial instruments to manage risks from fluctuations
in interest rates. These instruments include interest rate swap agreements. All
such instruments are only used for risk management purposes. The net receipts or
payments arising from financial instruments relating to the management of
interest rate risks are recognized in interest expense over the term of the
instrument. The carrying values of derivative financial instruments are adjusted
to reflect their current market value.




During
fiscal 2006, the Company entered into Canadian interest rate swap agreements to
fix the interest rate on its outstanding bank loans. The estimated fair value of
these agreements at August 31, 2008 is $9.4 million. This estimated fair value
has been recorded as a liability in the consolidated balance
sheets.




During
fiscal 2007, the Company entered into a derivative instrument in order to offset
its exposure to changes in the fair value of units issued under its PSU
plan.  As this derivative does not qualify for hedge accounting, the
fair value of $0.1 million for this derivative has been included as a liability
in the consolidated balance sheet as at August 31, 2008.




In
fiscal 2006, Corus terminated a cross-currency agreement as part of the
refinancing of its debt. The fair value of the liability at the date of its
termination was included in the debt refinancing loss recorded in the second
quarter of fiscal 2006.




Contractual
commitments


Corus
has the following contractual obligations:





[thousands
      of Canadian dollars]
            
            Total
            
            
            Less
      than one year
            
            
            One
      to three years
            
            
            Four
      to
              five
      years
            
            
            After
      five
              yearsLong-term
      debt
            
            
            700,000
            
            
            
            -
            
            
            
            700,000
            
            
            
            -
            
            
            
            -Operating
      leases
            
            
            290,830
            
            
            
            26,741
            
            
            
            44,937
            
            
            
            28,888
            
            
            
            190,264Film
      and program rights purchase commitments
            
            
            359,740
            
            
            
            139,369
            
            
            
            152,183
            
            
            
            68,188
            
            
            
            -Other
      long-term obligations
            
            
            15,977
            
            
            
            3,424
            
            
            
            9,187
            
            
            
            1,454
            
            
            
            1,912




22




TRANSACTIONS
WITH RELATED PARTIES


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




During
the year, the Company received cable service subscriber, programming and
advertising fees of $102.4 million (2007 - $104.4 million), production and
distribution revenue of $0.9 million (2007 - $3.5 million) and administrative
and other fees of $6.4 million (2007 - $5.0 million) from related parties. In
addition, the Company paid cable and satellite system distribution access fees
of $4.5 million (2007 - $4.5 million) and administrative and other fees of $3.0
million (2007 - $2.6 million) to related parties. As at August 31, 2008, the
Company had $19.4 million (2007 - $19.3 million) receivable from related
parties.




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




Certain
officers of the Company are currently indebted to the Company in connection with
the purchase of Class B Non-Voting Shares and relocation housing loans. The
loans granted by the Company do not bear interest. The aggregate amount of such
indebtedness as of August 31, 2008 was $1.3 million.




OUTSTANDING
SHARE DATA


As
at October 31, 2007, 3,445,358 Class A Voting Shares and 76,586,434 Class B
Non-Voting Shares were issued and outstanding. Class A Voting Shares are
convertible at any time into an equivalent number of Class B Non-Voting Shares.
The Class B Non-Voting Shares are convertible into an equivalent number of Class
A Voting Shares in limited circumstances.




IMPACT
OF NEW ACCOUNTING POLICIES


Financial
instruments, comprehensive income and hedges


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




In
adopting these recommendations, the Company made adjustments to its opening
balance sheet as at September 1, 2007.  The adoption of these
standards did not have a significant impact on net income for the year ended
August 31, 2008.




RECENT
ACCOUNTING PRONOUNCEMENTS


Financial
instruments - disclosure and presentation


In
December 2006, the CICA issued Handbook Sections 3862, ‘‘Financial Instruments -
Disclosures’’ and 3863, ‘‘Financial Instruments - Presentation’’. These
standards enhance existing disclosures in previously issued Section 3861
‘‘Financial Instruments - Disclosures and Presentation’’. Section 3862 places
greater emphasis on disclosures about risks related to recognized and
unrecognized financial instruments and how those risks are managed. Section 3863
carries forward the same 39 presentation standards as Section 3861. These new
standards are effective for interim and annual financial statements relating to
fiscal years commencing on or after October 1, 2007 on a prospective basis. The
Company will adopt these new standards effective September 1, 2008.




23




Capital
disclosures


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




Goodwill
and intangible assets


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




International
Financial Reporting Standards


In
February 2008, The Canadian Accounting Standards Board confirmed that the use of
International Financial Reporting Standards (“IFRS”) will be required in Canada
for publically accountable profit-oriented enterprises for fiscal years
beginning on or after January 1, 2011.  The Company will be required
to report using IFRS beginning September 1, 2011.  The Company has
begun the process of evaluating the impact of the change to IFRS.




CRITICAL
ACCOUNTING ESTIMATES


The
Company’s significant accounting policies are described in note 2 to the
consolidated financial statements. 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
investments in film and television programs; property, plant and equipment;
long-term investments; current and future income taxes; broadcast licenses and
goodwill. Actual results could differ from those estimates. The policies
described below are considered to be critical accounting estimates, as they
require significant estimation or judgment.




24




Film
investments


The
Company accounts for its production and distribution of film and television
programs in accordance with the American Institute of Certified Public
Accountants (“AICPA”) Statement of Position 00-2, “Accounting by Producers or
Distributors of Films” (“SOP 00-2”). SOP 00-2 requires that film and television
costs of production and acquisitions are amortized using the
individual-film-forecast-computation method. Under this method, capitalized
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 10  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, therefore impacting direct
cost of sales, general and administrative expenses, and
profitability.




Broadcast
licenses and goodwill


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




Broadcast
licenses are considered to have an indefinite life based on management’s intent
and ability to renew the licenses without substantial cost and without material
modification of the existing terms and conditions of the license. No assurance
can be given that the Company will be able to renew its licenses or that
substantial cost or material modification of the existing terms and conditions
will not be incurred.




Broadcast
licenses and goodwill are tested for impairment annually or more frequently if
events or changes in circumstances indicate that they are impaired. The Company
has selected August 31 as the date it performs its annual impairment test. The
key assumptions used in the test include forecasted segment profit and industry
multiples. The fair value of the Company’s intangible assets is exposed to
future adverse changes if the Company experiences declines in operating results,
significant negative industry or economic trends, or if future performance is
below historical trends.




Income
taxes


The
liability method of tax allocation is used in accounting for income taxes. Under
this method, future tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities, and measured using the substantively enacted tax rates and laws
which are expected to be in effect when the differences are expected to reverse.
Certain assumptions are required in order to determine the provision for income
taxes, including filing positions on certain items and the realization of future
tax assets. In fiscal 2008, the Company recorded $10.3 million in income tax
recoveries related to the impact of income tax rate reductions on the
measurement of future tax liabilities.




The
Company is audited regularly by federal and provincial authorities in the areas
of income taxes and the remittance of sales taxes. These audits consider the
timing and amount of deductions and compliance with federal and provincial laws.
To the extent that the Company’s filing positions are challenged, the Company’s
effective tax rate in a given financial statement period could be materially
affected.




The
recognition of future tax assets depends on management’s assumption that future
earnings will be sufficient to realize the future benefit. No assurance can be
given that future earnings will be sufficient to realize the future benefit. In
fiscal 2008, the Company recorded an income tax recovery of $13.3 million
relating to future tax liabilities that were deemed in that period to be no
longer required as the result of various tax-planning strategies.




25




Production
tax credits


The
Company’s consolidated balance sheets contain balances related to production tax
credits received or receivable from federal and provincial government agencies.
Tax credits are claimed based on the expectation of meeting eligibility
requirements and amounts may be subject to estimation and interpretation. Claims
are subject to audit by federal and provincial authorities, and no assurances
can be given that amounts received or receivable will not be disallowed. Such a
disallowance may have an impact on the net unamortized cost of completed films,
and result in higher film amortization expense.




CONTROLS
AND PROCEDURES


As
required by Multilateral Instrument 52-109 issued by the Canadian Securities
Administrators, Corus’ Chief Executive Officer and Chief Financial Officer have
made certain certifications related to the information in Corus’ annual filings
(as defined in Multilateral Instrument 52-109) with the provincial securities
legislation.




As
Corus is a foreign private issuer listed on the New York Stock Exchange, similar
certifications by Corus’ Chief Executive Officer and Chief Financial Officer are
required by Section 302(a) of the Sarbanes-Oxley Act of 2002related to information in Corus’ annual report on Form 40-F.




Evaluation
of disclosure controls and procedures


As
part of the Form 52-109 certification, the Chief Executive Officer and Chief
Financial Officer must certify that they are responsible for establishing and
maintaining disclosure controls and procedures and have designed such disclosure
controls and procedures (or caused such disclosure controls and procedures to be
designed under their supervision) to ensure that material information with
respect to Corus, including its consolidated subsidiaries, is made known to them
and that they have evaluated the effectiveness of Corus’ disclosure controls and
procedures as of the end of the period covered by these annual filings.
Disclosure controls and procedures ensure that information required to be
disclosed by Corus in the reports that it files or submits to the provincial
securities legislation is recorded, processed, summarized and reported, within
the time periods required. Corus has adopted or formalized such controls and
procedures as it believes are necessary and consistent with its business and
internal management and supervisory practices.




The
Company’s Chief Executive Officer and Chief Financial Officer, after evaluating
the effectiveness of the Company’s disclosure controls and procedures (as
defined in Multilateral Instrument 52-109 and in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange
Act of 1934, as amended [the “Exchange Act”]), have concluded that, as at
August 31, 2008, the Company’s disclosure controls and procedures were
effective.




Management’s
annual report on internal control over financial reporting


As
part of the Form 52-109 certification, the Chief Executive Officer and Chief
Financial Officer must also certify that they are responsible for establishing
and maintaining internal control over financial reporting and have designed such
internal control over financial reporting (or caused such internal control over
financial reporting to be designed under their supervision). In addition, Corus’
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act. The Company’s internal control over financial
reporting includes those policies and procedures that: (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of Corus’ assets; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that the Company’s receipts and expenditures are being made only
in accordance with authorizations of the Company’s management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets that could have a
material effect on the Company’s financial statements.




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The
Company’s Chief Executive Officer and Chief Financial Officer have concluded
that, as at August 31, 2008, the Company has designed such internal control over
financial reporting (as defined in Multilateral Instrument 52-109) to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
Canadian GAAP.





Under
the supervision and with the participation of the Chief Executive Officer and
Chief Financial Officer, Corus’ management conducted an evaluation of the
effectiveness of the Company’s internal control over financial reporting, as at
August 31, 2008, based on the framework set forth in Internal Control - Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). Based on its evaluation under this framework,
management concluded that the Company’s internal control over financial
reporting was effective as of that date.




Attestation
report of the registered public accounting firm


Ernst
& Young LLP, an independent registered public accounting firm, who has
audited, and reported on, the Company’s consolidated financial statements for
the year ended August 31, 2008, as included in this annual report, has also
issued a report, under Auditing Standard No. 5 of the Public Company Accounting
Oversight Board (United States), on the operating effectiveness of internal
control over financial reporting as at August 31, 2008.




Changes
in internal controls over financial reporting


There
were no changes in the Company’s internal control over financial reporting that
occurred during fiscal 2008 that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial
reporting.




The
design of any system of controls and procedures is based in part upon certain
assumptions about the likelihood of certain events. There can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote.




Additional
information relating to the Company, including the Annual Information Form, can
be found on SEDAR at www.sedar.com.




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