##### 



CANWEST GLOBAL COMMUNICATIONS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2002 AND 2001

REVISED

1



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##### 



(PRICEWATERHOUSECOOPERS LOGO)

---

| |  |                            
| |  | ---------------------------
| |  | PricewaterhouseCoopers LLP 
| |  | Chartered Accountants      
| |  | One Lombard Place          
| |  | Suite 2300                 
| |  | Winnipeg Manitoba          
| |  | Canada R3B 0X6             
| |  | Telephone +1 (204) 926 2400
| |  | Facsimile +1 (204) 944 1020

November 1, 2002, except for Note 18 which is as of April 3, 2003
and the revision to Note 20 which is as of June 6, 2003

Auditors Report

To the Shareholders of CanWest Global Communications Corp.

We have audited the consolidated balance sheets of CanWest Global
Communications Corp. as at August 31, 2002 and August 31, 2001 and the
consolidated statements of earnings, retained earnings and cash flows for the
years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audit in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at August 31, 2002
and August 31, 2001 and the results of its operations and its cash flows for
the years then ended in accordance with Canadian generally accepted accounting
principles.

Our previous report dated November 1, 2002 has been withdrawn and the financial
information in accordance with United States Generally Accepted Accounting
Principles in Note 20 has been revised as described in Note 20 under the
heading Revision of 2002 and priors information.

(PRICEWATERHOUSECOOPERS LLP)

Chartered Accountants
Winnipeg, Canada

November 1, 2002

Comments by Auditors on
Canada  U.S. Reporting Difference

In the United States, reporting
standards for auditors require the addition of an explanatory
paragraph when there are changes in accounting principles that have a
material effect on the comparability of the Companys financial
statements, such as the changes described in note 1 to the
consolidated financial statements. Our report to the shareholders
dated November 1, 2002 is expressed in accordance with Canadian
reporting standards which do not require a reference to such changes
in accounting principles in the auditors report when the
changes are properly accounted for and adequately disclosed in the
financial statements.

(PRICEWATERHOUSECOOPERS LLP)

Chartered Accountants
Winnipeg, Canada

2



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##### 



CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED BALANCE SHEETS
AS AT AUGUST 31

|                                                    |  |      |           |      |  |  |           |  
|--------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | -
|                                                    |  | 2002 |           | 2001
|ASSETS                                              |  | $000 |           | $000
|Current Assets                                      |  |      |           |      |  |  |           |  
|Cash                                                |  |      | 61,090    |      |  |  | 19,489    |  
|Accounts receivable                                 |  |      | 470,246   |      |  |  | 475,618   |  
|Income taxes recoverable                            |  |      | 33,334    |      |  |  |          |  
|Inventory                                           |  |      | 19,836    |      |  |  | 30,817    |  
|Investment in film and television programs          |  |      | 98,096    |      |  |  | 96,385    |  
|Future income taxes                                 |  |      | 30,013    |      |  |  | 33,243    |  
|Other                                               |  |      | 13,726    |      |  |  | 17,840    |  
|                                                    |  |      |           |      |  |  |           |  
|                                                    |  |      | 726,341   |      |  |  | 673,392   |  
|Investment in Network TEN                           |  |      | 4,494     |      |  |  | 107,210   |  
|Other investments                                   |  |      | 162,361   |      |  |  | 415,413   |  
|Investment in film and television programs          |  |      | 317,176   |      |  |  | 355,994   |  
|Property, plant and equipment                       |  |      | 679,224   |      |  |  | 707,811   |  
|Other assets                                        |  |      | 103,975   |      |  |  | 130,966   |  
|Intangibles                                         |  |      | 1,096,458 |      |  |  | 1,080,412 |  
|Goodwill                                            |  |      | 2,631,099 |      |  |  | 2,828,022 |  
|                                                    |  |      |           |      |  |  |           |  
|                                                    |  |      | 5,721,128 |      |  |  | 6,299,220 |  
|                                                    |  |      |           |      |  |  |           |  
|LIABILITIES                                         |  |      |           |      |  |  |           |  
|Current Liabilities                                 |  |      |           |      |  |  |           |  
|Bank loans and advances                             |  |      |          |      |  |  | 28,999    |  
|Accounts payable                                    |  |      | 164,988   |      |  |  | 131,542   |  
|Accrued liabilities                                 |  |      | 227,104   |      |  |  | 268,891   |  
|Income taxes payable                                |  |      |          |      |  |  | 1,175     |  
|Film and television program accounts payable        |  |      | 64,834    |      |  |  | 45,084    |  
|Deferred revenue                                    |  |      | 60,596    |      |  |  | 75,970    |  
|Current portion of long term debt                   |  |      | 172,753   |      |  |  | 116,500   |  
|                                                    |  |      |           |      |  |  |           |  
|                                                    |  |      | 690,275   |      |  |  | 668,161   |  
|Long term debt                                      |  |      | 3,337,163 |      |  |  | 3,795,262 |  
|Other accrued liabilities                           |  |      | 86,217    |      |  |  | 88,809    |  
|Future income taxes                                 |  |      | 431,562   |      |  |  | 440,992   |  
|                                                    |  |      |           |      |  |  |           |  
|                                                    |  |      | 4,545,217 |      |  |  | 4,993,224 |  
|                                                    |  |      |           |      |  |  |           |  
|SHAREHOLDERS EQUITY                                |  |      |           |      |  |  |           |  
|Capital stock                                       |  |      | 896,422   |      |  |  | 896,313   |  
|Contributed surplus                                 |  |      | 3,647     |      |  |  | 3,647     |  
|Retained earnings                                   |  |      | 317,376   |      |  |  | 475,053   |  
|Cumulative foreign currency translation
adjustments |  |      | (41,534   | )    |  |  | (69,017   | )
|                                                    |  |      |           |      |  |  |           |  
|                                                    |  |      | 1,175,911 |      |  |  | 1,305,996 |  
|                                                    |  |      |           |      |  |  |           |  
|                                                    |  |      | 5,721,128 |      |  |  | 6,299,220 |  
|                                                    |  |      |           |      |  |  |           |  

The notes constitute an integral part of the consolidated financial statements.

Signed on behalf of the Board

|                     |  |                     
|-------------------- |  | --------------------
|(DIRECTOR SIGNATURE) |  | (DIRECTOR SIGNATURE)
|                     |  |                     
|Director             |  | Director            

3



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##### 



CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED AUGUST 31

|                                                      |         |  |           |      |      |  |           |      | 
|----------------------------------------------------- | ------- |  | --------- | ---- | ---- |  | --------- | ---- | 
|                                                      |         |  | 2002      |      | 2001
|                                                      |         |  | $000      |      | $000
|Revenue                                               |         |  | 2,272,783 |      |      |  | 1,944,775 |     
|Operating expenses                                    |         |  | 1,244,263 |      |      |  | 1,121,392 |     
|Selling, general and administrative expenses          |         |  | 558,214   |      |      |  | 382,312   |     
|                                                      |         |  |           |      |      |  |           |     
|                                                      |         |  | 470,306   |      |      |  | 441,071   |     
|Amortization of intangibles and goodwill              |         |  | 17,500    |      |      |  | 90,159    |     
|Amortization of property, plant and equipment         |         |  | 74,654    |      |      |  | 60,565    |     
|Other amortization                                    |         |  | 6,670     |      |      |  | 5,240     |     
|                                                      |         |  |           |      |      |  |           |     
|                                                      |         |  | 371,482   |      |      |  | 285,107   |     
|Financing expenses                                    |         |  | (376,632  | )    |      |  | (356,755  | )   
|Investment gains net of write-down of
investments     |         |  | 32,043    |      |      |  | 28,630    |     
|Dividend income                                       |         |  | 3,241     |      |      |  | 2,952     |     
|                                                      |         |  |           |      |      |  |           |     
|                                                      |         |  | 30,134    |      |      |  | (40,066   | )   
|Provision for (recovery of) income taxes              |         |  | 7,108     |      |      |  | (59,019   | )   
|                                                      |         |  |           |      |      |  |           |     
|Earnings before the following                         |         |  | 23,026    |      |      |  | 18,953    |     
|Minority interests                                    |         |  | 4,330     |      |      |  | (3,196    | )   
|Interest in earnings (loss) of Network TEN            |         |  | (11,815   | )    |      |  | 52,567    |     
|Interest in loss of other equity accounted
affiliates |         |  | (1,523    | )    |      |  | (14,491   | )   
|Realized currency translation adjustments             |         |  | (1,000    | )    |      |  | (7,200    | )   
|                                                      |         |  |           |      |      |  |           |     
|Net earnings for the year                             |         |  | 13,018    |      |      |  | 46,633    |     
|                                                      |         |  |           |      |      |  |           |     
|Net earnings per share:                               |         |  |           |      |      |  |           |     
|                                                      | Basic   |  | $         | 0.07 |      |  | $         | 0.27 | 
|                                                      | Diluted |  | $         | 0.07 |      |  | $         | 0.27 | 

The notes constitute an integral part of the consolidated financial statements.

4



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##### 



CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED AUGUST 31

|                                                              |       |  |          |   |      |  |         |         |  
|------------------------------------------------------------- | ----- |  | -------- | - | ---- |  | ------- | ------- | -
|                                                              |       |  | 2002     |   | 2001
|                                                              |       |  | $000     |   | $000
|Retained earnings  beginning
of year, as previously
reported |       |  | 475,053  |   |      |  | 529,112 |        
|Adjustment for adoption of new
accounting pronouncements      |       |  | (170,695 | ) |      |  | (5,164  | )      
|                                                              |       |  |          |   |      |  |         |        
|Retained earnings  beginning
of year, as adjusted            |       |  | 304,358  |   |      |  | 523,948 |        
|Net earnings for the year                                     |       |  | 13,018   |   |      |  | 46,633  |        
|Dividends                                                     |       |  |          |   |      |  |         |        
|                                                              | Cash  |  |          |  |      |  |         | (49,003 | )
|                                                              | Stock |  |          |  |      |  |         | (46,525 | )
|                                                              |       |  |          |   |      |  |         |        
|Retained earnings  end of year                               |       |  | 317,376  |   |      |  | 475,053 |        
|                                                              |       |  |          |   |      |  |         |        

The notes constitute an integral part of the consolidated financial statements.

5



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##### 



CANWEST GLOBAL COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31

|                                             |                                                       |         |          |         |      |      |            |         |      | 
|-------------------------------------------- | ----------------------------------------------------- | ------- | -------- | ------- | ---- | ---- | ---------- | ------- | ---- | 
|                                             |                                                       |         |          | 2002    |      | 2001
|                                             |                                                       |         |          | $000    |      | $000
|CASH GENERATED (UTILIZED) BY:                |                                                       |         |          |         |      |      |            |        
|OPERATING ACTIVITIES                         |                                                       |         |          |         |      |      |            |        
|Net earnings for the year                    |                                                       |         | 13,018   |         |      |      | 46,633     |        
|Items not affecting cash                     |                                                       |         |          |         |      |      |            |        
|                                             | Amortization                                          |         |          | 108,765 |      |      |            | 166,979 |     
|                                             | Interest paid in kind                                 |         |          | 105,790 |      |      |            | 75,947  |     
|                                             | Future income taxes                                   |         |          | 11,209  |      |      |            | (97,281 | )   
|                                             | Interest in (earnings) loss of Network TEN            |         |          | 11,815  |      |      |            | (52,567 | )   
|                                             | Interest in loss of other equity
accounted affiliates |         |          | 1,523   |      |      |            | 14,491  |     
|                                             | Minority interests                                    |         |          | (4,330  | )    |      |            | 3,196   |     
|                                             | Realized currency translation adjustments             |         |          | 1,000   |      |      |            | 7,200   |     
|                                             | Investment gains net of write-down of
investments     |         |          | (32,043 | )    |      |            | (28,630 | )   
|                                             | Write-off of deferred financing fees                  |         |          |        |      |      |            | 17,900  |     
|Distributions from Network TEN               |                                                       |         | 60,984   |         |      |      | 71,096     |        
|                                             |                                                       |         |          |         |      |      |            |        
|                                             |                                                       |         | 277,731  |         |      |      | 224,964    |        
|Investment in film and television programs   |                                                       |         | (194,619 | )       |      |      | (267,437   | )      
|Amortization of film and television programs |                                                       |         | 132,033  |         |      |      | 157,629    |        
|Other changes in non-cash operating accounts |                                                       |         | (55,554  | )       |      |      | (51,406    | )      
|                                             |                                                       |         |          |         |      |      |            |        
|                                             |                                                       |         | 159,591  |         |      |      | 63,750     |        
|                                             |                                                       |         |          |         |      |      |            |        
|INVESTING ACTIVITIES                         |                                                       |         |          |         |      |      |            |        
|Acquisitions                                 |                                                       |         |         |         |      |      | (2,007,291 | )      
|Other investments                            |                                                       |         | (5,187   | )       |      |      | (1,733     | )      
|Proceeds from sale of other investments      |                                                       |         | 87,000   |         |      |      | 65,596     |        
|Proceeds from divestitures                   |                                                       |         | 390,059  |         |      |      | 32,454     |        
|Purchase of property and equipment           |                                                       |         | (53,338  | )       |      |      | (49,641    | )      
|                                             |                                                       |         |          |         |      |      |            |        
|                                             |                                                       |         | 418,534  |         |      |      | (1,960,615 | )      
|                                             |                                                       |         |          |         |      |      |            |        
|FINANCING ACTIVITIES                         |                                                       |         |          |         |      |      |            |        
|Dividends paid                               |                                                       |         |         |         |      |      | (49,003    | )      
|Issuance of long term debt                   |                                                       |         | 3,255    |         |      |      | 3,903,291  |        
|Repayment of long term debt                  |                                                       |         | (510,889 | )       |      |      | (2,030,988 | )      
|Issuance of share capital                    |                                                       |         | 109      |         |      |      | 4,012      |        
|Net change in bank loans and advances        |                                                       |         | (28,999  | )       |      |      | 12,744     |        
|                                             |                                                       |         |          |         |      |      |            |        
|                                             |                                                       |         | (536,524 | )       |      |      | 1,840,056  |        
|                                             |                                                       |         |          |         |      |      |            |        
|Net change in cash                           |                                                       |         | 41,601   |         |      |      | (56,809    | )      
|Cash and cash equivalents-                   |                                                       |         |          |         |      |      |            |        
|                                             | Beginning of year                                     |         |          | 19,489  |      |      |            | 76,298  |     
|                                             |                                                       |         |          |         |      |      |            |        
|Cash and cash equivalents                   |                                                       |         |          |         |      |      |            |        
|                                             | End of year                                           |         |          | 61,090  |      |      |            | 19,489  |     
|                                             |                                                       |         |          |         |      |      |            |        
|Cash flow per share                          |                                                       |         |          |         |      |      |            |        
|                                             |                                                       | Basic   |          | $       | 1.57 |      |            | $       | 1.31 | 
|                                             |                                                       | Diluted |          | $       | 1.52 |      |            | $       | 1.31 | 

The notes constitute an integral part of the consolidated financial statements.

6



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##### 



CANWEST GLOBAL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2002 AND 2001



|1. |  | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company is an international media company with interests in broadcast
television, publishing, radio, specialty cable channels, out-of-home
advertising, production and distribution of film and television
programming and internet websites in Canada, Australia, New Zealand,
Ireland and Northern Ireland. The Companys operating segments include
television and radio broadcasting, entertainment and publishing and online
operations. In Canada, the Television Broadcasting segment includes the
operation of the Global Television Network, Global Prime and various other
conventional and specialty channels. The Canadian Publishing and Online
segment includes the publication of a number of newspapers, including
metropolitan daily newspapers, community newspapers and the National Post,
as well as operation of the canada.com web portal and other web-based
operations. The Entertainment segment includes the operation of Fireworks
Entertainment, a producer and distributor of film and television
programs. The New Zealand Television Broadcasting segment includes the
operations of the TV3 and TV4 Television Networks. The New Zealand Radio
Broadcasting segment includes the More FM and RadioWorks radio networks.
The Irish Television Broadcasting segment includes the Companys 45%
interest in the Republic of Irelands TV3 Television Network. The
Corporate and Other segment includes the Companys 57.5% economic interest
in The TEN Group Pty Limited, which owns and operates Australias TEN
Television Network (Network TEN), and various portfolio investments in
media operations, including a 29.9% equity interest in Northern Irelands
Ulster Television plc (UTV).
|  
|   |  | The Companys broadcast customer base is comprised primarily of large
advertising companies who place advertisements with the Company on behalf
of their customers. Publishing revenues include advertising, circulation
and subscriptions which are derived from a variety of sources. The
Companys advertising revenues are seasonal. Revenues are highest in the
first and third quarters, while expenses are relatively constant
throughout the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | A summary of significant accounting policies followed in the preparation
of these consolidated financial statements is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Basis of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada. All amounts are
expressed in Canadian dollars unless otherwise noted. A reconciliation to
accounting principles generally accepted in the United States is provided
in note 20.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

7



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##### 





| |  | Principles of consolidation                                                                                                                                                                                                                                                                                                   
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The consolidated financial statements include the accounts of the Company
and its subsidiaries, and the Companys pro rata 45% share of the assets,
liabilities, and results of operations of TV3 Ireland from March 28, 2001,
the date when it ceased to be a subsidiary and became a jointly controlled
enterprise.         
|
| |  | Investments                                                                                                                                                                                                                                                                                                                   
|
| |  | The Company accounts for its investment in Network TEN, ROBTv (to the date
of its sale on August 31, 2001) and CF Television Inc. (to the date of its
sale on September 12, 2001), mentv and Mystery using the equity method.
The Companys accounting for its investment in The National Post Company
is described in note 2.
|
| |  | Other investments are recorded at the lower of cost and net realizable
value. A provision for loss in value of other investments is made when
the decline in current market values is considered other than temporary.                                                                                                        
|
| |  | Investment in film and television program rights                                                                                                                                                                                                                                                                              



| | (a) |  | Broadcast rights
| | --- |  | ----------------



| |  | The Company has entered into various agreements for the rights to
broadcast certain feature films and television programs. The Company
records a liability for broadcast rights and the corresponding asset when
the programs are available for telecast. Broadcast rights are charged to
operations as programs are telecast over the anticipated period of use.
Broadcast rights are carried at the lower of unamortized cost and net
recoverable value based on discounted future cash flows.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Film and television programs
| | --- |  | ----------------------------



| |  | Investment in film and television programs represents the unamortized
costs of film and television programs that have been produced by the
Company, or for which the Company has acquired distribution rights.
Included in investment in film and television programs are film and
television programs in progress and in development, and acquired film and
television program libraries. Costs of completed film and television
programs include all production costs and capitalized interest, which are
expected to be recovered from exploitation, exhibition or licencing. Film
and television programs in progress represent the accumulated costs of
productions that have not yet been completed by the Company.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Costs of film and television programs in development represent
expenditures made on projects prior to production, including investments
in scripts. Advances or contributions received from third parties to
assist in development are deducted from these costs. Upon commencement of
production, development costs are reclassified to investment in film and
television programs. Development costs are written off at the earlier of
when determined not to be recoverable and three years following the year
incurred. Costs of advertising and marketing are expensed as incurred.                                                                                                                                 
|
| |  | Amortization of investment in completed films and television programs and
accrual of participation costs are calculated using the individual film
forecast computation method, based on the ratio that current period
revenue earned from the film and television programs bears to managements
estimate of ultimate revenue expected to be recognized from the
exploitation of the film or television program.                                                                                                                                                                                                                                                                                                         

8



---



##### 





| |  | Estimates of ultimate future revenue are prepared on a title-by-title
basis and reviewed periodically based on current market conditions. For
episodic television series, until ultimate revenue estimates include
revenues from secondary markets, capitalized costs for each episode are
limited to the amount of revenue contracted for each episode. Ultimate
revenue includes estimates of secondary market revenue only when the
Company can demonstrate through its experience or industry norms, that the
number of episodes already produced, plus those for which a firm
commitment exists and the Company expects to deliver, can be licenced
successfully in the secondary market. Ultimate revenue estimates include
revenues for up to ten years for film and television programs produced by
the Company, and up to 20 years for acquired libraries.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The valuation of film and television programs, including acquired film
libraries, is reviewed on a title-by-title basis. When an event or change
in circumstances indicates that the fair value of a film or television
program is less than its unamortized cost, the fair value is determined
using managements estimate of discounted future cash flows. A write-down
is recorded equivalent to the amount by which the unamortized costs
exceeds the estimated fair value of the film or television program.                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The Companys operations in Australia, New Zealand and Ireland represent
self-sustaining foreign operations, and the respective accounts have been
translated into Canadian dollars in accordance with the current rate
method. Assets and liabilities are translated at the exchange rates
prevailing at the balance sheet dates, and revenue and expenses are
translated on the basis of average exchange rates during the periods. Any
gains or losses arising from the translation of these accounts are
deferred and included as a component of shareholders equity as cumulative
foreign currency translation adjustments. An applicable portion of these
deferred gains and losses is included in the determination of net earnings
when there is a reduction of the net investment.                                                                       
|
| |  | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Property, plant and equipment are recorded at cost. Amortization is
provided over the assets estimated useful lives on a straight-line basis
at the following annual rates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                |  |  |             |  
|------------------------------- |  |  | ----------- | -
|Buildings                       |  |  | 2 1/2% - 5  | %
|Machinery and equipment         |  |  | 4% - 33 1/3 | %
|Leasehold and land improvements |  |  | 2 1/2% - 20 | %



| |  | Intangible assets                                                                                                                                                                                                                                                                                                                    
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Broadcast licences, newspaper mastheads, circulation and other intangible
assets are recorded at their cost which represents the fair market value
at the date of the acquisition.                                                                                                                                                   
|
| |  | Circulation and other finite life intangibles are amortized over periods
from 5 to 40 years. Intangibles with indefinite lives are not subject to
amortization and are tested for impairment annually. Impairment of
indefinite life intangibles is tested by comparing the fair value of the
intangible asset to its carrying value.

9



---



##### 





| |  | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Goodwill represents the cost of acquired businesses in excess of the fair value
of net identifiable assets acquired. Effective September 1, 2001, goodwill is
not subject to amortization, whereas previously goodwill was amortized over a 40
year period. Goodwill is tested for impairment annually by comparing the fair
value of goodwill assigned to a particular reporting unit to its carrying value.                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Pre-operating costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Pre-operating costs incurred in new business undertakings are deferred
prior to the commencement of commercial operations, which is generally the
time at which subscriber revenues commence. Pre-operating costs are
amortized over a period of five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Revenue derived from broadcasting activities consists primarily of the
sale of airtime which is recognized at the time commercials are broadcast.
Circulation and advertising revenue from publishing activities is
recognized when the newspaper is delivered. Subscription revenue is
recognized on a straight-line basis over the term of the subscription.                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Revenue derived from the sale or licencing of film and television program
distribution rights is recognized when all of the following conditions are
met: persuasive evidence of a sale or licensing arrangement exists; the
film is complete and has been delivered or is available for immediate and
unconditional delivery; the licence period has begun; the fee is fixed or
determinable and collection of the fee is reasonably assured.                                                                                                                                                                                                                                                                                                                                        
|
| |  | Amounts received or receivable and not yet recognized as revenue are
included in deferred revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | The asset and liability method is used to account for income taxes. Under
this method, future income tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between
the financial statement carrying amounts and the tax bases of assets and
liabilities. Future income tax assets and liabilities are measured using
substantively enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. The effect
on future income tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Future income tax assets are recognized to the extent that realization is
considered more likely than not.
|
| |  | Income taxes on unremitted earnings of Network TEN are provided at rates
applicable to distributions. Income taxes on unremitted earnings of
foreign operations other than Network TEN are not provided as such
earnings are expected to be indefinitely reinvested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Inventory, consisting primarily of printing materials, is valued at the
lower of cost and net realizable values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

10



---



##### 





| |  | Pension plans and post retirement benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company maintains a number of defined benefit and defined contribution
pension plans. For the defined benefit plans, the pension expense is
determined using the projected benefit method pro rated based on service.
For the defined contribution plans, the pension expense is the Companys
contribution to the plan. The Company also maintains post retirement
benefit plans for certain of its employees, the cost of which is expensed
as benefits are earned by the employees.                                        
|
| |  | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | For the purpose of the statements of cash flows, cash includes cash and
short-term investments with maturities at the date of purchase of up to
three months.                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Per share calculations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Basic earnings and cash flow per share are calculated using the daily
weighted average number of shares outstanding. Cash flow is defined as
cash flow from operations excluding amortization of film and programs,
investment in film and television programs and changes in non-cash
operating accounts.                                                                                                                                                                                                                        
|
| |  | Diluted earnings and cash flow per share are calculated using the daily
weighted average number of shares that would have been outstanding during
the year had all potential common shares been issued at the beginning of
the year, or when the underlying options or convertible securities were
granted or issued, if later. The treasury stock method is employed to
determine the incremental number of shares that would have been
outstanding had the Company used proceeds from the exercise of options to
acquire shares.
|
| |  | Basic earnings per share was calculated based on weighted average shares
outstanding for 2002 of 176,957,000 (2001  171,421,000). The dilutive
effect of outstanding stock options in 2002 is 27,000 shares (2001 -
130,000 shares). The dilutive effect of preference shares is 5,275,000
shares (2001  659,000) resulting in a denominator for diluted earnings
per share of 182,259,000 (2001  172,210,000). The Company had 1,721,000
options outstanding in 2002 which would have been anti-dilutive (2001 -
971,000).    
|
| |  | Stock-based Compensation Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | The Company has share based compensation plans as described in note 10.
The Company utilizes the intrinsic value approach to accounting for
stock-based compensation. No compensation expense is recognized for these
plans when the options are issued. Any consideration paid by employees on
exercise of stock options is credited to share capital.                                                                                                                                                                           
|
| |  | The following are proforma results as if the Company had applied the fair
value based method of accounting for stock-based compensation.                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | The fair value of the options granted during 2002 was estimated using the
Black-Scholes option pricing model with the assumptions of no dividend
yield (2001  2%), an expected volatility of 40% (2001  60%), risk free
interest rates of 4.8% to 5.4% (2001  5.4% to 5.6%) and an expected life
of 6 to 9 years (2001  6 to 9 years).                                                                                                                                                                                        
|
| |  | The total fair value of 233,458 stock options that were granted by the
Company during 2002 was $1,542,300 (during 2001, 240,440 stock options
were granted with a total fair value of $1,969,000). The proforma cost of
stock compensation expense for the year ended August 31, 2002 would be                                                                                                                                                                                                                                    

11



---



##### 





|    |  | $2,303,000 (2001  $1,229,000). A value of $4,548,000 will be charged to
proforma net earnings in future years according to the vesting terms of
the options. The resulting proforma net earnings and diluted earnings per
share for the year ended August 31, 2002 are $10,715,000 and $0.06
respectively (2001  $45,404,000 and $0.26).                                                                                                                                                                                
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The effects of applying this method in the proforma disclosure are not
indicative of future amounts. The Companys proforma disclosure does not
apply to awards prior to 1996, and additional awards in future years are
anticipated.                                                                                                                                                                                                                                                                                     
|   
|    |  | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | The Company uses various financial instruments to reduce its exposure to
fluctuations in interest and U.S. currency exchange rates. The Company
does not hold or issue any derivative financial instruments for
speculative trading purposes. The interest differential to be paid or
received under interest rate swap agreements is recognized as an
adjustment to interest expense. The Company translates its U.S.
denominated debt that is hedged by cross-currency swaps at the rate
implicit in the swap agreement.
|   
|    |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | The preparation of financial statements in accordance with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect reported amounts of assets, liabilities, revenue
and expenses, and disclosure of contingencies. Future events could alter
such estimates in the near term.                                                                                                                                                                                         
|   
|    |  | The Company operates in highly competitive markets. The Company has
estimated the useful lives of intangible assets and the value of goodwill,
based on historical customer patterns, industry trends and existing
competitive factors. Significant long-term changes in these factors could
result in a material impairment of the value and life of intangible assets
and goodwill.                                                                                                                                     
|   
|    |  | In addition, management estimates ultimate revenue from film and
television programs to determine amortization and fair values of
investments in film and television programs. Actual revenues may differ
from these estimates.                                                                                                                                                                                                                                                                                           
|   
|    |  | Changes in Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(a) |  | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | On September 1, 2000 the Company adopted the recommendations of the
Canadian Institute of Chartered Accountants (CICA) Handbook Section 3465,
Income Taxes,which replaced the deferral method with the asset and
liability method of tax allocation. The Company has applied the change
retroactively, restating prior years. The cumulative effect of the change
on opening retained earnings at September 1, 2000 was a $5.2 million
reduction.                                                                         
|   
|(b) |  | Business combinations, intangibles and goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | In July 2001, the Accounting Standards Board of the CICA issued Handbook
Section 1581, Business Combinations,and Handbook Section 3062, Goodwill
and Other Intangibles.                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | Under Section 1581, all business combinations initiated after June 30,
2001, must be accounted for as a purchase. In addition, the standards
require classification of carrying amounts of goodwill and other
intangibles related to purchase business combinations in accordance with
the new definitions of intangibles. The standard requires intangible
assets to be recognized separately from goodwill if an asset arises from
contractual or other legal rights, or is separable. These provisions are             

12



---



##### 





| |  | applicable to business combinations consummated after June 30, 2001 and
for any recognized intangibles acquired in a business combination prior to
July 1, 2001 when Section 3062 is first applied. This section was adopted
by the Company on September 1, 2001 and applied prospectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On September 1, 2001, the Company adopted Section 3062, Goodwill and Other
Intangibles. As a result of adopting the new standard, goodwill and
certain intangibles with indefinite lives, including newspaper mastheads
and broadcast licences, are no longer amortized. Circulation and other
intangibles are amortized over periods from 5 to 40 years. As a result of
applying the new standards, no impairment in intangibles with indefinite
lives or goodwill have been identified at the Company or any of its
subsidiaries. However, an initial goodwill impairment was identified by
Network TEN in its reporting unit, Eye Corp, resulting in a charge to the
Companys retained earnings of $45.3 million (net of income tax recoveries
of $2.5 million). In addition, as a result of events occurring after the
beginning of 2001, a goodwill impairment of $30.2 million (net of income
tax recoveries of $2.0 million) has been reflected in the Companys
interest in loss of Network TEN in the Companys statement of earnings for
the period ended August 31, 2002 (see note 3).
|
| |  | This change in accounting policy has been applied prospectively commencing
September 1, 2001. The tables below provide a reconciliation of
previously reported 2001 earnings to net earnings adjusted to exclude
amortization of goodwill and intangible assets with indefinite lives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                                                                                                   |         |  |        |      |      |  |         |      | 
|------------------------------------------------------------------------------------------------------------------ | ------- |  | ------ | ---- | ---- |  | ------- | ---- | 
|                                                                                                                   |         |  | 2002   |      | 2001
|                                                                                                                   |         |  | $000   |      | $000
|                                                                                                                   |         |  |        |      |     
|Reported net earnings for the year                                                                                 |         |  | 13,018 |      |      |  | 46,633  |     
|Amortization of goodwill and
indefinite life intangibles, net
of tax of $11,975 for the year
ended August 31, 2001 |         |  |       |      |      |  | 64,338  |     
|Amortization of goodwill and
indefinite life intangibles in
equity accounted affiliates, net
of tax of nil         |         |  |       |      |      |  | 6,211   |     
|                                                                                                                   |         |  |        |      |      |  |         |     
|Net earnings for the year
adjusted to exclude
amortization expense
recognized in 2001                              |         |  | 13,018 |      |      |  | 117,182 |     
|                                                                                                                   |         |  |        |      |      |  |         |     
|Net earnings per share:                                                                                            |         |  |        |      |      |  |         |     
|Reported net earnings                                                                                              |         |  |        |      |      |  |         |     
|                                                                                                                   | Basic   |  | $      | 0.07 |      |  | $       | 0.27 | 
|                                                                                                                   | Diluted |  | $      | 0.07 |      |  | $       | 0.27 | 
|Adjusted net earnings                                                                                              |         |  |        |      |      |  |         |     
|                                                                                                                   | Basic   |  | $      | 0.07 |      |  | $       | 0.68 | 
|                                                                                                                   | Diluted |  | $      | 0.07 |      |  | $       | 0.68 | 



|(c) |  | Accounting for film and television programs                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In June 2000, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position
00-2 Accounting by Producers or Distributors of Films(SOP 00-2). SOP
00-2, established new accounting standards for producers or distributors
of films, including changes in revenue recognition, capitalization and
amortization of costs of films

13



---



##### 





| |  | and television programs and accounting for development, overhead and other
exploitation costs, including advertising and marketing expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company has retroactively adopted SOP 00-2 effective as of September
1, 2001. Prior years financial statements have not been restated, as the
effect of the new policy on prior periods was not reasonably determinable.
Accordingly, opening retained earnings for the year ended August 31, 2002
was reduced to reflect the cumulative effect of the accounting change in
the amount of $125.4 million (net of income taxes of $nil).                                                                                                                                                                                                                                                                                                                    
|
| |  | The principal changes as a result of applying SOP 00-2 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Cash outflows incurred to acquire, produce and develop film and television
programs, which were previously presented under investing activities in
the consolidated statement of cash flows, are presented under cash flows
from operating activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Advertising and marketing participation costs, which were previously
capitalized to investment in film and television programs and amortized
using the individual film forecast method, are now expensed as incurred.
This change resulted in a reduction of $26.0 million in investment in film
and television programs and a reduction of $9.2 million in other assets.                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Ultimate revenue include estimates of revenue that are expected to be
recognized from the exploitation, exhibition and sale of a film or program
in all markets and territories, subject to certain limitations. These
limitations include certain exclusions for estimates of secondary market
revenue that were previously included by the Company in ultimate revenue.
This change resulted in a reduction of $18.6 million to investment in film
and television programs.                                                                                                                                                                                                                                                                                   
|
| |  | The valuation of investment in film and television programs is reviewed on
a title-by-title basis when an event or change in circumstances indicate
that the fair value of a film or television program is less than its
unamortized cost. The fair value of the film or television program,
previously determined using an undiscounted expected future revenue
approach, is now determined using managements future revenue estimates
and a discounted cash flow approach. A write-down is recorded equivalent
to the amount by which the unamortized costs exceed the estimated fair
value of the film or television program. This change resulted in a
reduction of $69.0 million in investment in film and television programs.                           
|
| |  | Development costs related to overall deals that cannot be identified with
specific projects, which were previously capitalized, are now expensed as
incurred. This change resulted in a reduction of $2.6 million in
investment in film and television programs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | The effect of this change in accounting policy on the Companys net
earnings for 2002 is not readily determinable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Proposed accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Foreign currency translation and hedging relationships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | In November 2001, the Accounting Standards Board of the CICA approved
amendments to Handbook Section 1650, Foreign Currency Translation,and a
new accounting Guideline, Hedging Relationships. The amendments to
Section 1650, applicable for the Company in fiscal 2003 with retroactive
application, eliminate the deferral and amortization method for unrealized
translation gains and losses on non-current monetary assets and
liabilities and require the disclosure of exchange gains and losses
included in net income. The Guideline, applicable for the Company in
fiscal 2004, deals with the identification, documentation and designation
and effectiveness of hedges. The impact of implementing these changes is
not expected to be significant.

14



---



##### 





|2. |  | ACQUISITIONS AND DIVESTITURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | (a) Effective March 31, 2002, the Company acquired the remaining 50%
interest in The National Post Company not already owned. The purchase
price consisted of cash and other consideration in the form of agreements
and undertakings, exchanged by the parties, which had a nominal value. In
addition, the vendor agreed to provide $22.5 million to fund losses and
cash requirements of The National Post Company to March 31, 2002. In
September 2001, the Company assumed control of the National Post;
therefore, the Company changed its method of accounting for the National
Post to a consolidation basis from an equity basis.
|  
|   |  | (b) In April 2001, through an amalgamation of CanWest Broadcasting Ltd.
(CBL), the 29.34% minority interest in CBL was exchanged for 21,783
series 2 preference shares of the Company, rendering CBL a wholly owned
subsidiary. The redemption and conversion value of the shares is based on
valuations which have not been finally determined and was estimated at
$50.0 million. As at August 31, 2002, the estimated redemption and
conversion value is $54.7 million.                                                                                                                                                              
|  
|   |  | (c) In January 2001, the Company acquired the shares of RadioWorks that it
did not already own. The cost to acquire this 28% interest was $21.8
million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | (d) On November 16, 2000, the Company acquired substantially all of the
Canadian newspaper and other Canadian media assets including a 50%
interest in the National Post (CanWest Publications) of Hollinger
International Inc. and certain of its affiliates (Hollinger) for
consideration of approximately $3.1 billion, including certain costs
related to the acquisition.                                                                                                                                                                                                                                                        
|  
|   |  | The purchase price is subject to adjustment based on the working capital
of CanWest Publications at August 31, 2000 and the results of its
operations from September 1, 2000 to November 16, 2000. The amount of
such adjustment is subject to negotiation between the parties and has not
been finally determined. When finalized, the working capital adjustment
payable or refundable will increase or decrease the amount of goodwill
recorded on the acquisition.                                                                                                                                                                    
|  
|   |  | The Company partially financed the acquisition and refinanced certain
existing credit facilities by entering into a new senior secured credit
facility, of which the Company had drawn approximately $2.5 billion at
closing. In addition, the Company issued US$425.0 million and $60.7
million in senior subordinated notes, and approximately $767.0 million in
subordinated notes payable to Hollinger. The Company also issued 2.7
million Series 1 preferred shares and 24.3 million non-voting shares to
Hollinger.                                                                                                                
|  
|   |  | During the year ended August 31, 2002 the Company adjusted the allocation
of the purchase price based on valuations of intangibles which were
completed in the year. This resulted in an increase in mastheads,
circulation and other intangibles, a reduction in goodwill and an increase
in the future tax liability. The prior year was restated to reflect this
reallocation.                                                                                                                                                                                                                                                         
|  
|   |  | The Company accounted for these acquisitions using the purchase method.
As such, the results of operations reflect the revenues and expenses of
the acquired operations since the dates of acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                   

15



---



##### 





| |  | A summary of the fair value of the assets acquired is as follows:
| |  | -----------------------------------------------------------------

|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|----------------------------------------------------------------------------- |  | ---------------- | ------- | ---------------- |  | ---------- | --------- | ---- |  | ----- | ------ | --- |  |  | ------ | --- |  |  | --------- | -
|                                                                              |  | 2002             |         | 2001            
|                                                                              |  |                  |         |                 
|                                                                              |  |                  |         |                  |  | CanWest    |           |      |  |       |        |     |  |  |        |     |  | 
|                                                                              |  | National Post(3) |         | Publications (2) |  | RadioWorks |           | CBL  |  | Total
|                                                                              |  | $000             |         | $000             |  | $000       |           | $000 |  | $000 
|Current assets                                                                |  |                  | 50,257  |                  |  |            | 324,382   |      |  |       |       |     |  |  |       |     |  |  | 324,382   |  
|Property, plant and
equipment                                                 |  |                  | 12,436  |                  |  |            | 537,053   |      |  |       |       |     |  |  |       |     |  |  | 537,053   |  
|Other investments                                                             |  |                  |        |                  |  |            | 101,561   |      |  |       |       |     |  |  |       |     |  |  | 101,561   |  
|Other assets                                                                  |  |                  |        |                  |  |            | 67,412    |      |  |       |       |     |  |  |       |     |  |  | 67,412    |  
|Circulation and other
intangibles                                             |  |                  | 10,700  |                  |  |            | 129,300   |      |  |       |       |     |  |  |       |     |  |  | 129,300   |  
|Newspaper mastheads
and broadcast licences                                    |  |                  | 35,000  |                  |  |            | 330,000   |      |  |       |       |     |  |  | 25,466 |     |  |  | 355,466   |  
|Goodwill                                                                      |  |                  | 62,987  |                  |  |            | 2,101,619 |      |  |       | 16,928 |     |  |  |       |     |  |  | 2,118,547 |  
|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|Total assets                                                                  |  |                  | 171,380 |                  |  |            | 3,591,327 |      |  |       | 16,928 |     |  |  | 25,466 |     |  |  | 3,633,721 |  
|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|Current liabilities                                                           |  |                  | (50,665 | )                |  |            | (294,856  | )    |  |       |       |     |  |  |       |     |  |  | (294,856  | )
|Other accrued liabilities                                                     |  |                  |        |                  |  |            | (10,000   | )    |  |       |       |     |  |  |       |     |  |  | (10,000   | )
|Future income taxes                                                           |  |                  | (14,600 | )                |  |            | (158,587  | )    |  |       |       |     |  |  |       |     |  |  | (158,587  | )
|Minority interests                                                            |  |                  | (22,500 | )                |  |            |          |      |  |       | 4,842  | (1) |  |  | 24,534 | (1) |  |  | 29,376    |  
|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|Total liabilities                                                             |  |                  | (87,765 | )                |  |            | (463,443  | )    |  |       | 4,842  |     |  |  | 24,534 |     |  |  | (434,067  | )
|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|                                                                              |  |                  | 83,615  |                  |  |            | 3,127,884 |      |  |       | 21,770 |     |  |  | 50,000 |     |  |  | 3,199,654 |  
|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|Consideration:                                                                |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|Cash                                                                          |  |                  |        |                  |  |            | 1,985,521 |      |  |       | 21,770 |     |  |  |       |     |  |  | 2,007,291 |  
|Shares                                                                        |  |                  |        |                  |  |            | 375,516   |      |  |       |       |     |  |  | 50,000 |     |  |  | 425,516   |  
|Note payable                                                                  |  |                  |        |                  |  |            | 766,847   |      |  |       |       |     |  |  |       |     |  |  | 766,847   |  
|Carrying value of The
National Post Company
investment at date of
acquisition |  |                  | 83,615  |                  |  |            |          |      |  |       |       |     |  |  |       |     |  |  |          |  
|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  
|                                                                              |  |                  | 83,615  |                  |  |            | 3,127,884 |      |  |       | 21,770 |     |  |  | 50,000 |     |  |  | 3,199,654 |  
|                                                                              |  |                  |         |                  |  |            |           |      |  |       |        |     |  |  |        |     |  |  |           |  



---

|(1) |  | The allocation of consideration to minority interests represents the
extinguishment of those interests.
|--- |  | -------------------------------------------------------------------------------------------------------
|   
|(2) |  | Including a 50% interest in the National Post.                                                         
|   
|(3) |  | The remaining 50% interest at acquisition of control, September 1,
2001.                               



| |  |  | Divestitures                                                                                                                                                                                                                                                                                                            
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | (a) On August 7, 2002, the Company sold its interest in community
newspapers and related assets in Atlantic Canada and Saskatchewan for cash
proceeds of $257.0 million. The accounting gain on this sale was $48.9
million; assets and liabilities disposed amounted to $227.3 million and
$19.2 million, respectively.
|
| |  |  | (b) On October 31, 2001, the Company completed the sale of CKVU Sub Inc.,
and received proceeds of $133.0 million. The accounting gain on the sale
was $67.7 million; assets and liabilities disposed amounted to $84.1
million and $18.8 million, respectively.                                                        

16



---



##### 





| |    |  | (c) On September 12, 2001, the Company completed the sale of CF Television
Inc., and received proceeds of $87.0 million. No gain or loss arose from
this transaction; assets and liabilities disposed amount to $87.0 million
and nil, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | (d) On August 31, 2001 the Company sold its 50% interest in ROBTv for
$30.0 million. No gain or loss arose from this sale; assets and
liabilities disposed amount to $30.0 million and nil, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |    |  | (e) On March 28, 2001, the Company restructured its controlling interest
in TV3 Ireland through a series of transactions, which included: (i) the
repayment by TV3 Ireland of loans made by the Company and another minority
investor, (ii) the exercise of certain call options by the Company and
(iii) the acquisition by Granada Media plc of a 45% interest in TV3
Ireland from the Company and another minority investor. The Company
received cash, net of the call price and including repayment of loans made
to TV3 Ireland of $32.5 million and recorded a gain on disposition of
$30.7 million. The Company and Granada Media plc also entered into a
joint venture agreement to jointly control TV3 Ireland. As a result,
effective March 28, 2001, the Company began to proportionately consolidate
its 45% interest in TV3 Ireland.                                           
|
| | 3. |  | INVESTMENT IN NETWORK TEN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |    |  | The Company owns approximately 15% of the issued ordinary shares and all
of the convertible debentures and subordinated debentures of Network TEN,
an Australian television broadcast network. The subordinated debentures
have an aggregate principal amount of A$45.5 million and pay interest
based on distributions to holders of Network TENs ordinary shares. The
convertible debentures have an aggregate principal amount of A$45,500 and
pay a market-linked rate of interest. The combination of ordinary shares
and subordinated debentures yield distributions equivalent to
approximately 57.5% of all distributions paid by Network TEN. The
convertible debentures are convertible, upon payment of an aggregate of
A$45.5 million, into a number of ordinary shares which would represent 50%
of the issued and outstanding shares of Network TEN at the time of
conversion.
|
| |    |  | As a result of its contractual right to representation on Network TENs
board of directors and other factors, the Company accounts for its
interest in Network TEN on the equity basis. The Company has appointed
three of the thirteen members of the board of directors of Network TEN.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |    |  | The following selected consolidated financial information of Network TEN
has been prepared in accordance with accounting principles generally
accepted in Canada. The accounts have been translated to Canadian dollars
using the current rate method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |    |  | 17                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Summary Consolidated Balance Sheets

|                                     |                                                    |  |         |         |      |  |         |         |  
|------------------------------------ | -------------------------------------------------- |  | ------- | ------- | ---- |  | ------- | ------- | -
|                                     |                                                    |  | 2002    |         | 2001
|                                     |                                                    |  | $000    |         | $000
|Assets                               |                                                    |  |         |         |      |  |         |        
|                                     | Current assets                                     |  |         | 285,303 |      |  |         | 192,460 |  
|                                     | Other assets                                       |  |         | 4,825   |      |  |         | 7,893   |  
|                                     | Property, plant and equipment                      |  |         | 71,875  |      |  |         | 61,967  |  
|                                     | Long term investments                              |  |         | 2,188   |      |  |         | 17,516  |  
|                                     | Intangibles                                        |  |         | 246,305 |      |  |         | 245,721 |  
|                                     | Goodwill                                           |  |         | 49,304  |      |  |         | 215,615 |  
|                                     |                                                    |  |         |         |      |  |         |        
|                                     |                                                    |  | 659,800 |         |      |  | 741,172 |        
|                                     |                                                    |  |         |         |      |  |         |        
|Liabilities and Shareholders Equity |                                                    |  |         |         |      |  |         |        
|                                     | Current liabilities                                |  |         | 191,736 |      |  |         | 194,813 |  
|                                     | Other long term liabilities                        |  |         | 442,975 |      |  |         | 251,390 |  
|                                     | Minority interest                                  |  |         |        |      |  |         | 54,433  |  
|                                     | Subordinated debentures issued to the Company      |  |         | 40,154  |      |  |         | 40,154  |  
|                                     | Share capital                                      |  |         | 40,146  |      |  |         | 40,146  |  
|                                     | Retained earnings (deficit)                        |  |         | (52,232 | )    |  |         | 177,251 |  
|                                     | Cumulative foreign currency translation
adjustment |  |         | (2,979  | )    |  |         | (17,015 | )
|                                     |                                                    |  |         |         |      |  |         |        
|                                     |                                                    |  | 659,800 |         |      |  | 741,172 |        
|                                     |                                                    |  |         |         |      |  |         |        

Other Consolidated Financial Data

|                              |  |      |         |      |  |  |         | 
|----------------------------- |  | ---- | ------- | ---- |  |  | ------- | 
|                              |  | 2002 |         | 2001
|                              |  | $000 |         | $000
|Cash flow from operations (1) |  |      | 75,000  |      |  |  | 105,000 | 
|                              |  |      |         |      |  |  |         | 
|Distributions paid            |  |      | 111,900 |      |  |  | 130,000 | 
|                              |  |      |         |      |  |  |         | 
|Capital expenditures          |  |      | 25,700  |      |  |  | 18,600  | 
|                              |  |      |         |      |  |  |         | 



---

|(1) |  | Cash flow from operations before changes in non-cash operating
accounts
|--- |  | -----------------------------------------------------------------------

18



---



##### 



Summary Consolidated Statements of Earnings

|                                                                                       |  |      |         |      |  |  |         |  
|-------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                                                       |  | 2002 |         | 2001
|                                                                                       |  | $000 |         | $000
|                                                                                       |  |      |         |     
|Revenue                                                                                |  |      | 555,653 |      |  |  | 445,179 |  
|Operating expenses                                                                     |  |      | 411,904 |      |  |  | 324,999 |  
|                                                                                       |  |      |         |      |  |  |         |  
|Operating profit before amortization                                                   |  |      | 143,749 |      |  |  | 120,180 |  
|Amortization of intangibles and goodwill                                               |  |      |        |      |  |  | 10,802  |  
|Amortization of property, plant, equipment
and other                                   |  |      | 15,130  |      |  |  | 9,329   |  
|                                                                                       |  |      |         |      |  |  |         |  
|                                                                                       |  |      | 128,619 |      |  |  | 100,049 |  
|Investment income and gains net of losses
on write-down of investments                 |  |      | (17,221 | )    |  |  | 26,427  |  
|Financing expenses                                                                     |  |      | (28,270 | )    |  |  | (71,343 | )
|Goodwill impairment loss (1)                                                           |  |      | (56,114 | )    |  |  |        |  
|                                                                                       |  |      |         |      |  |  |         |  
|                                                                                       |  |      | 27,014  |      |  |  | 55,133  |  
|Provision for income taxes (2)                                                         |  |      | 59,511  |      |  |  | 19,328  |  
|                                                                                       |  |      |         |      |  |  |         |  
|Earnings (loss) before the following                                                   |  |      | (32,497 | )    |  |  | 35,805  |  
|Minority interests                                                                     |  |      | 4,737   |      |  |  | 4,354   |  
|Interest in earnings of equity
accounted affiliates                                    |  |      |        |      |  |  | 940     |  
|                                                                                       |  |      |         |      |  |  |         |  
|Net earnings (loss) for the year                                                       |  |      | (27,760 | )    |  |  | 41,099  |  
|Interest in respect of subordinated
debentures held by the Company                     |  |      | 5,370   |      |  |  | 56,697  |  
|                                                                                       |  |      |         |      |  |  |         |  
|Earnings (loss) for the year before
interest in respect of subordinated
debentures (3) |  |      | (22,390 | )    |  |  | 97,796  |  
|                                                                                       |  |      |         |      |  |  |         |  

Summary Statement of Retained earnings

|                                                                                   |  |      |          |      |  |  |          |  
|---------------------------------------------------------------------------------- |  | ---- | -------- | ---- |  |  | -------- | -
|                                                                                   |  | 2002 |          | 2001
|                                                                                   |  | $000 |          | $000
|                                                                                   |  |      |          |     
|Retained earnings  beginning of
year as previously reported                       |  |      | 177,251  |      |  |  | 220,853  |  
|Adjustment for adoption of new
accounting pronouncements (1)                       |  |      | (83,109  | )    |  |  |         |  
|                                                                                   |  |      |          |      |  |  |          |  
|Retained earnings  beginning of
year as adjusted                                  |  |      | 94,142   |      |  |  | 220,853  |  
|Earnings (loss) for the year before interest in respect of
subordinated debentures |  |      | (22,390  | )    |  |  | 97,796   |  
|Distributions paid                                                                 |  |      | (123,984 | )    |  |  | (141,398 | )
|                                                                                   |  |      |          |      |  |  |          |  
|Retained earnings (deficit)  end of year                                          |  |      | (52,232  | )    |  |  | 177,251  |  
|                                                                                   |  |      |          |      |  |  |          |  

19



---



##### 





---

|(1) |  | On December 18, 2000, Network TEN acquired 60% of Eye Corp. for A$189.9
million. Under Australian generally accepted accounting principles
(GAAP), on February 28, 2002 the Eye Corp. goodwill was written down by
A$137.5 million to A$113.8 million. In August, 2002, Network TEN
determined that there was a further impairment of Eye Corp. goodwill which
resulted in an additional write down of A$40.9 million. Under Canadian
GAAP, in accordance with the adoption of CICA Handbook Section 3062, the
Eye Corp. goodwill impairment was recorded as a charge of $83.1 million to
retained earnings as of September 1, 2001 with a further goodwill
impairment loss of $56.1 million recorded as a charge to net earnings for
year ended August 31, 2002. Under Canadian GAAP, the fair value of Eye
Corp. has been determined on a discounted cash flow basis. The decline in
fair value is attributable to weaknesses in the out-of-home advertising
market and to certain operational issues.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Network TEN had been in dispute with the Australian Tax Office (ATO)
regarding the deductibility of debenture interest paid to the Company
since 1997. Network TEN reached an agreement with the ATO during 2002.
Under the agreement Network TEN will be entitled to deduct debenture
interest until June 30, 2004. The settlement resulted in a non-recurring
income tax expense charge of A$36.2 million to Network TEN in the year
ended August 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(3) |  | The Companys economic interest in Network TENs earnings (loss) for the
year ended August 31, 2002 is ($11.8) million (2001  $52.6 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | At August 31, 2002 the Companys share of undistributed earnings of Network
TEN was NIL, (August 31, 2001  $101.9 million). The Company estimates that
the market value of the Companys investment in Network TEN, based on quoted
market rates for Ten Network Holdings Limited at August 31, 2002, was
approximately $842 million (August 31, 2001  $810 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



|4. |  | OTHER INVESTMENTS
|-- |  | -----------------

|                                         |           |                           |         |       |        |           |         |        |         |           |         |        |         |        |         |  |        | 
|---------------------------------------- | --------- | ------------------------- | ------- | ----- | ------ | --------- | ------- | ------ | ------- | --------- | ------- | ------ | ------- | ------ | ------- |  | ------ | 
|                                         |           |                           |         | 2002  |        | 2001     
|                                         |           |                           |         |       |        |          
|                                         |           |                           |         |       |        |           |         | Market |         |           |         |        |         | Market
|                                         |           |                           |         | Cost  |        | Value (1) |         | Cost   |         | Value (1)
|                                         |           |                           |         | $000  |        | $000      |         | $000   |         | $000     
|                                         |           |                           |         |       |        |           |         |        |         |          
|Investments in publicly traded companies |           |                           |         |       |        |           |         |        |         |           |         |        |         |        |         | 
|                                         |  at cost |                           |         |       |        |           |         |        |         |           |         |        |         |        |         |  |       
|                                         |           | Ulster Television plc (2) |         |       | 92,006 |           |         |        | 148,340 |           |         |        | 92,006  |        |         |  | 95,109 | 
|                                         |           | Other                     |         |       | 59,160 |           |         |        | 52,355  |           |         |        | 118,741 |        |         |  | 73,781 | 
|                                         |           |                           |         |       |        |           |         |        |         |           |         |        |         |        |         | 
|                                         |           |                           | 151,166 |       |        |           | 200,695 |        |         |           | 210,747 |        |         |        | 168,890 | 
|                                         |           |                           |         |       |        |           |         |        |         |           |         |        |         |        |         | 
|Investments in private companies         |           |                           |         |       |        |           |         |        |         |           |         |        |         |        |         | 
|                                         |  at cost |                           |         | 8,602 |        |           |         |        |         |           |         | 34,052 |         |        |         |  |       
|Investments  on an equity basis         |           |                           | 2,593   |       |        |           |         |        |         |           | 170,614 |        |         |        |         | 
|                                         |           |                           |         |       |        |           |         |        |         |           |         |        |         |        |         | 
|                                         |           |                           | 162,361 |       |        |           |         |        |         |           | 415,413 |        |         |        |         | 
|                                         |           |                           |         |       |        |           |         |        |         |           |         |        |         |        |         | 

During 2002 the Company wrote down the value of various other investments by
$85.5 million to reflect the non-temporary decline in market value.



---

|(1) |  | Market values are based on quoted closing prices at August 31. The Company
considers the excess of cost over market value to be a temporary decline in
value, the result of short term market volatility.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20



---



##### 



|(2) |  | The Companys 29.9% equity interest is accounted for at cost, as the
Company has not been successful in its attempts to gain board representation or
to influence UTVs management.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | INVESTMENT IN FILM AND TELEVISION PROGRAMS
|-- |  | ------------------------------------------

|                                              |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|--------------------------------------------- |  | ------- | ------ | --------- |  | ------- | ------- | --------- |  |  | ------ |  |  |  | ------- | 
|                                              |  | 2002    |        | 2001     
|                                              |  |         |        |          
|                                              |  | Current |        | Long term |  | Current |         | Long term
|                                              |  | $000    |        | $000      |  | $000    |         | $000     
|Broadcast rights (1)                          |  |         | 98,096 |           |  |         | 23,172  |           |  |  | 96,385 |  |  |  | 8,335   | 
|Non-theatrical
films and
television
programs: |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|Released (1)                                  |  |         |       |           |  |         | 112,297 |           |  |  |       |  |  |  | 109,312 | 
|Acquired library (1)                          |  |         |       |           |  |         | 90,314  |           |  |  |       |  |  |  | 123,018 | 
|Programs in progress                          |  |         |       |           |  |         | 50,779  |           |  |  |       |  |  |  | 52,929  | 
|Development costs                             |  |         |       |           |  |         | 1,520   |           |  |  |       |  |  |  | 2,311   | 
|Theatrical Films:                             |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|Released (1)                                  |  |         |       |           |  |         | 37,029  |           |  |  |       |  |  |  | 24,416  | 
|Acquired library (1)                          |  |         |       |           |  |         | 661     |           |  |  |       |  |  |  | 979     | 
|Films in progress                             |  |         |       |           |  |         |        |           |  |  |       |  |  |  | 32,666  | 
|Development costs                             |  |         |       |           |  |         | 1,404   |           |  |  |       |  |  |  | 2,028   | 
|                                              |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|                                              |  |         | 98,096 |           |  |         | 317,176 |           |  |  | 96,385 |  |  |  | 355,994 | 
|                                              |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 



---

|(1) |  | Net of accumulated amortization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company expects that 51% of the unamortized cost of released film and
television programs will be amortized during the year ended August 31,
2003. The Company expects that 77% of the unamortized cost of released
film and television programs will be amortized during the three year
period ended August 31, 2005. The Company expects that over 80% of the
amounts of all such programming will be amortized by August 31, 2006. The
Company expects that acquired libraries will be fully amortized in 18
years. The Company expects that $1.4 million of participation liabilities
will be paid during the year ended August 31, 2003.
|   
|    |  | The Company has entered into various agreements for the right to broadcast
certain feature films and syndicated television programs in the future.
These agreements, which range in term from one to five years, generally
commit the Company to acquire specific programs or films or certain levels
of future productions. The acquisition of these additional broadcast
rights is contingent on the actual production and/or the airing of the
programs or films. Management estimates that these agreements will result
in future annual broadcast rights expenditures of $250 million to $277
million.                                      
|   
|    |  | In addition, the Company has entered into various agreements to acquire
investments in film and television programs amounting to $17.5 million
(US$11.2 million) (2001  $55.7 million (US$36.0 million)). Subsidiaries
of the Company have provided financial guarantees on certain credit
facilities arranged for the acquisition of film and television programs.
An amount of $17.7 million (US$11.4 million) (2001  $18.6 million
(US$12.0 million)) has been guaranteed, in addition to the guarantee of
certain interest obligations on such facilities.                                                                                 

21



---



##### 





|6. |  | PROPERTY, PLANT AND EQUIPMENT
|-- |  | -----------------------------

|                                |  |      |         |              |  |             |         |  |  |  |         | 
|------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------- |  |  |  | ------- | 
|                                |  | 2002
|                                |  |     
|                                |  |      |         |              |  | Accumulated |         |  |  | 
|                                |  | Cost |         | amortization |  | Net        
|                                |  | $000 |         | $000         |  | $000       
|Land                            |  |      | 60,002  |              |  |             |        |  |  |  | 60,002  | 
|Buildings                       |  |      | 170,302 |              |  |             | 36,630  |  |  |  | 133,672 | 
|Machinery and equipment         |  |      | 669,265 |              |  |             | 201,293 |  |  |  | 467,972 | 
|Leasehold and land
improvements |  |      | 29,293  |              |  |             | 11,715  |  |  |  | 17,578  | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 
|                                |  |      | 928,862 |              |  |             | 249,638 |  |  |  | 679,224 | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 

|                                |  |      |         |              |  |             |         |  |  |  |         | 
|------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------- |  |  |  | ------- | 
|                                |  | 2001
|                                |  |     
|                                |  |      |         |              |  | Accumulated |         |  |  | 
|                                |  | Cost |         | amortization |  | Net        
|                                |  | $000 |         | $000         |  | $000       
|Land                            |  |      | 61,409  |              |  |             |        |  |  |  | 61,409  | 
|Buildings                       |  |      | 212,497 |              |  |             | 35,426  |  |  |  | 177,071 | 
|Machinery and equipment         |  |      | 604,551 |              |  |             | 146,108 |  |  |  | 458,443 | 
|Leasehold and land
improvements |  |      | 18,550  |              |  |             | 7,662   |  |  |  | 10,888  | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 
|                                |  |      | 897,007 |              |  |             | 189,196 |  |  |  | 707,811 | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 



|7. |  | INTANGIBLES AND GOODWILL
|-- |  | ------------------------

|                      |  |      |           |              |  |             |         |  |  |  |           | 
|--------------------- |  | ---- | --------- | ------------ |  | ----------- | ------- |  |  |  | --------- | 
|                      |  | 2002
|                      |  |     
|                      |  |      |           |              |  | Accumulated |         |  |  | 
|                      |  | Cost |           | Amortization |  | Net        
|                      |  | $000 |           | $000         |  | $000       
|Intangibles           |  |      |           |              |  |             |         |  |  |  |           | 
|Finite life:          |  |      |           |              |  |             |         |  |  |  |           | 
|Circulation and other |  |      | 140,000   |              |  |             | 26,972  |  |  |  | 113,028   | 
|Indefinite life:      |  |      |           |              |  |             |         |  |  |  |           | 
|Broadcast licences    |  |      | 706,031   |              |  |             | 81,091  |  |  |  | 624,940   | 
|Newspaper mastheads   |  |      | 365,000   |              |  |             | 6,510   |  |  |  | 358,490   | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 
|                      |  |      | 1,071,031 |              |  |             | 87,601  |  |  |  | 983,430   | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 
|Total intangibles     |  |      | 1,211,031 |              |  |             | 114,573 |  |  |  | 1,096,458 | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 
|Goodwill              |  |      | 2,753,967 |              |  |             | 122,868 |  |  |  | 2,631,099 | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 

22



---



##### 



|                      |  |      |           |              |  |             |         |  |  |  |           | 
|--------------------- |  | ---- | --------- | ------------ |  | ----------- | ------- |  |  |  | --------- | 
|                      |  | 2001
|                      |  |     
|                      |  |      |           |              |  | Accumulated |         |  |  | 
|                      |  | Cost |           | Amortization |  | Net        
|                      |  | $000 |           | $000         |  | $000       
|Intangibles           |  |      |           |              |  |             |         |  |  |  |           | 
|Finite life:          |  |      |           |              |  |             |         |  |  |  |           | 
|Circulation and other |  |      | 129,300   |              |  |             | 9,471   |  |  |  | 119,829   | 
|Indefinite life:      |  |      |           |              |  |             |         |  |  |  |           | 
|Broadcast licences    |  |      | 726,574   |              |  |             | 89,481  |  |  |  | 637,093   | 
|Newspaper mastheads   |  |      | 330,000   |              |  |             | 6,510   |  |  |  | 323,490   | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 
|                      |  |      | 1,056,574 |              |  |             | 95,991  |  |  |  | 960,583   | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 
|Total intangibles     |  |      | 1,185,874 |              |  |             | 105,462 |  |  |  | 1,080,412 | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 
|Goodwill              |  |      | 2,958,716 |              |  |             | 130,694 |  |  |  | 2,828,022 | 
|                      |  |      |           |              |  |             |         |  |  |  |           | 



|(a) |  | The divestiture of CKVU resulted in decreases in broadcast licences
and goodwill of $22.4 million and $44.8 million respectively.                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Sale of community newspapers and related assets in Atlantic Canada
and Saskatchewan resulted in a decrease of goodwill of $187.9 million.                                                            
|   
|(c) |  | Acquisition of the remaining 50% interest in the National Post
resulted in a net increase of goodwill of $32.4 million.                                                                              
|   
|(d) |  | Changes in the currency translation rates used to translate the balances
of goodwill and broadcast licences resulted in net increases in the balances
of $2.2 million and $10.3 million respectively.
|   
|(e) |  | The resolution of an income tax issue related to a period prior to an
acquisition resulted in a $13.4 million reduction in goodwill.                                                                 
|   
|(f) |  | Amortization of circulation and other intangibles was $17.5 million
for the year ended August 31, 2002.                                                                                              
|   
|    |  | 23                                                                                                                                                                                                   
|   
|8.  |  | LONG TERM DEBT                                                                                                                                                                                       

|                                                    |  |          |        |      |  |          |           |      |  |  |        |   |  |  |           |  
|--------------------------------------------------- |  | -------- | ------ | ---- |  | -------- | --------- | ---- |  |  | ------ | - |  |  | --------- | -
|                                                    |  | Interest |        | 2002 |  | Interest |           | 2001
|                                                    |  | Rate (1) |        | $000 |  | Rate (1) |           | $000
|Term bank loans(2)                                  |  |          | 9.73   | %    |  |          | 1,791,938 |      |  |  | 9.14   | % |  |  | 2,286,018 |  
|Senior subordinated notes(3)                        |  |          | 7.8    | %    |  |          | 705,700   |      |  |  | 9.08   | % |  |  | 703,585   |  
|Term loans US$17,162
(2001  US$26,329) (4)         |  |          | 4.04   | %    |  |          | 26,758    |      |  |  | 6.40   | % |  |  | 40,691    |  
|Term and demand loan 21,375
(2001 - IRE£16,505)(5) |  |          | 5.8    | %    |  |          | 32,686    |      |  |  | 5.32   | % |  |  | 29,486    |  
|Term and demand loan
(2001 - NZ$7,275)              |  |          |       |      |  |          |          |      |  |  | 6.50   | % |  |  | 4,938     |  
|Note payable due May, 2003(6)                       |  |          | 3.7    | %    |  |          | 4,250     |      |  |  | 3.25   | % |  |  | 4,250     |  
|Junior subordinated notes(7)                        |  |          | 12.125 | %    |  |          | 948,584   |      |  |  | 12.125 | % |  |  | 842,794   |  
|                                                    |  |          |        |      |  |          |           |      |  |  |        |   |  |  |           |  
|Long term debt                                      |  |          |        |      |  |          | 3,509,916 |      |  |  |        |   |  |  | 3,911,762 |  
|Less portion due within one year                    |  |          |        |      |  |          | (172,753  | )    |  |  |        |   |  |  | (116,500  | )
|                                                    |  |          |        |      |  |          |           |      |  |  |        |   |  |  |           |  
|Long term portion                                   |  |          |        |      |  |          | 3,337,163 |      |  |  |        |   |  |  | 3,795,262 |  
|                                                    |  |          |        |      |  |          |           |      |  |  |        |   |  |  |           |  

(1) The weighted average interest rate gives effect to interest rate
swaps.

(2) Credit facilities provide for revolving and term loans in the maximum
amounts of $600,000,000 and $1,796,500,000 respectively. At August 31,
2002 the Company had drawn on availabilities under all of its term
facilities, including U.S. dollar loans of US$705,765,000 and had no
amounts drawn under revolving facilities. The revolving credit facility
matures in November 2006. The amount of credit available under the
$1,796,500,000 term facilities decreases periodically until maturity
between November 2006 and May 2009. Additional term facilities of
$15,000,000, of which no amount was drawn at August 31, 2002, mature in
August 2005. The loans bear interest at floating rates, and are
collateralized by certain assets of the Company.

Up to $30,000,000 of the revolving credit facility is available on an
operating basis, of which no amount was utilized at August 31, 2002.

(3) The senior subordinated notes mature on May 15, 2011, bear interest at
10.625% and include loans of US$425,000,000 and Canadian dollar loans of
$60,724,000. Most of the Canadian dollar loans are held by the majority
shareholder of the Company. The notes rank junior to the Companys senior
credit facility and are guaranteed by certain subsidiaries of the Company.

(4) Consists of term bank loans with maturity dates commencing October
2002 to December 2003. The debt bears interest at floating rates of LIBOR
+ 2.0% and is collateralized by the Companys rights to certain film and
television programs including an assignment of accounts receivable and all
expected future revenues from exploitation of the financed film and
television programs.

(5) These credit facilities provide for demand bank loans at August 31,
2002 in the maximum amount of 47,500,000 (2001  IRE£46,086,000). The
debt bears interest at floating rates and is secured by a letter of credit
provided by the Company.

(6) Note payable is due to a related party. The debt bears interest at
prime less 2% and is unsecured.

24



---



##### 



(7) The junior subordinated notes mature in November 2010, bear interest
at a fixed rate of 12.125%, and are redeemable at par until May 2003. At
the Companys option, interest payments to November 2005 may be paid in
cash, the issuance of additional notes, or subject to conditions, the
issuance of non-voting shares of the Company. The notes rank junior to
senior debt and are collateralized by way of assets of certain
subsidiaries of the Company. The notes include $104,676,928 in notes
issued during 2002 in satisfaction of interest as well as an accrual of
$9,977,511 for notes to be issued in January 2003, (2001  $67,082,427 and
$8,864,781 respectively).

The Company has entered into various cross currency interest rate and
interest rate swaps resulting in fixed interest costs on its senior
indebtedness, in the principal amount of $1,796,500,000 at August 31, 2002
at rates ranging from 5.7% to 6.63%, plus a margin, for terms matching the
maturity of the loans. (At August 31, 2001 the Company had fixed
$1,884,000,000 at interest rates ranging from 5.7% to 6.73%, plus a
margin). In addition, the Company has entered into swaps resulting in
floating rates on the US$425,000,000 senior subordinated notes.

The Company is subject to covenants under certain of the credit facilities
referred to above, including thresholds for leverage and interest
coverage, and is also subject to certain restrictions under negative
covenants.

Principal payments of long term debt, based on terms existing at August
31, 2002 over the next five years, are:

|                       |  |  |      |  |  |      |         | 
|---------------------- |  |  | ---- |  |  | ---- | ------- | 
|                       |  |  |      |  |  | $000
|Year ending August 31, |  |  | 2003 |  |  |      | 172,753 | 
|                       |  |  | 2004 |  |  |      | 141,190 | 
|                       |  |  | 2005 |  |  |      | 166,113 | 
|                       |  |  | 2006 |  |  |      | 204,800 | 
|                       |  |  | 2007 |  |  |      | 192,027 | 

In addition to the facilities described above, the Company has additional
operating loan facilities payable on demand of NZ$5,000,000 at floating
rates. As at August 31, 2002, the Companys indebtedness under these
facilities was NIL (2001  $728,000).



|9. |  | BUSINESS COMBINATION RESTRUCTURING ACCRUALS
|-- |  | -------------------------------------------

At August 31, 2000, the Company had restructuring accruals of $113.1
million related to the acquisition and integration of WIC Western
International Communications Ltd. (WIC). This balance was made up of
approximately $75 million in required regulatory benefits, payable over a
6-year period, $12.5 million in severance costs, $10.0 million related to
integration and rebranding of WIC and $15.6 million in other restructuring
costs.

During 2001, the Company recorded restructuring accruals of $43.0 million
related to the acquisition and restructuring of its publishing operations.
Restructuring activities include the centralization of certain call
centres, integration of the Companys interactive and news and editorial
operations, and centralization of business, finance and information
technology functions. This balance was made up of $23.8 million in
involuntary severance costs, and $19.2 million in other restructuring
costs.

In the year ended August 31, 2002, the Company established a restructuring
accrual of $7.0 million related to its acquisition and restructuring of
the National Post. This balance is primarily related to involuntary
severance costs and contract cancellation costs.

25



---



##### 



For the year ended August 31 2002, expenditures charged to the
restructuring accruals were $43.9 million (August 31, 2001- $19.5
million). As at August 31, 2002, an aggregate balance of $99.7 million
remains accrued for future expenditures.



|10. |  | CAPITAL STOCK
|--- |  | -------------

Authorized

Authorized capital consists of an unlimited number of preference shares
issuable in series, multiple voting shares, subordinate voting shares and
non-voting shares.

The multiple voting shares, the subordinate voting shares and the
non-voting shares rank equally on a per share basis in respect of
dividends and distributions of capital, and are subordinate to the
preference shares. Subordinate voting shares carry one vote per share,
and multiple voting shares carry ten votes per share. Non-voting shares
do not vote, except at meetings where the holders of such shares would be
entitled, by law, to vote separately as a class.

Multiple voting shares are convertible into subordinate voting shares and
non-voting shares on a one-for-one basis at any time at the option of the
holder. Subordinate voting shares are convertible into non-voting shares
on a one-for-one basis at any time at the option of the holder.
Non-voting shares are convertible into subordinate voting shares on a
one-for-one basis provided the holder is Canadian.

Series 1 preference shares carry 19 votes per share, and carry
preferential votes pertaining to the election of up to two directors of
the Company. Each series 1 preference shares is convertible, at the
option of the holder, into 0.15 subordinate voting or non-voting shares.

Series 2 preference shares were issued on the amalgamation of subsidiaries
of the Company, including CanWest Broadcasting Ltd. and are held by the
former minority shareholders of CanWest Broadcasting Ltd. Series 2
preference shares are not eligible to vote. Series 2 preference shares
are, at the option of the Company, redeemable for cash, or convertible to
subordinate voting or non-voting shares based on the market value of the
subordinate voting or non-voting shares at the date of conversion. The
Companys articles of incorporation state that in the event the Company
does not redeem or convert the series 2 preference shares within a period
of twelve months following the date on which the sale proceeds of CKVU are
conclusively determined, they will convert automatically. The Company
expects the redemption or conversion of the series 2 preference shares to
occur within the next fiscal year. Should the series 2 preference shares
be converted, a significant dilutive effect would occur. The redemption
price or conversion value of the shares is determined in accordance with a
formula contained in the articles. The formula amount is based, among
other things, on the proceeds of the sale of CKVU (net of costs and
inherent tax), the revenue of the Manitoba and Saskatchewan television
stations for the twelve months ending October 31, 2001, and the value of
certain other assets. The redemption or conversion price has not yet been
finally determined, but is estimated by the Company at August 31, 2002, to
be $54.7 million.

26



---



##### 



The series 1 and 2 preference shares are not entitled to dividends and
distributions in the normal course or in respect of a liquidation or
wind-up and have no right to vote separately as a class.

|                                                         |  |      |         |      |  |  |         | 
|-------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | 
|                                                         |  | 2002 |         | 2001
|Issued                                                   |  | $000 |         | $000
|76,785,976 (2001 - 76,785,976)
multiple voting shares    |  |      | 3,199   |      |  |  | 3,199   | 
|98,371,658 (2001  70,545,434)
subordinate voting shares |  |      | 816,418 |      |  |  | 419,583 | 
|1,903,401 (2001  29,308,918)
non-voting shares          |  |      | 26,805  |      |  |  | 417,375 | 
|Nil (2001  2,700,000)
Series 1 preference shares        |  |      |        |      |  |  | 6,156   | 
|21,783 (2001  21,783)
Series 2 preference shares        |  |      | 50,000  |      |  |  | 50,000  | 
|                                                         |  |      |         |      |  |  |         | 
|                                                         |  |      | 896,422 |      |  |  | 896,313 | 
|                                                         |  |      |         |      |  |  |         | 

27



---



##### 



Changes in outstanding share capital during the two years ended August 31, 2002 were as follows:

|                                   |                                    |                                                  |  |            |             |        |  |         |          |  
|---------------------------------- | ---------------------------------- | ------------------------------------------------ |  | ---------- | ----------- | ------ |  | ------- | -------- | -
|                                   |                                    |                                                  |  | Number of  |             | Amount
|                                   |                                    |                                                  |  | shares     |             | $000  
|Multiple voting share capital:     |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2000          |                                                  |  | 78,040,908 |             |        |  | 3,252   |         
|                                   | Changes pursuant to:               |                                                  |  |            |             |        |  |         |         
|                                   |                                    | Conversion to non-voting shares                  |  |            | (1,254,932  | )      |  |         | (53      | )
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2001 and 2002 |                                                  |  | 76,785,976 |             |        |  | 3,199   |         
|                                   |                                    |                                                  |  |            |             |        |  |        
|Subordinate voting share capital:  |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2000          |                                                  |  | 69,395,035 |             |        |  | 394,050 |         
|                                   | Changes pursuant to:               |                                                  |  |            |             |        |  |         |         
|                                   |                                    | Share purchase plans                             |  |            | 69,502      |        |  |         | 836      |  
|                                   |                                    | Exercise of stock options                        |  |            | 195,197     |        |  |         | 735      |  
|                                   |                                    | Dividend reinvestment plan                       |  |            | 165,434     |        |  |         | 2,344    |  
|                                   |                                    | Stock dividend                                   |  |            | 760,917     |        |  |         | 18,050   |  
|                                   |                                    | Conversion to non-voting shares  net            |  |            | (40,651     | )      |  |         | 3,568    |  
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2001          |                                                  |  | 70,545,434 |             |        |  | 419,583 |         
|                                   | Changes pursuant to:               |                                                  |  |            |             |        |  |         |         
|                                   |                                    | Share purchase plans                             |  |            | 6,077       |        |  |         | 66       |  
|                                   |                                    | Exercise of stock options                        |  |            | 9,645       |        |  |         | 43       |  
|                                   |                                    | Redeemed fractions                               |  |            | (11         | )      |  |         |         |  
|                                   |                                    | Conversion from series 1 preference share        |  |            | 405,000     |        |  |         | 6,156    |  
|                                   |                                    | Conversion from non-voting shares  net          |  |            | 27,405,513  |        |  |         | 390,570  |  
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2002          |                                                  |  | 98,371,658 |             |        |  | 816,418 |         
|                                   |                                    |                                                  |  |            |             |        |  |        
|Non-voting share capital:          |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2000          |                                                  |  | 2,607,837  |             |        |  | 22,958  |         
|                                   | Changes pursuant to:               |                                                  |  |            |             |        |  |         |         
|                                   |                                    | Shares issued as consideration in an acquisition |  |            | 24,300,000  |        |  |         | 369,360  |  
|                                   |                                    | Conversion from multiple voting shares           |  |            | 1,254,932   |        |  |         | 53       |  
|                                   |                                    | Stock dividend                                   |  |            | 1,100,082   |        |  |         | 28,475   |  
|                                   |                                    | Dividend reinvestment plan                       |  |            | 5,416       |        |  |         | 97       |  
|                                   |                                    | Conversion from subordinate voting shares  net  |  |            | 40,651      |        |  |         | (3,568   | )
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2001          |                                                  |  | 29,308,918 |             |        |  | 417,375 |         
|                                   | Changes pursuant to:               |                                                  |  |            |             |        |  |         |         
|                                   |                                    | Redeemed fractions                               |  |            | (4          | )      |  |         |         |  
|                                   |                                    | Conversion to subordinate voting shares  net    |  |            | (27,405,513 | )      |  |         | (390,570 | )
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2002          |                                                  |  | 1,903,401  |             |        |  | 26,805  |         
|                                   |                                    |                                                  |  |            |             |        |  |        
|Series 1 preference share capital: |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2000          |                                                  |  |           |             |        |  |        |         
|                                   |                                    | Shares issued as consideration in an acquisition |  |            | 2,700,000   |        |  |         | 6,156    |  
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2001          |                                                  |  | 2,700,000  |             |        |  | 6,156   |         
|                                   |                                    | Conversion to subordinate voting shares          |  |            | (2,700,000  | )      |  |         | (6,156   | )
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2002          |                                                  |  |           |             |        |  |        |         
|                                   |                                    |                                                  |  |            |             |        |  |        
|Series 2 preference share capital: |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2000          |                                                  |  |           |             |        |  |        |         
|                                   |                                    | Shares issued as consideration in an acquisition |  |            | 21,783      |        |  |         | 50,000   |  
|                                   |                                    |                                                  |  |            |             |        |  |        
|                                   | Balance  August 31, 2001 and 2002 |                                                  |  | 21,783     |             |        |  | 50,000  |         
|                                   |                                    |                                                  |  |            |             |        |  |        

28



---



##### 



Share Compensation Plans

The Companys board of directors has approved share compensation plans,
the purpose of which is to provide employees and certain directors of the
Company and its subsidiaries with the opportunity to participate in the
growth and development of the Company through the granting of options and
share purchase loans. At any time, the number of subordinate voting and
non-voting shares reserved and set aside for purposes of the plans may not
exceed 10% of the issued shares of the Company.

Options vest over a five or six-year period, are fully exercisable on
vesting and expire ten years after issuance, except that under certain
specified conditions the options vest and become exercisable immediately.
The exercise price represents the market trading price at the date on
which the option was granted.

Under management and employee share purchase plans, employees may purchase
subordinate voting shares or non-voting shares from treasury at the market
trading price using non-interest bearing short term loans provided by the
Company. The shares are held as collateral by a trustee until the loans
are repaid.

Changes in outstanding options to purchase subordinate voting shares or
non-voting shares for the two years ended August 31 were as follows:

|                                       |                   |  |           |         |       |  |         |       |       |  |           |          |         |  |       |       | 
|-------------------------------------- | ----------------- |  | --------- | ------- | ----- |  | ------- | ----- | ----- |  | --------- | -------- | ------- |  | ----- | ----- | 
|                                       |                   |  | 2002      |         | 2001 
|                                       |                   |  |           |         |      
|                                       |                   |  |           |         |       |  | Average |       |       |  |           |          | Average
|                                       |                   |  | Options   |         | Price |  | Options |       | Price
|Options outstanding, beginning of year |                   |  | 1,646,321 |         |       |  | 15.75   |       |       |  | 1,651,792 |          |         |  | 14.52 |      
|Changes pursuant to:                   |                   |  |           |         |       |  |         |       |       |  |           |          |         |  |       |      
|                                       | Options granted   |  |           | 233,458 |       |  |         | 11.52 |       |  |           | 240,440  |         |  |       | 14.66 | 
|                                       | Options exercised |  |           | (9,645  | )     |  |         | 4.30  |       |  |           | (195,197 | )       |  |       | 3.77  | 
|                                       | Options expired   |  |           | (50,866 | )     |  |         | 16.68 |       |  |           | (50,714  | )       |  |       | 16.88 | 
|                                       |                   |  |           |         |       |  |         |       |       |  |           |          |         |  |       |      
|Options outstanding, end of year       |                   |  | 1,819,268 |         |       |  | 15.24   |       |       |  | 1,646,321 |          |         |  | 15.75 |      
|                                       |                   |  |           |         |       |  |         |       |       |  |           |          |         |  |       |      

The following options to purchase
subordinate voting shares or non-voting shares were outstanding and exercisable as at August 31, 2002:

|        |  |          |              |        |  |             |      |             |  |  |           |  |  |  |           | 
|------- |  | -------- | ------------ | ------ |  | ----------- | ---- | ----------- |  |  | --------- |  |  |  | --------- | 
|Year    |  | Exercise |              | Expiry |  | Number      |      | Number     
|Granted |  | Price    |              | Date   |  | Outstanding |      | Exercisable
|1993    |  | $        | 2.13         |        |  |             | 2003 |             |  |  | 9,651     |  |  |  | 9,651     | 
|1994    |  | $        | 3.53         |        |  |             | 2004 |             |  |  | 7,923     |  |  |  | 7,923     | 
|1995    |  | $        | 4.54         |        |  |             | 2005 |             |  |  | 12,024    |  |  |  | 12,024    | 
|1996    |  | $        | 7.12-$12.76  |        |  |             | 2006 |             |  |  | 551,870   |  |  |  | 551,870   | 
|1997    |  | $        | 14.07-$22.22 |        |  |             | 2007 |             |  |  | 150,466   |  |  |  | 150,466   | 
|1998    |  | $        | 22.67-$25.67 |        |  |             | 2008 |             |  |  | 149,332   |  |  |  | 140,050   | 
|1999    |  | $        | 18.70-$21.14 |        |  |             | 2009 |             |  |  | 62,783    |  |  |  | 41,557    | 
|2000    |  | $        | 16.00-$16.79 |        |  |             | 2010 |             |  |  | 411,551   |  |  |  | 170,644   | 
|2001    |  | $        | 12.03-$15.20 |        |  |             | 2011 |             |  |  | 233,138   |  |  |  | 52,505    | 
|2002    |  | $        | 8.14-$12.90  |        |  |             | 2012 |             |  |  | 230,530   |  |  |  | 158,106   | 
|        |  |          |              |        |  |             |      |             |  |  |           |  |  |  |           | 
|        |  |          |              |        |  |             |      |             |  |  | 1,819,268 |  |  |  | 1,294,796 | 
|        |  |          |              |        |  |             |      |             |  |  |           |  |  |  |           | 

29



---



##### 



Dividend Reinvestment Plan

The Company has established a dividend reinvestment plan. Under the terms
of this plan, shareholders may, under certain conditions, apply their cash
dividends to the purchase of shares from treasury at a price equal to 95%
of the average market trading price of the shares.



|11. |  | CUMULATIVE TRANSLATION ADJUSTMENTS
|--- |  | ----------------------------------

The cumulative foreign currency translation adjustments account reflects
the net changes in the respective book values of the Companys investments
in self-sustaining foreign operations due to exchange rate fluctuations
since the respective dates of their acquisition or start-up.

The changes in this account arise from changes in the Australian, New
Zealand, Irish, Euro, and United States currencies relative to the
Canadian currency, and changes in the Companys net investment in the book
values of international operations.

Changes in this account were as follows:

|                                                                                                                              |  |      |         |      |  |  |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                                                                                              |  | 2002 |         | 2001
|                                                                                                                              |  | $000 |         | $000
|Deferred loss, beginning of year                                                                                              |  |      | 69,017  |      |  |  | 87,728  |  
|Deferred foreign currency gain during the year                                                                                |  |      | (26,483 | )    |  |  | (11,511 | )
|Realization of translation loss due to distributions                                                                          |  |      | (1,000  | )    |  |  | (7,200  | )
|                                                                                                                              |  |      |         |      |  |  |         |  
|Deferred loss, end of year                                                                                                    |  |      | 41,534  |      |  |  | 69,017  |  
|                                                                                                                              |  |      |         |      |  |  |         |  
|                                                                                                                             
|The balance of cumulative translation adjustments at the end of the year
represents net unrealized losses (gains) as follows:
|                                                                                                                             
|                                                                                                                              |  | 2002 |         | 2001
|                                                                                                                              |  | $000 |         | $000
|Australian dollar                                                                                                             |  |      | 8,120   |      |  |  | 19,759  |  
|New Zealand dollar                                                                                                            |  |      | 40,266  |      |  |  | 55,467  |  
|Irish punt                                                                                                                    |  |      |        |      |  |  | (932    | )
|Euro                                                                                                                          |  |      | 272     |      |  |  |        |  
|United States dollar                                                                                                          |  |      | (7,124  | )    |  |  | (5,277  | )
|                                                                                                                              |  |      |         |      |  |  |         |  
|                                                                                                                              |  |      | 41,534  |      |  |  | 69,017  |  
|                                                                                                                              |  |      |         |      |  |  |         |  

30



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##### 





|12. |  | INCOME TAXES
|--- |  | ------------

The Companys provision for income taxes reflects an effective income tax rate which differs from the combined Canadian statutory rate as follows:

|                                                                              |  |      |         |      |  |  |         |  
|----------------------------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                                              |  | 2002 |         | 2001
|                                                                              |  | $000 |         | $000
|Income taxes at combined Canadian statutory
rate of 38.7% (2001  41.3%)      |  |      | 11,661  |      |  |  | (16,547 | )
|Non-taxable portion of capital gains                                          |  |      | (17,049 | )    |  |  | (11,716 | )
|Non-deductible amortization expense                                           |  |      | 6,766   |      |  |  | 30,980  |  
|Effect of valuation allowance on future tax assets                            |  |      | 3,090   |      |  |  | 2,490   |  
|Effect of foreign income tax rates differing from
Canadian income tax rates   |  |      | (1,924  | )    |  |  | (995    | )
|Effect of substantively enacted income tax rate
change on future tax balances |  |      |        |      |  |  | (70,573 | )
|Large corporation tax                                                         |  |      | 3,250   |      |  |  | 1,788   |  
|Other                                                                         |  |      | 1,314   |      |  |  | 5,554   |  
|                                                                              |  |      |         |      |  |  |         |  
|Provision for (recovery of) income taxes                                      |  |      | 7,108   |      |  |  | (59,019 | )
|                                                                              |  |      |         |      |  |  |         |  

An analysis of net earnings (loss) before tax by jurisdiction follows:

|                               |  |      |        |      |  |  |         |  
|------------------------------ |  | ---- | ------ | ---- |  |  | ------- | -
|                               |  | 2002 |        | 2001
|                               |  | $000 |        | $000
|Canada                         |  |      | 9,463  |      |  |  | (64,960 | )
|Foreign                        |  |      | 20,671 |      |  |  | 24,894  |  
|                               |  |      |        |      |  |  |         |  
|Net earnings (loss) before tax |  |      | 30,134 |      |  |  | (40,066 | )
|                               |  |      |        |      |  |  |         |  

An analysis of the provision for (recovery of) current and future income taxes by jurisdiction follows:

|                                         |         |  |        |        |      |  |         |         |  
|---------------------------------------- | ------- |  | ------ | ------ | ---- |  | ------- | ------- | -
|                                         |         |  | 2002   |        | 2001
|                                         |         |  | $000   |        | $000
|Current income taxes                     |         |  |        |        |      |  |         |        
|                                         | Canada  |  |        | (2,047 | )    |  |         | 38,059  |  
|                                         | Foreign |  |        | 302    |      |  |         | 203     |  
|                                         |         |  |        |        |      |  |         |        
|                                         |         |  | (1,745 | )      |      |  | 38,262  |        
|                                         |         |  |        |        |      |  |         |        
|Future income taxes                      |         |  |        |        |      |  |         |        
|                                         | Canada  |  |        | 8,703  |      |  |         | (94,819 | )
|                                         | Foreign |  |        | 150    |      |  |         | (2,462  | )
|                                         |         |  |        |        |      |  |         |        
|                                         |         |  | 8,853  |        |      |  | (97,281 | )      
|                                         |         |  |        |        |      |  |         |        
|Provision for (recovery of) income taxes |         |  | 7,108  |        |      |  | (59,019 | )      
|                                         |         |  |        |        |      |  |         |        

31



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##### 



Significant components of the Companys future tax assets and liabilities
are as follows:

|                                                |  |             |         |      |  |  |         |  
|----------------------------------------------- |  | ----------- | ------- | ---- |  |  | ------- | -
|                                                |  | August, 31,
|                                                |  |            
|                                                |  | 2002        |         | 2001
|                                                |  | $000        |         | $000
|Future tax assets                               |  |             |         |      |  |  |         |  
|Non-capital loss carryforwards                  |  |             | 107,909 |      |  |  | 47,984  |  
|Accounts payable and other accruals             |  |             | 45,417  |      |  |  | 63,192  |  
|Pension and post retirement benefits            |  |             |        |      |  |  | 5,660   |  
|Less: Valuation allowance                       |  |             | (61,439 | )    |  |  | (13,329 | )
|                                                |  |             |         |      |  |  |         |  
|Total future tax assets                         |  |             | 91,887  |      |  |  | 103,507 |  
|                                                |  |             |         |      |  |  |         |  
|Future tax liabilities                          |  |             |         |      |  |  |         |  
|Tax depreciation in excess of book
amortization |  |             | 56,407  |      |  |  | 73,504  |  
|Pension obligations                             |  |             | 14,823  |      |  |  |        |  
|Intangible assets                               |  |             | 408,797 |      |  |  | 413,126 |  
|Other assets                                    |  |             | 13,409  |      |  |  | 24,626  |  
|                                                |  |             |         |      |  |  |         |  
|Total future tax liabilities                    |  |             | 493,436 |      |  |  | 511,256 |  
|                                                |  |             |         |      |  |  |         |  
|Net future tax liability                        |  |             | 401,549 |      |  |  | 407,749 |  
|Net current future tax asset                    |  |             | 30,013  |      |  |  | 33,243  |  
|                                                |  |             |         |      |  |  |         |  
|Net long term future tax liability              |  |             | 431,562 |      |  |  | 440,992 |  
|                                                |  |             |         |      |  |  |         |  

As at August 31, 2002 the Company had non capital loss carry forwards for
income tax purposes of $408,061,000, that expire as follows: 2006 -
$2,010,000, 2007  $12,900,000, 2008  $63,919,000, 2009  $128,934
thereafter  $200,298,000.

32



---



##### 





|13. |  | STATEMENTS OF CASH FLOWS
|--- |  | ------------------------

The following amounts comprise the net change in non-cash operating accounts included in the
statements of cash flows:

|                                                                         |  |      |         |      |  |  |         |  
|------------------------------------------------------------------------ |  | ---- | ------- | ---- |  |  | ------- | -
|                                                                         |  | 2002 |         | 2001
|                                                                         |  | $000 |         | $000
|CASH GENERATED (UTILIZED) BY:                                            |  |      |         |      |  |  |         |  
|Accounts receivable                                                      |  |      | 6,415   |      |  |  | 55,986  |  
|Broadcast rights                                                         |  |      | (25,733 | )    |  |  | (55,395 | )
|Inventory                                                                |  |      | 12,342  |      |  |  | (7,342  | )
|Other current assets                                                     |  |      | 1,400   |      |  |  | (5,825  | )
|Other assets                                                             |  |      | 10,379  |      |  |  | 25,121  |  
|Accounts payable and accrued liabilities                                 |  |      | (54,347 | )    |  |  | (35,928 | )
|Income taxes payable                                                     |  |      | (6,724  | )    |  |  | (49,125 | )
|Deferred revenue                                                         |  |      | (18,620 | )    |  |  | 5,046   |  
|Film and program accounts payable                                        |  |      | 19,334  |      |  |  | 16,056  |  
|                                                                         |  |      |         |      |  |  |         |  
|                                                                         |  |      | (55,554 | )    |  |  | (51,406 | )
|                                                                         |  |      |         |      |  |  |         |  
|                                                                        
|The following amounts were paid on account of interest and income taxes:
|                                                                        
|                                                                         |  | 2002 |         | 2001
|                                                                         |  | $000 |         | $000
|Interest                                                                 |  |      | 261,265 |      |  |  | 241,618 |  
|Income taxes                                                             |  |      | 23,961  |      |  |  | 73,796  |  

33



---



##### 





|14. |  | RETIREMENT ASSETS AND OBLIGATIONS                                              
|--- |  | -------------------------------------------------------------------------------
|   
|    |  | Information on the Companys pension and post retirement benefit plans
follows:

|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | ------------------------ |  | ------ | --------- | ------ |  |  | ------- | - |  |  | ------- | -
|                                                                                                                                 |  | Pension benefits |           | Post retirement benefits
|                                                                                                                                 |  |                  |           |                         
|                                                                                                                                 |  | 2002             |           | 2001                     |  | 2002   |           | 2001  
|Plan Assets                                                                                                                      |  | $000's           |           | $000's                   |  | $000's |           | $000's
|Fair value  beginning of year                                                                                                   |  |                  | 220,346   |                          |  |        | 96,351    |        |  |  |        |   |  |  |        |  
|Plan assets acquired                                                                                                             |  |                  | 8,163     |                          |  |        | 132,425   |        |  |  |        |   |  |  |        |  
|Investment income                                                                                                                |  |                  | 3,739     |                          |  |        | (2,444    | )      |  |  |        |   |  |  |        |  
|Employer contributions                                                                                                           |  |                  | 3,699     |                          |  |        | 609       |        |  |  | 400     |   |  |  |        |  
|Employee contributions                                                                                                           |  |                  | 5,800     |                          |  |        | 4,475     |        |  |  |        |   |  |  |        |  
|Benefits, refund of contributions and administrative
Expenses                                                                    |  |                  | (7,027    | )                        |  |        | (11,070   | )      |  |  | (400    | ) |  |  |        |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Fair value  end of year                                                                                                         |  |                  | 234,720   |                          |  |        | 220,346   |        |  |  |        |   |  |  |        |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|The valuation of the plan net assets is based on
market values with unrealized gains and losses
averaged over a five year period |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Plan Obligations                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Accrued benefit obligation  beginning of year                                                                                   |  |                  | 226,361   |                          |  |        | 77,704    |        |  |  | 35,121  |   |  |  | 5,816   |  
|Obligation acquired                                                                                                              |  |                  | 8,084     |                          |  |        | 132,425   |        |  |  |        |   |  |  | 26,927  |  
|Accrued interest on benefits                                                                                                     |  |                  | 18,252    |                          |  |        | 13,814    |        |  |  | 2,503   |   |  |  | 1,959   |  
|Current service cost                                                                                                             |  |                  | 15,174    |                          |  |        | 10,586    |        |  |  | 1,198   |   |  |  | 419     |  
|Past service costs                                                                                                               |  |                  | 11,868    |                          |  |        |          |        |  |  |        |   |  |  |        |  
|Benefits, refund of contributions                                                                                                |  |                  | (7,027    | )                        |  |        | (10,499   | )      |  |  | (400    | ) |  |  |        |  
|Experience loss                                                                                                                  |  |                  | 4,900     |                          |  |        | 2,331     |        |  |  | 2,744   |   |  |  |        |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Accrued benefit obligation  end of year                                                                                         |  |                  | 277,612   |                          |  |        | 226,361   |        |  |  | 41,166  |   |  |  | 35,121  |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|The Companys accrued benefit asset is
determined as follows:                                                                    |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Plan deficit                                                                                                                     |  |                  | (42,892   | )                        |  |        | (6,015    | )      |  |  | (41,166 | ) |  |  | (35,121 | )
|Unamortized net actuarial loss                                                                                                   |  |                  | 41,662    |                          |  |        | 21,069    |        |  |  | 2,752   |   |  |  |        |  
|Unamortized transitional (asset) obligation                                                                                      |  |                  | (5,573    | )                        |  |        | (5,029    | )      |  |  | 4,938   |   |  |  | 5,377   |  
|Unamortized past service costs                                                                                                   |  |                  | 11,542    |                          |  |        |          |        |  |  |        |   |  |  |        |  
|Valuation allowance                                                                                                              |  |                  | (916      | )                        |  |        | (1,002    | )      |  |  |        |   |  |  |        |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Accrued plan asset                                                                                                               |  |                  | 3,823     |                          |  |        | 9,023     |        |  |  | (33,476 | ) |  |  | (29,744 | )
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|The valuation allowance represents the amount of
surplus not recognized on the Companys balance sheet                           |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|The Companys benefit expense is determined as follows:                                                                          |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Current service cost                                                                                                             |  |                  | 15,174    |                          |  |        | 10,586    |        |  |  | 1,198   |   |  |  | 419     |  
|Employee contributions                                                                                                           |  |                  | (5,800    | )                        |  |        | (4,475    | )      |  |  |        |   |  |  |        |  
|Accrued interest on benefits                                                                                                     |  |                  | 18,252    |                          |  |        | 13,814    |        |  |  | 2,503   |   |  |  | 1,959   |  
|Expected return on plan assets                                                                                                   |  |                  | (19,174   | )                        |  |        | (16,451   | )      |  |  |        |   |  |  |        |  
|Amortization of transitional (asset) obligation                                                                                  |  |                  | (358      | )                        |  |        | (358      | )      |  |  | 439     |   |  |  | 439     |  
|Amortization of past service costs                                                                                               |  |                  | 527       |                          |  |        |          |        |  |  |        |   |  |  |        |  
|Amortization of net experience losses                                                                                            |  |                  | 57        |                          |  |        |          |        |  |  |        |   |  |  |        |  
|Changes in valuation allowance                                                                                                   |  |                  | (86       | )                        |  |        | (61       | )      |  |  |        |   |  |  |        |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Benefit expense                                                                                                                  |  |                  | 8,592     |                          |  |        | 3,055     |        |  |  | 4,140   |   |  |  | 2,817   |  
|Employer contribution to the defined
contribution plan                                                                           |  |                  | 1,552     |                          |  |        | 463       |        |  |  |        |   |  |  |        |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Total pension and post retirement benefit expense                                                                                |  |                  | 10,144    |                          |  |        | 3,518     |        |  |  | 4,140   |   |  |  | 2,817   |  
|                                                                                                                                 |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Significant actuarial assumptions in measuring the
Companys accrued benefit obligations are as follows:                         |  |                  |           |                          |  |        |           |        |  |  |         |   |  |  |         |  
|Discount rate                                                                                                                    |  |                  | 6.75-7.25 | %                        |  |        | 7.25      | %      |  |  | 7.25    | % |  |  | 7.00    | %
|Expected long-term rate of return on pension
plan assets                                                                         |  |                  | 7.00-7.25 | %                        |  |        | 7.25-8.00 | %      |  |  | 7.00    | % |  |  | 7.00    | %
|Rate of compensation increase                                                                                                    |  |                  | 3.50-4.00 | %                        |  |        | 4.00      | %      |  |  | 4.00    | % |  |  | 4.00    | %

34



---



##### 





|15. |  | FINANCIAL INSTRUMENTS                          
|--- |  | -----------------------------------------------
|   
|    |  | Financial instruments consist of the following:

|                                            |  |          |           |       |  |          |           |       |  |  |           |  |  |  |           | 
|------------------------------------------- |  | -------- | --------- | ----- |  | -------- | --------- | ----- |  |  | --------- |  |  |  | --------- | 
|                                            |  | 2002     |           | 2001 
|                                            |  |          |           |      
|                                            |  | Carrying |           | Fair  |  | Carrying |           | Fair 
|                                            |  | Value    |           | Value |  | Value    |           | Value
|                                            |  | $000     |           | $000  |  | $000     |           | $000 
|Short term assets                           |  |          | 578,396   |       |  |          | 578,396   |       |  |  | 512,947   |  |  |  | 512,947   | 
|Other investments                           |  |          | 162,361   |       |  |          | 209,515   |       |  |  | 415,413   |  |  |  | 410,838   | 
|Short term liabilities                      |  |          | 629,679   |       |  |          | 629,679   |       |  |  | 591,016   |  |  |  | 591,016   | 
|Long term debt                              |  |          | 3,337,163 |       |  |          | 3,281,163 |       |  |  | 3,795,262 |  |  |  | 3,701,198 | 
|Other long term liabilities                 |  |          | 86,217    |       |  |          | 86,217    |       |  |  | 88,809    |  |  |  | 88,809    | 
|Unrealized net loss on
interest rates swaps |  |          |          |       |  |          | 56,000    |       |  |  |          |  |  |  | 94,064    | 

The fair value of short-term assets and liabilities, which include cash
and short term investments, accounts receivable, income taxes recoverable,
and other assets, bank loans and advances, accounts payable and accrued
liabilities and film and program accounts payable approximate their fair
value due to the short term nature of these financial instruments.

The fair value of other investments is primarily based on quoted market
prices for publicly traded securities, and the most recent purchase
transactions and agreements for non-listed securities.

The fair value of long term debt subject to floating interest rates
approximates the carrying value. The fair value of long term debt,
subject to fixed interest rates, is estimated by discounting future cash
flows, including interest payments, using rates currently available for
debt of similar terms and maturity.

The fair values of other long term liabilities, including business
combination restructuring accruals, and film and television program
accounts payable, approximates their carrying values.

The fair values of unrealized net gains and losses on interest rate and
cross-currency swaps are based on the amounts at which they could be
settled based on estimates of market rates.

Credit risk

The Company is exposed to credit risk, primarily in relation to accounts
receivable. Exposure to credit risk varies due to the concentration of
individual balances with large advertising agencies. The Company performs
regular credit assessments of its customers and provides allowances for
potentially uncollectable accounts receivable.

Interest rate risk

The Company manages its exposure to fluctuations in interest rates through
the use of interest rate and cross currency interest rate swap agreements,
more fully described in note 8.

35



---



##### 





|16. |  | JOINTLY CONTROLLED ENTERPRISE                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The following amounts included in the consolidated financial statements
represent the Companys proportionate interest in TV3 Ireland.

|                              |                       |  |        |        |      |  |        |        |  
|----------------------------- | --------------------- |  | ------ | ------ | ---- |  | ------ | ------ | -
|                              |                       |  | 2002   |        | 2001
|                              |                       |  | $000   |        | $000
|Balance sheets                |                       |  |        |        |      |  |        |       
|Assets                        |                       |  |        |        |      |  |        |       
|                              | Current assets        |  | 9,329  |        |      |  | 7,106  |       
|                              | Long term assets      |  |        | 12,732 |      |  |        | 12,801 |  
|                              |                       |  |        |        |      |  |        |       
|                              |                       |  | 22,061 |        |      |  | 19,907 |       
|                              |                       |  |        |        |      |  |        |       
|Liabilities                   |                       |  |        |        |      |  |        |       
|                              | Current liabilities   |  | 32,906 |        |      |  | 5,700  |       
|                              | Long term liabilities |  |        | 4,643  |      |  |        | 29,486 |  
|                              |                       |  |        |        |      |  |        |       
|                              |                       |  | 37,549 |        |      |  | 35,186 |       
|                              |                       |  |        |        |      |  |        |       
|Statements of earnings        |                       |  |        |        |      |  |        |       
|Revenue                       |                       |  | 25,643 |        |      |  | 9,542  |       
|Expenses                      |                       |  | 24,630 |        |      |  | 8,051  |       
|                              |                       |  |        |        |      |  |        |       
|Net earnings                  |                       |  | 1,013  |        |      |  | 1,491  |       
|                              |                       |  |        |        |      |  |        |       
|Statements of cash flows      |                       |  |        |        |      |  |        |       
|Cash generated (utilized) by: |                       |  |        |        |      |  |        |       
|                              | Operating activities  |  |        | (1,936 | )    |  |        | 207    |  
|                              | Investing activities  |  |        | (130   | )    |  |        | (227   | )
|                              | Financing activities  |  |        | 2,903  |      |  |        | 334    |  
|                              |                       |  |        |        |      |  |        |       
|                              | Net increase in cash  |  |        | 837    |      |  |        | 314    |  
|                              |                       |  |        |        |      |  |        |       

36



---



##### 





|17. |  | COMMITMENTS AND CONTINGENCIES                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------
|   
|(a) |  | The Companys future minimum payments under the terms of its
operating lease commitments for the next five years are as follows:

|     |  |  |            | 
|---- |  |  | ---------- | 
|2003 |  |  | 26,216,987 | 
|2004 |  |  | 23,265,207 | 
|2005 |  |  | 20,926,748 | 
|2006 |  |  | 17,807,462 | 
|2007 |  |  | 15,553,883 | 



|(b) |  | On March 5, 2001, a statement of claim was filed against the Company
and certain of the Companys subsidiaries by CBLs former minority
interests requesting, among other things, that their interests in CBL be
purchased without minority discount. In addition, the claim alleges the
Company wrongfully terminated certain agreements and acted in an
oppressive and prejudicial manner towards the plaintiffs. The lawsuit
seeks damages in excess of $345 million. The Company believes the
allegations are substantially without merit and not likely to have a
material adverse effect on its business, financial condition or results
of operation. The Company intends to vigorously defend this lawsuit.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(c) |  | The Company is involved in various legal matters arising in the
ordinary course of business. The resolution of these matters is not
expected to have a material adverse effect on the Companys financial
position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|18. |  | EVENTS SUBSEQUENT TO AUGUST 31, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | In October 2002, Fireworks Entertainment closed a US$110 million stand
alone credit facility with a syndicate of lenders. This facility was used
to repay existing Fireworks financing of US$26 million and will finance
future growth. The facility is a three-year revolving facility secured by
all assets of Fireworks, and bears interest at LIBOR plus 2.25% to 3.5%.                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Subsequent to the end of the 2002 fiscal year, the Company elected to
redeem all of its outstanding Series 2 Preference Shares recorded at $50.0
million for an aggregate redemption price of $57.7 million. The shares
were redeemed on December 18, 2002, and the Company financed the
redemption through its senior credit facility.                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | In February 2003, the Company sold its interest in community newspapers
and related assets in Southern Ontario for cash proceeds of $193.5
million. The accounting gain on this sale was $20.7 million; assets and
liabilities disposed amounted to $179.6 million (including goodwill of
$157.0 million) and $6.8 million respectively.                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | In April 2003, the Company issued US$200 million in 7.625% senior
unsecured notes due April 15, 2013. The proceeds were used to finance the
repayment of $275 million of obligations under the 12.125% junior
subordinated notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|19. |  | SEGMENTED INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | The Company operates primarily within the publishing, online, broadcasting
and entertainment industries in Canada, New Zealand, Ireland and
Australia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

37



---



##### 





| |  | Each segment reported below operates as a strategic business unit with
separate management. Segment performance is measured primarily on the
basis of operating profit. There are no significant inter-segment
transactions. Segmented information in Canadian dollars is as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|------------------------------------------------------ |  | -------------- | --------- | ------------ |  | ------------- | --------- | --------- |  | ------------ | ------- | ---- |  | ---- | ------- | ---- |  |  | ------ | - |  |  | ------- | --------- |  |  | ------- | - |  |  | --------- | -
|                                                       |  | Publishing and |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         | Corporate |  |  |         |  
|                                                       |  | Online         |           | Broadcasting |  | Entertainment |           | and Other |  | Consolidated
|                                                       |  |                |           |              |  |               |           |           |  |             
|                                                       |  | Canada         |           | Canada       |  | New Zealand   |           | Ireland   |  | Canada       |         |      |  |      |         |      |  | 
|                                                       |  |                |           |              |  | TV            |           | Radio     |  |              |         |      |  |      |         |      |  |  |        |  
|                                                       |  | $000           |           | $000         |  | $000          |           | $000      |  | $000         |         | $000 |  | $000 |         | $000
|Revenue from
external customers                        |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 1,270,336 |              |  |               | 691,888   |           |  |              | 69,079  |      |  |      | 60,724  |      |  |  | 28,317 |   |  |  | 152,439 |           |  |  |        |   |  |  | 2,272,783 |  
|2001                                                   |  |                | 919,923   |              |  |               | 701,027   |           |  |              | 58,436  |      |  |      | 56,864  |      |  |  | 31,056 |   |  |  | 177,469 |           |  |  |        |   |  |  | 1,944,775 |  
|Operating profit
(loss) before
amortization            |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 288,028   |              |  |               | 191,092   |           |  |              | (1,938  | )    |  |      | 16,361  |      |  |  | 7,654  |   |  |  | (743    | )         |  |  | (30,148 | ) |  |  | 470,306   |  
|2001                                                   |  |                | 207,804   |              |  |               | 226,458   |           |  |              | (8,939  | )    |  |      | 14,301  |      |  |  | 2,748  |   |  |  | 13,551  |           |  |  | (14,852 | ) |  |  | 441,071   |  
|Amortization of
intangibles and
goodwill               |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 17,500    |              |  |               |          |           |  |              |        |      |  |      |        |      |  |  |       |   |  |  |        |           |  |  |        |   |  |  | 17,500    |  
|2001                                                   |  |                | 50,504    |              |  |               | 33,645    |           |  |              | 2,246   |      |  |      | 2,834   |      |  |  | 61     |   |  |  | 840     |           |  |  | 29      |   |  |  | 90,159    |  
|Amortization of
capital assets and other               |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 44,986    |              |  |               | 25,924    |           |  |              | 2,574   |      |  |      | 2,086   |      |  |  | 1,869  |   |  |  | 505     |           |  |  | 3,380   |   |  |  | 81,324    |  
|2001                                                   |  |                | 32,649    |              |  |               | 24,195    |           |  |              | 2,731   |      |  |      | 1,919   |      |  |  | 3,046  |   |  |  | 386     |           |  |  | 879     |   |  |  | 65,805    |  
|Financing expenses
(revenue)                           |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 238,521   |              |  |               | 125,170   |           |  |              | 261     |      |  |      | 188     |      |  |  | 1,728  |   |  |  | 15,933  |           |  |  | (5,169  | ) |  |  | 376,632   |  
|2001                                                   |  |                | 227,464   |              |  |               | 113,751   |           |  |              | 104     |      |  |      | 234     |      |  |  | 3,374  |   |  |  | 16,618  |           |  |  | (4,790  | ) |  |  | 356,755   |  
|Investment gains
net of writedowns
and dividend
income |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                |          |              |  |               |          |           |  |              |        |      |  |      |        |      |  |  |       |   |  |  |        |           |  |  | 35,284  |   |  |  | 35,284    |  
|2001                                                   |  |                |          |              |  |               |          |           |  |              |        |      |  |      |        |      |  |  |       |   |  |  |        |           |  |  | 31,582  |   |  |  | 31,582    |  
|Earnings (loss)
before taxes                           |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | (12,979   | )            |  |               | 31,898    |           |  |              | (4,898  | )    |  |      | 14,087  |      |  |  | 3,809  |   |  |  | (17,181 | )         |  |  | 15,398  |   |  |  | 30,134    |  
|2001                                                   |  |                | (100,046  | )            |  |               | 42,536    |           |  |              | (14,298 | )    |  |      | 9,314   |      |  |  | (3,733 | ) |  |  | (4,292  | )         |  |  | 30,453  |   |  |  | (40,066   | )
|Capital expenditures                                   |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 17,063    |              |  |               | 14,392    |           |  |              | 1,518   |      |  |      | 1,207   |      |  |  | 479    |   |  |  | 396     |           |  |  | 18,283  |   |  |  | 53,338    |  
|2001                                                   |  |                | 21,932    |              |  |               | 16,465    |           |  |              | 2,163   |      |  |      | 1,090   |      |  |  | 86     |   |  |  | 1,481   |           |  |  | 6,424   |   |  |  | 49,641    |  
|Property, plant and
equipment                          |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 490,932   |              |  |               | 122,956   |           |  |              | 22,635  |      |  |      | 8,481   |      |  |  | 4,183  |   |  |  | 2,245   |           |  |  | 27,792  |   |  |  | 679,224   |  
|2001                                                   |  |                | 523,381   |              |  |               | 130,211   |           |  |              | 22,099  |      |  |      | 8,781   |      |  |  | 4,288  |   |  |  | 2,312   |           |  |  | 16,739  |   |  |  | 707,811   |  
|Intangibles                                            |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 478,439   |              |  |               | 491,157   |           |  |              | 47,657  |      |  |      | 75,333  |      |  |  | 2,219  |   |  |  |        |           |  |  | 1,653   |   |  |  | 1,096,458 |  
|2001                                                   |  |                | 450,239   |              |  |               | 513,807   |           |  |              | 43,851  |      |  |      | 70,020  |      |  |  | 1,330  |   |  |  |        |           |  |  | 1,165   |   |  |  | 1,080,412 |  
|Goodwill                                               |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 1,920,333 |              |  |               | 604,752   |           |  |              | 19,613  |      |  |      | 54,323  |      |  |  | 1,223  |   |  |  | 30,855  |           |  |  |        |   |  |  | 2,631,099 |  
|2001                                                   |  |                | 3,060,559 |              |  |               | 662,733   |           |  |              | 19,613  |      |  |      | 53,039  |      |  |  | 1,223  |   |  |  | 30,855  |           |  |  |        |   |  |  | 2,828,022 |  
|Total assets                                           |  |                |           |              |  |               |           |           |  |              |         |      |  |      |         |      |  |  |        |   |  |  |         |           |  |  |         |   |  |  |           |  
|2002                                                   |  |                | 3,219,846 |              |  |               | 1,588,000 |           |  |              | 141,677 |      |  |      | 150,176 |      |  |  | 21,530 |   |  |  | 425,146 |           |  |  | 174,753 |   |  |  | 5,721,128 |  
|2001                                                   |  |                | 3,360,423 |              |  |               | 1,721,356 |           |  |              | 133,018 |      |  |      | 141,761 |      |  |  | 21,950 |   |  |  | 518,168 |           |  |  | 402,544 |   |  |  | 6,299,220 |  

38



---



##### 



|                                                                                         |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         |           |  |  |         |   |  |  |         |  
|---------------------------------------------------------------------------------------- |  | ---------- | -------- | ------ |  | ----------- | -------- | ------------ |  | ------ | ------- | ---- |  | ------------- | ------ | --------- |  | ------------ | ------ | - |  |  | ------- | --------- |  |  | ------- | - |  |  | ------- | -
|                                                                                         |  | Publishing |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         | Corporate |  |  |         |  
|                                                                                         |  | and Online |          |        |  |             |          | Broadcasting |  |        |         |      |  | Entertainment |        | and other |  | Consolidated
|                                                                                         |  |            |          |        |  |             |          |              |  |       
|                                                                                         |  | Canada     |          | Canada |  | New Zealand |          | Ireland      |  | Canada |         |      |  |               |        |           |  |             
|                                                                                         |  |            |          |        |  | TV          |          | Radio        |  |        |         |      |  |               |        |          
|                                                                                         |  | $000       |          | $000   |  | $000        |          | $000         |  | $000   |         | $000 |  | $000          |        | $000     
|                                                                                         |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |          
|Reconciliation of
net earnings
before taxes to
net earnings 
year ended August
31, 2002 |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         |           |  |  |         |   |  |  |         |  
|Earnings (loss)
before income tax                                                        |  |            | (12,979  | )      |  |             | 31,898   |              |  |        | (4,898  | )    |  |               | 14,087 |           |  |              | 3,809  |   |  |  | (17,181 | )         |  |  | 15,398  |   |  |  | 30,134  |  
|(Provision for)
recovery of income
taxes                                                 |  |            | (8,731   | )      |  |             | (6,595   | )            |  |        | 42      |      |  |               | 94     |           |  |              | (612   | ) |  |  | (1,125  | )         |  |  | 9,819   |   |  |  | (7,108  | )
|Minority interests                                                                       |  |            | 4,330    |        |  |             |         |              |  |        |        |      |  |               |       |           |  |              |       |   |  |  |        |           |  |  |        |   |  |  | 4,330   |  
|Interest in loss
of Network TEN (1)                                                      |  |            |         |        |  |             |         |              |  |        |        |      |  |               |       |           |  |              |       |   |  |  |        |           |  |  | (11,815 | ) |  |  | (11,815 | )
|Interest in loss of
other equity
accounted affiliates                                    |  |            |         |        |  |             | (1,523   | )            |  |        |        |      |  |               |       |           |  |              |       |   |  |  |        |           |  |  |        |   |  |  | (1,523  | )
|Realized
translation
adjustments                                                         |  |            |         |        |  |             |         |              |  |        |        |      |  |               |       |           |  |              |       |   |  |  |        |           |  |  | (1,000  | ) |  |  | (1,000  | )
|                                                                                         |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         |           |  |  |         |   |  |  |         |  
|Net earnings (loss)
for the year                                                         |  |            | (17,380  | )      |  |             | 23,780   |              |  |        | (4,856  | )    |  |               | 14,181 |           |  |              | 3,197  |   |  |  | (18,306 | )         |  |  | 12,402  |   |  |  | 13,018  |  
|                                                                                         |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         |           |  |  |         |   |  |  |         |  
|Reconciliation of
net earnings
before taxes to
net earnings 
year ended August
31, 2001 |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         |           |  |  |         |   |  |  |         |  
|Earnings (loss)
before income tax                                                        |  |            | (100,046 | )      |  |             | 42,536   |              |  |        | (14,298 | )    |  |               | 9,314  |           |  |              | (3,733 | ) |  |  | (4,292  | )         |  |  | 30,453  |   |  |  | (40,066 | )
|(Provision for)
recovery of income
taxes                                                 |  |            | 18,304   |        |  |             | - 35,099 |              |  |        | 2,821   |      |  |               | (614   | )         |  |              | 269    |   |  |  | (73     | )         |  |  | 3,213   |   |  |  | 59,019  |  
|Minority interests                                                                       |  |            |         |        |  |             | (2,531   | )            |  |        |        |      |  |               | (665   | )         |  |              |       |   |  |  |        |           |  |  |        |   |  |  | (3,196  | )
|Interest in earnings
of Network TEN (1)                                                  |  |            |         |        |  |             |         |              |  |        |        |      |  |               |       |           |  |              |       |   |  |  |        |           |  |  | 52,567  |   |  |  | 52,567  |  
|Interest in
earnings (loss) of
other equity
accounted
affiliates                         |  |            | (16,385  | )      |  |             |         |              |  |        | 1,894   |      |  |               |       |           |  |              |       |   |  |  |        |           |  |  |        |   |  |  | (14,491 | )
|Realized
translation
adjustments                                                         |  |            |         |        |  |             |         |              |  |        |        |      |  |               |       |           |  |              |       |   |  |  |        |           |  |  | (7,200  | ) |  |  | (7,200  | )
|                                                                                         |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         |           |  |  |         |   |  |  |         |  
|Net earnings
(loss) for the year                                                         |  |            | (98,127  | )      |  |             | 76,998   |              |  |        | (11,477 | )    |  |               | 8,035  |           |  |              | (3,464 | ) |  |  | (4,365  | )         |  |  | 79,033  |   |  |  | 46,633  |  
|                                                                                         |  |            |          |        |  |             |          |              |  |        |         |      |  |               |        |           |  |              |        |   |  |  |         |           |  |  |         |   |  |  |         |  



---

|(1) |  | Selected financial information for Network TEN is presented in note 3.
|--- |  | ----------------------------------------------------------------------

39



---



##### 



20.           UNITED STATES ACCOUNTING PRINCIPLES



| |  |  | These consolidated financial statements have been prepared in accordance
with Canadian GAAP. In certain aspects GAAP as applied in the United
States (U.S.) differs from Canadian GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Principal differences affecting the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  |  | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | Comprehensive income, defined as all changes in equity other than those
resulting from investments by owners and distributions to owners, must be
reported under U.S. GAAP. There is no similar requirement under Canadian
GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | Pre-operating costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | In the U.S., pre-operating costs are expensed in the period incurred. In
accordance with Canadian GAAP, the Company defers pre-operating costs
until commencement of commercial operations and amortizes the deferred
costs over a period of five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  |  | In the U.S., distributions from self-sustaining foreign operations do not
result in a realization of the cumulative translation adjustments account.
Realization of such foreign currency translation adjustments occur only
upon the sale of all or a part of the investment giving rise to the
translation adjustments. In accordance with Canadian GAAP, reductions in
the net investment in self-sustaining foreign operations result in a
proportionate reduction in the cumulative foreign currency translation
adjustment accounts.                                                                                                                                                              
|
| |  |  | Programming commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | Under Canadian GAAP, certain programming commitments related to an
acquisition imposed by regulatory requirements were accrued in the
purchase equation. Under U.S. GAAP, these costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  |  | Equity accounted affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  |  | Under U.S. GAAP, investments placed in trust due to regulatory
requirements must be accounted for at cost. Under Canadian GAAP, these
investments are accounted as cost, equity or consolidated investments
based on the level of influence that the investor has over the investment.                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  |  | Investment in WIC on an equity basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | Under Canadian GAAP, the investment in WIC was accounted for using the
equity method during the period that this investment was held in trust
pending completion of the regulatory approval process. Under US GAAP, the
investment was accounted for on a cost basis then, as a result of
receiving approval to complete the purchase of WIC, the Company changed
its method of accounting for WIC to the equity method. The change in
accounting policy was retroactively applied as required under APB Opinion
No. 18, The Equity Method of Accounting for Investments in Common Stock.
Effective July 6, 2000, the Company consolidated its investment in WIC for
both Canadian and US GAAP purposes.

40



---



##### 





| |  |  | Impairment of long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Under U.S. GAAP, the Company recognizes an impairment loss on property,
equipment and broadcast licences and circulation if the undiscounted
expected future cash flows are less than the carrying value. The
impairment loss recognized would be an amount equal to the difference
between the carrying amount and the fair value of the assets. Under
Canadian GAAP, the impairment loss would be equal to the difference
between the carrying amount and the undiscounted expected future cash
flows.                                                                                                                                                                                                                                                                   
|
| |  |  | Under U.S. GAAP, goodwill associated with assets acquired in a purchase
business combination is included in impairment evaluations of other
long-lived assets when events or circumstances exist that indicate the
carrying value of those assets may not be recoverable. In addition,
impairments of goodwill would be recognized when a review indicates that
the goodwill will not be recoverable, as determined based on projected
income and cash flows on an undiscounted basis from the underlying
operations. In such circumstances, the goodwill will be reduced to the
estimated recoverable amount. Under Canadian GAAP, prior to the
acquisition of WIC and Southam Publications, the Company has not had any
significant goodwill arising on its acquisitions.
|
| |  |  | The Company regularly assesses the carrying value of its assets and has
determined that there is no impairment in long-lived assets at this time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  |  | Investment in marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | In the U.S., investment assets classified as available for sale are
carried at market, and unrealized temporary gains and losses are included,
net of tax, in accumulated comprehensive income. In accordance with
Canadian GAAP, the Company carries its investment in marketable securities
at lower of cost and net realizable value. A provision for loss in value
of marketable securities is made when a decline in market value is
considered other than temporary.                                                                                                                                                                                                                                                                                               
|
| |  |  | Effect of tax rate changes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | Under U.S. GAAP, changes in tax rates are applied to reduce or increase
future income tax assets or liabilities when the proposed tax rate change
has received legislative approval. Under Canadian GAAP, tax rate changes
are applied when the change in tax rate is considered substantively
enacted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | Cash flow statement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | The Canadian accounting standard for the preparation of cash flow
statements is consistent with the guidance provided under IAS 7, and
accordingly, the cash flow statements presented herein have not been
reconciled to U.S. GAAP under the accommodation provided by the Securities
and Exchange Commission of the United States (SEC).                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Proportionate consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | In the U.S., investments in jointly controlled entities are accounted as
equity investments. Canadian GAAP requires the accounts of jointly
controlled enterprises to be proportionately consolidated. This
accounting difference applies to the Companys investment in TV3 Ireland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | Accounting for derivative instruments and hedging activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Under U.S. GAAP, entities are required to recognize all derivative
instruments as either assets or liabilities in the balance sheet, and
measure those instruments at fair value. The changes in fair value of the
derivative are included in the statement of earnings. Under Canadian GAAP
hedging                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

41



---



##### 





| |    |  | derivatives are eligible for hedge accounting if certain criteria are met.
Non-hedging derivatives are recognized at their fair value as either
assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | Cumulative effect of the prospective adoption of new accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |    |  | Under U.S. GAAP, the transitional impairment of goodwill related to
Network TEN is recorded as a charge to net earnings in accordance with
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangibles, where as under Canadian GAAP it is recorded as a charge to
opening retained earnings. The principles and methods for computing
impairment in accordance with FAS 142 are similar to those prescribed
under Canadian GAAP, as described in notes 1 and 3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |    |  | Debt classification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |    |  | Effective for 2002, in accordance with new requirements under Canadian
GAAP, which are consistent with US GAAP, the Company has classified all
debt maturing in the following twelve months as current if refinancing was
not in place. Previously under Canadian GAAP, debt which the Company
intended to refinance was classified as long term. For 2001 under US GAAP
this debt was reclassified as current.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |    |  | Integration costs related to CanWest Publications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |    |  | Under Canadian GAAP certain integration costs related to the CanWest
Publications acquisition were accrued in the purchase equation. Under US GAAP,
these costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |    |  | Revision of 2002 and Prior Years Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |    |  | The Companys 2001 and subsequent periods net income and shareholders
equity have been revised to reflect certain adjustments to previously
reported net income and shareholders equity in accordance with US GAAP
for the accounting for derivative financial instruments. The Company has
determined, notwithstanding their designation as hedges and achievement of
their intended economic purpose, its cross currency interest rate and
interest rate swaps did not meet all of the criteria for hedge accounting
under FAS 133. As a result, the unrealized gains and losses on derivative
financial instruments are included in net income as they arise whereas
previously these amounts were included in other comprehensive income.
These adjustments resulted in increasing net income for 2002 by $27.5
million (net of income taxes of $1.3 million) and decreasing net income
for 2001 by $55.6 million (net of income taxes of $37.0 million). These
adjustments resulted in revised net income and diluted earnings per share
for 2002 of ($0.74) and ($0.72) respectively (2001  ($0.04) and
($0.04)). The effect on shareholders equity resulting from these
adjustments was an increase of $4.8 million (net of income taxes of $9.4
million) as at August 31, 2002 and a decrease of $5.9 million ( net of
income taxes of $2.5 million) as at August 31, 2001.
|
| |    |  | New accounting standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | a) |  | Accounting for asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |    |  | In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 143, Accounting for Asset Retirement
Obligations.FAS 143 requires that an asset retirement obligation be
recognized as a liability, measured at fair value, in the period in which
the obligation is incurred or a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as part of
the carrying amount of the long lived assets and amortized to expense over
the useful life of the asset. FAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The
Company is currently considering the impact of FAS 143.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

42



---



##### 





| | b) |  | Accounting for the impairment or disposal of long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | In fiscal 2003, the Company will adopt new standards approved by the
Financial Accounting Standards Board, Statement of Financial Accounting
Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. The Standard requires that an impairment loss should be
recognized if the carrying amount of a long-lived asset is not recoverable
and exceeds its fair value for assets in use. Long-lived assets
classified as held for sale should be measured at the lower of their
carrying amount or fair value less cost to sell. The standard also
changes the criteria for classification of operating results as
discontinued operations. FAS 144 is effective for financial statements
prepared beginning on or after December 15, 2001. The Company is
currently considering the impact of FAS 144.
|
| | c) |  | Technical corrections                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |    |  | In April 2002, Statement of Financial Accounting Standard No. 145 was
issued rescinding the requirement to include gains and losses on the
settlement of debt as extraordinary items. FAS 145 is applicable for
fiscal years beginning on or after May 15, 2002. The standard has been
adopted by the Company with no impact.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | d) |  | Accounting for costs associated with exit or disposal activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |    |  | In June, 2002, Statement of Financial Accounting Standard No. 146 was
issued. The standard requires that liabilities for exit or disposal
activity costs be recognized and measured at fair value when the liability
is incurred. This standard is effective for disposal activities initiated
after December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |    |  | RECONCILIATION TO US GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |    |  | Consolidated Statements of Earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |    |  | The following is a reconciliation of net earnings reflecting the
differences between Canadian and U.S. GAAP:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

43



---



##### 



|                                                                                                                                                     |                                                                              |  |          |         |   |         |         |        |   | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- |  | -------- | ------- | - | ------- | ------- | ------ | - | 
|                                                                                                                                                     |                                                                              |  |          | 2002    |   | 2001   
|                                                                                                                                                     |                                                                              |  |          | $000    |   | $000   
|                                                                                                                                                     |                                                                              |  |          | Revised |   | Revised
|                                                                                                                                                     |                                                                              |  |          |         |   |        
|Net earnings in accordance with Canadian GAAP                                                                                                        |                                                                              |  | 13,018   |         |   |         | 46,633  |       
|Pre-operating costs net of tax of $1,331 (2001  ($1,175))                                                                                           |                                                                              |  | (100     | )       |   |         | 3,337   |       
|Realization of cumulative translation adjustments net
of tax of nil                                                                                  |                                                                              |  | 1,000    |         |   |         | 7,200   |       
|Programming costs imposed by regulatory requirement
net of tax of $2,438 (2001  $774)                                                               |                                                                              |  | (3,232   | )       |   |         | (1,026  | )     
|Integration costs related to CanWest Publications
net of tax of $827                                                                                 |                                                                              |  | (1,470   | )       |   |         |        |       
|Reversal of amortization of goodwill related to future
programming costs imposed by regulatory
requirement on business combination net of tax of nil |                                                                              |  |         |         |   |         | 938     |       
|Equity accounted affiliates in trust net of tax of nil                                                                                               |                                                                              |  | 3,375    |         |   |         | (3,375  | )     
|Investment in WIC on an equity basis, net of tax
of $nil (2001  $2,758)                                                                             |                                                                              |  |         |         |   |         | (4,138  | )     
|Amortization of WIC goodwill adjustment resulting
from retroactive equity accounting of WIC
upon regulatory approval, net of tax of nil              |                                                                              |  |         |         |   |         | (1,572  | )     
|Unrealized gain (loss) on interest rate and cross
currency swaps net of tax of $1,268 (2001 - $37,016)                                               |                                                                              |  | 27,535   |         |   |         | (55,618 | )     
|                                                                                                                                                     |                                                                              |  |          |         |   |         |         |       
|Net earnings (loss) in accordance with U.S. GAAP before
cumulative effect of adoption of new accounting policies                                     |                                                                              |  | 40,126   |         |   |         | (7,621  | )     
|Cumulative effect of adoption of new accounting
policies net of tax of $2,500                                                                        |                                                                              |  | (170,695 | )       |   |         |        |       
|                                                                                                                                                     |                                                                              |  |          |         |   |         |         |       
|Net earnings (loss) in accordance with U.S. GAAP                                                                                                     |                                                                              |  | (130,596 | )       |   |         | (7,621  | )     
|Amortization of goodwill and indefinite life intangibles,
net of tax of ($11,975)                                                                    |                                                                              |  |         |         |   |         | 64,972  |       
|Amortization of goodwill and indefinite life intangibles in
equity accounted affiliates, net of tax of nil                                           |                                                                              |  |         |         |   |         | 6,211   |       
|                                                                                                                                                     |                                                                              |  |          |         |   |         |         |       
|Net earnings (loss) in accordance with U.S. GAAP
adjusted to exclude amortization expense recognized
in 2001                                         |                                                                              |  | (130,596 | )       |   |         | 63,562  |       
|                                                                                                                                                     |                                                                              |  |          |         |   |         |         |       
|Earnings per share:                                                                                                                                  |                                                                              |  |          |         |   |         |         |       
|                                                                                                                                                     | Net earnings before cumulative effect of adoption of
new accounting policies |  |          |         |   |         |         |        |  
|                                                                                                                                                     | Basic                                                                        |  |          | $0.23   |   |         |         | ($0.04 | )
|                                                                                                                                                     | Diluted                                                                      |  |          | $0.22   |   |         |         | ($0.04 | )
|                                                                                                                                                     | Net earnings (loss)                                                          |  |          |         |   |         |         |        |  
|                                                                                                                                                     | Basic                                                                        |  |          | ($0.74  | ) |         |         | ($0.04 | )
|                                                                                                                                                     | Diluted                                                                      |  |          | ($0.72  | ) |         |         | ($0.04 | )
|                                                                                                                                                     | Adjusted net earnings (loss)                                                 |  |          |         |   |         |         |        |  
|                                                                                                                                                     | Basic                                                                        |  |          | ($0.74  | ) |         | $       | 0.37   |  
|                                                                                                                                                     | Diluted                                                                      |  |          | ($0.72  | ) |         | $       | 0.37   |  

44



---



##### 



Statements of Comprehensive Income

Comprehensive income (loss)  current periods:

|                                                 |                                                                                                                                             |  |          |        |         |  |         |         |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ------ | ------- |  | ------- | ------- | -
|                                                 |                                                                                                                                             |  | 2002     |        | 2001   
|                                                 |                                                                                                                                             |  | $000     |        | $000   
|                                                 |                                                                                                                                             |  | Revised  |        | Revised
|                                                 |                                                                                                                                             |  |          |        |        
|Net earnings (loss) in accordance with U.S. GAAP |                                                                                                                                             |  | (130,596 | )      |         |  | (7,621  | )      
|                                                 |                                                                                                                                             |  |          |        |         |  |         |        
|Other comprehensive income, net of tax:          |                                                                                                                                             |  |          |        |         |  |         |        
|                                                 | Foreign currency translation gain                                                                                                           |  |          | 26,483 |         |  |         | 11,511  |  
|                                                 |                                                                                                                                             |  |          |        |         |  |         |        
|                                                 | Unrealized gains (losses) on securities available
for sale, nil (2001 $5,755)                                                              |  |          | 31,387 |         |  |         | (73,178 | )
|                                                 | Realization of prior years unrealized (gains)
losses on sale / write-down of securities available
for sale, net of tax of nil, (2001  486) |  |          | 60,000 |         |  |         | (987    | )
|                                                 |                                                                                                                                             |  |          |        |         |  |         |        
|                                                 |                                                                                                                                             |  | 91,387   |        |         |  | (74,165 | )      
|                                                 |                                                                                                                                             |  |          |        |         |  |         |        
|                                                 | Reclassification of transition adjustment related to
interest rate swaps net of tax of $69 (2001 - $70)                                     |  |          | 115    |         |  |         | 114     |  
|                                                 |                                                                                                                                             |  |          |        |         |  |         |        
|                                                 |                                                                                                                                             |  | 117,985  |        |         |  | (62,540 | )      
|                                                 |                                                                                                                                             |  |          |        |         |  |         |        
|Comprehensive income (loss)                      |                                                                                                                                             |  | (12,611  | )      |         |  | (70,161 | )      
|                                                 |                                                                                                                                             |  |          |        |         |  |         |        

Comprehensive income (loss)  accumulated balances:

|                               |  |             |         |                |  |                      |         |         |  |  |        |   |  |  |          |  
|------------------------------ |  | ----------- | ------- | -------------- |  | -------------------- | ------- | ------- |  |  | ------ | - |  |  | -------- | -
|                               |  | Foreign     |         | Unrealized     |  | Transitionadjustment |         |         |  | 
|                               |  | currency    |         | gains (losses) |  | on swaps             |         | Total  
|                               |  | translation |         | on securities  |  | Revised              |         | Revised
|                               |  |             |         |                |  |                      |         |        
|Balance, August 31, 2000       |  |             | (85,958 | )              |  |                      | 32,307  |         |  |  |       |   |  |  | (53,651  | )
|Transition adjustment on swaps |  |             |        |                |  |                      |        |         |  |  | (2,577 | ) |  |  | (2,577   | )
|Change during 2001             |  |             | 11,511  |                |  |                      | (74,165 | )       |  |  | 114    |   |  |  | (62,540  | )
|                               |  |             |         |                |  |                      |         |         |  |  |        |   |  |  |          |  
|Balance, August 31, 2001       |  |             | (74,447 | )              |  |                      | (41,858 | )       |  |  | (2,463 | ) |  |  | (118,768 | )
|Change during 2002             |  |             | 26,483  |                |  |                      | 91,387  |         |  |  | 115    |   |  |  | 117,985  |  
|                               |  |             |         |                |  |                      |         |         |  |  |        |   |  |  |          |  
|Balance, August 31, 2002       |  |             | (47,964 | )              |  |                      | 49,529  |         |  |  | (2,348 | ) |  |  | (783     | )
|                               |  |             |         |                |  |                      |         |         |  |  |        |   |  |  |          |  

45



---



##### 



Consolidated Balance Sheets

Balance sheet captions restated to reflect the above items are presented below:

|                                              |  |         |           |         |  |  |           |  
|--------------------------------------------- |  | ------- | --------- | ------- |  |  | --------- | -
|                                              |  | 2002    |           | 2001   
|                                              |  | $000    |           | $000   
|                                              |  | Revised |           | Revised
|ASSETS                                        |  |         |           |         |  |  |           |  
|Current assets                                |  |         | 683,677   |         |  |  | 640,149   |  
|Investment in Network TEN                     |  |         | 4,494     |         |  |  | 107,210   |  
|Property, plant and equipment                 |  |         | 675,041   |         |  |  | 687,811   |  
|Intangibles and goodwill                      |  |         | 3,743,404 |         |  |  | 3,946,499 |  
|Other investments                             |  |         | 196,253   |         |  |  | 370,180   |  
|Other assets                                  |  |         | 485,089   |         |  |  | 487,029   |  
|                                              |  |         |           |         |  |  |           |  
|                                              |  |         | 5,787,958 |         |  |  | 6,238,878 |  
|                                              |  |         |           |         |  |  |           |  
|LIABILITIES                                   |  |         |           |         |  |  |           |  
|Current liabilities                           |  |         | 621,609   |         |  |  | 729,624   |  
|Long term debt                                |  |         | 3,339,507 |         |  |  | 3,732,710 |  
|Other liabilities                             |  |         | 197,746   |         |  |  | 161,768   |  
|Future income taxes                           |  |         | 406,847   |         |  |  | 380,052   |  
|                                              |  |         |           |         |  |  |           |  
|                                              |  |         | 4,565,709 |         |  |  | 5,004,154 |  
|                                              |  |         |           |         |  |  |           |  
|SHAREHOLDERS EQUITY                          |  |         |           |         |  |  |           |  
|Capital stock                                 |  |         | 896,422   |         |  |  | 896,313   |  
|Contributed surplus                           |  |         | 3,647     |         |  |  | 3,647     |  
|Retained earnings                             |  |         | 322,963   |         |  |  | 453,532   |  
|Accumulated other comprehensive income (loss) |  |         | (783      | )       |  |  | (118,768  | )
|                                              |  |         |           |         |  |  |           |  
|                                              |  |         | 1,222,249 |         |  |  | 1,234,724 |  
|                                              |  |         |           |         |  |  |           |  
|                                              |  |         | 5,787,958 |         |  |  | 6,238,878 |  
|                                              |  |         |           |         |  |  |           |  

46



---



##### 



A reconciliation of shareholders equity reflecting the differences between Canadian and U.S. GAAP is
set out below:

|                                                                                                                                                     |  |         |           |         |  |  |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------- | --------- | ------- |  |  | --------- | -
|                                                                                                                                                     |  | 2002    |           | 2001   
|                                                                                                                                                     |  | $000    |           | $000   
|                                                                                                                                                     |  | Revised |           | Revised
|                                                                                                                                                     |  |         |           |        
|Shareholders equity in accordance with
Canadian GAAP                                                                                                |  |         | 1,175,911 |         |  |  | 1,305,996 |  
|Adjustments relating to pre-operating costs,
net of tax of $3,608 (2001  $2,277)                                                                    |  |         | (6,473    | )       |  |  | (6,373    | )
|Adjustment to goodwill resulting from retroactive
equity accounting of WIC upon regulatory
approval net of tax of nil                                |  |         | 38,503    |         |  |  | 38,503    |  
|Programming
costs imposed by regulatory requirement
On business combination net of tax of
$3,212 (2001  $774)                                       |  |         | (4,258    | )       |  |  | (1,026    | )
|Integration costs related to CanWest Publications
net of tax of $827                                                                                 |  |         | (1,470    | )       |  |  |          |  
|Reversal of amortization of goodwill related to
future programming costs imposed by regulatory
requirement on business combination net of tax of nil |  |         | 938       |         |  |  | 938       |  
|Adjustment to reflect losses on interest
rate and cross currency swaps net of tax of
$35,748 (2001  $37,016)                                        |  |         | (28,083   | )       |  |  | (55,618   | )
|Transition adjustment on interest rate swaps, net of
tax of $1,383 (2001 - $1,452)                                                                   |  |         | (2,348    | )       |  |  | (2,463    | )
|Equity accounted affiliates in trust net of tax of nil                                                                                               |  |         |          |         |  |  | (3,375    | )
|Unrealized gain (loss) on other investments net
of tax of nil                                                                                        |  |         | 49,529    |         |  |  | (41,858   | )
|                                                                                                                                                     |  |         |           |         |  |  |           |  
|Shareholders equity in accordance with U.S. GAAP                                                                                                    |  |         | 1,222,249 |         |  |  | 1,234,724 |  
|                                                                                                                                                     |  |         |           |         |  |  |           |  

47



---



##### 



Other



| |  |  | The following amounts are included in accounts receivable:
| |  |  | ----------------------------------------------------------

|                                |  |      |        |      |  |  |        | 
|------------------------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                                |  | 2002 |        | 2001
|                                |  | $000 |        | $000
|                                |  |      |        |     
|Allowance for doubtful accounts |  |      | 14,800 |      |  |  | 14,500 | 



| |  |  | The following amounts are included in operating expenses:
| |  |  | ---------------------------------------------------------

|                 |  |      |        |      |  |  |        | 
|---------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                 |  | 2002 |        | 2001
|                 |  | $000 |        | $000
|                 |  |      |        |     
|Bad debt expense |  |      | 5,700  |      |  |  | 7,800  | 
|Rent expense     |  |      | 17,300 |      |  |  | 12,700 | 



| |  |  | The following amounts are included in accrued liabilities:
| |  |  | ----------------------------------------------------------

|                 |  |      |        |      |  |  |        | 
|---------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                 |  | 2002 |        | 2001
|                 |  | $000 |        | $000
|                 |  |      |        |     
|Accrued salaries |  |      | 63,000 |      |  |  | 57,000 | 



| |  |  | Amortization expense related to existing finite life intangibles will be
$17.5 million per year to 2005, $8.8 million and $1.5 million in 2006 and
2007, respectively.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

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