Exhibit 99.2



CanWest Global Communications Corp.

Managements Discussion and Analysis



For the year
ended August 31, 2005



November 17, 2005



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Certain statements in this report may constitute forward-looking statements. Such forward-looking statements involve
risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. Many of these factors are beyond the control of the Company. Consequently, all forward-looking statements made in this Management Discussion and Analysis or the Companys documents referred to herein are qualified by this cautionary
statement and there can be no assurance that actual results or developments anticipated by the Company will be realized.



OVERVIEW



CanWest Global Communications Corp. (CanWest) is an international media company with interests in broadcast television, publishing, radio, specialty cable channels, outdoor advertising and Internet
websites in Canada, Australia, New Zealand, Ireland and the United Kingdom. In each of our markets we seek to develop a broad media platform that enables us to provide a multimedia product offering to our customers. Our diversification within the
Canadian market and internationally has contributed to the stability of our overall results.



On October 13, 2005, CanWest MediaWorks Income Fund (the Fund) completed its $550 million initial public offering. On the completion of the Funds initial public offering, CanWest transferred its
Canadian newspaper and online media businesses, with the exception of the National Post, to CanWest MediaWorks Limited Partnership (the Limited Partnership) in exchange for units and indebtedness of the Limited Partnership.
Substantially all of the indebtedness was repaid by the Limited Partnership using $517 million in net proceeds of the Funds initial public offering, together with $823 million advanced under the Limited Partnerships new unsecured $1
billion senior unsecured credit facility. As a consequence, the Fund now holds a 25.8% equity interest in the Limited Partnership, with CanWest holding the remaining 74.2%. As a result of the transaction, we will record a dilution gain or loss on
the sale of a 25.8% interest in the operations transferred to the Limited Partnership. The amount of the gain or loss has not been determined. We will continue to consolidate the results of these operations.



SELECTED ANNUAL INFORMATION



|                                                  |  |                      |           |                |   |           |                |  |   |          
|------------------------------------------------- |  | -------------------- | --------- | -------------- | - | --------- | -------------- |  | - | ---------
|                                                  |  | Year ended August 31
|                                                  |  | 2005                 |           | 2004           |   |           | 2003          
|                                                  |  | $000                 |           | $000 (revised) |   |           | $000 (revised)
|Revenue                                           |  |                      | 3,072,542 |                |   | 2,911,400 |                |  |   | 2,790,484
|Net earnings from continuing operations           |  |                      | 20,422    |                |   | 194,299   |                |  |   | 114,798  
|Net earnings (loss)                               |  |                      | 10,290    |                |   | (13,478   | )              |  |   | 46,088   
|Net earnings from continuing operations per share |  |                      |           |                |   |           |                |  |   |          
|Basic                                             |  | $                    | 0.12      |                | $ | 1.10      |                |  | $ | 0.60     
|Diluted                                           |  | $                    | 0.12      |                | $ | 1.10      |                |  | $ | 0.60     
|Net earnings (loss) per share                     |  |                      |           |                |   |           |                |  |   |          
|Basic                                             |  | $                    | 0.06      |                | $ | (0.08     | )              |  | $ | 0.22     
|Diluted                                           |  | $                    | 0.06      |                | $ | (0.08     | )              |  | $ | 0.22     
|Total Assets                                      |  |                      | 5,328,418 |                |   | 5,573,643 |                |  |   | 5,934,508
|Long term liabilities                             |  |                      | 3,261,798 |                |   | 3,502,813 |                |  |   | 3,713,050



Revised: The 2004 and 2003 results
have been revised to reflect the adoption of the Institute of Chartered Accountants of Canada, Accounting Guideline 15, Consolidation of Variable Interest Entities, resulting in the consolidation of TEN Group Pty Limited, which was previously
accounted for on an equity basis (see note 1 to the audited consolidated financial statements).



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Key Factors Affecting Segment Revenues and Operating Income



Television Broadcast



We have four television broadcast segments, one for each country in which we carry on such operations. Our Canadian television segment
includes our broadcast television networks in Canada as well as specialty channels and two radio stations. Our New Zealand and Irish television segments cover our television operations in those countries. Our Australian television segment includes
TEN Group Pty Limited (TEN Group), which owns and operates TEN Television Network (Network TEN).



We generate the majority of our television broadcast revenues from the sale of advertising, with the remainder generated from subscriber revenues earned by our specialty
channels and the sale of broadcast rights to our programming. Demand for television advertising is driven primarily by advertisers in the packaged goods, automotive, retail and entertainment industries and is strongly influenced by general economic
conditions. The attractiveness of our programs to advertisers and the rates we charge are primarily a function of the size and demographics of our viewing audience. The dependence of our advertising revenues on the ratings performance of our
television programs makes our television broadcast revenues less predictable than our publishing revenues.



Following a 7% decline in advertising revenue in fiscal 2004 for Canadian television, advertising revenues have remained constant for fiscal 2005 as compared to fiscal 2004. The revenue decrease in 2004 and continued
weakness in 2005 reflected a loss of market share resulting primarily from reduced ratings performance. Canadian television will remain a challenge for 2006. However, new programs that have attracted promising initial ratings include the new drama
Prison Break, the comedy My Name is EarlandEntertainment Tonight Canada, which launched in the first two weeks of the season immediately rose to the number one spot for a Canadian entertainment magazine program. Canadian
television has also achieved ratings gains in its key news programming. We believe that increased ratings will have a positive impact on revenues in fiscal 2007.



Our Australian television broadcast segment recorded a 9% increase in revenues in fiscal 2005 compared to fiscal 2004, driven by Network
TENs strong ratings performance in a continuing strong television market. Local currency revenue increases of 11% were partially offset by the weakening of the local currency relative to the Canadian dollar. For fiscal 2006, we expect a
slowdown in the Network TEN revenue growth. Our New Zealand television broadcast segment also had a strong performance in fiscal 2005, recording a 14% revenue increase that reflected an 12% increase in local currency revenues driven by improved
audience share at 3 and C4 networks in a strong advertising environment and the effect of the strengthening local currency relative to the Canadian dollar, which increased revenue growth by an additional 2%. For fiscal 2006, we expect New Zealand to
continue its growth relative to fiscal 2005, but at a lower growth rate reflecting a slowing in the advertising market. In our Irish television segment, revenues showed growth of 10% in fiscal 2005, as compared to fiscal 2004.



Our principal television broadcast operating expenses are programming costs and employee
salaries. In our Canadian television segment, operating expenses increased 6% in fiscal 2005 compared to fiscal 2004, primarily as a result of increased programming and promotion costs. We expect this trend to continue in Canada into fiscal 2006 as
we continue to invest in our program schedule. In Australia, segment operating expenses increased by 5% in fiscal 2005 compared to fiscal 2004, driven by an 8% local currency expense increase compared to the same period in the prior year, primarily
reflecting increased programming costs. In New Zealand, segment operating expenses for fiscal year 2005 increased by 9% in fiscal 2005 compared to fiscal 2004 driven by a 7% local currency expense increase compared to the same period in the prior
year, primarily as a result of increased promotion and programming costs. We expect that the trend will continue into fiscal 2006 as programming costs continue to increase. For our Irish broadcasting operation, segment operating expenses increased
3% in fiscal 2005 compared to fiscal 2004, reflecting general cost and wage increases and programming cost increases.



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Publishing and Online



Our publishing and online segment includes our Canadian newspaper operations as well as our internet operations including the canada.com web portal. Our publishing and
online revenues are primarily earned from newspaper advertising and circulation revenues from our newspapers in Canada. Our newspaper and online advertising revenues are a function of the volume, or lineage, of advertising sold and the rates we
charge. Circulation revenues are produced from home-delivery subscriptions for our newspapers and single-copy sales sold at retail outlets and vending machines and are a function of the number of newspapers we sell and the average per copy prices we
charge.



Advertising and circulation revenues for the publishing and online
operations were 3% higher in fiscal 2005 compared to fiscal 2004. The increase in advertising revenues resulted from advertising rate increases as well as from growth in online classified revenues, which increased to $12 million for fiscal 2005
compared to $4 million for fiscal 2004. Average daily newspaper circulation in Canada has declined, although the decline in circulation has been offset by an increase in the median sale price for a weekday edition of a Canadian daily newspaper. We
believe that the circulation revenues of the publishing operations are reflective of this general trend in the newspaper industry. Circulation revenues were unchanged for fiscal 2005 compared to fiscal 2004, as declines in circulation volumes were
offset by higher per copy prices. Circulation revenues constitute approximately 20% of total publishing and online revenues. For fiscal 2006, advertising revenues are expected to continue to increase, primarily as a result of rate increases, growth
in insert volumes as well as from significant increases in online advertising. Circulation revenues are expected to be consistent with the prior year.



The principal operating expenses for publishing and online are salaries, newsprint and distribution expenses. Operating expenses increased by 5% in fiscal 2005 compared
to fiscal 2004, primarily as a result of increased payroll and distribution costs. Newsprint expense for fiscal 2005 decreased by approximately 4% as a result of reduced pricing and a reduction in newsprint usage. For fiscal 2006, expenses are
generally expected to increase moderately. Salary costs will increase due to increases in staffing to support certain key initiatives (e.g. increased online product offerings) and due to normal wage escalation. The declining newsprint expense trend
experienced through fiscal 2005 is expected to reverse in fiscal 2006 as a result of increased newsprint pricing. Finally, increased gasoline prices are expected to result in increased distribution costs.



Radio Broadcast



Our radio broadcast segment consists of our radio operations in New Zealand, which earn substantially all of their revenues from
advertising. Radio advertising revenues are a function of overall radio advertising demand and advertising rates. Radio advertising rates are determined based on the number and demographics of our listeners. Our radio broadcast segment revenues in
fiscal 2005 increased 8% overall, driven by a 6% local currency revenue increase compared to the same period in the prior fiscal year, reflecting strong growth in radio advertising expenditures in New Zealand. In addition, a strengthened New Zealand
currency contributed an additional 2% increase for fiscal 2005. We expect revenues in local currencies to continue to increase during 2006, bolstered by the addition of new FM frequencies acquired in 2005 and the continued growth of the recently
launched Radio Livenetwork.



The principal operating
expenses in the radio broadcast segment are salaries, marketing costs and music royalties. Segment operating expenses increased 12% in fiscal 2005 compared to fiscal 2004, driven by a 10% increase in local currency expenses and an additional 2% as a
result of the strengthened New Zealand currency. The increase in costs was due to costs associated with the launch of Radio Live network, and branding costs related to Kiwi FM. For fiscal 2006, we expect costs to continue to increase
to reflect the continuing promotion and the full year operation of Radio Live and normal salary and wage increases.



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Australian outdoor advertising



Our outdoor advertising segment consists of TEN Groups wholly owned subsidiary, Eye Corp. Eye Corp. generates its revenue from the
sale of out-of-home advertising. Eye Corp.s advertising revenues are a function of overall outdoor advertising demand and rates. Eye Corp.s advertising rates are primarily a function of the number and demographics of the audience for Eye
Corp.s displays. Segment revenues increased by 40% in fiscal 2005 compared to fiscal 2004, in part reflecting Eye Corp.s acquisition of the remaining 50% interest in its Eye Shop subsidiary. In addition, airport terminal advertising
sales have increased with increases in rates and inventories. The principal operating expenses in this segment are salaries, site rental costs and production expenses. Segment operating expenses have decreased to 79% as a percentage of revenues for
fiscal 2005 from 81% in fiscal 2004. For fiscal 2006, we expect revenues and expenses to continue to grow as a result of the acquisitions in 2005.



Acquisitions and Divestitures



We have made a number of acquisitions and divestitures that affect the comparability of our results from period to period.



| |  |  | In February 2003, we disposed of certain community newspapers.
| | - |  | --------------------------------------------------------------



| |  |  | In July 2004, we completed the initial public offering and refinancing of our New Zealand operations, which reduced our ownership from 100% to 70%.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In September 2004, Eye Corp acquired the remaining 50% of Eye Shop Pty Limited (formerly Eye Village Joint Venture). In addition, in July 2005, Eye Corp acquired 100% of Eye Drive
Melbourne Pty Limited (formerly Southcoast Pty Limited).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In September 2005, we acquired a radio licence to operate a station in the Solent region of the United Kingdom. This operation will commence in fiscal 2006.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



Foreign currency effects



Our Australia, New Zealand and Ireland operations expose our segment revenues and operating
expenses to fluctuations between the Canadian dollar and the Australian dollar and the New Zealand dollar and the Euro respectively. A decline in the value of the Canadian dollar against those currencies increases the Canadian dollar equivalent of
the revenues and expenses we record in those currencies. An increase in the value of the Canadian dollar has the opposite effect. During fiscal 2005, the Canadian dollar appreciated against the Australian dollar and Euro by 2%, and depreciated
against the New Zealand dollar by 2%.



Seasonality



Our advertising revenues are seasonal. Revenues are typically highest in the first and third
quarters, while expenses are relatively constant throughout the year.



CRITICAL ACCOUNTING ESTIMATES



The preparation of financial
statements in accordance with accounting principles generally accepted in Canada requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, as well as the disclosure of
contingent assets and liabilities. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different
assumptions or conditions.



We have identified below the critical accounting
estimates that we believe require significant judgment in the preparation of our consolidated financial statements. We consider these accounting estimates to be critical because changes in the assumptions or estimates we have selected have the
potential of materially impacting our financial statements. For a summary of all of our significant accounting policies, see note 1 to our audited consolidated financial statements.



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Goodwill and Intangible Assets



We estimate 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 material impairment of the value and life of intangible assets and goodwill. As at August 31, 2005 we had $1,144 million of intangibles and $2,425
million of goodwill on our balance sheet.



In performing the annual impairment
testing of goodwill and intangibles, management makes a number of assumptions and estimates in determining fair value. The fair value definition used is the amount at which an asset could be bought or sold in a current transaction between willing
parties. Valuation for indefinite life broadcast licenses have been determined using an income approach and more specifically the Greenfield approach in which the value is determined based on the present value of the required resources
and eventual returns from the build out of an operational network and the acquisition of advertisers, starting with only the broadcast licenses as assets. Other valuation techniques used include a market approach or a discounted cash flow
(DCF) approach. The market approach is used where comparable public market data is available, or we have bona fide offers for assets. The projections used in the DCFs represent managements best estimates of expected future
operating results of the reporting units for the first three years and an extrapolation based on aggregate economic factors such as gross domestic product growth rates and inflation, for the final two years of the forecast period. Precedent
transactions involving comparable companies and market statistics for comparable companies are used to select appropriate terminal value multiples. In addition, the expected risk-free and other rates of return, general economic conditions,
historical and forecasted operating results, and valuations prepared by third parties are considered. The discount rates used are based on the weighted average costs of capital using the capital asset pricing model and adjusting for the size of the
local reporting unit, local tax rates and risk profile. Had different assumptions or valuation techniques been used in performing the impairment testing at August 31, 2005, the carrying value of intangibles and goodwill might have been
different.



During 2005, we determined that the value of goodwill and the
circulation of the National Post were impaired and as a result, we have recorded goodwill and intangible asset impairments of $41 million and $10 million, respectively. The impairment resulted from the incurrence of successive years of
operating losses in this business unit and its failure to achieve the profitability targets set out in its business plans.



Income Taxes



We are subject to income taxes in Canada and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. During the ordinary course of business, there are
many transactions and calculations for which the ultimate tax determination is uncertain. Management uses judgment and estimates in determining the appropriate rates and amounts in recording future taxes, giving consideration to timing and
probability. Actual income taxes could vary from these estimates as a result of future events, including changes in income tax law or the outcome of reviews by tax authorities and related appeals. To the extent that the final tax outcome is
different from the amounts that were initially recorded, such differences will impact the income tax provision in the period in which such determination is made. Our income tax provision was $20 million for the year ended August 31, 2005.
Future tax assets were $201 million, while future tax liabilities were $264 million at August 31, 2005. See note 13 to our audited consolidated financial statements.



Accounting for Pension and Other Benefit Plans



The cost of defined benefit pension and other retirement benefits earned by employees is calculated based on managements estimates of
expected plan investment performance, salary escalation, retirement ages of employees, the discount rate used in measuring the liability and expected healthcare costs. For fiscal 2005 and 2004, based on the investment mix, current yields and
experience, management estimated the long-term rate of return on plan assets to be 7.25%. For the same periods, the discount rate used in measuring the liability was 5.35% and 6.5%, respectively. The discount rate was estimated by applying Canadian
corporate AA zero coupon bonds to the expected future benefit payments under the plans. Management assumed that salaries would increase by 3% to 3.5% per year. The defined benefit pension and other retirement benefit expense we recorded for the
year ended August 31, 2005 was $33 million. Use of different assumptions would vary results.



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Broadcast Rights



At August 31, 2005, we had $210 million in broadcast rights. Broadcast rights represent the right to air various forms of programming. Broadcast rights and the
corresponding payable are recorded when the license period begins and the programs are available for air. Foreign programming is primarily acquired on a pay for play basis, and is immediately aired, while some foreign and most domestic
programming may be carried in inventory and amortized over a series of plays. Management must use estimates and judgment in determining the useful lives and carrying values of broadcast rights. Estimates of useful life relates to the expected number
of plays over which the cost of acquiring the rights are amortized, while estimates of value primarily relate to the time slots in which the programs will be aired. Inventories are reviewed regularly to ensure recoverability of the net book value of
broadcast rights.



CHANGES IN ACCOUNTING POLICIES



Consolidation of variable interest entities



Effective September 1, 2004 we have adopted the provisions of The Accounting Standards
Board of the Institute of Chartered Accountants of Canada, Accounting Guideline 15 (AcG-15).We have determined that we are the primary beneficiary of TEN Group, a variable interest entity. Accordingly, as required by AcG-15, we
have consolidated the results of TEN Group. AcG-15 has been adopted on a retroactive basis with restatement of prior periods. Previously, we accounted for our investment in TEN Group using the equity method. As at August 31, 2005 we hold a
56.4% economic interest in TEN Group (56.6% at August 31, 2004). The interest held by the 43.6% minority is classified in minority interests (43.4% at August 31, 2004). The change had no impact on net earnings or shareholders equity.



Valuation of Intangibles



In accordance with the Emerging Issues Task Force topic number D-108, Use of Residual
Method to Value Acquired Assets Other than Goodwill, released September 29, 2004, we adopted a direct approach in the valuation of intangible assets for any business combinations completed after September 29,2004. We have performed
impairment testing using a direct method on all intangible assets previously valued under the residual method. Previously, we utilized a residual value approach in valuing indefinite lived broadcast licenses. There was no effect on the audited
consolidated financial statements as a result of this change in accounting policy.



FORTHCOMING CHANGES IN ACCOUNTING POLICIES



Financial
Instruments, Hedges and Comprehensive Income



The Accounting Standards
Board of the Institute of Chartered Accountants of Canada has issued CICA 3855, Financial InstrumentsRecognition and Measurement, CICA 3865, Hedges, and CICA 1530, Comprehensive Income,which we must apply for our fiscal
year beginning on September 1, 2007. CICA 3855 prescribes when a financial asset, financial liability, or non-financial derivative is to be recognized on the balance sheet and the measurement of such amount. It also specifies how financial
instrument gains and losses are to be presented. CICA 3865 is applicable for designated hedging relationships and builds on existing Canadian GAAP guidance by specifying how hedge accounting is applied and what disclosures are necessary when it is
applied. CICA 1530 introduces new standards for the presentation and disclosure of components of comprehensive income. Comprehensive income is defined as the change in net assets of an enterprise during a reporting period from transactions and other
events and circumstances from non-owner sources. It includes all changes in net assets during a period except those resulting from investments by owners and distributions to owners. We are currently considering the impacts of the adoption of such
standards.



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Implicit Variable Interest



The Emerging Issues Committee (EIC) of the Accounting Standards Board of the Institute of Chartered Accountants of Canada has
issued EIC 157, Implicit Variable Interests under AcG-15, (EIC 157) which must be applied by the Company in the first interim period beginning subsequent to October 17, 2005. EIC 157 prescribes that an implicit variable
interest, which is an implied pecuniary interest in an entity that changes with changes in the fair value of that entitys net assets, exclusive of variable interests, be evaluated in accordance with AcG-15 to determine if consolidation is
appropriate. The Company is currently considering the impact of the adoption of such standards.



RESTATEMENT OF PRIOR YEAR RESULTS



As
described in note 1 to our consolidated financial statements, certain prior year results and balances have been revised for the reasons stated therein.



OPERATING RESULTS



Introductory Note



| |  |  | Segment operating profit.In the discussion that follows, we provide information concerning our segment operating profit. See note 23 to our audited consolidated financial
statements. Management utilizes segment operating profit as a measure of segment profitability in making strategic resource allocations.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating income before amortization.We also discuss our consolidated operating income before amortization. We provide this measure because we and our lenders and investors
use operating income before amortization to measure performance against our various leverage covenants. Operating income before amortization is not a recognized measure of financial performance under Canadian generally accepted accounting principles
(GAAP). Investors are cautioned that operating income before amortization should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of our performance. Our method of calculating
operating income before amortization may not be comparable to similarly titled measures used by other companies. A reconciliation of operating income before amortization to net earnings, which is the most closely comparable GAAP measure, is set
forth below under Reconciliation of Non-GAAP Financial Measures section of this report.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Fiscal 2005 Compared to Fiscal 2004



Following is a table summarizing segmented results for August 31, 2005 and August 31, 2004. See note 23 to our audited
consolidated financial statements:



|                                          |  |           |  |                          |  |         |     |  |                   |    
|----------------------------------------- |  | --------- |  | ------------------------ |  | ------- | --- |  | ----------------- | ---
|                                          |  | Revenue   |  | Segment operating profit | 
|                                          |  | 2005      |  | 2004                     |  | 2005    |     |  | 2004              |    
|                                          |  | $000      |  | $000 (REVISED)(1)        |  | $000    |     |  | $000 (REVISED)(1) |    
|Operating Segments                        |  |           |  |                          |  |         |     |  |                   |    
|Publishing and Online  Canada            |  | 1,228,851 |  | 1,193,629                |  | 254,875 |     |  | 267,343           |    
|                                          |  |           |  |                          |  |         |     |  |                   |    
|Television                                |  |           |  |                          |  |         |     |  |                   |    
|Canada                                    |  | 698,644   |  | 690,302                  |  | 124,699 |     |  | 147,430           |    
|Australia-Network TEN                     |  | 783,315   |  | 721,247                  |  | 293,528 |     |  | 256,033           |    
|New Zealand                               |  | 122,995   |  | 108,236                  |  | 30,713  |     |  | 23,291            |    
|Ireland                                   |  | 37,519    |  | 34,152                   |  | 13,254  |     |  | 10,591            |    
|                                          |  |           |  |                          |  |         |     |  |                   |    
|                                          |  | 1,642,473 |  | 1,553,937                |  | 462,194 |     |  | 437,345           |    
|Radio - New Zealand                       |  | 93,428    |  | 86,717                   |  | 26,994  |     |  | 27,488            |    
|Outdoor - Australia                       |  | 107,790   |  | 77,117                   |  | 23,173  |     |  | 14,477            |    
|Corporate and other                       |  |          |  |                         |  | (34,249 | )   |  | (27,110           | )  
|                                          |  |           |  |                          |  |         |     |  |                   |    
|                                          |  | 3,072,542 |  | 2,911,400                |  | 732,987 |     |  | 719,543           |    
|                                          |  |           |  |                          |  |         |     |  |                   |    
|Ravelston management contract termination |  |           |  |                          |  | (12,750 | )   |  |                  |    
|Restructuring expense(2)                  |  |           |  |                          |  |        |     |  | (2,445            | )  
|                                          |  |           |  |                          |  |         |     |  |                   |    
|Operating income before amortization      |  |           |  |                          |  | 720,237 | (3) |  | 717,098           | (3)
|                                          |  |           |  |                          |  |         |     |  |                   |    



|(1) | See note 1 to our audited consolidated financial statements.
|--- | ------------------------------------------------------------



|(2) | Restructuring expenses relate to Canadian television operations.
|--- | ----------------------------------------------------------------



|(3) | See Reconciliation of Non-GAAP Financial Measures for a reconciliation to net earnings.
|--- | -----------------------------------------------------------------------------------------



Consolidated Results



Revenues.Consolidated revenues increased by $161 million or 6% to $3,073 million for fiscal 2005 from consolidated revenues of
$2,911 million fiscal 2004. The increase reflected higher revenues in each of our operating segments, with the most significant increases from our Canadian publishing and online, New Zealand television, Australian television and Australian outdoor
advertising segments.



Operating expenses.Consolidated operating
expenses (including selling, general, and administrative expenses) before amortization increased $148 million or 7% to $2,340 million. This increase reflects expense increases in all operating segments.



Ravelston management contract termination. Effective April 2005, we terminated the
agreement under which we received management services from The Ravelston Corporation Limited (Ravelston). The agreement provided for annual payments of $6 million to Ravelston as well as the payment of a fee upon termination. In August
2005, we and RSM Richter Inc., in its capacity as interim receiver, receiver manager and monitor of Ravelston, received Court approval for a termination payment in the amount of $13 million, which was paid in September 2005. This charge was recorded
in operating expenses for year ended August 31, 2005.



Restructuring
charge.In fiscal 2004 we incurred $2 million in restructuring expenses related to Canadian television operations.



Operating income before amortization.Consolidated operating income before amortization increased nominally to $720 million for fiscal 2005 from $717 million for
fiscal 2004. The increase in operating income before amortization reflected increases in revenues that were partially offset by losses in our operations under development, the contract termination fees, increases in television programming expenses
and increases in compensation expenses related to executive management of Canadian operations.



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Amortization.Amortization of intangibles was $20 million for fiscal 2005 compared to $18 million for fiscal 2004.
Amortization of property, plant and equipment and was $92 million for fiscal 2005 compared to $89 million for fiscal 2004. The increases in amortization expenses are due to acquisitions made in fiscal 2005 and fiscal 2004.



Interest expense. Interest expense was $252 million for fiscal 2005 compared to $339
million for fiscal 2004, reflecting a reduced level of debt as well as reduced interest rates achieved through our refinancing activities in fiscal 2005 and in fiscal 2004.



Interest rate and foreign currency swap losses. For fiscal 2005, we recorded a $189 million loss equivalent to the change in fair
value of interest rate and foreign currency interest rate swaps on debt that has been retired (overhanging swaps) compared to a $111 million loss for fiscal 2004. The increase is due to an increase in amount of overhanging swaps as a
result of reduced debt levels.



Foreign exchange gains. We recorded net
foreign exchange gains of $76 million in fiscal 2005 compared to $45 million in fiscal 2004. This reflects gains of $68 million on repayment of US dollar denominated debt and a $5 million gain that arose on the translation of a portion of our U.S.
debt which is not hedged.



Investment gains. For fiscal 2005, we
recorded an investment gain of $2 million, compared to $116 million for fiscal 2004. This includes dilution gains on the exercise of stock options at TEN Group, a gain on disposal of non-core assets and gains on disposal of property plant and
equipment. The gain in fiscal 2004 reflected a $66 million gain from completing the initial public offering and refinancing of our New Zealand operations, which reduced our ownership from 100% to 70%, a $52 million gain from selling our 29.9%
interest in Ulster Television and dilution gains on the exercise of stock options at TEN Group.



Goodwill impairment. For fiscal 2005, we performed our annual impairment testing and determined that the value of goodwill related to the National Post was impaired and as a result, recorded an
impairment of $41 million.



Asset impairment.For fiscal 2005, we
performed our annual impairment testing and determined that the value of circulation related to the National Post was impaired and as a result, recorded an impairment of $10 million.



Loss on debt extinguishment. During the first quarter of fiscal 2005, we completed an
exchange offer and concurrent debt offering through which we settled the $904 million 12.125% Senior Notes due 2010 by issuance of $908 million (US$761 million) of 8% Senior Subordinated Notes due 2012. The fair value of the new debt on its
settlement date was determined to be $944 million. The excess of fair value of the new debt over the book value of the old debt together with certain costs of settling the debt has been charged to earnings for fiscal 2005 as a loss on debt
extinguishment of $44 million. This refinancing reduces cash interest expense by approximately $40 million annually.



Income taxes.Our income tax expense was $20 million for fiscal 2005, compared to $37 million for fiscal 2004. The effective tax rate of 15% was below the
Companys statutory rate of 35% as a result of the impact of international tax rates which were lower than Canadian tax rates, as well as the impact of (i) a $10 million recovery related to the resolution of an uncertain tax position,
(ii) a $7 million effect of recognizing temporary differences which were not previously tax effected, and (iii) a change in Australian tax legislation that allowed TEN Group to record a future taxes recovery of $18 million. The $7 million
of temporary differences not previously tax effected related to earnings of periods prior to fiscal 2005. We have determined that these adjustments are not material to the current or previously reported results and accordingly, the amount has been
included in current years earnings. This adjustment has the effect of increasing basic and diluted earnings per share for fiscal 2005, by $0.04 per share.



Minority interests. For fiscal 2005 we recorded minority interests charges related to the 30% minority interest in CanWest MediaWorks (NZ) and the 43.6%
minority interest in TEN Group of $7 and $90 million, respectively. The minority interests charge related to TEN Group increased by 12% as compared to the $80 million charge for the same period in fiscal 2004 as a result of TEN Groups
increased net earnings. There was only a nominal minority interests charge related to CanWest MediaWorks (NZ) for fiscal 2004 because it was wholly owned to July 2004.



Net earnings from continuing operations. Our net earnings from continuing operations for fiscal 2005 were $20 million, or $0.12 per
share, compared to $194 million, or $1.10 per share, for fiscal 2004.



10



---

Discontinued operations. In July 2005, we sold a substantial portion of our entertainment operations. Net loss
from discontinued operations was $10 million for fiscal 2005 compared to $208 million for fiscal 2004.



Net earnings (loss). Our net earnings for fiscal 2005 were $10 million or $0.06 per share compared to a net loss of $13 million or $0.08 per share for fiscal 2004.



Segment Results



Publishing and online



| |  |  | Revenues.Revenues increased by $35 million or 3% to $1,229 million for fiscal 2005 as compared to fiscal 2004. Increases in advertising revenues resulted from rate increases
as well as from increases in revenues from online classifieds. Revenues from online classified increased to $12 million for fiscal 2005 from $4 million for fiscal 2004. Circulation revenues of $247 million for both fiscal 2005 and 2004 represented
20% of publishing and online revenues for fiscal 2005 compared to 21% for fiscal 2004. Circulation volume decreased by 3%, while the average rate per copy increased by 3%, which resulted in a nominal decrease in circulation revenues for fiscal 2005
as compared to fiscal 2004.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Operating expenses of the publishing and online segment increased by $48 million or 5% to $974 million for fiscal 2005 as compared to fiscal 2004,
primarily as a result of increased payroll costs, including increased costs of executive management, and higher distribution costs. Newsprint costs decreased by approximately 4% reflecting reduced pricing and newsprint usage.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit. Segment operating profit for fiscal 2005 decreased by $12 million or 5% compared to the same period in the prior year. The decrease in segment
operating profit arose from losses of $8 million related to Dose and the Metro joint venture, both of which commenced operations in fiscal 2005, and the increased costs of executive management and distribution expenses discussed above.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Canadian television



| |  |  | Revenues. In total, revenues from our Canadian television operating segment of $699 million were approximately $8 million, or 1%, higher in fiscal 2005 than the $690 million
recorded in fiscal 2004. This reflected a 22% increase in subscription revenues from our specialty television operations and flat advertising revenues.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our conventional television revenues for fiscal 2005 were flat compared to the prior year. This reflects the effect of continued ratings declines throughout fiscal 2005.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Revenues from our digital specialty channels increased by 42% to $15 million in fiscal 2005 compared to fiscal 2004. This reflects increases in advertising and subscriber revenues
as well as the effect of proportionately consolidating our 50% interest in Mystery, which was previously equity accounted. Our digital specialty channels achieved subscriber growth of 15% in fiscal 2005, increasing total subscriptions to
8.6 million subscribers at August 31, 2005.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Operating expenses (including selling, general and administrative expenses) of $574 million at our Canadian television segment were $31 million, or 6%,
higher than in fiscal 2004 primarily because of increased programming and promotion expenses, to build ratings, and compensation cost increases associated with our new management structure.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit. Reflecting an increase in segment operating expenses that more than offset an increase in segment revenues, Canadian television segment operating
profit declined to $125 million in fiscal 2005 from the $147 million recorded for fiscal 2004.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



11



---

Australian television



| |  |  | Revenues.Segment revenues increased by 9% to $783 million for fiscal 2005 from $721 million during fiscal 2004. In local currency, revenues increased 11%, reflecting
TENs strong rating performance in a continuing strong television advertising environment.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses.Segment operating expenses increased 5% to $490 million for fiscal 2005 compared to $465 million for fiscal 2004, primarily reflecting increased
programming costs.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit.Segment operating profit increased by 15% to $294 million in fiscal 2005, compared to $256 million in fiscal 2004, as the increase in revenues more
than offset the increase in expenses.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



New Zealand television.



| |  |  | Revenues.Revenues from television broadcast operations for New Zealands 3 and C4 television networks increased by 14% to $123 million for fiscal 2005 from $108 million
for fiscal 2004. In local currency, revenues increased by 12%, reflecting improved audience share in a strong advertising environment. The strengthening New Zealand currency contributed an additional 2% on translation to Canadian dollar revenues.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Operating expenses in fiscal 2005 increased by 9% to $92 million. In local currency, expenses increased by 7%, driven primarily by higher programming
expenses, which included costs related to the development and start up of a new weeknight current affairs program  Campbell Live  and the re-launch of 3 News. The appreciation of the New Zealand dollar relative to the
Canadian dollar added an additional 2% increase on translation to Canadian dollar revenues.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit. New Zealand 3 and C4 produced segment operating profit of $31 million, a $7 million or 32% increase from the results recorded in fiscal 2004.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



Irish television.



Segment operating revenues increased by 10% to $38 million in fiscal 2005 as compared to $34
million in fiscal 2004. As a result of revenue increases, segment operating profit in fiscal 2005 increased by $3 million to $13 million compared to fiscal 2004.



New Zealand radio.



Due to the acquisition of new radio frequencies in 2005 and 2004, CanWest RadioWorks continued its steady performance, increasing revenues for fiscal 2005. Revenue grew
by 8% to $93 million from $87 million in fiscal 2004, reflecting a 6% increase in revenue in local currency and an additional 2% increase as a result of currency translation. Segment operating profit declined by 2% to $27 million for fiscal 2005 as
compared to fiscal 2004 due to the significant start up costs associated with Radio Live and the branding costs related to Kiwi FM.



Australian outdoor advertising.



Segment revenues increased by $31 million, or 40%, to $108 million for fiscal 2005 from $77 million for fiscal 2004. This increase reflected a 44% growth in revenue in
local currency. Our segment operating profit from TENs outdoor advertising operations increased by $9 million to $23 million as compared to fiscal 2004 driven by Eye Corp.s acquisition of the remaining 50% of Eye Shop as well as stronger
airport advertising revenues.



Corporate and other.



Corporate and other segment expenses increased to $34 million in fiscal 2005 compared to $27
million in the same period in the prior year due to increased costs related to analysis and documentation of our internal controls in preparation for the requirements under section 404 of the Sarbanes Oxley Act as well as to expenses related to
increased corporate development activities.



12



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Fiscal 2004 Compared to Fiscal 2003



Following is a table summarizing segmented results for August 31, 2004 and August 31, 2003:



|                                                            |  |                  |  |                          |  |                  |     |  |                  |    
|----------------------------------------------------------- |  | ---------------- |  | ------------------------ |  | ---------------- | --- |  | ---------------- | ---
|                                                            |  | REVENUE          |  | SEGMENT OPERATING PROFIT | 
|                                                            |  | 2004             |  | 2003                     |  | 2004             |     |  | 2003             |    
|                                                            |  | $000(REVISED)(1) |  | $000(REVISED)(1)         |  | $000(REVISED)(1) |     |  | $000(REVISED)(1) |    
|Operating Segments                                          |  |                  |  |                          |  |                  |     |  |                  |    
|Publishing and Online  Canada                              |  | 1,193,629        |  | 1,208,180                |  | 267,343          |     |  | 258,496          |    
|Television                                                  |  |                  |  |                          |  |                  |     |  |                  |    
|Canada                                                      |  | 690,302          |  | 730,407                  |  | 147,430          |     |  | 216,346          |    
|Australia-Network TEN                                       |  | 721,247          |  | 586,998                  |  | 256,033          |     |  | 186,644          |    
|New Zealand                                                 |  | 108,236          |  | 95,055                   |  | 23,291           |     |  | 10,095           |    
|Ireland                                                     |  | 34,152           |  | 32,490                   |  | 10,591           |     |  | 9,729            |    
|                                                            |  |                  |  |                          |  |                  |     |  |                  |    
|                                                            |  | 1,553,937        |  | 1,444,950                |  | 437,345          |     |  | 422,814          |    
|Radio-New Zealand                                           |  | 86,717           |  | 73,400                   |  | 27,488           |     |  | 20,751           |    
|Outdoor-Australia                                           |  | 77,117           |  | 63,954                   |  | 14,477           |     |  | 4,466            |    
|Corporate and other                                         |  |                 |  |                         |  | (27,110          | )   |  | (23,213          | )  
|                                                            |  |                  |  |                          |  |                  |     |  |                  |    
|                                                            |  | 2,911,400        |  | 2,790,484                |  | 719,543          |     |  | 683,314          |    
|                                                            |  |                  |  |                          |  |                  |     |  |                  |    
|Restructuring and film and television impairment expense(2) |  |                  |  |                          |  | (2,445           | )   |  | (31,071          | )  
|                                                            |  |                  |  |                          |  |                  |     |  |                  |    
|Operating income before amortization                        |  |                  |  |                          |  | 717,098          | (3) |  | 652,243          | (3)
|                                                            |  |                  |  |                          |  |                  |     |  |                  |    

---

|(1) | See note 1 to our audited consolidated financial statements.
|--- | ------------------------------------------------------------



|(2) | For 2004, restructuring expenses relate to Canadian television operations. For 2003, it
includes Network TEN film and television impairment charges of $18 million and Canadian media operations restructuring expenses of $13 million.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | See Reconciliation of Non-GAAP Financial Measures for a reconciliation to net
earnings.
|--- | -----------------------------------------------------------------------------------------



Effect of Divestitures. In February 2003, we
sold certain newspaper publishing assets to Osprey Media. The following table summarizes the contribution of these newspaper assets to consolidated revenues, operating income before amortization and net earnings during fiscal 2003.



|                                     |  |                            |   |  |                                                |  
|------------------------------------ |  | -------------------------- | - |  | ---------------------------------------------- | -
|                                     |  | Year ended August 31, 2003 |  
|                                     |  | Revenues Revised (1)       |   |  | OperatingIncome BeforeAmortization Revised (1) |  
|As Reported                          |  | 2,790,484                  |   |  | 652,243                                        |  
|Newspaper Publishing Properties Sold |  | (39,956                    | ) |  | (10,105                                        | )
|                                     |  |                            |   |  |                                                |  
|                                     |  | 2,750,528                  |   |  | 642,138                                        |  
|                                     |  |                            |   |  |                                                |  

---

|(1) | See note 1 to our audited consolidated financial statements.
|--- | ------------------------------------------------------------



CONSOLIDATED RESULTS



Revenues. Consolidated revenues increased by $121 million to $2,911 million during fiscal year 2004, compared to $2,790 million during fiscal year 2003. This increase was driven by significant increases in
revenues from our international media operations and an improvement in our continuing operations in the publishing and online segment, which were partially offset by a decrease in revenues from our Canadian television segment and from the sale of
the newspaper assets to Osprey Media described above; these assets accounted for $40 million of our consolidated revenues for fiscal 2003.



13



---

Operating expenses, excluding restructuring charge and film and television program impairment expense.
Consolidated operating expenses (including selling, general and administrative expenses) increased by $85 million for fiscal year 2004 to $2,192 million. The assets sold to Osprey Media accounted for $30 million of our consolidated operating
expenses during fiscal 2003. Consolidated operating expenses attributable to operations not sold increased $115 million, or 6%, from $2,077 million in fiscal 2003, as a result of significant programming expense increases for our Canadian television
segment as well as general expense increases in other operating segments.



Restructuring and film and television program impairment expense. In fiscal 2004, we incurred $2 million in restructuring expenses related to Canadian television operations. In fiscal 2003, we undertook restructuring activities in
our Canadian media operations that generated restructuring expenses of $13 million. The fiscal 2003 restructuring expenses related to the following operating segments: Canadian television - $3 million, Canadian publishing and online - $9 million and
corporate and other - $1 million. In 2003, TEN wrote down program and television rights associated with certain features in the amount of $18 million.



Operating income before amortization. Consolidated operating income before amortization increased by 10% in fiscal year 2004 to $717 million from $652 million in
fiscal 2003. The increase is due to increases in our New Zealand and Australian television segments and our publishing and online segment, which was partially offset by lower segment operating profit in our Canadian television segment.



Amortization. Amortization of intangibles was $18 million for both fiscal 2004 and
2003. Amortization of property, plant and equipment was $89 million in fiscal 2004, and $86 million in fiscal 2003.



Interest income and expense and other financing expenses. Interest expense was $339 million for fiscal year 2004, compared to $377 million for fiscal year 2003,
reflecting a reduced level of debt as well as reduced interest rates achieved through refinancing of debt. Debt at August 31, 2004 was $3,217 million, $364 million less than the debt outstanding at August 31, 2003 of $3,581 million. We
refinanced our senior secured debt in August 2003 and in June 2004 resulting in annual interest savings of approximately $8 million and $5 million, respectively.



In fiscal 2004, we recorded a $111 million loss equivalent to the change in fair value of interest rate swaps and foreign currency interest
rate swaps that have not been settled and which relate to debt that has been retired. This compared to a loss of $23 million for the same period of fiscal 2003.



We recorded interest income of $9 million for fiscal year 2004, primarily related to interest received on an income tax refund related to an income tax issue which was
resolved in the first quarter and interest received from Hollinger in settlement of a claim related to our acquisition of the National Post.



Foreign exchange gains. We recorded net foreign exchange gains of $45 million fiscal 2004. Approximately $36 million of this gain related to a gain on early
retirement of U.S. dollar denominated debt in August 2004. In addition, we recorded translation gains on U.S. dollar denominated debt, which has not been hedged. This compared to a $4 million foreign exchange gain recorded in the previous year.



Investment gains and losses, net of write-down. For fiscal 2004, we
recorded investment income of $116 million, compared to investment income of $9 million in fiscal 2003. In fiscal 2004, we recorded a gain on the sale of our interest in UTV of $52 million, a gain of $66 million related to the New Zealand
transaction and a dilution gain of $2 million as a result of the exercise of stock options at TEN Group which effectively diluted our economic interest to 56.6%. For fiscal year 2003, we recorded a gain of $21 million on the sale of community
newspapers and a dilution gain of $2 million as a result of the exercise of stock options at TEN Group, which were offset by a loss of $11 million on the sale of our shares in SBS Broadcasting and other write downs of $3 million. Dividend income of
$4 million received from UTV in fiscal 2004 was 6% higher than in fiscal 2003. In June 2004, we sold our interest in UTV.



14



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Income taxes. The income tax provision was $37 million for fiscal year 2004, compared to a recovery of $47 million
for fiscal year 2003. The effective tax rate of 12% in fiscal year 2004 differed from our statutory rate of 35% as a result of the $37 million reduction due to the non taxable portion of capital losses, the $41 million reduction due to foreign
income rates differing from Canadian income tax rates, a $20 million credit from the resolution of tax issues and the effect of increases in future tax rates which caused a net increase in future tax liabilities and resulted in a $9 million income
tax expense.



Minority interest.Minority interest remained constant at
$80 million for both fiscal 2004 and 2003 and mainly represented the minority interest related to TEN Group.



Currency translation. We recorded net currency translation losses of $7 million in fiscal 2004 related to the realization of currency translation gains related to TEN Group distributions, currency translation
losses related to the repayment of inter-company loans by our New Zealand operations and the divestiture of 30% of our interest in New Zealand. This compared to a $1 million gain in fiscal 2003.



Net earnings before discontinued operations. Our net earnings before discontinued
operations for fiscal 2004 were $194 million compared to $115 million for fiscal 2003.



Discontinued operations.In 2004, we commenced a process to sell all of Fireworks Entertainments production and distribution operations, resulting in the classification of these operating results as a loss from discontinued
operations and its assets and liabilities as assets and liabilities of discontinued operations. This process was completed in 2005. These operations were previously classified in the Canadian Entertainment segment. Impairment charges of $211 million
including goodwill impairment of $31 million were recorded to adjust the assets to their fair values based upon recent estimates less cost to dispose. Net loss from discontinued operations was $208 million for the year ended August 31, 2004
compared to $69 million for the same operations for the year ended August 31, 2003.



Net earnings (loss). Our net loss for fiscal 2004 was $13 million or ($0.08) per share compared to a net earnings of $46 million or $0.22 per share for fiscal 2003.



SEGMENT RESULTS



Publishing and online



| |  |  | Revenues. Segment revenues for fiscal year 2004 were $1,194 million, a decrease of $15 million, or 1%, from the revenues recorded in the fiscal 2003. This decline reflects
the publishing asset sale in February 2003; the divested assets accounted for $40 million of our publishing and online revenues during fiscal 2003. Our remaining publishing assets recorded an increase of $25 million, or 2%, compared to fiscal 2003.
Excluding the impact of the publishing asset sales, advertising revenues were up approximately 2% overall due to flat lineage and increased pricing. The flat lineage reflects increases in classified and retail advertising that were partially offset
by decreases in national account lineage most significantly in the automotive sector. The increase in rates reflects increases for national accounts; the rates achieved for retail decreased as a result of an increased use of inserts versus run of
press. While circulation numbers excluding the asset sales were flat, circulation revenue excluding those asset sales increased marginally as a result of achieving an increase in revenue per copy due to price increases.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Segment operating expenses (including selling, general and administrative expenses) for fiscal year 2004 declined by $23 million compared to fiscal 2003.
This decline reflects a $30 million decrease in operating expenses attributable to publishing assets sold, partially offset by a $6 million increase in operating expenses attributable to our continuing operations. The modest increase reflected
normal salary escalations and increases in certain administrative costs including pension expense, partially offset by cost reductions attributable to the restructuring undertaken in the latter part of fiscal 2003. Newsprint expenses increased
approximately 1%, reflecting an increase in the cost of newsprint partially offset by reduced consumption.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



15



---

| |  |  | Segment operating profit. Segment operating profit for fiscal year 2004 increased by $9 million compared to the same period in the prior year. Excluding the impact of the
publishing assets sold to Osprey Media, segment operating profit was $19 million, or 8%, higher than in fiscal 2003, driven primarily by the increase in revenues.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restructuring Expenses. Restructuring expenses of $9 million were recorded in respect of this segment for fiscal year 2003 consisting of employee severance costs. These
charges are not reflected in segment operating profit.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Canadian television



| |  |  | Revenues. Segment revenues for fiscal year 2004 declined by 5%, or $40 million, to $690 million from $730 million recorded in fiscal 2003 as a result of a 7% decrease in
airtime sales for fiscal year 2004. The decrease in airtime sales primarily reflects an increasingly competitive market place, a decline in ratings and decreased advertising spending from certain sectors, particularly packaged goods and retail.
Airtime revenue decreases were most significant in the first quarter of fiscal 2004 with an 11% decrease compared to the first quarter of fiscal 2003.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



This decrease was partially offset by an approximately $3 million increase in revenues from the sale of program rights
resulting from an increase in television program production by Global Television. In addition, our seven digital specialty channels reported increases in both subscriber and advertising revenue. Overall, digital revenues increased by 22% to $10
million in fiscal year 2004 compared to the same period in the previous year. There are now more than 3.4 million subscribers to our digital services, representing a 17% increase in fiscal 2004. Our seventh channel, Cool TV was launched in the
first quarter of fiscal 2004.



| |  |  | Operating expenses. Segment operating expenses (including selling, general and administrative expenses) were $543 million for fiscal year 2004, which is $29 million, or 6%,
higher than segment operating expenses for fiscal year 2003. This reflected increases in expenses due to the following:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | program amortization, which comprises approximately 50% of segment operating expenses, increased by approximately $14 million, or 6%, for fiscal 2004 as compared to fiscal 2003.
This included charges related to the discontinuance of certain programming activities such as the Mike Bullard Show as well as increased costs of new program offerings;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased pension expense primarily as a result of an increase in the amortization of the actuarial loss in our defined benefit pension plans; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased levies for the Society of Composers, Authors and Music Publishers of Canada, or SOCAN, were introduced resulting in an expense increase of approximately $2 million for
fiscal year 2004, including approximately $1.5 million which related to retroactive assessment for prior fiscal years.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



These increases were partially offset by cost reductions achieved through savings as a result of headcount reductions undertaken in the second half of
fiscal 2003.



| |  |  | Segment operating profit. As a result of revenue decreases and expense increases, Canadian television segment operating profit for fiscal 2004 decreased 32% to $147 million
compared to $216 million for fiscal 2003.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restructuring Expenses. Restructuring expenses of $2 million were recorded in respect of this segment for fiscal 2004 and $3 million were recorded in respect of this segment
for fiscal 2003 consisting of employee severance costs. These charges are not reflected in segment operating profit.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16



---

Australian television



| |  |  | Revenues. Segment revenues for fiscal year 2004 increased by 22% to $721 million from $587 million for the same period in the prior year. In domestic currency, segment
revenues increased 14% reflecting Network TENs strong rating performance in a strong television advertising environment. The strength of the Australian currency contributed an additional 8% increase on translation to Canadian dollars.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Segment operating expenses for fiscal 2004 increased 16% to $465 million compared to $400 million for fiscal 2003. In domestic currency, operating
expenses increased 8% primarily as a result of increased programming expenses. The strength of the Australian currency added an additional 8% increase on translation to Canadian dollars.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit. Segment operating profit increased by 37% to $256 million for fiscal 2004, compared to $187 million for fiscal 2003, as the increase in revenues
more than offset the increase in operating expenses.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



New
Zealand television



Revenues for New Zealands 3 and C4 television
networks increased by 14% to $108 million for fiscal year 2004 from $95 million the previous year. In local currency, revenues increased by 6%, reflecting growth in New Zealand television advertising expenditures. C4 (formerly TV4) was re-launched
in fiscal 2004 as New Zealands first free-to-air music channel and has contributed to the increase in revenues. The stronger New Zealand currency contributed an additional 8% increase. In local currency, operating expenses for New
Zealands 3 and C4 television networks decreased by 6% primarily as a result of reduced programming costs partially due to the increased purchasing power of the New Zealand dollar. In addition, in fiscal 2003 programming expense was higher as a
result of the write-down of inventory in anticipation of the C4 format change. On translation to Canadian dollars, operating expenses for New Zealands 3 and C4 television networks were flat as compared to fiscal 2003, as a result of the
strengthened New Zealand currency. New Zealands 3 and C4 produced segment operating profit of $23 million, more than twice the segment operating profit of $10 million recorded in fiscal year 2003.



Irish television



Segment revenues increased by 5% to $34 million for fiscal 2004 from $32 million in fiscal 2003. Segment operating expenses increased by 4%
as a result of general cost and wage increases. Segment operating profit increased by 9% to $11 million from $10 million recorded in fiscal 2003, reflecting the increase in segment revenues, which more than offset the increase in segment operating
expenses.



New Zealand radio



CanWest RadioWorks in New Zealand continued its steady performance, with increasing revenues
and segment operating profit for fiscal year 2004. Segment revenues grew by 18% to $87 million from $73 million in the same period in the previous year. Domestic currency segment revenues grew by 10%, with an additional 8% increase as a result of
translation to Canadian currency. The revenue increase was driven principally by growth in radio advertising expenditures in New Zealand. As a result of growth segment revenue and a strengthening New Zealand currency, RadioWorks segment
operating profit grew to $27 million from $21 million in fiscal 2003.



Australian outdoor advertising



Segment revenues increased by
$13 million, or 21%, to $77 million from $64 million for fiscal 2003. This increase reflected 13% growth in revenue in domestic currency with a further 8% increase as a result of currency translation. Segment operating profit increased by $10
million to $14 million fiscal year 2004, as compared to $4 million for fiscal year 2003.



Corporate and other



Segment expenses
increased from $23 million in fiscal 2003 to $27 million in fiscal 2004. Restructuring expenses of $1 million were incurred in respect of this segment in fiscal 2003 consisting of employee severance costs.



17



---

CONSOLIDATED QUARTERLY FINANCIAL RESULTS



For the three month periods ended (in thousands of dollars, except as noted)

(unaudited)

2005



|                                                         |  |          |   |  |        |         |        |   |         |  |   |        
|-------------------------------------------------------- |  | -------- | - |  | ------ | ------- | ------ | - | ------- |  | - | -------
|                                                         |  | 31-Aug   |   |  | 31-May |         | 28-Feb |   | 30-Nov 
|Revenue                                                  |  | 701,537  |   |  |        | 809,722 |        |   | 688,653 |  |   | 872,630
|Operating income before amortization                     |  | 84,322   |   |  |        | 197,614 |        |   | 148,696 |  |   | 289,605
|Amortization of intangibles                              |  | 5,456    |   |  |        | 4,988   |        |   | 4,958   |  |   | 4,939  
|Amortization of property, plant, and equipment and other |  | 24,743   |   |  |        | 24,914  |        |   | 24,643  |  |   | 22,859 
|Net earnings (loss) from continuing operations           |  | (102,089 | ) |  |        | 58,823  |        |   | 28,242  |  |   | 35,446 
|Net earnings (loss)                                      |  | (106,039 | ) |  |        | 52,718  |        |   | 28,196  |  |   | 35,415 
|Cash flow from continuing operating activities           |  | 202,539  |   |  |        | 72,948  |        |   | 175,313 |  |   | 18,488 
|Cash flow from operating activities                      |  | 214,141  |   |  |        | 83,298  |        |   | 181,628 |  |   | 36,629 
|Net earnings (loss) from continuing operations per share |  |          |   |  |        |         |        |   |         |  |   |        
|Basic                                                    |  | ($0.57   | ) |  | $      | 0.33    |        | $ | 0.16    |  | $ | 0.20   
|Diluted                                                  |  | ($0.57   | ) |  | $      | 0.33    |        | $ | 0.16    |  | $ | 0.20   
|Net earnings (loss) per share                            |  |          |   |  |        |         |        |   |         |  |   |        
|Basic                                                    |  | ($0.60   | ) |  | $      | 0.30    |        | $ | 0.16    |  | $ | 0.20   
|Diluted                                                  |  | ($0.59   | ) |  | $      | 0.30    |        | $ | 0.16    |  | $ | 0.20   



2004



(Revised: see note 1 to the audited consolidated financial statements)



|                                                         |  |        |         |        |   |         |  |          |        |  |   |        
|-------------------------------------------------------- |  | ------ | ------- | ------ | - | ------- |  | -------- | ------ |  | - | -------
|                                                         |  | 31-Aug |         | 31-May |   | 28-Feb  |  |          | 30-Nov
|Revenue                                                  |  |        | 664,990 |        |   | 783,941 |  | 661,865  |        |  |   | 800,604
|Operating income before amortization                     |  |        | 120,837 |        |   | 202,367 |  | 143,495  |        |  |   | 250,399
|Amortization of intangibles                              |  |        | 4,542   |        |   | 4,552   |  | 4,550    |        |  |   | 4,538  
|Amortization of property, plant, and equipment and other |  |        | 20,646  |        |   | 25,369  |  | 24,210   |        |  |   | 23,877 
|Net earnings (loss) from continuing operations           |  |        | 59,767  |        |   | 52,475  |  | (1,535   | )      |  |   | 83,592 
|Net earnings (loss)                                      |  |        | 61,966  |        |   | 54,337  |  | (211,277 | )      |  |   | 81,496 
|Cash flow from continuing operating activities           |  |        | 184,685 |        |   | 52,003  |  | 114,761  |        |  |   | 42,834 
|Cash flow from operating activities                      |  |        | 186,943 |        |   | 75,962  |  | 105,862  |        |  |   | 41,507 
|Net earnings (loss) from continuing operations per share |  |        |         |        |   |         |  |          |        |  |   |        
|Basic                                                    |  | $      | 0.34    |        | $ | 0.30    |  | ($0.01   | )      |  | $ | 0.47   
|Diluted                                                  |  | $      | 0.34    |        | $ | 0.30    |  | ($0.01   | )      |  | $ | 0.47   
|Net earnings (loss) per share                            |  |        |         |        |   |         |  |          |        |  |   |        
|Basic                                                    |  | $      | 0.35    |        | $ | 0.31    |  | ($1.19   | )      |  | $ | 0.46   
|Diluted                                                  |  | $      | 0.35    |        | $ | 0.31    |  | ($1.19   | )      |  | $ | 0.46   



18



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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31, 2005



Following is a table of segmented results for the three
months ended August 31, 2005 and August 31, 2004:



|                                                         |  |                 |  |                               |  |                 |   |  |                               |  
|-------------------------------------------------------- |  | --------------- |  | ----------------------------- |  | --------------- | - |  | ----------------------------- | -
|                                                         |  | Revenue         |  | Segment operating profit      | 
|                                                         |  | 2005            |  | 2004                          |  | 2005            |   |  | 2004                          |  
|                                                         |  | $000(unaudited) |  | $000 (unaudited) (REVISED)(1) |  | $000(unaudited) |   |  | $000 (unaudited) (REVISED)(1) |  
|Operating Segments                                       |  |                 |  |                               |  |                 |   |  |                               |  
|Publishing and Online - Canada                           |  | 290,242         |  | 280,807                       |  | 38,869          |   |  | 53,348                        |  
|                                                         |  |                 |  |                               |  |                 |   |  |                               |  
|Television                                               |  |                 |  |                               |  |                 |   |  |                               |  
|Canada                                                   |  | 133,949         |  | 130,590                       |  | (13,313         | ) |  | (20                           | )
|Australia - Network TEN                                  |  | 187,439         |  | 175,415                       |  | 61,634          |   |  | 58,405                        |  
|New Zealand                                              |  | 33,192          |  | 29,682                        |  | 7,894           |   |  | 5,630                         |  
|Ireland                                                  |  | 7,351           |  | 7,110                         |  | 1,712           |   |  | 1,712                         |  
|                                                         |  |                 |  |                               |  |                 |   |  |                               |  
|Total television                                         |  | 361,931         |  | 342,797                       |  | 57,927          |   |  | 65,727                        |  
|Radio - New Zealand                                      |  | 22,199          |  | 21,418                        |  | 5,879           |   |  | 6,544                         |  
|Outdoor - Australia                                      |  | 27,165          |  | 19,968                        |  | 5,149           |   |  | 4,116                         |  
|Corporate and other                                      |  |                |  |                              |  | (11,502         | ) |  | (6,453                        | )
|                                                         |  |                 |  |                               |  |                 |   |  |                               |  
|                                                         |  | 701,537         |  | 664,990                       |  | 96,322          |   |  | 123,282                       |  
|                                                         |  |                 |  |                               |  |                 |   |  |                               |  
|Ravelston management contract termination                |  |                 |  |                               |  | (12,000         | ) |  |                              |  
|Restructuring and film and television impairment expense |  |                 |  |                               |  |                |   |  | (2,445                        | )
|                                                         |  |                 |  |                               |  |                 |   |  |                               |  
|Operating income before amortization                     |  |                 |  |                               |  | 84,322          |   |  | 120,837                       |  
|                                                         |  |                 |  |                               |  |                 |   |  |                               |  



|(1) | See note 1 to our audited consolidated financial statements.
|--- | ------------------------------------------------------------



CONSOLIDATED RESULTS



Revenues. Consolidated revenues increased by $37 million or 5% to $702 million for the three months ended August 31, 2005 from consolidated revenues of $665 million for the same period in fiscal 2004.
Revenues for the fourth quarter reflected an 9% increase in revenues from international media operations, a 3% increase in Canadian television revenues and a 3% increase in Canadian Publishing and Online revenues.



Operating expenses. Consolidated operating expenses (including selling, general, and
administrative expenses) before amortization increased $63 million or 12% to $605 million. This increase reflects expense increases in all operating segments.



Ravelston management contract termination. Effective April 2005, we terminated the agreement under which we received management services from The Ravelston
Corporation Limited (Ravelston). The agreement provided for annual payments of $6 million to Ravelston as well as the payment of a fee upon termination. In August 2005, we and RSM Richter Inc., in its capacity as interim receiver,
receiver manager and monitor of Ravelston, received Court approval for a termination payment in the amount of $12 million, which was paid in September 2005. This charge was recorded in operating expenses for the year ended August 31, 2005.



Operating income before amortization. Consolidated operating income
before amortization decreased by 30% to $84 million for the three months ended August 31, 2005 from $121 million for the same period last year. The decrease in operating income before amortization reflected increases for international media
operations that were offset by decreases in operating income from the Canadian media operations and the Ravelston management contract termination.



Amortization. Amortization of intangibles was $5 million in the fourth quarter of both fiscal 2005 and 2004. Amortization of property plant and equipment was $25
million in fiscal 2005 compared to $21 million in fiscal 2004. The increase in amortization of property plant and equipment reflect acquisitions made in fiscal 2005 and fiscal 2004.



19



---

Financing costs. Interest expense was $59 million for the three months ended August 31, 2005 compared to $80
million in the previous year, reflecting a reduced level of debt as well as reduced interest rates achieved through our refinancing activities in fiscal 2005 and in fiscal 2004.



Interest rate and foreign currency swap losses. For the three months ended August 31, 2005, we recorded a $109 million loss
equivalent to the change in fair value of interest rate and foreign currency interest rate swaps on debt that has been retired. This compared to a loss of $102 million for the same period in fiscal 2004.



Foreign exchange gains. We recorded net foreign exchange gains of $47 million in the
three months ended August 31, 2005 compared to a gain of $41 million for the same period in 2004. This reflects gains of $49 million on repayment of US dollar denominated debt net of a $2 million loss on the translation of U.S. debt which is
not hedged and a loss on the translation of US dollar cash.



Investment
gains. For the three months ended August 31, 2005, we recorded an investment gain of $1 million, compared to a $118 million gain for the same period the previous year. The gain in 2005 relates to gains on disposal of property plant and
equipment. The gain in fiscal 2004 reflects a $66 million gain from completing the initial public offering and refinancing of our New Zealand operations, which reduced our ownership from 100% to 70% and a $51 million gain from selling our 29.9%
interest in Ulster Television.



Goodwill impairment. For fiscal 2005, we
performed our annual impairment testing and determined that the goodwill related to the National Post was impaired and as a result, recorded an impairment of $41 million.



Asset impairment.For fiscal 2005, we performed our annual impairment testing and determined that an intangible asset related to the
National Post was impaired and as a result, recorded an impairment of $10 million.



Income taxes.Our income tax recovery was $34 million for the three months ended August 31, 2005, compared to $10 million in the same period of fiscal 2004. The effective tax rate of 28% was below the
Companys statutory rate of 35% due to the effect of non-tax deductible goodwill impairment of $14 million offset by the resolution of uncertain tax position in the amount of $5 million.



Minority interests. For the three months ended August 31, 2005 we recorded
minority interests charges related to the 30% minority interests in CanWest MediaWorks (NZ) and the 43.6% minority interests in TEN Group of $1 and $17 million, respectively. The minority interests charge related to TEN Group decreased 6% as
compared to the $18 million charge for the same period in fiscal 2004 as a result of the decrease in TEN Groups net earnings in the quarter. There was only a nominal minority interests charge related to CanWest MediaWorks (NZ) for fourth
quarter of fiscal 2004 because it was wholly owned to July 2004.



Net
earnings from continuing operations. Our net loss from continuing operations for the three months ended August 31, 2005 were $102 million, or ($0.57) per share, compared to net earnings of $60 million, or $0.34 per share, for the three
months ended August 31, 2004.



Discontinued operations. In July
2005, we sold a substantial portion of our entertainment operations. The loss from discontinued operations was $4 million for the three months ended August 31, 2005 compared to earnings of $2 million for the same operations for the three months
ended August 31, 2004.



Net earnings. Our net loss for the three
months ended August 31, 2005 was $106 million or ($0.57) per share compared to net earnings $62 million or $0.34 per share for the fourth quarter of fiscal 2004.



20



---

Segmented Results



Publishing and online



| |  |  | Revenues.Revenues increased by $9 million or 3% to $290 million for the three months ended August 31, 2005 as compared to the same period in the prior year. Increases
in advertising revenues resulted from rate increases as well as from increases in revenues from online classifieds. Revenues from online classifieds increased to $4 million for the three months ended August 31, 2005 from less than $1 million
dollars for the same period in the prior year. Circulation revenues were $61 million for the three months ended August 31, 2005 and 2004 and represented 21% of newspaper and online segment revenues for the three months ended August 31,
2005 compared to 22% for the same period in the prior year. Circulation volume decreased by 2%, while the average rate per copy increased by 2%, which resulted in flat circulation revenues for the three months ended August 31, 2005 as compared
to the same period in fiscal 2004.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Segment operating expenses increased by $24 million or 11% to $251 million for the three months ended August 31, 2005 as compared to the same period
in the prior year, primarily as a result of increased payroll costs including increased costs of executive management. Newsprint costs increased by approximately 1% reflecting reduced pricing offset by increased newsprint usage.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit. Segment operating profit for the three months ended August 31, 2005 decreased by $14 million or 27% compared to the same period in the prior
year. The decrease in segment operating profit arose from increased operating costs and by losses of $5 million related to Dose and the Metro joint venture, both of which commenced operations in 2005.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Canadian television



| |  |  | Revenues. In total, revenues from our Canadian television operating segment of $134 million were $3 million or 3% higher than the $131 million recorded in the same period in
fiscal 2004. This reflected a 3% decrease in airtime revenues. Subscriber revenues from our specialty channels increased by 15% for the fourth quarter of fiscal 2005 as compared to the same period in fiscal 2004, reflecting a 16% increase in
subscribers.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Operating expenses (including selling, general and administrative expenses) of $147 million at Canadian television operations were $17 million, or 13%
higher than in the same period the prior year primarily the result of an increase in program amortization expense and promotion as we continue to invest in our schedule in order to increase ratings.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating loss. Our Canadian television segment recorded an operating loss of $13 million for the fourth quarter of fiscal 2005 compared to break even for the same
period in fiscal 2004. This reflects the increases in expenses off set by the increased revenue previously mentioned.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Australian television



| |  |  | Revenues. Segment revenues increased by 7% to $187 million for the three months ended August 31, 2005, from $175 million during the same period in the prior year. In
local currency, revenues increased 8%, reflecting TENs strong rating performance in the quarter in a tough television advertising environment.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating expenses. Segment operating expenses increased 8% to $126 million for the three months ended August 31, 2005 compared to $117 million for the same period in
fiscal 2004, primarily reflecting increased programming costs.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit. Segment operating profit increased by 6% to $62 million for the fourth quarter of 2005, compared to $58 million in the same period in fiscal 2004.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



New Zealand television



| |  |  | Revenues.Revenues from television broadcast operations for New Zealands 3 and C4 television networks increased by 12% to $33 million for the fourth quarter of fiscal
2005 from $30 million for the same period in fiscal 2004 reflecting improved audience share in a strong advertising environment. In local currency, revenues increased 13%, reflecting New Zealands strong rating performance.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



21



---

| |  |  | Operating expenses. Operating expenses increased by 5% to $25 million for the fourth quarter of fiscal 2005 from $24 million, as a result of increased programming expenses.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment operating profit. New Zealand 3 and C4 produced segment operating profit of $8 million, a $2 million or 40% increase from the results recorded in the fourth quarter
of 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Irish television



Our 45% share of revenues at TV3 in the Republic of Ireland increased by 3% to $7 million in
the fourth quarter of fiscal 2005 compared to the fourth quarter of fiscal 2004. Our share of TV3s segment operating profit stayed flat at $2 million for both the three months ended August 31, 2005 and 2004.



New Zealand radio



CanWest RadioWorks continued its steady performance, increasing revenues for the three months ended August 31, 2005. Revenue grew by 4%
to $22 million from $21 million during the fourth quarter of the previous year. Segment operating profit declined by 10% to $6 million for the three months ended August 31, 2005 as compared to the same period the previous year, due to the
significant start up costs associated with Radio Live and the branding costs related to Kiwi FM.



Australian outdoor advertising



Segment
revenues increased by $7 million, or 36%, to $27 million for the three months ended August 31, 2005 from $20 million for the fourth quarter in fiscal 2004. This increase reflected 38% growth in revenue in local currency. Our segment operating
profit from TEN Groups outdoor advertising operations increased by $1 million to $5 million as compared to the fourth quarter in fiscal 2004 driven by Eye Corp.s acquisition of the remaining 50% of Eye Shop as well as stronger airport
advertising revenues.



Corporate and other



Corporate and other segment expenses increased to $12 million in for the three months ended
August 31, 2005 compared to $6 million in the same period in the prior year due to increased costs related to analysis and documentation of our internal controls in preparation for the requirements under section 404 of the Sarbanes Oxley Act,
as well as, expenses related to a corporate reorganization and increased expenses related to corporate development initiatives.



LIQUIDITY AND CAPITAL RESOURCES



Overview



Our principal uses of funds are for capital expenditures and repayment of debt. We have historically met these requirements by using cash generated from operating activities and through short term and long term debt.
We believe these sources of funds, together with our cash on hand, will continue to be adequate to meet our currently anticipated capital requirements.



We also review acquisition and investment opportunities in the course of our business and will, if a suitable opportunity arises and is permitted by the terms of our debt
instruments, make selected acquisitions and investments to implement our business strategy. We expect that the funding for any such acquisitions or investments would come from working capital, borrowing under our credit facility or future credit
facilities, additional equity and debt



22



---

financing, entering into joint ventures or a combination of these methods. Similarly, from time to time, we review opportunities to dispose of non-core
assets, and may, if a suitable opportunity arises, sell certain non-core assets.



For 2006, we expect our major non-operating cash requirements to include expected capital expenditures of approximately $151 million, swap recouponing payments as discussed below in swap transactions and repayment of $21 million in
principal payments on long term debt due in fiscal 2006 and US$42 million related to the acquisition of Turkish radio operations. We expect to meet our cash needs for fiscal 2006 primarily through a combination of operating cash flow, cash on hand
and our credit facilities.



CanWest MediaWorks Income Fund and related
transactions



In October 2005, we transferred our investment in our
newspaper and online operations (excluding the National Post) and certain shared service operations, which provide customer support and administrative services, to the Limited Partnership. In exchange, we received units of the Limited
Partnership representing a 74.2% ownership interest and notes receivable of $1,340 million.



Concurrently, the Fund closed its initial public offering (IPO) of units and invested the net proceeds of $517 million for units of the Limited Partnership representing a 25.8% interest.



In addition, the Limited Partnership obtained credit facilities in the amount of $1 billion,
consisting of an $825 million non-revolving term credit facility and a $175 million revolving term credit facility. The revolving facility matures in five years, is subject to certain restrictions and bears interest at the prevailing prime rate,
U.S. base rate, bankers acceptance rate or LIBOR plus, in each case, an applicable margin. The non-revolving facility matures in five years, and bears interest at the prevailing prime rate, U.S. base rate, bankers acceptance rate or
LIBOR plus, in each case, an applicable margin. On closing of the IPO, the Limited Partnership drew $830 million on its credit facilities. The Limited Partnership has entered into five year interest rate swap contracts to fix the interest payments
on a notional amount of $825 million for the first three years and $660 million for the remaining two years resulting in an effective interest rate of 5.0%.



The Limited Partnership utilized the proceeds of the issuance of the units to the Fund and $823 million of drawings under its new credit facilities to repay the $1,340
million note payable to the Company.



As a result of the transaction, we will
record a dilution gain or loss on the sale of a 25.8% interest in the operations transferred to the Limited Partnership. The amount of the gain or loss has not been determined. We will continue to consolidate the results of these operations.



In October 2005, we obtained a new $500 million revolving term credit
facility. The revolving facility matures in five years, is subject to certain restrictions and bears interest at the prevailing prime rate, U.S. base rate, bankers acceptance rate or LIBOR plus, in each case, an applicable margin. This
facility is secured by substantially all our directly held assets, including the assets of our Canadian broadcast operations and the National Post as well as by other investments. The total leverage covenant under the new facility is 5.0
times cash flow. On October 13, 2005, we drew $418 million on this facility.



The net proceeds from the IPO and the Limited Partnership debt as well as proceeds of $401 million from our new credit facility were utilized to retire certain debt and interest rate and cross currency interest rate contracts as follows:



| | a. | In October 2005, we completed tender offers for the 10.625% senior subordinated notes payable due in 2011 and the 7.625% senior unsecured notes payable due in 2013. Substantially
all of the notes under these facilities were settled. Debt with a book value of $772 million, and related deferred financing costs of $28 million were retired for cash of $849 million. The transaction resulted in a loss on debt retirement of $71
million, net of tax of $34 million. As a result of the repayment of these notes we recorded a swap loss of $22 million, net of tax of $12 million related to the associated cross currency interest rate swaps in the first quarter of fiscal 2006.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



23



---

| | b. | In October 2005, we retired the senior credit facility. Debt with a book value of $526 million and deferred financing costs of $6 million were settled for cash of $526 million. The
transaction resulted in a loss on debt retirement of $4 million, net of tax of $2 million. In addition, as a result of the settlement of this debt, we recorded a loss of $48 million, net of tax of $27 million related to the associated interest rate
and cross currency interest rate swaps in the first quarter of fiscal 2006.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | In November 2005, we retired interest rate and cross currency interest rate swap contracts relating to the 7.625% notes, the 10.625% notes and 50% of the cross currency interest
rate swap related to the senior secured credit facilities for cash of $365 million.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Upon closing of the above noted transactions, our consolidated debt was reduced by $400 million to $2,194 million.



Following the Income Fund transactions in October 2005 our cash flow from the Publications Group will be diluted for the 25.8% interest held by the Income Fund and will
be received by way of distributions from the Limited Partnership, a portion of which are subordinated. If distributable cash of the Limited Partnership is not sufficient to pay the entire distribution our share will be disproportionately affected by
the shortfall.



Sources of Funds



Our principal sources of liquidity are cash and cash equivalents on hand and cash flows from
operating activities. At August 31, 2005, we had cash on hand of $30 million including $12 million of TEN Group cash and $2 million of CanWest MediaWorks (NZ) cash. We generated cash flows from operating activities of continuing operations of
$469 million in fiscal 2005 and $394 million in fiscal 2004.



In addition to
the above sources of liquidity, we had unused borrowing capacity under our credit facility of $413 million at August 31, 2005. TEN Group had unused borrowing capacity of A$520 million under its credit facilities.



In October 2005, we obtained a new $500 million revolving term credit facility as discussed
in the CanWest MediaWorks Income Fund and related transactions section of this report.



Investing activities



In October 2005, we received proceeds of
$1,340 million from the Limited Partnership which consisted of $517 million relating to the proceeds received from the initial public offering of the Fund and $823 million related to new debt obtained by the Limited Partnership. For further
discussion of these activities, refer to CanWest MediaWorks Income Fund and related transactions section of this report.



We expect to receive annual distributions of approximately $146 million from the Limited Partnership related to our 74.2% interest. $108 million of these distributions
will be payable to us on the same priority as the amounts payable to the Income Fund while the remaining $38 million is subordinated and will be payable on a quarterly basis only if the Limited Partnership has sufficient distributable cash.



Uses of Funds



Capital Expenditures



In fiscal 2005, our capital expenditures amounted to $99 million. We also invested $2 million in the acquisition of new FM radio frequencies
related to our New Zealand radio operations. In fiscal 2006, we expect to increase our capital expenditures to approximately $151 million. This amount includes $40 million in technical upgrades, $10 million for a broadcast traffic system in Canada,
and $75 million to replace existing equipment.



24



---

Swap transactions



Under our credit facility, we are required to maintain the fair value of our foreign currency and interest rate swaps above a prescribed minimum liability ($600 million
at August 31, 2005). In addition, there are prescribed minimums with individual counterparties. Under these agreements, which have two-way recouponing provisions, we were required to make net recouponing payments of $97 million in the year
ended August 31, 2005. Subsequent to year-end, we were required to make further recouponing payments of $118 million. In October 2005, we settled swaps as described in the CanWest MediaWorks Income Fund and related transactions section of this
report



Investing activities



In fiscal 2005, Eye Corp, Eye Corp acquired the remaining 50% of Eye Shop Pty Limited
(formerly Eye Village Joint Venture). Also, in July 2005, Eye Corp acquired 100% of Eye Drive Melbourne Pty Limited (formerly Southcoast Pty Limited).



In addition, on September 21, 2005, we announced the acquisition of an equity interest in CGS Televizyon Ve Radyo Yayinciligi Ticaret Anonim Sirketi
(CGS) that in turn was successful in its bid to acquire the assets of Super FM for consideration of US$33 million, which will be payable upon completion of the transaction. On September 22, 2005, we announced that Pasifik
Televizyon Ve Radyo Yayinciligi Ticaret A.S. (Pasifik) was successful in its bid to acquire the assets of Metro FM for consideration of US$23 million, which will be payable upon completion of the transaction. In exchange for the
payment of US$42 million, we will acquire a 75% economic interest in both CGS and Pasifik. These transactions, which are subject to regulatory approvals by certain Turkish authorities, are expected to be completed within 90 days of the
announcement. Subject to a relaxation of foreign ownership restrictions and the receipt of all necessary regulatory approvals, we have the right to convert our interest to a 75% equity interest in Metro FMandSuper FM.



Debt



General



At August 31, 2005, we had total outstanding consolidated debt of $2,907 million, including TEN Group debt of $309 million and CanWest MediaWorks (NZ) debt of $155
million, compared to debt of $3,216 million as at August 31, 2004. In addition, we had obligations under capital leases of $17 million. For additional information concerning our indebtedness see notes 7 and 8 to our audited consolidated
financial statements for the year ended August 31, 2005.



In October 2005,
specific debt was repaid and the credit facility was refinanced as described in the CanWest MediaWorks Income Fund and related transactions section of this report.



Credit Facility



Total credit available under our senior secured credit facility was $759 million as of August 31, 2005, of which we had drawn $346 million. The facility includes
revolving and non-revolving tranches with terms ranging from two and a half to five years. The credit facility is collateralized by substantially all of our assets.



Total leverage as calculated under our credit facility was 4.7 times cash flow for debt covenant purposes for the twelve months ended
August 31, 2005 compared to a covenant of 6.0 times. On closing of the CanWest MediaWorks Income Fund and related transactions in October 2005, our total leverage as calculated under our new credit facility was 3.74. The total leverage covenant
under the new credit facility is 5.0 times.



25



---

Refinancing of Junior Subordinated Notes



In November 2004, we successfully completed the refinancing of our junior subordinated notes. These notes were issued to Hollinger as
consideration for the purchase of our publishing operations in November 2000. Interest obligations under these notes to November 2005 were payable via the issuance of additional notes. The $904 million (including accrued interest to
November 18, 2004) 12.125% notes due November 2000 were effectively settled through the issuance of $908 million (US$761 million) in senior subordinated notes due 2012. The premium on the old notes was expensed in our first quarter of 2005. The
new notes carry an interest rate coupon of 8%, which is settled in cash on a semi-annual basis, and will result in annual interest savings of approximately $40 million.



Tender offer



As discussed in the CanWest MediaWorks Income Fund and related transactions section of this report, we closed tender offers on the 10.625% senior subordinated notes and
7.625% senior unsecured notes payable in the principal amount of US$625 million.



CONTRACTUAL OBLIGATIONS AND COMMITMENTS



The Companys
obligations under firm contractual arrangements, including commitments for future payments under long term debt arrangements, operating lease arrangements, purchase commitments and other long term liabilities as at August 31, 2005 are
summarized below.



|                                                                        |  |                        |  |                 |  |             |  |             |  |           
|----------------------------------------------------------------------- |  | ---------------------- |  | --------------- |  | ----------- |  | ----------- |  | ----------
|                                                                        |  | Payments due by period
|                                                                        |  | Total                  |  | Less than1 year |  | 1  3 years |  | 3  5 years |  | Thereafter
|                                                                        |  | $000                   |  | $000            |  | $000        |  | $000        |  | $000      
|Long term debt(1)                                                       |  | 2,907,107              |  | 21,017          |  | 9,853       |  | 748,177     |  | 2,128,060 
|Cash interest obligations on long term debt(2)                          |  | 1,097,178              |  | 201,520         |  | 385,684     |  | 319,000     |  | 190,974   
|Cash payments on interest rate and foreign currency swap liabilities(3) |  | 245,208                |  | 28,451          |  | 50,080      |  | 166,677     |  |          
|Obligations under capital leases                                        |  | 23,946                 |  | 2,637           |  | 8,419       |  | 7,522       |  | 5,368     
|Operating leases                                                        |  | 355,168                |  | 72,828          |  | 104,994     |  | 56,580      |  | 120,766   
|Purchase obligations(3)                                                 |  | 1,684,771              |  | 401,571         |  | 684,817     |  | 598,383     |  |          
|Estimated pension funding obligations(4)                                |  | 85,367                 |  | 16,699          |  | 34,255      |  | 34,413      |  |          
|Other long term liabilities                                             |  | 126,432                |  |                |  | 82,127      |  |            |  | 44,305    
|                                                                        |  |                        |  |                 |  |             |  |             |  |           
|Total                                                                   |  | 6,525,177              |  | 744,723         |  | 1,360,229   |  | 1,930,752   |  | 2,489,473 
|                                                                        |  |                        |  |                 |  |             |  |             |  |           



|(1) | Long term debt represents our contractual commitments as of August 31, 2005 and do not take into account the transactions discussed in the CanWest MediaWorks
Income Fund and related transactions section of this report. As a result of the refinancing, long term debt repayments for the periods noted will be as follows: less than 1 year  $17 million, 1-3 years  $1 million, 3-5 years  $315
million and thereafter  $2,338 million.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Interest obligations on long term debt represents an estimate of future cash interest expense based on current interest rates, current debt levels and scheduled debt
repayments and their related interest rate and foreign currency interest swaps. As a result of the Income Fund transaction cash interest expense for the periods noted will change as follows: lease than 1 year  decrease by $30 million, 1-3
years  $72 million, 3-5 years will decrease by $26 million and thereafter will decrease by $37 million.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Cash payments on interest rate and foreign currency swap liabilities represents an estimate of future cash payments based on current interest rate levels and current
foreign exchange rates.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Purchase obligations represent an estimate of our contractual commitments to purchase broadcast rights and to make investments in television programs.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Pension funding obligation estimates have only been included for the next five years.
|--- | -------------------------------------------------------------------------------------



26



---

FINANCIAL INSTRUMENTS



Our primary market risk exposures are interest rate and foreign currency exchange rate risk. We are exposed to interest rate risk and foreign exchange rate fluctuations
resulting from the issuance of floating rate debt and debt denominated in U.S. dollars. In addition to monitoring the ratio of fixed rate debt to total long-term debt, we use interest rate swaps to manage the proportion of total debt that is subject
to variable rates. Cross currency swaps are used to hedge both the interest rate and the currency exposure on debt originally issued in U.S. dollars. We do not enter into any derivatives for trading purposes.



As at August 31, 2005, we have fully hedged the currency exposure on our U.S. dollar
denominated debt with the exception of senior and senior subordinated notes in the amount of US$42 million, and have fixed the interest rate of 100% of our floating rate debt by entering into a combination of cross currency swaps and interest rate
swaps.



As of August 31, 2005, we have entered into interest rate swap
contracts to pay fixed rates of interest (at an average rate of 6.5%) and receive floating rates of interest (at an average rate of 2.7%) on a notional amount of $448 million. We have entered into pay fixed receive floating cross currency swap
contracts at an average rate of 6.7% on a notional amount of $1,051 million and receive floating rates of 3.8% on a notional amount of US$679 million. We have also entered into pay floating receive fixed cross currency swap contracts at an average
floating rate of 7.0% on a notional amount of $1,862 million and an average fixed rate of 8.9% on a notional amount of US$1,386 million. As part of the refinancing discussed in the CanWest MediaWorks Income Fund and related transactions section of
this report, a portion of the cross currency swaps were settled in the first quarter of fiscal 2006.



We are also exposed to foreign exchange and interest rate risk as a result of debt and related swaps issued by CanWest MediaWorks (NZ), TV3 Ireland, and TEN Group. As at August 31, 2005, our share of the TV3 debt
was $12 million (8 million). 10 million of this debt was swapped to a fixed rate (at an average rate of 3.2%) and the remainder of the debt bears interest at a floating rate. As at August 31,2005, CanWest MediaWorks (NZ) had $155
million (NZ$188 million) of debt. NZ$165 million of this debt was swapped to a fixed rate (at an average rate of 6.5% until 2006), and the remainder of the debt bears interest at a floating rate.



At August 31, 2005, TEN Group had long term debt of $309 million (A$346 million). TEN
Group has entered into pay floating receive fixed cross currency swap contracts at an average floating rate of 7.0% on a notional amount of A$210 million and received fixed swap contracts at an average rate of 5.4% on a
notional amount of US$ 125 million. TEN Group has also entered into interest rate swap contracts to pay fixed rates of interest (at an average rate of 5.7%) on a notional amount of A$285 million.



Based on the swap contracts outstanding and the level of variable rate debt at
August 31, 2005, we estimate that a 1% increase in floating interest rates would increase annual interest expense by $21 million. This estimate is based on the assumption of a constant variable rate debt and swap level and an immediate rate
increase with no subsequent rate changes in the remaining term to maturity.



The fair value of the swap contracts represents an estimate of the amount that we would receive or pay if the contracts were closed out at a market price on the balance sheet date. As of August 31, 2005, our outstanding swap contracts
were in a net unrealized loss position of $119 million (including $2 million related to TEN Group). In addition, we have recorded the effect of hedging instruments on the US$ principal balance of debt of $356 million (including $39 million related
to TEN Group).



As of August 31, 2005, assuming all other variables are
held constant, a 10 basis point parallel upward shift in the Canadian and U.S. fixed yield would result in a $4 million deterioration in the mark to market value of all swaps, excluding TEN Group. A $0.001 change in the value of the Canadian dollar
against the U.S. dollar, assuming all other variables are held constant, would result in a $3 million change in the mark to market value of the cross currency swaps. A $0.001 change in the value of the Australian dollar against the U.S. dollar,
assuming all other variables are held constant, would result in a $0.3 million change in the mark to market value of the cross currency swaps.



27



---

RELATED PARTY TRANSACTIONS



Senior subordinated notes held by CanWest Communications Corporation, our parent company totaled $50 million (US$42 million) at
August 31, 2005 (2004 - $55 million (US$42 million)). This debt, issued in May 2001, matures May 15, 2011 and bears interest at 10.625%. Interest expense related to this debt totaled $6 million in fiscal 2004 (2003 - $6 million). In
October 2005, we settled these notes under the same terms offered to unrelated senior subordinated note holders for $55.4 million.



A company which is owned by CanWest Communications Corporation owns CanWest Global Place in Winnipeg, Manitoba, a building in which the we are a tenant. Rent paid to this
company in fiscal 2005 amounted to $1 million (2004 - $1 million) and is included in selling, general and administrative expenses. The obligations under these operating leases continue until 2010.



All the related party transactions have been recorded at the
exchange amount, which are representative of market rates.



DIFFERENCES
BETWEEN CANADIAN GAAP AND U.S. GAAP



The preceding discussion and analysis
has been based upon financial statements prepared in accordance with Canadian GAAP, which differs in certain respects from United States GAAP. The significant differences relevant to the Company are discussed in detail in note 25 of Notes to the
Consolidated Financial Statements for the years ended August 31, 2005 and August 31, 2004.



28



---

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES



Following is a reconciliation of operating income before amortization, a non-GAAP measure, to net earnings, its most closely comparable GAAP
measure.



|                                                             |  |                                                   |   |  |                                |   |  |         |   |  |              |   |  |              |  
|------------------------------------------------------------ |  | ------------------------------------------------- | - |  | ------------------------------ | - |  | ------- | - |  | ------------ | - |  | ------------ | -
|                                                             |  | For the three months ended August 31, (unaudited) |   |  | For the years ended August 31, |  
|                                                             |  | 2005                                              |   |  | 2004                           |   |  | 2005    |   |  | 2004         |   |  | 2003         |  
|                                                             |  |                                                   |   |  | (Revised)(1)                   |   |  |         |   |  | (Revised)(1) |   |  | (Revised)(1) |  
|Net earnings (loss)                                          |  | (106,039                                          | ) |  | 61,966                         |   |  | 10,290  |   |  | (13,478      | ) |  | 46,088       |  
|Amortization                                                 |  | 30,199                                            |   |  | 25,188                         |   |  | 117,500 |   |  | 112,284      |   |  | 111,604      |  
|Interest and other financing expenses                        |  | 171,526                                           |   |  | 188,025                        |   |  | 453,067 |   |  | 462,027      |   |  | 408,296      |  
|Investment gains, losses, interest and dividend income       |  | (1,717                                            | ) |  | (121,145                       | ) |  | (4,158  | ) |  | (128,665     | ) |  | (12,772      | )
|Foreign exchange gains                                       |  | (47,319                                           | ) |  | (41,207                        | ) |  | (76,025 | ) |  | (44,973      | ) |  | (3,919       | )
|Loss on debt extinguishment                                  |  |                                                  |   |  |                               |   |  | 43,992  |   |  |             |   |  |             |  
|Goodwill impairment                                          |  | 41,406                                            |   |  |                               |   |  | 41,406  |   |  |             |   |  |             |  
|Asset impairment                                             |  | 9,629                                             |   |  |                                |   |  | 9,629   |   |  |             |   |  |             |  
|Loss (income) from discontinued operations                   |  | 3,950                                             |   |  | (2,199                         | ) |  | 10,132  |   |  | 207,777      |   |  | 68,710       |  
|Provision for income tax expense (recovery)                  |  | (33,714                                           | ) |  | (9,701                         | ) |  | 20,472  |   |  | 37,485       |   |  | (46,810      | )
|Interest in earnings (losses) of equity accounted affiliates |  | (492                                              | ) |  | (3,287                         | ) |  | (2,043  | ) |  | (2,731       | ) |  | 1,332        |  
|Minority interests                                           |  | 17,971                                            |   |  | 18,059                         |   |  | 96,597  |   |  | 80,349       |   |  | 80,636       |  
|Realized currency translation adjustments                    |  | (1,078                                            | ) |  | 5,138                          |   |  | (622    | ) |  | 7,023        |   |  | (922         | )
|                                                             |  |                                                   |   |  |                                |   |  |         |   |  |              |   |  |              |  
|Operating income before amortization                         |  | 84,322                                            |   |  | 120,837                        |   |  | 720,237 |   |  | 717,098      |   |  | 652,243      |  
|                                                             |  |                                                   |   |  |                                |   |  |         |   |  |              |   |  |              |  



|(1) | See note 1 to our audited consolidated financial statements.
|--- | ------------------------------------------------------------



OTHER



Share Data



As at November 17, 2005 we had the following number of shares outstanding:



|                          |  |           
|------------------------- |  | ----------
|Multiple voting shares    |  | 76,785,976
|Subordinate voting shares |  | 98,772,468
|Non-voting shares         |  | 1,844,092 



Our AIF is filed on SEDAR at
www.sedar.com.



29



---

CANWEST GLOBAL COMMUNICATIONS CORP.



CONSOLIDATED FINANCIAL STATEMENTS



FOR THE YEARS ENDED AUGUST 31, 2005 AND 2004



---

LOGO



| |  |                                                                                                                                                                   
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | PricewaterhouseCoopers LLPChartered AccountantsOne Lombard Place, Suite 2300Winnipeg, ManitobaCanada R3B 0X6Telephone +1
(204) 926 2400Facsimile +1 (204) 944 1020



November 17, 2005



Auditors Report



To the Shareholders of

CanWest
Global Communications Corp.



We have audited the consolidated balance
sheets of CanWest Global Communications Corp. as of August 31, 2005 and August 31, 2004 and the consolidated statements of earnings (loss), 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 of August 31, 2005 and
August 31, 2004 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.



|                                      
|--------------------------------------
|                                      
|LOGO                                  
|Chartered Accountants Winnipeg,
Canada







November 17, 2005



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



In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion 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. Our report to the shareholders dated November 17, 2005, is
expressed in accordance with Canadian reporting standards which do not require a reference to such changes in accounting principles or corrections of errors in the auditors report when the changes are properly accounted for and adequately
disclosed in the financial statements.



|                                      
|--------------------------------------
|                                      
|LOGO                                  
|Chartered Accountants Winnipeg,
Canada











PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP and the other member firms of PricewaterhouseCoopers International Limited, each of which
is a separate and independent legal entity.



---

CANWEST GLOBAL COMMUNICATIONS CORP.

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

FOR THE YEARS ENDED AUGUST 31

(In thousands of Canadian dollars except as otherwise noted)



|                                                         |  |      |           |   |                  |   |           |  
|-------------------------------------------------------- |  | ---- | --------- | - | ---------------- | - | --------- | -
|                                                         |  | 2005 |           |   | 2004             |  
|                                                         |  |      |           |   | (Revised note 1) |  
|Revenue                                                  |  |      | 3,072,542 |   |                  |   | 2,911,400 |  
|Operating expenses                                       |  |      | 1,617,210 |   |                  |   | 1,538,466 |  
|Selling, general and administrative expenses             |  |      | 722,345   |   |                  |   | 653,391   |  
|Ravelston management contract termination (note 21)      |  |      | 12,750    |   |                  |   |          |  
|Restructuring expenses (note 9)                          |  |      |          |   |                  |   | 2,445     |  
|                                                         |  |      |           |   |                  |   |           |  
|                                                         |  |      | 720,237   |   |                  |   | 717,098   |  
|Amortization of intangibles (note 6)                     |  |      | 20,341    |   |                  |   | 18,182    |  
|Amortization of property, plant and equipment (note 4)   |  |      | 91,868    |   |                  |   | 89,067    |  
|Other amortization                                       |  |      | 5,291     |   |                  |   | 5,035     |  
|                                                         |  |      |           |   |                  |   |           |  
|Operating income                                         |  |      | 602,737   |   |                  |   | 604,814   |  
|Interest expense                                         |  |      | (251,853  | ) |                  |   | (338,528  | )
|Interest income                                          |  |      | 2,631     |   |                  |   | 9,141     |  
|Amortization of deferred financing costs                 |  |      | (12,708   | ) |                  |   | (12,641   | )
|Interest rate and foreign currency swap losses (note 7)  |  |      | (188,506  | ) |                  |   | (110,858  | )
|Foreign exchange gains (note 7)                          |  |      | 76,025    |   |                  |   | 44,973    |  
|Investment gains, losses and write-downs (note 14)       |  |      | 1,527     |   |                  |   | 115,786   |  
|Goodwill impairment (note 5)                             |  |      | (41,406   | ) |                  |   |          |  
|Asset impairment (note 6)                                |  |      | (9,629    | ) |                  |   |          |  
|Loss on debt extinguishment (note 7)                     |  |      | (43,992   | ) |                  |   |          |  
|Dividend income                                          |  |      |          |   |                  |   | 3,738     |  
|                                                         |  |      |           |   |                  |   |           |  
|                                                         |  |      | 134,826   |   |                  |   | 316,425   |  
|Provision for income taxes (note 13)                     |  |      | 20,472    |   |                  |   | 37,485    |  
|                                                         |  |      |           |   |                  |   |           |  
|Earnings before the following                            |  |      | 114,354   |   |                  |   | 278,940   |  
|Minority interests                                       |  |      | (96,597   | ) |                  |   | (80,349   | )
|Interest in earnings of equity accounted affiliates      |  |      | 2,043     |   |                  |   | 2,731     |  
|Realized currency translation adjustments (note 12)      |  |      | 622       |   |                  |   | (7,023    | )
|                                                         |  |      |           |   |                  |   |           |  
|Net earnings from continuing operations                  |  |      | 20,422    |   |                  |   | 194,299   |  
|Loss from discontinued operations (note 15)              |  |      | (10,132   | ) |                  |   | (207,777  | )
|                                                         |  |      |           |   |                  |   |           |  
|Net earnings (loss) for the year                         |  |      | 10,290    |   |                  |   | (13,478   | )
|                                                         |  |      |           |   |                  |   |           |  
|Earnings per share from continuing operations (note 11): |  |      |           |   |                  |   |           |  
|Basic                                                    |  | $    | 0.12      |   |                  | $ | 1.10      |  
|Diluted                                                  |  | $    | 0.12      |   |                  | $ | 1.10      |  
|Earnings (loss) per share (note 11):                     |  |      |           |   |                  |   |           |  
|Basic                                                    |  | $    | 0.06      |   |                  |   | ($0.08    | )
|Diluted                                                  |  | $    | 0.06      |   |                  |   | ($0.08    | )



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



32



---

CANWEST GLOBAL COMMUNICATIONS CORP.

CONSOLIDATED BALANCE SHEETS

AS AT AUGUST 31

(In thousands of Canadian dollars)



|                                                                       |  |           |   |  |                  |   |  |            
|---------------------------------------------------------------------- |  | --------- | - |  | ---------------- | - |  | -----------
|                                                                       |  | 2005      |   |  | 2004             |   |  |            
|                                                                       |  |           |   |  | (Revised note 1) |   |  |            
|ASSETS                                                                 |  |           |   |  |                  |   |  |            
|Current Assets                                                         |  |           |   |  |                  |   |  |            
|Cash                                                                   |  | 29,858    |   |  | 97,271           |   |  |            
|Accounts receivable                                                    |  | 486,568   |   |  | 488,418          |   |  |            
|Inventory                                                              |  | 13,533    |   |  | 13,449           |   |  |            
|Investment in broadcast rights                                         |  | 188,729   |   |  | 194,099          |   |  |            
|Future income taxes (note 13)                                          |  | 3,893     |   |  | 6,166            |   |  |            
|Other current assets                                                   |  | 26,043    |   |  | 22,574           |   |  |            
|Assets of discontinued operations (note 15)                            |  | 2,850     |   |  | 89,094           |   |  |            
|                                                                       |  |           |   |  |                  |   |  |            
|                                                                       |  | 751,474   |   |  | 911,071          |   |  |            
|Other investments (note 3)                                             |  | 23,059    |   |  | 26,830           |   |  |            
|Investment in broadcast rights                                         |  | 21,197    |   |  | 35,157           |   |  |            
|Property, plant and equipment (note 4)                                 |  | 709,222   |   |  | 708,311          |   |  |            
|Future income taxes (note 13)                                          |  | 54,058    |   |  | 45,826           |   |  |            
|Other assets (note 17)                                                 |  | 200,242   |   |  | 158,917          |   |  |            
|Intangible assets (note 6)                                             |  | 1,144,299 |   |  | 1,179,465        |   |  |            
|Goodwill (note 5)                                                      |  | 2,424,867 |   |  | 2,469,690        |   |  |            
|Assets of discontinued operations (note 15)                            |  |          |   |  | 38,376           |   |  |            
|                                                                       |  |           |   |  |                  |   |  |            
|                                                                       |  | 5,328,418 |   |  | 5,573,643        |   |  |            
|                                                                       |  |           |   |  |                  |   |  |            
|LIABILITIES                                                            |  |           |   |  |                  |   |  |            
|Current Liabilities                                                    |  |           |   |  |                  |   |  |            
|Accounts payable                                                       |  | 174,602   |   |  | 158,461          |   |  |            
|Accrued liabilities (note 9)                                           |  | 294,380   |   |  | 240,502          |   |  |            
|Income taxes payable                                                   |  | 51,883    |   |  | 27,419           |   |  |            
|Broadcast rights accounts payable                                      |  | 78,318    |   |  | 65,270           |   |  |            
|Deferred revenue                                                       |  | 36,774    |   |  | 34,218           |   |  |            
|Future income taxes (note 13)                                          |  | 44,663    |   |  | 48,080           |   |  |            
|Current portion of long term debt and obligations under capital leases |  | 22,216    |   |  | 31,008           |   |  |            
|Liabilities of discontinued operations (note 15)                       |  |          |   |  | 69,716           |   |  |            
|                                                                       |  |           |   |  |                  |   |  |            
|                                                                       |  | 702,836   |   |  | 674,674          |   |  | Signed on  
|Long term debt and related foreign currency swap liability (note 7)    |  | 2,886,090 |   |  | 3,185,755        |   |  | behalf of  
|Interest rate and foreign currency swap liability (note 7)             |  | 215,075   |   |  | 120,341          |   |  | the Board  
|Obligations under capital leases (note 8)                              |  | 16,101    |   |  | 17,300           |   |  |            
|Other accrued liabilities (note 17)                                    |  | 144,532   |   |  | 179,417          |   |  |            
|Future income taxes (note 13)                                          |  | 77,255    |   |  | 139,280          |   |  | /s/ David  
|Minority interests                                                     |  | 90,581    |   |  | 77,456           |   |  | Drybrough  
|                                                                       |  |           |   |  |                  |   |  |            
|                                                                       |  | 4,132,470 |   |  | 4,394,223        |   |  | Director   
|                                                                       |  |           |   |  |                  |   |  |            
|Commitments, contingencies and guarantees (note 22)                    |  |           |   |  |                  |   |  |            
|SHAREHOLDERS EQUITY                                                   |  |           |   |  |                  |   |  | /s/ Leonard
|Capital stock (note 10)                                                |  | 849,909   |   |  | 848,628          |   |  | Aspen      
|Contributed surplus                                                    |  | 7,685     |   |  | 4,612            |   |  | Director   
|Retained earnings                                                      |  | 350,291   |   |  | 340,001          |   |  |            
|Cumulative foreign currency translation adjustments (note 12)          |  | (11,937   | ) |  | (13,821          | ) |  |            
|                                                                       |  |           |   |  |                  |   |  |            
|                                                                       |  | 1,195,948 |   |  | 1,179,420        |   |  |            
|                                                                       |  |           |   |  |                  |   |  |            
|                                                                       |  | 5,328,418 |   |  | 5,573,643        |   |  |            
|                                                                       |  |           |   |  |                  |   |  |            



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



33



---

CANWEST GLOBAL COMMUNICATIONS CORP.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

FOR THE YEARS ENDED AUGUST 31

(In thousands of Canadian dollars)



|                                      |  |         |  |                  |  
|------------------------------------- |  | ------- |  | ---------------- | -
|                                      |  | 2005    |  | 2004             |  
|                                      |  |         |  | (Revised note 1) |  
|Retained earnings - beginning of year |  | 340,001 |  | 353,479          |  
|Net earnings (loss) for the year      |  | 10,290  |  | (13,478          | )
|                                      |  |         |  |                  |  
|Retained earnings  end of year       |  | 350,291 |  | 340,001          |  
|                                      |  |         |  |                  |  



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



34



---

CANWEST GLOBAL COMMUNICATIONS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED AUGUST 31

(In thousands of Canadian dollars)



|                                                                  |  |          |   |  |                  |  
|----------------------------------------------------------------- |  | -------- | - |  | ---------------- | -
|                                                                  |  | 2005     |   |  | 2004             |  
|                                                                  |  |          |   |  | (Revised note 1) |  
|CASH GENERATED (UTILIZED) BY:                                     |  |          |   |  |                  |  
|OPERATING ACTIVITIES                                              |  |          |   |  |                  |  
|Net earnings from continuing operations for the year              |  | 20,422   |   |  | 194,299          |  
|Items not affecting cash                                          |  |          |   |  |                  |  
|Amortization                                                      |  | 130,208  |   |  | 124,925          |  
|Non-cash interest expense                                         |  | 32,021   |   |  | 102,092          |  
|Future income taxes                                               |  | (74,349  | ) |  | (8,310           | )
|Realized currency translation adjustments                         |  | (622     | ) |  | 7,023            |  
|Interest rate and foreign currency swap losses net of settlements |  | 105,366  |   |  | 98,055           |  
|Investment gains, losses, and write-downs                         |  | (1,527   | ) |  | (115,786         | )
|Loss on debt extinguishment                                       |  | 43,992   |   |  |                 |  
|Goodwill and asset impairment                                     |  | 51,035   |   |  |                 |  
|Amortization and write-down of film and television programs       |  | 6,163    |   |  | 5,656            |  
|Pension expense                                                   |  | 8,254    |   |  | 6,276            |  
|Minority interests                                                |  | 96,597   |   |  | 80,349           |  
|Earnings of equity accounted affiliates                           |  | (2,043   | ) |  | (2,731           | )
|Foreign exchange gains                                            |  | (10,407  | ) |  | (5,571           | )
|Stock compensation expense                                        |  | 3,073    |   |  | 964              |  
|Investment film and television programs                           |  |         |   |  | (12,234          | )
|                                                                  |  |          |   |  |                  |  
|                                                                  |  | 408,183  |   |  | 475,007          |  
|Changes in non-cash operating accounts (note 16)                  |  | 61,105   |   |  | (80,724          | )
|                                                                  |  |          |   |  |                  |  
|Cash flows from operating activities of continuing operations     |  | 469,288  |   |  | 394,283          |  
|Cash flows from operating activities of discontinued operations   |  | 46,408   |   |  | 15,991           |  
|                                                                  |  |          |   |  |                  |  
|Cash flows from operating activities                              |  | 515,696  |   |  | 410,274          |  
|                                                                  |  |          |   |  |                  |  
|INVESTING ACTIVITIES                                              |  |          |   |  |                  |  
|Other investments                                                 |  | 426      |   |  | (389             | )
|Investment in broadcast licences                                  |  | (2,182   | ) |  | (5,813           | )
|Acquisitions                                                      |  | (19,487  | ) |  |                 |  
|Proceeds from sale of assets of discontinued operations           |  | 13,742   |   |  |                 |  
|Proceeds from sales of other investments                          |  | 2,171    |   |  | 144,127          |  
|Proceeds from divestitures                                        |  |         |   |  | 83,316           |  
|Proceeds from sale of property, plant and equipment               |  | 5,035    |   |  | 7,426            |  
|Purchase of property, plant and equipment                         |  | (99,191  | ) |  | (62,556          | )
|                                                                  |  |          |   |  |                  |  
|                                                                  |  | (99,486  | ) |  | 166,111          |  
|                                                                  |  |          |   |  |                  |  
|FINANCING ACTIVITIES                                              |  |          |   |  |                  |  
|Issuance of long term debt                                        |  | 161,321  |   |  | 167,500          |  
|Repayment of long term debt                                       |  | (510,323 | ) |  | (381,589         | )
|Advances (repayments) of revolving facilities                     |  | 4,640    |   |  | (243,883         | )
|Swap recouponing payments                                         |  | (41,653  | ) |  | (27,957          | )
|Payments of capital leases                                        |  | (1,100   | ) |  | (358             | )
|Issuance of share capital                                         |  | 1,281    |   |  | 1,804            |  
|Issuance of share capital of TEN Group                            |  | 5,369    |   |  | 14,423           |  
|Payment of dividends to minority interests                        |  | (84,920  | ) |  | (93,002          | )
|Financing activities from discontinued operations                 |  | (18,354  | ) |  | (57,644          | )
|                                                                  |  |          |   |  |                  |  
|                                                                  |  | (483,739 | ) |  | (620,706         | )
|                                                                  |  |          |   |  |                  |  
|Foreign exchange gain on cash denominated in foreign currencies   |  | 116      |   |  | 2,389            |  
|                                                                  |  |          |   |  |                  |  
|Net change in cash                                                |  | (67,413  | ) |  | (41,932          | )
|Cash  beginning of year                                          |  | 97,271   |   |  | 139,203          |  
|                                                                  |  |          |   |  |                  |  
|Cash  end of year                                                |  | 29,858   |   |  | 97,271           |  
|                                                                  |  |          |   |  |                  |  



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



35



---

CANWEST GLOBAL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31,
2005 AND 2004

(In thousands of Canadian dollars except as otherwise noted)



|1. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------



The Company is an international media company with interests in broadcast television, publishing, radio, specialty cable channels, outdoor advertising,
and Internet websites in Canada, Australia, New Zealand and Ireland. The Companys operating segments include television and radio broadcasting, publishing and online operations and outdoor advertising. In Canada, the Television Broadcast
segment includes the operation of the Global Television Network, Prime TV, various other conventional and specialty channels and Cool FM and The Beat radio stations. The Australian Television Broadcast segment includes TEN Group Pty Limiteds
(TEN Group) TEN Television Network (Network TEN). The Canadian Publishing and Online segment includes the publication of a number of newspapers, including metropolitan daily newspapers and the National Post, as well as
operation of the canada.com web portal and other web-based operations. The New Zealand Television Broadcast segment includes CanWest MediaWorks NZ Limiteds 3 and C4 Television Networks. The New Zealand Radio Broadcast segment includes CanWest
MediaWorks NZ Limiteds RadioWorks operation, which is comprised of six nationally-networked radio brands and two local radio brands. The Irish Television Broadcast segment includes the Companys 45% interest in the Republic of
Irelands TV3 Television Network. The Australian Outdoor Advertising segment includes EyeCorp Pty Limited (Eye Corp), an outdoor advertising operation which is wholly owned by TEN Group. Corporate and Other includes various
investments in media operations, including a 29.9% interest in Northern Irelands Ulster Television plc (UTV) (sold in June 2004).



The Companys broadcast customer base is comprised primarily of large advertising agencies, which place advertisements with the Company on behalf of
their customers. Publishing and online revenues include advertising, circulation and subscriptions which are derived from a variety of sources. The Companys advertising revenues are seasonal. Revenues and accounts receivable 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 25.



Principles of consolidation



The consolidated financial statements include the accounts of the Company, its subsidiaries, and the Companys pro rata
share of the assets, liabilities, and results of operations of TV3 Ireland (45%), Mystery (50%) (effective June 2004), and Metro (33%) (effective March 2005). The Company has determined that it is the primary beneficiary of TEN Group, a
variable interest entity. Accordingly, as required by The Accounting Standards Board of the Institute of Chartered Accountants of Canada, Accounting Guideline 15 (AcG-15), Consolidation of Variable Interest Entities, the Company
has consolidated the results of TEN Group.



36



---

Investments



The Company accounts for investments where significant influence can be exercised, but not control, using the equity method.
Other investments are recorded at cost. A provision for loss in value of investments is made when a decline in value 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. A loss is recognized when the carrying amount
exceeds net realizable value.



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



Investment in film and television programs represents the film and television assets 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. These assets were held for sale and recorded at fair value.



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     | % - 50% 
|Leasehold and land improvements |  | 2 1/2 | % - 20% 



Impairment of
long lived assets



Impairment of long lived assets is
recognized when an event or change in circumstances causes the assets carrying value to exceed the total undiscounted cash flows expected from its use and eventual disposition. The impairment loss is calculated by deducting the fair value of
the asset or group of assets from its carrying value.



37



---

Disposal of long-lived assets and discontinued operations



Long-lived assets are classified as held for sale when specific criteria are
met, in accordance with CICA Handbook Section 3475, Disposal of Long-Lived Assets and Discontinued Operations. Assets held for sale are measured at the lower of their carrying amounts and fair values less costs to dispose and are no
longer amortized. The fair value of film and television programs are estimated on a discounted cash flow basis or firm purchase commitments, if available. Assets and liabilities classified as held for sale are reported separately on the balance
sheet. A component of the Company that is held for sale is reported as a discontinued operation if the operations and cash flows of the component will be eliminated from the ongoing operations as a result of the disposal transaction and the Company
will not have a significant continuing involvement in the operations of the component after the disposal transaction.



Deferred Charges



Certain 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 and advertising revenues commence. Pre-operating costs deferred in the current year amounted to $3.6 million (2004  $1.7 million). Pre-operating costs are amortized over a period of five years. Costs related to debt
financing are deferred and amortized over the term of the debt.



Capitalization of interest



Interest is
capitalized as part of the cost of certain assets while they are being prepared for use. Interest of $4.3 million was capitalized in 2005 (2004 - $3.8 million).



Intangible assets



Broadcast licences, site licences, newspaper mastheads, circulation and other intangible assets are recorded at their cost which, for business
acquisitions, represents the fair market value at the date of the acquisition.



Circulation, broadcast licences, site licences and other finite life intangibles are amortized over periods from 5 to 40 years. Finite life intangibles are tested for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable. Intangibles with indefinite lives are not subject to amortization and are tested for impairment annually or when indicated by events or changes in circumstances. Impairment of an indefinite
life intangible asset is recognized in an amount equal to the difference between the carrying value and the fair value of the related indefinite life intangible asset. The Company utilizes a direct valuation approach in determining the fair value of
intangible assets.



Goodwill



Goodwill represents the cost of acquired businesses in excess of the fair
value of net identifiable assets acquired. Goodwill is tested for impairment annually or when indicated by events or changes in circumstances by comparing the fair value of a particular reporting unit to its carrying value. When the carrying value
exceeds its fair value, the fair value of the reporting units goodwill is compared with its carrying value to measure any impairment loss.



38



---

Revenue recognition



Revenue derived from broadcasting activities consists primarily of the sale of airtime which is recognized at the time
commercials are broadcast, net of any provisions for viewer shortfalls. Circulation and advertising revenue from publishing activities is recognized when the newspaper is delivered. Revenue derived from out-of-home advertising is recognized over the
period the advertisement is being displayed. Subscription revenues for newspapers and news, business research and corporate financial information services is recognized on a straight-line basis over the term of the subscription or relevant contract.



Revenue from the sale or licencing of film and television
programs is recognized when all of the following conditions are met: persuasive evidence of a sale or licencing arrangement exists, the film is complete, the contractual delivery arrangements have been satisfied, the licence period has begun, the
fee is fixed or determinable and collection of the fee is reasonably assured.



Amounts received that do not meet all of the above criteria are recorded as deferred revenue on the balance sheet.



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 including equity accounted investments. 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 substantive enactment date. Future income tax assets are recognized to the extent that realization is considered more likely than not.



Income taxes on undistributed earnings of TEN Group and CanWest MediaWorks (NZ) Limited are provided at rates applicable to distributions. Income taxes
on undistributed earnings of foreign operations, other than TEN Group and CanWest MediaWorks (NZ) Limited, 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.



39



---

Pension plans and post retirement benefits



The Company maintains a number of defined benefit and defined contribution
pension and other post retirement defined benefit plans. For the defined benefit plans, the cost of pension and other retirement benefits earned by employees is determined using the projected benefit method pro rated on service and managements
estimate of expected plan investment performance, salary escalation, retirement ages of employees, expected health care costs, and other costs. For the purpose of calculating the expected return on plan assets, those assets are valued at fair value.
Past service costs from plan amendments are amortized on a straight line basis over the average remaining service period of employees active at the date of the amendment. For each plan, the excess of the net actuarial gain or loss over 10% of the
greater of the accrued benefit obligation and the fair value of plan assets at the beginning of the year is amortized over the average remaining service period of active employees. Transitional obligations are amortized on a straight line basis over
the average remaining service life of the employees expected to receive benefits under the plans as of September 1, 2000. Gains or losses arising from the settlement of a pension plan are only recognized once responsibility for the pension
obligation has been relieved. The average remaining service period of employees covered by the pension plans is 14 years (2004  15 years). The average remaining service period of the employees covered by the post retirement defined benefit
plans is 15 years (2004  15 years). The Company also maintains post retirement defined benefit plans for certain of its employees, the cost of which is expensed as benefits are earned by the employees. For the defined contribution plans, the
pension expense is the Companys contribution to the plan.



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.



Share-based compensation



The Company has share-based compensation plans as described in note 10. The Company utilizes the fair value approach to account for stock options issued
subsequent to August 31, 2003. The fair value of share-based compensation is recorded as a charge to net earnings based on the vesting period with a credit to contributed surplus. No compensation expense was recorded for stock options issued
prior to August 31, 2003. The Companys proforma results, reflecting the fair value based method of accounting for stock-based compensation, are disclosed in note 10.



Derivative financial instruments



Derivative financial instruments, up to the principal balance of the hedged item, are used to reduce foreign currency and
interest rate risk on the Companys debt. Derivative financial instruments in excess of the principal balance of the hedged item are accounted for at fair value. The Company does not enter into financial instruments for trading or speculative
purposes. The Companys policy is to designate each derivative financial instrument as a hedge of a specifically identified debt instrument at the time the Company enters into the derivative financial instrument. In the event of early
extinguishment of the debt obligations, the Company may continue to hold the related derivative financial instruments. The realized or unrealized gain or loss from these swaps is recognized in earnings, and the swaps are recorded on the balance
sheet at fair value. Subsequent changes in the fair value of overhanging swaps are recognized in earnings.



40



---

Interest rate swap agreements are used as part of the Companys program to manage the fixed and
floating interest rate mix of the Companys total debt portfolio and related overall cost of borrowing. The interest differential to be paid or received under interest rate swap agreements is recognized as an adjustment to interest expense.



Foreign currency interest rate swap agreements are used to
manage exchange and interest rate exposures related to debt instruments denominated in foreign currencies. Translation gains and losses on the principal swapped are offset by corresponding translation losses and gains on the related debt in
earnings. The Company translates its foreign currency denominated debt that is hedged by cross currency interest rate swaps at the current rate and also records the effect of the foreign currency exchange rate implicit in the swap agreement.



Gains and losses on terminations of interest rate and foreign
currency interest rate swap agreements are deferred and amortized over the remaining term of the underlying debt as an adjustment to interest expense.



Reclassification of prior year amounts



Certain prior year amounts have been reclassified to conform with the financial statement presentation adopted in the current year.



Changes in accounting policies



Consolidation of variable interest entities



Effective September 1, 2004 the Company has adopted AcG-15.The
Company has determined that it is the primary beneficiary of TEN Group, a variable interest entity. Accordingly, as required by AcG-15, the Company has consolidated the results of TEN Group. AcG-15 has been adopted on a retroactive basis with
restatement of prior periods. Previously, the Company accounted for its investment in TEN Group using the equity method. As at August 31, 2005 the Company holds a 56.4% (56.6% at August 31, 2004) economic interest in TEN Group. The
interest held by the 43.6% (43.4% at August 31, 2004) minority is classified in minority interests. The change had no impact on net earnings or shareholders equity.



In addition, as a result of the adoption of AcG-15, the Company determined that an immaterial entity should not be
consolidated in its results, and accordingly the results of the entity have been excluded from the consolidation on a retroactive basis.



41



---

A summary of the changes to other components of the financial statements is presented below:



|                                           |  |         |  
|------------------------------------------ |  | ------- | -
|                                           |  | 2004    |  
|Consolidated Statements of Earnings (Loss) |  |         |  
|Revenue                                    |  | 798,366 |  
|Operating income                           |  | 251,940 |  
|Consolidated Statements of Cash Flows      |  |         |  
|Cash flows generated (utilized) by:        |  |         |  
|Operating activities                       |  | 82,171  |  
|Investing activities                       |  | (9,483  | )
|Financing activities                       |  | (73,790 | )
|Consolidated Balance Sheets                |  |         |  
|Current assets                             |  | 232,271 |  
|Non-current assets                         |  | 402,463 |  
|Current liabilities                        |  | 183,364 |  
|Non-current liabilities                    |  | 453,683 |  
|Shareholders equity                       |  | (2,313  | )



Proposed accounting
policies



The Accounting Standards Board of the Institute
of Chartered Accountants of Canada issued CICA 3855, Financial Instruments - Recognition and Measurement, CICA 3865, Hedges, and CICA 1530, Comprehensive Income,which must be applied by the Company for its fiscal years
beginning on September 1, 2007. CICA 3855 prescribes when a financial asset, financial liability, or non-financial derivative is to be recognized on the balance sheet and the measurement of such amount. It also specifies how financial
instrument gains and losses are to be presented. CICA 3865 is applicable for designated hedging relationships and builds on existing Canadian GAAP guidance by specifying how hedge accounting is applied and what disclosures are necessary when it is
applied. CICA 1530 introduces new standards for the presentation and disclosure of components of comprehensive income. Comprehensive income is defined as the change in net assets of an enterprise during a reporting period from transactions and other
events and circumstances from non-owner sources. It includes all changes in net assets during a period except those resulting from investments by owners and distributions to owners. The Company is currently considering the impacts of the adoption of
such standards.



The Emerging Issues Committee
(EIC) of the Accounting Standards Board of the Institute of Chartered Accountants of Canada has issued EIC 157, Implicit Variable Interests under AcG-15, (EIC 157) which must be applied by the Company in the first
interim period beginning subsequent to October 17, 2005. EIC 157 prescribes that an implicit variable interest, which is an implied pecuniary interest in an entity that changes with changes in the fair value of that entitys net assets,
exclusive of variable interests, be evaluated in accordance with AcG-15 to determine if consolidation is appropriate. The Company is currently considering the impact of the adoption of such standards.



42



---

|2. | ACQUISITIONS AND DIVESTITURES
|-- | -----------------------------



Acquisitions



| | (a) | On September 1, 2004, Eye Corp acquired the remaining 50% of Eye Shop Pty Limited (formerly Eye Village Joint Venture). In addition, on July 1, 2005, Eye Corp acquired
100% of Eye Drive Melbourne Pty Limited (formerly Southcoast Pty Limited). The total purchase price was $19.5 million (AUS$21.2 million). The principal business activities of these companies is the sale of outdoor advertising.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Eye Corp accounted for these acquisitions using
the purchase method. As such, the results of operations reflect revenue and expenses of the acquired operations since the date of acquisition. A summary of the fair value of the assets and liabilities acquired is as follows:



|                                                    |  |        |  
|--------------------------------------------------- |  | ------ | -
|Current assets                                      |  | 5,872  |  
|Property, plant and equipment                       |  | 5,224  |  
|Site licences                                       |  | 3,931  |  
|Goodwill                                            |  | 9,633  |  
|Liabilities                                         |  | (1,607 | )
|                                                    |  |        |  
|                                                    |  | 23,053 |  
|                                                    |  |        |  
|Consideration:                                      |  |        |  
|Cash                                                |  | 19,487 |  
|Carrying value of investment at date of acquisition |  | 3,566  |  
|                                                    |  |        |  
|                                                    |  | 23,053 |  
|                                                    |  |        |  



| | (b) | 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. As a result of the inability to resolve disagreements with Hollinger regarding amounts owing, the Company has
referred a claim of $86.5 million to arbitration. When finalized, the working capital adjustment payable or refundable will increase or decrease the amount of goodwill recorded on the acquisition.



Divestitures



| | (a) | In July 2004, through a series of transactions, the Company transferred its net assets and the operations of its New Zealand media operations to CanWest MediaWorks (NZ) Limited for
a 70% interest in the ordinary shares of CanWest Mediaworks (NZ) Limited and repayment of inter-company debt. Concurrent with the transfer of the net assets and operations, CanWest MediaWorks (NZ) Limited completed an Initial Public Offering for 30%
of its ordinary shares for NZ$104.0 million, net of costs of NZ$4.0 million (net proceeds of NZ$83.3 million). In addition, CanWest MediaWorks (NZ) Limited entered into a term bank loan of NZ$200.0 million. In preparation of these consolidated
financial statements, the transfer of the net assets to CanWest MediaWorks (NZ) Limited has been accounted for at their carrying values. As a result of the reduction in the Companys interest in the New Zealand media operations, the Company
recorded a gain of $65.5 million in the year ended August 31, 2004.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



43



---

|3. | OTHER INVESTMENTS
|-- | -----------------



|                                           |  |        |  |       
|------------------------------------------ |  | ------ |  | ------
|                                           |  | 2005   |  | 2004  
|Investments in private companies  at cost |  | 12,715 |  | 12,998
|Investments  on an equity basis           |  | 10,344 |  | 13,832
|                                           |  |        |  |       
|                                           |  | 23,059 |  | 26,830
|                                           |  |        |  |       



In June 2004, the
Company sold its investment in Ulster Television for proceeds of $143.8 million, resulting in an investment gain of $51.7 million in the year ended August 31, 2004.



In November 2004, the Company received proceeds of $2.2 million from the liquidation of an investment in a private company,
resulting in an investment gain of $2.2 million as the investment was previously written off as a result of an impairment.



|4. | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------



|                                |  |           |  |                         |  |        
|------------------------------- |  | --------- |  | ----------------------- |  | -------
|                                |  | 2005     
|                                |  | Cost      |  | Accumulatedamortization |  | Net    
|Land                            |  | 62,421    |  |                        |  | 62,421 
|Buildings                       |  | 203,368   |  | 40,511                  |  | 162,857
|Machinery and equipment         |  | 944,219   |  | 482,000                 |  | 462,219
|Leasehold and land improvements |  | 41,424    |  | 19,699                  |  | 21,725 
|                                |  |           |  |                         |  |        
|                                |  | 1,251,432 |  | 542,210                 |  | 709,222
|                                |  |           |  |                         |  |        



|                                |  |           |  |                         |  |        
|------------------------------- |  | --------- |  | ----------------------- |  | -------
|                                |  | 2004     
|                                |  | Cost      |  | Accumulatedamortization |  | Net    
|Land                            |  | 65,259    |  |                        |  | 65,259 
|Buildings                       |  | 206,408   |  | 35,520                  |  | 170,888
|Machinery and equipment         |  | 875,099   |  | 423,477                 |  | 451,622
|Leasehold and land improvements |  | 38,214    |  | 17,672                  |  | 20,542 
|                                |  |           |  |                         |  |        
|                                |  | 1,184,980 |  | 476,669                 |  | 708,311
|                                |  |           |  |                         |  |        



The net book value of
property, plant and equipment located in Canada was $587.5 million (2004 - $586.0 million) and in foreign jurisdictions was $121.7 million (2004 - $122.3 million).



During 2005, the Company had no additions related to assets under capital leases. In 2004, the Company recorded additions of
$19.2 million related to assets under capital leases, of which $15.4 million was added to buildings, and $3.8 million was added to machinery and equipment.



The Company has assets under capital leases with original cost of $19.2 million (2004  $15.4 million) and accumulated amortization of $1.0 million
(2004  $0.3).



44



---

|5. | GOODWILL
|-- | --------



2004

Additions


Divestitures

Other


2005Operating segmentPublishing and Online - Canada

1,707,595






(41,803
)(2),(3)

1,665,792Television  Canada

510,876






(535
)(3)

510,341Television  Network TEN

32,395






(1,384
)(4)

31,011Television  New Zealand

44,868






(1,975
)(4)

42,893Television  Ireland

4,280






(264
)(4)

4,016Radio  New Zealand

105,823






(5,950
)(4)

99,873Outdoor  Australia

63,853

9,633
(1)



(2,545
)(4)

70,941Total

2,469,690

9,633




(54,456
)

2,424,8672003

Additions


Divestitures

Other


2004Operating segmentPublishing and Online - Canada

1,707,595









1,707,595Television  Canada

510,876









510,876Television  Network TEN

31,300






1,095
(4)

32,395Television  New Zealand

43,672






1,196
(4)

44,868Television  Ireland

4,280









4,280Radio  New Zealand

100,353






5,470
(4)

105,823Outdoor  Australia

61,972






1,881
(4)

63,853Total

2,460,048






9,642


2,469,690




| | (1) | Increase in goodwill related to TEN Groups acquisitions of Eye Shop Pty Limited and Eye Drive Melbourne Pty Limited (note 2).
| | --- | ------------------------------------------------------------------------------------------------------------------------------



| | (2) | Decrease in goodwill of the Publishing and Online segment related to the National Post. Through its annual goodwill impairment testing the Company determined
that the fair value of the National Post was less than its book value. As a result the Company recorded a goodwill impairment of $41.4 million. In addition, the value of intangible assets related to National Post circulation was
determined to be impaired (see note 6). The impairments resulted from the incurrence of successive years of operating losses in this business unit and its failure to achieve the profitability targets set out in its business plans.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Decrease in goodwill related to an adjustment to reflect the reversal of certain unutilized
restructuring provisions (note 9).
| | --- | ------------------------------------------------------------------------------------------------------------------------------



| | (4) | Increase (decrease) in goodwill was related to fluctuations in currency translation rates.
| | --- | ------------------------------------------------------------------------------------------



45



---

|6. | INTANGIBLE ASSETS
|-- | -----------------



|                            |  |         |  |                         |  |          
|--------------------------- |  | ------- |  | ----------------------- |  | ---------
|                            |  | 2005   
|                            |  | Cost    |  | AccumulatedAmortization |  | Net      
|Finite life:                |  |         |  |                         |  |          
|Circulation and other       |  | 126,766 |  | 78,099                  |  | 48,667   
|Broadcast and site licences |  | 44,750  |  | 5,336                   |  | 39,414   
|                            |  |         |  |                         |  |          
|                            |  | 171,516 |  | 83,435                  |  | 88,081   
|                            |  |         |  |                         |  |          
|Indefinite life:            |  |         |  |                         |  |          
|Broadcast licences          |  |         |  |                         |  | 717,332  
|Newspaper mastheads         |  |         |  |                         |  | 338,886  
|                            |  |         |  |                         |  |          
|                            |  |         |  |                         |  | 1,056,218
|                            |  |         |  |                         |  |          
|Total intangible assets     |  |         |  |                         |  | 1,144,299
|                            |  |         |  |                         |  |          



|                            |  |         |  |                         |  |          
|--------------------------- |  | ------- |  | ----------------------- |  | ---------
|                            |  | 2004   
|                            |  | Cost    |  | AccumulatedAmortization |  | Net      
|Finite life:                |  |         |  |                         |  |          
|Circulation and other       |  | 137,466 |  | 61,732                  |  | 75,734   
|Broadcast and site licences |  | 40,758  |  | 2,444                   |  | 38,314   
|                            |  |         |  |                         |  |          
|                            |  | 178,224 |  | 64,176                  |  | 114,048  
|                            |  |         |  |                         |  |          
|Indefinite life:            |  |         |  |                         |  |          
|Broadcast licences          |  |         |  |                         |  | 726,531  
|Newspaper mastheads         |  |         |  |                         |  | 338,886  
|                            |  |         |  |                         |  |          
|                            |  |         |  |                         |  | 1,065,417
|                            |  |         |  |                         |  |          
|Total intangible assets     |  |         |  |                         |  | 1,179,465
|                            |  |         |  |                         |  |          



The Australian
Outdoor Advertising segment acquired site licences during the year in the amount of $3.9 million (note 2). The New Zealand Radio Broadcast segment purchased broadcast licences during the year in the amount of $2.2 million. These acquisitions are
classified as broadcast and site licences in the note above.



An impairment loss of $9.6 million (net of accumulated amortization of $1.1 million) relating to finite-lived intangible assets classified as circulation and other was recorded during the year (note 5(2)). The impairment relates to the Publishing and Online  Canada segment.



Amortization of intangible assets of $20.3 million was recorded in 2005 (2004 -$18.2 million).



46



---

|7. | LONG TERM DEBT
|-- | --------------



|                                                         |  |                  |   |  |           |   |  |                  |   |  |           |  
|-------------------------------------------------------- |  | ---------------- | - |  | --------- | - |  | ---------------- | - |  | --------- | -
|                                                         |  | InterestRate (1) |   |  | 2005      |   |  | InterestRate (1) |   |  | 2004      |  
|Senior secured credit facility(2)                        |  | 6.9              | % |  | 346,100   |   |  | 8.6              | % |  | 665,011   |  
|Senior unsecured notes(3)                                |  | 6.3              | % |  | 237,420   |   |  | 6.3              | % |  | 263,340   |  
|Senior subordinated notes(4)                             |  | 7.5              | % |  | 549,632   |   |  | 7.3              | % |  | 608,373   |  
|Senior subordinated notes  exchange offer(5)            |  | 6.9              | % |  | 936,967   |   |  |                  |   |  |          |  
|Term and demand loan 8,368 (2004 - 13,678)(6)          |  | 3.2              | % |  | 12,270    |   |  | 3.4              | % |  | 21,943    |  
|Term bank loan NZ$187,802 (2004  NZ$200,000)(7)         |  | 6.9              | % |  | 154,824   |   |  | 6.2              | % |  | 173,120   |  
|Unsecured bank loan AUS$180,000 (2004  AUS$175,000)(8)  |  | 5.7              | % |  | 160,794   |   |  | 5.7              | % |  | 163,048   |  
|Senior unsecured notes US$125,000 (2004  US$125,000)(9) |  | 6.4              | % |  | 148,609   |   |  | 6.7              | % |  | 164,585   |  
|Junior subordinated notes(10)                            |  |                  |   |  |          |   |  | 12.1             | % |  | 881,116   |  
|Other                                                    |  |                  |   |  | 4,250     |   |  |                  |   |  |          |  
|                                                         |  |                  |   |  |           |   |  |                  |   |  |           |  
|                                                         |  |                  |   |  | 2,550,866 |   |  |                  |   |  | 2,940,536 |  
|Effect of foreign currency swap                          |  |                  |   |  | 356,241   |   |  |                  |   |  | 275,127   |  
|                                                         |  |                  |   |  |           |   |  |                  |   |  |           |  
|Long term debt                                           |  |                  |   |  | 2,907,107 |   |  |                  |   |  | 3,215,663 |  
|Less portion due within one year                         |  |                  |   |  | (21,017   | ) |  |                  |   |  | (29,908   | )
|                                                         |  |                  |   |  |           |   |  |                  |   |  |           |  
|Long term portion                                        |  |                  |   |  | 2,886,090 |   |  |                  |   |  | 3,185,755 |  
|                                                         |  |                  |   |  |           |   |  |                  |   |  |           |  



|(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 $413.1
million and $346.1 million, respectively as at August 31, 2005. At August 31, 2005 the Company had drawn on availabilities under its term facilities, including U.S. dollar loans of US$278.9 million, Canadian dollar loans of $15.0 million,
and had nil drawn under revolving facilities. The revolving credit facility matures in November 2006. The amount of credit available under the $346.1 million term facilities decreases periodically based on scheduled repayments until maturity in
August 2009. This credit facility is collateralized by substantially all the Canadian assets of the Company. The Canadian dollar debt bears interest at CDOR plus a margin and the US dollar debt bears interest at LIBOR plus a margin. During 2005, the
Company repaid US$209.6 million under this credit facility which resulted in a foreign exchange gain of $68.3 million, which has been included in foreign exchange gains on the income statement. In October 2005 these credit facilities were
extinguished, see note 24.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



47



---

The Company has entered into an interest rate swap in the notional amount of $250 million to fix the
interest payments on this revolving facility and subsequent revolving facilities until November 2009, resulting in an effective interest rate of 6.7% plus a margin. As a result of the revolving facility not being drawn upon, the notional amount of
$250 million was overhanging as at August 31, 2005 (2004 - $250 million) and its fair value was recognized in earnings. The Company has entered into an interest rate swap to fix the interest payments on its Canadian dollar term loans, until
maturity, with a notional value of $197.8 million (2004 - $278.3 million) resulting in an effective interest rate of 6.3% plus a margin. As a result of debt repayments and the reduction of notional amounts, a notional amount of $182.8 million was
overhanging as at August 31, 2005 (2003 - $256.5 million) and its fair value was recognized in earnings. The Company has also entered into a cross currency interest rate swap to fix its payments on its U.S. dollar term loans, until maturity,
with a notional amount of $1,050.5 million (2004 - $1,061.5 million) resulting in an effective interest rate of 6.7% and a fixed currency exchange rate of US$1:$1.5485. As a result of debt repayments a notional amount of $618.6 million was
overhanging as at August 31, 2005 (2004 - $305.0 million) and its fair value was recognized in earnings. For the year ended August 31, 2005, total overhanging swap losses of $186.1 million (2004 - $110.9 million) were charged to earnings.
The resulting overhanging swap liability as at August 31, 2005 was $212.8 million (2004 - $120.3 million). In November 2005, $525.3 million of the notional amount cross currency interest rate swaps were settled, see note 24.



|(3) | The US$200.0 million senior unsecured notes mature in April 2013 and bear interest at 7.625%.
The notes are redeemable at the Companys option, in whole at any time or in part from time to time, on or after April 15, 2008. The Company has entered into a US$200 million cross-currency interest rate swap resulting in floating interest
rates on its senior unsecured notes at interest rates based on CDOR plus a margin and a fixed currency exchange rate of US$1:$1.4735 until May 2013. In October 2005, US$199.8 million of these notes were settled and in November 2005, the
cross-currency interest rate swaps were settled, see note 24.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The senior subordinated notes include loans of US$425.0 million, $4.6 million and loans held
by the majority shareholder of the Company in the amount of US$41.9 million (2004  US$41.9 million) which mature on May 15, 2011 and bear interest at 10.625%. The notes rank junior to the Companys senior credit facility and are
guaranteed by certain subsidiaries of the Company. The notes are redeemable at the Companys option, in whole at any time or in part from time to time, on or after May 15, 2006. The Company has entered into a US$425.0 million
cross-currency interest rate swap resulting in floating interest rates on its senior subordinated notes at interest rates based on CDOR plus a margin and a fixed currency exchange rate of US$1:$1.5505. In October 2005, US$419.9 million and $0.7
million of the notes, and all of the loans held by the majority shareholder were settled. In addition, in November 2005, the cross-currency interest rate swap was settled, see note 24.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | On November 18, 2004, the Company completed an exchange offer to exchange a new series
of 8% Senior Subordinated notes due 2012 for the outstanding 12.125% Senior notes due 2010 issued by the Hollinger Participation Trust. In the exchange offer, the holders of the trust notes received US$1,240 principal amount of new notes in exchange
for each US$1,000 of trust notes. In addition, the Company completed a concurrent offer of notes, proceeds of which were used to retire the 12.125% junior subordinated notes held by Hollinger, which had not been participated to the Hollinger
Participation Trust. The effect of these transactions replaced the Companys existing $903.6 million 12.125% junior subordinated notes (including accrued interest to November 18, 2004) with new $908.1 million (US$761.1 million) 8% senior
subordinated notes.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



48



---

The issuance of the new notes was recorded at their fair value at November 18, 2004 of $944 million.
The difference between the fair value of the new notes and the book value of the junior subordinated notes together with certain other costs of settling the debt totaling $44 million, was charged to earnings as a loss on debt extinguishment.



The new senior subordinated notes include loans of US$761.1
million mature on September 15, 2012 and bear interest at 8.0%. The notes rank junior to the Companys senior credit facility and are guaranteed by certain subsidiaries of the Company. The notes are redeemable at the Companys option
on or after September 15, 2009. The Company has entered into a US$761.1 million cross-currency interest rate swap resulting in floating interest rates on its senior subordinated notes at interest rates based on CDOR plus a margin and a fixed
currency exchange rate of US$1:$1.1932 until September 2012.



|(6) | These credit facilities provide for demand bank loans maturing December 2005 in the maximum
amount of 36.5 million (2004 - 38.5 million). This facility is expected to be renewed annually. The debt bears interest at floating rates. The Company has entered into an interest rate swap to fix the interest payments on
10.0 million of its loan resulting in an effective interest rate of 3.23% until March 2008.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | These credit facilities provide for revolving working capital and revolving term loans in the
amount of NZ$25.0 million and NZ$200.0 million respectively, and are subject to a negative pledge deed. The working capital facility matures July 2007 and the term facility matures July 2009. At August 31, 2005 NZ$1.0 million (August 31, 2004
 nil) and NZ$186.8 million (August 31, 2004  NZ$200.0 million) were drawn under the working capital and revolving term loan facilities, respectively. The debt bears interest at floating rates. The Company has entered into an interest
rate swap to fix the interest payments on NZ$165.0 million of its New Zealand term bank loan resulting in an effective interest rate of 6.17% until July 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | Credit facility provides for a maximum of $625.3 million (AUS$700.0 million) in advances. At August 31, 2005 the TEN Group had drawn AUS$180.0 million against
this facility leaving an availability of AUS$520.0 million. This facility matures in December 2008. The TEN Group entered into interest rate swap contracts with a notional amount of AUS$250.0 million to fix the interest on this facility and
subsequent facilities with maturities to 2011. The swap contracts are not designated as hedging instruments and accordingly, the fair value of $2.3 million were charged to net earnings (2004 - $0.1 million) and a corresponding liability of $2.3
million (2004-$0.1 million) was recorded. The effective interest rate of this debt is approximately 5.7%.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | The US$125.0 million unsecured notes mature in March 2013. The TEN Group has entered into a US$125.0 million cross currency interest rate swap resulting in floating
rates and a fixed currency exchange rate of US$1:AUS$1.6807. The effective interest rate of this debt is approximately 6.9%.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(10) | The 12.125% junior subordinated notes due November 2010 were settled through the exchange offer (see note 7(5)). Under the terms of the notes interest obligations were satisfied by the issuance of additional notes. In 2005, the related interest was $22.5 million (2004
- $98.0 million).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



49



---

Under its Senior Secured Credit facility the Company was required to maintain a fair value of its
interest rate swaps and foreign currency and interest rate swaps above a prescribed minimum liability ($600.0 million as at August 31, 2005). There were also prescribed minimum liabilities with individual counterparties, which have two-way
recouponing provisions. The Company was required to make net recouponing payments of $97.0 million during 2005 (2004  $28.0 million), $55.3 million of this recouponing payment related to overhanging swaps and accordingly was reflected in cash
flows from operating activities. Subsequent to August 31, 2005 the Company made further net recouponing payments of $118.5 million. Further strengthening of the Canadian currency and/or declining interest rates may result in further payments to
counterparties.



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, 2005 over the next five years, are:



|                       |  |      |  |        
|---------------------- |  | ---- |  | -------
|Year ending August 31, |  | 2006 |  | 21,017 
|                       |  | 2007 |  | 5,339  
|                       |  | 2008 |  | 4,514  
|                       |  | 2009 |  | 748,177
|                       |  | 2010 |  |       



Subsequent to
August 31, 2005 the Company entered into new senior secured credit facilities, see note 24.



|8. | OBLIGATIONS UNDER CAPITAL LEASES
|-- | --------------------------------



The Company has entered into capital leases with future minimum lease payments for the years ended August 31 as follows:



|                                                         |  |        |  
|-------------------------------------------------------- |  | ------ | -
|2006                                                     |  | 2,637  |  
|2007                                                     |  | 4,890  |  
|2008                                                     |  | 3,529  |  
|2009                                                     |  | 3,868  |  
|2010                                                     |  | 3,654  |  
|Thereafter                                               |  | 5,368  |  
|                                                         |  |        |  
|Total minimum lease payments                             |  | 23,946 |  
|Amount representing interest (at rates of 5.9% to 9.6%)  |  | (6,646 | )
|                                                         |  |        |  
|Present value of minimum capital lease payments          |  | 17,300 |  
|Less current portion of obligations under capital leases |  | (1,199 | )
|                                                         |  |        |  
|                                                         |  | 16,101 |  
|                                                         |  |        |  



Interest expense
recorded on the obligations under capital leases was $1.4 million (2004  $0.2 million).



50



---

|9. | RESTRUCTURING ACCRUALS
|-- | ----------------------



As at August 31, 2003, the Company had restructuring accruals of $15.2 million related to its acquisition and restructuring of WIC Western
International Communications Ltd. (WIC), its publishing properties, as well as a result of operating restructuring activities undertaken in its Canadian Media and Entertainment operations.



In 2004, the Company restructured certain other Canadian broadcast
operations including the centralization of traffic and master control operations. The $2.4 million cost consisted of employee severance.



For the year ended August 31, 2005, expenditures charged to the restructuring accruals were $3.6 million (August 31, 2004$11.2 million).



In 2005, the Company reversed unutilized restructuring
accruals in the amount of $1.4 million. The reversals of $0.8 million related to the Canadian Television segment and $0.6 million related to the Canadian Publishing and Online segment with related tax effects of $0.3 million and $0.2 million,
respectively, were recorded as reductions of goodwill.



|                        |  |           |   |  |                            |   |  |             |   |  |        |   |  |         |  
|----------------------- |  | --------- | - |  | -------------------------- | - |  | ----------- | - |  | ------ | - |  | ------- | -
|                        |  | Severance |   |  | Lease/ contracttermination |   |  | Integration |   |  | Other  |   |  | Total   |  
|Balance August 31, 2003 |  | 10,203    |   |  | 2,428                      |   |  | 250         |   |  | 2,340  |   |  | 15,221  |  
|Canadian television     |  | 2,445     |   |  |                           |   |  |            |   |  |       |   |  | 2,445   |  
|Expenditures  2004     |  | (7,630    | ) |  | (2,269                     | ) |  |            |   |  | (1,341 | ) |  | (11,240 | )
|                        |  |           |   |  |                            |   |  |             |   |  |        |   |  |         |  
|Balance August 31, 2004 |  | 5,018     |   |  | 159                        |   |  | 250         |   |  | 999    |   |  | 6,426   |  
|Expenditures  2005     |  | (3,208    | ) |  | (143                       | ) |  | (250        | ) |  |       |   |  | (3,601  | )
|Reversal  2005         |  | (594      | ) |  | (16                        | ) |  |            |   |  | (800   | ) |  | (1,410  | )
|                        |  |           |   |  |                            |   |  |             |   |  |        |   |  |         |  
|Balance August 31, 2005 |  | 1,216     |   |  |                           |   |  |            |   |  | 199    |   |  | 1,415   |  
|                        |  |           |   |  |                            |   |  |             |   |  |        |   |  |         |  



|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.



51



---

Series 1 preference shares carry 19 votes per share with certain limitations. Under certain conditions,
the series 1 preference shares carry preferential voting rights 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 are not eligible to vote,
and at the option of the Company, are 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 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.



At August 31, 2005, and August 31, 2004, there were no series 1 or series 2 preference shares outstanding.



|                                                         |  |         |  |        
|-------------------------------------------------------- |  | ------- |  | -------
|Issued                                                   |  | 2005    |  | 2004   
|76,785,976 (2004  76,785,976) multiple voting shares    |  | 3,199   |  | 3,199  
|98,813,655 (2004  98,667,438) subordinate voting shares |  | 824,543 |  | 820,625
|1,795,092 (2004  1,825,718) non-voting shares           |  | 22,167  |  | 24,804 
|                                                         |  |         |  |        
|                                                         |  | 849,909 |  | 848,628
|                                                         |  |         |  |        



Changes in outstanding
share capital during the two years ended August 31, 2005 were as follows:



|                                              |  |                 |   |  |         |  
|--------------------------------------------- |  | --------------- | - |  | ------- | -
|                                              |  | Number ofshares |   |  | $       |  
|Multiple voting share capital:                |  |                 |   |  |         |  
|Balance  August 31, 2004 and 2005            |  | 76,785,976      |   |  | 3,199   |  
|                                              |  |                 |   |  |         |  
|Subordinate voting share capital:             |  |                 |   |  |         |  
|Balance  August 31, 2003                     |  | 98,280,291      |   |  | 815,545 |  
|Changes pursuant to:                          |  |                 |   |  |         |  
|Share purchase plans                          |  | 32,561          |   |  | 446     |  
|Exercise of stock options                     |  | 114,056         |   |  | 1,358   |  
|Conversion from non-voting shares  net       |  | 240,530         |   |  | 3,276   |  
|                                              |  |                 |   |  |         |  
|Balance  August 31, 2004                     |  | 98,667,438      |   |  | 820,625 |  
|Changes pursuant to:                          |  |                 |   |  |         |  
|Share purchase plans                          |  | 25,711          |   |  | 371     |  
|Exercise of stock options                     |  | 89,242          |   |  | 901     |  
|Redeemed fractions                            |  | (4              | ) |  |        |  
|Conversion from non-voting shares  net       |  | 31,268          |   |  | 2,646   |  
|                                              |  |                 |   |  |         |  
|Balance  August 31, 2005                     |  | 98,813,655      |   |  | 824,543 |  
|                                              |  |                 |   |  |         |  
|Non-voting share capital:                     |  |                 |   |  |         |  
|Balance  August 31, 2003                     |  | 2,066,248       |   |  | 28,080  |  
|Changes pursuant to:                          |  |                 |   |  |         |  
|Conversion to subordinate voting shares  net |  | (240,530        | ) |  | (3,276  | )
|                                              |  |                 |   |  |         |  
|Balance  August 31, 2004                     |  | 1,825,718       |   |  | 24,804  |  
|Changes pursuant to:                          |  |                 |   |  |         |  
|Share purchase plans                          |  | 642             |   |  | 9       |  
|Conversion to subordinate voting shares  net |  | (31,268         | ) |  | (2,646  | )
|                                              |  |                 |   |  |         |  
|Balance August 31, 2005                      |  | 1,795,092       |   |  | 22,167  |  
|                                              |  |                 |   |  |         |  



52



---

Share Compensation Plans



The Companys board of directors has approved share compensation plans, the purpose of which is to provide employees 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. Except as described below 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.



The Company adopted the fair value method of accounting for share based
compensation on a prospective basis for options granted subsequent to September 1, 2003, resulting in compensation expense and a credit to contributed surplus of $2.5 million for the year ended August 31, 2005 (2004  $1.0 million).
The fair value of the options granted during the year ended August 31, 2005 was estimated using the Black-Scholes option pricing model with the assumptions of no dividend yield (2004  nil), an expected volatility of 42% (2004  52%),
risk free interest rates of 4.2% (2004  4.4% to 4.9%) and an expected life of 7 years (2004  7 to 9 years).



The total fair value of 1,177,500 stock options granted by the Company in the year ended August 31, 2005 with an average exercise price of $12.06 per
option was $6.4 million, a weighted average fair value per option of $5.44. During 2004, 523,000 stock options were granted with a total fair value of $4.0 million, and a weighted average fair value per option of $7.58. During the year, the Company
agreed to issue approximately 187,000 shares, which vest in two years, for no consideration. The fair value of the shares at the time of issuance was $10.40 per share. During the year ended August 31, 2005, the Company recorded compensation
expense, and a credit to contributed surplus, of $0.6 million related to these shares.



53



---

The proforma cost of share compensation expense if the Company had adopted the fair value method retroactively for the
year ended August 31, 2005 would be $1.3 million (2004 $1.6 million). A value of $1.6 million would be charged to proforma net earnings in future years according to the vesting terms of the options. The resulting proforma net earnings
from continuing operations, basic and diluted earnings per share for the year ended August 31, 2005 would have been $19.2 million, $0.11 and $0.11 respectively (2004 - $192.7 million, $1.09, and $1.09). The resulting proforma net earnings
(loss), basic and diluted earnings per share for the year ended August 31, 2005 would have been $9.0 million, $0.05 and $0.05 respectively (2004  ($15.0) million, ($0.09), and ($0.09)).



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



|                                       |  |           |   |      |                |  |           |   |  |               
|-------------------------------------- |  | --------- | - | ---- | -------------- |  | --------- | - |  | --------------
|                                       |  | 2005      |   | 2004
|                                       |  | Options   |   |      | AveragePrice $ |  | Options   |   |  | AveragePrice $
|Options outstanding, beginning of year |  | 2,360,483 |   |      | 13.74          |  | 2,075,561 |   |  | 13.95         
|Changes pursuant to:                   |  |           |   |      |                |  |           |   |  |               
|Options granted                        |  | 1,177,500 |   |      | 12.06          |  | 523,000   |   |  | 12.85         
|Options exercised                      |  | (89,242   | ) |      | 10.10          |  | (114,056  | ) |  | 11.91         
|Options expired                        |  | (583,113  | ) |      | 13.74          |  | (5,798    | ) |  | 15.22         
|Options forfeited                      |  | (371,426  | ) |      | 11.25          |  | (118,224  | ) |  | 15.21         
|                                       |  |           |   |      |                |  |           |   |  |               
|Options outstanding, end of year       |  | 2,494,202 |   |      | 13.45          |  | 2,360,483 |   |  | 13.74         
|                                       |  |           |   |      |                |  |           |   |  |               
|Options exercisable as at August 31    |  | 1,725,914 |   |      | 15.10          |  | 1,314,380 |   |  | 15.45         



The following options to purchase
subordinate voting shares or non-voting shares were outstanding and exercisable as at August 31, 2005:



|                           |  |                   |  |                                     |  |                                 |  |                   |  |                                
|-------------------------- |  | ----------------- |  | ----------------------------------- |  | ------------------------------- |  | ----------------- |  | -------------------------------
|Range of exercise prices $ |  | Numberoutstanding |  | Weightedaverageremaining life years |  | Weightedaverageexercise price $ |  | Numberexercisable |  | Weighted averageexercise price$
|5  10                     |  | 259,410           |  | 7.1                                 |  | 7.21                            |  | 56,810            |  | 7.19                           
|10  15                    |  | 1,581,144         |  | 8.5                                 |  | 12.29                           |  | 885,843           |  | 12.43                          
|15  20                    |  | 402,397           |  | 4.6                                 |  | 16.24                           |  | 498,785           |  | 16.48                          
|20  25                    |  | 246,558           |  | 2.5                                 |  | 22.63                           |  | 279,783           |  | 22.54                          
|25 and over                |  | 4,693             |  | 2.3                                 |  | 25.67                           |  | 4,693             |  | 25.67                          
|                           |  |                   |  |                                     |  |                                 |  |                   |  |                                
|                           |  | 2,494,202         |  | 7.1                                 |  | 13.45                           |  | 1,725,914         |  | 15.10                          
|                           |  |                   |  |                                     |  |                                 |  |                   |  |                                



|11. | EARNINGS PER SHARE
|--- | ------------------



Basic earnings per share are calculated using the daily weighted average number of shares outstanding.



54



---

Diluted earnings 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.



The following table provides a reconciliation of the numerators and denominators used in computing basic and diluted earnings per share.



|                                                            |  |             |   |  |             |  
|----------------------------------------------------------- |  | ----------- | - |  | ----------- | -
|                                                            |  | 2005        |   |  | 2004        |  
|Net earnings from continuing operations                     |  | 20,422      |   |  | 194,299     |  
|Net loss from discontinued operations                       |  | (10,132     | ) |  | (207,777    | )
|                                                            |  |             |   |  |             |  
|Net earnings (loss) available to common shareholders        |  | 10,290      |   |  | (13,478     | )
|                                                            |  |             |   |  |             |  
|Basic weighted average shares outstanding during the year   |  | 177,319,675 |   |  | 177,235,944 |  
|Dilutive effect of options                                  |  | 328,915     |   |  | 158,074     |  
|                                                            |  |             |   |  |             |  
|Diluted weighted average shares outstanding during the year |  | 177,648,590 |   |  | 177,394,018 |  
|                                                            |  |             |   |  |             |  
|Options outstanding that would have been anti-dilutive      |  | 859,609     |   |  | 1,930,283   |  
|                                                            |  |             |   |  |             |  



|12. | 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, Euro and U.S. 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:



|                                                                                |  |        |   |  |        |  
|------------------------------------------------------------------------------- |  | ------ | - |  | ------ | -
|                                                                                |  | 2005   |   |  | 2004   |  
|Deferred loss, beginning of year                                                |  | 13,821 |   |  | 30,646 |  
|Deferred foreign currency gain during the year                                  |  | (2,506 | ) |  | (9,802 | )
|Realization of translation gains (losses) due to distributions and divestitures |  | 622    |   |  | (7,023 | )
|                                                                                |  |        |   |  |        |  
|Deferred loss, end of year                                                      |  | 11,937 |   |  | 13,821 |  
|                                                                                |  |        |   |  |        |  



The balance of
cumulative translation adjustments at the end of the year represents net unrealized losses (gains) as follows:



|                     |  |        |  |        |  
|-------------------- |  | ------ |  | ------ | -
|                     |  | 2005   |  | 2004   |  
|Australian dollar    |  | 9,880  |  | 8,242  |  
|New Zealand dollar   |  | 1,498  |  | (1,102 | )
|Euro                 |  | 559    |  | 1,032  |  
|United States dollar |  |       |  | 5,649  |  
|                     |  |        |  |        |  
|                     |  | 11,937 |  | 13,821 |  
|                     |  |        |  |        |  



55



---

|13. | 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:



|                                                                            |  |         |   |  |         |  
|--------------------------------------------------------------------------- |  | ------- | - |  | ------- | -
|                                                                            |  | 2005    |   |  | 2004    |  
|Income taxes at combined Canadian statutory rate of 34.9% (2004  35.2%)    |  | 47,054  |   |  | 111,382 |  
|Non-taxable portion of capital gains                                        |  | (521    | ) |  | (36,733 | )
|Effect of valuation allowance on future tax assets                          |  | 2,853   |   |  | 2,200   |  
|Effect of foreign income tax rates differing from Canadian income tax rates |  | (16,001 | ) |  | (40,883 | )
|Incremental taxes on debt extinguishment                                    |  | 5,652   |   |  |        |  
|Large corporation tax and withholding tax                                   |  | 2,839   |   |  | 7,721   |  
|Effect of change in tax rates                                               |  | (2,896  | ) |  | 9,398   |  
|Non-deductible expenses                                                     |  | 4,126   |   |  | 3,389   |  
|Goodwill impairment                                                         |  | 14,546  |   |  |        |  
|Prior period temporary differences not previously tax effected              |  | (6,644  | ) |  |        |  
|Effect of resolved tax dispute                                              |  | (10,299 | ) |  | (19,667 | )
|Change in Australian tax consolidation legislation                          |  | (17,710 | ) |  |        |  
|Other                                                                       |  | (2,527  | ) |  | 678     |  
|                                                                            |  |         |   |  |         |  
|Provision for income taxes                                                  |  | 20,472  |   |  | 37,485  |  
|                                                                            |  |         |   |  |         |  



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



|                        |  |          |   |  |         |  
|----------------------- |  | -------- | - |  | ------- | -
|                        |  | 2005     |   |  | 2004    |  
|Canada                  |  | (183,627 | ) |  | (85,551 | )
|Foreign                 |  | 318,453  |   |  | 401,976 |  
|                        |  |          |   |  |         |  
|Net earnings before tax |  | 134,826  |   |  | 316,425 |  
|                        |  |          |   |  |         |  



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



|                           |  |         |   |  |         |  
|-------------------------- |  | ------- | - |  | ------- | -
|                           |  | 2005    |   |  | 2004    |  
|Current income taxes       |  |         |   |  |         |  
|Canada                     |  | (1,588  | ) |  | 9,704   |  
|Foreign                    |  | 96,409  |   |  | 36,091  |  
|                           |  |         |   |  |         |  
|                           |  | 94,821  |   |  | 45,795  |  
|                           |  |         |   |  |         |  
|Future income taxes        |  |         |   |  |         |  
|Canada                     |  | (55,710 | ) |  | (23,149 | )
|Foreign                    |  | (18,639 | ) |  | 14,839  |  
|                           |  |         |   |  |         |  
|                           |  | (74,349 | ) |  | (8,310  | )
|                           |  |         |   |  |         |  
|Provision for income taxes |  | 20,472  |   |  | 37,485  |  
|                           |  |         |   |  |         |  



56



---

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



|                                                                                       |  |          |   |  |         |  
|-------------------------------------------------------------------------------------- |  | -------- | - |  | ------- | -
|                                                                                       |  | 2005     |   |  | 2004    |  
|Future tax assets                                                                      |  |          |   |  |         |  
|Non-capital loss carryforwards                                                         |  | 186,933  |   |  | 154,831 |  
|Provision for write down of investments                                                |  | 11,337   |   |  | 12,442  |  
|Accounts payable, other accruals and interest rate and foreign currency swap liability |  | 90,402   |   |  | 60,575  |  
|Post retirement benefits                                                               |  | 14,402   |   |  | 9,028   |  
|Less: Valuation allowance                                                              |  | (102,573 | ) |  | (96,351 | )
|                                                                                       |  |          |   |  |         |  
|Total future tax assets                                                                |  | 200,501  |   |  | 140,525 |  
|                                                                                       |  |          |   |  |         |  
|Future tax liabilities                                                                 |  |          |   |  |         |  
|Capital cost allowances in excess of book amortization                                 |  | 86,059   |   |  | 85,038  |  
|Pension assets - net                                                                   |  | 3,505    |   |  | 2,428   |  
|Broadcast rights                                                                       |  | 38,590   |   |  | 42,008  |  
|Intangible assets                                                                      |  | 116,466  |   |  | 131,201 |  
|Other assets                                                                           |  | 19,848   |   |  | 15,623  |  
|                                                                                       |  |          |   |  |         |  
|Total future tax liabilities                                                           |  | 264,468  |   |  | 276,298 |  
|                                                                                       |  |          |   |  |         |  
|Net future tax liability                                                               |  | 63,967   |   |  | 135,773 |  
|Current portion of future tax asset                                                    |  | 3,893    |   |  | 6,166   |  
|Long term portion of future tax asset                                                  |  | 54,058   |   |  | 45,826  |  
|Current portion of future tax liability                                                |  | (44,663  | ) |  | (48,080 | )
|Discontinued operations future tax liability                                          |  |         |   |  | (405    | )
|                                                                                       |  |          |   |  |         |  
|Net long term future tax liability                                                     |  | 77,255   |   |  | 139,280 |  
|                                                                                       |  |          |   |  |         |  



The provision for
income taxes for the year ended August 31, 2005, includes adjustments for prior period temporary differences not previously tax effected aggregating to $6.6 million ($5.8 million future income tax, and $0.8 million current income tax). The
Company has determined these adjustments are not material to the previously reported and current year results, accordingly, the adjustments have been included in the current years earnings. These adjustments have the effect of increasing basic
and diluted earnings per share for the year ended August 31, 2005, by $0.04 per share.



As at August 31, 2005, the Company had non-capital loss carry forwards for income tax purposes of $672.8 million, that expire as follows: 2006 - $2.0 million, 2007 - $6.8 million, 2008 -
$22.1 million, 2009 - $87.3 million, 2010 - $53.9 million, thereafter - $500.7 million.



The recognition and measurement of the current and future tax assets and liabilities involves dealing with uncertainties in the application of complex tax
regulations in a number of jurisdictions and in the assessment of the recoverability of future tax assets. Actual income taxes could vary from these estimates as a result of future events, including changes in income tax laws or the outcome of tax
reviews by tax authorities and related appeals. To the extent that the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax provision in the period in which the determination is
made.



57



---

|14. | INVESTMENT GAINS, LOSSES AND WRITE-DOWNS
|--- | ----------------------------------------



The Company has recorded the following investment gains, losses and writedowns.



|                                                         |  |        |   |  |         |  
|-------------------------------------------------------- |  | ------ | - |  | ------- | -
|                                                         |  | 2005   |   |  | 2004    |  
|Gain on sale of other investment (note 3)                |  | 2,171  |   |  |        |  
|Gain on sale of investment in UTV (note 3)               |  |       |   |  | 51,717  |  
|Dilution gain  CanWest MediaWorks (NZ) Limited (note 2) |  |       |   |  | 65,515  |  
|Dilution gain  TEN Group                                |  | 660    |   |  | 1,889   |  
|Other losses and write-downs                             |  | (1,304 | ) |  | (3,335  | )
|                                                         |  |        |   |  |         |  
|                                                         |  | 1,527  |   |  | 115,786 |  
|                                                         |  |        |   |  |         |  



|15. | DISCONTINUED OPERATIONS
|--- | -----------------------



In the year ended August 31, 2004 the Company commenced a process to sell its Fireworks Entertainment Division. As a result, the results of
operations of Fireworks were classified as a loss from discontinued operations in the consolidated statements of earnings, the net cash flows were classified as operating, investing and financing activities from discontinued operations in the
consolidated statements of cash flows and the assets and liabilities were classified on the consolidated balance sheets as assets and liabilities of discontinued operations. Prior to the classification as a discontinued operation, these results were
reported within the Canadian Entertainment segment. In July 2005, a subsidiary of the Company sold certain assets and operations which comprise its film and television program operations for net proceeds of $16.1 million. $2.3 million of these
proceeds are recorded in accounts receivable as they have been held in escrow to be released over a 30 month period. In September 2005, a subsidiary of the Company completed the sale of its remaining film and television program rights for net
proceeds of $2.9 million. Certain remaining accounts receivable and accounts payable will be settled by the Company.



The loss from discontinued operations of Fireworks is summarized as follows:



|                                                     |  |         |   |  |          |  
|---------------------------------------------------- |  | ------- | - |  | -------- | -
|                                                     |  | 2005    |   |  | 2004     |  
|Revenue                                              |  | 56,748  |   |  | 115,852  |  
|                                                     |  |         |   |  |          |  
|Loss from discontinued operations before tax expense |  | (9,428  | ) |  | (207,078 | )
|Income tax expense                                   |  | (704    | ) |  | (699     | )
|                                                     |  |         |   |  |          |  
|Loss from discontinued operations                    |  | (10,132 | ) |  | (207,777 | )
|                                                     |  |         |   |  |          |  
|Loss from discontinued operations per share:         |  |         |   |  |          |  
|Basic and diluted                                    |  | ($0.06  | ) |  | ($1.18   | )



58



---

The carrying values of the net assets related to the discontinued Fireworks Entertainment division are as
follows:



|                                           |  |       |  |         |     
|------------------------------------------ |  | ----- |  | ------- | ----
|                                           |  | 2005  |  | 2004    |     
|Accounts receivable                        |  | 329   |  | 85,269  |     
|Investment in film and television programs |  | 2,521 |  |        |     
|Other current assets                       |  |      |  | 3,825   |     
|                                           |  |       |  |         |     
|Total current assets                       |  | 2,850 |  | 89,094  |     
|                                           |  |       |  |         |     
|Investment in film and television programs |  |      |  | 37,971  |     
|Other assets                               |  |      |  | 405     |     
|                                           |  |       |  |         |     
|Total non current assets                   |  |      |  | 38,376  |     
|                                           |  |       |  |         |     
|Debt                                       |  |      |  | (23,571 | )(1)
|Other current liabilities                  |  |      |  | (46,145 | )   
|                                           |  |       |  |         |     
|Total current liabilities                  |  |      |  | (69,716 | )   
|                                           |  |       |  |         |     
|Net assets                                 |  | 2,850 |  | 57,754  |     
|                                           |  |       |  |         |     



| | (1) | This included a three year revolving facility collateralized by certain assets of Fireworks
Entertainment Inc. This loan was fully repaid and effective December 21, 2004, the facility has been terminated.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|16. | STATEMENTS OF CASH FLOWS
|--- | ------------------------



The following amounts comprise the net change in non-cash operating accounts included in the statements of cash flows excluding non-cash operating
accounts related to discontinued operations:



|                                             |  |         |   |  |         |  
|-------------------------------------------- |  | ------- | - |  | ------- | -
|                                             |  | 2005    |   |  | 2004    |  
|CASH GENERATED (UTILIZED) BY:                |  |         |   |  |         |  
|Accounts receivable                          |  | 30,664  |   |  | (1,787  | )
|Investment in film and television programs   |  | 12,448  |   |  | (3,781  | )
|Inventory                                    |  | (84     | ) |  | 1,060   |  
|Other current assets                         |  | (6,726  | ) |  | (5,052  | )
|Other assets                                 |  | (26,605 | ) |  | (6,086  | )
|Accounts payable and accrued liabilities     |  | 24,550  |   |  | (21,638 | )
|Income taxes payable                         |  | 20,721  |   |  | (26,101 | )
|Deferred revenue                             |  | 2,556   |   |  | 4,151   |  
|Film and television program accounts payable |  | 3,581   |   |  | (21,490 | )
|                                             |  |         |   |  |         |  
|                                             |  | 61,105  |   |  | (80,724 | )
|                                             |  |         |   |  |         |  



The following amounts
were paid on account of interest and income taxes:



|             |  |         |  |        
|------------ |  | ------- |  | -------
|             |  | 2005    |  | 2004   
|Interest     |  | 216,198 |  | 226,702
|Income taxes |  | 76,445  |  | 71,371 



59



---

|17. | RETIREMENT ASSETS AND OBLIGATIONS
|--- | ---------------------------------



The Company has a number of funded and unfunded defined benefit plans, as well as defined contribution plans, that provide pension, other retirement and
post retirement benefits to its employees. Its defined benefit pension plans are based on years of service and final average salary. Information on the Companys pension and post retirement benefit plans follows:



|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | - |  | --------------------------- | - |  | ------- | - |  | ------- | -
|                                                                                                                                                                                                                                                                                                      |  | Pension benefits (1) |   |  | Post retirementbenefits (2) |  
|                                                                                                                                                                                                                                                                                                      |  | 2005                 |   |  | 2004                        |   |  | 2005    |   |  | 2004    |  
|Plan Assets                                                                                                                                                                                                                                                                                           |  |                      |   |  |                             |   |  |         |   |  |         |  
|Fair value  beginning of year                                                                                                                                                                                                                                                                        |  | 276,707              |   |  | 250,877                     |   |  |        |   |  |        |  
|Divestiture                                                                                                                                                                                                                                                                                           |  |                     |   |  | (25                         | ) |  |        |   |  |        |  
|Actual return on plan assets                                                                                                                                                                                                                                                                          |  | 32,184               |   |  | 19,538                      |   |  |        |   |  |        |  
|Employer contributions                                                                                                                                                                                                                                                                                |  | 15,913               |   |  | 13,883                      |   |  | 249     |   |  | 277     |  
|Employee contributions                                                                                                                                                                                                                                                                                |  | 6,153                |   |  | 6,125                       |   |  |        |   |  |        |  
|Benefits paid and administrative expenses                                                                                                                                                                                                                                                             |  | (14,109              | ) |  | (13,691                     | ) |  | (249    | ) |  | (277    | )
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|Fair value  end of year                                                                                                                                                                                                                                                                              |  | 316,848              |   |  | 276,707                     |   |  |        |   |  |        |  
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|Plan Obligations                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|Accrued benefit obligation  beginning of year                                                                                                                                                                                                                                                        |  | 366,149              |   |  | 337,436                     |   |  | 34,985  |   |  | 30,724  |  
|Accrued interest on benefits                                                                                                                                                                                                                                                                          |  | 24,440               |   |  | 22,413                      |   |  | 2,346   |   |  | 2,334   |  
|Current service costs                                                                                                                                                                                                                                                                                 |  | 18,002               |   |  | 17,078                      |   |  | 1,329   |   |  | 1,260   |  
|Benefits paid                                                                                                                                                                                                                                                                                         |  | (12,770              | ) |  | (13,064                     | ) |  | (249    | ) |  | (277    | )
|Actuarial losses                                                                                                                                                                                                                                                                                      |  | 49,967               |   |  | 2,286                       |   |  | 7,177   |   |  | 944     |  
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|Accrued benefit obligation  end of year                                                                                                                                                                                                                                                              |  | 445,788              |   |  | 366,149                     |   |  | 45,588  |   |  | 34,985  |  
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|The Companys accrued benefit asset (liability) is determined as follows:                                                                                                                                                                                                                             |  |                      |   |  |                             |   |  |         |   |  |         |  
|Accrued benefit obligations                                                                                                                                                                                                                                                                           |  | 445,788              |   |  | 366,149                     |   |  | 45,588  |   |  | 34,985  |  
|Fair value of plan assets                                                                                                                                                                                                                                                                             |  | 316,848              |   |  | 276,707                     |   |  |        |   |  |        |  
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|Plan deficits                                                                                                                                                                                                                                                                                         |  | (128,940             | ) |  | (89,442                     | ) |  | (45,588 | ) |  | (34,985 | )
|Unamortized net actuarial losses (gains)                                                                                                                                                                                                                                                              |  | 118,858              |   |  | 82,609                      |   |  | (395    | ) |  | (7,930  | )
|Unamortized transitional obligations                                                                                                                                                                                                                                                                  |  | 5,353                |   |  | 5,786                       |   |  | 2,723   |   |  | 3,026   |  
|Unamortized past service costs                                                                                                                                                                                                                                                                        |  | 13,730               |   |  | 14,936                      |   |  | 838     |   |  | 973     |  
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|Accrued plan asset (liability)                                                                                                                                                                                                                                                                        |  | 9,001                |   |  | 13,889                      |   |  | (42,422 | ) |  | (38,916 | )
|Valuation allowance                                                                                                                                                                                                                                                                                   |  | (572                 | ) |  | (722                        | ) |  |        |   |  |        |  
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|Accrued net plan asset (liability), net of valuation allowance                                                                                                                                                                                                                                        |  | 8,429                |   |  | 13,167                      |   |  | (42,422 | ) |  | (38,916 | )
|                                                                                                                                                                                                                                                                                                      |  |                      |   |  |                             |   |  |         |   |  |         |  
|The accrued plan asset of $27.2 million (2004
- $27.9 million) is included in long term other assets, the accrued plan liability of $18.8 million (2004 - $14.8 million) and the accrued post retirement plan liability is included in other long term liabilities in the consolidated balance
sheet. | 



|                        |  |        |   |  |        |  
|----------------------- |  | ------ | - |  | ------ | -
|                        |  | Actual |   |  | Target |  
|Plan assets consist of: |  |        |   |  |        |  
|Equity securities       |  | 54     | % |  | 53     | %
|Debt securities         |  | 41     | % |  | 42     | %
|Other                   |  | 5      | % |  | 5      | %
|                        |  |        |   |  |        |  
|Total                   |  | 100    | % |  | 100    | %
|                        |  |        |   |  |        |  



The pension plans have
no investment in securities of CanWest entities.



60



---

The Company measures its accrued benefit obligation and the fair value of plan assets for accounting
purposes as at June 30 of each year. The most recent actuarial valuation for the most significant of our pension plans, which make up over half of our accrued benefit obligation, was as of December 31, 2003. The valuation indicated that
the plan had an unfunded liability. As a result, the Company is required to make additional contributions of $1.0 million annually for fifteen years. The next required valuation will be as of December 31, 2004 with an expected completion date
of December 2005. The investment strategy for pension plan assets is to utilize a balanced mix of equity and fixed income portfolios, with limited additional diversification, to earn a long-term investment return that meets our pension plan
obligations. Active management strategies and style diversification strategies are utilized in anticipation of realizing investment returns in excess of market indices.



Total cash payments for 2005, consisting of cash contributed by the Company to its funded pension plans, cash payments to
beneficiaries for its post-retirement plans, and cash contributed to its defined contribution plans, was $25.1 million (2004 - $22.6 million)



The Companys pension benefit expense is determined as follows:



|                                                       |  |                            |   |  |                            |   |  |                    |   |  |                  |   |  |                         |   |  |                    |  
|------------------------------------------------------ |  | -------------------------- | - |  | -------------------------- | - |  | ------------------ | - |  | ---------------- | - |  | ----------------------- | - |  | ------------------ | -
|                                                       |  | Year ended August 31, 2005 |   |  | Year ended August 31, 2004 |  
|                                                       |  | Incurred in year           |   |  | Matching adjustments(3)    |   |  | Recognized In year |   |  | Incurred in year |   |  | Matching adjustments(3) |   |  | Recognized In year |  
|Current service cost                                   |  | 18,002                     |   |  |                           |   |  | 18,002             |   |  | 17,078           |   |  |                        |   |  | 17,078             |  
|Employee contributions                                 |  | (6,153                     | ) |  |                           |   |  | (6,153             | ) |  | (6,125           | ) |  |                        |   |  | (6,125             | )
|Accrued interest on benefits                           |  | 24,440                     |   |  |                           |   |  | 24,440             |   |  | 22,413           |   |  |                        |   |  | 22,413             |  
|Return on plan assets                                  |  | (32,184                    | ) |  | 11,881                     |   |  | (20,303            | ) |  | (19,538          | ) |  | 1,227                   |   |  | (18,311            | )
|Administrative expenses                                |  | 1,339                      |   |  | (1,339                     | ) |  |                   |   |  | 627              |   |  | (627                    | ) |  |                   |  
|Transitional obligation                                |  |                           |   |  | 433                        |   |  | 433                |   |  |                 |   |  | 434                     |   |  | 434                |  
|Past service costs                                     |  |                           |   |  | 1,206                      |   |  | 1,206              |   |  |                 |   |  | 1,206                   |   |  | 1,206              |  
|Net actuarial loss                                     |  | 49,967                     |   |  | (46,782                    | ) |  | 3,185              |   |  | 2,286            |   |  | 1,227                   |   |  | 3,513              |  
|Changes in valuation allowance                         |  |                           |   |  | (150                       | ) |  | (150               | ) |  |                 |   |  | (48                     | ) |  | (48                | )
|                                                       |  |                            |   |  |                            |   |  |                    |   |  |                  |   |  |                         |   |  |                    |  
|Benefit expense                                        |  | 55,411                     |   |  | (34,751                    | ) |  | 20,660             |   |  | 16,741           |   |  | 3,419                   |   |  | 20,160             |  
|Employer contribution to the defined contribution plan |  | 8,973                      |   |  |                           |   |  | 8,973              |   |  | 8,488            |   |  |                        |   |  | 8,488              |  
|                                                       |  |                            |   |  |                            |   |  |                    |   |  |                  |   |  |                         |   |  |                    |  
|Total pension benefit expense                          |  | 64,384                     |   |  | (34,751                    | ) |  | 29,633             |   |  | 25,229           |   |  | 3,419                   |   |  | 28,648             |  
|                                                       |  |                            |   |  |                            |   |  |                    |   |  |                  |   |  |                         |   |  |                    |  



The Companys
post retirement benefit expense is determined as follows:



|                                      |  |                            |  |                         |                            |  |                    |   |  |                  |  |                         |   |  |                   
|------------------------------------- |  | -------------------------- |  | ----------------------- | -------------------------- |  | ------------------ | - |  | ---------------- |  | ----------------------- | - |  | ------------------
|                                      |  | Year ended August 31, 2005 |  |                         | Year ended August 31, 2004
|                                      |  | Incurred in year           |  | Matching adjustments(3) |                            |  | Recognized In year |   |  | Incurred in year |  | Matching adjustments(3) |   |  | Recognized In year
|Current service cost                  |  | 1,329                      |  |                        |                            |  | 1,329              |   |  | 1,260            |  |                        |   |  | 1,260             
|Accrued interest on benefits          |  | 2,346                      |  |                        |                            |  | 2,346              |   |  | 2,334            |  |                        |   |  | 2,334             
|Transitional obligation               |  |                           |  | 303                     |                            |  | 303                |   |  |                 |  | 303                     |   |  | 303               
|Past service costs                    |  |                           |  | 135                     |                            |  | 135                |   |  |                 |  | 137                     |   |  | 137               
|Net actuarial loss                    |  | 7,177                      |  | (7,535                  | )                          |  | (358               | ) |  | 944              |  | (941                    | ) |  | 3                 
|                                      |  |                            |  |                         |                            |  |                    |   |  |                  |  |                         |   |  |                   
|Total post retirement benefit expense |  | 10,852                     |  | (7,097                  | )                          |  | 3,755              |   |  | 4,538            |  | (501                    | ) |  | 4,037             
|                                      |  |                            |  |                         |                            |  |                    |   |  |                  |  |                         |   |  |                   



61



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|                                                                                                                       |  |                 |   |  |                        |   |  |      |   |  |      |  
|---------------------------------------------------------------------------------------------------------------------- |  | --------------- | - |  | ---------------------- | - |  | ---- | - |  | ---- | -
|                                                                                                                       |  | Pensionbenefits |   |  | Postretirementbenefits |  
|                                                                                                                       |  | 2005            |   |  | 2004                   |   |  | 2005 |   |  | 2004 |  
|Significant actuarial assumptions in measuring the Companys accrued benefit obligations as at June 30 are as
follows: |  |                 |   |  |                        |   |  |      |   |  |      |  
|Discount rate                                                                                                          |  | 5.35            | % |  | 6.50                   | % |  | 5.35 | % |  | 6.50 | %
|Rate of compensation increase                                                                                          |  | 3.00            | % |  | 3.50                   | % |  |     |   |  |     |  
|Significant actuarial assumptions in measuring the Companys benefit costs as at June 30 are as follows:               |  |                 |   |  |                        |   |  |      |   |  |      |  
|Discount rate                                                                                                          |  | 6.50            | % |  | 6.50                   | % |  | 6.50 | % |  | 6.50 | %
|Expected long-term rate of return on pension plan assets                                                               |  | 7.25            | % |  | 7.25                   | % |  |     |   |  |     |  
|Rate of compensation increase                                                                                          |  | 3.50            | % |  | 3.50                   | % |  |     |   |  |     |  



The discount rate was
estimated by applying Canadian corporate AA zero coupon bonds to the expected future benefit payments under the plans. For fiscal 2006, the expected long-term rate of return on plan assets will continue to be 7.25%, based on the investment mix,
current yields and experience. In 2006, the Company expects to contribute $16.5 million to its defined benefit pension plans and $0.3 million to its other postretirement benefit plans.



Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending
August 31:



|                       |  |             |  |        
|---------------------- |  | ----------- |  | -------
|Year ending August 31, |  | 2006        |  | 14,189 
|                       |  | 2007        |  | 16,210 
|                       |  | 2008        |  | 18,028 
|                       |  | 2009        |  | 20,329 
|                       |  | 2010        |  | 22,249 
|                       |  | 2011  2015 |  | 151,266



| | (1) | As at August 31, 2005 the Company has defined benefit pension plans that are not fully
funded. These plans have aggregate plan assets of $309.9 million (2004 - $196.7 million) and aggregate benefit obligations of $439.1 million (2004 - $291.0 million)
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Post retirement plans are non-contributory and include health, dental, and life insurance
benefits. The assumed health care cost trend rates for the next year used to measure the expected cost of benefits covered for the post retirement health and life plans were 9.0% for medical and 7.0% for dental, decreasing to an ultimate rate of
5.0% for medical and 6.0% for dental in 2009 and 2013, respectively. A one percentage point increase in assumed health care cost trend rates would have increased the service and interest costs and obligation by $0.6 million and $6.8 million,
respectively. A one percentage point decrease in assumed health care cost trends would have lowered the service and interest costs and the obligation by $0.5 million and $5.3 million, respectively.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Accounting adjustments to allocate costs to different periods so as to recognize the
long-term nature of employee future benefits.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



62



---

|18. | FINANCIAL INSTRUMENTS
|--- | ---------------------



Financial instruments consist of the following:



|                                                  |  |                |  |            |  |                |  |           
|------------------------------------------------- |  | -------------- |  | ---------- |  | -------------- |  | ----------
|                                                  |  | 2005           |  | 2004      
|                                                  |  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
|Short term assets                                 |  | 516,426        |  | 516,426    |  | 585,689        |  | 585,689   
|Other investments                                 |  | 23,059         |  | 25,619     |  | 26,830         |  | 32,978    
|Short term liabilities                            |  | 599,183        |  | 599,183    |  | 491,652        |  | 491,652   
|Long term debt                                    |  | 2,550,866      |  | 2,774,648  |  | 2,940,536      |  | 3,100,279 
|Obligations under capital leases                  |  | 17,300         |  | 17,300     |  | 18,400         |  | 18,400    
|Other long term accrued liabilities               |  | 83,344         |  | 83,344     |  | 125,725        |  | 125,725   
|Interest rate and cross currency swap liabilities |  | 516,175        |  | 634,828    |  | 377,979        |  | 465,127   



The fair values of
short-term assets and liabilities, which include cash, accounts receivable, accounts payable and accrued liabilities, income taxes payable and film and program accounts payable, approximate their fair values 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 and comparable valuations for non-listed securities.



The fair value of long term debt subject to floating interest rates approximates its 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 the obligations under capital leases approximate their
carrying values as interest rates for similar leases have not changed significantly.



The fair values of other long term liabilities, including film and television program accounts payable, approximate their carrying values.



The fair values of interest rate and cross-currency interest rate 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
uncollectible 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 7.



63



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|19. | JOINTLY CONTROLLED ENTERPRISES
|--- | ------------------------------



The following amounts included in the consolidated financial statements represent the Companys proportionate interest in joint ventures.



|                                |  |        |   |  |        |  
|------------------------------- |  | ------ | - |  | ------ | -
|                                |  | 2005   |   |  | 2004   |  
|Balance sheets                  |  |        |   |  |        |  
|Assets                          |  |        |   |  |        |  
|Current assets                  |  | 10,304 |   |  | 11,140 |  
|Long term assets                |  | 10,205 |   |  | 9,695  |  
|                                |  |        |   |  |        |  
|                                |  | 20,509 |   |  | 20,835 |  
|                                |  |        |   |  |        |  
|Liabilities                     |  |        |   |  |        |  
|Current liabilities             |  | 23,488 |   |  | 28,902 |  
|Long term liabilities           |  | 958    |   |  |       |  
|                                |  |        |   |  |        |  
|                                |  | 24,446 |   |  | 28,902 |  
|                                |  |        |   |  |        |  
|Statements of earnings          |  |        |   |  |        |  
|Revenue                         |  | 37,002 |   |  | 31,634 |  
|Expenses                        |  | 31,284 |   |  | 27,591 |  
|                                |  |        |   |  |        |  
|Net earnings                    |  | 5,718  |   |  | 4,043  |  
|                                |  |        |   |  |        |  
|Statements of cash flows        |  |        |   |  |        |  
|Cash generated (utilized) by:   |  |        |   |  |        |  
|Operating activities            |  | 6,271  |   |  | 7,633  |  
|Investing activities            |  | (688   | ) |  | 117    |  
|Financing activities            |  | (8,144 | ) |  | (5,230 | )
|                                |  |        |   |  |        |  
|Net increase (decrease) in cash |  | (2,561 | ) |  | 2,520  |  
|                                |  |        |   |  |        |  



|20. | RELATED PARTY TRANSACTIONS
|--- | --------------------------



Senior subordinated notes held by CanWest Communications Corporation, the Companys parent, totaled $49.7 million (US$41.9 million) at
August 31, 2005 (2004 - $55.0 million). This debt matures on May 15, 2011 and bears interest at 10.625%. During 2005, interest expense related to this debt totaled $6.0 million (2004 - $6.3 million). In October 2005, these notes were
settled by the Company under the same terms offered to the unrelated senior subordinated note holders for $55.4 million.



A company which is owned by CanWest Communications Corporation owns CanWest Global Place in Winnipeg, Manitoba, a building in which the Company is a
tenant. During 2005, rent paid to this company amounted to $1.1 million (2004 - $1.1 million) and is included in selling, general and administrative expenses. The obligations under these operating leases continue until August 2010.



All the related party transactions have been recorded at the exchange
amounts, which are representative of market rates.



64



---

|21. | CONTRACT TERMINATION
|--- | --------------------



Effective April 2005, the Company terminated the agreement under which the Company received management services from The Ravelston Corporation Limited
(Ravelston). The agreement provided for annual payments of $6.0 million to Ravelston as well as the payment of a fee upon termination. In August 2005, the Company and RSM Richter Inc., in its capacity as interim receiver, receiver
manager and monitor of Ravelston, received Court approval for a termination payment in the amount of $12.8 million, which was paid in September 2005. This charge was recorded in operating expenses for year ended August 31, 2005.



|22. | COMMITMENTS, CONTINGENCIES and GUARANTEES
|--- | -----------------------------------------



COMMITMENTS



| | (a) | 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 approximately $335 million.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | The Companys future minimum payments under the terms of its operating leases are as follows:
| | --- | ---------------------------------------------------------------------------------------------



|           |  |        
|---------- |  | -------
|2006       |  | 72,828 
|2007       |  | 57,475 
|2008       |  | 47,519 
|2009       |  | 32,084 
|2010       |  | 24,496 
|Thereafter |  | 120,766



| | (c) | As part of the joint venture agreement with Metro International S.A. and Torstar Corporation, the Company has agreed to fund its proportionate share of capital requirements and
operating losses up to a prescribed limit per city. Currently, the Company has agreed to the launch of Metro in four cities with the aggregate amount of the commitment being $8.8 million.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



CONTINGENCIES



| | (d) | The Company has requested arbitration related to $86.5 million owed by Hollinger International Inc., Hollinger Inc. and certain related parties (collectively Hollinger)
related to certain unresolved adjustments and claims related to its November 15, 2000 acquisition of certain newspaper assets from Hollinger. Hollinger disputes this claim and claims that it and certain of its affiliates are owed $45 million by
the Company. The outcome and recoverability of this claim is not determinable.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



65



---

| | (e) | In March 2001, a statement of claim was filed against the Company and certain of the Companys subsidiaries by CanWest Broadcasting Ltd.s (CBLs) former
minority shareholders 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 action was stayed on the basis that the Ontario courts have no jurisdiction to try the claim. In April 2004, a statement of claim was filed in Manitoba by the same minority shareholders, which was substantially the
same as the previous claim, seeking damages of $405 million. In June 2005, the Company filed a Statement of Defence and Counterclaim. In its Counterclaim, the Company is seeking a declaration of the fair value of the former minority
shareholders interest in CBL and repayment of the difference between the fair value and the redemption amount paid by the Company to the former shareholders. The Company believes the allegations in the Statement of Claim are substantially
without merit and not likely to have a material adverse effect on its business, financial condition or results of operation. The outcome of this claim is not determinable and the Company intends to vigorously defend this lawsuit.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | The Company is one of several defendants to a claim by a proposed class of freelance writers instituted in July 2003 in respect of works that they provided to newspapers and other
print publications in Canada. The total amount claimed (by all plaintiffs against all defendants) is $500 million in compensatory damages and $250 million in exemplary and punitive damages. The outcome of this claim is not determinable.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



GUARANTEES



In connection with the disposition of assets, the Company has provided
customary representations and warranties that range in duration. In addition, as is customary, the Company has agreed to indemnify the buyers of certain assets in respect of certain liabilities pertaining to events occurring prior to the respective
sales relating to taxation, environmental, litigation and other matters. The Company is unable to estimate the maximum potential liability for these indemnifications as the underlying agreements often do not specify a maximum amount and the amounts
are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined.



The Company has agreed to indemnify its current and former directors and officers to the extent permitted by law against any and all charges, costs,
expenses, amounts paid in settlement and damages incurred by the directors and officers as a result of any lawsuit or any other judicial, administrative or investigative proceeding in which the directors and officers are sued as result of their
service. These indemnification claims will be subject to any statutory or other legal limitation period. The nature of such indemnification prevents the Company from making a reasonable estimate of the maximum potential amount it could be required
to pay to counter parties. The Company has $30 million in directors and officers liability insurance coverage.



|23. | SEGMENTED INFORMATION
|--- | ---------------------



The Company operates primarily within the publishing, online, broadcasting, entertainment and outdoor advertising industries in Canada, New Zealand,
Ireland and Australia.



66



---

Each segment operates as a strategic business unit with separate management. Segment performance is
measured primarily upon the basis of segment operating profit. Segmented information and a reconciliation from segment operating profit to earnings before income taxes are presented below:



|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|---------------------------------------------- |  | --------- |  | ------------------------ |  | -------- | ------------ |  | ------------------- | - |  | --------- |  | --------- |  | ------ |  | ------
|                                               |  | Revenue   |  | Segment Operating profit |  |          | Total assets |  | Capitalexpenditures
|                                               |  | 2005      |  | 2004                     |  | 2005     |              |  | 2004                |   |  | 2005      |  | 2004      |  | 2005   |  | 2004  
|Operating Segments                             |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|Publishing and Online  Canada                 |  | 1,228,851 |  | 1,193,629                |  | 254,875  |              |  | 267,343             |   |  | 2,669,128 |  | 2,813,850 |  | 21,765 |  | 28,197
|Television                                     |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|Canada                                         |  | 698,644   |  | 690,302                  |  | 124,699  |              |  | 147,430             |   |  | 1,379,495 |  | 1,397,175 |  | 21,431 |  | 22,840
|Australia  Network TEN                        |  | 783,315   |  | 721,247                  |  | 293,528  |              |  | 256,033             |   |  | 604,369   |  | 642,342   |  | 9,065  |  | 7,009 
|New Zealand                                    |  | 122,995   |  | 108,236                  |  | 30,713   |              |  | 23,291              |   |  | 115,991   |  | 120,196   |  | 5,953  |  | 2,962 
|Ireland                                        |  | 37,519    |  | 34,152                   |  | 13,254   |              |  | 10,591              |   |  | 22,775    |  | 20,920    |  | 939    |  | 255   
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|                                               |  | 1,642,473 |  | 1,553,937                |  | 462,194  |              |  | 437,345             |   |  | 2,122,630 |  | 2,180,633 |  | 37,388 |  | 33,066
|Radio  New Zealand                            |  | 93,428    |  | 86,717                   |  | 26,994   |              |  | 27,488              |   |  | 138,584   |  | 142,136   |  | 4,508  |  | 3,231 
|Outdoor  Australia                            |  | 107,790   |  | 77,117                   |  | 23,173   |              |  | 14,477              |   |  | 147,443   |  | 116,730   |  | 7,036  |  | 2,380 
|Corporate and other                            |  |          |  |                         |  | (34,249  | )            |  | (27,110             | ) |  | 247,783   |  | 192,824   |  | 28,494 |  | 11,880
|Discontinued operations                        |  |          |  |                         |  |         |              |  |                    |   |  | 2,850     |  | 127,470   |  |       |  |      
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|                                               |  | 3,072,542 |  | 2,911,400                |  | 732,987  |              |  | 719,543             |   |  | 5,328,418 |  | 5,573,643 |  | 99,191 |  | 78,754
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|Restructuring expenses(1)                      |  |           |  |                          |  |         |              |  | (2,445              | ) |  |           |  |           |  |        |  |       
|Ravelston management contract termination      |  |           |  |                          |  | (12,750  | )            |  |                    |   |  |           |  |           |  |        |  |       
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|                                               |  |           |  |                          |  | 720,237  |              |  | 717,098             |   |  |           |  |           |  |        |  |       
|Amortization of intangibles                    |  |           |  |                          |  | 20,341   |              |  | 18,182              |   |  |           |  |           |  |        |  |       
|Amortization of property, plant and equipment  |  |           |  |                          |  | 91,868   |              |  | 89,067              |   |  |           |  |           |  |        |  |       
|Other amortization                             |  |           |  |                          |  | 5,291    |              |  | 5,035               |   |  |           |  |           |  |        |  |       
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|Operating income                               |  |           |  |                          |  | 602,737  |              |  | 604,814             |   |  |           |  |           |  |        |  |       
|Interest expense                               |  |           |  |                          |  | (251,853 | )            |  | (338,528            | ) |  |           |  |           |  |        |  |       
|Interest income                                |  |           |  |                          |  | 2,631    |              |  | 9,141               |   |  |           |  |           |  |        |  |       
|Amortization of deferred financing costs       |  |           |  |                          |  | (12,708  | )            |  | (12,641             | ) |  |           |  |           |  |        |  |       
|Interest rate and foreign currency swap losses |  |           |  |                          |  | (188,506 | )            |  | (110,858            | ) |  |           |  |           |  |        |  |       
|Foreign exchange gains                         |  |           |  |                          |  | 76,025   |              |  | 44,973              |   |  |           |  |           |  |        |  |       
|Investment gains, losses and write-downs       |  |           |  |                          |  | 1,527    |              |  | 115,786             |   |  |           |  |           |  |        |  |       
|Goodwill impairment                            |  |           |  |                          |  | (41,406  | )            |  |                    |   |  |           |  |           |  |        |  |       
|Asset impairment                               |  |           |  |                          |  | (9,629   | )            |  |                    |   |  |           |  |           |  |        |  |       
|Loss on debt extinguishment                    |  |           |  |                          |  | (43,992  | )            |  |                    |   |  |           |  |           |  |        |  |       
|Dividend income                                |  |           |  |                          |  |         |              |  | 3,738               |   |  |           |  |           |  |        |  |       
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       
|Earnings before income taxes                   |  |           |  |                          |  | 134,826  |              |  | 316,425             |   |  |           |  |           |  |        |  |       
|                                               |  |           |  |                          |  |          |              |  |                     |   |  |           |  |           |  |        |  |       



|(1) | Canadian television restructuring expenses.
|--- | -------------------------------------------



67



---

|24. | SUBSEQUENT EVENTS
|--- | -----------------



| | (a) | In October 2005, the Company transferred its investment in its newspaper and interactive operations (excluding the National Post) and certain shared service operations, which
provide customer support and administrative services to the Company (the Publications Group) to a new entity, CanWest MediaWorks Limited Partnership (the Limited Partnership). In exchange, the Company received units of the
Limited Partnership representing a 74.2% ownership interest and notes receivable of $1,339.5 million.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Concurrently, the CanWest MediaWorks Income Fund (the Fund) closed its initial public offering (IPO) of units and invested the
proceeds for units of the Limited Partnership representing a 25.8% interest. Total proceeds for the offering were $550 million and costs of the offering were approximately $33 million and were paid by the Limited Partnership.



In addition, the Limited Partnership obtained credit facilities in the
amount of $1 billion consisting of an $825 million non-revolving term credit facility and a $175 million revolving term credit facility. The revolving facility matures in five years, is subject to certain restrictions and bears interest at the
prevailing prime rate, U.S. base rate, bankers acceptance rate or LIBOR plus, in each case, an applicable margin. The non-revolving facility matures in five years, and bears interest at the prevailing prime rate, U.S. base rate, bankers
acceptance rate or LIBOR plus, in each case, an applicable margin. On closing of the IPO, the Limited Partnership drew $830.0 million on its credit facilities. The Limited Partnership has entered into five year interest rate swap contracts to fix
the interest payments on a notional amount of $825.0 million for the first three years and $660.0 million for the remaining two years resulting in an effective interest rate of 5%.



The Limited Partnership utilized the proceeds of the issuance of the units to the Fund and $822.5 million drawings under its
new credit facilities to repay the $1,339.5 million note payable to the Company.



In conjunction with these transactions, the Limited Partnership entered into agreements with the Company that will entitle it to recover certain costs from the Companys Canadian television and radio broadcasting
operations and the National Post and also require the Limited Partnership to make payments for certain services provided by the Company.



As a result of the transaction, the Company will record a dilution gain or loss on the sale of a 25.8% interest in the operations transferred to the
Limited Partnership. The amount of the gain or loss has not been determined. The Company will continue to consolidate the results of the Publications Group with a minority interest charge to reflect the ownership interest of the Fund. Approximately
36% of the Companys units of the Limited Partnership are subordinated in the payment of distributions if the Limited Partnership does not have adequate resources on a quarterly basis to fund distributions.



| | (b) | In October 2005, the Company obtained a new $500 million revolving term credit facility. The revolving facility matures in five years, is subject to certain restrictions and bears
interest at the prevailing prime rate, U.S. base rate, bankers acceptance rate or LIBOR plus, in each case, an applicable margin. This facility is secured by substantially all of the Companys directly held assets including the assets of
its Canadian broadcast operations and the National Post as well as by its other investments.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



68



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| | (c) | The net proceeds from the IPO and the Limited Partnership debt as well as proceeds of $400.6 million from the new credit facility (note 24 (b)) were utilized to retire certain debt
and interest rate and cross currency interest rate contracts as follows:
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i. | In October 2005, the Company completed a tender offer for its 10.125% senior subordinated notes payable due in 2011 and its 7.625% senior unsecured notes payable due in 2013.
Substantially all of the notes under these facilities were settled. Debt with a book value of $772.4 million, and related deferred financing costs of $27.7 million were retired for cash of $849.3 million. The transaction resulted in a loss on debt
retirement of $71.1 million, net of tax of $33.5 million. As a result of the repayment of these notes the Company will record a swap loss of $21.8 million, net of tax of $12.1 million related to the associated cross currency interest rate swaps.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | In October 2005, the Company retired its senior credit facility. Debt with a book value of $526.4 million and deferred financing costs of $6.0 million were settled for cash of
$526.4 million. The transaction resulted in a loss on debt retirement of $3.9 million, net of tax of $2.1 million. In addition, as a result of the settlement of this debt, the Company will record a loss of $48.2 million, net of tax of $26.7 million
related to the associated interest rate and cross currency interest rate swaps.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | In November 2005, the Company retired interest rate and cross currency interest rate swap contracts relating to the 7.625% notes, the 10.625% notes and 50% of the cross currency
interest rate swap related to the senior secured credit facilities for cash of $364.8 million.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Subsequent to year end, the Company announced its successful bids to acquire interests in two radio stations in Turkey. On September 21, 2005, the Company announced that it
acquired an equity interest in CGS Televizyon Ve Radyo Yayinciligi Ticaret Anonim Sirketi (CGS) that in turn was successful in its bid to acquire the assets of Super FM for consideration of US$33 million, which will be payable
upon completion of the transaction. On September 22, 2005, the Company announced that Pasifik Televizyon Ve Radyo Yayinciligi Ticaret A.S. (Pasifik) was successful in its bid to acquire the assets of Metro FM for
consideration of US$23 million, which will be payable upon completion of the transaction. In exchange for the payment of US$42.0 million, the Company will acquire a 75% economic interest in both CGS and Pasifik. These transactions, which are
subject to regulatory approvals by certain Turkish authorities, are expected to be completed within 90 days of the announcement. Subject to a relaxation of foreign ownership restrictions and the receipt of all necessary regulatory approvals, the
Company has the right to convert its interest to a 75% equity interest in Metro FMandSuper FM.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|25. | 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. Amounts are in thousands of Canadian dollars, unless otherwise noted.



Principal differences affecting the Company



| | (a) | 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 currently no similar requirement under Canadian GAAP, however upon adoption of CICA 1530, Comprehensive Income, no such GAAP difference will exist.



69



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| | (b) | 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. The U.S. GAAP reconciliation reflects the expensing of amounts which were deferred for Canadian GAAP of: 2005 - $3,568 (2004 - $1,748), with related
tax recoveries of: 2005 - $1,273 (2004-$305) and the reversal of amortization of pre-operating costs of: 2005 - $2,297 (2004 - $1,471), with related tax provisions of 2005 - $820 (2004  $646). The balance sheet effect of these adjustments
was: other assets reduced by $7,769 (2004-$6,498), long term future tax liability reduced by 2005 - $2,781 (2004 - $2,328) and shareholders equity reduced by the net amount of: 2005 - $4,988 (2004 - $4,170).



| | (c) | 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 occurs 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. The U.S. GAAP reconciliation reflects the reversal of realization of cumulative translation adjustments
resulting in a decrease in net earnings of: 2005  $622 (2004  increase in net earnings of $4,526). The balance sheet effect of these adjustments was: increase retained earnings by: 2005 - $9,412 (2004 - $10,034) and decrease
accumulated other comprehensive income by: 2005 - $9,412 (2004  $10,034).



Under Canadian GAAP cumulative currency translation adjustments are presented as a separate component of shareholders equity. Under US GAAP it is a component of accumulated other comprehensive income. The
US GAAP reconciliation reflects this reclassification.



| | (d) | Programming commitments
| | --- | -----------------------



Under Canadian GAAP, certain programming commitments imposed by regulatory requirements related to an acquisition, completed prior to January 1,
2001, were accrued in the purchase equation resulting in additional goodwill. Under U.S. GAAP, these costs were expensed as incurred. The U.S. GAAP reconciliation reflects the expensing of these programming costs as incurred of: 2005 - $6,463 (2004
- $6,012), with related tax recoveries of 2005 - $2,321 (2004 - $1,683). The balance sheet effect of these adjustments was to reduce goodwill by: 2005 and 2004-$18,639, increase long term future tax liability by: 2005 - $2,500 (2004 - $7,372),
reduce other long term accrued liabilities by: 2005 - $7,558 (2004 - $14,021), and reduce shareholders equity by: 2005 - $13,581 (2004 - $11,052).



70



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| | (e) | Investment in a broadcasting operation on an equity basis
| | --- | ---------------------------------------------------------



Under Canadian GAAP, the Companys investment in a broadcasting operation 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 U.S. GAAP, the investment was initially accounted for on a cost basis; then, as a result of receiving approval to complete the purchase of the broadcasting
operation, the Company changed its method of accounting for the investment 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, to the date that the Company initially acquired its investment. Effective July 6, 2000, the Company consolidated this investment for both Canadian and U.S. GAAP purposes. The U.S. GAAP reconciliation had no effect on
earnings for the periods presented. The effect on the balance sheet was to increase goodwill by: 2005 and 2004 - $ 38,503 and increase shareholders equity by: 2005 and 2004 - $38,503.



| | (f) | Intangible assets
| | --- | -----------------



Under Canadian GAAP, certain costs related to the development of broadcast licences, other than through a business combination, were recorded as
intangible assets. Under U.S. GAAP such costs are expensed as incurred. The U.S. GAAP reconciliation had no effect on earnings for the periods presented. The balance sheet effect was to reduce intangible assets by: 2005 and 2004 - $2,325 to reduce
long term future tax liability by: 2005 and 2004 - $860 and to reduce shareholders equity by: 2005 and 2004 - $1,465.



| | (g) | Investment in marketable securities
| | --- | -----------------------------------



For U.S. GAAP, investment assets classified as available for sale are carried at market, and unrealized temporary gains and losses are
included, net of tax, in other comprehensive income. In accordance with Canadian GAAP, the Company carries its investment in marketable securities at cost. For the Companys other investments, fair value is not readily determinable and are
accordingly carried at cost. The effect of the U.S. GAAP reconciliation was to decrease other comprehensive income by: 2005 - nil (2004  ($16,834)), to increase other investments by: 2005 and 2004  nil, and to increase shareholders
equity by: 2005 and 2004  nil.



| | (h) | Pension valuation allowances
| | --- | ----------------------------



Under Canadian GAAP a valuation allowance against pension assets is the excess of the adjusted benefit asset over the expected future benefit. Changes in
the valuation allowance are recorded as adjustments to pension expense. Under U.S. GAAP valuation allowances are not recorded. The U.S. GAAP reconciliation reflects the elimination of pension valuation allowances resulting in reduced earnings of:
2005 - $150 (2004 - $48), with related tax recoveries of: 2005 - $52 (2004 - $19). The balance sheet effect was to increase long term other assets by: 2005 - $572 (2004 - $722), increase long term future tax liability by: 2005 - $214 (2004 -
$266) and increase shareholders equity by: 2005 - $358 (2004 - $456).



71



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| | (i) | Proportionate consolidation
| | --- | ---------------------------



Canadian GAAP requires the accounts of jointly controlled enterprises to be proportionately consolidated. Under U.S. GAAP, investments in jointly
controlled entities are accounted as equity investments. This accounting difference applies to the Companys investment in TV3 Ireland, Mystery, and Metro. The proportionate interest is disclosed in note 19. Accordingly, under accommodation
provided by the SEC this difference is not included in the following reconciliation.



| | (j) | 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 derivatives are included in the statement of earnings. Under Canadian GAAP hedge accounting is applied for derivatives that are eligible for hedge accounting if certain criteria are met and
non-hedging derivatives are recognized at their fair value as either assets or liabilities. As a result of adopting FAS 133 on September 1, 2001, the Company discontinued hedge accounting. The fair values of derivatives designated as hedges
before August 31, 2000 have been included in a transitional adjustment and are included in income over the term of the hedged transaction. The U.S. GAAP reconciliation reflects the recording of gains on interest rate and cross-currency swaps
of: 2005 - $3,315 (2004 - $77,770), with related tax provision of: 2005 - $18,624 (2004 - $31,875) and the recording of minority interests share of gains (losses) on interest rate and cross-currency swaps and translation of foreign denominated
debt of: 2005 - $809 (2004 - ($2,032)). The balance sheet effect was to increase long term swap liabilities by: 2005 - $65,776 (2004 - $69,586), reduce future tax liabilities by: 2005 - $19,981 (2004 - $38,781) and decrease minority interests
by: 2005 - $1,393 (2004  $584), and reduce shareholders equity by: 2005 - $44,402 (2004 - $30,221).



| | (k) | Integration costs related to the acquisition of the publishing properties
| | --- | -------------------------------------------------------------------------



Under Canadian GAAP certain integration costs related to the acquisition of the Companys publishing properties were
accrued in the purchase equation. Under U.S. GAAP, these costs are expensed as incurred. The U.S. GAAP reconciliation had no effect on earnings for the periods presented. The balance sheet effect was to decrease goodwill by: 2005 and 2004 -$1,663
and reduce shareholders equity by: 2005 and 2004 - $1,663.



| | (l) | Resolution of acquired tax contingencies
| | --- | ----------------------------------------



Under U.S. GAAP, the settlement of tax contingencies acquired through a business acquisition result in an adjustment to the purchase equation. In
accordance with Canadian GAAP, the resolution of such tax contingencies is included in earnings once the purchase price allocation is finalized. The U.S. GAAP reconciliation reflects the reduction of earnings related to the reversal of tax
recoveries of: 2005 - nil (2004 - $7,000). The balance sheet effect was to reduce goodwill and shareholders equity by: 2005 and 2004 - $7,000.



72



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| | (m) | Future income taxes
| | --- | -------------------



Under U.S. GAAP, the changes to future tax balances upon the adoption of FAS 142, Goodwill and Other Intangible Assets, in 2001, were reflected as a
future income tax recovery in the year FAS 142 was adopted. In accordance with Canadian GAAP, the adjustment was recorded as a reduction in goodwill. The related U.S. GAAP balance sheet effect would be to increase goodwill by: 2005 and 2004 -
$160,500 and increase retained earnings by: 2005 and 2004 - $160,500.



| | (n) | Additional minimum liability
| | --- | ----------------------------



Under FAS 87, Employers Accounting for Pensions, the Company recognizes an additional minimum pension liability when the accumulated benefit
obligation exceeds the fair value of plan assets to the extent that such excess is greater than accrued pension costs otherwise recorded. For the purposes of determining the additional minimum pension liability, the accumulated benefit obligation
does not incorporate projections of future compensation increases in the determination of the obligation. No such adjustment is required under Canadian GAAP. The effect on the U.S. GAAP reconciliation was to decrease other comprehensive income
by $28,674 with related tax recovery of $10,323. The balance sheet effect was to increase other long term liabilities by $84,274, increase intangible assets by $13,558, increase other assets by $3,015, decrease future tax liabilities by $24,372, and
decrease shareholders equity by $43,329.



The minimum pension
liability for the year ended August 31, 2005, includes a comprehensive income adjustment for the current year of $18,351, net of tax of $10,323. Comprehensive income adjustments for 2004 and prior years of $24,978, net of tax of $14,049 are
included in the comprehensive income (loss) accumulated balances. The Company has determined these adjustments are not material to the previously reported results, accordingly, the adjustments have been included in the current years
comprehensive income (loss) accumulated balances.



Proposed
accounting policies



Share-Based Payments



In December 2004, The Financial Accounting Standards Board
issued the Statement of Financial Accounting Standards No. 123 (Revised 2004), Share Based Payment, which requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the
grant-date fair value of the award (with limited exceptions). FAS 123 (Revised 2004) is applicable for as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The Company utilizes a similar approach
under Canadian GAAP and does not expect the adoption of this accounting policy to have a material impact on its results.



73



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Adopted Accounting Pronouncements



Consolidating Variable Interest Entities



For its year ended August 31, 2004, for U.S. GAAP, the Company was required to apply the Financial Accounting Standards
Board (FASB) Interpretation No. 46(R) (FIN 46(R)), Consolidation of Variable Interest Entities. The Company had determined that it is the primary beneficiary of Network TEN Group, a variable interest entity. Accordingly, for U.S.
GAAP, as required by FIN 46(R) the Company consolidated its investment in TEN Group effective May 31, 2004. This was applied on a prospective basis. As explained in Note 1, effective September 1, 2004, under Canadian GAAP, the Company
adopted AcG-15 and consolidated its investment in the TEN Group on a retroactive basis and restated the prior years financial statements of the Company. There are no material differences between the consolidation principles under FIN 46(R) and
AcG-15. With the adoption of AcG-15, the Company changed the transition method previously adopted for US GAAP purposes by restating previously issued US GAAP financial information as permitted under paragraph 40 of FIN 46(R). Management is
of the opinion that this change in method is preferable as it presents comparable information for all periods of the consolidation of the TEN Group which was encouraged in FIN 46(R).



Comparative Reconciliation of Net Earnings (Loss)



The following is a reconciliation of net earnings reflecting the differences between Canadian and U.S. GAAP:



|                                                                                               |  |      |         |   |      |    |          |  
|---------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | -- | -------- | -
|                                                                                               |  | 2005 |         |   | 2004 |   
|Net earnings in accordance with Canadian GAAP from continuing operations                       |  |      | 20,422  |   |      |    | 194,299  |  
|Pre-operating costs incurred (b)                                                               |  |      | (3,568  | ) |      |    | (1,748   | )
|Amortization of pre-operating costs (b)                                                        |  |      | 2,297   |   |      |    | 1,471    |  
|Realization of currency translation adjustments (c)                                            |  |      | (622    | ) |      |    | 4,526    |  
|Programming costs imposed by regulatory requirement (d)                                        |  |      | (6,463  | ) |      |    | (6,012   | )
|Pension valuation allowances (h)                                                               |  |      | (150    | ) |      |    | (48      | )
|Gain on interest rate and cross currency swaps and translation of foreign denominated debt (j) |  |      | 3,315   |   |      |    | 77,770   |  
|Resolution of acquired tax contingencies (l)                                                   |  |      |        |   |      |    | (7,000   | )
|Minority interests effect of adjustments                                                       |  |      | 809     |   |      |    | (2,032   | )
|Tax effect of adjustments                                                                      |  |      | (13,408 | ) |      |    | (30,514  | )
|                                                                                               |  |      |         |   |      |    |          |  
|Net earnings for the year from continuing operations in accordance with U.S. GAAP              |  |      | 2,632   |   |      |    | 230,712  |  
|Loss from discontinued operations                                                              |  |      | (10,132 | ) |      |    | (207,777 | )
|                                                                                               |  |      |         |   |      |    |          |  
|Net earnings (loss) for the year in accordance with U.S. GAAP                                  |  |      | (7,500  | ) |      |    | 22,935   |  
|                                                                                               |  |      |         |   |      |    |          |  
|Earnings per share from continuing operations                                                  |  |      |         |   |      |    |          |  
|Basic                                                                                          |  | $    | 0.01    |   |      | $  | 1.30     |  
|Diluted                                                                                        |  | $    | 0.01    |   |      | $  | 1.30     |  
|Earnings (loss) per share                                                                      |  |      |         |   |      |    |          |  
|Basic                                                                                          |  |      | ($0.04  | ) |      | $  | 0.13     |  
|Diluted                                                                                        |  |      | ($0.04  | ) |      | $  | 0.13     |  
|Loss from discontinued operations per share:                                                   |  |      |         |   |      |    |          |  
|Basic                                                                                          |  |      | ($0.06  | ) |      | ($ | 1.18     | )
|Diluted                                                                                        |  |      | ($0.06  | ) |      | ($ | 1.18     | )



74



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Consolidated Statements of Comprehensive Income (Loss)



Comprehensive income (loss)  current periods



|                                                                                 |  |         |   |  |         |  
|-------------------------------------------------------------------------------- |  | ------- | - |  | ------- | -
|                                                                                 |  | 2005    |   |  | 2004    |  
|Net earnings (loss) in accordance with U.S. GAAP                                 |  | (7,500  | ) |  | 22,935  |  
|                                                                                 |  |         |   |  |         |  
|Unrealized foreign currency translation gain (c)                                 |  | 2,506   |   |  | 9,802   |  
|Realized foreign currency translation loss (c)                                   |  |        |   |  | 2,497   |  
|                                                                                 |  |         |   |  |         |  
|Foreign currency translation gain                                                |  | 2,506   |   |  | 12,299  |  
|Unrealized gains (losses) on securities available for sale net of tax of nil (h) |  |        |   |  | 34,883  |  
|Realized (gains) losses on securities available for sale net of tax of nil (h)   |  |        |   |  | (51,717 | )
|Transition adjustment on swaps net of tax of $176 (2004 - $177) (k)              |  | 316     |   |  | 313     |  
|Additional minimum liability net of tax of $10,323 (n)                           |  | (18,351 | ) |  |        |  
|                                                                                 |  |         |   |  |         |  
|                                                                                 |  | (15,529 | ) |  | (4,222  | )
|                                                                                 |  |         |   |  |         |  
|Comprehensive income (loss)                                                      |  | (23,029 | ) |  | 18,713  |  
|                                                                                 |  |         |   |  |         |  



Comprehensive income
(loss)  accumulated balances



|                                                                |  |                            |   |  |                                      |   |  |                              |   |  |                            |   |  |         |  
|--------------------------------------------------------------- |  | -------------------------- | - |  | ------------------------------------ | - |  | ---------------------------- | - |  | -------------------------- | - |  | ------- | -
|                                                                |  | Foreigncurrencytranslation |   |  | Unrealizedgains(losses) onsecurities |   |  | Transitionadjustmenton swaps |   |  | Additionalminimumliability |   |  | Total   |  
|Accumulated other comprehensive income (loss)  August 31, 2003 |  | (36,154                    | ) |  | 16,834                               |   |  | (2,230                       | ) |  |                           |   |  | (21,550 | )
|Change during the year                                          |  | 12,299                     |   |  | (16,834                              | ) |  | 313                          |   |  |                           |   |  | (4,222  | )
|                                                                |  |                            |   |  |                                      |   |  |                              |   |  |                            |   |  |         |  
|Accumulated other comprehensive income (loss)  August 31, 2004 |  | (23,855                    | ) |  |                                     |   |  | (1,917                       | ) |  |                           |   |  | (25,772 | )
|Change during the year                                          |  | 2,506                      |   |  |                                     |   |  | 316                          |   |  | (43,329                    | ) |  | (40,507 | )
|                                                                |  |                            |   |  |                                      |   |  |                              |   |  |                            |   |  |         |  
|Accumulated other comprehensive income (loss)  August 31, 2005 |  | (21,349                    | ) |  |                                     |   |  | (1,601                       | ) |  | (43,329                    | ) |  | (66,279 | )
|                                                                |  |                            |   |  |                                      |   |  |                              |   |  |                            |   |  |         |  



75



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Comparative Reconciliation of Shareholders Equity



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



|                                                                                                                                      |  |           |   |  |           |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | - |  | --------- | -
|                                                                                                                                      |  | 2005      |   |  | 2004      |  
|Shareholders equity in accordance with Canadian GAAP                                                                                 |  | 1,195,948 |   |  | 1,179,420 |  
|Pre-operating costs incurred (b)                                                                                                      |  | (7,769    | ) |  | (6,498    | )
|Goodwill adjustment related to retroactive equity accounting of WIC upon regulatory approval (e)                                      |  | 38,503    |   |  | 38,503    |  
|Goodwill adjustment related to programming costs incurred (d)                                                                         |  | (25,142   | ) |  | (18,679   | )
|Goodwill adjustment related to integration costs (k)                                                                                  |  | (1,663    | ) |  | (1,663    | )
|Historical amortization of goodwill related to future programming costs imposed by regulatory requirement on business combination
(d) |  | 938       |   |  | 938       |  
|Costs to develop intangible assets expensed (f)                                                                                       |  | (2,325    | ) |  | (2,325    | )
|Pension valuation allowance (h)                                                                                                       |  | 572       |   |  | 722       |  
|Goodwill adjustment related to resolution of acquired tax contingencies (l)                                                           |  | (7,000    | ) |  | (7,000    | )
|Future income taxes (m)                                                                                                               |  | 160,500   |   |  | 160,500   |  
|Adjustment to reflect losses on interest rate and cross-currency swaps (j)                                                            |  | (63,210   | ) |  | (66,525   | )
|Transition adjustment on interest rate swaps (j)                                                                                      |  | (2,566    | ) |  | (3,058    | )
|Additional minimum liability (n)                                                                                                      |  | (67,701   | ) |  |          |  
|Minority interests effect of adjustments                                                                                              |  | 1,393     |   |  | 584       |  
|Tax effect of adjustments                                                                                                             |  | 59,180    |   |  | 48,392    |  
|                                                                                                                                      |  |           |   |  |           |  
|Shareholders equity in accordance with U.S. GAAP                                                                                     |  | 1,279,658 |   |  | 1,323,311 |  
|                                                                                                                                      |  |           |   |  |           |  



Other



The following amounts are included in accounts
receivable:



|                                                    |  |        |   |  |                  |  
|--------------------------------------------------- |  | ------ | - |  | ---------------- | -
|                                                    |  | 2005   |   |  | 2004             |  
|                                                    |  |        |   |  | (Revised note 1) |  
|Allowance for doubtful accounts  beginning of year |  | 17,074 |   |  | 18,860           |  
|Bad debt expense                                    |  | 6,813  |   |  | 5,634            |  
|Write offs during the year                          |  | (8,092 | ) |  | (7,513           | )
|Foreign exchange                                    |  | (186   | ) |  | 93               |  
|                                                    |  |        |   |  |                  |  
|                                                    |  | 15,609 |   |  | 17,074           |  
|                                                    |  |        |   |  |                  |  



The following amounts
are included in operating expenses:



|             |  |        |  |                 
|------------ |  | ------ |  | ----------------
|             |  | 2005   |  | 2004            
|             |  |        |  | (Revised note 1)
|Rent expense |  | 68,141 |  | 53,297          



The following amounts
are included in accrued liabilities:



|                            |  |        |  |                 
|--------------------------- |  | ------ |  | ----------------
|                            |  | 2005   |  | 2004            
|                            |  |        |  | (Revised note 1)
|Employment related accruals |  | 88,000 |  | 75,000          



Amortization expense
related to existing finite life intangibles will be $11.5 million per year in 2006 and $4.2 million in 2007 to 2010.



76