##### 



EXHIBIT 2

Management Discussion and Analysis of Financial Condition and Results of
Operations

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

The Company is an international media company formed under the laws of Canada.
In Canada, the Company owns and operates 16 broadcast television stations and
several specialty cable channels  including Prime TV and 7 digital specialty
channels, 10 metropolitan newspapers, the National Post  a daily Canadian
national newspaper, and more than 20 non-daily publications. The Company also
owns and operates New Zealands 3 and C4 television networks and CanWest Radio
NZ and has a 57.1% economic interest in Australias Network TEN, which includes
a wholly owned out-of-home advertising company, Eye Corp. The Company also has
a 45% interest in the Republic of Irelands TV3, and a 29.9% equity interest in
Northern Irelands UTV. In addition, the Company owns and operates CanWest
Entertainment, an international film and television production and distribution
operation.

In August, 2003, the Companys wholly owned subsidiary refinanced $940 million
of its existing senior secured credit facilities. The transaction involved
refinancing of two of the existing term loans into a single loan at current
market rates. The refinancing will achieve annual interest savings of
approximately $8 million.

In July 2003, the Company sold, in a private transaction, its holdings of more
than 2 million shares of SBS Broadcasting S.A. The transaction, part of a
program to divest of non-core assets, netted the Company $44 million which was
used to reduce corporate debt and resulted in an investment loss of $11
million.

In May 2003, the Companys wholly owned subsidiary, Global Communications Ltd.,
was awarded a radio broadcast licence by the Canadian Radio-television and
Telecommunications Commission (CRTC) for an FM station in the
Kitchener-Waterloo region of Ontario. The radio licence is the second awarded
to CanWest in Canada. The new station, scheduled to go on the air in early 2004
joins Cool FM in Winnipeg, which successfully launched in February 2003.

In April 2003, the Companys subsidiary CanWest Media Inc. completed a private
placement of $295 million in unsecured senior notes at a coupon interest rate
of 7 5/8% per annum with a ten-year term. The proceeds from the sale were used
to retire a portion of the outstanding Hollinger notes which will result in
annual interest savings of approximately $12 million.

In February 2003, CanWest completed the sale of a number of its smaller daily
and community newspapers and related assets in Southern Ontario to Osprey Media
Group Inc. (Osprey Media) for $194 million, resulting in an investment gain
of $21 million. The sale was the continuation of the Companys efforts to
divest itself of non-core assets. The sale included such papers as the St.
Catharines Standard, the Brantford Expositorand the Welland Tribune.



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In December 2002, the Company redeemed all of its outstanding Series 2
Preference Shares for cash consideration of $57.7 million. The Series 2
Preference Shares were issued in May 2001 on the amalgamation of certain
subsidiaries of CanWest.

In August 2002, the Companys Australian operating unit, Network TEN, purchased
the remaining 40% of Eye Corp, Australias leading out-of-home advertising
company, for aggregate cash consideration of approximately A$10 million.

In August 2002, CanWest sold 10 small-to-medium market daily newspapers  as
well as certain community papers in Atlantic Canada and Saskatchewan  to
G.T.C. Transcontinental Group Ltd. (GTC) for aggregate cash consideration of
approximately $257 million.

In March 2002, the Company completed the purchase of the 50% of the National
Post it did not already own for nominal consideration in the form of cash and
agreements and undertakings.

In October 2001, the Company sold its interest in television station CKVU
(Vancouver) for cash proceeds of approximately $133 million. In September 2001,
the Company sold its 70% interest in television station CFCF (Montreal) for
cash proceeds of $87 million. In August 2001, the Company sold its 50% interest
in the ROBTv specialty cable channel for cash proceeds of $30 million.

TRENDS

The Company has historically derived more than 70% of its revenue from
advertising in Canada. For that reason, the Companys results typically
reflect overall activity in the economy. Advertising markets in North America
and throughout the world recovered in the second half of fiscal 2002 and
continued to improve through fiscal 2003. The impact of the war in Iraq, which
overtook normal television schedules for several days during the third quarter
and the effects of the Severe Acute Respiratory Syndrome (SARS) on the travel
and tourism sector, particularly in Toronto, was temporary, and advertising
markets strengthened in the fourth quarter.

Looking forward to fiscal 2004, the positive momentum in advertising markets
for Canadian newspapers experienced in fiscal 2003 is expected to continue. For
Canadian television, after a strong up front market, the television advertising
market in Canada appears to have softened as we move into the first quarter of
fiscal 2004. Beyond the first quarter, the outlook is more positive as current
bookings are tracking with the prior year and the Company anticipates further
strengthening of its program schedule in the marketplace.

In the production and distribution of programming, international markets
continue to be a challenge as European broadcasters turn away from North
American programming. CanWest has responded with significant changes in
strategy at its program and distribution operation, which has been
refocused to concentrate on the North American market, particularly in
meeting the requirements of the Companys own broadcast operations.

Internationally, advertising markets, particularly in Australia and New
Zealand, continue to be very strong and are expected to contribute to further
growth in our results for our broadcasting operations in those markets.



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CRITICAL ACCOUNTING POLICIES

The Company prepares its consolidated financial statements in Canadian dollars
and in accordance with Canadian GAAP. The consolidated financial statements
include the Companys accounts and the accounts of its subsidiary companies.

The Companys operating segments include television and radio broadcasting,
entertainment, publishing and online operations and outdoor advertising. In
Canada, the Television Broadcast segment includes the operation of the Global
Television Network, Prime, various other conventional and specialty channels
and the Cool FM radio station. The Australian Television segment includes the
Companys 57.1% economic interest (57.5% to February 27, 2003) in the TEN Group
Pty Limited which owns and operates Australias TEN Television Network
(Network TEN). The Canadian Publishing and Online segment includes the
publication of a number of newspapers, including 10 metropolitan daily
newspapers, and the National Post as well as operation of the canada.com web
portal and other web based operations. The Entertainment segment includes the
operation of CanWest Entertainment, a producer and distributor of film and
television programs. The New Zealand Television Broadcasting segment includes
the operations of the 3 and C4 Television Networks. The New Zealand Radio
Broadcasting segment includes five nationally networked radio brands and 27
local radio stations including the More FM stations. The Irish Television
Broadcasting segment includes the Companys 45% interest in the Republic of
Irelands TV3 Television Network. The Australian Outdoor advertising segment
includes the Companys economic interest in EyeCorp, an out-of-home advertising
operation which is wholly owned by the TEN Group Pty Limited. The Corporate and Other segment includes various investments in
media operations including a 29.9% interest in Northern Irelands Ulster
Television plc (UTV).

The Company accounts for its economic interest in Network TEN using the equity
method of accounting. Under this method, the Companys interest in the net
earnings (before interest on subordinated debentures) of Network TEN is
included in the Companys consolidated earnings, and an adjustment is made to
the carrying value at which the investment is recorded on the consolidated
balance sheet. The carrying value of this investment is reduced by any interest
on subordinated debentures and dividends received by the Company.

In fiscal 2001, the Company accounted for its interest in the National Post
using the equity method. In September 2001, the Company assumed control of the
National Post and, thereafter, consolidated its interest in the National Post.

The preparation of financial statements in accordance with Canadian GAAP
requires the use of estimates and assumptions that affect reported amounts of
assets, liabilities, revenue and expenses, and disclosure of contingencies.
Future events could alter such estimates.

On an ongoing basis, management evaluates its estimates, including those
related to allowances for doubtful accounts, broadcast rights, investments in
films and television programs, useful lives of property plant and equipment,
carrying values of intangibles and goodwill, carrying values of investments,
accrued liabilities, contingent liabilities, income taxes, employee future
benefits, and the fair value of financial instruments. The estimates noted
herein are the most subjective and therefore could have a material effect upon
our reported results.



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Goodwill and intangible assets

We operate in highly competitive markets. We have estimated the useful lives
of intangible assets and the value of goodwill, based on historical customer
patterns, industry trends and existing competitive factors. Significant long
term changes in these factors could result in material impairment of the value
and life of intangible assets and goodwill.

As at August 31, 2003 we had $1,094 million of intangibles and $2,456 million
of goodwill on our balance sheet.

In performing the annual impairment testing of goodwill and intangibles, we
make a number of assumptions and estimates in applying a fair value test. 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 techniques
used for reporting units include either 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 operating managements 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 multiples. In
addition, we consider the expected risk-free and other rates of return, general
economic conditions, historical and forecasted operating results, and
valuations prepared by third parties. The discount rates used are based on the
weighted average costs of capital using the capital pricing model and adjusting
for the size of the local reporting unit, local tax rates and risk profile.

Had we used different assumptions or valuation techniques in performing the
impairment testing at August 31, 2003, the carrying value of intangibles and
goodwill may have been different. The Company considers the assumptions and
techniques used to be reasonable.

Revenue Recognition and Allowance for Doubtful Accounts

Approximately 70% of our revenue is derived from the sale of advertising.
Advertising revenue, net of agency commissions, is recognized at the time a
television or radio commercial is broadcast, or at the time the publication is
delivered.

Circulation revenue is recognized when the publication is delivered.
Circulation revenue includes sales to retail distributors that are subject to
returns. We record the retail sales upon delivery, net of estimated returns.
The estimates are based on historical return rates and are revised as necessary
based on actual returns realized. Subscription revenue is recorded straight
line over the term of the subscription.

Our allowance for doubtful accounts represents an estimate of amounts that may
not be collectible. At August 31, 2003, our allowance was $15 million and our
bad debts expense for that year was $6 million. The allowance is estimated
based on historical collection experience, continual review of aging categories
and the specific identification of customers at risk.



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##### 



Income taxes

Income taxes were $3 million for the year ended August 31, 2003. Future tax
assets were $107 million, while future tax liabilities were $493 million at
August 31, 2003 (see note 14 to the consolidated financial statements).

Management uses judgment and estimates in determining the appropriate rates and
amounts to record 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 reviews by tax authorities.

Investment in film and television program rights

At August 31, 2003, we had $111 million in broadcast rights. Broadcast rights
represent the right to air various forms of programming. Broadcast rights and
the corresponding liability are recorded when the licence period begins and the
programs are available for air. Program rights are carried at the lower of
unamortized cost and estimated net recoverable value based on discounted future
cash flows. Most of our foreign programming is 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.

As at August 31, 2003, we had investments in film and television program rights
of $243 million. Investment in film and television programs represents the
unamortized costs of film and television programs that have been produced by
the Company or for which the Company has acquired program rights.

The Company estimates ultimate future revenue for each title to determine
amortization and fair value. Amortization is recorded based on the ratio that
current revenue bears to managements estimate of ultimate revenue for the
title. Valuation of film and television programs is reviewed on a title by
title basis. When an event or change in circumstance indicates that the fair
value of a film or program is less than its unamortized cost, the fair value is
determined based on the discounted future cash flow. A writedown is recorded
equivalent to the amount by which the unamortized costs exceed the estimated
fair value.



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##### 



OPERATING RESULTS

Fiscal 2003 Compared to Fiscal 2002

Earnings before interest, taxes, depreciation and amortization (EBITDA) is
not a recognized measure of financial performance under Canadian GAAP.
Management utilizes EBITDA as a measure of segment profitability in making
strategic resource allocations. In addition, the Company and its lenders and
investors use EBITDA to measure performance against the Companys various
leverage covenants. EBITDA also provides investors with an indication of cash
available for distribution prior to debt service, capital expenditures and
income taxes. Investors are cautioned, however, that EBITDA should not be
construed as an alternative to operating income or net earnings determined in accordance with GAAP as an
indicator of the Companys performance. The Companys method of calculating
EBITDA may differ from other companies and, accordingly, EBITDA may not be
comparable to measures used by other companies.

The following is a table of segmented results for the years ended August 31,
2003 and August 31, 2002 including a reconciliation of operating income before
amortization (EBITDA) to operating income:

|                                                            |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|----------------------------------------------------------- |  | ------- | --------- | -------- |  | ------------ | --------- | ---------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- | ---- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | - |  |  | ------- | -
|                                                            |  |         |           |          |  |              |           |                  |  | Segment operating profit |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  | 
|                                                            |  | Revenue |           | (EBITDA) |  | Amortization |           | Operating income
|                                                            |  |         |           |          |  |              |           |                 
|                                                            |  | 2003    |           | 2002     |  | 2003         |           | 2002             |  | 2003                     |         | 2002 |  | 2003 |         | 2002
|                                                            |  | $000    |           | $000     |  | $000         |           | $000             |  | $000                     |         | $000 |  | $000 |         | $000
|Operating Segments                                          |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Television                                                  |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Canada                                                      |  |         | 728,318   |          |  |              | 691,888   |                  |  |                          | 220,099 |      |  |      | 190,752 |      |  |  | 25,363  |   |  |  | 25,924  |   |  |  | 194,736 |   |  |  | 164,828 |  
|Australia-Network TEN(1)                                    |  |         | 336,362   |          |  |              | 281,427   |                  |  |                          | 106,975 |      |  |      | 81,782  |      |  |  | 6,573   |   |  |  | 5,808   |   |  |  | 100,402 |   |  |  | 75,974  |  
|New Zealand                                                 |  |         | 95,752    |          |  |              | 69,079    |                  |  |                          | 10,095  |      |  |      | (1,938  | )    |  |  | 3,408   |   |  |  | 2,541   |   |  |  | 6,687   |   |  |  | (4,479  | )
|Ireland                                                     |  |         | 32,490    |          |  |              | 28,317    |                  |  |                          | 9,729   |      |  |      | 7,654   |      |  |  | 2,249   |   |  |  | 1,869   |   |  |  | 7,480   |   |  |  | 5,785   |  
|                                                            |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|                                                            |  |         | 1,192,922 |          |  |              | 1,070,711 |                  |  |                          | 346,898 |      |  |      | 278,250 |      |  |  | 37,593  |   |  |  | 36,142  |   |  |  | 309,305 |   |  |  | 242,108 |  
|Publishing and Online 
Canada                              |  |         | 1,164,012 |          |  |              | 1,270,335 |                  |  |                          | 258,496 |      |  |      | 285,027 |      |  |  | 56,349  |   |  |  | 62,488  |   |  |  | 202,147 |   |  |  | 222,539 |  
|Radio - New Zealand                                         |  |         | 73,400    |          |  |              | 60,724    |                  |  |                          | 20,751  |      |  |      | 16,361  |      |  |  | 2,336   |   |  |  | 2,086   |   |  |  | 18,415  |   |  |  | 14,275  |  
|Entertainment-Canada                                        |  |         | 184,344   |          |  |              | 152,439   |                  |  |                          | (34,524 | )    |  |      | (743    | )    |  |  | 1,362   |   |  |  | 505     |   |  |  | (35,886 | ) |  |  | (1,248  | )
|Outdoor-Australia(1)                                        |  |         | 36,656    |          |  |              | 38,074    |                  |  |                          | 2,560   |      |  |      | 874     |      |  |  | 2,782   |   |  |  | 2,891   |   |  |  | (222    | ) |  |  | (2,017  | )
|                                                            |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|                                                            |  |         | 2,651,334 |          |  |              | 2,592,283 |                  |  |                          | 594,181 |      |  |      | 579,769 |      |  |  | 100,422 |   |  |  | 104,112 |   |  |  | 493,759 |   |  |  | 475,657 |  
|Corporate expenses                                          |  |         |          |          |  |              |          |                  |  |                          | (23,213 | )    |  |      | (26,807 | )    |  |  | 5,570   |   |  |  | 3,411   |   |  |  | (28,783 | ) |  |  | (30,218 | )
|                                                            |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|                                                            |  |         | 2,651,334 |          |  |              | 2,592,283 |                  |  |                          | 570,968 |      |  |      | 552,962 |      |  |  | 105,992 |   |  |  | 107,523 |   |  |  | 464,976 |   |  |  | 445,439 |  
|Restructuring and film
and television
impairment expense(2) |  |         |          |          |  |              |          |                  |  |                          | (53,087 | )    |  |      |        |      |  |  |        |   |  |  |        |   |  |  | (53,087 | ) |  |  |        |  
|                                                            |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Total Combined                                              |  |         | 2,651,334 |          |  |              | 2,592,283 |                  |  |                          | 517,881 |      |  |      | 552,962 |      |  |  | 105,992 |   |  |  | 107,523 |   |  |  | 411,889 |   |  |  | 445,439 |  
|Elimination of equity
accounted affiliates(1)               |  |         | (373,018  | )        |  |              | (319,500  | )                |  |                          | (99,219 | )    |  |      | (82,656 | )    |  |  | (9,355  | ) |  |  | (8,699  | ) |  |  | (89,864 | ) |  |  | (73,957 | )
|                                                            |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Total Consolidated                                          |  |         | 2,278,316 |          |  |              | 2,272,783 |                  |  |                          | 418,662 |      |  |      | 470,306 |      |  |  | 96,637  |   |  |  | 98,824  |   |  |  | 322,025 |   |  |  | 371,482 |  
|                                                            |  |         |           |          |  |              |           |                  |  |                          |         |      |  |      |         |      |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  

|(1) Represents the Companys proportionate interest in Network TEN and its
wholly owned subsidiaries.                                                                                                    
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                         
|(2) Includes Network TEN film and television impairment charges of $10,316,
Entertainment film and television impairment charges of $22,748 and Canadian
media and film restructuring charges of $20,023.



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The following discussion is based on the Companys consolidated results for the
year ended August 31, 2003. Comparisons with the prior years results are
affected by corporate initiatives, including the divestiture of certain
newspaper publishing properties, accordingly, the Company provides certain pro
forma comparatives. Pro forma revenue, EBITDA and operating income for fiscal
2002 exclude the results of newspaper publishing interests in Saskatchewan and
Atlantic Canada sold to GTC in August 2002 and exclude the results of the
newspaper properties sold to Osprey Media in February 2003 for the period from
February 16, 2002 to August 31, 2002.

|                                     |  |         |           |        |  |        |         |   |  |           |         |  
|------------------------------------ |  | ------- | --------- | ------ |  | ------ | ------- | - |  | --------- | ------- | -
|                                     |  |         |           |        |  |        |         |   |  | Operating
|                                     |  | Revenue |           | EBITDA |  | income
|                                     |  | $000    |           | $000   |  | $000  
|For the year ended August 31, 2002   |  |         |           |        |  |       
|As reported                          |  |         | 2,272,783 |        |  |        | 470,306 |   |  |           | 371,482 |  
|Newspaper publishing properties sold |  |         | (141,807  | )      |  |        | (42,721 | ) |  |           | (39,167 | )
|                                     |  |         |           |        |  |        |         |   |  |           |         |  
|Pro forma                            |  |         | 2,130,976 |        |  |        | 427,585 |   |  |           | 332,315 |  
|                                     |  |         |           |        |  |        |         |   |  |           |         |  

The Company reported consolidated revenues of $2,278 million for the year ended
August 31, 2003, an increase of $6 million from the actual revenues reported
for the previous year and an increase of $147 million from pro forma revenues
of $2,131 million. Revenues for 2003 reflect solid increases in Canadian
television and Publishing revenues, as well as New Zealand broadcasting
operations.

Consolidated operating expenses (including selling, general, and administrative
expenses) before amortization increased $57 million to $1,860 million. On a pro
forma basis, operating expenses increased $156 million, or 9% from $1,703
million in the previous year, reflecting expense increases in Entertainment and
Publishing and Online expenses, as well as restructuring and film and
television program impairment expenses.

Consolidated EBITDA decreased by 11% to $419 million from $470 million last
year. Compared to last year on a pro forma basis, EBITDA decreased by 2% from
$428 million last year. Substantial increases at broadcast operations in
Canada, New Zealand, and Ireland as well as in publishing and online operations
were more than offset by increased losses at Entertainment and restructuring
and film and television program impairment expenses.

Revenues from Canadian Television Broadcast operations were up by 5% to $728
million from $692 million recorded in the previous year. Revenues at
conventional television operations and at Prime, the Companys top-rated analog
specialty channel, increased by 5% in fiscal 2003 compared to fiscal 2002.

The Companys six digital specialty channels saw revenues double to $9 million
in their second full year of operation. CanWests portfolio of digital
channels continue to perform well relative to their peers, steadily gaining
subscribers. Subsequent to year-end the Company launched a seventh channel,
CoolTV.



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Global Televisions news operations continue to increase viewer support across
Canada and new programming was launched in fiscal 2003. Canadian audiences
continue to support Global National with Kevin Newman, increasing audience
share by 17% over the summer period compared to the same period last year, the
largest such increase by a national news program. Global Sunday continues to be
one of the highest ranked Canadian current affairs programs.

Operating expenses (including selling, general and administrative expenses) at
Canadian Television Broadcast operations increased by 1% to $508 million
dollars, compared to $501 million in fiscal 2002. Operating expenses were well
controlled. The increase reflects nominal inflationary increases and costs
related to the start up of Cool FM. Programming expenses were consistent with
the previous year.

As a result of revenue increases and expense control Canadian television
broadcast EBITDA increased 15% to $220 million and operating income increased
18% to $195 million in fiscal 2003 as compared to 2002.

Publishing and Online revenues for fiscal 2003, including the National Post,
were $1,164 million, an increase of 3% from the pro forma revenues of $1,129
million for the previous year, on a same paper basis. Newspaper advertising was
bolstered by robust activity in the automotive and technology sectors through
the second half of the fiscal year. Advertising and circulation comprise 79%
and 18%, respectively, of the Companys newspaper revenues for 2003, consistent
with the prior year.

Compared to last year, on a pro forma basis, operating expenses (including
selling, general and administrative expenses) of the Companys publishing and
online operations increased slightly to $906 million from $886 million on a pro
forma basis. This reflects normal cost escalations, particularly payroll and
moderate increases in the price of newsprint.

The Companys online operations achieved a significant improvement in fiscal
2003 and for the first time recorded positive EBITDA of just under $1 million,
compared to EBITDA losses of $4.5 million the previous year. The Online
properties are now more closely aligned with other media properties and are
contributing to overall profitability.

In February, 2003, CanWest completed the sale of a number of smaller market
daily, weekly and shopper publications and related assets in Southern Ontario
to Osprey Media for $193.5 million resulting in an investment gain of $21.3
million. The sale, which followed a similar divestiture of community papers in
2002, was the continuation of a strategy by the Company to divest of assets not
central to its multi-platform sales, content and promotion strategy.

Revenue from the Entertainment segment increased by 21% to $184 million from
$152 million recorded the previous year. Operating expenses at Entertainment
increased to $219 million from $153 million the previous year, resulting in
operating loss of $36 million compared to a loss of $1 million in the previous
year. Weak demand for television programming in Europe continued through fiscal
2003 which negatively affected distribution revenues. The weak demand has had
the additional effect of decreasing future revenue estimates which has
significantly reduced the profit margin recognized on sales. The Company began
addressing the situation by restructuring Entertainment to concentrate more on
programming for the North American market and CanWest broadcasting properties
in particular.

CanWests 45% share of revenues at TV3 in the Republic of Ireland increased 15%
to $32 million from $28 million the previous year. CanWests share of TV3s
EBITDA was $10 million,



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##### 



up from $8 million and operating income increased to $7 million from $6 million
the previous year.

Revenues from television broadcast operations for New Zealands 3 and C4
television networks increased by 39% to $96 million for fiscal 2003 from $69
million the previous year. In local currency, revenues increased by 21% to
NZ$121 million from NZ$100 million in 2002. EBITDA also improved, from an
EBITDA loss of $2 million in fiscal 2002 to $10 million for the year ended
August 31, 2003. Operating income increased to $7 million from a loss of $4
million the previous year. Results from New Zealand have been translated at an
average exchange rate of $0.7957, an increase of 15% over the prior years rate
of exchange. A combination of factors contributed to the improved results,
including higher ratings, improved advertising market conditions, and higher
prices for advertising. A stronger New Zealand dollar also helped to reduce the
cost of imported programming.

CanWest Radio New Zealand continued its steady performance, increasing
revenues, EBITDA and operating income. Revenue grew by 21% to $73 million from
$61 million the previous year. EBITDA grew by 27% to $21 million from $16
million in the previous year and operating income increased to $18 million from
$14 million in fiscal 2002.

Corporate operating expenses decreased to $23 million from $27 million in
fiscal 2002.

The Company recorded a restructuring charge of $20 million related to expenses
associated with the restructuring of Canadian Media operations consisting of
$14 million in employee severance, $3 million in lease termination costs and $2
million in costs related to discontinuing certain film and television projects.
The restructuring charge affected the following operating segments: Canadian
Broadcasting - $3 million, Publishing and Online - $9 million, Entertainment -
$7 million and Corporate and Other - $1 million. In addition, the Company
recorded a $23 million charge, reflecting the write down of certain of
Entertainments investments in film and television programs to fair value.

Amortization of intangibles was $18 million in both 2003 and 2002.
Amortization of property and equipment decreased to $72 million from $75
million reflecting the sale of community newspapers.

Financing costs were $364 million for the year ended August 2003, compared to
$377 million in the previous year, reflecting the reduced level of debt as well
as reduced interest rates achieved through refinancing of debt.

In 2003, the Company had investment gains of $9 million, primarily as a result
of the gain on sale of community newspapers of $21 million offset by the loss
on the sale of SBS shares of $11 million. The Company recorded a $23 million
loss equivalent to the fair value of interest rate swaps related to debt that
was repaid during the year. Dividend income of $3 million from UTV is
consistent with fiscal 2002.

The provision for income taxes was $3 million in 2003, compared to $7 million
in fiscal 2002. The negative effective tax rate is primarily the result of
losses for which tax recoveries were not recognized primarily at CanWest
Entertainment.

The Companys interest in earnings of Network TEN was $101 million in 2003
compared to a loss of $12 million in 2002. The Companys share of EBITDA
increased to $110 million for fiscal 2003 compared to $83 million in fiscal
2002. Earnings were affected by a number of one-time



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##### 



charges in both years.
The Companys share of one-time charges in fiscal 2003 included a charge of $10
million related to program inventory write-down, and a recovery of future taxes
of $39 million as a result of new tax consolidation legislation in Australia.
In fiscal 2002, one-time charges included an investment write down of $8
million, a charge for Eye Corp. goodwill impairment of $30 million and a charge
related to the resolution of a taxation issue of $17 million. Results from TEN
have been translated at an average rate of $0.8893, up 7% from the average rate
of exchange in 2002. See detailed discussion of Network TEN herein.

Net earnings for the year were $46 million, or $0.22 per share, compared to $13
million, or $0.07 per share in 2002.

Fiscal 2002 Compared to Fiscal 2001

Our results were significantly impacted by acquisitions and divestitures in
2002 and 2001 including the following transactions:



| |  |  | the acquisition of publishing and online operations in November 2000;                                                    
| | - |  | -------------------------------------------------------------------------------------------------------------------------
| |   |  |                                                                                                                          
| |  |  | the acquisition of the remaining shares of RadioWorks effective January 2001;                                            
| |   |  |                                                                                                                          
| |  |  | the reorganization of our interest in TV3 Ireland in March 2001;                                                         
| |   |  |                                                                                                                          
| |  |  | the sale of CKVU in October 2001; and                                                                                    
| |   |  |                                                                                                                          
| |  |  | the gain of effective control of the National Post in September, 2001, when we
began consolidating its financial results.

The Company reported consolidated revenues of $2,273 million for the year ended
August 31, 2002, an increase of $328 million from the actual revenues reported
for the previous year. The increase in revenue was primarily attributable to
the inclusion of twelve months of Publishing and Online results in 2002
compared to only nine and a half months in 2001, offset in part by a decrease
in revenue as a result of the sale of CKVU and the restructuring of our
interest in TV3 Ireland. On a same asset basis revenues decreased by $17
million reflecting solid increases in Canadian television revenues offset by
decreased revenues in Publishing and Online and Entertainment.

Consolidated operating expenses (including selling, general, and administrative
expenses) before amortization increased $299 million to $1,802 million as a
result of the inclusion of a full year of the Publishing and Online results.

EBIT increased $86 million to $371 million from $285 million in the previous
year. $83 million of this increase resulted from the accounting policy change
that discontinued the amortization of goodwill and indefinite life intangibles,
the remainder is primarily the result of the inclusion of a full year of
Publishing and Online results in 2002 compared to only nine and a half months
in 2001.

Actual revenues from Canadian Television Broadcast operations were down
slightly to $692 million from $701 million recorded in the previous year.
This was due entirely to the sale of CKVU (Vancouver) effective August 31,
2001. On a same station basis, Canadian Television revenues increased by
9% compared to $633 million in fiscal 2001. Operating expenses increased
by 5% to $493 million, compared to $472 million in fiscal 2001. On a same
station basis, which excluded operating expenses associated with CKVU in
the previous year, the increase in operating expenses was 16% compared to
fiscal 2001. The year-over-year increase reflected higher programming
costs arising from the affiliation of BCTV in Vancouver with the





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##### 



Global Television Network, as well as substantial additional investment in
programs designed to enhance future ratings performance.

In addition, as part of the CRTC approval, CanWest made substantial investments
in local programming at the CH stations in Victoria and Hamilton, which
included enhanced news programming and daytime programming. Operating expense
increases in 2002 were offset by the discontinuation of amortization of
indefinite life intangibles resulting in a decrease in amortization expense of
$33.6 million. Operating income for Canadian Television Broadcast operations
increased to $164.8 million in fiscal 2002 compared to $150.4 million in the
prior year.

Revenues increased by 27% at Prime, the Companys top-rated specialty cable
channel, to $25 million from $19 million in fiscal 2001. The increase was
attributable to a 44.9% increase in advertising sales revenue over the previous
year, and an increase in the subscriber base of 6.6% over the previous year.

The Company launched six specialty digital channels in September 2001. Five of
the new channels ranked in the top ten of the 47 new digital channels that went
on air at that time. At the close of the fiscal year, the Companys portfolio
of Canadian digital channels had an aggregate of approximately 2,000,000
subscribers. Revenue from the specialty digital channels for the eight months
following the end of the free preview period was $4 million, with expenses of
$8 million, resulting in an EBIT loss of $4 million.

Publishing and Online revenues for fiscal 2002, including the National Post,
were $1,270 million, an increase of $350 million from revenues of $920 million
for the previous year. A 6% decline in revenue was offset by an increase
attributable to the inclusion of an additional two and a half months of
operations for the publishing properties as well as the inclusion of National
Post operations effective September 1, 2001. Newspaper revenues were
negatively affected by the impact of the September 11th tragedy on advertising
expenditures and the lingering effects of a slowdown in overall advertising
markets that began in April 2001. However, the decrease in advertising linage
slowed and reversed through fiscal 2002. During the last four months of fiscal
2002, revenues were ahead of the corresponding months of the previous year.
Consistent with the prior year, approximately 78% of newspaper revenues are
derived from advertising, while circulation represents about 17% of the total.

Compared to last year, operating expenses (including selling, general and
administrative expenses) of the Companys newspaper operations increased by
$270 million to $982 million as a result of the inclusion of a full year of
operations for the publishing properties and the National Post, offset by
expense reductions of $135 million. The reductions were the result of
restructuring at the National Postand reduced manning at other newspapers, and
an overall drop of 14% in average newsprint costs during the year. Operating
costs include the start-up costs associated with the launch of the Reach Canada
customer contact centre in Winnipeg which receives customer service calls for
all major newspapers in the group. Operating income for the publishing group
increased by $101 million or 81%, to $226 million from $125 million in the
prior year. This increase is the result of the inclusion of a full year of
operations of the newspaper group as compared to nine and a half months the
prior year, as well as the discontinuation of amortization of goodwill and
indefinite life intangibles.

In August 2002, the Company sold a number of newspapers and related assets to
GTC for aggregate cash proceeds of $257 million. These newspapers, which
included eleven smaller market daily papers and certain community papers in
Atlantic Canada and Saskatchewan, were





---



##### 



not central to the Companys multi-platform sales, content and promotion
strategy. The newspapers and related assets included in the transaction
generated approximately $94 million in revenue and $27 million in operating
income in fiscal 2002.

Revenue from Entertainment decreased to $157 million from $182 million
recorded the previous year. Operating expenses at Entertainment also declined
to $158 million from $168 million the previous year, producing an EBIT loss of
$1 million compared to an EBIT of $14 million in the previous year.

CanWests 45% share of revenues at TV3 in the Republic of Ireland increased 39%
to $28 million from $20 million the previous year. CanWests share of TV3s
operating income was $6 million compared to a small operating loss in the
previous year. Ratings were up 13% in prime time viewing hours, with an 18%
growth in all-day ratings at TV3. Improved ratings for locally produced
programming, as well as the inclusion of top-rated entertainment programming
from Granada Media, contributed substantially to the continued growth at TV3.

Revenues from New Zealand Television operations in fiscal 2002 increased by 18%
to $69 million from $58 million the previous year. In local currency revenues
increased by 9% to NZ$100 million from NZ$92 million in 2001. Operating income
also improved, from a loss of $14 million in fiscal 2001 to a loss of $4
million for the year ended August 31, 2002. Results from New Zealand have been
translated at an average exchange rate of $0.6910, an increase of 8% over the
prior years rate of exchange. A combination of factors contributed to the
improved results, including higher ratings, improved advertising market
conditions, and higher prices for advertising. A stronger New Zealand dollar
also helped to reduce the cost of imported programming.

3 Television Network gained two points in ad market share to 25% compared to a
23% ad market share in the previous fiscal year. In the last quarter of the
year, TV3 achieved the highest share in Auckland, New Zealands largest city,
with an audience market share of 32%.

CanWest Radio in New Zealand continued to make steady progress, increasing both
its revenues and operating profit. Operating profit grew by 50% to $14 million
from $10 million in the previous year on revenues of $61 million. It recorded
operating expenses of $44 million, a 4% reduction in costs from the previous
year.

Financing costs were $377 million for the year ended August 31, 2002, compared
to $357 million in the previous year. The increase reflects a full twelve
months of financing costs related to the acquisition of the Publishing
properties which occurred late in the first quarter of last year, resulting in
only nine and one-half months of the carrying cost associated with the
acquisition, partially offset by reduced interest rates and debt repayments in
2002.

Amortization of intangibles and goodwill was reduced to $18 million in 2002,
compared to $90 million in the previous year as a result of the adoption of the
new accounting policy under which goodwill and indefinite life intangibles are
no longer amortized. Amortization of property and equipment increased to $75
million from $61 million as a result of the acquisition of the publishing
properties.

In 2002, the Company had investment gains, net of losses on write down of
investments, of $32 million. This is comprised of a gain of the sale of CKVU of
$68 million, a gain on the sale of Atlantic Canada and Saskatchewan community
newspapers of $49 million offset by write downs





---



##### 



of $86 million as a result of non temporary declines in fair value of other
investments. In the previous year, the net investment gain was $29 million.

The provision for income taxes was $7 million in 2002, compared to a tax
recovery of $59 million in 2001. The effective tax rate of 24% is significantly
lower than the Companys statutory rate of 38%, primarily as a result of the
non-taxable portion of gains. The previous years recovery included a future
income tax recovery of $71 million due to reductions in federal and provincial
income tax rates enacted during 2001.

In 2002, the Company recorded a recovery from minority interest of $4 million,
compared to a charge of $3 million in the prior year. In 2002, the credit is
related to the minority interest in the National Post from September 1, 2001 to
March 2002. In the prior year the charge related to the minority interest in
RadioWorks to January 2001.

The Companys interest in the loss of Network TEN for the year was $12 million,
compared to income of $53 million the previous year. The Companys share of
earnings before TENs investment losses and write downs was $44 million in
2002, compared to $37 million in 2001, a $7 million, or 19% increase. In 2002,
our share of TENs non-recurring charges included a one-time income tax
settlement of $17 million, a goodwill impairment loss related to Eye Corp. of
$30 million, and a $9 million write down of investments to fair value. In the
prior year, the Companys share of non-recurring charges included gains on sale
of investments of $29 million offset by a loss on the write down of the SCAPE
investment of $13 million. Results from TEN have been translated at an average
rate of $0.8311, up 4% from the average rate of exchange in 2001. See detailed
discussion of Network TEN herein.

The Companys interest in losses of equity accounted affiliates was $2 million
for 2002, compared to $14 million in 2001. The 2001 loss is primarily comprised
of the Companys share of the National Post losses. In 2002, the National Post
was consolidated.

The Company incurred a $1 million loss from currency translation, realized on
distributions declared by Network TEN in 2002, compared to a $7 million loss in
2001.

Net earnings for the year were $13 million, or $0.07 per share, compared to $47
million, or $0.27 per share in 2001. Adjusted earnings for 2001, excluding the
amortization of goodwill and indefinite life intangibles, were $117 million or
$0.68 per share.





---



##### 



Consolidated Quarterly Financial Results
For the three month periods ended (in thousands of dollars, except as noted)(unaudited)

2003

|                                                         |         |  |         |      |        |  |         |      |        |  |         |      |  |  |          |      | 
|-------------------------------------------------------- | ------- |  | ------- | ---- | ------ |  | ------- | ---- | ------ |  | ------- | ---- |  |  | -------- | ---- | 
|                                                         |         |  | 31-Aug  |      | 31-May |  | 28-Feb  |      | 30-Nov
|Revenue                                                  |         |  | 520,301 |      |        |  | 593,212 |      |        |  | 531,240 |      |  |  | 633,563  |     
|Operating profit before
amortization (EBITDA)            |         |  | 17,443  |      |        |  | 128,828 |      |        |  | 95,888  |      |  |  | 176,503  |     
|Amortization of intangibles                              |         |  | 4,375   |      |        |  | 4,375   |      |        |  | 4,375   |      |  |  | 4,375    |     
|Amortization of property, plant,
and equipment and other |         |  | 18,855  |      |        |  | 18,732  |      |        |  | 20,957  |      |  |  | 20,593   |     
|Interest in earnings (loss) of TEN                       |         |  | 52,250  |      |        |  | 12,428  |      |        |  | 10,884  |      |  |  | 25,777   |     
|Net earnings (loss)                                      |         |  | (44,712 | )    |        |  | 12,484  |      |        |  | 9,881   |      |  |  | 68,435   |     
|Cash flow from operations 1                              |         |  | (36,640 | )    |        |  | 58,884  |      |        |  | 71,758  |      |  |  | 100,864  |     
|Cash flow from operating activities                      |         |  | 93,052  |      |        |  | 64,338  |      |        |  | 171,359 |      |  |  | (100,959 | )   
|Net earnings (loss) per share                            |         |  |         |      |        |  |         |      |        |  |         |      |  |  |          |     
|                                                         | Basic   |  | ($      | 0.25 | )      |  | $       | 0.07 |        |  | $       | 0.01 |  |  | $        | 0.39 | 
|                                                         | Diluted |  | ($      | 0.25 | )      |  | $       | 0.07 |        |  | $       | 0.01 |  |  | $        | 0.36 | 

2002

|                                                        |         |  |          |      |        |  |         |      |        |  |         |      |   |  |          |      | 
|------------------------------------------------------- | ------- |  | -------- | ---- | ------ |  | ------- | ---- | ------ |  | ------- | ---- | - |  | -------- | ---- | 
|                                                        |         |  | 31-Aug   |      | 31-May |  | 28-Feb  |      | 30-Nov
|Revenue                                                 |         |  | 484,059  |      |        |  | 617,014 |      |        |  | 529,130 |      |   |  | 642,580  |     
|Operating profit before
amortization (EBITDA)           |         |  | 52,512   |      |        |  | 154,829 |      |        |  | 91,875  |      |   |  | 171,090  |     
|Amortization of intangibles                             |         |  | 4,375    |      |        |  | 4,375   |      |        |  | 4,375   |      |   |  | 4,375    |     
|Amortization of property, plant
and equipment and other |         |  | 21,129   |      |        |  | 20,793  |      |        |  | 20,580  |      |   |  | 18,822   |     
|Interest in earnings (loss) of TEN                      |         |  | (34,003  | )    |        |  | 7,989   |      |        |  | (5,243  | )    |   |  | 19,442   |     
|Net earnings (loss)                                     |         |  | (104,144 | )    |        |  | 30,688  |      |        |  | (21,660 | )    |   |  | 108,134  |     
|Cash flow from operations 1                             |         |  | 24,673   |      |        |  | 80,354  |      |        |  | 99,388  |      |   |  | 79,761   |     
|Cash flow from operating activities                     |         |  | 82,273   |      |        |  | 38,547  |      |        |  | 141,431 |      |   |  | (102,660 | )   
|Net earnings (loss) per share                           |         |  |          |      |        |  |         |      |        |  |         |      |   |  |          |     
|                                                        | Basic   |  | ($       | 0.59 | )      |  | $       | 0.17 |        |  | ($      | 0.12 | ) |  | $        | 0.61 | 
|                                                        | Diluted |  | ($       | 0.59 | )      |  | $       | 0.17 |        |  | ($      | 0.12 | ) |  | $        | 0.60 | 

There were no extraordinary items reported in the last eight quarters.

1 Before changes in non-cash operating accounts and amortization of and
investment in film and television programs. This is a non-GAAP measure which is
utilized by management as an alternative to the GAAP measure.





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##### 



Liquidity and Capital Resources

Cash flow from operations before changes in non-cash working capital and
investment in and amortization and impairment of investment in film and
television programs was $195 million for the year ended August 31, 2003,
compared to $284 million for the previous year. Amortization and impairment of
film and television programs at Entertainment exceed investments in film and
television programs by $42 million during 2003, compared to a net investment of
$63 million in fiscal 2002. Cash flow from operating activities for fiscal 2003
was $228 million compared to $160 million in the previous year.

Distributions of $33 million from Network TEN were included in cash flow from
operations in 2003, compared to $61 million in 2002. In fiscal 2004 the
Company expects to receive approximately $99 million in distributions from
Network TEN.

Cash and short-term investments were $122 million at August 31, 2003, compared
to $61 million as of August 31, 2002. Subsequent to August 31, 2003, $90
million was applied to reduce outstanding debt.

Capital expenditures were $39 million for the year ended August 31, 2003,
compared to $53 million for the previous fiscal year. Capital spending in 2003
was primarily related to regular replacement of capital assets.

Proceeds from the sale of community newspapers were $193.5 million in 2003
compared to proceeds from divestitures and the sale of investments of $477
million in 2002, which included CFCF and CKVU and certain newspapers.

Long-term debt, including the current portion, decreased $195 million during
the year ended August 31, 2003 to $3,315 million. The Company made principal
payments during 2003 of $678 million, offset by the issuance of $295 million in
senior unsecured notes and the issuance of $80 million in debt by
Entertainment. In addition, the Company issued junior subordinated notes in the
amount of $110 million in satisfaction of payment-in-kind interest.

The total credit available under the Companys senior credit facility is $1,769
million, of which the Company had drawn approximately $1,417 million as of
August 31, 2003. The facility includes revolving and non-revolving tranches
with terms ranging from 3 to 6.5 years. The senior secured credit facility is
collateralized by substantially all assets of the Company. Scheduled repayments
of the Companys senior secured credit facility amount to $38 million in fiscal
2004. In addition, the Company has outstanding $709 million in senior
subordinated notes, guaranteed by certain subsidiaries, maturing in 2011 and
$295 million in senior unsecured notes maturing in 2013.

Total leverage under the Companys senior secured credit facility was 4.91
times cash flow for debt covenant purposes for the year ended August 31, 2003
(2002 - 5.25 times), compared to a covenant of 5.75 times.

The Company has entered into currency and interest rate swaps with certain
lenders under its indebtedness. The average cost of debt, including junior
subordinated notes, after taking into account other financial instruments in
place, was 9.5%. As a result of debt repayment the Companys notional value of
swaps exceeded its debt, a loss of $23 million, equivalent to the fair value of
the overhanging swap was realized in earnings in fiscal 2003. Unrealized
losses





---



##### 



associated with the Companys interest rate and cross currency interest rate
swaps amounted to $334 million. Unrealized gains related to foreign exchange on
US denominated debt amounted to $194 million as at August 31, 2003.

At August 31, 2003 the junior subordinated notes payable were $783 million.
These notes bear interest at 12 1/8% and mature in 2010. At the Companys
option, interest payments to November 2005 may be paid in cash, by the issuance
of additional notes or, subject to conditions, by the issuance of non-voting
shares of the Company.

During 2003, CanWest Entertainment secured a stand-alone credit facility with a
syndicate of lenders. This facility was used to repay existing debt financing
and to finance future growth. The facility is a three year revolving facility
secured by certain assets of Fireworks Entertainment Inc. The loan bears
interest at floating rates of LIBOR plus a margin. Availability under this
US$85 million facility is based on acceptable receivables. As at August 31,
2003, the total US$58 million availability was utilized. The facility contains
profitability and financial ratio covenants, certain of which were not met at
August 31, 2003 and accordingly, the debt has been classified as current.
Fireworks is negotiating with its lenders to receive the necessary covenant
amendments and waivers. As well, in order for Fireworks bank debt to remain
within acceptable limits, the Company may be required to provide additional
financial support to Fireworks over the course of the next fiscal year.

The Companys primary market risk exposures are interest rate and currency
exchange rate risk. The Company is exposed to interest rate risk and currency
exchange rate fluctuations resulting from the issuance of floating rate debt
and debt denominated in U.S. dollars. The Company uses interest rate swaps to
manage the proportion of total debt that is subject to variable interest rates.
Cross-currency swaps are used to hedge the currency exposure on debt originally
issued in U.S. dollars. The Company does not enter into any derivatives for
trading purposes.

The Company has limited the currency exposure on its US dollar denominated debt
to US$42 million, and has fixed the interest rate for its senior debt by
entering into a combination of cross-currency swaps and interest rate swaps.
The Companys US$425 million senior subordinated notes and US$200 million
senior unsecured notes have been swapped to floating interest rates.

In addition to foreign exchange rate risk on foreign currency denominated debt,
the Company is also exposed to some currency risk as a result of having
investments and carrying on business in currencies other than the Canadian
dollar. All of the Companys foreign operations are self-sustaining, and
therefore foreign exchange gains and losses are deferred as a separate
component of shareholders equity. The Company translates the earnings of
equity accounted subsidiaries and affiliates at the average rate of translation
of the relevant period. The Company recognizes deferred translation gains and
losses as appropriate upon dispositions and/or distributions from such
operations. The Companys primary currency exposure is to variations in the
Australian and New Zealand dollars relative to the Canadian dollar as a result
of its investments in Network TEN and its New Zealand television and radio
operations. Currently, the Company does not use derivative financial
instruments to manage its exposure to fluctuations in foreign currency exchange
rates other than to hedge exposure on its debt issued in U.S. dollars as
discussed above.

Based on current operations, the Company believes that cash flow from
operations, together with available borrowing capacity under the senior credit
facility, will be adequate to meet its





---



##### 



anticipated requirements for working capital, capital expenditures, interest
and principal payments.

Although the Company has no current undertakings or agreements with respect to
material acquisitions or investments, from time to time potential acquisitions
and investments are evaluated and, to the extent permitted by the terms of
senior debt instruments, the Company may make such acquisitions or investments
should attractive opportunities arise. The Company expects that the funding for
any such acquisitions or investments would come from working capital, borrowing
under the senior secured credit facility or future credit facilities,
additional equity and debt financing, entering into joint ventures or a
combination of these options.

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, 2003 are summarized below.

|                            |  |                        |           |        |  |             |         |             |  |         |         |  |  |  |         |           |  |  |           | 
|--------------------------- |  | ---------------------- | --------- | ------ |  | ----------- | ------- | ----------- |  | ------- | ------- |  |  |  | ------- | --------- |  |  | --------- | 
|                            |  | Payments due by period
|                            |  |                       
|                            |  |                        |           |        |  | Less than   |         |             |  |         |         |  |  |  |         | More than
|                            |  | Total                  |           | 1 year |  | 1  3 years |         | 3  5 years |  | 5 years
|                            |  | $000                   |           | $000   |  | $000        |         | $000        |  | $000   
|Long term debt              |  |                        | 3,314,697 |        |  |             | 147,386 |             |  |         | 104,185 |  |  |  | 171,639 |           |  |  | 2,891,487 | 
|Operating leases            |  |                        | 181,111   |        |  |             | 31,165  |             |  |         | 55,443  |  |  |  | 41,453  |           |  |  | 53,050    | 
|Purchase obligations(1)     |  |                        | 387,600   |        |  |             | 324,600 |             |  |         | 45,000  |  |  |  | 15,000  |           |  |  | 3,000     | 
|Other long term liabilities |  |                        | 150,190   |        |  |             |        |             |  |         | 55,400  |  |  |  | 42,000  |           |  |  | 52,790    | 
|                            |  |                        |           |        |  |             |         |             |  |         |         |  |  |  |         |           |  |  |           | 
|Total                       |  |                        | 4,033,598 |        |  |             | 503,151 |             |  |         | 260,028 |  |  |  | 270,092 |           |  |  | 3,000,327 | 
|                            |  |                        |           |        |  |             |         |             |  |         |         |  |  |  |         |           |  |  |           | 

(1)Purchase obligations represent an estimate of the Companys contractual
commitments to purchase broadcast rights and to make investments in film and
television programs.

NETWORK TEN

The Company has a 57.1% economic interest in Network TEN, one of Australias
three private sector owned national television broadcast networks. While
Network TENs results are not consolidated into the Companys financial
statements, the Company receives interest payments under Network TENs
outstanding subordinated debentures, all of which are owned by the Company and
dividend payments in respect of the Network TEN shares owned by the Company.

Set forth below is a discussion of Network TENs results of operations without
giving effect to the Companys proportionate interest in Network TEN.

Fiscal 2003 Compared to Fiscal 2002

Network TEN television operations in Australia reported the second consecutive
record year in terms of revenues and operating profit after significant ratings
gains for its prime time schedule in both its target demographic of 16-39 year
olds and significant gains related to TENs successful acquisition of key
sports properties. Total revenues increased by 13% to A$661 million, from A$587
million the previous year.





---



##### 



Operating expenses of the Australian television operation increased by A$34
million, or 8%, to A$450 million for the year ended August 31, 2003, from A$416
million in the same period in the previous year. The increase reflected the
investment in a winning program strategy that included sports programming with
wide audience appeal, such as the Australian Football League games, including
the AFL Grand Final.

EBITDA at the broadcasting operations increased by A$39 million, or 23%, to
A$211 million for the year ended August 31, 2003, from A$172 million for the
same period in the previous year. Revenues from Eye Corp., TENs out-of-home
operation, decreased by A$8 million, or 10%, to A$72 million for the year ended
August 31, 2003, from A$80 million the previous year.

Operating expenses at Eye Corp. decreased by 14% to A$67 million, from A$78
million the previous. EBITDA of Eye Corp. increased to A$5 million from A$2
million the previous year.

In 2003, Network TEN recorded an A$20 million write down of program inventory
to fair value.

Financing expenses, excluding interest in respect of subordinated debentures,
was A$27 million in 2002 and 2003.

Network TEN recorded an income tax recovery of A$44 million in 2003, compared
to an income tax provision of A$71 million in 2002. The current years
recovery resulted from the introduction of a new tax consolidation regime in
Australia and the consequent impact on future income taxes.

Network TENs earnings, excluding interest in respect of subordinated
debentures, increased to A$194 million for the year ended August 31, 2003, from
a loss of A$23 million in the previous year.

Fiscal 2002 Compared to Fiscal 2001

Network TEN television operations in Australia reported a record year in terms
of revenues after significant ratings gains for its prime time schedule in both
its target demographic of 16-39 year olds and other audience categories. Total
revenues increased by 16% to A$587 million, from A$506 million the previous
year. This included a record fourth quarter for the television operations of
the Company.

Operating expenses of the Australian television operation increased by A$60
million, or 17%, to A$416 million for the year ended August 31, 2002, from
A$356 million in the same period in the previous year. The increase reflected
the investment in a winning program strategy that included the most watched
Australian program, Big Brother, and sports programming with wide audience
appeal, such as the AFL games.

EBITDA increased by A$22 million, or 15%, to A$172 million for the year ended
August 31, 2002, from A$150 million for the same period in the previous year.
Revenues from Eye Corp., TENs out-of-home operation, increased by A$30
million, or 59%, to A$80 million for the year ended August 31, 2002, from A$50
million the previous year, which included only eight months of Eye Corp.
results.

Operating expenses at Eye Corp. increased by 67% to A$78 million, from A$47
million the previous year due to the inclusion of a full year of Eye Corp.
results in 2002 compared to eight months in 2001.





---



##### 



EBITDA of Eye Corp. decreased to A$2 million from A$4 million the previous
year.

Shortly before the end of the fiscal year, Network TEN acquired the remaining
40% of Eye Corp. for A$10 million.
In 2002, Network TEN recorded an investment loss of A$20 million related to the
write down of other investments to fair value. In 2001, Network TEN had a net
investment income of A$35 million.

In 2002, Network TEN recognized a goodwill impairment loss of A$168 million
related to its investment in Eye Corp. A$102 million was recorded as a charge
against opening retained earnings, and A$66 million charged against 2002
earnings. The decline in fair value was attributable to weaknesses in the
out-of-home advertising market and to certain operational issues. Financing
expenses, excluding interest in respect of subordinated debentures, increased
to A$27 million from A$18 million in the previous year, reflecting higher debt
levels.

Income tax expense increased to A$71 million in 2002, compared to A$24 million
in 2001 as a result of increased taxable income, as well as the A$36 million
settlement of a dispute with the Australian Tax Office.

Network TENs earnings, excluding interest in respect of subordinated
debentures, decreased to a loss of A$23 million for the year ended August 31,
2002, from earnings of A$123 million in the previous year.

REGULATORY STRUCTURE

Television broadcasting is a regulated industry in each of the countries in
which CanWest operates. Depending upon the jurisdiction, the Company must meet
varying requirements in respect of programming and advertising. All of the
broadcasting licences held by the Company are in good standing and the Company
is confident of its ability to continue to satisfy the conditions of licence of
its various broadcast undertakings. In 2001, the Canadian conventional
television licences were renewed for a further seven years, the maximum
permitted term.

OUTLOOK

All CanWest television operations have shown considerable strength through the
end of fiscal 2003. This positive trend should continue as economic indicators
in the respective economies of Canada, Australia and New Zealand show positive
growth, particularly in relation to the U.S. market.

In Canada, however, after a strong up front market, television revenues have
softened and revenues for the first half of 2004 will be below last year. The
shortfall, in part, is attributable to delays in new product launches and a
program schedule with a number of new offerings. The outlook for the balance
of the year is more positive with revenue bookings tracking with the prior
year.

Internationally, continued strengthening of individual currencies will serve to
increase the contribution above the already strong domestic results.

In Canada, the continued implementation of a more aggressive domestic
programming strategy is expected by management to help boost long term
profitability at conventional television. The signing of Kevin Newman to a new
multi-year contract as executive editor and anchor of the





---



##### 



nightly national news flagship has enabled Global Nationalto sustain its
strong competitive position in the Canadian news marketplace and continue to
move closer to the traditional leaders. The recruitment of well-known comedian
Mike Bullard to launch a national late night talk/variety show continues the
trend of aggressively pursuing leading Canadian talent.

For Fiscal 2004, Global has concentrated on a strategy to refresh and renew its
prime time schedule. Earlier this year, CanWest acquired 10 new dramas, 6 new
sitcoms and 1 new reality series from top U.S. producers. The acquisitions
brought 14 new hours of high quality primetime viewing to Canadians in the fall
and will complement returning drama series such as 24and Without A Tracethat
continue to gain popularity with viewers. In addition, the final season of
Friendsand Frasierhave created must-see programming events around the series
finales that will be the television events of the year.

The CRTC held a public hearing in June 2003 to hear an application from
CanWest, among others, to disaffiliate its Red Deer, Alberta station, CKRD,
from the Canadian Broadcasting Corporation and bring to Alberta the CH schedule
currently seen throughout Ontario, Montreal, and the Greater Vancouver and
Victoria BC markets. A favourable decision by the CRTC on the application,
which was supported by the CBC, would increase the reach for CH to 75% of
English speaking Canadians. The CRTC also heard an application from the Company
for a new FM radio station for the Edmonton market. The Companys digital
specialty channels remained popular among viewers. Two of them, Lonestarand
DejaView,remained among the most popular aged 24-54 in Canada. The other
channels continue to rate in the top twenty among digital subscribers. Close to
3 million households now have access to CanWests digital channels, and
advertisers are beginning to show an interest in the niche market opportunities
provided by the new specialty channels. Subsequent to year-end, CanWest
launched its seventh specialty service, CoolTV, dedicated to jazz music and the
jazz lifestyle. The service which was added to the present offering with only
small additional resources complements and enhances the Companys jazz radio
station CoolFM, which launched in February, 2003.

CanWest will add to its radio operations in early 2004 with the launch of The
Beat, a contemporary urban station in the Kitchener-Waterloo region. The
station which will reach out to the regions underserved youth market will
feature a mix of contemporary hits, hip-hop and rhythmic dance music.

CanWests newspaper operations in Canada continue to perform well. The
automobile and technology sectors continue to remain strong and the financial
sector, particularly the investment market, is expected to significantly
increase its presence through newspaper advertising during the upcoming
Canadian RRSP season. The absence of newspaper circulation growth remains a
concern at metropolitan daily newspapers everywhere and CanWests properties
are no exception. Nevertheless, various promotional campaigns generated
increases in net paid circulation in CanWest dailies in Montreal, Calgary and
Vancouver through fiscal 2003, and similar initiatives are in process at other
locations. The cannibalization of newspaper subscribers accessing content
online is also being addressed. The implementation of tiered access to
newspapers online, including an innovative new product that allows subscribers
complete access to an enhanced digital version of CanWests daily newspapers,
is being rolled out across the country.

CanWest continues to pursue additional operational efficiencies and cost
reductions at all of its operating units. The Company announced a major
re-organization of the senior management of its Canadian media operations in
January, 2003. The more integrated management structure has streamlined
decision-making and enhanced the ability of the Companys broadcast,





---



##### 



publishing and interactive assets to work more closely together as
complementary and mutually supportive media businesses. This re-organization
was followed by the launch of the CanWest News Service and the Canadian News
Desk, located in Winnipeg, but with journalist resources in Winnipeg and across
Canada. CanWest consumers saw immediate benefits of increased depth and wider
coverage of Canadian and international news on both television and in CanWests
newspapers.

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 22 of Notes to the Consolidated Financial
Statements for the years ended August 31, 2003 and August 31, 2002.





---



##### 



CANWEST GLOBAL COMMUNICATIONS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2003 AND 2002





---



##### 



MANAGEMENTS REPORT TO SHAREHOLDERS

The accompanying financial statements
were prepared by the management of the Company, which is responsible
for the integrity and objectivity of the information contained
therein. The statements have been prepared by qualified personnel in
accordance with policies and procedures established by management.
The Companys procedures and related internal control systems
are designed to provide assurance that accounting records are
reliable and to safeguard the Companys assets.

In managements opinion, the
consolidated financial statements fairly reflect the financial
position of the Company, the results of its operations and cash flow,
and are prepared in accordance with generally accepted accounting
principles.

In addition to the consolidated
financial statements, management has prepared unaudited combined
financial information, which includes the accounts of the
Companys investment in Network TEN on a proportionately
consolidated basis, and which are supplementary to the consolidated
financial statements. Management believes that the unaudited combined
financial information provides additional meaningful information
regarding the magnitude and impact of the Companys investment
in Network TEN.

PricewaterhouseCoopers LLP, as the
Companys external auditors, have audited the consolidated
financial statements, and their report can be found on the following
page.
Their opinion is based upon an examination conducted in accordance
with generally accepted auditing standards in Canada and a review of
certain of the Companys accounting policies and procedures and
internal control systems. Based upon the evaluation of these systems,
the external auditors conduct appropriate tests of the
Companys accounting records and obtain sufficient audit
evidence to provide reasonable assurance that the financial
statements are presented fairly, in all material respects, in
accordance with Canadian generally accepted accounting principles.

The Audit Committee, none of the
members of which are officers of the Company, meets at various times
throughout the year and reviews the Companys consolidated
financial statements before recommending them to the Board of
Directors for approval. It also reviews reports prepared by the
external auditors of the Company on the Companys accounting
policies and procedures and internal control systems. The Audit
Committee recommends the appointment of the Companys external
auditors, who are appointed annually by the Companys
shareholders.

/s/ John Maguire

JOHN MAGUIRE
CHIEF FINANCIAL OFFICER
OCTOBER 31, 2003



---



##### 



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

Auditors Report

To the Shareholders of CanWest Global Communications Corp.

We have audited the consolidated balance sheets of CanWest Global
Communications Corp. as at August 31, 2003 and August 31, 2002 and the
consolidated statements of earnings, retained earnings and cash flows for the
years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at August 31, 2003
and August 31, 2002 and the results of its operations and its cash flows for
the years then ended in accordance with Canadian generally accepted accounting
principles.

(PRICEWATERCOOPERS LLP)

Chartered Accountants
Winnipeg, Canada
October 31, 2003





---



##### 



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

|                                                              |  |      |           |      |  |  |           |  
|------------------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | -
|                                                              |  | 2003 |           | 2002
|                                                              |  | $000 |           | $000
|ASSETS                                                        |  |      |           |     
|Current Assets                                                |  |      |           |      |  |  |           |  
|Cash                                                          |  |      | 121,922   |      |  |  | 61,090    |  
|Accounts receivable                                           |  |      | 493,905   |      |  |  | 470,246   |  
|Distributions receivable from Network TEN                     |  |      | 20,909    |      |  |  |          |  
|Income taxes recoverable                                      |  |      |          |      |  |  | 33,334    |  
|Inventory                                                     |  |      | 14,509    |      |  |  | 19,836    |  
|Investment in film and television programs (note 5)           |  |      | 82,912    |      |  |  | 98,096    |  
|Future income taxes (note 14)                                 |  |      | 20,223    |      |  |  | 30,013    |  
|Other                                                         |  |      | 11,173    |      |  |  | 13,726    |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 765,553   |      |  |  | 726,341   |  
|Investment in Network TEN (note 3)                            |  |      | 55,546    |      |  |  | 4,494     |  
|Other investments (note 4)                                    |  |      | 113,022   |      |  |  | 162,361   |  
|Investment in film and television programs (note 5)           |  |      | 270,306   |      |  |  | 317,176   |  
|Property, plant and equipment (note 6)                        |  |      | 640,032   |      |  |  | 679,224   |  
|Other assets                                                  |  |      | 136,100   |      |  |  | 103,975   |  
|Intangible assets (note 8)                                    |  |      | 1,093,818 |      |  |  | 1,096,458 |  
|Goodwill (note 7)                                             |  |      | 2,455,618 |      |  |  | 2,610,051 |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 5,529,995 |      |  |  | 5,700,080 |  
|                                                              |  |      |           |      |  |  |           |  
|LIABILITIES                                                   |  |      |           |      |  |  |           |  
|Current Liabilities                                           |  |      |           |      |  |  |           |  
|Accounts payable                                              |  |      | 108,689   |      |  |  | 164,988   |  
|Accrued liabilities (note 10)                                 |  |      | 203,325   |      |  |  | 227,104   |  
|Income taxes payable                                          |  |      | 24,459    |      |  |  |          |  
|Film and television program accounts payable                  |  |      | 99,410    |      |  |  | 64,834    |  
|Deferred revenue                                              |  |      | 46,884    |      |  |  | 60,596    |  
|Future income taxes (note 14)                                 |  |      | 6,072     |      |  |  | 6,072     |  
|Current portion of long term debt                             |  |      | 147,386   |      |  |  | 172,753   |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 636,225   |      |  |  | 696,347   |  
|Long term debt (note 9)                                       |  |      | 3,167,311 |      |  |  | 3,337,163 |  
|Other accrued liabilities                                     |  |      | 150,190   |      |  |  | 65,169    |  
|Future income taxes (note 14)                                 |  |      | 400,652   |      |  |  | 425,490   |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 4,354,378 |      |  |  | 4,524,169 |  
|                                                              |  |      |           |      |  |  |           |  
|Commitments, contingencies and guarantees (note 20)           |  |      |           |      |  |  |           |  
|                                                              |  |      |           |      |  |  |           |  
|SHAREHOLDERS EQUITY                                          |  |      |           |      |  |  |           |  
|Capital stock (note 11)                                       |  |      | 846,824   |      |  |  | 896,422   |  
|Contributed surplus                                           |  |      | 3,647     |      |  |  | 3,647     |  
|Retained earnings                                             |  |      | 355,792   |      |  |  | 317,376   |  
|Cumulative foreign currency translation adjustments
(note 13) |  |      | (30,646   | )    |  |  | (41,534   | )
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 1,175,617 |      |  |  | 1,175,911 |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 5,529,995 |      |  |  | 5,700,080 |  
|                                                              |  |      |           |      |  |  |           |  

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

Signed on behalf of the Board

|              |  |                   
|------------- |  | ------------------
|-s- Illegible |  | -s- Frank Mc Kenna
|              |  |                   
|Director      |  | Director          





---



##### 



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

|                                                                  |         |  |           |      |      |  |           |      | 
|----------------------------------------------------------------- | ------- |  | --------- | ---- | ---- |  | --------- | ---- | 
|                                                                  |         |  | 2003      |      | 2002
|                                                                  |         |  | $000      |      | $000
|Revenue                                                           |         |  | 2,278,316 |      |      |  | 2,272,783 |     
|Operating expenses                                                |         |  | 1,257,836 |      |      |  | 1,244,263 |     
|Selling, general and administrative expenses                      |         |  | 559,047   |      |      |  | 558,214   |     
|Restructuring and film and television
program impairment expenses |         |  | 42,771    |      |      |  |          |     
|                                                                  |         |  |           |      |      |  |           |     
|                                                                  |         |  | 418,662   |      |      |  | 470,306   |     
|Amortization of intangibles                                       |         |  | 17,500    |      |      |  | 17,500    |     
|Amortization of property, plant and equipment                     |         |  | 72,050    |      |      |  | 74,654    |     
|Other amortization                                                |         |  | 7,087     |      |      |  | 6,670     |     
|                                                                  |         |  |           |      |      |  |           |     
|Operating income                                                  |         |  | 322,025   |      |      |  | 371,482   |     
|Financing expenses                                                |         |  | (363,518  | )    |      |  | (376,632  | )   
|Dividend income                                                   |         |  | 3,532     |      |      |  | 3,241     |     
|                                                                  |         |  |           |      |      |  |           |     
|                                                                  |         |  | (37,961   | )    |      |  | (1,909    | )   
|Investment gains, losses and write-downs                          |         |  | 9,240     |      |      |  | 32,043    |     
|Interest rate swap loss (note 9)                                  |         |  | (23,015   | )    |      |  |          |     
|                                                                  |         |  |           |      |      |  |           |     
|                                                                  |         |  | (51,736   | )    |      |  | 30,134    |     
|Provision for income taxes (note 14)                              |         |  | 3,105     |      |      |  | 7,108     |     
|                                                                  |         |  |           |      |      |  |           |     
|Earnings (loss) before the following                              |         |  | (54,841   | )    |      |  | 23,026    |     
|Minority interests                                                |         |  |          |      |      |  | 4,330     |     
|Interest in earnings (loss) of Network TEN                        |         |  | 101,339   |      |      |  | (11,815   | )   
|Interest in loss of other equity accounted
affiliates             |         |  | (1,332    | )    |      |  | (1,523    | )   
|Realized currency translation adjustments                         |         |  | 922       |      |      |  | (1,000    | )   
|                                                                  |         |  |           |      |      |  |           |     
|Net earnings for the year                                         |         |  | 46,088    |      |      |  | 13,018    |     
|                                                                  |         |  |           |      |      |  |           |     
|Net earnings per share (note 12):                                 |         |  |           |      |      |  |           |     
|                                                                  | Basic   |  | $         | 0.22 |      |  | $         | 0.07 | 
|                                                                  | Diluted |  | $         | 0.22 |      |  | $         | 0.07 | 

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





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##### 



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

|                                                                             |  |      |         |      |  |  |          |  
|---------------------------------------------------------------------------- |  | ---- | ------- | ---- |  |  | -------- | -
|                                                                             |  | 2003 |         | 2002
|                                                                             |  | $000 |         | $000
|Retained
earnings  beginning of year,
as previously reported                |  |      | 317,376 |      |  |  | 475,053  |  
|Adjustment for adoption of new
accounting pronouncements                     |  |      |        |      |  |  | (170,695 | )
|                                                                             |  |      |         |      |  |  |          |  
|Retained
earnings  beginning of year,
as adjusted                           |  |      | 317,376 |      |  |  | 304,358  |  
|Excess of redemption price over carrying
value of preferred shares (note 11) |  |      | (7,672  | )    |  |  |         |  
|Net earnings for the year                                                    |  |      | 46,088  |      |  |  | 13,018   |  
|                                                                             |  |      |         |      |  |  |          |  
|Retained earnings - end of year                                              |  |      | 355,792 |      |  |  | 317,376  |  
|                                                                             |  |      |         |      |  |  |          |  

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





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##### 



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

|                                                            |                                                       |  |          |          |      |  |          |         |  
|----------------------------------------------------------- | ----------------------------------------------------- |  | -------- | -------- | ---- |  | -------- | ------- | -
|                                                            |                                                       |  | 2003     |          | 2002
|                                                            |                                                       |  | $000     |          | $000
|CASH GENERATED (UTILIZED) BY:                               |                                                       |  |          |          |      |  |          |        
|OPERATING ACTIVITIES                                        |                                                       |  |          |          |      |  |          |        
|Net earnings for the year                                   |                                                       |  | 46,088   |          |      |  | 13,018   |        
|Items not affecting cash                                    |                                                       |  |          |          |      |  |          |        
|                                                            | Amortization                                          |  |          | 106,983  |      |  |          | 108,765 |  
|                                                            | Interest paid in kind                                 |  |          | 108,385  |      |  |          | 105,790 |  
|                                                            | Future income taxes                                   |  |          | (20,423  | )    |  |          | 11,209  |  
|                                                            | Interest in (earnings) loss of Network TEN            |  |          | (101,339 | )    |  |          | 11,815  |  
|                                                            | Interest in loss of other equity
accounted affiliates |  |          | 1,332    |      |  |          | 1,523   |  
|                                                            | Minority interests                                    |  |          |         |      |  |          | (4,330  | )
|                                                            | Realized currency translation adjustments             |  |          | (922     | )    |  |          | 1,000   |  
|                                                            | Interest rate swap loss                               |  |          | 23,015   |      |  |          |        |  
|                                                            | Investment gains, losses and write-downs              |  |          | (9,240   | )    |  |          | (32,043 | )
|                                                            | Pension expense                                       |  |          | 7,609    |      |  |          | 6,445   |  
|Distributions from Network TEN                              |                                                       |  | 33,378   |          |      |  | 60,984   |        
|                                                            |                                                       |  |          |          |      |  |          |        
|                                                            |                                                       |  | 194,866  |          |      |  | 284,176  |        
|Investment in film and television programs                  |                                                       |  | (172,743 | )        |      |  | (194,619 | )      
|Amortization and impairment of film and
television programs |                                                       |  | 214,879  |          |      |  | 132,033  |        
|Other changes in non-cash operating accounts
(note 15)      |                                                       |  | (9,212   | )        |      |  | (61,999  | )      
|                                                            |                                                       |  |          |          |      |  |          |        
|Cash flows from operating activities                        |                                                       |  | 227,790  |          |      |  | 159,591  |        
|                                                            |                                                       |  |          |          |      |  |          |        
|INVESTING ACTIVITIES                                        |                                                       |  |          |          |      |  |          |        
|Other investments                                           |                                                       |  | (4,311   | )        |      |  | (5,187   | )      
|Investment in broadcast licences                            |                                                       |  | (2,325   | )        |      |  |         |        
|Proceeds from sale of other investments                     |                                                       |  | 45,605   |          |      |  | 87,000   |        
|Proceeds from divestitures                                  |                                                       |  | 193,500  |          |      |  | 390,059  |        
|Purchase of property, plant and equipment                   |                                                       |  | (38,555  | )        |      |  | (53,338  | )      
|                                                            |                                                       |  |          |          |      |  |          |        
|                                                            |                                                       |  | 193,914  |          |      |  | 418,534  |        
|                                                            |                                                       |  |          |          |      |  |          |        
|FINANCING ACTIVITIES                                        |                                                       |  |          |          |      |  |          |        
|Issuance of long term debt                                  |                                                       |  | 374,758  |          |      |  | 3,255    |        
|Repayment of long term debt                                 |                                                       |  | (678,360 | )        |      |  | (510,889 | )      
|Issuance of share capital                                   |                                                       |  | 402      |          |      |  | 109      |        
|Preferred share redemption                                  |                                                       |  | (57,672  | )        |      |  |         |        
|Net change in bank loans and advances                       |                                                       |  |         |          |      |  | (28,999  | )      
|                                                            |                                                       |  |          |          |      |  |          |        
|                                                            |                                                       |  | (360,872 | )        |      |  | (536,524 | )      
|                                                            |                                                       |  |          |          |      |  |          |        
|Net change in cash                                          |                                                       |  | 60,832   |          |      |  | 41,601   |        
|Cash - beginning of year                                    |                                                       |  | 61,090   |          |      |  | 19,489   |        
|                                                            |                                                       |  |          |          |      |  |          |        
|Cash - end of year                                          |                                                       |  | 121,922  |          |      |  | 61,090   |        
|                                                            |                                                       |  |          |          |      |  |          |        

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





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##### 



CANWEST GLOBAL COMMUNICATIONS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2003 AND 2002



|1. |  | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company is an international media company with interests in broadcast
television, publishing, radio, specialty cable channels, out-of-home
advertising, production and distribution of film and television
programming and internet websites in Canada, Australia, New Zealand,
Ireland and Northern Ireland. The Companys operating segments include
television and radio broadcasting, entertainment, publishing and online
operations and outdoor advertising. In Canada, the Television Broadcast
segment includes the operation of the Global Television Network, Global
Prime, various other conventional and specialty channels and the Cool FM
radio station. The Australian Television segment includes the Companys
57.1% economic interest (57.5% to February 27, 2003) in the TEN Group Pty
Limited which owns and operates Australias 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 Entertainment segment
includes the operation of CanWest Entertainment, a producer and
distributor of film and television programs. The New Zealand Television
Broadcasting segment includes the operations of the 3 and C4 Television
Networks. The New Zealand Radio Broadcasting segment includes five
nationally networked radio brands and 27 local radio stations including
More FM stations. The Irish Television Broadcasting segment includes the
Companys 45% interest in the Republic of Irelands TV3 Television
Network. The Australian Outdoor Advertising segment includes the
Companys economic interest in EyeCorp, an out-of-home advertising
operation which is wholly owned by the TEN Group Pty Limited. The
Corporate and Other segment includes various investments in media
operations including a 29.9% interest in Northern Irelands Ulster
Television plc (UTV).
|  
|   |  | 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 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 22.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | The consolidated financial statements include the accounts of the Company
and its subsidiaries, and the Companys pro rata 45% share of the assets,
liabilities, and results of operations of TV3 Ireland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           





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##### 





| |  | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company accounts for its investment in Network TEN, CF Television Inc.
(to the date of its sale on September 12, 2001), mentv and Mystery using
the equity method. Other investments are recorded at the lower of cost
and net realizable value. 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.
An impairment loss is recognized when the carrying amount is not
recoverable and exceeds fair value.                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | (b)     Film and television
programs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Investment in film and television programs represents the unamortized
costs of film and television programs that have been produced by the
Company, or for which the Company has acquired distribution rights.
Included in investment in film and television programs are film and
television programs in progress and in development, and acquired film and
television program libraries. Costs of completed film and television
programs include all production costs and capitalized interest, which are
expected to be recovered from exploitation, exhibition or licencing. Film
and television programs in progress represent the accumulated costs of
productions that have not yet been completed by the Company. Acquired
libraries are defined to include titles released at least three years
prior to the date of acquisition by the Company.
|
| |  | Costs of film and television programs in development represent
expenditures made on projects prior to production, including investments
in scripts. Advances or contributions received from third parties to
assist in development are deducted from these costs. Upon commencement of
production, development costs are reclassified to investment in film and
television programs. Development costs are written off at the earlier of
when determined not to be recoverable and three years following the date
incurred. Costs of advertising and marketing are expensed as incurred.                                                                                                                                                                                                                                                                 
|
| |  | Amortization of investment in completed films and television programs and
accrual of participation costs are calculated using the individual film
forecast computation method, based on the ratio that current period
revenue earned from the film and television programs bears to managements
estimate of ultimate revenue expected to be recognized from the
exploitation of the film or television program.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Estimates of ultimate future revenue are prepared on a title-by-title
basis and reviewed periodically based on current market conditions. For
episodic television series, until revenue estimates include revenues from
secondary markets, capitalized costs for each episode are limited to the
amount of revenue contracted for each episode. Ultimate revenue estimates
include secondary market revenue only when the Company can demonstrate
through its experience or industry norms, that the number of episodes
already produced, plus those for which a firm commitment exists and the
Company expects to deliver, can be licenced successfully in the secondary
market. Ultimate revenue estimates include revenues for up to ten years
for film and television programs produced by the Company, and up to 20
years for acquired libraries.   
|
| |  | The valuation of film and television programs, including acquired film
libraries, is reviewed on a title-by-title basis. When an event or change
in circumstances indicates that the fair value of a film or television
program is less than its unamortized cost, the fair value is determined
using managements estimate of discounted future cash flows. A write-down
is recorded equivalent to the                                                                                                                                                                                                                                                                                                                                                                                                                                                  





---



##### 





| |  | amount by which the unamortized costs exceeds the estimated fair value of
the film or television program.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | The Companys operations in Australia, New Zealand and Ireland represent
self-sustaining foreign operations, and the respective accounts have been
translated into Canadian dollars in accordance with the current rate
method. Assets and liabilities are translated at the exchange rates
prevailing at the balance sheet dates, and revenue and expenses are
translated on the basis of average exchange rates during the periods. Any
gains or losses arising from the translation of these accounts are
deferred and included as a component of shareholders equity as cumulative
foreign currency translation adjustments. An applicable portion of these
deferred gains and losses is included in the determination of net earnings
when there is a reduction of the net investment.
|
| |  | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Property, plant and equipment are recorded at cost. Amortization is
provided over the assets estimated useful lives on a straight-line basis
at the following annual rates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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



| |  | 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
from its carrying value.                                                  
|
| |  | 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 revenues commence. 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 or sale. Interest in the amount of $5.6 million
was capitalized in 2003 (2002 - $5.9 million).                                                                                                                                                                        
|
| |  | Intangible assets                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Broadcast 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 and other finite life intangibles are amortized over periods
from 5 to 40 years. Intangibles with indefinite lives are not subject to
amortization and are tested for impairment annually. Impairment of an
intangible asset is recognized in an amount equal to the difference
between the carrying value and the fair value of the related intangible
asset.





---



##### 





| |  | 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 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Revenue derived from broadcasting activities consists primarily of the
sale of airtime which is recognized at the time commercials are broadcast.
Circulation and advertising revenue from publishing activities is
recognized when the newspaper is delivered. Subscription revenue is
recognized on a straight-line basis over the term of the subscription.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Revenue 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | 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 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 Network TEN are provided at
rates applicable to distributions. Income taxes on undistributed earnings
of foreign operations other than Network TEN are not provided as such
earnings are expected to be indefinitely reinvested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Inventory, consisting primarily of printing materials, is valued at the
lower of cost and net realizable values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Pension plans and post retirement benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | The Company maintains a number of defined benefit and defined contribution
pension and other post retirement 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 and expected health care
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.
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 is
amortized over the average remaining service period of active employees.
The average remaining service period of employees covered by the pension
plans is 15 years. The average





---



##### 





| |  | remaining service period of the employees covered by the post retirement
benefit plans is 15 years. 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 11.
The Company utilizes the intrinsic value approach to account for
share-based compensation. No compensation expense is recorded for these
plans when the options are issued. Any consideration paid by employees on
exercise of stock options is credited to share capital. The Companys
proforma results, reflecting the fair value based method of accounting for
stock-based compensation, are disclosed in note 11.
|
| |  | Derivative financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Derivative financial instruments are used to reduce foreign currency and
interest rate risk on the Companys debt. 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.                                                                                                                                               
|
| |  | 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 foreign currency interest rate swaps at the 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 as an adjustment
to interest expense related to the underlying debt over the remaining term
of the original contract life of the terminated swap agreement. In the
event of early extinguishment of the debt obligation, any realized or
unrealized gain or loss from the swap is recognized in earnings.                                                      
|
| |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | The preparation of financial statements in accordance with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect reported amounts of assets, liabilities, revenue
and expenses, and disclosure of contingencies. Future events could alter
such estimates in the near term.                                                                                                                                                              
|
| |  | The Company operates in highly competitive markets. The Company has
estimated the useful lives of intangible assets and the value of goodwill,
based on historical customer patterns, industry trends and existing
competitive factors. Significant long-term changes in these factors could
result in a material impairment of the value and life of intangible assets
and goodwill.                                                                                                          
|
| |  | Management estimates ultimate revenue from film and television programs to
determine amortization and fair values of investments in film and
television programs. Actual revenues may differ from these estimates.                                                                                                                                                                                                                                                                             





---



##### 





| |  | Expenses, assets and liabilities related to defined benefit pension and
other post retirement benefit plans are determined actuarially based on
estimates including discount rates for obligations, expected long term
rates of return on pension assets and the rate of compensation increase.
Actual results may differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Changes in Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | (a)     Goodwill and other intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | On September 1, 2001, the Company adopted Section 3062, Goodwill and Other
Intangibles. As a result of adopting the new standard, goodwill and
certain intangibles with indefinite lives, including newspaper mastheads
and broadcast licences, are no longer amortized. Circulation and other
intangibles are amortized over periods from 5 to 40 years. As a result of
applying the new standards, no initial impairment in intangibles with
indefinite lives or goodwill were identified at the Company or any of its
subsidiaries. However, an initial goodwill impairment was identified by
Network TEN in its reporting unit, Eye Corp, resulting in a charge to the
Companys retained earnings of $45.3 million (net of income tax recoveries
of $2.5 million). In addition, as a result of events occurring after the
beginning of 2001, a goodwill impairment of $30.2 million (net of income
tax recoveries of $2.0 million) was reflected in the Companys interest in
loss of Network TEN in the Companys statement of earnings for the period
ended August 31, 2002 (see note 3).
|
| |  | (b)     Accounting for film and television programs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | In June 2000, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position
00-2 Accounting by Producers or Distributors of Films(SOP 00-2). SOP
00-2, established new accounting standards for producers or distributors
of films, including changes in revenue recognition, capitalization and
amortization of costs of films and television programs and accounting for
development, overhead and other exploitation costs, including advertising
and marketing expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | The Company retroactively adopted SOP 00-2 effective as of September 1,
2001. Prior years financial statements were not restated, as the effect
of the new policy on prior periods was not reasonably determinable.
Accordingly, opening retained earnings for the year ended August 31, 2002
were reduced to reflect the cumulative effect of the accounting change in
the amount of $125.4 million (net of income taxes of $nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Proposed accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | (a)     Hedging relationships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The CICA has issued Accounting Guideline 13, Hedging Relationships, (AcG
13) which will be effective for fiscal years beginning on or after July 1,
2003. AcG 13 addresses the identification, designation, documentation,
and effectiveness of hedging transactions for the purposes of applying
hedge accounting. It also establishes conditions for applying or
discontinuing hedge accounting. Under the new guideline, the Company will
be required to document its hedging transactions and explicitly
demonstrate that the hedges are sufficiently effective in order to
continue accrual accounting for positions hedged with derivatives. As at
August 31, 2003, the only derivatives utilized by the Company are interest
rate swaps and foreign currency interest rate swaps as described in notes
9 and 17. The Company has determined that the adoption of AcG 13 will not
have a material effect on the balance sheet or the statement of earnings.                                                                                                                             





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##### 





|2. |  | ACQUISITIONS AND DIVESTITURES                                                                                                                                                                                                                                                                                  
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Acquisitions                                                                                                                                                                                                                                                                                                   
|  
|   |  | a)Effective March 31, 2002, the Company acquired the remaining 50%
interest in the National Post not already owned. In September 2001, the
Company assumed control of the National Post and, accordingly, changed its
method of accounting for the National Post to a consolidation basis from
an equity basis.
|  
|   |  | The fair values of the net assets acquired for proceeds consisting of the
carrying value of The National Post Company at date of acquisition of
$83.6 million are as follows:                                                                                                                                  

|                                  |  |  |         |  
|--------------------------------- |  |  | ------- | -
|                                  |  |  | $000    |  
|Current assets                    |  |  | 50,257  |  
|Property plant and equipment      |  |  | 12,436  |  
|Circulation and other intangibles |  |  | 10,700  |  
|Newspaper masthead                |  |  | 35,000  |  
|Goodwill                          |  |  | 62,987  |  
|                                  |  |  |         |  
|Total Assets                      |  |  | 171,380 |  
|                                  |  |  |         |  
|Current liabilities               |  |  | (50,665 | )
|Future income taxes               |  |  | (14,600 | )
|Minority interests                |  |  | (22,500 | )
|                                  |  |  |         |  
|Total liabilities                 |  |  | (87,765 | )
|                                  |  |  |         |  
|                                  |  |  | 83,615  |  
|                                  |  |  |         |  



| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In 2003 the Company retroactively adjusted the allocation of the purchase
price based on the final determination of the balance of pension assets
acquired. The impact was to reduce goodwill by $21.0 million and reduce
the pension liability by $21.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | The purchase price is subject to adjustment based on the working capital
of CanWest Publications at August 31, 2000 and the results of its
operations from September 1, 2000 to November 16, 2000. The amount of
such adjustment is subject to negotiation between the parties and has not
been finally determined. When finalized, the working capital adjustment
payable or refundable will increase or decrease the amount of goodwill
recorded on the acquisition. In June 2003, the Company filed a claim with
Hollinger in respect of several items including the working capital and
other closing adjustments totaling $54.1 million. Certain amounts are
currently in dispute and are to be resolved with Hollinger. Inability to
resolve disagreements of amounts owing may result in matters being
referred to arbitration or formal court adjudication.
|
| |  | Divestitures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | (c)In February 2003, the Company sold its interest in community
newspapers and related assets in Southern Ontario for cash proceeds of
$193.5 million. The accounting gain on this sale was $21.3 million;
assets and liabilities disposed of amounted to $179.6 million and $7.4
million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | (d)In August 2002, the Company sold its interest in community newspapers
and related assets in Atlantic Canada and Saskatchewan for cash proceeds
of $257.0 million. The accounting gain on this sale was $48.2 million;
assets and liabilities disposed of amounted to $228.7 million and $19.9
million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | (e)In October 2001, the Company completed the sale of CKVU Sub Inc., and
received cash proceeds of $133.0 million. The accounting gain on the sale
was $67.7 million; assets and liabilities disposed of amounted to $84.1
million and $18.8 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





---



##### 





|   |  | (f)In September 2001, the Company completed the sale of CF Television
Inc., and received cash proceeds of $87.0 million. No gain or loss arose
from this transaction; assets and liabilities disposed of amounted to
$87.0 million and nil, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|3. |  | INVESTMENT IN NETWORK TEN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | The Company owns approximately 14.8% (15% to February 27, 2003) of the
issued ordinary shares and all of the convertible debentures and
subordinated debentures of Network TEN, an Australian television broadcast
network. The subordinated debentures have an aggregate principal amount of
A$45.5 million and pay interest based on distributions to holders of
ordinary shares. The convertible debentures have an aggregate principal
amount of A$45,500 and pay a market linked rate of interest. The
combination of ordinary shares and subordinated debentures yield
distributions equivalent to approximately 57.1% (57.5% to February 27,
2003) of all distributions paid by Network TEN. The convertible debentures
are convertible, upon payment of an aggregate of A$45.5 million, into a
number of ordinary shares which would represent 49.7% (50% to February 27,
2003) of the issued and outstanding shares of Network TEN at the time of
conversion.
|  
|   |  | As a result of its contractual right to representation on Network TENs
board of directors and other factors, the Company accounts for its
interest in Network TEN on the equity basis. The Company has appointed
three of the thirteen members of the board of directors of Network TEN.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | During the year ended August 31, 2003 Network TEN issued 7.1 million
shares for proceeds of $14.4 million as a result of the exercise of
management stock options. This effectively diluted the Companys economic
interest in Network TEN to 57.1% from 57.5% and resulted in an investment
gain of $1.9 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | The following selected consolidated financial information of Network TEN
has been prepared in accordance with accounting principles generally
accepted in Canada. The accounts have been translated to Canadian dollars
using the current rate method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





---



##### 



Summary Consolidated Balance Sheets

|                                     |                                                    |  |         |         |      |  |         |         |  
|------------------------------------ | -------------------------------------------------- |  | ------- | ------- | ---- |  | ------- | ------- | -
|                                     |                                                    |  | 2003    |         | 2002
|                                     |                                                    |  | $000    |         | $000
|Assets                               |                                                    |  |         |         |      |  |         |        
|                                     | Current assets                                     |  |         | 241,822 |      |  |         | 285,303 |  
|                                     | Other assets                                       |  |         | 37,367  |      |  |         | 11,913  |  
|                                     | Property, plant and equipment                      |  |         | 79,288  |      |  |         | 71,875  |  
|                                     | Long term investments                              |  |         | 11,421  |      |  |         | 2,188   |  
|                                     | Intangibles                                        |  |         | 257,477 |      |  |         | 246,305 |  
|                                     | Goodwill                                           |  |         | 88,752  |      |  |         | 49,304  |  
|                                     |                                                    |  |         |         |      |  |         |        
|                                     |                                                    |  | 716,127 |         |      |  | 666,888 |        
|                                     |                                                    |  |         |         |      |  |         |        
|Liabilities and Shareholders Equity |                                                    |  |         |         |      |  |         |        
|                                     | Current liabilities                                |  |         | 188,633 |      |  |         | 191,736 |  
|                                     | Other long term liabilities                        |  |         | 398,047 |      |  |         | 450,063 |  
|                                     | Subordinated debentures issued to the Company      |  |         | 40,171  |      |  |         | 40,154  |  
|                                     | Share capital                                      |  |         | 53,150  |      |  |         | 40,146  |  
|                                     | Undistributed earnings (deficit)                   |  |         | 35,636  |      |  |         | (52,232 | )
|                                     | Cumulative foreign currency translation
adjustment |  |         | 490     |      |  |         | (2,979  | )
|                                     |                                                    |  |         |         |      |  |         |        
|                                     |                                                    |  | 716,127 |         |      |  | 666,888 |        
|                                     |                                                    |  |         |         |      |  |         |        

Summary Consolidated Statements of Earnings

|                                                                                      |  |      |          |      |  |  |         |  
|------------------------------------------------------------------------------------- |  | ---- | -------- | ---- |  |  | ------- | -
|                                                                                      |  | 2003 |          | 2002
|                                                                                      |  | $000 |          | $000
|Revenue                                                                               |  |      | 650,952  |      |  |  | 555,653 |  
|Operating expenses                                                                    |  |      | 459,842  |      |  |  | 411,904 |  
|Write down of program inventory                                                       |  |      | 18,082   |      |  |  |        |  
|                                                                                      |  |      |          |      |  |  |         |  
|Operating profit before amortization                                                  |  |      | 173,028  |      |  |  | 143,749 |  
|Amortization of property, plant, equipment
and other                                  |  |      | 16,329   |      |  |  | 15,130  |  
|                                                                                      |  |      |          |      |  |  |         |  
|                                                                                      |  |      | 156,699  |      |  |  | 128,619 |  
|Investment income and gains net of losses
on write down of investments                |  |      |         |      |  |  | (17,221 | )
|Financing expenses                                                                    |  |      | (102,124 | )    |  |  | (28,270 | )
|Goodwill impairment loss(1)                                                           |  |      |         |      |  |  | (56,114 | )
|                                                                                      |  |      |          |      |  |  |         |  
|                                                                                      |  |      | 54,575   |      |  |  | 27,014  |  
|Provision for (recovery of)income taxes(2)                                            |  |      | (55,969  | )    |  |  | 59,511  |  
|                                                                                      |  |      |          |      |  |  |         |  
|Earnings (loss) before the following                                                  |  |      | 110,544  |      |  |  | (32,497 | )
|Minority interests                                                                    |  |      | 48       |      |  |  | 4,737   |  
|                                                                                      |  |      |          |      |  |  |         |  
|Net earnings (loss) for the year                                                      |  |      | 110,592  |      |  |  | (27,760 | )
|                                                                                      |  |      |          |      |  |  |         |  
|Net earnings (loss) for the year                                                      |  |      | 110,592  |      |  |  | (27,760 | )
|Interest in respect of subordinated
debentures held by the Company                    |  |      | 78,056   |      |  |  | 5,370   |  
|                                                                                      |  |      |          |      |  |  |         |  
|Earnings (loss) for the year before
interest in respect of subordinated
debentures(3) |  |      | 188,648  |      |  |  | (22,390 | )
|                                                                                      |  |      |          |      |  |  |         |  





---



##### 



Summary Statement of Undistributed earnings

|                                                                                   |  |      |          |      |  |  |          |  
|---------------------------------------------------------------------------------- |  | ---- | -------- | ---- |  |  | -------- | -
|                                                                                   |  | 2003 |          | 2002
|                                                                                   |  | $000 |          | $000
|Undistributed earnings (deficit)  beginning of
year as previously reported        |  |      | (52,232  | )    |  |  | 177,251  |  
|Adjustment for adoption of new
accounting pronouncements(1)                        |  |      |         |      |  |  | (83,109  | )
|                                                                                   |  |      |          |      |  |  |          |  
|Undistributed earnings (deficit)  beginning of
year as adjusted                   |  |      | (52,232  | )    |  |  | 94,142   |  
|Earnings (loss) for the year before interest in respect of
subordinated debentures |  |      | 188,648  |      |  |  | (22,390  | )
|Distributions paid and payable                                                     |  |      | (100,780 | )    |  |  | (123,984 | )
|                                                                                   |  |      |          |      |  |  |          |  
|Undistributed earnings (deficit)  end of year                                     |  |      | 35,636   |      |  |  | (52,232  | )
|                                                                                   |  |      |          |      |  |  |          |  



| |  | (1) On December 18, 2000, Network TEN acquired 60% of Eye Corp. for
A$189.9 million. Under Australian generally accepted accounting
principles (GAAP), on February 28, 2002 the Eye Corp. goodwill was
written down by A$137.5 million to A$113.8 million. In August, 2002,
Network TEN determined that there was a further impairment of Eye Corp.
goodwill which resulted in an additional write down of A$40.9 million.
Under Canadian GAAP, in accordance with the Companys adoption of CICA
Handbook Section 3062, the Eye Corp. goodwill impairment was recorded as a
charge of $83.1 million to retained earnings as of September 1, 2001 with
a further goodwill impairment loss of $56.1 million recorded as a charge
to net earnings for year ended August 31, 2002. Under Canadian GAAP, the
fair value of Eye Corp. was determined on a discounted cash flow basis.
The decline in fair value was attributable to weaknesses in the
out-of-home advertising market and to certain operational issues.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (2) During 2003 Network TEN and its wholly controlled Australian entities
implemented a new income tax consolidation regime provided for under
enacted changes to Australian tax law. During the application of the new
regime, the tax values of certain assets were reset. This resulted in the
recognition of additional goodwill and intangible assets of approximately
$47.3 million, and equivalent additional future income tax liabilities.
In addition, the new regime allowed for the uplift in the tax value of
certain assets; as a result a non-recurring income tax recovery of $63.9
million was recorded related to reduction of future tax liabilities.                                                                                                                                                                                                                                                                                                                                            
|
| |  | In 2002, Network TEN reached an agreement with the Australian Tax Office
(ATO) regarding a dispute related to the deductibility of debenture
interest paid to the Company since 1997. Under the agreement Network TEN
will be entitled to deduct debenture interest until June 30, 2004. The
settlement resulted in a non-recurring income tax expense of A$36.2
million to Network TEN in the year ended August 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | (3) The Companys economic interest in Network TENs earnings for the
year ended August 31, 2003 is $101.3 million (2002  $11.8 million loss),
comprised of its 14.8% interest in net earnings and interest on the
subordinated debentures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | At August 31, 2003 the Companys share of undistributed earnings of
Network TEN was $20.3 million, (August 31, 2002 - NIL). The Company
estimates that the market value of the Companys                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            





---



##### 





| |  | investment in Network TEN, based on quoted market rates for Ten Network
Holdings Limited at August 31, 2003, was approximately $1,091 million
(August 31, 2002 - $901 million).
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

|                                                    |                          |  |         |        |          |  |         |         |          |  |         |        |        |  |         |         | 
|--------------------------------------------------- | ------------------------ |  | ------- | ------ | -------- |  | ------- | ------- | -------- |  | ------- | ------ | ------ |  | ------- | ------- | 
|                                                    |                          |  | 2003    |        | 2002    
|                                                    |                          |  |         |        |         
|                                                    |                          |  |         |        |          |  | Market  |         |          |  |         |        | Market
|                                                    |                          |  | Cost    |        | Value(2) |  | Cost    |         | Value(2)
|                                                    |                          |  | $000    |        | $000     |  | $000    |         | $000    
|Investments in publicly traded
securities  at cost |                          |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|                                                    | Ulster Television
plc(1) |  |         | 92,006 |          |  |         | 108,841 |          |  |         | 92,006 |        |  |         | 148,340 | 
|                                                    | Other                    |  |         | 6,121  |          |  |         | 6,121   |          |  |         | 59,160 |        |  |         | 52,355  | 
|                                                    |                          |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|                                                    |                          |  | 98,127  |        |          |  | 114,962 |         |          |  | 151,166 |        |        |  | 200,695 |        
|                                                    |                          |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|Investments in private companies
 at cost          |                          |  | 8,602   |        |          |  |         |         |          |  | 8,602   |        |        |  |         |        
|Investments  on an equity basis                    |                          |  | 6,293   |        |          |  |         |         |          |  | 2,593   |        |        |  |         |        
|                                                    |                          |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|                                                    |                          |  | 113,022 |        |          |  |         |         |          |  | 162,361 |        |        |  |         |        
|                                                    |                          |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        



| |  | During 2003 the Company sold its investment in SBS Broadcasting S.A. for
proceeds of $44.1 million resulting in an investment loss of $11.0
million.                                                                
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | During 2002 the Company wrote down the value of various other investments
by $85.5 million to reflect the non-temporary decline in market value.                                                                    
|
| |  | (1) The Companys 29.9% equity interest (15,763,545 ordinary shares)
is accounted for at cost, as the Company has not been successful in its
attempts to gain board representation or to influence UTVs management.
|
| |  | (2) Market value for publicly traded securities is based on quoted market
prices.                                                                                                                                   



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

|                                               |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|---------------------------------------------- |  | ------- | ------ | --------- |  | ------- | ------- | --------- |  |  | ------ |  |  |  | ------- | 
|                                               |  | 2003    |        | 2002     
|                                               |  |         |        |          
|                                               |  | Current |        | Long term |  | Current |         | Long term
|                                               |  | $000    |        | $000      |  | $000    |         | $000     
|Broadcast rights(1)                            |  |         | 82,912 |           |  |         | 27,661  |           |  |  | 98,096 |  |  |  | 23,172  | 
|Non- theatrical
films and
television
programs: |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|Released(1)                                    |  |         |       |           |  |         | 115,906 |           |  |  |       |  |  |  | 112,297 | 
|Acquired library(1)                            |  |         |       |           |  |         | 62,770  |           |  |  |       |  |  |  | 90,314  | 
|Programs in progress                           |  |         |       |           |  |         | 29,534  |           |  |  |       |  |  |  | 50,779  | 
|Development costs                              |  |         |       |           |  |         | 64      |           |  |  |       |  |  |  | 1,520   | 
|Theatrical Films:                              |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|Released(1)                                    |  |         |       |           |  |         | 34,044  |           |  |  |       |  |  |  | 37,029  | 
|Acquired library(1)                            |  |         |       |           |  |         |        |           |  |  |       |  |  |  | 661     | 
|Development costs                              |  |         |       |           |  |         | 327     |           |  |  |       |  |  |  | 1,404   | 
|                                               |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 
|                                               |  |         | 82,912 |           |  |         | 270,306 |           |  |  | 98,096 |  |  |  | 317,176 | 
|                                               |  |         |        |           |  |         |         |           |  |  |        |  |  |  |         | 



| |  | (1)       Net of accumulated amortization.                                                                                                                                                                                                                                                  
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company expects that 40% of the unamortized cost of released film and
television programs will be amortized during the year ended August 31,
2004. The Company expects that 62% of the
unamortized cost of released film and television programs will be
amortized during the three year





---



##### 





| |  | period ended August 31, 2006. The Company
expects that over 80% of the amounts of all such programming will be
amortized by August 31, 2007. The Company expects that acquired libraries
will be fully amortized in 17 years. The Company expects that $1.3
million of participation liabilities will be paid during the year ended
August 31, 2004.                                                                                                                                                                                                                                                       
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company has entered into various agreements for the right to broadcast
certain feature films and syndicated television programs in the future.
These agreements, which range in term from one to five years, generally
commit the Company to acquire specific programs or films or certain levels
of future productions. The acquisition of these additional broadcast
rights is contingent on the actual production and/or the airing of the
programs or films. Management estimates that these agreements will result
in future annual broadcast rights expenditures of $250 million to $277
million.
|
| |  | In addition, the Company has entered into various agreements to acquire
investments in film and television programs amounting to $74.6 million at
August 31, 2003 (US$53.8 million) (2002 - $17.5 million (US$11.2
million)). Subsidiaries of the Company have provided financial guarantees
on certain credit facilities arranged for the acquisition of film and
television programs. An amount of $1.5 million (US$1.1 million) (2002 -
$17.7 million (US$11.4 million)) has been guaranteed, in addition to the
guarantee of certain interest obligations on such facilities.                          



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

|                                |  |      |         |              |  |             |         |  |  |  |         | 
|------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------- |  |  |  | ------- | 
|                                |  | 2003
|                                |  |     
|                                |  |      |         |              |  | Accumulated |         |  |  | 
|                                |  | Cost |         | amortization |  | Net        
|                                |  | $000 |         | $000         |  | $000       
|Land                            |  |      | 58,703  |              |  |             |        |  |  |  | 58,703  | 
|Buildings                       |  |      | 179,214 |              |  |             | 29,972  |  |  |  | 149,242 | 
|Machinery and equipment         |  |      | 674,456 |              |  |             | 259,238 |  |  |  | 415,218 | 
|Leasehold and land
improvements |  |      | 30,445  |              |  |             | 13,576  |  |  |  | 16,869  | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 
|                                |  |      | 942,818 |              |  |             | 302,786 |  |  |  | 640,032 | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 

|                                |  |      |         |              |  |             |         |  |  |  |         | 
|------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------- |  |  |  | ------- | 
|                                |  | 2002
|                                |  |     
|                                |  |      |         |              |  | Accumulated |         |  |  | 
|                                |  | Cost |         | amortization |  | Net        
|                                |  | $000 |         | $000         |  | $000       
|Land                            |  |      | 60,002  |              |  |             |        |  |  |  | 60,002  | 
|Buildings                       |  |      | 176,946 |              |  |             | 36,790  |  |  |  | 140,156 | 
|Machinery and equipment         |  |      | 662,621 |              |  |             | 201,133 |  |  |  | 461,488 | 
|Leasehold and land
improvements |  |      | 29,293  |              |  |             | 11,715  |  |  |  | 17,578  | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 
|                                |  |      | 928,862 |              |  |             | 249,638 |  |  |  | 679,224 | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 



| |  | Property, plant and equipment located in Canada was $596.0 million (2002 -
$637.7 million) and in foreign jurisdictions was $44.0 million (2002 -
$41.5 million).
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### 





|7. |  | GOODWILL
|-- |  | --------

|                               |  |      |           |           |  |              |   |       |  |      |          |   |  |  |        |      |  |  |           | 
|------------------------------ |  | ---- | --------- | --------- |  | ------------ | - | ----- |  | ---- | -------- | - |  |  | ------ | ---- |  |  | --------- | 
|                               |  | 2002 |           | Additions |  | Divestitures |   | Other |  | 2003
|Operating segment              |  | $000 |           | $000      |  | $000         |   | $000  |  | $000
|Television - Canada            |  |      | 604,437   |           |  |              |  |       |  |      |         |   |  |  | (4,025 | )(1) |  |  | 600,412   | 
|Television - New Zealand       |  |      | 19,613    |           |  |              |  |       |  |      |         |   |  |  |       |      |  |  | 19,613    | 
|Television - Ireland           |  |      | 1,223     |           |  |              |  |       |  |      |         |   |  |  |       |      |  |  | 1,223     | 
|Radio - New Zealand            |  |      | 55,239    |           |  |              |  |       |  |      |         |   |  |  | 1,775  | (2)  |  |  | 57,014    | 
|Entertainment - Canada         |  |      | 30,855    |           |  |              |  |       |  |      |         |   |  |  |       |      |  |  | 30,855    | 
|Publishing and Online -
Canada |  |      | 1,898,684 |           |  |              |  |       |  |      | (151,376 | ) |  |  | (807   | )(1) |  |  | 1,746,501 | 
|                               |  |      |           |           |  |              |   |       |  |      |          |   |  |  |        |      |  |  |           | 
|Total                          |  |      | 2,610,051 |           |  |              |  |       |  |      | (151,376 | ) |  |  | (3,057 | )    |  |  | 2,455,618 | 
|                               |  |      |           |           |  |              |   |       |  |      |          |   |  |  |        |      |  |  |           | 

|                               |  |      |           |           |  |              |        |       |  |      |          |   |  |  |         |      |  |  |           | 
|------------------------------ |  | ---- | --------- | --------- |  | ------------ | ------ | ----- |  | ---- | -------- | - |  |  | ------- | ---- |  |  | --------- | 
|                               |  | 2001 |           | Additions |  | Divestitures |        | Other |  | 2002
|Operating segment              |  | $000 |           | $000      |  | $000         |        | $000  |  | $000
|Television - Canada            |  |      | 662,637   |           |  |              |       |       |  |      | (44,800  | ) |  |  | (13,400 | )(1) |  |  | 604,437   | 
|Television - New Zealand       |  |      | 19,613    |           |  |              |       |       |  |      |         |   |  |  |        |      |  |  | 19,613    | 
|Television - Ireland           |  |      | 1,223     |           |  |              |       |       |  |      |         |   |  |  |        |      |  |  | 1,223     | 
|Radio - New Zealand            |  |      | 53,039    |           |  |              |       |       |  |      |         |   |  |  | 2,200   | (2)  |  |  | 55,239    | 
|Entertainment - Canada         |  |      | 30,855    |           |  |              |       |       |  |      |         |   |  |  |        |      |  |  | 30,855    | 
|Publishing and Online -
Canada |  |      | 2,039,607 |           |  |              | 47,000 |       |  |      | (187,923 | ) |  |  |        |      |  |  | 1,898,684 | 
|                               |  |      |           |           |  |              |        |       |  |      |          |   |  |  |         |      |  |  |           | 
|Total                          |  |      | 2,806,974 |           |  |              | 47,000 |       |  |      | (232,723 | ) |  |  | (11,200 | )    |  |  | 2,610,051 | 
|                               |  |      |           |           |  |              |        |       |  |      |          |   |  |  |         |      |  |  |           | 



| |  | (1) Decrease in goodwill was related to the adjustment of WIC and CanWest
Publications purchase equations including the reversal of certain
unutilized restructuring provisions (note 10).
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (2) Increase in goodwill was related to increase in currency translation
rates.                                                                                                           



|8. |  | INTANGIBLE ASSETS
|-- |  | -----------------

|                        |  |      |         |              |  |             |        |  |  |  |           | 
|----------------------- |  | ---- | ------- | ------------ |  | ----------- | ------ |  |  |  | --------- | 
|                        |  | 2003
|                        |  |     
|                        |  |      |         |              |  | Accumulated |        |  |  | 
|                        |  | Cost |         | Amortization |  | Net        
|                        |  | $000 |         | $000         |  | $000       
|Finite life:            |  |      |         |              |  |             |        |  |  |  |           | 
|Circulation and other   |  |      | 140,000 |              |  |             | 44,472 |  |  |  | 95,528    | 
|Indefinite life:        |  |      |         |              |  |             |        |  |  |  |           | 
|Broadcast licences      |  |      |         |              |  |             |        |  |  |  | 639,800   | 
|Newspaper mastheads     |  |      |         |              |  |             |        |  |  |  | 358,490   | 
|                        |  |      |         |              |  |             |        |  |  |  |           | 
|                        |  |      |         |              |  |             |        |  |  |  | 998,290   | 
|                        |  |      |         |              |  |             |        |  |  |  |           | 
|Total intangible assets |  |      |         |              |  |             |        |  |  |  | 1,093,818 | 
|                        |  |      |         |              |  |             |        |  |  |  |           | 





---



##### 

\

|                        |  |      |         |              |  |             |        |  |  |  |           | 
|----------------------- |  | ---- | ------- | ------------ |  | ----------- | ------ |  |  |  | --------- | 
|                        |  | 2002
|                        |  |     
|                        |  |      |         |              |  | Accumulated |        |  |  | 
|                        |  | Cost |         | Amortization |  | Net        
|                        |  | $000 |         | $000         |  | $000       
|Finite life:            |  |      |         |              |  |             |        |  |  |  |           | 
|Circulation and other   |  |      | 140,000 |              |  |             | 26,972 |  |  |  | 113,028   | 
|Indefinite life:        |  |      |         |              |  |             |        |  |  |  |           | 
|Broadcast licences      |  |      |         |              |  |             |        |  |  |  | 624,940   | 
|Newspaper mastheads     |  |      |         |              |  |             |        |  |  |  | 358,490   | 
|                        |  |      |         |              |  |             |        |  |  |  |           | 
|                        |  |      |         |              |  |             |        |  |  |  | 983,430   | 
|                        |  |      |         |              |  |             |        |  |  |  |           | 
|Total intangible assets |  |      |         |              |  |             |        |  |  |  | 1,096,458 | 
|                        |  |      |         |              |  |             |        |  |  |  |           | 



| |  | Amortization of intangible assets of $17.5 million was recorded in 2003
and 2002.
| |  | ---------------------------------------------------------------------------------



|9. |  | LONG TERM DEBT
|-- |  | --------------

|                                                 |  |          |      |      |  |          |           |      |  |  |      |   |  |  |           |  
|------------------------------------------------ |  | -------- | ---- | ---- |  | -------- | --------- | ---- |  |  | ---- | - |  |  | --------- | -
|                                                 |  | Interest |      | 2003 |  | Interest |           | 2002
|                                                 |  | Rate(1)  |      | $000 |  | Rate(1)  |           | $000
|Term bank loans(2)                               |  |          | 9.7  | %    |  |          | 1,417,148 |      |  |  | 9.7  | % |  |  | 1,791,938 |  
|Senior subordinated notes(3)                     |  |          | 8.2  | %    |  |          | 709,399   |      |  |  | 7.8  | % |  |  | 705,700   |  
|Term loans US$17,162                             |  |          |      |      |  |          |          |      |  |  | 4.0  | % |  |  | 26,758    |  
|Term loan US$57,802(4)                           |  |          | 4.0  | %    |  |          | 80,058    |      |  |  |      |   |  |  |          |  
|Senior unsecured notes(5)                        |  |          | 7.2  | %    |  |          | 294,500   |      |  |  |      |   |  |  |          |  
|Term
and demand loan 17,201
(2002 - 21,375)(6) |  |          | 2.7  | %    |  |          | 26,177    |      |  |  | 5.8  | % |  |  | 32,686    |  
|Note payable(7)                                  |  |          | 2.3  | %    |  |          | 4,250     |      |  |  | 3.7  | % |  |  | 4,250     |  
|Junior subordinated notes(8)                     |  |          | 12.1 | %    |  |          | 783,165   |      |  |  | 12.1 | % |  |  | 948,584   |  
|                                                 |  |          |      |      |  |          |           |      |  |  |      |   |  |  |           |  
|Long term debt                                   |  |          |      |      |  |          | 3,314,697 |      |  |  |      |   |  |  | 3,509,916 |  
|Less portion due within one year                 |  |          |      |      |  |          | (147,386  | )    |  |  |      |   |  |  | (172,753  | )
|                                                 |  |          |      |      |  |          |           |      |  |  |      |   |  |  |           |  
|Long term portion                                |  |          |      |      |  |          | 3,167,311 |      |  |  |      |   |  |  | 3,337,163 |  
|                                                 |  |          |      |      |  |          |           |      |  |  |      |   |  |  |           |  



| |  | (1) The weighted average interest rate gives effect to interest rate
swaps.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (2) Credit facilities provide for revolving and term loans in the maximum
amounts of $600 million and $1,768.5 million, respectively
and are secured by substantially all of the assets of the Company. At August 31,
2003 the Company had drawn on availabilities under all of its term
facilities, including U.S. dollar loans of US$648.8 million and had $250
million drawn under revolving facilities. The revolving credit facility
matures in November 2006. The amount of credit available under the
$1,768.5 million term facilities decreases periodically until maturity
between November 2006 and May 2009. The Canadian dollar debt bears
interest at CDOR plus a margin and the US dollar debt bears interest at
LIBOR plus a margin. During 2003, the Company refinanced all of its US
dollar debt and $30.2 million of its Canadian dollar debt resulting in the
extension of maturity dates and reduction of interest rates.
|
| |  | Up to $30.0 million of the revolving credit facility is available on an
operating basis, of which no amount was utilized at August 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 





---



##### 





| |  | (3) The senior subordinated notes include loans of US$425.0 million and
loans held by the majority shareholder of the Company in the amount of
US$41.9 million (2002 - $56.1 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (4) The three year revolving facility is collateralized by certain assets
of Fireworks Entertainment Inc., matures in October, 2005 and bears
interest at floating rates of LIBOR plus a margin. The total US$85.0
million commitment under this facility is based on acceptable receivables;
as at August 31, 2003 total availability of US$57.8 million was advanced.
The facility contains profitability and financial ratio covenants, certain
of which were not met at August 31, 2003 and accordingly, the debt has
been classified as current. Fireworks is negotiating with its lenders to
receive the necessary covenant amendments and waivers. As well, in order
for Fireworks bank debt to remain within acceptable limits, the Company
may be required to provide additional financial support to Fireworks over
the course of the next fiscal year.
|
| |  | (5) The US$200.0 million senior unsecured notes mature on April 3, 2013
and bear interest at 7.625%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | (6) These credit facilities provide for demand bank loans at August 31,
2003 in the maximum amount of 40.7 million (2002 - 47.5 million).
The debt bears interest at floating rates and is secured by a letter of
credit provided by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | (7) The demand note bears interest at prime less 2% and is unsecured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | (8) The junior subordinated notes mature in November 2010, bear interest
at a fixed rate of 12.125%. At the Companys option, interest payments to
November 2005 may be paid in cash, the issuance of additional notes, or
subject to conditions, the issuance of non-voting shares of the Company.
The notes rank junior to senior debt and are collateralized by way of
assets of certain subsidiaries of the Company. The notes include $110.1
million in notes issued during 2003 in satisfaction of interest as well as
an accrual of $8.2 million for notes to be issued in January 2004, (2002 -
$104.7 million and $10.0 million respectively). In May 2003, the Company
repaid $274.0 million in 12.125% junior subordinated notes.                                                                                                                      
|
| |  | The Company has entered into various cross-currency interest rate and
interest rate swaps which have resulted in fixed interest costs on its
senior indebtedness. The total notional value of such instruments was
$1,661.3 million at August 31, 2003 (2002 - $1,796.5 million) at rates
ranging from 6.25% to 6.59% plus a margin (2002  5.7% to 6.63% plus a
margin). As a result of debt repayment during 2003 the notional value of
the swaps exceeded the principal outstanding on the debt, resulting in a
swap loss of $23.0 million being recorded in earnings. The Company has
also entered into a cross-currency interest rate swap resulting in
floating interest rates on the US$425.0 million, senior subordinated notes
and the US$200.0 million, senior unsecured notes at rates based on CDOR
plus a margin.                                    
|
| |  | 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, 2003 over the next five years, are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                       |  |      |  |      |         | 
|---------------------- |  | ---- |  | ---- | ------- | 
|                       |  |      |  | $000
|Year ending August 31, |  | 2004 |  |      | 147,386 | 
|                       |  | 2005 |  |      | 47,484  | 
|                       |  | 2006 |  |      | 56,701  | 
|                       |  | 2007 |  |      | 33,657  | 
|                       |  | 2008 |  |      | 137,982 | 





---



##### 





|10. |  | RESTRUCTURING ACCRUALS
|--- |  | ----------------------



| |  | In 2000, the Company established restructuring accruals of $37.8 million
related to the acquisition and integration of WIC Western International
Communications Ltd. (WIC). This balance was made up of approximately
$12.5 million in severance costs, $9.7 million related to integration and
rebranding of WIC and $15.7 million in other restructuring costs.                                                                                                                                                                                                          
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In 2001, the Company recorded restructuring accruals of $43.0 million
related to the acquisition and restructuring of its publishing operations.
Restructuring activities included the centralization of certain call
centres, integration of the Companys interactive and news and editorial
operations, and centralization of business, finance and information
technology functions. This balance was made up of $24.5 million in
involuntary severance costs, $3.6 million in lease and contract
termination costs and $14.9 million in other restructuring costs.      
|
| |  | In the year ended August 31, 2002, the Company established a restructuring
accrual of $7.0 million related to its acquisition and restructuring of
the National Post. This balance is primarily related to involuntary
severance costs and contract cancellation costs.                                                                                                                                                                                                                                                                                                      
|
| |  | In 2003, the Company undertook restructuring activities in its Canadian
Media and Entertainment operations. The $20.0 million cost of this
restructuring, consisted of $14.3 million in employee severance, $3.4
million in lease termination costs and $2.3 million in costs related to
discontinuing certain film and television projects. The restructuring
expense related to the following operating segments: Canadian Broadcasting
- $3.2 million, Canadian Publishing and Online - $8.8 million,
Entertainment - $6.9 million and Corporate and Other - $1.1 million.
|
| |  | For the year ended August 31 2003, expenditures charged to the
restructuring accruals were $40.7 million (August 31, 2002- $26.9
million). The balance of the restructuring accruals is expected to be
utilized by August 31, 2004.                                                                                                                                                                                                                                                                                                                                          
|
| |  | In 2003, the Company reversed certain unutilized restructuring accruals in
the amount of $8.1 million as a result of changes in estimates. The
reversal was recorded as a reduction of goodwill.                                                                                                                                                                                                                                                                                                                                                                             

|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|--------------------------------- |  | --------- | ------- | ----------- |  | ----------- | ------ | ----- |  | ----- | ------ | - |  |  | ------- | - |  |  | ------- | -
|                                  |  |           |         |             |  | Lease/      |        |       |  |       |        |   |  |  |         |   |  | 
|                                  |  |           |         |             |  | contract    |        |       |  |       |        |   |  |  |         |   |  | 
|                                  |  | Severance |         | termination |  | Integration |        | Other |  | Total
|                                  |  | $000      |         | $000        |  | $000        |        | $000  |  | $000 
|WIC integration accrual           |  |           | 12,450  |             |  |             |       |       |  |       | 9,670  |   |  |  | 15,680  |   |  |  | 37,800  |  
|CanWest Publications accrual      |  |           | 24,556  |             |  |             | 3,588  |       |  |       | 250    |   |  |  | 14,606  |   |  |  | 43,000  |  
|Expenditures - 2001               |  |           | (3,851  | )           |  |             |       |       |  |       | (8,232 | ) |  |  | (2,259  | ) |  |  | (14,342 | )
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|Balance August 31, 2001           |  |           | 33,155  |             |  |             | 3,588  |       |  |       | 1,688  |   |  |  | 28,027  |   |  |  | 66,458  |  
|National Post accrual             |  |           | 4,539   |             |  |             | 2,461  |       |  |       |       |   |  |  |        |   |  |  | 7,000   |  
|Expenditures - 2002               |  |           | (14,728 | )           |  |             | (3,328 | )     |  |       | (1,438 | ) |  |  | (7,452  | ) |  |  | (26,946 | )
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|Balance August 31, 2002           |  |           | 22,966  |             |  |             | 2,721  |       |  |       | 250    |   |  |  | 20,575  |   |  |  | 46,512  |  
|Canadian Media operations
accrual |  |           | 14,333  |             |  |             | 3,438  |       |  |       |       |   |  |  | 2,252   |   |  |  | 20,023  |  
|Expenditures  2003               |  |           | (22,062 | )           |  |             | (2,053 | )     |  |       |       |   |  |  | (16,553 | ) |  |  | (40,668 | )
|Reversals                         |  |           | (4,117  | )           |  |             |       |       |  |       |       |   |  |  | (3,934  | ) |  |  | (8,051  | )
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|Balance August 31, 2003           |  |           | 11,120  |             |  |             | 4,106  |       |  |       | 250    |   |  |  | 2,340   |   |  |  | 17,816  |  
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  





---



##### 





|11. |  | CAPITAL STOCK
|--- |  | -------------



| |  | Authorized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Authorized capital consists of an unlimited number of preference shares
issuable in series, multiple voting shares, subordinate voting shares and
non-voting shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | The multiple voting shares, the subordinate voting shares and the
non-voting shares rank equally on a per share basis in respect of
dividends and distributions of capital, and are subordinate to the
preference shares. Subordinate voting shares carry one vote per share,
and multiple voting shares carry ten votes per share. Non-voting shares
do not vote, except at meetings where the holders of such shares would be
entitled, by law, to vote separately as a class.                                                                                                                                                                                                                      
|
| |  | Multiple voting shares are convertible into subordinate voting shares and
non-voting shares on a one-for-one basis at any time at the option of the
holder. Subordinate voting shares are convertible into non-voting shares
on a one-for-one basis at any time at the option of the holder.
Non-voting shares are convertible into subordinate voting shares on a
one-for-one basis provided the holder is Canadian.                                                                                                                                                                                                                                                                                 
|
| |  | Series 1 preference shares carry 19 votes per share, and carry
preferential votes pertaining to the election of up to two directors of
the Company. Each series 1 preference shares is convertible, at the
option of the holder, into 0.15 subordinate voting or non-voting shares.                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Series 2 preference shares were issued on the amalgamation of subsidiaries
of the Company, including CanWest Broadcasting Ltd. and were held by the
former minority shareholders of CanWest Broadcasting Ltd. Series 2
preference shares are not eligible to vote. Series 2 preference shares
are, at the option of the Company, redeemable for cash, or convertible to
subordinate voting or non-voting shares based on the market value of the
subordinate voting or non-voting shares at the date of conversion. On
December 18, 2002 the Company elected to redeem all of its outstanding
series 2 preference shares recorded at $50.0 million for an aggregate
redemption price of $57.7 million.
|
| |  | The 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



| |  | Issued
| |  | ------



|                                                         |  |      |         |      |  |  |         | 
|-------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | 
|                                                         |  | 2003 |         | 2002
|                                                         |  | $000 |         | $000
|76,785,976 (2002 - 76,785,976)
multiple voting shares    |  |      | 3,199   |      |  |  | 3,199   | 
|98,280,291 (2002  98,371,658)
subordinate voting shares |  |      | 815,545 |      |  |  | 816,418 | 
|2,066,248 (2002  1,903,401)
non-voting shares           |  |      | 28,080  |      |  |  | 26,805  | 
|Nil (2002  21,783)
Series 2 preference shares           |  |      |        |      |  |  | 50,000  | 
|                                                         |  |      |         |      |  |  |         | 
|                                                         |  |      | 846,824 |      |  |  | 896,422 | 
|                                                         |  |      |         |      |  |  |         | 





---



##### 





| |  | Changes in outstanding share capital during the two years ended August 31, 2003 were as follows:
| |  | ------------------------------------------------------------------------------------------------

|                                   |                                          |                                                 |  |            |             |      |  |         |          |  
|---------------------------------- | ---------------------------------------- | ----------------------------------------------- |  | ---------- | ----------- | ---- |  | ------- | -------- | -
|                                   |                                          |                                                 |  | Number of  |             |      |  |        
|                                   |                                          |                                                 |  | shares     |             | $000
|Multiple voting share capital:     |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2001, 2002 and 2003 |                                                 |  | 76,785,976 |             |      |  | 3,199   |         
|                                   |                                          |                                                 |  |            |             |      |  |        
|Subordinate voting share capital:  |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2001                |                                                 |  | 70,545,434 |             |      |  | 419,583 |         
|                                   | Changes pursuant to:                     |                                                 |  |            |             |      |  |         |         
|                                   |                                          | Share purchase plans                            |  |            | 6,077       |      |  |         | 66       |  
|                                   |                                          | Exercise of stock options                       |  |            | 9,645       |      |  |         | 43       |  
|                                   |                                          | Redeemed fractions                              |  |            | (11         | )    |  |         |         |  
|                                   |                                          | Conversion from series 1 preference share       |  |            | 405,000     |      |  |         | 6,156    |  
|                                   |                                          | Conversion from non-voting shares  net         |  |            | 27,405,513  |      |  |         | 390,570  |  
|                                   |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2002                |                                                 |  | 98,371,658 |             |      |  | 816,418 |         
|                                   | Changes pursuant to:                     |                                                 |  |            |             |      |  |         |         
|                                   |                                          | Share purchase plans                            |  |            | 58,454      |      |  |         | 369      |  
|                                   |                                          | Exercise of stock options                       |  |            | 13,031      |      |  |         | 33       |  
|                                   |                                          | Redeemed fractions                              |  |            | (4          | )    |  |         |         |  
|                                   |                                          | Conversion to non-voting shares  net           |  |            | (162,848    | )    |  |         | (1,275   | )
|                                   |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2003                |                                                 |  | 98,280,291 |             |      |  | 815,545 |         
|                                   |                                          |                                                 |  |            |             |      |  |        
|Non-voting share capital:          |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2001                |                                                 |  | 29,308,918 |             |      |  | 417,375 |         
|                                   | Changes pursuant to:                     |                                                 |  |            |             |      |  |         |         
|                                   |                                          | Dividend reinvestment plan                      |  |            | (4          | )    |  |         |         |  
|                                   |                                          | Conversion to subordinate voting shares  net   |  |            | (27,405,513 | )    |  |         | (390,570 | )
|                                   |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2002                |                                                 |  | 1,903,401  |             |      |  | 26,805  |         
|                                   | Changes pursuant to:                     |                                                 |  |            |             |      |  |         |         
|                                   |                                          | Redeemed fractions                              |  |            | (1          | )    |  |         |         |  
|                                   |                                          | Conversion from subordinate voting shares  net |  |            | 162,848     |      |  |         | 1,275    |  
|                                   |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2003                |                                                 |  | 2,066,248  |             |      |  | 28,080  |         
|                                   |                                          |                                                 |  |            |             |      |  |        
|Series 1 preference share capital: |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2001                |                                                 |  | 2,700,000  |             |      |  | 6,156   |         
|                                   |                                          | Conversion to subordinate voting shares         |  |            | (2,700,000  | )    |  |         | (6,156   | )
|                                   |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2002 and 2003       |                                                 |  |           |             |      |  |        |         
|                                   |                                          |                                                 |  |            |             |      |  |        
|Series 2 preference share capital: |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2001 and 2002       |                                                 |  | 21,783     |             |      |  | 50,000  |         
|                                   |                                          | Redemption of shares                            |  |            | (21,783     | )    |  |         | (50,000  | )
|                                   |                                          |                                                 |  |            |             |      |  |        
|                                   | Balance  August 31, 2003                |                                                 |  |           |             |      |  |        |         
|                                   |                                          |                                                 |  |            |             |      |  |        



| |  | Share Compensation Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Companys board of directors has approved share compensation plans,
the purpose of which is to provide employees and certain directors of the
Company and its subsidiaries with the opportunity to participate in the
growth and development of the Company through the granting of options and
share purchase loans. At any time, the number of subordinate voting and
non-voting shares reserved and set aside for purposes of the plans may not
exceed 10% of the issued shares of the Company.
|
| |  | Options vest over a five or six-year period, are fully exercisable on
vesting and expire ten years after issuance, except that under certain
specified conditions the options vest and become exercisable immediately.
The exercise price represents the market trading price at the date on
which the option was granted.                                                                                                                                                                            
|
| |  | Under management and employee share purchase plans, employees may purchase
subordinate voting shares or non-voting shares from treasury at the market
trading price using non-interest                                                                                                                                                                                                                                                                                                                





---



##### 





| |  | bearing short term loans provided by the
Company. The shares are held as collateral by a trustee until the loans
are repaid.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company utilizes the intrinsic value approach to account for
share-based compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The following are proforma results reflecting the fair value based method
of accounting for share-based compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The fair value of the options granted during 2003 was estimated using the
Black-Scholes option pricing model with the assumptions of no dividend
yield (2002  nil), an expected volatility of 54% (2002  40%), risk free
interest rates of 4.5% to 4.9% (2002  4.8% to 5.4%) and an expected life
of 7 to 9 years (2002  6 to 9 years).                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | The total fair value of 394,500 stock options that were granted by
the Company during 2003 was $1.5 million, a weighted average fair value
per option of $3.81 (during 2002, 233,458 stock options were granted with
a total fair value of $1.5 million, a weighted average fair value per
option of $6.61). The proforma cost of share compensation expense for the
year ended August 31, 2003 would be $1.6 million (2002  $2.3 million). A
value of $4.4 million will be charged to proforma net earnings in future
years according to the vesting terms of the options. The resulting
proforma net earnings and diluted earnings per share for the year ended
August 31, 2003 are $44.5 million and $0.21 respectively
(2002 - $10.7
million and $0.06).
|
| |  | The effects of applying this method in the proforma disclosure are not
indicative of future amounts. The Companys proforma disclosure does not
apply to awards prior to 1996, and additional awards in future years are
anticipated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Changes in outstanding options to purchase subordinate voting shares or
non-voting shares for the two years ended August 31 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                       |                   |  |           |          |       |  |         |       |       |  |           |         |         |  |       |       | 
|-------------------------------------- | ----------------- |  | --------- | -------- | ----- |  | ------- | ----- | ----- |  | --------- | ------- | ------- |  | ----- | ----- | 
|                                       |                   |  | 2003      |          | 2002 
|                                       |                   |  |           |          |      
|                                       |                   |  |           |          |       |  | Average |       |       |  |           |         | Average
|                                       |                   |  | Options   |          | Price |  | Options |       | Price
|Options outstanding, beginning of year |                   |  | 1,819,268 |          |       |  | 15.24   |       |       |  | 1,646,321 |         |         |  | 15.75 |      
|Changes pursuant to:                   |                   |  |           |          |       |  |         |       |       |  |           |         |         |  |       |      
|                                       | Options granted   |  |           | 394,500  |       |  |         | 7.21  |       |  |           | 233,458 |         |  |       | 11.52 | 
|                                       | Options exercised |  |           | (13,031  | )     |  |         | 2.51  |       |  |           | (9,645  | )       |  |       | 4.30  | 
|                                       | Options expired   |  |           | (125,176 | )     |  |         | 11.67 |       |  |           | (50,866 | )       |  |       | 16.68 | 
|                                       |                   |  |           |          |       |  |         |       |       |  |           |         |         |  |       |      
|Options outstanding, end of year       |                   |  | 2,075,561 |          |       |  | 13.95   |       |       |  | 1,819,268 |         |         |  | 15.24 |      
|                                       |                   |  |           |          |       |  |         |       |       |  |           |         |         |  |       |      





---



##### 





| |  | The following options to purchase subordinate voting shares or non-voting
shares were outstanding and exercisable as at August 31, 2003:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------

|             |  |             |           |                |  |                |     |             |  |                |       |  |  |          |           |  |  |   |       | 
|------------ |  | ----------- | --------- | -------------- |  | -------------- | --- | ----------- |  | -------------- | ----- |  |  | -------- | --------- |  |  | - | ----- | 
|             |  |             |           |                |  | Weighted       |     |             |  |                |       |  |  |          |           |  |  |  
|Range of     |  |             |           |                |  | average        |     | Weighted    |  |                |       |  |  | Weighted
|exercise     |  | Number      |           | remaining life |  | average        |     | Number      |  | average       
|prices       |  | outstanding |           | (years)        |  | exercise price |     | exercisable |  | exercise price
|$1 - $4.99   |  |             | 16,429    |                |  |                | 1.1 |             |  | $              | 4.27  |  |  |          | 16,429    |  |  | $ | 4.27  | 
|$5 - $9.99   |  |             | 426,031   |                |  |                | 9.0 |             |  | $              | 7.32  |  |  |          | 63,531    |  |  | $ | 7.18  | 
|$10 - $14.99 |  |             | 743,229   |                |  |                | 4.2 |             |  | $              | 12.75 |  |  |          | 725,025   |  |  | $ | 12.79 | 
|$15  $19.99 |  |             | 601,907   |                |  |                | 6.6 |             |  | $              | 16.25 |  |  |          | 259,964   |  |  | $ | 16.34 | 
|$20 - $24.99 |  |             | 280,370   |                |  |                | 4.6 |             |  | $              | 22.54 |  |  |          | 270,486   |  |  | $ | 22.59 | 
|$25 and over |  |             | 7,595     |                |  |                | 4.3 |             |  | $              | 25.67 |  |  |          | 7,595     |  |  | $ | 25.67 | 
|             |  |             |           |                |  |                |     |             |  |                |       |  |  |          |           |  |  |   |       | 
|             |  |             | 2,075,561 |                |  |                | 5.9 |             |  | $              | 13.95 |  |  |          | 1,343,030 |  |  | $ | 15.15 | 
|             |  |             |           |                |  |                |     |             |  |                |       |  |  |          |           |  |  |   |       | 



|12. |  | EARNINGS PER SHARE
|--- |  | ------------------



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

|                                                                   |  |      |             |      |  |  |             | 
|------------------------------------------------------------------ |  | ---- | ----------- | ---- |  |  | ----------- | 
|                                                                   |  | 2003 |             | 2002
|                                                                   |  | $000 |             | $000
|Net earnings                                                       |  |      | 46,088      |      |  |  | 13,018      | 
|Excess of redemption price over carrying value of preferred shares |  |      | (7,672      | )    |  |  |            | 
|                                                                   |  |      |             |      |  |  |             | 
|Earnings available to common shareholders                          |  |      | 38,416      |      |  |  | 13,018      | 
|                                                                   |  |      |             |      |  |  |             | 
|Basic weighted average shares outstanding during the period        |  |      | 177,140,694 |      |  |  | 176,956,800 | 
|Dilutive effect of options                                         |  |      | 8,025       |      |  |  | 26,793      | 
|Dilutive effect of preference shares                               |  |      |            |      |  |  | 5,274,619   | 
|                                                                   |  |      |             |      |  |  |             | 
|Diluted weighted average shares outstanding during the period      |  |      | 177,148,719 |      |  |  | 182,258,212 | 
|                                                                   |  |      |             |      |  |  |             | 
|Options outstanding that would have been anti-dilutive             |  |      | 2,056,178   |      |  |  | 1,721,000   | 
|                                                                   |  |      |             |      |  |  |             | 





---



##### 





|13. |  | 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 United States currencies relative to the Canadian
currency, and changes in the Companys net investment in the book values
of international operations.                                        
|   
|    |  | Changes in this account were as follows:                                                                                                                                                                                                                                                

|                                                            |  |      |         |      |  |  |         |  
|----------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                            |  | 2003 |         | 2002
|                                                            |  | $000 |         | $000
|Deferred loss, beginning of year                            |  |      | 41,534  |      |  |  | 69,017  |  
|Deferred foreign currency gain during the year              |  |      | (11,810 | )    |  |  | (26,483 | )
|Realization of translation gain (loss) due to distributions |  |      | 922     |      |  |  | (1,000  | )
|                                                            |  |      |         |      |  |  |         |  
|Deferred loss, end of year                                  |  |      | 30,646  |      |  |  | 41,534  |  
|                                                            |  |      |         |      |  |  |         |  



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

|                     |  |      |        |      |  |  |        |  
|-------------------- |  | ---- | ------ | ---- |  |  | ------ | -
|                     |  | 2003 |        | 2002
|                     |  | $000 |        | $000
|Australian dollar    |  |      | 5,705  |      |  |  | 8,120  |  
|New Zealand dollar   |  |      | 21,506 |      |  |  | 40,266 |  
|Euro                 |  |      | 282    |      |  |  | 272    |  
|United States dollar |  |      | 3,153  |      |  |  | (7,124 | )
|                     |  |      |        |      |  |  |        |  
|                     |  |      | 30,646 |      |  |  | 41,534 |  
|                     |  |      |        |      |  |  |        |  



|14. |  | 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:

|                                                                            |  |      |         |      |  |  |         |  
|--------------------------------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                                            |  | 2003 |         | 2002
|                                                                            |  | $000 |         | $000
|Income taxes at combined Canadian statutory
rate of 36.6% (2002  38.7%)    |  |      | (18,935 | )    |  |  | 11,661  |  
|Non-taxable portion of capital gains                                        |  |      | (3,705  | )    |  |  | (17,049 | )
|Non-deductible amortization expense                                         |  |      |        |      |  |  | 6,766   |  
|Effect of valuation allowance on future tax assets                          |  |      | 18,233  |      |  |  | 3,090   |  
|Effect of foreign income tax rates differing from
Canadian income tax rates |  |      | (1,477  | )    |  |  | (1,924  | )
|Large corporation tax                                                       |  |      | 3,853   |      |  |  | 3,250   |  
|Effect of future tax rates differing from current rates                     |  |      | 3,011   |      |  |  |        |  
|Non deductible expenses                                                     |  |      | 1,832   |      |  |  | 1,125   |  
|Other                                                                       |  |      | 293     |      |  |  | 189     |  
|                                                                            |  |      |         |      |  |  |         |  
|Provision for (recovery of) income taxes                                    |  |      | 3,105   |      |  |  | 7,108   |  
|                                                                            |  |      |         |      |  |  |         |  





---



##### 





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

|                               |  |      |         |      |  |  |        | 
|------------------------------ |  | ---- | ------- | ---- |  |  | ------ | 
|                               |  | 2003 |         | 2002
|                               |  | $000 |         | $000
|Canada                         |  |      | (48,439 | )    |  |  | 9,463  | 
|Foreign                        |  |      | (3,297  | )    |  |  | 20,671 | 
|                               |  |      |         |      |  |  |        | 
|Net earnings (loss) before tax |  |      | (51,736 | )    |  |  | 30,134 | 
|                               |  |      |         |      |  |  |        | 



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

|                           |         |  |         |         |      |  |        |        |  
|-------------------------- | ------- |  | ------- | ------- | ---- |  | ------ | ------ | -
|                           |         |  | 2003    |         | 2002
|                           |         |  | $000    |         | $000
|Current income taxes       |         |  |         |         |      |  |        |       
|                           | Canada  |  |         | 23,157  |      |  |        | (4,403 | )
|                           | Foreign |  |         | 371     |      |  |        | 302    |  
|                           |         |  |         |         |      |  |        |        |  
|                           |         |  | 23,528  |         |      |  | (4,101 | )     
|                           |         |  |         |         |      |  |        |        |  
|Future income taxes        |         |  |         |         |      |  |        |       
|                           | Canada  |  |         | (20,685 | )    |  |        | 11,059 |  
|                           | Foreign |  |         | 262     |      |  |        | 150    |  
|                           |         |  |         |         |      |  |        |        |  
|                           |         |  | (20,423 | )       |      |  | 11,209 |       
|                           |         |  |         |         |      |  |        |        |  
|Provision for income taxes |         |  | 3,105   |         |      |  | 7,108  |       
|                           |         |  |         |         |      |  |        |        |  



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

|                                                       |  |      |         |      |  |  |         |  
|------------------------------------------------------ |  | ---- | ------- | ---- |  |  | ------- | -
|                                                       |  | 2003 |         | 2002
|                                                       |  | $000 |         | $000
|Future tax assets                                      |  |      |         |      |  |  |         |  
|Non-capital loss carryforwards                         |  |      | 132,311 |      |  |  | 107,909 |  
|Accounts payable and other accruals                    |  |      | 29,756  |      |  |  | 45,417  |  
|Pension and post retirement benefits                   |  |      | 7,139   |      |  |  |        |  
|Less: Valuation allowance                              |  |      | (62,620 | )    |  |  | (61,439 | )
|                                                       |  |      |         |      |  |  |         |  
|Total future tax assets                                |  |      | 106,586 |      |  |  | 91,887  |  
|                                                       |  |      |         |      |  |  |         |  
|Future tax liabilities                                 |  |      |         |      |  |  |         |  
|Capital cost allowances in excess of book
amortization |  |      | 75,112  |      |  |  | 56,407  |  
|Pension obligations                                    |  |      | 2,404   |      |  |  | 14,823  |  
|Intangible assets                                      |  |      | 387,176 |      |  |  | 408,797 |  
|Other assets                                           |  |      | 28,395  |      |  |  | 13,409  |  
|                                                       |  |      |         |      |  |  |         |  
|Total future tax liabilities                           |  |      | 493,087 |      |  |  | 493,436 |  
|                                                       |  |      |         |      |  |  |         |  
|Net future tax liability                               |  |      | 386,501 |      |  |  | 401,549 |  
|Current future tax asset                               |  |      | 20,223  |      |  |  | 30,013  |  
|Current future tax liability                           |  |      | (6,072  | )    |  |  | (6,072  | )
|                                                       |  |      |         |      |  |  |         |  
|Net long term future tax liability                     |  |      | 400,652 |      |  |  | 425,490 |  
|                                                       |  |      |         |      |  |  |         |  





---



##### 





|    |  | As at August 31, 2003, the Company had non-capital loss carry forwards for
income tax purposes of $468.4 million, that expire as follows: 2006 - $2.0
million, 2007 - $12.0 million, 2008 - $41.8 million, 2009 - $127.6
million, thereafter - $285.0 million.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|15. |  | STATEMENTS OF CASH FLOWS                                                                                                                                                                                                                                      
|   
|    |  | The following amounts comprise the net change in non-cash operating accounts included in the
statements of cash flows:                                                                                                                                        

|                                           |  |      |         |      |  |  |         |  
|------------------------------------------ |  | ---- | ------- | ---- |  |  | ------- | -
|                                           |  | 2003 |         | 2002
|                                           |  | $000 |         | $000
|CASH GENERATED (UTILIZED) BY:              |  |      |         |      |  |  |         |  
|Accounts receivable                        |  |      | (30,653 | )    |  |  | 6,415   |  
|Investment in film and television programs |  |      | (1,613  | )    |  |  | (25,733 | )
|Inventory                                  |  |      | 4,681   |      |  |  | 12,342  |  
|Other current assets                       |  |      | 2,478   |      |  |  | 1,400   |  
|Other assets                               |  |      | (15,688 | )    |  |  | 10,379  |  
|Accounts payable and accrued liabilities   |  |      | (60,203 | )    |  |  | (60,792 | )
|Income taxes payable                       |  |      | 58,873  |      |  |  | (6,724  | )
|Deferred revenue                           |  |      | (11,897 | )    |  |  | (18,620 | )
|Film and program accounts payable          |  |      | 44,810  |      |  |  | 19,334  |  
|                                           |  |      |         |      |  |  |         |  
|                                           |  |      | (9,212  | )    |  |  | (61,999 | )
|                                           |  |      |         |      |  |  |         |  



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

|             |  |      |         |      |  |  |         | 
|------------ |  | ---- | ------- | ---- |  |  | ------- | 
|             |  | 2003 |         | 2002
|             |  | $000 |         | $000
|Interest     |  |      | 319,774 |      |  |  | 261,265 | 
|Income taxes |  |      | 9,732   |      |  |  | 23,961  | 





---



##### 





|16. |  | RETIREMENT ASSETS AND OBLIGATIONS                                              
|--- |  | -------------------------------------------------------------------------------
|   
|    |  | Information on the Companys pension and post retirement benefit plans
follows:

|                                          |  |                  |         |                          |  |      |         |         |  |  |      |   |  |  |      |  
|----------------------------------------- |  | ---------------- | ------- | ------------------------ |  | ---- | ------- | ------- |  |  | ---- | - |  |  | ---- | -
|                                          |  | Pension benefits |         | Post retirement benefits
|                                          |  |                  |         |                         
|                                          |  | 2003             |         | 2002                     |  | 2003 |         | 2002   
|                                          |  | $000             |         | $000                     |  | $000 |         | $000   
|Plan Assets                               |  |                  |         | Revised                  |  |      |         | Revised
|Fair value  beginning of year            |  |                  | 254,906 |                          |  |      | 240,533 |         |  |  |     |   |  |  |     |  
|Plan assets acquired (disposed)           |  |                  | (1,330  | )                        |  |      | 8,163   |         |  |  |     |   |  |  |     |  
|Investment income (loss)                  |  |                  | (10,368 | )                        |  |      | 3,739   |         |  |  |     |   |  |  |     |  
|Employer contributions                    |  |                  | 10,693  |                          |  |      | 3,699   |         |  |  | 275  |   |  |  | 400  |  
|Employee contributions                    |  |                  | 6,322   |                          |  |      | 5,800   |         |  |  |     |   |  |  |     |  
|Benefits paid and refund of contributions |  |                  | (9,346  | )                        |  |      | (7,027  | )       |  |  | (275 | ) |  |  | (400 | )
|                                          |  |                  |         |                          |  |      |         |         |  |  |      |   |  |  |      |  
|Fair value  end of year                  |  |                  | 250,877 |                          |  |      | 254,907 |         |  |  |     |   |  |  |     |  
|                                          |  |                  |         |                          |  |      |         |         |  |  |      |   |  |  |      |  



| |  | The valuation of the plan net assets is based on market values with unrealized gains and losses averaged over a five year period.
| |  | ---------------------------------------------------------------------------------------------------------------------------------

|                                               |  |  |         |   |  |  |         |   |  |  |         |   |  |  |        |  
|---------------------------------------------- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | - |  |  | ------ | -
|Plan Obligations                               |  |  |         |   |  |  |         |   |  |  |         |   |  |  |        |  
|Accrued benefit obligation  beginning of year |  |  | 277,612 |   |  |  | 226,361 |   |  |  | 40,429  |   |  |  | 35,121 |  
|Obligation acquired (disposed)                 |  |  | (2,000  | ) |  |  | 8,084   |   |  |  |        |   |  |  |       |  
|Amendment to plan                              |  |  | 16,808  |   |  |  |        |   |  |  |        |   |  |  |       |  
|Gain on sale of assets                         |  |  |        |   |  |  |        |   |  |  | (3,195  | ) |  |  |       |  
|Accrued interest on benefits                   |  |  | 20,622  |   |  |  | 18,252  |   |  |  | 2,868   |   |  |  | 2,503  |  
|Current service cost                           |  |  | 17,055  |   |  |  | 15,174  |   |  |  | 1,235   |   |  |  | 1,198  |  
|Past service costs                             |  |  |        |   |  |  | 11,868  |   |  |  |        |   |  |  |       |  
|Benefits paid                                  |  |  | (9,346  | ) |  |  | (7,027  | ) |  |  | (275    | ) |  |  | (400   | )
|Actuarial loss (gain)                          |  |  | 16,685  |   |  |  | 4,900   |   |  |  | (10,338 | ) |  |  | 2,007  |  
|                                               |  |  |         |   |  |  |         |   |  |  |         |   |  |  |        |  
|Accrued benefit obligation  end of year       |  |  | 337,436 |   |  |  | 277,612 |   |  |  | 30,724  |   |  |  | 40,429 |  
|                                               |  |  |         |   |  |  |         |   |  |  |         |   |  |  |        |  



| |  | The Companys accrued benefit asset (liability) is determined as follows:
| |  | -------------------------------------------------------------------------

|                                            |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|------------------------------------------- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | - |  |  | ------- | -
|Plan deficit                                |  |  | (86,559 | ) |  |  | (22,705 | ) |  |  | (30,724 | ) |  |  | (40,429 | )
|Unamortized net actuarial loss (gain)       |  |  | 84,481  |   |  |  | 41,639  |   |  |  | (8,870  | ) |  |  | 1,500   |  
|Unamortized transitional (asset) obligation |  |  | 6,220   |   |  |  | (4,688  | ) |  |  | 3,329   |   |  |  | 4,938   |  
|Unamortized past service costs              |  |  | 16,142  |   |  |  | 11,542  |   |  |  | 1,110   |   |  |  |        |  
|Valuation allowance                         |  |  | (770    | ) |  |  | (916    | ) |  |  |        |   |  |  |        |  
|                                            |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Accrued plan asset (liability)              |  |  | 19,514  |   |  |  | 24,872  |   |  |  | (35,155 | ) |  |  | (33,991 | )
|                                            |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  



| |  | The valuation allowance represents the amount of surplus not recognized on the Companys balance sheet.
The Companys benefit expense is determined as follows:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       |  |  |         |   |  |  |         |   |  |  |       |  |  |  |       | 
|------------------------------------------------------ |  |  | ------- | - |  |  | ------- | - |  |  | ----- |  |  |  | ----- | 
|Current service cost                                   |  |  | 17,055  |   |  |  | 15,174  |   |  |  | 1,235 |  |  |  | 1,198 | 
|Employee contributions                                 |  |  | (6,322  | ) |  |  | (5,800  | ) |  |  |      |  |  |  |      | 
|Accrued interest on benefits                           |  |  | 20,622  |   |  |  | 18,252  |   |  |  | 2,868 |  |  |  | 2,503 | 
|Expected return on plan assets                         |  |  | (18,060 | ) |  |  | (19,174 | ) |  |  |      |  |  |  |      | 
|Amortization of transitional (asset) obligation        |  |  | 610     |   |  |  | (358    | ) |  |  | 439   |  |  |  | 439   | 
|Amortization of past service costs                     |  |  | 808     |   |  |  | 527     |   |  |  |      |  |  |  |      | 
|Amortization of net actuarial loss                     |  |  | 1,516   |   |  |  | 57      |   |  |  | 92    |  |  |  |      | 
|Changes in valuation allowance                         |  |  | (146    | ) |  |  | (86     | ) |  |  |      |  |  |  |      | 
|                                                       |  |  |         |   |  |  |         |   |  |  |       |  |  |  |       | 
|Benefit expense                                        |  |  | 16,083  |   |  |  | 8,592   |   |  |  | 4,634 |  |  |  | 4,140 | 
|Employer contribution to the defined
contribution plan |  |  | 2,299   |   |  |  | 1,552   |   |  |  |      |  |  |  |      | 
|                                                       |  |  |         |   |  |  |         |   |  |  |       |  |  |  |       | 
|Total pension and post retirement benefit expense      |  |  | 18,382  |   |  |  | 10,144  |   |  |  | 4,634 |  |  |  | 4,140 | 
|                                                       |  |  |         |   |  |  |         |   |  |  |       |  |  |  |       | 



| |  | Significant actuarial assumptions in measuring the Companys accrued benefit obligations are as follows:
| |  | --------------------------------------------------------------------------------------------------------

|                                                         |  |  |           |   |  |  |           |   |  |  |           |   |  |  |      |  
|-------------------------------------------------------- |  |  | --------- | - |  |  | --------- | - |  |  | --------- | - |  |  | ---- | -
|Discount rate                                            |  |  | 6.50-6.75 | % |  |  | 6.75-7.25 | % |  |  | 6.50-6.75 | % |  |  | 7.25 | %
|Expected long-term rate of return on pension
plan assets |  |  | 6.75-7.25 | % |  |  | 7.00-7.25 | % |  |  | 7.25      | % |  |  | 7.00 | %
|Rate of compensation increase                            |  |  | 3.50-4.50 | % |  |  | 3.50-4.00 | % |  |  | 3.50-5.00 | % |  |  | 4.00 | %





---



##### 





|17. |  | FINANCIAL INSTRUMENTS                          
|--- |  | -----------------------------------------------
|   
|    |  | Financial instruments consist of the following:

|                                                  |  |          |           |       |  |          |           |       |  |  |           |  |  |  |           | 
|------------------------------------------------- |  | -------- | --------- | ----- |  | -------- | --------- | ----- |  |  | --------- |  |  |  | --------- | 
|                                                  |  | 2003     |           | 2002 
|                                                  |  |          |           |      
|                                                  |  | Carrying |           | Fair  |  | Carrying |           | Fair 
|                                                  |  | Value    |           | Value |  | Value    |           | Value
|                                                  |  | $000     |           | $000  |  | $000     |           | $000 
|Short term assets                                 |  |          | 647,909   |       |  |          | 647,909   |       |  |  | 578,396   |  |  |  | 578,396   | 
|Other investments                                 |  |          | 113,022   |       |  |          | 123,564   |       |  |  | 162,361   |  |  |  | 209,297   | 
|Short term liabilities                            |  |          | 435,883   |       |  |          | 435,883   |       |  |  | 456,926   |  |  |  | 456,926   | 
|Long term debt                                    |  |          | 3,314,697 |       |  |          | 2,980,756 |       |  |  | 3,509,916 |  |  |  | 3,453,916 | 
|Other long term liabilities                       |  |          | 150,190   |       |  |          | 150,190   |       |  |  | 65,169    |  |  |  | 65,169    | 
|Interest rate and cross-currency
swap liabilities |  |          | 23,015    |       |  |          | 356,956   |       |  |  |          |  |  |  | 56,000    | 



| |  | The fair values of short-term assets and liabilities, which include cash,
accounts receivable, distributions receivable from Network TEN, income
taxes recoverable, and other assets, bank loans and advances, accounts
payable and accrued liabilities 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 for non-listed securities.                                                                                                                                                                                      
|
| |  | The fair value of long term debt subject to floating interest rates
approximates the carrying value. The fair value of long term debt,
subject to fixed interest rates, is estimated by discounting future cash
flows, including interest payments, using rates currently available for
debt of similar terms and maturity.                                                             
|
| |  | The fair values of other long term liabilities, including film and
television program accounts payable, approximate their carrying values.                                                                                                                                                                                                                                              
|
| |  | The fair values of unrealized net gains and losses on 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 9.                                                                                                                                                                                                   





---



##### 





|18. |  | JOINTLY CONTROLLED ENTERPRISE                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The following amounts included in the consolidated financial statements
represent the Companys proportionate interest in TV3 Ireland.

|                              |                       |  |        |        |      |  |        |        |  
|----------------------------- | --------------------- |  | ------ | ------ | ---- |  | ------ | ------ | -
|                              |                       |  | 2003   |        | 2002
|                              |                       |  | $000   |        | $000
|Balance sheets                |                       |  |        |        |      |  |        |       
|Assets                        |                       |  |        |        |      |  |        |       
|                              | Current assets        |  |        | 10,182 |      |  |        | 9,329  |  
|                              | Long term assets      |  |        | 9,823  |      |  |        | 12,732 |  
|                              |                       |  |        |        |      |  |        |       
|                              |                       |  | 20,005 |        |      |  | 22,061 |       
|                              |                       |  |        |        |      |  |        |       
|Liabilities                   |                       |  |        |        |      |  |        |       
|                              | Current liabilities   |  |        | 33,692 |      |  |        | 32,906 |  
|                              | Long term liabilities |  |        |       |      |  |        | 4,643  |  
|                              |                       |  |        |        |      |  |        |       
|                              |                       |  | 33,692 |        |      |  | 37,549 |       
|                              |                       |  |        |        |      |  |        |       
|Statements of earnings        |                       |  |        |        |      |  |        |       
|Revenue                       |                       |  | 29,461 |        |      |  | 25,643 |       
|Expenses                      |                       |  | 27,674 |        |      |  | 24,630 |       
|                              |                       |  |        |        |      |  |        |       
|Net earnings                  |                       |  | 1,787  |        |      |  | 1,013  |       
|                              |                       |  |        |        |      |  |        |       
|Statements of cash flows      |                       |  |        |        |      |  |        |       
|Cash generated (utilized) by: |                       |  |        |        |      |  |        |       
|                              | Operating activities  |  |        | 6,833  |      |  |        | 242    |  
|                              | Investing activities  |  |        | (70    | )    |  |        | (887   | )
|                              | Financing activities  |  |        | (6,602 | )    |  |        | 600    |  
|                              |                       |  |        |        |      |  |        |       
|                              | Net increase in cash  |  |        | 161    |      |  |        | (45    | )
|                              |                       |  |        |        |      |  |        |       



|19. |  | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Senior subordinated notes held by CanWest Communications Corporation, the
parent company of CanWest Global Communications Corp. totaled $58.1
million (US$41.9 million) at August 31, 2003 (2002  $56.1 million). This
debt, issued in May 2001, matures May 15, 2011 and bears interest at
10.625%. Interest expense related to this debt totaled $6.4 million in
fiscal 2003 (2002  $6.0 million). During 2003, CanWest Communications
Corporation exchanged these Canadian dollar denominated notes for United
States dollar denominated notes. The exchange was completed pursuant to
the provisions of the original note indenture. In September 2003, the
necessary filings were made with the Securities Exchange Commission to
register the notes for trading.
|   
|    |  | In June 2003, a company in which an affiliate of CanWest Communications
Corporation holds a 50% interest, acquired the TD Centre in Winnipeg,
Manitoba, a building in which the Company is a tenant. Rent paid to this
company in fiscal 2003 amounted to $0.2 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 





---



##### 





|20. |  | COMMITMENTS, CONTINGENCIES and GUARANTEES                                                   
|--- |  | --------------------------------------------------------------------------------------------
|   
|    |  | Commitments                                                                                 
|   
|    |  | The Companys future minimum payments under the terms of its operating lease are as follows:

|           |  |      |        | 
|---------- |  | ---- | ------ | 
|           |  | $000
|2004       |  |      | 31,165 | 
|2005       |  |      | 29,479 | 
|2006       |  |      | 25,964 | 
|2007       |  |      | 20,939 | 
|2008       |  |      | 20,514 | 
|thereafter |  |      | 53,050 | 



| |  | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | a) The Company has entered into a Management Services Agreement with The
Ravelston Corporation Limited, a company affiliated with The Lord Black of
Crossharbour and Mr. David Radler, who are directors of the Company. The
agreement provides for annual payments of $6.0 million. Either party upon
six months notice may terminate the agreement. In the event of
termination by the Company, a fee of $45 million is payable. In the event
of termination by The Ravelston Corporation Limited, or in the event that
The Ravelston Corporation Limited is unable to perform the services in
accordance with the agreement, a fee in the amount of $22.5 million is
payable.                                                                   
|
| |  | b) 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 interests requesting, among other things, that
their interests in CBL be purchased without minority discount. In
addition, the claim alleges the Company wrongfully terminated certain
agreements and acted in an oppressive and prejudicial manner towards the
plaintiffs. The lawsuit seeks damages in excess of $345 million. The
Company believes the allegations are substantially without merit and not
likely to have a material adverse effect on its business, financial
condition or results of operation. The Company intends to vigorously
defend this lawsuit.
|
| |  | c) The Company is involved in various legal matters arising in the
ordinary course of business. The resolution of these matters is not
expected to have a material adverse effect on the Companys financial
position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | d) The Company has claimed $54.1 million from Hollinger related to certain
unresolved matters related to the acquisition of CanWest Publications
including the National Post. Certain of these matters are in dispute and
may result in the claim being referred to arbitration or formal court
adjudication. (see note 2(b)).                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | 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.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|21. |  | SEGMENTED INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | The Company operates primarily within the publishing, online,
broadcasting, entertainment and outdoor advertising industries in Canada,
New Zealand, Ireland and Australia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | Each segment below operates as a strategic business unit with separate
management. Segment performance is measured primarily on the basis of
operating profit. Management includes its proportionate interest in the
results of its equity accounted Australian television and outdoor
operations in strategic decision making, therefore, these proportionate
results are included in the following segmented disclosure. Segmented
information in Canadian dollars is as follows:                                                                                                                                                                                                                                                                                               

|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  
|--------------------------------------------------------- |  | ------- | --------- | ---------------- |  | ------------ | --------- | ------------ |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  |  | --------- | - |  |  | --------- | - |  | ------- | ------- | - |  |  | ------- | -
|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  | Capital
|                                                          |  | Revenue |           | Operating profit |  | Total assets |           | expenditures
|                                                          |  |         |           |                  |  |              |           |             
|                                                          |  | 2003    |           | 2002             |  | 2003         |           | 2002         |  | 2003 |         | 2002 |  | 2003 |         | 2002
|Operating Segments                                        |  | $000    |           | $000             |  | $000         |           | $000         |  | $000 |         | $000 |  | $000 |         | $000
|Television                                                |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  
|Canada                                                    |  |         | 728,318   |                  |  |              | 691,888   |              |  |      | 220,099 |      |  |      | 190,752 |      |  |  | 1,485,263 |   |  |  | 1,362,562 |   |  |         | 9,364   |   |  |  | 14,392  |  
|Australia - Network TEN                                   |  |         | 336,362   |                  |  |              | 281,427   |              |  |      | 106,975 |      |  |      | 81,782  |      |  |  | 372,039   |   |  |  | 345,051   |   |  |         | 11,097  |   |  |  | 12,388  |  
|New Zealand                                               |  |         | 95,752    |                  |  |              | 69,079    |              |  |      | 10,095  |      |  |      | (1,938  | )    |  |  | 156,662   |   |  |  | 141,677   |   |  |         | 3,056   |   |  |  | 1,518   |  
|Ireland                                                   |  |         | 32,490    |                  |  |              | 28,317    |              |  |      | 9,729   |      |  |      | 7,654   |      |  |  | 19,923    |   |  |  | 21,530    |   |  |         | 117     |   |  |  | 479     |  
|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  
|                                                          |  |         | 1,192,922 |                  |  |              | 1,070,711 |              |  |      | 346,898 |      |  |      | 278,250 |      |  |  | 2,033,887 |   |  |  | 1,870,820 |   |  |         | 23,634  |   |  |  | 28,777  |  
|Radio - New Zealand                                       |  |         | 73,400    |                  |  |              | 60,724    |              |  |      | 20,751  |      |  |      | 16,361  |      |  |  | 163,118   |   |  |  | 150,176   |   |  |         | 2,666   |   |  |  | 1,207   |  
|Entertainment - Canada                                    |  |         | 184,344   |                  |  |              | 152,439   |              |  |      | (34,524 | )    |  |      | (743    | )    |  |  | 406,497   |   |  |  | 425,146   |   |  |         | 117     |   |  |  | 396     |  
|Publishing and Online - Canada                            |  |         | 1,164,012 |                  |  |              | 1,270,335 |              |  |      | 258,496 |      |  |      | 285,027 |      |  |  | 2,836,809 |   |  |  | 3,236,317 |   |  |         | 9,348   |   |  |  | 17,063  |  
|Outdoor - Australia                                       |  |         | 36,656    |                  |  |              | 38,074    |              |  |      | 2,560   |      |  |      | 874     |      |  |  | 23,789    |   |  |  | 27,867    |   |  |         | 693     |   |  |  | 2,379   |  
|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  
|                                                          |  |         | 2,651,334 |                  |  |              | 2,592,283 |              |  |      | 594,181 |      |  |      | 579,769 |      |  |  | 5,464,100 |   |  |  | 5,710,326 |   |  |         | 36,458  |   |  |  | 49,822  |  
|Corporate and other                                       |  |         |          |                  |  |              |          |              |  |      | (23,213 | )    |  |      | (26,807 | )    |  |  | 385,268   |   |  |  | 358,178   |   |  |         | 13,887  |   |  |  | 18,283  |  
|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  
|                                                          |  |         | 2,651,334 |                  |  |              | 2,592,283 |              |  |      | 570,968 |      |  |      | 552,962 |      |  |  | 5,849,368 |   |  |  | 6,068,504 |   |  |         | 50,345  |   |  |  | 68,105  |  
|Restructuring and film and
television impairment
expenses |  |         |          |                  |  |              |          |              |  |      | (53,087 | )    |  |      |        |      |  |  |          |   |  |  |          |   |  |         |        |   |  |  |        |  
|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  
|Total Combined                                            |  |         | 2,651,334 |                  |  |              | 2,592,283 |              |  |      | 517,881 |      |  |      | 552,962 |      |  |  | 5,849,368 |   |  |  | 6,068,504 |   |  |         | 50,345  |   |  |  | 68,105  |  
|Elimination of equity
accounted affiliates(1)             |  |         | (373,018  | )                |  |              | (319,500  | )            |  |      | (99,219 | )    |  |      | (82,656 | )    |  |  | (319,373  | ) |  |  | (368,424  | ) |  |         | (11,790 | ) |  |  | (14,767 | )
|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  
|Total Consolidated                                        |  |         | 2,278,316 |                  |  |              | 2,272,783 |              |  |      | 418,662 |      |  |      | 470,306 |      |  |  | 5,529,995 |   |  |  | 5,700,080 |   |  |         | 38,555  |   |  |  | 53,338  |  
|                                                          |  |         |           |                  |  |              |           |              |  |      |         |      |  |      |         |      |  |  |           |   |  |  |           |   |  |         |         |   |  |  |         |  



|(1) Elimination of proportionate interest in Australias Network TEN and
Outdoor.
|---------------------------------------------------------------------------------





---



##### 





|22. |  | UNITED STATES ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | These consolidated financial statements have been prepared in accordance
with Canadian GAAP. In certain aspects GAAP as applied in the United
States (U.S.) differs from Canadian GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Principal differences affecting the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Comprehensive income, defined as all changes in equity other than those
resulting from investments by owners and distributions to owners, must be
reported under U.S. GAAP. There is no similar requirement under Canadian
GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Pre-operating costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | In the U.S., pre-operating costs are expensed in the period incurred. In
accordance with Canadian GAAP, the Company defers pre-operating costs
until commencement of commercial operations and amortizes the deferred
costs over a period of five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | In the U.S., distributions from self-sustaining foreign operations do not
result in a realization of the cumulative translation adjustments account.
Realization of such foreign currency translation adjustments occur only
upon the sale of all or a part of the investment giving rise to the
translation adjustments. In accordance with Canadian GAAP, reductions in
the net investment in self-sustaining foreign operations result in a
proportionate reduction in the cumulative foreign currency translation
adjustment accounts.                                                                                                                                                              
|   
|    |  | Programming commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | Under Canadian GAAP, certain programming commitments related to an
acquisition imposed by regulatory requirements were accrued in the
purchase equation. Under U.S. GAAP, these costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | Equity accounted affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Under U.S. GAAP, investments placed in trust due to regulatory
requirements must be accounted for at cost. Under Canadian GAAP, these
investments are accounted as cost, equity or consolidated investments
based on the level of influence that the investor has over the investment.                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Investment in WIC on an equity basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Under Canadian GAAP, the investment in WIC was accounted for using the
equity method during the period that this investment was held in trust
pending completion of the regulatory approval process. Under US GAAP, the
investment was accounted for on a cost basis then, as a result of
receiving approval to complete the purchase of WIC, the Company changed
its method of accounting for WIC to the equity method. The change in
accounting policy was retroactively applied as required under APB Opinion
No. 18, The Equity Method of Accounting for Investments in Common Stock.
Effective July 6, 2000, the Company consolidated its investment in WIC for
both Canadian and US GAAP purposes.





---



##### 





| |  | Intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Under Canadian GAAP, certain costs related to the acquisition of broadcast
licences, other than through a business combination, were recorded as
intangible assets. Under U.S. GAAP such costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Investment in marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | In the U.S., investment assets classified as available for sale are
carried at market, and unrealized temporary gains and losses are included,
net of tax, in accumulated comprehensive income. In accordance with
Canadian GAAP, the Company carries its investment in marketable securities
at lower of cost and net realizable value.                                                                                                                                                                                                                                                                                      
|
| |  | Effect of tax rate changes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Under U.S. GAAP, changes in tax rates are applied to reduce or increase
future income tax assets or liabilities when the proposed tax rate change
has received legislative approval. Under Canadian GAAP, tax rate changes
are applied when the change in tax rate is considered substantively
enacted.                                                                                                                                                                                                                                                                                                                         
|
| |  | Pension Valuation Allowances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Under Canadian GAAP a valuation allowance is used to reduce the carrying
value of pension assets to the future benefit expected to be realized.
Changes in the valuation allowance are recorded as adjustments to pension
expense. Under US GAAP valuation allowances are not recorded.                                                                                                                                                                                                                                                                                                                                         
|
| |  | Cash flow statement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | The Canadian accounting standard for the preparation of cash flow
statements is consistent with the guidance provided under IAS 7, and
accordingly, the cash flow statements presented herein have not been
reconciled to U.S. GAAP under the accommodation provided by the Securities
and Exchange Commission of the United States (SEC).                                                                                                                                                                                                                                                                                    
|
| |  | Proportionate consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Canadian GAAP requires the accounts of jointly controlled enterprises to
be proportionately consolidated. In the U.S., investments in jointly
controlled entities are accounted as equity investments. This accounting
difference applies to the Companys investment in TV3 Ireland. The
proportionate interest is disclosed in note 18. Accordingly, under
accommodation provided by the SEC this difference is not included in the
following reconciliation.                                                                                                                                                                 
|
| |  | Accounting for derivative instruments and hedging activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Under U.S. GAAP, entities are required to recognize all derivative
instruments as either assets or liabilities in the balance sheet, and
measure those instruments at fair value. The changes in fair value of the
derivative are included in the statement of earnings. In addition, under
U.S. GAAP foreign denominated debt is adjusted through earnings to reflect
currency translation rates at each balance sheet date. Under Canadian GAAP
hedging derivatives are eligible for hedge accounting if certain criteria
are met. Non-hedging derivatives are recognized at their fair value as
either assets or liabilities.





---



##### 





| |  | U.S. GAAP for Equity accounted affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For Canadian GAAP the Company accounts for Network TENs derivative
instruments using hedge accounting. Under U.S. GAAP the change in fair
value of the instruments would be reflected in earnings as described
above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Cumulative effect of the prospective adoption of new accounting
pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Under U.S. GAAP, the transitional impairment of goodwill related to
Network TEN is recorded as a charge to net earnings in accordance with
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangibles, whereas under Canadian GAAP it was recorded as a charge to
opening retained earnings. The principles and methods for computing
impairment in accordance with FAS 142 are similar to those prescribed
under Canadian GAAP, as described in notes 1 and 3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In addition, under U.S. GAAP the effect of the adoption of SOP 00-2 as of
September 1, 2001 was recorded as a charge to earnings rather than
retained earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Integration costs related to CanWest Publications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Under Canadian GAAP certain integration costs related to the CanWest
Publications acquisition were accrued in the purchase equation. Under US
GAAP, these costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Revision of 2002 and Prior Years Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The Companys 2001 and 2002 net income and shareholders equity under U.S.
GAAP were revised to reflect certain adjustments to previously reported
net income and shareholders equity for the accounting for derivative
financial instruments. The Company has determined, notwithstanding their
designation as hedges and achievement of their intended economic purpose,
its cross currency interest rate and interest rate swaps did not meet all
of the criteria for hedge accounting under FAS 133. As a result, the
unrealized gains and losses on derivative financial instruments are
included in net income as they arise whereas previously these amounts were
included in other comprehensive income. These adjustments resulted in
increasing U.S. GAAP net income for 2002 by $27.5 million (net of income
taxes of $1.3 million) and decreasing U.S. GAAP net income for 2001 by
$55.6 million (net of income taxes of $37.0 million). The effect on U.S.
GAAP shareholders equity resulting from these adjustments was an increase
of $4.8 million (net of income taxes of $9.4 million) as at August 31,
2002 and a decrease of $5.9 million (net of income taxes of $2.5 million)
as at August 31, 2001.





---



##### 



RECONCILIATION TO US GAAP



| | Consolidated Statements of Earnings
| | -----------------------------------



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

|                                                                                                                                        |         |  |         |      |         |  |          |      |  
|--------------------------------------------------------------------------------------------------------------------------------------- | ------- |  | ------- | ---- | ------- |  | -------- | ---- | -
|                                                                                                                                        |         |  |         |      |         |  | 2002    
|                                                                                                                                        |         |  | 2003    |      | $000   
|                                                                                                                                        |         |  | $000    |      | revised
|Net earnings in accordance with Canadian GAAP                                                                                           |         |  | 46,088  |      |         |  | 13,018   |     
|Pre-operating costs net of tax of ($939) (2002  $1,331)                                                                                |         |  | 2,921   |      |         |  | (100     | )   
|Realization of cumulative translation adjustments net
of tax of nil                                                                     |         |  | (922    | )    |         |  | 1,000    |     
|Programming costs imposed by regulatory requirement
net of tax of $2,567 (2002  $2,438)                                                |         |  | (3,403  | )    |         |  | (3,232   | )   
|Integration costs related to CanWest Publications
net of tax of $109 (2002 - $827)                                                      |         |  | (193    | )    |         |  | (1,470   | )   
|Intangible assets net of tax of $860                                                                                                    |         |  | (1,465  | )    |         |  |         |     
|Pension valuation allowances net of tax of $54 (2002 - $32)                                                                             |         |  | (92     | )    |         |  | (54      | )   
|Equity accounted affiliates in trust net of tax of nil                                                                                  |         |  |        |      |         |  | 3,375    |     
|US GAAP adjustments in equity accounted affiliates
net of tax of ($1,955)                                                               |         |  | (3,476  | )    |         |  |         |     
|Gain (loss) on interest rate and cross-currency
swaps and translation of foreign denominated
debt net of tax of $30,272 (2002 - $1,199) |         |  | (40,605 | )    |         |  | 27,535   |     
|                                                                                                                                        |         |  |         |      |         |  |          |     
|Net earnings (loss) in accordance with U.S. GAAP before
cumulative effect of adoption of new accounting policies                        |         |  | (1,147  | )    |         |  | 40,072   |     
|Cumulative effect of adoption of new accounting
policies net of tax of nil (2002 - $2,500)                                              |         |  |        |      |         |  | (170,695 | )   
|                                                                                                                                        |         |  |         |      |         |  |          |     
|Net earnings (loss) in accordance with U.S. GAAP                                                                                        |         |  | (1,147  | )    |         |  | (130,623 | )   
|                                                                                                                                        |         |  |         |      |         |  |          |     
|Earnings per share:                                                                                                                     |         |  |         |      |         |  |          |     
|Net earnings (loss) before cumulative effect of
adoption of new accounting policies                                                     |         |  |         |      |         |  |          |     
|                                                                                                                                        | Basic   |  | ($      | 0.05 | )       |  | $        | 0.23 |  
|                                                                                                                                        | Diluted |  | ($      | 0.05 | )       |  | $        | 0.22 |  
|Net earnings (loss)                                                                                                                     |         |  |         |      |         |  |          |     
|                                                                                                                                        | Basic   |  | ($      | 0.05 | )       |  | ($       | 0.74 | )
|                                                                                                                                        | Diluted |  | ($      | 0.05 | )       |  | ($       | 0.72 | )



---



##### 



Statements of Comprehensive Income

Comprehensive income (loss)  current periods:

|                                                 |                                                                                                                                    |  |         |         |         |  |          |        | 
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------- |  | ------- | ------- | ------- |  | -------- | ------ | 
|                                                 |                                                                                                                                    |  |         |         |         |  | 2002    
|                                                 |                                                                                                                                    |  | 2003    |         | $000   
|                                                 |                                                                                                                                    |  | $000    |         | revised
|Net earnings (loss) in accordance with U.S. GAAP |                                                                                                                                    |  | (1,147  | )       |         |  | (130,623 | )     
|                                                 |                                                                                                                                    |  |         |         |         |  |          |       
|Other comprehensive income, net of tax:          |                                                                                                                                    |  |         |         |         |  |          |       
|                                                 | Foreign currency translation gain                                                                                                  |  |         | 11,810  |         |  |          | 26,483 | 
|                                                 |                                                                                                                                    |  |         |         |         |  |          |       
|                                                 | Unrealized gains (losses) on securities available
for sale, net of tax of nil (2002  nil)                                         |  |         | (43,647 | )       |  |          | 31,387 | 
|                                                 | Realization of prior years unrealized losses
on sale / write-down of securities available
for sale, net of tax of nil (2002  nil) |  |         | 10,952  |         |  |          | 60,000 | 
|                                                 |                                                                                                                                    |  |         |         |         |  |          |       
|                                                 |                                                                                                                                    |  | (32,695 | )       |         |  | 91,387   |       
|                                                 |                                                                                                                                    |  |         |         |         |  |          |       
|                                                 | Reclassification of transition adjustment related to
interest rate swaps net of tax of $68 (2002 - $69)                            |  |         | 118     |         |  |          | 115    | 
|                                                 |                                                                                                                                    |  |         |         |         |  |          |       
|                                                 |                                                                                                                                    |  | (20,767 | )       |         |  | 117,985  |       
|                                                 |                                                                                                                                    |  |         |         |         |  |          |       
|Comprehensive income (loss)                      |                                                                                                                                    |  | (21,914 | )       |         |  | (12,638  | )     
|                                                 |                                                                                                                                    |  |         |         |         |  |          |       

Other comprehensive income (loss)  accumulated balances:

|                         |  |             |         |                |  |            |         |   |         |  |        |   |  |  |          |  
|------------------------ |  | ----------- | ------- | -------------- |  | ---------- | ------- | - | ------- |  | ------ | - |  |  | -------- | -
|                         |  | Foreign     |         | Unrealized     |  | Transition |         |   |         | 
|                         |  | currency    |         | gains (losses) |  | adjustment |         |   | Total   | 
|                         |  | translation |         | on securities  |  | on swaps   |         |   | revised | 
|Balance, August 31, 2001 |  |             | (74,447 | )              |  |            | (41,858 | ) |         |  | (2,463 | ) |  |  | (118,768 | )
|Change during 2002       |  |             | 26,483  |                |  |            | 91,387  |   |         |  | 115    |   |  |  | 117,985  |  
|                         |  |             |         |                |  |            |         |   |         |  |        |   |  |  |          |  
|Balance, August 31, 2002 |  |             | (47,964 | )              |  |            | 49,529  |   |         |  | (2,348 | ) |  |  | (783     | )
|Change during 2003       |  |             | 11,810  |                |  |            | (32,695 | ) |         |  | 118    |   |  |  | (20,767  | )
|                         |  |             |         |                |  |            |         |   |         |  |        |   |  |  |          |  
|Balance, August 31, 2003 |  |             | (36,154 | )              |  |            | 16,834  |   |         |  | (2,230 | ) |  |  | (21,550  | )
|                         |  |             |         |                |  |            |         |   |         |  |        |   |  |  |          |  



---



##### 



Consolidated Balance Sheets

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

|                                              |  |      |           |         |  |      |           |  
|--------------------------------------------- |  | ---- | --------- | ------- |  | ---- | --------- | -
|                                              |  |      |           |         |  | 2002
|                                              |  | 2003 |           | $000   
|                                              |  | $000 |           | revised
|ASSETS                                        |  |      |           |         |  |      |           |  
|Current assets                                |  |      | 755,370   |         |  |      | 683,677   |  
|Investment in Network TEN                     |  |      | 52,070    |         |  |      | 4,494     |  
|Property, plant and equipment                 |  |      | 636,701   |         |  |      | 675,041   |  
|Intangibles and goodwill                      |  |      | 3,564,926 |         |  |      | 3,743,404 |  
|Other investments                             |  |      | 116,007   |         |  |      | 196,253   |  
|Other assets                                  |  |      | 396,025   |         |  |      | 485,089   |  
|                                              |  |      |           |         |  |      |           |  
|                                              |  |      | 5,521,099 |         |  |      | 5,787,958 |  
|                                              |  |      |           |         |  |      |           |  
|LIABILITIES                                   |  |      |           |         |  |      |           |  
|Current liabilities                           |  |      | 600,281   |         |  |      | 621,609   |  
|Long term debt                                |  |      | 2,973,329 |         |  |      | 3,339,507 |  
|Other liabilities                             |  |      | 460,754   |         |  |      | 196,938   |  
|Future income taxes                           |  |      | 343,093   |         |  |      | 407,078   |  
|                                              |  |      |           |         |  |      |           |  
|                                              |  |      | 4,377,457 |         |  |      | 4,565,132 |  
|                                              |  |      |           |         |  |      |           |  
|SHAREHOLDERS EQUITY                          |  |      |           |         |  |      |           |  
|Capital stock                                 |  |      | 846,824   |         |  |      | 896,422   |  
|Contributed surplus                           |  |      | 3,647     |         |  |      | 3,647     |  
|Retained earnings                             |  |      | 314,721   |         |  |      | 323,540   |  
|Accumulated other comprehensive income (loss) |  |      | (21,550   | )       |  |      | (783      | )
|                                              |  |      |           |         |  |      |           |  
|                                              |  |      | 1,143,642 |         |  |      | 1,222,826 |  
|                                              |  |      |           |         |  |      |           |  
|                                              |  |      | 5,521,099 |         |  |      | 5,787,958 |  
|                                              |  |      |           |         |  |      |           |  



---



##### 



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

|                                                                                                                                                     |  |      |           |         |  |      |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ------- |  | ---- | --------- | -
|                                                                                                                                                     |  |      |           |         |  | 2002
|                                                                                                                                                     |  | 2003 |           | $000   
|                                                                                                                                                     |  | $000 |           | revised
|Shareholders equity in accordance with
Canadian GAAP                                                                                                |  |      | 1,175,617 |         |  |      | 1,175,911 |  
|Adjustments relating to pre-operating costs,
net of tax of $2,669 (2002  $3,608)                                                                    |  |      | (3,552    | )       |  |      | (6,473    | )
|Adjustment to goodwill resulting from retroactive
equity accounting of WIC upon regulatory
approval net of tax of nil                                |  |      | 38,503    |         |  |      | 38,503    |  
|Programming costs imposed by regulatory requirement
on business combination net of tax of
$5,779 (2002  $3,212)                                     |  |      | (7,661    | )       |  |      | (4,258    | )
|Integration costs related to CanWest Publications
net of tax of $936 (2002 - $827)                                                                   |  |      | (1,663    | )       |  |      | (1,470    | )
|Reversal of amortization of goodwill related to
future programming costs imposed by regulatory
requirement on business combination net of tax of nil |  |      | 938       |         |  |      | 938       |  
|Adjustment from expensing intangible assets net of
tax of $860                                                                                       |  |      | (1,465    | )       |  |      |          |  
|Pension valuation allowance net of tax of $285
(2002 - $339)                                                                                         |  |      | 485       |         |  |      | 577       |  
|Adjustments to equity accounted affiliates
net of tax of $1,955                                                                                      |  |      | (3,476    | )       |  |      |          |  
|Adjustment to reflect losses on interest
rate and cross-currency swaps net of tax of
$65,951 (2002  $35,679)                                        |  |      | (68,688   | )       |  |      | (28,083   | )
|Transition adjustment on interest rate swaps, net of
tax of $1,451 (2002 - $1,383)                                                                   |  |      | (2,230    | )       |  |      | (2,348    | )
|Unrealized gain (loss) on other investments net
of tax of nil (2002  nil)                                                                           |  |      | 16,834    |         |  |      | 49,529    |  
|                                                                                                                                                     |  |      |           |         |  |      |           |  
|Shareholders equity in accordance with U.S. GAAP                                                                                                    |  |      | 1,143,642 |         |  |      | 1,222,826 |  
|                                                                                                                                                     |  |      |           |         |  |      |           |  

Other

The following amounts are included in accounts receivable:

|                                |  |       |        |       |  |  |        | 
|------------------------------- |  | ----- | ------ | ----- |  |  | ------ | 
|                                |  | 2003  |        | 2002 
|                                |  | $ 000 |        | $ 000
|Allowance for doubtful accounts |  |       | 14,700 |       |  |  | 14,800 | 



---



##### 



The following amounts are included in operating expenses:

|                 |  |      |        |      |  |  |        | 
|---------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                 |  | 2003 |        | 2002
|                 |  | $000 |        | $000
|Bad debt expense |  |      | 6,366  |      |  |  | 5,700  | 
|Rent expense     |  |      | 20,545 |      |  |  | 17,300 | 

The following amounts are included in accrued liabilities:

|                 |  |      |        |      |  |  |        | 
|---------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                 |  | 2003 |        | 2002
|                 |  | $000 |        | $000
|Accrued salaries |  |      | 76,000 |      |  |  | 63,000 | 

Amortization expense related to existing finite life intangibles will be
$17.5 million per year to 2005, $8.8 million in 2006 and $1.5 million in
2007 and 2008.