Exhibit
      99.2





Management’s
      discussion and analysis of the financial position and results of operations
      for
      the fiscal year ended August 31, 2007 is prepared at October 31, 2007. This
      should be read in conjunction with the Company’s August 31, 2007 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
      24 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.





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








1





**(a)
      Radio**


The
      Radio segment comprises 52 radio stations situated primarily in nine of the
      10
      largest Canadian markets by population, and in the densely populated area of
      Southern Ontario. Revenues are derived from advertising aired over these
      stations. Corus is Canada’s leading radio operator 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 two digital television channels: SCREAM 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.





The
      increase of Television’s interest in TELETOON from 40% to 50% and the absorption
      of the Nelvana production studio occurred at the start of fiscal
      2007.  The segment results of Television for the prior year have been
      restated to reflect certain aspects of the change related to the Nelvana
      production studio.  The impact of this restatement on fiscal 2006 is
      to increase Television’s revenues and segment profit by $8.5 million and $1.1
      million, respectively.  For other aspects of the new business
      relationship between the Content and Television segments it is impracticable
      to
      restate the prior year.





**(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. For
      fiscal 2007, the production studio has been integrated into the Television
      segment.





The
      absorption of the Nelvana production studio into Television occurred at the
      start of fiscal 2007.  The segment results of Content for the prior
      year have been restated to reflect certain aspects of this
      change.  The impact of this restatement on fiscal 2006 is to decrease
      Content’s revenues and segment profit by $8.5 million and $1.1 million,
      respectively.  For other aspects of the new business relationship
      between the Content and Television segments it is impracticable to restate
      the
      prior year.








2





**ANNUAL
      SELECTED FINANCIAL INFORMATION**


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








[millions
                of Canadian dollars except percentages and per share
                amounts]
            
            
            
            
            
            
            
            
            
            
            **%
                Increase [Decrease]****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2007
                over**
              **2006**
            
            
            **2006
                over**
              **2005****Revenues**
            
            
            768.7
            
            
            
            726.3
            
            
            
            683.1
            
            
            
            5.8
            
            
            
            6.3Segment
                profit [1]
            
            
            240.9
            
            
            
            214.1
            
            
            
            195.3
            
            
            
            12.5
            
            
            
            9.6Net
                income
            
            
            107.0
            
            
            
            35.5
            
            
            
            71.1**Earnings
                per share**Basic
            
            $
            2.53
            
            
            $
            0.84
            
            
            $
            1.66Diluted
            
            $
            2.47
            
            
            $
            0.82
            
            
            $
            1.65Total
                assets
            
            
            1,937.0
            
            
            
            1,842.2
            
            
            
            1,928.4Total
                long-term financial liabilities
            
            
            673.8
            
            
            
            666.4
            
            
            
            660.4**Cash
                dividends declared per share**Class
                A Voting
            
            $
            1.00250
            
            
            $
            0.4525
            
            
            $
            0.065Class
                B Non-Voting
            
            $
            1.01331
            
            
            $
            0.4650
            
            
            $
            0.075





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:





[millions
                of Canadian dollars except percentages]
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **%
                Increase [Decrease]****2007**
            
            
            ****
            **%[1]**
            
            
            **2006**
            
            
            ****
            **%[1]**
            
            
            **2005**
            
            
            ****
            **%[1]**
            
            
            **2007
                over**
              **2006**
            
            
            **2006
                over**
              **2005****Revenues**Radio
            
            
            275.7
            
            
            
            35.9
            
            
            
            268.4
            
            
            
            37.0
            
            
            
            252.7
            
            
            
            37.0
            
            
            
            2.7
            
            
            
            6.2Television
            
            
            436.3
            
            
            
            56.8
            
            
            
            401.9
            
            
            
            55.3
            
            
            
            354.2
            
            
            
            51.9
            
            
            
            8.6
            
            
            
            13.5Content
            
            
            61.3
            
            
            
            8.0
            
            
            
            63.6
            
            
            
            8.8
            
            
            
            82.3
            
            
            
            12.0
            
            
            
            (3.6
            )
            
            
            (22.7
            )Eliminations
            
            
            (4.6
            )
            
            
            (0.6
            )
            
            
            (7.6
            )
            
            
            (1.0
            )
            
            
            (6.1
            )
            
            
            (0.9
            )768.7
            
            
            
            100.0
            
            
            
            726.3
            
            
            
            100.0
            
            
            
            683.1
            
            
            
            100.0
            
            
            
            5.8
            
            
            
            6.3**Direct
                cost of sales, general and administrative
                expenses**Radio
            
            
            198.2
            
            
            
            71.9
            
            
            
            200.0
            
            
            
            74.5
            
            
            
            183.7
            
            
            
            72.7
            
            
            
            (0.9
            )
            
            
            8.9Television
            
            
            253.8
            
            
            
            58.2
            
            
            
            236.6
            
            
            
            58.9
            
            
            
            213.4
            
            
            
            60.2
            
            
            
            7.3
            
            
            
            10.9Content
            
            
            55.9
            
            
            
            91.2
            
            
            
            59.1
            
            
            
            92.9
            
            
            
            78.7
            
            
            
            95.6
            
            
            
            (5.4
            )
            
            
            (24.9
            )Corporate
            
            
            24.8
            
            
            
            3.2
            
            
            
            24.0
            
            
            
            3.3
            
            
            
            18.6
            
            
            
            2.7
            
            
            
            3.3
            
            
            
            29.0Eliminations
            
            
            (4.9
            )
            
            
            (0.6
            )
            
            
            (7.5
            )
            
            
            (1.0
            )
            
            
            (6.6
            )
            
            
            (1.0
            )527.8
            
            
            
            68.7
            
            
            
            512.2
            
            
            
            70.5
            
            
            
            487.8
            
            
            
            71.4
            
            
            
            3.0
            
            
            
            5.0**Segment
                profit[2]**Radio
            
            
            77.5
            
            
            
            28.1
            
            
            
            68.4
            
            
            
            25.5
            
            
            
            69.0
            
            
            
            27.3
            
            
            
            13.3
            
            
            
            (0.9
            )Television
            
            
            182.4
            
            
            
            41.8
            
            
            
            165.3
            
            
            
            41.1
            
            
            
            140.8
            
            
            
            39.8
            
            
            
            10.3
            
            
            
            17.4Content
            
            
            5.4
            
            
            
            8.8
            
            
            
            4.5
            
            
            
            7.1
            
            
            
            3.6
            
            
            
            4.4
            
            
            
            20.0
            
            
            
            25.0Corporate
            
            
            (24.8
            )
            
            
            (3.2
            )
            
            
            (24.0
            )
            
            
            (3.3
            )
            
            
            (18.6
            )
            
            
            (2.7
            )
            
            
            3.3
            
            
            
            29.0Eliminations
            
            
            0.4
            
            
            
            
            
            
            (0.1
            )
            
            
            
            
            
            0.5
            
            
            
            0.1240.9
            
            
            
            31.3
            
            
            
            214.1
            
            
            
            29.5
            
            
            
            195.3
            
            
            
            28.6
            
            
            
            12.5
            
            
            
            9.6Depreciation
            
            
            21.6
            
            
            
            2.8
            
            
            
            21.3
            
            
            
            2.9
            
            
            
            23.7
            
            
            
            3.5
            
            
            
            1.4
            
            
            
            (10.1
            )Amortization
            
            
            1.6
            
            
            
            0.2
            
            
            
            2.9
            
            
            
            0.4
            
            
            
            4.6
            
            
            
            0.7
            
            
            
            (44.8
            )
            
            
            (37.0
            )Interest
                expense
            
            
            35.8
            
            
            
            4.7
            
            
            
            43.1
            
            
            
            5.9
            
            
            
            55.6
            
            
            
            8.1
            
            
            
            (16.9
            )
            
            
            (22.5
            )Debt
                refinancing loss
            
            
            
            
            
            
            
            
            
            132.0
            
            
            
            
            
            
            Other
                expense, net
            
            
            9.8
            
            
            
            
            
            
            
            11.6
            
            
            
            
            
            
            
            (5.5
            )Income
                before income taxes and non-controlling interest
            
            
            172.1
            
            
            
            
            
            
            
            3.2
            
            
            
            
            
            
            
            116.9Income
                tax expense [recovery]
            
            
            59.8
            
            
            
            
            
            
            
            (36.0
            )
            
            
            
            
            
            
            42.8Non-controlling
                interest
            
            
            5.3
            
            
            
            
            
            
            
            3.7
            
            
            
            
            
            
            
            3.0**Net
                income for the year**
            
            
            107.0
            
            
            
            
            
            
            
            35.5
            
            
            
            
            
            
            
            71.1





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
      2007 COMPARED TO FISCAL 2006**





Revenues
      for fiscal 2007 of $768.7 million represented a 6% increase over $726.3 million
      last 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 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.  Please refer to
      the discussion of segmented results for additional analysis of
      expenses.





Segment
      profit for fiscal 2007 was $240.9 million, up 13% from $214.1 million last
      year.
      The Radio segment profit of $77.5 million was up 13% from the prior year. The
      Television division’s segment profit of $182.4 million represented a segment
      profit growth of 10%. The Content division generated segment profit of $5.4
      million, an increase of 21% over the prior year. Segment profit as a percentage
      of revenues for the year ended August 31, 2007, was 31% compared to 30% in
      fiscal 2006.





**Radio**


Radio
      revenues for the year were $275.7 million, up 3% 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.  The Company has
      taken measures to address its challenges in the Quebec market, where Corus’
growth is now beginning to keep pace with the market average
      growth.  Corus Radio believes that its assets continue to be
      competitively positioned to take advantage of the strong ad market in Western
      and Central Canada.





Direct
      cost of sales, general and administrative expenses for the year were $198.2
      million, down 1% from $200.0 million last year.  In fiscal 2007, the
      Company has not accrued 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, primarily in the fourth
      quarter, related to the Montréal cluster.  These costs are reflected
      in other expense, net and are excluded from segment profit.





Segment
      profit for the year was $77.5 million, an increase of 13% from last 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.











4





**Television**


Revenues
      for the year were $436.3 million, up 9% 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 in the full fiscal year.  The strong
      advertising results for fiscal 2007 were driven by double-digit revenue growth
      in CMT and W Network.  Specialty advertising growth was 12% for the
      year, while total revenues from local and other television properties were
      down
      slightly from the prior 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
      the
      year, up 7% from the prior year.  In fiscal 2007, the Company has not
      accrued 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 and Canadian content
      requirements based on the prior year’s revenues, 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% over the prior 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,
      primarily in the first quarter, 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 the year of $182.4 million represented 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. Segment profit margin was 42%, up from 41% in the prior
      year.





**Content**


Revenues
      for the year 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 inter-company revenues of $4.3 million.  These revenues are
      eliminated upon consolidation.





Direct
      cost of sales, general and administrative expenses for the year were $55.9
      million, down 5% from the prior year.  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 the first quarter of 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, up from $4.5 million last year. The
      Content division continues to perform in line with the Company’s expectations of
      modest segment profit.








5





**Corporate**


The
      Corporate segment results represent the incremental cost of corporate overhead
      in excess of the amount allocated to the other operating divisions. Corporate
      overhead in fiscal 2007 was $24.8 million, up from $24.0 million in 2006.
      Stock-based compensation includes the expenses related to the Company’s
      Performance Share Units (“PSUs”), stock options and other long-term incentive
      plans.  Stock-based compensation expenses decreased to $10.2 million
      in fiscal 2007 from $11.6 million last year.  An increase in the
      Company’s share price in the fourth quarter last year resulted in certain
      incentive plan thresholds being met that had not been accrued in earlier
      periods.  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 increased to $14.7
      million in fiscal 2007 from $12.4 million last year. This increase is the result
      of continued investment in information technology.  In addition, the
      prior year includes the impact of a refund in the fourth quarter related to
      employee benefits.





**Depreciation**


Depreciation
      expense for the year was $21.6 million, an increase of $0.3 million from last
      year.  This fluctuation reflects the timing of capital expenditures,
      and the fact that depreciation and capital expenditures have remained fairly
      constant over the past several fiscal years.





**Amortization**


Amortization
      expense for the year was $1.6 million, down from $2.9 million last
      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
      expense**


Interest
      expense for the year was $35.8 million, down from $43.1 million last
      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
      the second quarter of fiscal 2006, the Company purchased and cancelled
      U.S.$373.6 million of the Notes. Concurrently, the cross-currency agreements
      which 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 refinancing loss of $132.0
      million in the second quarter. The components of this loss include
      mark-to-market payments on the cross-currency agreement terminations, consent
      and tender premiums, the non-cash write-off of deferred financing charges
      related to the Notes and other fees. The after-tax impact of these transactions
      was approximately $1.95 per share.





**Other
      expense, net**


Other
      expense, net for the year was $9.8 million, compared to other expense, net
      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 segment in the third quarter and Content segment in the fourth
      quarter.  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.














6





**Income
      taxes**


The
      effective tax rate for 2007 was 34.7%, consistent with the Company’s 35.5%
      statutory rate.  The effective tax rate for the year reflects a
      benefit of $1.6 million related to a change in the long-term future tax
      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
      in the fourth quarter.





**Net
      income**


Net
      income for the year was $107.0 million, as compared to $35.5 million last
      year.  Earnings per share for the year were $2.53 basic and $2.47
      diluted, compared with $0.84 basic and $0.82 diluted last year.





**FISCAL
      2006 COMPARED TO FISCAL 2005**





Revenues
      for fiscal 2006 were $726.3 million, up 6% from $683.1 million in fiscal 2005.
      Radio and Television experienced increases of 6% and 14%, respectively, while
      Content was down 23% compared to fiscal 2005.





Direct
      cost of sales, general and administrative expenses were $512.2 million, up
      5%
      from $487.8 million in fiscal 2005. Expense increases in Television were a
      result of higher revenues, while increases in Radio were a result of the
      integration of the new stations in Québec. Expenses at Content decreased as a
      result of lower revenues, while Corporate expenses increased as a result of
      stock-based compensation and costs incurred in the process of continually
      improving its infrastructure and controls.





Segment
      profit for fiscal 2006 was $214.1 million, up 10% from $195.3 million in fiscal
      2005. The Radio segment profit of $68.4 million was down 1% from fiscal 2005,
      reflecting disappointing results in Québec. The Television division’s segment
      profit of $165.3 million represented a segment profit growth of 17%. The Content
      division generated segment profit of $4.5 million, an increase of 25% over
      fiscal 2005. Segment profit as a percentage of revenues for the year ended
      August 31, 2006 was 30% compared to 29% in fiscal 2005.





**Radio**


Radio
      revenues for fiscal 2006 were $268.4 million, up 6% from fiscal 2005. Local
      and
      national airtime sales each increased by 5% while interactive and other revenues
      also increased. According to the TRAM Report for the year ended August 31,
      2006,
      Corus stations generated advertising growth of 5.5%, compared to total market
      growth of 6.5%. Above average growth was experienced in the western markets
      of
      Vancouver, Calgary and Winnipeg. Although fiscal 2006 was a challenging year
      in
      major markets like Toronto and Montréal, where Corus’ growth did not keep pace
      with the market average growth, Corus Radio believes that its assets continue
      to
      be competitively positioned to take advantage of the strong advertising
      market.





Direct
      cost of sales, general and administrative expenses for fiscal 2006 were $200.0
      million, up 9% from fiscal 2005, mainly due to increased investments in new
      media and programming content, principally related to professional hockey which
      was unavailable the previous year and contributed approximately $2.6 million
      in
      costs in fiscal 2006. In addition, expenses related to the integration of the
      recently acquired Québec stations were higher than management’s expectations and
      this combined with lower than anticipated revenue growth had a negative impact
      on results for fiscal 2006.





Segment
      profit for fiscal 2006 was $68.4 million, 1% lower than in fiscal 2005. Segment
      profit margin for fiscal 2006 was 25%, down from 27% in fiscal 2005. During
      fiscal 2006 Corus Radio incurred $4.2 million in expenses related to
      restructuring costs primarily in Western Canada. These costs are reflected
      in
      other expense, net.








7





**Television**


Television
      revenues for fiscal 2006 were $401.9 million, up 14% over fiscal 2005. Revenue
      growth was driven by advertising growth of 13% and subscriber growth of 10%
      for
      the year. Subscriber revenues for fiscal 2006 include subscriber fee adjustments
      of $4.7 million. Excluding these items, subscriber revenue growth for fiscal
      2006 was 7%. The strong advertising results were driven by double-digit growth
      in YTV, CMT, W Network, TELETOON and Telelatino. Specialty advertising growth
      for fiscal 2006 was 14%, while total revenues from local and other television
      properties grew by 5% over fiscal 2005. Subscriber revenue growth was driven
      by
      Movie Central, which finished fiscal 2006 with 822,000 subscribers, up 10%
      from
      748,000 at August 31, 2005. The Company attributes this increase to successful
      marketing campaigns surrounding high-profile HBO programming, including *Rome*and the sixth season of *The Sopranos*, which launched in March
      2006.





Direct
      cost of sales, general and administrative expenses were $236.6 million for
      fiscal 2006, up 11% from fiscal 2005. The increase was primarily due to higher
      programming costs, as amortization of program rights increased by 10% over
      fiscal 2005. These costs fluctuate in proportion to changes in subscriber
      levels, as a result of program supply agreements, and Canadian content
      requirements based on the prior year’s revenues, as a result of conditions of
      license. These increased costs were offset by effective cost containment in
      other general and administrative overhead, which increased by 2% over fiscal
      2005, due to higher marketing costs as well as bad debt expense incurred in
      fiscal 2006.





Segment
      profit for fiscal 2006 of $165.3 million represented a 17% increase over fiscal
      2005. Segment profit margin was 41%, up from 40% in fiscal 2005.





**Content**


Content
      revenues for fiscal 2006 were $63.6 million, a decrease of 23% from fiscal
      2005.
      During fiscal 2006, Content delivered 107 completed episodes, compared to 111
      episodes in the prior year. The decrease in revenues from the prior year was
      due
      to the decline in *Beyblade*revenues towards the end of fiscal 2005. The
*Beyblade*decline is not likely to reverse and merchandising revenues
      will not return to the levels of the past few fiscal years until new brands
      come
      on line. Included in Content’s revenues for fiscal 2006 are intercompany
      revenues of $7.1 million. These revenues are eliminated upon
      consolidation.





Direct
      cost of sales, general and administrative expenses for fiscal 2006 were $59.1
      million, down 25% from the prior year. The decrease reflects ongoing diligence
      in expense control, as well as lower film amortization and third-party
      participation costs that fluctuate in proportion to revenues. In fiscal 2006,
      Content incurred $6.7 million in expenses related to the restructuring of the
      Toronto studio and the closure of foreign offices. These costs are reflected
      in
      other expense, net.





Segment
      profit for fiscal 2006 was $4.5 million, up from $3.6 million in fiscal 2005.
      The Content division continues to perform in line with the Company’s
      expectations.





**Corporate**


The
      Corporate segment results represent the incremental cost of corporate overhead
      in excess of the amount allocated to the other operating divisions. Corporate
      overhead in fiscal 2006 was $24.0 million, up from $18.6 million in fiscal
      2005.
      Stock-based compensation expenses increased to $11.6 million in fiscal 2006
      from
      $6.8 million in fiscal 2005. This increase reflects the impact of Corus’ higher
      average share price in fiscal 2006 on expenses related to the PSUs, as well
      as
      an additional year of expensing stock options. Other general and administrative
      costs increased to $12.4 million in fiscal 2006 from $11.8 million in fiscal
      2005. This increase relates primarily to the increased cost of information
      technology and costs associated with implementing the requirements of the
*Sarbanes-Oxley Act*and new Canadian securities standards.








8





**Depreciation**


Depreciation
      expense for fiscal 2006 was $21.3 million, a decrease of $2.4 million from
      fiscal 2005. This decrease reflects a lower capital cost base, particularly
      in
      the Television division, and continues a trend reflecting lower capital
      expenditures in that division in recent years.





**Amortization**


Amortization
      expense for fiscal 2006 was $2.9 million, down from $4.6 million in fiscal
      2005.
      The decrease is a result of certain deferred start-up and reformatting costs
      becoming fully amortized, as well as the write-off in the second quarter of
      deferred financing costs associated with the Notes. The write-off of these
      costs
      has been recorded as a component of the debt restructuring loss. The remaining
      deferred start-up costs of $0.4 million will be fully amortized in fiscal 2007,
      while $5.3 million in deferred financing charges relating to the new bank
      facility is being amortized over the remaining life of the
      facility.





**Interest
      expense**


Interest
      expense for fiscal 2006 was $43.1 million, down from $55.6 million in fiscal
      2005. The Company refinanced its debt at the end of January 2006, with the
      result that the 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 2006 since the refinancing was 5.2% on bank debt,
      compared to 9.1%, primarily on the Notes, in fiscal 2005.





**Debt
      refinancing loss**


In
      the second quarter of fiscal 2006, the Company purchased and cancelled
      U.S.$373.6 million of the Notes. Concurrently, the cross-currency agreements
      which 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 refinancing loss of $132.0
      million in the second quarter. The components of this loss include
      mark-to-market payments on the cross-currency agreement terminations, consent
      and tender premiums, the non-cash write-off of deferred financing charges
      related to the Notes and other fees. The after-tax impact of these transactions
      in fiscal 2006 was approximately $1.95 per share.





**Other
      expense, net**


Other
      expense, net for fiscal 2006 was $11.7 million, representing a decrease of
      $17.2
      million from income of $5.5 million in fiscal 2005. Fiscal 2006 includes
      severance-related restructuring charges of $4.2 million incurred in the Radio
      segment and $6.7 million incurred in the Content segment. Fiscal 2005 included
      foreign exchange and derivative gains of $3.3 million and $4.4 million,
      respectively. The financial instruments which gave rise to these gains were
      terminated in fiscal 2005 so there is no corresponding impact in fiscal 2006.
      In
      addition, fiscal 2005 includes a realized contingent consideration gain of
      $4.1
      million, a broadcast license impairment of $4.1 million and the retroactive
      portion of a performing rights tariff increase in the amount of $3.8
      million.





**Income
      taxes**


Income
      tax recovery for fiscal 2006 was $36.0 million on income before taxes of $3.2
      million. Fiscal 2006 was positively impacted by approximately $37.0 million
      in
      long-term future tax rate changes and other items as described in note 18 to
      the
      audited consolidated financial statements.





**Net
      income**


Net
      income for fiscal 2006 was $35.5 million, down $35.6 million from $71.1 million
      in fiscal 2005. Earnings per share for fiscal 2006 were $0.84 basic and $0.82
      diluted, compared with basic and diluted earnings per share of $1.66 and $1.65,
      respectively, in fiscal 2005. The after-tax impact of the debt refinancing
      transaction in fiscal 2006 was a loss of approximately $1.95 per
      share.








9





**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, 2007. 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
                [loss] per shareprofit
                [1]
            
            
            [loss]
            
            
            Basic
            
            
            Diluted20074th
                quarter
            
            
            187,204
            
            
            
            50,184
            
            
            
            21,219
            
            
            $
            0.50
            
            
            $
            0.493rd
                quarter
            
            
            197,612
            
            
            
            63,500
            
            
            
            29,587
            
            
            
            0.70
            
            
            
            0.682nd
                quarter
            
            
            174,729
            
            
            
            47,320
            
            
            
            19,543
            
            
            
            0.46
            
            
            
            0.451st  quarter
            
            
            209,198
            
            
            
            79,917
            
            
            
            36,669
            
            
            
            0.87
            
            
            
            0.8520064th
                quarter
            
            
            184,979
            
            
            
            44,515
            
            
            
            46,642
            
            
            $
            1.11
            
            
            $
            1.093rd
                quarter
            
            
            181,562
            
            
            
            57,702
            
            
            
            23,154
            
            
            
            0.55
            
            
            
            0.542nd
                quarter
            
            
            164,388
            
            
            
            42,151
            
            
            
            (65,732
            )
            
            
            (1.54
            )
            
            
            (1.54
            )1st  quarter
            
            
            195,341
            
            
            
            69,751
            
            
            
            31,407
            
            
            
            0.73
            
            
            
            0.72





Notes:


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





**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 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
      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 in the fourth quarter of fiscal 2006 was positively impacted
                by
                approximately $37.0 million in income tax rate changes and other
                income
                tax items.


•
            The
                second quarter of fiscal 2006 was impacted by the purchase and
                cancellation of the Company’s Notes, as well as the termination of the
                cross-currency agreements associated with the Notes. The after-tax
                impact
                of these transactions was approximately $82.6 million or $1.95 per
                share.











10





**FOURTH
      QUARTER**


Revenues
      for the fourth quarter were $187.2 million, an increase of 1% over $185.0
      million last year. Radio revenues for the fourth quarter were $66.5 million,
      essentially unchanged from the corresponding period last year. Revenue growth
      for the quarter was experienced in the west. Both local and national airtime
      sales for the fourth quarter increased by 2% over the prior, while other
      ancillary revenues were down. Television revenues for the fourth quarter were
      $104.2 million, up 8% over the corresponding period last year. Revenue growth
      for the quarter was driven by advertising growth of 5% and subscriber growth
      of
      5%. Other ancillary revenues, primarily derived through service work in the
      studio, were also up in the quarter. Subscriber revenues for the prior year
      include subscriber fee adjustments of $2.3 million. Content revenues for the
      fourth quarter were $17.7 million, a decrease of 28% from the prior year. This
      decrease largely reflects timing differences, as for the full year revenues
      decreased by only 4%.  This decrease reflects the fact that under the
      new studio structure, first Canadian windows on studios are not made available
      to Content for distribution.





Direct
      cost of sales, general and administrative expenses for the fourth quarter were
      $137.0 million, down 2% from $140.5 million in 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 the fourth quarter
      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 in the fourth quarter, expenses would have increased by 1% for
      the
      quarter.  Corporate overhead for the fourth quarter decreased to $7.4
      million from $7.9 million in the prior year, reflecting lower expenses for
      stock-based compensation.





Depreciation
      expense for the fourth quarter was $5.8 million, an increase of $0.2 million
      from last year. This fluctuation reflects the timing of capital expenditures,
      and the fact that depreciation and capital expenditures have remained fairly
      constant over the past several fiscal years. Amortization expense for the fourth
      quarter was $0.3 million, down from $0.6 million last year. The decrease is
      a
      result of deferred start-up and reformatting costs becoming fully amortized.
      Interest expense for the fourth quarter was $8.8 million, up from $8.5 million
      last year. The effective interest rate for the fourth quarter was 5.5% on bank
      debt, compared to 5.3% in the prior year. Other expense for the fourth quarter
      was $2.6 million, compared to $8.3 million in the prior year. The current year’s
      quarter includes $3.0 million in restructuring charges incurred primarily in
      the
      Radio segment, while the prior year’s quarter includes $7.3 million in
      restructuring charges incurred primarily in the Content division. The effective
      tax rate for the fourth quarter was 31.2%, compared with the Company’s 35.5%
      statutory rate. This difference reflects a benefit of $1.6 million related
      to a
      change in the long-term future tax rate.





Net
      income for the fourth quarter was $21.2 million, compared to $46.6 million
      last
      year. Earnings per share for the fourth quarter were $0.50 basic and $0.49
      diluted, compared with $1.11 basic and $1.09 diluted last year.





**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.








11





**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 indicates 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, 2007, derived primarily from three areas: advertising (57%),
      subscriber fees (29%) and license fees (6%) (2006 - 58%, 28% and 5%,
      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 35% and 32% of consolidated direct cost of sales, general and
      administrative expenses in fiscal 2007 (2006 - 36% and 29%, respectively) were
      composed of employee remuneration and programming and film costs,
      respectively.





**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 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 19 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]
            
            **2007**
            
            
            **2006**
            
            
            **2005**Cash
                provided by [used in]:Operating
                activities
            
            
            103,073
            
            
            
            111,018
            
            
            
            102,416Investing
                activities
            
            
            (70,798
            )
            
            
            (17,249
            )
            
            
            (21,623
            )Free
                cash flow
            
            
            32,275
            
            
            
            93,769
            
            
            
            80,793




**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.





12








[thousands
                of Canadian dollars]
            
            **2007**
            
            
            **2006**Long-term
                debt
            
            
            610,697
            
            
            
            596,362Cash
                and cash equivalents
            
            
            (33,347
            )
            
            
            (43,636
            )Net
                debt
            
            
            577,350
            
            
            
            552,726





**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]
            
            **2007**
            
            
            **2006**
            
            
            **2005**Net
                debt [numerator]
            
            
            577,350
            
            
            
            552,726
            
            
            
            465,914Segment
                profit [denominator]
            
            
            240,921
            
            
            
            214,119
            
            
            
            195,311Net
                debt to segment profit
            
            
            2.4
            
            
            
            2.6
            
            
            
            2.4




**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 Act*and, 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 Act*and 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 Act*and 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 Act*to 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 Act*to 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.








13





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 Company has concluded that it is not appropriate to accrue
      for these fees in its results for fiscal 2007.  The decision is
      subject to appeal, and the outcome of any appeal may have a detrimental impact
      on the future financial results of the Company.





*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 as 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 change rapidly 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.





*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.








14





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 online 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,
      as
      well as classical movie offerings to western Canadian subscribers. These
      services compete with pay-per-view movie offerings as well as video-on-demand
      offerings.





*Content*


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





Further,
      vertical integration of the television broadcast industry and the creation
      and
      expansion of new networks, which create a substantial portion of their own
      programming, have decreased the number of available time slots for programs
      produced by third-party production companies. There can be no assurances that
      Corus will be able to compete successfully in the future or that 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.








15





**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 change rapidly 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 online 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.





**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.








16





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 online 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, 2007, 65% of the Company’s consolidated long-term debt was fixed
      with respect to interest rates.





*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 7% 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, 2007, 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.








17





**FINANCIAL
      POSITION**


Total
      assets as at August 31, 2007 were $1.94 billion, compared to $1.84 billion
      as at
      August 31, 2006.  The following discussion describes the significant
      changes in the consolidated balance sheet since August 31, 2006.





Current
      assets increased by $21.1 million.  Cash and cash equivalents
      decreased by $10.3 million.  The Company generated positive free cash
      flow, which was offset by cash used in financing activities.  Accounts
      receivable increased by $8.4 million from year end, however, as expected, the
      balance decreased from $166.1 million at the end of the third
      quarter.  The accounts receivable balance typically grows in the first
      and third quarter as a result of the broadcast revenue cycle.





Non-current
      assets increased by $73.7 million.  Tax credits receivable increased
      as a result of accruals related to film production, offset by tax credit
      receipts.  Investments and other assets decreased by $12.2 million,
      primarily due to the sale of shares in Astral Media Inc.  Capital
      assets and deferred charges did not change significantly from their year-end
      balances.  Program and film rights (current and non-current) increased
      by $31.7 million, as additions of acquired rights of $158.5 million and $6.6
      million acquired in the TELETOON acquisition were offset by amortization of
      $138.7 million.  Program rights increased due to the acquisition of
      programming for the fall launch and increases in condition of license
      requirements due to revenue growth.  Film investments increased by
      $5.8 million as net film spending of $56.1 million was offset by film
      amortization and accruals for tax credits.  Broadcast licenses
      increased by $27.6 million and goodwill increased by $39.1 million as a result
      of the TELETOON acquisition in the first quarter and the acquisition of two
      radio stations in the fourth quarter.





Current
      liabilities increased by $2.5 million.  Accounts payable and accrued
      liabilities increased by $5.6 million and income taxes payable decreased by
      $3.1
      million.  Accounts payable and accrued liabilities related to working
      capital increased by $1.0 million, while non-working capital accruals for
      program rights and film investments increased by $6.6 million, as the Company
      invests in television programming.  Dividends payable decreased by
      $2.0 million.  Income taxes payable decreased due to the timing of
      income tax installments.





Non-current
      liabilities increased by $33.9 million.  Long-term debt increased by
      $14.3 million, as the Company used its credit facility to finance the TELETOON
      acquisition in the first quarter.  Other long-term liabilities
      decreased by $6.7 million primarily due to the payment of public benefit
      liabilities.  Other components of long-term liabilities, which consist
      primarily of the long-term portion of program rights payable, did not change
      significantly from the prior year. Net future tax liability (including current
      future tax asset) increased by $23.4 million due to the TELETOON acquisition,
      as
      well as the utilization of tax loss carry-forwards.





Share
      capital increased by $11.7 million as a result of the exercise of employee
      stock
      options, offset by the repurchase and cancellation of shares with a book value
      of $16.2 million under the Company’s normal course issuer
      bid.  Contributed surplus increased by $3.4 million as a result of
      expensing stock-based compensation for the period.  Cumulative
      translation adjustment increased by $0.6 million due to the translation of
      the
      net assets of self-sustaining foreign operations.








18





**LIQUIDITY
      AND CAPITAL RESOURCES**


**Cash
      flows**


Overall,
      the Company’s cash and cash equivalents position has decreased by $10.3 million
      in fiscal 2007, compared to a decrease of $94.5 million in the prior
      year.  Positive free cash flow, including business combinations, for
      fiscal 2007 is $32.3 million compared to $93.8 million in the prior
      year.  This decrease is due primarily to the $46.6 million acquisition
      of an additional 10% interest in TELETOON in the first quarter of fiscal 2007
      and the acquisition of two radio stations for $18.0 million in the fourth
      quarter.  After adding back the cost of these business combinations,
      free cash flow in fiscal 2007 is $97.0 million, which was within the Company’s
      stated guidance range.





Cash
      provided by operating activities in fiscal 2007 is $103.1 million, compared
      to
      $111.0 million last year.  This decrease is a result of higher
      payments for program rights and film investments in the current
      year.  This has been offset by lower interest payments on the new bank
      facility.




Cash
      used in investing activities in fiscal 2007 is $70.8 million, compared to cash
      used of $17.2 million last year. The current year includes $64.7 million in
      cash
      outflow related to the TELETOON acquisition and the acquisition of two radio
      stations.  The current year also includes $20.7 million in proceeds
      from the sale of other investments and assets, compared to $15.9 million in
      the
      prior year.  Proceeds in the current year include $14.6 million from
      the sale of shares of Astral Media Inc.  Capital expenditures are $3.3
      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 2007 is $42.6 million compared to cash
      used of $188.2 million in the prior year.  The prior year included the
      refinancing of long-term debt and the unwinding of the associated cross-currency
      swap agreements.  In the current year, the Company drew on its credit
      facility in order to finance the TELETOON acquisition in the first
      quarter.  The Company continued purchasing its own shares under a
      normal course issuer bid that began in the second quarter of fiscal
      2006.  To the end of fiscal 2007, 769,100 shares had been purchased at
      an average price of $47.36 per share for cash consideration of $36.4
      million.  The exercise of employee stock options resulted in $26.9
      million in cash receipts, while $44.8 million in dividends were
      paid.





**Liquidity**


As
      at August 31, 2007, the Company has available $185.0 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. The Company has no
      significant commitments related to the acquisition of property, plant and
      equipment for the upcoming fiscal year.  The Company will incur
      capital costs related to the Toronto waterfront lease signed in fiscal 2007
      however, these costs will not be incurred until towards the end of fiscal 2009.
      Over the past three fiscal years, the Company has reduced its investment in
      non-cash working capital.





As
      at August 31, 2007, the Company has a cash balance of $33.3 million and a
      working capital balance of $94.1 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
      2008.








19





**Net
      debt to segment profit**


As
      at August 31, 2007, net debt was $577.4 million, up from $552.7 million as
      at
      August 31, 2006. This increase in net debt is a result of the cash flows
      incurred to acquire 10% of TELETOON in the first quarter. Net debt to segment
      profit as at August 31, 2007 was 2.4 times, down from 2.6 times as at August
      31,
      2006. 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 value of derivative financial instruments that do
      not
      qualify for hedge accounting is 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, 2007 is $8.8 million. No asset has been included
      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 $0.5 million for this derivative has been included as a liability
      in the consolidated balance sheet as at August 31, 2007.





As
      at August 31, 2005, the consolidated balance sheet included a liability of
      $158.8 million related to a cross-currency agreement. Corus terminated this
      agreement in the second quarter of fiscal 2006 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
                years**Long-term
                debt
            
            
            615,000
            
            
            
            -
            
            
            
            -
            
            
            
            615,000
            
            
            
            -Operating
                leases
            
            
            296,407
            
            
            
            25,880
            
            
            
            40,234
            
            
            
            31,792
            
            
            
            198,501Film
                and program rights purchase commitments
            
            
            263,188
            
            
            
            107,582
            
            
            
            119,639
            
            
            
            35,967
            
            
            
            -Other
                long-term obligations
            
            
            17,769
            
            
            
            3,314
            
            
            
            6,108
            
            
            
            5,812
            
            
            
            2,535





**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 $104.4 million (2006 - $92.8 million), production and
      distribution revenue of $3.5 million (2006 - $2.9 million) and administrative
      and other fees of $5.0 million (2006 - $6.0 million) from related parties.
      In
      addition, the Company paid cable and satellite system distribution access fees
      of $4.5 million (2006 - $4.4 million) and administrative and other fees of
      $2.6
      million (2006 - $2.1 million) to related parties. As at August 31, 2007, the
      Company had $19.3 million (2006 - $17.4 million) receivable from related
      parties.








20





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.





In
      fiscal 2005, Corus acquired a cable advertising business for $0.9 million in
      cash from Shaw, a company subject to common voting control.





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, 2007 was $1.7 million.





**OUTSTANDING
      SHARE DATA**


As
      at October 31, 2007, 1,722,929 Class A Voting Shares and 40,260,173 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.





**RECENT
      ACCOUNTING PRONOUNCEMENTS**


**Financial
      instruments, comprehensive income and hedges**


In
      April 2005, the CICA issued Handbook Section 1530, “Comprehensive Income,”
Handbook Section 3855, “Financial Instruments - Recognition and Measurement,”
and Handbook Section 3865, “Hedges.” Section 3855 expands on CICA Handbook
      Section 3860, “Financial Instruments - Disclosure and Presentation,” by
      prescribing when a financial instrument is to be recognized on the balance
      sheet
      and at what amount. It also specifies how instrument gains and losses are to
      be
      presented. Section 3865 is optional. It provides alternative treatments to
      Section 3855 for entities that choose to designate qualifying transactions
      as
      hedges for accounting purposes and specifies how hedge accounting is applied
      and
      what disclosures are necessary when it is applied. Section 1530 introduced
      a new
      requirement to present temporarily certain gains and losses outside net income
      in a new component of shareholders’ equity entitled Comprehensive Income. These
      standards are substantially harmonized with U.S. GAAP and are effective for
      the
      Company beginning September 1, 2007. The Company is currently evaluating the
      impact of these standards on its consolidated financial position and results
      of
      operations.





**Financial
      instruments - disclosures 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.





**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.








21





**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.





**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.














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**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 2006, the Company recorded $11.8 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 2006, the Company recorded an income tax recovery of $25.2 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.





**Investments**


The
      Company’s consolidated balance sheets contain balances related to investments
      carried at historical cost. In certain cases, quoted market value has been
      lower
      than cost for several years. In each case, management believes that persuasive
      evidence exists to indicate that the financial condition and near-term prospects
      of the issuer are not impaired and that the Company has the intent and ability
      to retain its investment in the issuer until anticipated recovery in market
      value occurs. Therefore, management believes that the declines in market value
      are not other-than-temporary, and no writedown is required. No assurance can
      be
      given that a recovery will occur, and the prospect of a writedown some time
      in
      the future remains present.





**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 2002*related to
      information in Corus’ annual report on Form 40-F.








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**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, 2007, 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.





The
      Company’s Chief Executive Officer and Chief Financial Officer have concluded
      that, as at August 31, 2007, 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, 2007, based on the framework set forth in *Internal Control -
      Integrated Framework*issued 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, 2007, 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, 2007.








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**Changes
      in internal controls over financial reporting**


There
      were no changes in the Company’s internal control over financial reporting that
      occurred during fiscal 2007 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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