##### 



MANAGEMENTS DISCUSSION AND ANALYSIS

Managements Discussion and Analysis is a review of activities and results for
the fiscal year ended August 31, 2002 as compared to the previous year, and a
review of activities and results for the fiscal year ended August 31, 2001 as
compared to the previous year. Comments relate to and should be read in
conjunction with the audited consolidated financial statements.

FORWARD-LOOKING STATEMENTS

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

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

SUPPLEMENTAL EARNINGS MEASURES

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

EBITDA

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

PRO FORMA INFORMATION

Pro forma information (including pro forma revenues, pro forma EBITDA and pro
forma EBITDA margins) is provided to assist investors in comparing results
between periods after giving effect to significant acquisitions

19Managements Discussion and Analysis (continued)and divestitures. In particular, results from the same period in fiscal 2001 have
been adjusted to reflect operating results of all businesses reporting in the
current period as if the businesses had been owned for the same number of days
in the prior year. Pro forma information is provided on the basis of the
Companys reportable business segments (Radio, Television and Content) for
revenues and EBITDA  the measure of profitability reviewed by the chief
operating decision maker of these divisions, since there were acquisitions
and/or dispositions in each of these divisions during fiscal 2001 or fiscal
2002.PRO FORMA RESULTS RECONCILIATIONThe following table reconciles pro forma revenues and EBITDA for the year ended
August 31, 2001 to actual results as reported in the consolidated statement of
income for the same periods and should be read in conjunction with the
preceding comments on supplemental earnings measures:

|             |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |         | 
|------------ | --------------------------- |  | -------------------------- | ------ | ------------ |  | ------------ | ------ | --------- |  | ------- | ------- | - |  | ------- | ------- | 
|             |                             |  | YEAR ENDED AUGUST 31, 2001
|             |                             |  |                           
|             |                             |  | AS REPORTED                |        | ACQUISITIONS |  | DISPOSITIONS |        | PRO FORMA
|             |                             |  |                            |        |              |  |              |        |          
|REVENUES     |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        
|Radio        |                             |  | 191,773                    |        |              |  | 17,446       |        |           |  |        |         |   |  | 209,219 |        
|Television   |                             |  | 228,693                    |        |              |  | 37,644       |        |           |  | (11,687 | )       |   |  | 254,650 |        
|Content      |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        
|             | Production and distribution |  |                            | 81,287 |              |  |              | 26,188 |           |  |         |        |   |  |         | 107,475 | 
|             | Branded consumer products   |  |                            | 56,119 |              |  |              | 25,654 |           |  |         | (23,624 | ) |  |         | 58,149  | 
|Eliminations |                             |  | (1,047                     | )      |              |  |             |        |           |  |        |         |   |  | (1,047  | )      
|             |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        
|             |                             |  | 556,825                    |        |              |  | 106,932      |        |           |  | (35,311 | )       |   |  | 628,446 |        
|             |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        
|EBITDA(1)    |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        
|Radio        |                             |  | 48,063                     |        |              |  | (180         | )      |           |  |        |         |   |  | 47,883  |        
|Television   |                             |  | 73,728                     |        |              |  | 10,963       |        |           |  | (3,801  | )       |   |  | 80,890  |        
|Content      |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        
|             | Production and distribution |  |                            | 8,509  |              |  |              | 3,927  |           |  |         |        |   |  |         | 12,436  | 
|             | Branded consumer products   |  |                            | 3,616  |              |  |              | 4,388  |           |  |         | (921    | ) |  |         | 7,083   | 
|Corporate    |                             |  | (9,461                     | )      |              |  |             |        |           |  |        |         |   |  | (9,461  | )      
|Eliminations |                             |  | (539                       | )      |              |  |             |        |           |  |        |         |   |  | (539    | )      
|             |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        
|             |                             |  | 123,916                    |        |              |  | 19,098       |        |           |  | (4,722  | )       |   |  | 138,292 |        
|             |                             |  |                            |        |              |  |              |        |           |  |         |         |   |  |         |        



|(1) |  | EBITDA means net income (loss) before minority interest, equity earnings,
income tax expense (recovery), goodwill and intangible impairment loss,
asset write-downs, hedge transaction loss, restructuring charges, other
income, gain on sale of investments, interest expense, amortization and
depreciation.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OVERVIEW

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

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



|(a) |  | Radio                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Radio group is comprised of 50 radio stations, subject to CRTC approval of
the divestiture of its two Oshawa radio stations. (2001: 49 stations),
primarily situated in eight 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 revenues, audience reach and operating margins.

20



---



##### 



Managements Discussion and Analysis (continued)

|   
|---
|(b)
|   
|   
|   
|(c)
|   
|   
|   
|   
|   
|   

21



---



##### 



Results of Operations

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

|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|------------------------------------------------------------------------- |  | ------------------------------ | ------ | ---- |  | ------- | ----- | ---- |  | ---- | ------ | ---- |  | --------- | ----- | --------- |  |  | ------ | - |  |  | ----- | - |  | --------------------- | ------ | ---- |  |  | ------ | -
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  | % INCREASE (DECREASE)
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                      
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  | 2002                  |        | 2001
|                                                                          |  | 2002                           |        | %(2) |  | 2001(3) |       | %(2) |  | 2000 |        | %(2) |  | OVER 2001 |       | OVER 2000
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |          
|                                                                          |  | (CDN $MILLIONS EXCEPT FOR %'S)
|REVENUES                                                                  |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Radio                                                                     |  |                                | 211.4  |      |  |         | 32.3  |      |  |      | 191.8  |      |  |           | 34.4  |           |  |  | 86.2   |   |  |  | 37.6  |   |  |                       | 10.2   |      |  |  | 122.5  |  
|Television                                                                |  |                                | 284.7  |      |  |         | 43.6  |      |  |      | 228.7  |      |  |           | 41.1  |           |  |  | 143.0  |   |  |  | 62.4  |   |  |                       | 24.5   |      |  |  | 59.9   |  
|Content                                                                   |  |                                | 159.9  |      |  |         | 24.6  |      |  |      | 137.4  |      |  |           | 24.7  |           |  |  |       |   |  |  |      |   |  |                       | 16.4   |      |  |  |       |  
|Eliminations                                                              |  |                                | (3.2   | )    |  |         | (0.5  | )    |  |      | (1.1   | )    |  |           | (0.2  | )         |  |  |       |   |  |  |      |   |  |                       |       |      |  |  |       |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                | 652.8  |      |  |         | 100.0 |      |  |      | 556.8  |      |  |           | 100.0 |           |  |  | 229.2  |   |  |  | 100.0 |   |  |                       | 17.2   |      |  |  | 142.3  |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|OPERATING, GENERAL AND
ADMINISTRATIVE EXPENSES                            |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Radio                                                                     |  |                                | 158.5  |      |  |         | 75.0  |      |  |      | 143.7  |      |  |           | 74.9  |           |  |  | 59.5   |   |  |  | 69.0  |   |  |                       | 10.3   |      |  |  | 141.5  |  
|Television                                                                |  |                                | 194.6  |      |  |         | 68.4  |      |  |      | 155.0  |      |  |           | 67.8  |           |  |  | 100.2  |   |  |  | 70.0  |   |  |                       | 25.5   |      |  |  | 54.7   |  
|Content                                                                   |  |                                | 180.9  |      |  |         | 113.1 |      |  |      | 125.3  |      |  |           | 91.2  |           |  |  |       |   |  |  |      |   |  |                       | 44.4   |      |  |  |       |  
|Corporate                                                                 |  |                                | 4.9    |      |  |         | 0.8   |      |  |      | 9.5    |      |  |           | 1.7   |           |  |  | 4.0    |   |  |  | 1.7   |   |  |                       | (48.5  | )    |  |  | 137.5  |  
|Eliminations                                                              |  |                                | (2.6   | )    |  |         | (0.4  | )    |  |      | (0.6   | )    |  |           | (0.1  | )         |  |  |       |   |  |  |      |   |  |                       |       |      |  |  |       |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                | 536.3  |      |  |         | 82.2  |      |  |      | 432.9  |      |  |           | 77.7  |           |  |  | 163.7  |   |  |  | 71.4  |   |  |                       | 23.9   |      |  |  | 164.4  |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|EBITDA(1)                                                                 |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Radio                                                                     |  |                                | 52.9   |      |  |         | 25.0  |      |  |      | 48.1   |      |  |           | 25.1  |           |  |  | 26.7   |   |  |  | 31.0  |   |  |                       | 10.0   |      |  |  | 80.0   |  
|Television                                                                |  |                                | 90.1   |      |  |         | 31.6  |      |  |      | 73.7   |      |  |           | 32.2  |           |  |  | 42.8   |   |  |  | 30.0  |   |  |                       | 22.1   |      |  |  | 72.2   |  
|Content                                                                   |  |                                | (21.0  | )    |  |         | (13.1 | )    |  |      | 12.1   |      |  |           | 8.8   |           |  |  |       |   |  |  |      |   |  |                       | (273.6 | )    |  |  |       |  
|Corporate                                                                 |  |                                | (4.9   | )    |  |         | (0.8  | )    |  |      | (9.5   | )    |  |           | (1.7  | )         |  |  | (4.0   | ) |  |  | (1.7  | ) |  |                       | 48.5   |      |  |  | (137.5 | )
|Eliminations                                                              |  |                                | (0.6   | )    |  |         | (0.1  | )    |  |      | (0.5   | )    |  |           | (0.1  | )         |  |  |       |   |  |  |      |   |  |                       |       |      |  |  |       |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                | 116.5  |      |  |         | 17.8  |      |  |      | 123.9  |      |  |           | 22.3  |           |  |  | 65.5   |   |  |  | 28.6  |   |  |                       | (6.0   | )    |  |  | 89.2   |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Depreciation                                                              |  |                                | 25.9   |      |  |         | 4.0   |      |  |      | 20.0   |      |  |           | 3.6   |           |  |  | 9.0    |   |  |  | 3.9   |   |  |                       | 29.5   |      |  |  | 122.2  |  
|Amortization                                                              |  |                                | 8.0    |      |  |         | 1.2   |      |  |      | 45.9   |      |  |           | 8.3   |           |  |  | 13.4   |   |  |  | 5.8   |   |  |                       | (82.6  | )    |  |  | 242.5  |  
|Interest on long-term debt                                                |  |                                | 57.7   |      |  |         | 8.8   |      |  |      | 47.3   |      |  |           | 8.5   |           |  |  | 30.4   |   |  |  | 13.3  |   |  |                       | 22.0   |      |  |  | 55.6   |  
|Gain on sale of investments                                               |  |                                | (18.2  | )    |  |         |       |      |  |      | (103.1 | )    |  |           |       |           |  |  | (197.7 | ) |  |  |       |   |  |                       |        |      |  |  |        |  
|Other income                                                              |  |                                | (0.1   | )    |  |         |       |      |  |      | (10.5  | )    |  |           |       |           |  |  | (9.5   | ) |  |  |       |   |  |                       |        |      |  |  |        |  
|Restructuring charges                                                     |  |                                | 22.1   |      |  |         |       |      |  |      |       |      |  |           |       |           |  |  |       |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Hedge transaction loss                                                    |  |                                | 17.6   |      |  |         |       |      |  |      |       |      |  |           |       |           |  |  |       |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Asset write-downs                                                         |  |                                | 15.3   |      |  |         |       |      |  |      | 1.5    |      |  |           |       |           |  |  |       |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Goodwill impairment loss                                                  |  |                                | 162.8  |      |  |         |       |      |  |      |       |      |  |           |       |           |  |  |       |   |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Income (loss) before taxes                                                |  |                                | (174.6 | )    |  |         |       |      |  |      | 122.8  |      |  |           |       |           |  |  | 219.9  |   |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Income tax expense (recovery)                                             |  |                                | (5.1   | )    |  |         |       |      |  |      | (3.1   | )    |  |           |       |           |  |  | 65.8   |   |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Income (loss) before equity earnings
from investees and minority interest |  |                                | (169.5 | )    |  |         |       |      |  |      | 125.9  |      |  |           |       |           |  |  | 154.1  |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Equity earnings from investees                                            |  |                                | 5.1    |      |  |         |       |      |  |      | 2.6    |      |  |           |       |           |  |  | 2.1    |   |  |  |       |   |  |                       |        |      |  |  |        |  
|Minority interest                                                         |  |                                | (1.6   | )    |  |         |       |      |  |      | (0.3   | )    |  |           |       |           |  |  | (0.2   | ) |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  
|NET INCOME (LOSS)                                                         |  |                                | (166.0 | )    |  |         |       |      |  |      | 128.2  |      |  |           |       |           |  |  | 156.0  |   |  |  |       |   |  |                       |        |      |  |  |        |  
|                                                                          |  |                                |        |      |  |         |       |      |  |      |        |      |  |           |       |           |  |  |        |   |  |  |       |   |  |                       |        |      |  |  |        |  



|(1) |  | EBITDA means net income (loss) before minority interest, equity earnings,
income tax expense (recovery), goodwill and intangible impairment loss,
asset write-downs, hedge transaction loss, restructuring charges, other
income, gain on sale of investments, interest expense, amortization and
depreciation.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Operating, general and administrative expenses andEBITDA for each
business segment are expressed as a percentage of revenues for the
segment. Other items are expressed as a percentage of total revenues.                                                                                                     
|   
|(3) |  | As discussed in note 2(b) to Corus 2002 audited consolidated financial
statements, the financial results for fiscal 2001 have been restated to
reflect a change in the method of accounting for investments in film and
programming.                                                                          

22



---



##### 



Quarterly Consolidated Financial Information (unaudited)

|        |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                              |       |   |  |   |       |  
|------- |  | -------------------------------------------------------- | ------- | --------- |  | ----------------- | ------ | ----- |  | ------- | -------- | - |  | ---------------------------- | ----- | - |  | - | ----- | -
|        |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  | EARNINGS (LOSS) PER SHARE(2)
|        |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                             
|        |  | REVENUES                                                 |         | EBITDA(1) |  | NET INCOME (LOSS) |        | BASIC |  | DILUTED
|        |  |                                                          |         |           |  |                   |        |       |  |        
|        |  | (THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS)
|2002    |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                              |       |   |  |   |       |  
|4th Qtr |  | $                                                        | 165,741 |           |  | $                 | 2,874  |       |  | $       | (189,877 | ) |  | $                            | (4.45 | ) |  | $ | (4.45 | )
|3rd Qtr |  |                                                          | 149,402 |           |  |                   | 38,396 |       |  |         | 463      |   |  |                              | 0.01  |   |  |   | 0.01  |  
|2nd Qtr |  |                                                          | 162,923 |           |  |                   | 29,534 |       |  |         | 19,470   |   |  |                              | 0.46  |   |  |   | 0.45  |  
|1st Qtr |  |                                                          | 174,718 |           |  |                   | 45,692 |       |  |         | 3,907    |   |  |                              | 0.09  |   |  |   | 0.09  |  
|        |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                              |       |   |  |   |       |  
|2001    |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                              |       |   |  |   |       |  
|4th Qtr |  | $                                                        | 166,581 |           |  | $                 | 31,694 |       |  | $       | (1,901   | ) |  | $                            | (0.04 | ) |  | $ | (0.04 | )
|3rd Qtr |  |                                                          | 138,031 |           |  |                   | 30,197 |       |  |         | 103,373  |   |  |                              | 2.43  |   |  |   | 2.41  |  
|2nd Qtr |  |                                                          | 134,736 |           |  |                   | 25,604 |       |  |         | 13,132   |   |  |                              | 0.31  |   |  |   | 0.31  |  
|1st Qtr |  |                                                          | 117,477 |           |  |                   | 36,421 |       |  |         | 13,563   |   |  |                              | 0.35  |   |  |   | 0.35  |  
|        |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                              |       |   |  |   |       |  
|2000    |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                              |       |   |  |   |       |  
|4th Qtr |  | $                                                        | 81,042  |           |  | $                 | 22,627 |       |  | $       | 14,991   |   |  | $                            | 0.40  |   |  | $ | 0.40  |  
|3rd Qtr |  |                                                          | 55,411  |           |  |                   | 15,967 |       |  |         | 63,139   |   |  |                              | 1.80  |   |  |   | 1.77  |  
|2nd Qtr |  |                                                          | 41,369  |           |  |                   | 10,110 |       |  |         | 67,828   |   |  |                              | 2.23  |   |  |   | 2.19  |  
|1st Qtr |  |                                                          | 51,408  |           |  |                   | 16,832 |       |  |         | 10,026   |   |  |                              | 0.33  |   |  |   | 0.33  |  
|        |  |                                                          |         |           |  |                   |        |       |  |         |          |   |  |                              |       |   |  |   |       |  



|(1) |  | EBITDA means net income (loss) before minority interest, equity earnings,
income tax expense (recovery), goodwill and intangible impairment loss,
asset write-downs, hedge transaction loss, restructuring charges, other
income, gain on sale of investments, interest expense, amortization and
depreciation.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The sum of basic and diluted earnings (loss) per share for the four
quarters differ from the basic and diluted earnings (loss) per share for
the year, due to differences in the average number of shares outstanding.                                                                                         

23



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Fiscal Highlights  2002  2001

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Revenue from operations increased by 17% to
$653 million in 2002.

EBITDA decreased by 6% to $117 million in 2002
after absorbing a $40 million write-down in film
investments.

EBITDA margins were 18% in 2002 compared to
22% in 2001.

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

In April 2002, Corus relaunched and rebranded
the Womens Television Network (WTN) as W
Network, focused on making the network more
contemporary and entertaining with an enhanced
program schedule that provides a mix of new
dramas, fresher movies and lifestyle programming.
Recent Nielsen statistics indicate a 30% growth in
W18-34 weekly viewers and a 20% growth in
W18-49 weekly viewers for the period April 15/02 
June 30/02 compared to the prior year.

In January 2002, Corus Nelvana was granted
rights to Beyblade, the Japanese toy and animé
phenomenon. The program launched on YTV at
#1 among kids 2-11, on Cartoon Network U.K.,
as #1 with kids 10-15, and as the top program in
the ABC Family boys action block of programming
in the U.S. The spinning top toy has sold out
across Canada and is poised to sweep American
retail sales. |  | Effective November 16, 2001, Corus acquired
shares that increased its total interest in
Telelatino Network Inc. (Telelatino) to 50.5%
from 20% for cash consideration of $11 million.
Telelatino operates TLN Television, a specialty
ethnic channel that provides programming in
Italian, Spanish and English.

Effective November 19, 2001, Corus acquired
the Womens Television Network (WTN) for
$205 million. The service was relaunched as
W Network on April 15, 2002.

Effective December 18, 2001, Corus disposed of a
29.9% stake in the Comedy Network for $36 million.

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

Effective March 1, 2002, Corus exchanged
ownership interests with DMX Music, Inc.
of the digital music subscription services
to residential and commercial customers in
Canada. The transaction resulted in Corus
acquiring ownership of the existing Canadian
residential subscription business and DMX
Music, Inc. gaining ownership of the Canadian
commercial business. Corus acquired assets
with an assigned fair value of approximately
$19 million and for which cash consideration
of approximately $11 million was paid.

Effective April 8, 2002, Corus sold Klutz to
Scholastic Inc. for approximately $68 million
(U.S.$43 million) in cash plus a three-year
earn-out based on revenue.

Effective May 17, 2002, Corus acquired a 50%
interest in the Locomotion Channel, an
action-oriented animation pay television service
targeting young adults aged 18-35 available
in over 27 countries and seven million homes
throughout Latin America and Iberia (Spain
and Portugal). The service will be operated in
partnership with The Hearst Corporation.

Effective May 31, 2002, Corus completed the sale
of Viewers Choice to Shaw Communications Inc. for cash
consideration of $33 million. |  | On March 7, 2002, Corus issued U.S.$375
million aggregate principal amount of 8 3/4%
senior subordinated notes due 2012 at a price
of 99.186% of their aggregate principal amount.
The net proceeds of the offering were used to
repay existing bank debt.

During the year, Corus disposed of two million
non-voting shares of Astral Media Inc. for total
consideration of $93.3 million. The proceeds
were used to repay the securitized borrowing
of $89.5 million in full. |  | The CRTC licensed 16 new English-language
Category 1 digital Canadian specialty services,
which were launched in September, 2001.
Distributors using digital technology are required
to distribute all Category 1 services appropriate
for their market. The CRTC licensed more than
270 Category 2 services, which must negotiate
with distributors for access. Corus, in conjunction
with its partners, launched five new digital
services and two Category 1 services: The
Canadian Documentary Channel and Country
Canada, which was subsequently transferred
to the Canadian Broadcasting Corporation.
Corus also launched three Category 2 services:
Discovery Kids, Edge TV and SCREAM.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | acquisitions|divestitures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | regulatory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Revenue from operations increased by 143% to
$557 million in 2001.

EBITDA increased by 89% to $124 million in 2001.

EBITDA margins were 22% in 2001 compared to
29% in 2000.

The cumulative weekly audience for Corus radio
stations increased from 6.5 million to 8.1 million
listeners, an increase of 25%, therefore making
Corus the largest operator in terms of audience
tuning and revenues in Canada.

Pro forma EBITDA for Television increased 23%
over fiscal 2000, reflecting strong organic growth.

Nelvana delivered 242 episodes in the 12 months
ended August 31, 2001, a 22% increase over the
199 episodes delivered in the prior year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Effective November 14, 2000, Corus acquired
100% of Nelvana Limited (Nelvana), an international producer and distributor of childrens
programming and products for $561 million
in cash and shares and the assumption of
$94 million of debt. Nelvana operates as a new
business segment called Content.

Effective February 28, 2001, Corus completed
the acquisition of six radio stations in Quebec
from Metromedia CMR Broadcasting Inc. for
$170 million.

Effective February 28, 2001, Corus disposed
of the Quebec conventional television station
CHAU-TV for approximately $9 million.

Effective May 30, 2001, Corus disposed of its
50% interest in The Family Channel Inc.
including its direct 40% ownership interest in
TELETOON Canada Inc. for $127 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Acquired 2,029,000 Class A Non-Voting and
145,600 Class B subordinate voting shares
of Astral Media Inc. from Shaw for $110 million.
Subsequently, Corus monetized 2,000,000
Class A Non-Voting shares with a financial
institution for $89.5 million.

Increased the Companys credit facilities by
$150 million.

Issued 5,047,532 Corus Class B Non-Voting
shares to complete the Nelvana acquisition.                                                                       |  | During the year, a landmark decision was
announced by the CRTC removing a general
prohibition against cable companies or their
affiliates owning specialty and pay-television
channels distributed on analog channels.
The CRTC decision removes a growth constraint
for Corus, as Corus was viewed by the
CRTC as an affiliate of a cable company.                                                                                                                                                                                                                                                                                                                                           

24



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##### 



Fiscal 2002 Compared to Fiscal 2001

Revenues for fiscal 2002 were $652.8 million, up 17% from $556.8 million last
year. Through acquisition and organic growth, all divisions contributed to the
strong growth in revenues. On a pro forma basis, revenues increased 4% from
$628.4 million last year.

Operating, general and administrative expenses were $536.3 million, up 24% from
$432.9 million last year. Expenses were also impacted by the Companys
acquisitions during the year. Fiscal 2002 results include a write-down of film
investments in the Content division of $40 million. On a pro forma basis,
operating, general and administrative expenses increased 9% from $490.1 million
last year. The increase is due to the film investments write-down, increased
revenues and higher programming costs associated with specialty/pay television.

EBITDA was $116.5 million, after absorbing the $40 million write-down of film
investments in the Companys Content division, compared to $123.9 million last
year. The Radio and Television divisions achieved EBITDA growth of 10% and 22%,
respectively. The Content division incurred an EBITDA loss for fiscal 2002. On
a pro forma basis, EBITDA was down 16% from $138.3 million last year. EBITDA as
a percentage of revenues was 18% in 2002 (24% excluding the write-down) and 22%
in 2001.

RADIO

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

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

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

The increased EBITDA margins for the fiscal year indicate Corus is well
underway to achieving its hurdle rate of 30%. In particular, in the West, all
clusters met or exceeded the 30% margin and in Ontario, the Toronto cluster
delivered 33% margin for the year. In Quebec, the Companys investment in three
reformatted stations continued to put pressure on its overall EBITDA margins
for the divisions.

TELEVISION

Television revenues for fiscal 2002 were $284.7 million, up 24% from $228.7
million in fiscal 2001. There was $40.8 million (72.3%) of growth in revenues
resulting from acquisitions made in fiscal 2002 (W Network and Telelatino). On
a pro forma basis, revenues were up 12% from $254.7 million last year. Growth
in subscriber fee revenues continued as a result of increased direct-to-home
satellite and digital cable subscribers. In particular, the Companys premium
television services Movie Centraland Encore Avenuedelivered revenue growth of
29% over the prior year. At the end of fiscal 2002, Movie Centralhad
approximately 609,000 subscribers, a 4% increase from the end of fiscal 2001.

Operating, general and administrative expenses for fiscal 2002 were $194.6
million, up 26% from $155.0 million in fiscal 2001 primarily as a result of
acquisitions made in fiscal 2002, the costs of launching five new digital
networks in fiscal 2002 and increased programming costs as the Company
continued to invest in the promotion of the relaunch of Movie Centraland
Encore Avenue.

EBITDA was $90.1 million for fiscal 2002, up 22% from $73.7 million for fiscal
2001. EBITDA as a percentage of revenues was 32% in fiscal 2002, compared to
32% in fiscal 2001. Excluding the impact of the new digital networks, EBITDA as
a percentage of revenues was 34% in fiscal 2002.

25



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##### 



Fiscal 2002 Compared to Fiscal 2001 (continued)

CONTENT

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

Revenues for the Production and Distribution business were down 8% from the
prior year on a pro forma basis. In fiscal 2002, Corus produced 252 episodes
compared to 242 episodes in fiscal 2001, increasing its program library to over
2,100 half-hour equivalent episodes. Despite an increase in production, the
decrease in revenues reflect the upheaval in the German market and the overall
downward pressure on license fees as current revenue per episode decreased from
$295,000/episode in fiscal 2001 to $206,000/episode in fiscal 2002.
Unfortunately, the erosion of the production and distribution market has
negatively impacted the value of the Companys investment in Nelvana. As a
result, Corus wrote down its investment by $200 million with $40 million for
film investments, reflected in operating, general and administrative expenses,
and $160 million for goodwill and other intangibles.

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

Operating, general and administrative expenses for fiscal 2002 were $180.9
million, after absorbing the $40 million write-down of film investments
mentioned above. Excluding the write-down, operating, general and
administrative expenses were up 13% over the prior year and down 3% over the
prior year on a pro forma basis. The decrease, on a pro forma basis, is
primarily due to lower amortization expense associated with lower production
and distribution revenues for the year.

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

CORPORATE OVERHEAD

Corporate overhead in fiscal 2002 was $4.9 million down from $9.5 million in
2001. Corporate overhead is the incremental cost that is not allocated to the
operating divisions. The decrease is due to approximately $2.5 million in
incremental one-time costs for recruitment and professional fees incurred in
fiscal 2001.

DEPRECIATION

Depreciation expense was $25.9 million, up from $20.0 million in 2001. The
increase was due to an increase in the capital asset base from acquisitions
made in fiscal 2001 and 2002.

AMORTIZATION

Amortization was $8.0 million, down from $45.9 million in 2001. The decrease
was due to the Company not amortizing broadcast licenses and goodwill as a
result of adopting the new accounting standards in fiscal 2002.

INTEREST EXPENSE

Interest expense was $57.7 million, up from $47.3 million in 2001. The
Companys effective interest rate for fiscal 2002 was 7.7% compared to 8.7% in
the prior year reflecting lower interest rates in the current year.

GAIN ON SALE OF INVESTMENTS

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

26



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##### 



Fiscal 2002 Compared to Fiscal 2001 (continued)

OTHER INCOME

Other income was $0.1 million, down from $10.5 million last year primarily due
to higher interest income from short-term investments and dividend income
earned in fiscal 2001.

RESTRUCTURING CHARGES

In light of the current economic climate, Corus has taken proactive steps to
reduce debt and improve operating margins by streamlining operations through
workforce reductions and implementing cost control initiatives. Restructuring
charges of $22.1 million were recorded during the year, representing workforce
reductions of approximately 410 positions, lease terminations and settlement of
contracts relating to activities which will no longer be continued. Through
these initiatives, the Company estimates that it will capture annual cost
savings of approximately $10 to $15 million.

HEDGE TRANSACTION LOSS

The hedge transaction loss of $17.6 million reflects the non-cash expense
associated with unwinding U.S. $147 million of cross-currency interest rate
swaps during the third quarter fiscal 2002.

ASSET WRITE-DOWNS

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

GOODWILL AND INTANGIBLE IMPAIRMENT LOSS

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

INCOME TAXES

The income tax recovery in fiscal 2002 was $5.1 million, up from $3.1 million
last year. Fiscal 2002 reflects a benefit on the tax loss realized from the
sale of Klutz; however, there was not a corresponding accounting loss as the
investment was written down in a prior period. Fiscal 2001 included a $42.3
million future tax recovery which reflected a decrease in tax rates applicable
to certain future tax assets and liabilities.

EQUITY EARNINGS FROM INVESTEES

Equity earnings from investees was $5.1 million, up from $2.6 million last
year. The increase relates to the inclusion of an additional 20% interest in
TELETOON acquired as part of the Nelvana acquisition in fiscal 2001, which the
Company began recognizing on the equity basis in August 2001.

NET INCOME (LOSS)

Net income (loss) for fiscal 2002 was a loss of $166.0 million, compared to
income of $128.2 million last year. Earnings per share were a loss of $3.90
basic ($3.90 diluted) compared with earnings per share of $3.09 basic ($3.06
diluted) last year.

27



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##### 



Fiscal 2001 Compared to Fiscal 2000

Revenues for fiscal 2001 were $556.8 million, up 143% from $229.2 million in
fiscal 2000. Through acquisition and organic growth, all divisions contributed
to the strong growth in revenues. On a pro forma basis, revenues increased 9%
from $511.2 million last year.

Operating, general and administrative expenses were also affected by the
Companys acquisitions during the year. Operating, general and administrative
expenses for fiscal 2001 were $432.9, up 164% from $163.7 million in fiscal
2000. On a pro forma basis, operating, general and administrative expenses
increased 12% from $387.1 million in fiscal 2000. The increase was a direct
result of increased revenues and was mainly due to higher programming costs
associated with specialty/pay television and increased productions at Nelvana.

EBITDA was $123.9 million, up 89% from $65.5 million in fiscal 2000. The Radio
and Television divisions achieved EBITDA growth of 80% and 72%, respectively.
Fiscal 2001 EBITDA also included $12.1 million from the acquisition of Nelvana
in November 2000. On a pro forma basis, EBITDA was consistent with the prior
year. EBITDA as a percentage of revenues was 22% in 2001 and 29% in 2000.

RADIO

Radio revenues for fiscal 2001 were $191.8 million, up 122% from $86.2 million
in fiscal 2000, reflecting an increase from 43 stations at the end of fiscal
2000 to 49 stations at the end of fiscal 2001. In fiscal 2001 acquisitions
accounted for all of the growth which was offset by a decline in organic
revenues of 4%. Revenue growth of 7% was experienced in the key markets of
Toronto, Edmonton and Calgary on a same station basis. Revenues were adversely
affected by the temporary drop in revenues caused by abandoning existing
formats in favor of new formats for which audiences must be developed.
Specifically, CKLG, a soft adult contemporary format in Vancouver, was
relaunched as NW(2), a 24-hour news wheel; Talk 640in Toronto was reformatted
as a guy talk radio station branded as Mojo; and Barries leading radio
station, CHAY-FM, was reformatted to the youthful Energy Radio Networkas a hit
radio station. As well, two all news radio stations were launched in Montreal.
Revenues were also adversely affected by new competitors in Vancouver, Barrie,
London, Hamilton and Kingston.

Operating, general and administrative expenses for fiscal 2001 were $143.7
million, up 142% from $59.5 million in fiscal 2000. $79.5 million (94%) of the
increase was from the acquisitions made in fiscal 2001 and the full year
inclusion in fiscal 2001 of the acquisitions made in fiscal 2000.

EBITDA was $48.1 million for fiscal 2001, up 80% from $26.7 million for fiscal
2000. EBITDA as a percentage of revenues was 25% in fiscal 2001, compared to
31% in fiscal 2000, reflecting the impact of increased competition and the
investment in numerous format changes. Excluding the reformatted stations,
EBITDA as a percentage of revenues was 29% for fiscal 2001.

TELEVISION

Television revenues for fiscal 2001 were $228.7 million, up 60% from $143.0
million in fiscal 2000. $66.1 million (77%) of the growth in revenues was from
the acquisitions made in fiscal 2001 and the full year inclusion in fiscal 2001
of the acquisitions made in fiscal 2000. Growth in subscriber fee revenues
continued as a result of increased direct-to-home satellite and digital cable
subscribers. In addition, the reformatting of Superchanneland MovieMax!to the
four thematic channels of Movie Centraland two thematic channels of Encore
Avenuefueled further subscriber revenue growth. At the end of fiscal 2001,
Movie Centralhad approximately 586,000 subscribers, a 47% increase from the
end of fiscal 2000.

Operating, general and administrative expenses for fiscal 2001 were $155.0
million, up 55% from $100.2 million in fiscal 2000 as a result of increased
variable costs associated with increased revenues and increased programming
costs associated with the launch of Movie Centraland Encore Avenue.

EBITDA was $73.7 million for fiscal 2001, up 72% from $42.8 million for fiscal
2000. EBITDA as a percentage of revenues was 32% in fiscal 2001, compared to
30% in fiscal 2000.

CONTENT

Content includes the operating results of Nelvana since November 14, 2000.
Corus did not operate a Content business prior to the acquisition of Nelvana.
Content revenues were $137.4 million in 2001, an increase of 13% on a pro forma
basis. This growth, on a pro forma basis, reflects a 31% increase in Production
and Distribution revenues, and a 5% decrease in the Branded Consumer Products
business (formerly the Merchandise and Publishing business).

28



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##### 



Fiscal 2001 Compared to Fiscal 2000 (continued)

The significant increase in Production and Distribution revenues reflects: (i)
an increase of 54% in current revenue to $56.5 million; (ii) a 5% decrease in
library revenues to $21.1 million; and (iii) a 6% increase in music royalties
to $3.1 million. Current production revenue growth is a direct result of the
ramp-up in proprietary production deliveries which increased 22% in the twelve
months ended August 31, 2001 to 242 episodes compared to 199 episodes in the
previous year. For the same period, current revenue per episode also increased
from $230,000/episode last year to $295,000/episode in 2001. The decrease in
library revenues is due to the fact that Nelvana completed a large library bulk
sale in the prior year. Large library bulk deals do not necessarily repeat on
an annual basis.

The decrease in Merchandise revenue is due to a weak retail environment. In
fiscal 2001, a master toy license agreement was secured with Hasbro Inc. for
the successful Japanese animated show Medabotswhich is expected to generate
significant royalties over the next 3 to 5 years.

The Publishing business has been significantly affected by the weakness of the
retail market, especially the specialty book retail segment in the U.S., and
the merger of Chapters and Indigo in Canada. Despite the turmoil in the
Canadian publishing market, Kids Can Press continues to show revenue growth of
4% over a year ago. In the U.S., Klutz was impacted by the financial
difficulties and bankruptcies being experienced by several of its customers
resulting in a decrease in revenues of 8% compared to the prior year. Given the
softness of the specialty retail segment, management is actively pursuing the
expanding of its channels of distribution.

Operating, general and administrative expenses increased from $101.6 million in
fiscal 2000, on a pro forma basis, to $125.3 million in fiscal 2001. The 23%
increase reflects the higher costs associated with increased volume of
production, higher marketing expenses to support the growth of the merchandise
business and increased bad debt provisions of over $1.5 million to reflect
financial difficulties experienced by Klutz customers.

EBITDA decreased from $19.1 million in 2000, on a pro forma basis, to $12.1
million in 2001 and EBITDA as a percentage of revenues was 9% in 2001. The
decrease in EBITDA reflects the softness in the merchandising and publishing
businesses.

CORPORATE OVERHEAD

Corporate overhead in fiscal 2001 was $9.5 million up from $4.0 million in
fiscal 2000. Corporate overhead is the incremental cost that is not allocated
to the operating divisions. The increase is due to higher infrastructure costs
necessary to support the acquisitions made in 2000 and 2001 (mainly in the area
of information technology) and includes approximately $2.5 million in
incremental one-time costs for recruitment and professional fees.

DEPRECIATION

Depreciation expense in fiscal 2001 was $20.0 million, up from $9.0 million in
fiscal 2000. The increase was a result of the increase in the capital asset
base from acquisitions made in fiscal 2000 and 2001.

AMORTIZATION

Amortization expense in fiscal 2001 was $45.9 million, up from $13.4 million in
fiscal 2000. The majority of the increase was due to amortization of goodwill
and broadcast licenses acquired during fiscal 2000 and 2001 which was $42.4
million for fiscal 2001, up from $11.4 million in fiscal 2000.

INTEREST EXPENSE

Interest expense in fiscal 2001 was $47.3 million, up from $30.4 in fiscal 2000
which reflected an increase in long-term debt incurred to fund Corus
acquisitions in fiscal 2001 and to refinance debt of acquired companies. The
Companys effective interest rate for the period was 8.7% compared to 10.2% in
fiscal 2000.

GAIN ON SALE OF INVESTMENTS

The gain on sale of investments in fiscal 2001 was $103.1 million down from
$197.7 million in fiscal 2000. The gain in fiscal 2001 resulted from the
disposal of Corus interest in The Family Channel Inc. and CHAU-TV. The gain in
fiscal 2000 of $197.7 million resulted from the disposal of Corus interests in
Headline Sports Television, Liberty Digital Inc. and CTV Inc.

29



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Fiscal 2001 Compared to Fiscal 2000 (continued)

OTHER INCOME

Other income in fiscal 2001 was $10.5 million, up from $9.5 million in fiscal
2000 due to higher interest income from short-term investments in fiscal 2000.

INCOME TAXES

A future income tax recovery for fiscal 2001 of $42.3 million resulting from a
re-measurement of future income tax assets and liabilities due to reduced
income tax rates enacted from federal and provincial legislation. Income taxes
(excluding the future tax recovery) as a percentage of earnings before taxes
and amortization of broadcast licenses and goodwill were 25% in 2001 compared
to 30% last year. The decrease in the tax rate is due to a lower effective tax
rate for Nelvana and a lower effective tax rate on capital gains relating to
sale of investments in fiscal 2001.

EQUITY EARNINGS FROM INVESTEES

Equity earnings from investees for fiscal 2001 were $2.6 million up from $2.1
million in fiscal 2000, primarily due to improved earnings from the Companys
20% interest in TELETOON.

NET INCOME

Net income for fiscal 2001 was $128.2 million, compared to $156.0 million in
fiscal 2000. Earnings per share were $3.09 basic ($3.06 diluted) compared with
earnings per share of $4.67 basic ($4.61 diluted) in fiscal 2000.

Risks and Uncertainties

IMPACT OF REGULATION ON CORUS RESULTS OF OPERATIONS

Radio and Television

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

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

Corus radio, conventional television, specialty television, pay television,
and pay audio undertakings rely upon licenses under the Copyright Act(Canada)
in order to make use of the music component of the programming distributed by
these undertakings. Under these licenses, Corus is required to pay royalties
established by the Copyright Board pursuant to the requirements of the
Copyright Actto collecting societies which represent the copyright owners in
such music component. These royalties are paid by these undertakings on a
monthly basis in the normal course of their business.

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

For radio, two reproduction rights collectives have filed new tariffs against
commercial radio stations: Société du droit de reproduction des auteurs,
compositeurs et éditeurs au Canada (SODRAC), a collective representing
reproduction rights holders of largely French and foreign language music; and
the Canadian Musical Reproduction

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Risks and Uncertainties (continued)

Rights Agency (cmrra), which represents major English language music
publishers, the owners of reproduction rights in much of the English language
music that stations play.

The two tariffs seek compensation from commercial radio stations for all
reproductions of music made by such stations. The Canadian Association of
Broadcasters (cab) represented Canadian radio stations at a hearing before the
Copyright Board in April 2002. The CAB argued that the tariff amount for the
reproduction of music by Canadian radio stations should be nominal. A decision
from the Copyright Board, establishing the level of the tariff, is expected in
the fall/winter of 2002.

The Government of Canada has launched a consultation process that will lead to
broad reform of the Copyright Act. The CAB participated in the first round of
consultations by submitting strong positions to protect broadcasters
interests.

The CAB was not successful in reaching an agreement with the Society of
Composers, Authors and Music Publishers of Canada (SOCAN) or the Neighbouring
Rights Collective society (NRCC) to extend the existing tariff rate for the
public performance of music on radio stations. A hearing to consider the
appropriate tariff rate is expected in late 2003 or early 2004.

Recent CAB negotiations with SOCAN failed to resolve music use rates for
specialty and pay services for the years 2001 and 2002. A hearing is scheduled
to commence in April 2003 to consider the appropriate rate and in the interim,
the 2000 rates will be payable.

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 often requires Canadian television services to devote a
certain amount of their programming to, and to exhibit a certain number of
hours of, 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 the Companys 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. Currently, Canadian Heritage, the Canadian
ministry that oversees the tax credits, is conducting a review of the
definition of Canadian content, as it applies to film and television
production.

COMPETITION

Corus encounters aggressive competition in all areas of its business. Corus
failure to compete in these areas could materially and 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 television
programs or specialty television channels as revenue derived depends on
audience acceptance of other competing programs released into, or channels
existing in, the market place at or near the same time, the availability of
alternative forms of entertainment and leisure time activities, general
economic conditions, public tastes generally and other intangible factors. All
of which could change rapidly and many of which are beyond the Companys
control. The lack of audience acceptance for Corus television programs,
specialty and pay television channels would have an adverse impact on its
businesses, results of operations, prospects and financial condition.

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 and adversely affect Corus results of operations. In
addition, competition among specialty television services in Canada is highly
dependent upon the offering of prices, marketing and advertising support and
other incentives to cable operators and other distributors for carriage so as
to favorably position and package the services to subscribers. As well, the
CRTC has licensed a number of specialty services for digital distribution which
increases competition. Any failure by Corus to compete effectively in the area
of specialty television services could materially and adversely affect Corus
results of operations.

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Risks and Uncertainties (continued)

Radio

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

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

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

RISKS ASSOCIATED WITH PRODUCTION OF FILM AND TELEVISION PROGRAMS

Each production is an individual artistic work and its commercial success is
determined primarily by audience
acceptance, which cannot be accurately predicted. Audience acceptance is a
factor not only of the response to
artistic components of a film or television program, but also to 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. Therefore, economic
success of any production is not assured.

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

Financial risks exist in productions relating to tax credits and co-production
treaties. The aggregate amount
of government tax credits a project may receive can constitute a material
portion of a production budget and
typically can be as much as 20% of total budgeted costs. There is no assurance
that government tax credits and
industry funding assistance programs will continue to be available at current
levels or that Nelvanas production
projects will continue to qualify for them. As well, the majority of Nelvanas
productions are co-productions
involving international treaties which allow Nelvana 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 Nelvanas production capabilities and production financing.

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Risks and Uncertainties (continued)

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

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

INTELLECTUAL PROPERTY RIGHTS

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

Moreover, there can be no assurance that others will not assert rights in, or
ownership of, the Companys
trade-marks, copyrights and other proprietary rights, or that the Company will
be able to successfully resolve
these conflicts. In addition, the laws of certain foreign countries may not
protect proprietary rights to the same
extent as do the laws of the United States or Canada.

TECHNOLOGICAL DEVELOPMENTS

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

GOODWILL AND OTHER INTANGIBLE ASSETS

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

FOREIGN EXCHANGE RISK

A significant portion of revenues and expenses for the Content business is in
currencies other than the Canadian
dollar and, therefore, is subject to fluctuations in exchange rates.
Approximately 20% of Corus total revenues
were in foreign currencies, the majority of which were U.S. dollars. The
foreign exchange risk is mitigated as the
net cash flow from operations is a natural hedge against interest on U.S.
denominated debt.

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Risks and Uncertainties (continued)

INTEREST RATE RISK

Interest rate risk arises from fluctuations in interest rates on drawings under
Corus senior revolving credit
facility. As at August 31, 2002, 90% of the Companys total long-term debt is
fixed. Corus does not engage in a
speculative trading program.

CONTROL OF CORUS BY THE SHAW FAMILY

JR Shaw and members of his family and the corporations owned and/or controlled
by JR Shaw and members of his
family (the JR Shaw Group) currently own approximately 79% of outstanding
Corus Class A Voting Shares. The
Corus Class A Voting Shares are the only shares entitled to vote in all
circumstances. As long as the JR Shaw Group
owns a majority of the Corus Class A Voting Shares, the JR Shaw Group will
continue to be able to elect Corus
entire Board of Directors and to remove any director, with or without cause,
without calling a special meeting.
In addition, the concentration of ownership and voting power may have the
effect of delaying or preventing a
change of control of Corus that could otherwise be beneficial to holders of
Corus Non-Voting Shares. As a result,
the JR Shaw Group will control matters affecting Corus, including the
allocation of business opportunities that
may be suitable for Corus and the composition of Corus Board of Directors and,
through it, any determination
with respect to Corus business direction and policies, including the
appointment and removal of officers.

The JR Shaw Group may exercise their control over Corus according to interests
that are different from the
interests of other investors. They could pursue transactions that in their
judgment enhance the value of their
equity investment despite involving risks to other investors. In addition to
their interest in Corus, the JR Shaw
Group controls Shaw Communications Inc., a cable operator and its wholly-owned
subsidiary, Star Choice
Communications Inc., a direct-to-home satellite operator.

All of the Corus Class A Voting Shares held by the JR Shaw Group are subject to
a voting trust agreement
entered into by such persons. The voting rights with respect to such Corus
Class A Voting Shares are exercised
by the representative of a committee of five trustees.

ACTIONS BY CORUS BOARD OF DIRECTORS MAY DELAY OR PREVENT AN ACQUISITION OF
CORUS, WHICH COULD DECREASE THE VALUE OF CLASS B NON-VOTING SHARES.

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

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Liquidity and Capital Resources

CASH FLOW

Cash flow derived from operations was $229.8 million in fiscal 2002 compared to
$159.2 million in fiscal 2001, an
increase of 44%. The increase is due to cash flow generated from the various
acquisitions in fiscal 2001 and 2002.
Cash flow from operations per share for the year was $5.39 basic ($5.39
diluted) compared with $3.83 basic ($3.81
diluted) last year.

Cash used in investing activities in fiscal 2002 was $179.1 million (2001 
$814.5 million). Cash usage in
fiscal 2002 consisted primarily of capital asset additions, payments of program
and film rights, additions to film
investments and deferred charges, business acquisitions and investments as
described below:



| |  | Capital expenditures amounted to $28.0 million in fiscal 2002 compared to
$37.0 million in fiscal 2001. Fiscal
2001 capital expenditures reflected significant acquisitions (Nelvana,
Metromedia) made during the year.                                                                                                                                                                                                                                                                                                                                   
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Payment of program and film rights amounted to $96.7 million in fiscal 2002
compared to $63.9 million in
2001. Annual expenditures on program rights will vary depending upon
availability of materials, cost, length
of license agreements, and program success. The increase in fiscal 2002
reflects increased activity associated
with the acquisition of WTN, five new digital specialty channels launched
during the year, and continued investment
in the relaunch of Movie Centraland Encore Avenue.                                               
| 
| |  | Additions to film investments amounted to $132.5 million in fiscal 2002
compared to $95.6 million in 2001
reflecting increased production at Nelvana. In fiscal 2001, the additions to
film investments are reflected from
the acquisition date of November 2000.                                                                                                                                                                                                                                                                                         
| 
| |  | Cash usage for material business acquisitions and investments in fiscal 2002
amounted to $118 million (2001 
$746 million). The principal business acquisitions and investments consisted of
WTN, Telelatino, Locomotion,
and increased interests in The Comedy Network and DMX Music. In 2001, the
principal acquisitions consisted
of Nelvana ($332 million) and Metromedia ($129 million) and the principal
investments consisted of $110 million
for Class A and B shares of Astral Media Inc. and a $150 million advance for
the acquisition of WTN.
| 
| |  | Cash usage was partially offset by net proceeds received from business
divestitures and sale of investments
of $229.8 million (2001  $138.0 million), which included interests in The
Comedy Network, Astral Media nonvoting
shares, Klutz and Viewers Choice. Fiscal 2001 included the sale of The Family
Channel Inc. and CHAU-TV.                                                                                                                                                                                                                    

Cash used in financing activities in fiscal 2002 was $54.1 million, reflecting
managements efforts to reduce
debt during the year.

LONG-TERM DEBT

Bank Loans

At August 31, 2002, the Company had available a $25.0 million revolving
operating loan facility and senior
revolving credit facilities of $427.5 million, of which approximately $366.0
million were undrawn. Interest rates
on the bank loans fluctuate with the Canadian bankers acceptances and LIBOR
and averaged 6.7% for fiscal
2002 and 6.8% in fiscal 2001.

Senior Subordinated Notes

On March 7, 2002, Corus issued U.S. $375 million aggregate principal amount of
8 3/4% senior subordinated
notes (Notes) due 2012 at a price of 99.186% of their aggregate principal
amount.

The Company has entered into cross-currency interest rate agreements to fix the
liability for interest and
principal payments on the Notes. The agreements have resulted in an effective
interest rate of 9.33% on the
Canadian dollar equivalent of the U.S. debt. The exchange rate applicable to
the principal portion of the debt
has been fixed at Cdn. $1.6107 or approximately Cdn. $604 million.

The net proceeds from this offering were used to repay existing indebtedness
including the permanent
repayment in full of the Companys reducing term loans of Cdn. $294 million due
August 31, 2007. Consequently,
the Company unwound U.S. $147 million of cross-currency interest rate swaps
relating to the reducing term loan
that had fixed the interest rate at 11.4% and liability for interest and
principal payments at Cdn. $212 million.

At August 31, 2002, Corus had total net debt (long-term debt, including current
portion, plus securitized
borrowing and bank overdraft less cash and cash equivalents) outstanding of
$628.5 million, down from $716.8
million in fiscal 2001 reflecting a ratio of net debt to EBITDA of 5.4 to 1.
Excluding the write-down in film investments,
the ratio of net debt to EBITDA was 4.0 to 1. Corus had a net debt to EBITDA
ratio of 5.8 to 1 at August 31,
2001. The decrease in debt is mainly due to a restructuring initiative
implemented during the first quarter of
fiscal 2002 and with various asset dispositions throughout the year. Management
considers the current level of
long-term debt to be reasonable.

Corus believes that its current credit facilities and earnings from operations
are sufficient to fund operations
and commitments including CRTC benefits for the foreseeable future.

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Impact of New Accounting Pronouncements

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Effective September 1, 2001, Corus adopted retroactively the Canadian Institute
of Chartered Accountants
(CICA) standards on Business Combinations (CICA Section 1581), and Goodwill
and Other Intangible Assets
(CICA Section 3062). CICA Section 1581 requires that the purchase method of
accounting be used for all business
combinations initiated after June 30, 2001. CICA Section 3062 changes the
accounting for goodwill from an
amortization method to an impairment-only approach; thus, amortization of
goodwill, including goodwill
recorded in past business combinations, has ceased upon adoption of these
standards. Goodwill and other
intangibles will be tested for impairment annually, or more frequently if
events or changes in circumstances
indicate that they might be impaired.

Corus evaluated its intangible assets acquired on prior purchase business
combinations to ensure the
allocation of amounts to broadcast licenses, having indefinite lives, and to
goodwill as at September 1, 2001
was appropriate under the new recommendations. In the first quarter, Corus
tested the amounts allocated to
broadcast licenses and concluded that no provisions for impairment were
required. In the second quarter,
management tested the amounts allocated to goodwill and, as a result, Corus
recorded a non-cash charge for
goodwill impairment in the Content division of approximately $150 million of
which a portion related to the
recently disposed Klutz business. Such charge is non-operational in nature and
was reflected as an adjustment
to retained earnings as at September 1, 2001.

Adjusted earnings per share before amortization of broadcast licenses and
goodwill for the year ended
August 31, 2001 was $3.98 basic ($3.95 diluted).

ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF FILMS

Effective September 1, 2001, Corus retroactively adopted the Statement of
Position 00-2 (SOP 00-2),
Accounting by Producers or Distributors of Films, which provides guidance on
U.S. GAAP to all producers
or distributors that own or hold rights to distribute or exploit films.

The adoption of SOP 00-2 resulted in a retroactive adjustment to the allocation
of the purchase price of
the Nelvana Limited assets, which were acquired on November 14, 2000, of
$8,252,000, representing a reduction
of the film investments acquired. Consequently, future tax liability has been
decreased by $3,301,000 and
goodwill has been increased by $4,951,000. The consolidated balance sheet at
August 31, 2001 has been restated
to reflect these allocations. Consequently, net income for the year ended
August 31, 2001 has decreased by
$4,608,000 as a result of increased amortization of film investments and
goodwill. The consolidated statement
of income for the year ended August 31, 2001 has been restated to reflect these
adjustments.

EARNINGS PER SHARE

Effective September 1, 2001 Corus adopted the new recommendations of the CICA
Handbook Section 3500,
Earnings Per Share. Accordingly, earnings per share are calculated based on
net income attributable to
common shareholders. Basic earnings per share are calculated using the weighted
average number of common
shares outstanding during the year. The computation of diluted earnings per
share assumes the basic weighted
average number of common shares outstanding during the year is increased to
include the number of additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued.
The dilutive effect of warrants and stock options is determined using the
treasury stock method. The dilutive
effect of convertible securities is determined using the if-converted method.
The new recommendations have
been applied retroactively to restate all diluted earnings per share amounts.

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Recent Accounting Pronouncements

FOREIGN CURRENCY TRANSLATION

The Canadian Institute of Chartered Accountants has recently approved
amendments to CICA Handbook Section
1650, Foreign Currency Translation, which eliminates the unique Canadian
treatment of deferring and amortizing
unrealized translation gains and losses on long-term monetary items. These
amendments will be effective for the
Companys fiscal year commencing on September 1, 2002. Corus does not expect
that this amendment will have
a material impact on the consolidated financial statements as the foreign
exchange is fully hedged.

STOCK-BASED COMPENSATION

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

The standard requires that, for all stock-based payments to non-employees and
to employees where the
stock-based awards call for settlement in cash or other assets, including stock
appreciation rights, a compensation
expense be recognized in the consolidated statement of income, determined using
a fair value based method of
accounting. The standard is effective for the Companys fiscal year beginning
September 1, 2002 and is applied to
stock-based awards granted on or after that date.

Had the Company adopted the new standard on September 1, 2001, there would have
been no impact on the
Companys fiscal 2002 net income or earnings per share as the Company had
already included the compensation
costs associated with such payments and awards in its consolidated statement of
income.

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

Had the Company adopted the new standard on September 1, 2001, and had the
Company chosen to recognize
an expense related to the granting of stock options to its employees, the
impact on net income and basic and
diluted earnings per share of the Company would have been a decrease of $7.3
million and $0.17/share, respectively.
These effects may not be representative of future amounts since the estimated
fair value of stock options on the
date of grant is measured over the vesting period and additional options may be
granted in future years.

The Company plans to comply with the requirements of Section 3870 effective
September 1, 2002 and will
provide pro forma disclosure of net income and earnings per share in the notes
to the consolidated financial
statements as if the fair-value based method had been used.

HEDGING RELATIONSHIPS

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

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Critical Accounting Policies

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

FILM INVESTMENTS

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

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