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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 20-F

|  |                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------
|o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934                                                   
|  | OR                                                                                                                                               
|ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002                 
|  | OR                                                                                                                                               
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from                        to

Commission
file number

QUEBECOR MEDIA INC.(Exact name of Registrant as specified in its charter)

QUÉBEC, CANADA(Jurisdiction of incorporation or organization)

300 Viger Avenue East
Montréal, Québec, Canada H2X 3W4(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Name of each exchange on which registeredNone

None


Securities
registered or to be registered pursuant to Section 12(g) of the Act.

None(Title of Class)

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None(Title of Class)

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

6,659,238,175 Common Shares
1,950,000 Cumulative First Preferred Shares, Series A

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

o  Yes                        ý  No

Indicate
by check mark which financial statement item the registrant has elected to follow.

ý  Item 17                        o  Item 18

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TABLE OF CONTENTS

|Explanatory Notes                                                                      |  | 1 
|-------------------------------------------------------------------------------------- |  | --
|Exchange Rate Information                                                              |  | 1 
|Forward-Looking Statements                                                             |  | 2 
|Industry and Market Data                                                               |  | 2 
|PART I                                                                                
|Item 1  Identity of Directors, Senior Management and Advisers                         |  | 2 
|Item 2  Offer Statistics and Expected Timetable                                       |  | 2 
|Item 3  Key Information                                                               |  | 2 
|Item 4  Information on the Company                                                    |  | 10
|Item 5  Operating and Financial Review and Prospects                                  |  | 50
|Item 6  Directors, Senior Management and Employees                                    |  | 67
|Item 7  Major Shareholders and Related Party Transactions                             |  | 76
|Item 8  Financial Information                                                         |  | 78
|Item 9  The Offer and Listing                                                         |  | 79
|Item 10  Additional Information                                                       |  | 80
|Item 11  Quantitative and Qualitative Disclosures About Market Risk                   |  | 93
|Item 12  Description of Securities Other than Equity Securities                       |  | 96
|PART II                                                                               
|Item 13  Defaults, Dividend Arrearages and Delinquencies                              |  | 96
|Item 14  Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 96
|Item 15  Controls and Procedures                                                      |  | 96
|Item 16  [Reserved]                                                                   |  | 96
|PART III                                                                              
|Item 17  Financial Statements                                                         |  | 96
|Item 18  Financial Statements                                                         |  | 97
|Item 19  Exhibits                                                                     |  | 97

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EXPLANATORY NOTES

All references in this annual report to "Quebecor Media," "QMI" or the "Company," as well as use of the terms "we," "us," "our" or similar terms, are references
to Quebecor Media Inc., a company incorporated in Canada in August 2000 under Part 1A of the Companies Act (Québec), and, unless the context otherwise requires, its
subsidiaries and operating companies.

All
references herein to "dollars" and "$" refer to the lawful currency of Canada, unless otherwise expressly stated. All references herein to "US dollars" and to "US$" refer to the
lawful currency of the United States of America.

All
financial statements and financial information derived therefrom presented herein have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian
GAAP"). For a discussion of the principal differences between Canadian GAAP and U.S. generally accepted accounting principles ("U.S. GAAP"), see note 23 to our consolidated
financial statements contained in "Item 17  Financial Statements" of this annual report.

Unless
otherwise indicated, information provided in this annual report, including all operating data presented herein, is as of December 31, 2002.

EXCHANGE RATE INFORMATION

The following table sets forth, for the periods indicated, the average, high, low and end of period noon buying rates in the City of New York for cable
transfers as certified for customs purposes by the Federal Reserve Bank of New York. Such rates are set forth as US dollars per $1.00 and are the inverse of rates quoted by the Federal Reserve
Bank of New York for Canadian dollars per US$1.00. On March 25, 2003, the inverse of the noon buying rate was $1.00 equals US$0.6770.

High

Low

Period EndMonth EndedFebruary 28, 2003

0.6720

0.6530

0.6720January 31, 2003

0.6562

0.6349

0.6542December 31, 2002

0.6461

0.6329

0.6329November 30, 2002

0.6440

0.6288

0.6387October 31, 2002

0.6407

0.6272

0.6406September 30, 2002

0.6433

0.6304

0.6304


Average(1)

High

Low

Period EndYear EndedDecember 31, 2002

0.6370

0.6619

0.6200

0.6329December 31, 2001

0.6446

0.6697

0.6241

0.6279December 31, 2000

0.6727

0.6969

0.6410

0.6669December 31, 1999

0.6746

0.6925

0.6535

0.6925December 31, 1998

0.6722

0.7105

0.6341

0.6504


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1

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FORWARD-LOOKING STATEMENTS

This annual report contains both historical and forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are not historical facts, but only predictions and generally can be identified by the use of statements that
include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee" or other words or phrases of similar import. Similarly, statements that describe our objectives, plans or goals
also are forward-looking statements. These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated.
Factors that could materially affect these forward-looking statements can be found in this annual report. Potential investors and other readers are urged to consider these factors carefully in
evaluating the forward-looking statements, including the factors described below under "Item 3  Key
Information  Risk Factors" and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this
document are made only as of the date of this annual report and we undertake no obligation to publicly update these forward-looking statements to reflect new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking events might or might not occur. We cannot assure you that projected results or events will be achieved.

INDUSTRY AND MARKET DATA

Industry and market data obtained through company research, surveys and studies conducted by third parties and industry and general publications have not been
verified by any independent sources, and we make no representation as to the accuracy of this information. Information contained in this document concerning the media industry, the Company's general
expectations concerning this industry and the Company's market positions and market shares may also be based on estimates and assumptions made by the Company based on its knowledge of the industry and
which the Company believes to be reliable. The Company believes, however, that this data is inherently imprecise, although generally indicative of relative market positions and market shares. Industry
and company data is approximate and may reflect rounding in certain cases.

PART I

ITEM 1  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2  OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3  KEY INFORMATION

SELECTED FINANCIAL DATA

The selected historical consolidated financial data for the Company presented below under the captions "Statement of Operations Data" for the years ended
December 31, 2000, 2001 and 2002 and "Balance Sheet Data" as of December 2001 and 2002 are derived from the Company's audited financial statement included in Item 17 of this
annual report. The selected consolidated statement of operations data presented below for the years ended December 31, 1998 and 1999 and consolidated balance sheet data as of
December 31, 1998, 1999 and 2000 are derived from the Company's audited consolidated financial statements not included in this annual report. The selected financial data presented below should
be read in conjunction with the information contained in "Item 5  Operating and Financial Review and Prospects" and the consolidated financial
statements and notes thereto contained in "Item 17  Financial Statements" of this annual report (see pages F-1 to F-43). Our consolidated financial
statements have been prepared in accordance with Canadian

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GAAP. For a discussion of the principal differences between Canadian GAAP and U.S. GAAP, see note 23 to our consolidated financial statements contained in
"Item 17  Financial Statements" of this annual report.

|                                                                    |  | Years Ended December 31, |          
|------------------------------------------------------------------- |  | ------------------------ | ---------
|
|
|Statement of Operations Data (Canadian GAAP):                       |  |                          |          
|Revenue                                                             |  | $                        | 2,274,862
|Cost of sales and selling and administrative expenses               |  |                          | 1,669,941
|Amortization                                                        |  |                          | 245,491  
|Financial expenses                                                  |  |                          | 322,357  
|Reserve for restructuring and special charges                       |  |                          | 39,337   
|Write-down of goodwill                                              |  |                          | 187,035  
|Gains on sales of businesses and other assets and gains on dilution |  |                          | 3,577    
|Income taxes (credit)                                               |  |                          | 13,409   
|Amortization of goodwill, net of non-controlling interest(2)        |  |                          | 0        
|Other expenses (revenues)                                           |  |                          | 14,767   
|Net (loss) income(2)                                                |  | $                        | (213,898 
|Other Financial Data (Canadian GAAP):                               |  |                          |          
|Operating income(3)                                                 |  | $                        | 604,921  
|Capital expenditures                                                |  |                          | 141,550  

|                                    |  | As of December 31,
|----------------------------------- |  | ------------------
|
|Balance Sheet Data (Canadian GAAP): |  |                   
|Cash and cash equivalents           |  | $                 
|Total assets                        |  |                   
|Total debt                          |  |                   
|Capital stock                       |  |                   
|Shareholders' equity                |  |                   

|                                                                    |  | Years Ended December 31, |           
|------------------------------------------------------------------- |  | ------------------------ | ----------
|
|
|Statement of Operations Data (U.S. GAAP):                           |  |                          |           
|Revenues                                                            |  | $                        | 2,274,862 
|Cost of sales and selling and administrative expenses               |  |                          | 1,692,526 
|Amortization                                                        |  |                          | 245,491   
|Financial expenses                                                  |  |                          | 295,481   
|Reserve for restructuring and special charges                       |  |                          | 40,991    
|Write-down of goodwill                                              |  |                          | 187,035   
|Gains on sales of businesses and other assets and gains on dilution |  |                          | 3,577     
|Income taxes                                                        |  |                          | 6,242     
|Amortization of goodwill, net of non-controlling interest(2)        |  |                          | 0         
|Cumulative effect of changes in accounting policy                   |  |                          | 2,144,344 
|Other expenses (revenues)                                           |  |                          | 14,871    
|Net loss(2)                                                         |  | $                        | (2,348,542

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|Other Financial Data (U.S. GAAP): |  |   |            |   |   |          |   |   |          |  
|--------------------------------- |  | - | ---------- | - | - | -------- | - | - | -------- | -
|Operating income(3)               |  | $ | 582,336    |   | $ | 404,659  |   | $ | 195,616  |  
|Capital expenditures              |  |   | 141,550    |   |   | 123,760  |   |   | 42,945   |  
|Comprehensive loss                |  |   | (2,217,774 | ) |   | (524,106 | ) |   | (216,372 | )

|                                |  | As of December 31,
|------------------------------- |  | ------------------
|
|Balance Sheet Data (U.S. GAAP): |  |                   
|Cash and cash equivalents       |  | $                 
|Total assets                    |  |                   
|Total debt                      |  |                   
|Capital stock                   |  |                   
|Shareholders' equity            |  |                   

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|                                                                |  | Year Ended December 31,
|--------------------------------------------------------------- |  | -----------------------
|
|
|AMOUNTS UNDER CANADIAN GAAP                                     |  |                        
|Net (loss) income                                               |  | $                      
|Add back goodwill amortization, net of non-controlling interest |  |                        
|                                                                |  |                        
|Net (loss) income before goodwill amortization                  |  | $                      
|                                                                |  |                        
|AMOUNTS UNDER U.S. GAAP                                         |  |                        
|Net loss                                                        |  | $                      
|Add back goodwill amortization, net of income taxes             |  |                        
|                                                                |  |                        
|Net loss before goodwill amortization                           |  | $                      
|                                                                |  |                        

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CAPITALIZATION AND INDEBTEDNESS

Not applicable.

REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

RISK FACTORS

We have substantial debt and significant interest payment requirements which could adversely affect our financial
condition.

We
currently have a substantial amount of debt and significant interest payment requirements. As of December 31, 2002, the Company had approximately $3.5 billion of
consolidated long-term debt. Our substantial indebtedness could have significant consequences, including the following: (i) increase our vulnerability to general adverse economic
and industry conditions; (ii) require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our indebtedness, reducing the
availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; (iii) limit our flexibility in planning for, or reacting to, changes in our
businesses and the industries in which we operate; (iv) place us at a competitive disadvantage compared to our competitors that have less debt or greater financial resources; and
(v) limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds. Any failure to pay such indebtedness or
other liabilities when due could have a material adverse effect on us.

We and our subsidiaries may still be able to incur substantially more debt which could increase the risk described above.

We
and our subsidiaries may be able to incur substantial additional debt in the future. If we or any of our subsidiaries do so, the risk described above could intensify. As of
December 31, 2002, we would have had approximately $50 million available for additional borrowings under our credit facility and our subsidiaries would have had approximately
$225 million available for additional borrowings under their credit facilities.

Restrictive covenants in our outstanding debt instruments may reduce our operating and financial flexibility.

The
terms of our outstanding debt instruments contain a number of restrictive covenants that impose significant operating and financial covenants on us including, among other things,
restrictions on our ability to: (i) incur additional debt; (ii) pay dividends and make restricted payments; (iii) create liens; (iv) use the proceeds from sales of assets
and subsidiary stock; (v) enter into sale and leaseback transactions; (vi) enter into transactions with affiliates; and (vii) enter into certain mergers, consolidations and
transfers of all or substantially all of our assets. Our failure to comply with the covenants contained in our outstanding debt instruments could result in an event of default which could materially
and adversely affect our operating results and our financial condition.

We may need to refinance certain of our indebtedness. Our inability to do so on favorable terms, or at all, could have a material adverse effect on
us.

We
may need to refinance certain of our existing debt instruments at their term. Our ability to obtain additional financing to repay our existing debt at maturity will depend upon a
number of factors, including prevailing market conditions and our operating performance. There can be no assurance that the terms and conditions of such additional financing will be favorable to us or
that any such financing will be available at all.

There is currently no established trading market for our 111/8% Senior Notes due 2011 and our 133/4% Senior Discount Notes due
2011.

There
can be no assurance as to (1) the liquidity of any market that may develop for the Senior Notes and the Senior Discount Notes, (2) the ability of the holders of the
Senior Notes and the Senior Discount Notes to sell them or (3) the prices at which any sales may be made. We do not presently intend to apply for a listing of the Senior Notes or the Senior
Discount Notes on any national securities exchange or to quote them on a

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quotation system. The record holder of the Senior Notes and the Senior Discount Notes is Cede & Co., a nominee of The Depository Trust Company.

We operate in highly competitive industries.

We operate in highly competitive industries. Our cable operations face competition from direct broadcast satellite, or DBS, providers, multi-channel multipoint
distribution systems, or MDS, satellite master antenna television systems and over-air television broadcasters. In our Internet access business, we compete against other Internet service
providers offering residential and commercial Internet access services. In our broadcasting and publishing operations, competition for advertising, subscribers, viewers, listeners, readers and
distribution is intense and comes from broadcast television stations and networks and specialty cable channels, radio, local, regional and national newspapers, magazines, direct mail, and other
communications and advertising media that operate in our markets. Our competitors include both privately-owned companies and government-owned market participants. In addition, there is increasing
consolidation in the Canadian media industries, and our competitors increasingly include market participants with interests in multiple industries and media. We cannot assure you that our existing and
future competitors will not pursue or be capable of achieving business strategies similar or competitive to ours. Some of our competitors have greater financial and other resources than we do. We may
not be able to compete successfully in the future against existing or potential competitors, and increased competition could have a material adverse effect on our business, financial condition or
results of operations.

We may not successfully implement our business strategies.

Our business strategies are based on developing an integrated platform of media assets. Our strategies include the offering of multi-platform advertising
solutions, the pursuit of cross-promotional opportunities and enhanced content development. There can be no assurance that the Company will be able to fully implement these strategies or that it will
realize the anticipated benefits of these strategies. Implementation of these strategies could also be affected by a number of factors beyond our control, including operating difficulties, regulatory
developments, general or local economic conditions or increased competition. In addition, our ability to achieve other anticipated benefits from our recent and future acquisitions, will depend, in
large part, on our ability to successfully implement measures intended to increase efficiency and to reduce operating costs.

We have grown rapidly. This rapid growth presents significant strains on our management. If we do not effectively manage our growth, our financial results and
operations could be adversely affected.

We
have recently experienced substantial growth in our business and have significantly expanded our operations. The acquisition of Le Groupe Vidéotron ltée,
or Groupe Vidéotron, contributed approximately $1.2 billion, or 51%, to our revenue for the twelve months ended December 31, 2002. We have made a number of other
acquisitions in the past, and we plan to continue to make acquisitions in the future. Some of our acquisitions have involved expansion into businesses in which we have historically had limited or no
involvement. We intend to continue to increase our business, make strategic acquisitions and further expand the types of businesses in which we participate. This growth and expansion has placed, and
will continue to place, a significant demand on our management. To manage growth effectively, we must maintain a high level of content quality, efficiency and performance and must continue to enhance
our operational, financial and management systems, and attract, train, motivate and manage our employees. We may not be able to effectively manage this expansion, and our failure to do so could have a
material adverse effect on our business, financial condition or results of operations.

Our content may not attract large audiences, which may limit our ability to generate advertising and circulation revenue.

Revenues
from our broadcasting and publishing operations are derived from advertising and circulation revenues. Advertising and circulation revenues are largely dependent upon audience
acceptance which is a function of the content offered and is influenced by factors such as reviews by critics, promotions, quality and acceptance of other competing content in the marketplace at or
near the same time, availability of alternative forms of entertainment, general economic conditions, public tastes generally and other intangible factors. All of these factors could change rapidly and
many are beyond our control. Lack of audience acceptance for our content could have a material adverse effect on our businesses, financial condition or results of operations.

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Our advertising revenue is subject to cyclical and seasonal variations.

Some of our businesses are cyclical in nature and have experienced significant seasonality due to, among other things, seasonal advertising patterns and seasonal
influences on people's viewing, reading and listening habits. Because we depend upon the sale of advertising for a significant portion of our revenue, our operating results are also sensitive to
prevailing economic conditions, including changes in local, regional and national economic conditions, particularly as they may affect advertising expenditures. In addition, newspaper publishing is
labor intensive and, as a result, newspapers have relatively high fixed-cost structure. During periods of economic contraction, revenue may decrease while some of our costs remain fixed,
resulting in decreased earnings. Similarly, because a significant portion of our revenue is derived from retail advertisers, which have historically been sensitive to general economic cycles, our
business, financial condition or results of operations could be materially adversely affected by a downturn in the retail sector.

We may be adversely affected in the cost of newsprint.

Newsprint expense represents one of our largest raw material expenses and, after wages and employee benefits expenses and programming acquisition costs, is our
most significant operating cost. Newsprint costs vary widely from time to time, and price changes in newsprint can significantly affect the overall earnings of our publishing operations. Volatile or
increased newsprint costs which could have a material adverse effect on our business, financial condition or results of operations may, in the future, affect our publishing operations.

We
have entered into a long-term agreement expiring December 31, 2005 with a newsprint manufacturer for the supply of most of our newsprint purchases. Our supply of
newsprint may be threatened if this newsprint manufacturer is unable to supply us with sufficient newsprint to meet our needs. Our inability to obtain sufficient newsprint on acceptable terms when
needed could materially increase our costs or disrupt our operations.

We may be adversely affected by variations in our costs, quality and variety of our television programming.

The
most significant cost in our broadcasting business is television programming. Our broadcasting operations may be exposed in the future to volatile or increased television programming
costs which may adversely affect their operating results. Developments in cable, satellite or other forms of distribution could also affect both the availability and the cost of programming and
increase competition for advertising expenditures. The production and distribution costs of television and other forms of entertainment may also increase in the future. Moreover, programs may be
purchased for broadcasting two to three years in advance, making it difficult to predict how such programs will perform. In some instances, programs must be replaced before their costs have been fully
amortized, resulting in accounting adjustments that would accelerate the recognition of expenses.

Our
ability to attract and retain digital cable subscribers depends, to a certain extent, upon our capacity to offer quality content and a variety of programming choices and packages. If
the number of specialty channels being offered decreases significantly or if the content offered on such channels does not receive audience acceptance, it may have a significant negative impact on
revenues from our digital cable operations.

We may be adversely affected by strikes and other labor protests.

Approximately 39% of our employees are represented by collective bargaining agreements. As of March 1, 2003, collective bargaining agreements covering
approximately 2,329 of our employees had expired or were under negotiation. The Company is currently negotiating new collective bargaining agreements with union representatives with a view to
significantly increasing productivity and reducing the Company's labor costs. As of March 23, 2003, an agreement in principle has been ratified with regard to a collective bargaining agreement
representing approximately 493 employees in the Broadcasting segment.

Since
May 8, 2002, the Company has been experiencing a work stoppage in the operations of its Cable Television segment (approximately 1,401 employees). As a result of the work
stoppage, the Company experienced, during the first three months of the work stoppage, disrupted service and property damage. As of March 27, 2003, an agreement in principle has been ratified
by the Cable Television employees under work stoppage.

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The
Company's inability to negotiate acceptable new agreements with respect to any of the above collective bargaining agreements could result in strikes or other forms of work stoppage.
If our unionized workers engage in a strike or if there is any other form of work stoppage, we could experience a significant disruption of our operations, damages to our property and service
interruption, which could adversely affect our business, financial position or results of operations.

We compete, and will continue to compete, with alternative technologies, and we may be required to invest a significant amount of capital to address continued
technological development.

The
media industry is experiencing rapid and significant technological changes, which may result in alternative means of program and content transmission and which could have a material
adverse effect on our business, financial condition or results of operations. The continued growth of the Internet has presented alternative content distribution options that compete with traditional
media. Furthermore, in each of our broadcasting markets, industry regulators have already authorized direct-to-home satellite and microwave services and may authorize other
alternative methods of transmitting television and other content with improved speed and quality. We may not be able to successfully compete with existing or newly developed alternative technologies
or we may be required to acquire, develop or integrate new technologies ourselves. The cost of the acquisition, development or implementation of new technologies could be significant and our ability
to fund such implementation may be limited and could have a material adverse effect on our ability to successfully compete in the future.

We depend on key personnel who may not remain with us in the future.

Our success depends to a large extent upon the continued services of our senior management. The loss of the services of our key personnel could have a material
adverse effect on our business, financial condition or results of operations. Our business also depends upon our ability to retain skilled employees. There is intense competition for qualified
management and skilled employees and our failure to recruit, train and retain such employees could have a material adverse effect on our business, financial condition or results of operations. Some of
our senior managers also serve as members of senior management of other companies owned by Quebecor Inc.

We may be adversely affected by fluctuations of the exchange rate.

Most of our revenues and expenses, other than interest expense on U.S. dollar-denominated debt and certain capital expenditures, are received or
denominated in Canadian dollars. A large portion of our debt is denominated, and interest, principal and premium, if any, thereon will have to be paid, in U.S. dollars. We have entered into
transactions to hedge the exchange rate risk with respect to most of our U.S. dollar-denominated debt, but fluctuations of the exchange rate may affect our ability to make payments in respect
of debt obligations that are not hedged against such exchange rate risk. In addition, hedging transactions may not be successful in protecting us against exchange rate fluctuations, or we may be
required to provide cash and other collateral to secure our obligations with respect to such hedging transactions.

For
the purposes of financial reporting, any change in the value of the Canadian dollar against the U.S. dollar during a given financial reporting period would result in a foreign
exchange gain or loss on the translation of any unhedged U.S. dollar denominated debt into Canadian dollars. Consequently, our reported earnings and debt could fluctuate materially as a result
of foreign exchange gains or losses.

We are subject to extensive government regulation. Changes in government regulation could adversely affect our business, financial condition or results of
operations.

Broadcasting
operations are generally subject to extensive government regulation. Regulations govern the issuance, amendment, renewal, transfer, suspension, revocation and ownership of
broadcast programming and distribution licenses. With respect to programming undertakings, regulations govern,inter alia, the timing and content
of programming, the timing, content and amount of commercial advertising, and the amount of foreign versus domestically produced programming. With respect to distribution undertakings, regulations
govern,inter alia, the distribution of Canadian programming services and linkage with non-Canadian programming

8

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services and the maximum fees to be charged to the public in certain circumstances. In Canada, there are significant restrictions on the ability of foreign entities to own or control broadcasting
licenses.

Our
Canadian television operations are regulated pursuant to theBroadcasting Act(Canada) and regulations thereunder. Our distribution
operations are regulated by both theBroadcasting Actand theTelecommunications Act(Canada) and
regulations thereunder. The Canadian Radio-television and Telecommunications Commission, which is generally referred to as the CRTC in this annual report, which administers the Broadcasting Actand theTelecommunications Act, has the power to grant, amend, suspend, revoke and
renew broadcasting licenses, approve certain changes in corporate ownership and control, and make regulations and policies in accordance with theBroadcasting
Actand theTelecommunications Act, subject to certain directions from the Federal Cabinet.

A
significant aspect of television broadcasting in Canada is simultaneous program substitution, or simulcasting, a regulatory requirement under which Canadian distribution undertakings,
like cable television systems with over 6,000 subscribers, are required to substitute the foreign programming service with local Canadian signal, including Canadian commercials, for broadcasts of
identical programs by a U.S. station when both programs are exhibited at the same time. These requirements are designed to protect the program rights that Canadian broadcasters acquire for
their respective local markets.

In
addition, the CRTC's Canadian content rules, which are embodied in regulations and license conditions, require television broadcasters to show significant, specified percentages of
programming of Canadian origin during each broadcast day and, specifically, during the evening hours. Large multi-station television ownership groups, like the Company, must also broadcast at least
eight hours per week of specified types of Canadian programming during prime time.

Television
broadcasting operations in Canada are also subject to "must carry" rules which require terrestrial distributors, like cable and microwave systems, to carry the signals of
local broadcasters as part of their basic service. The guaranteed carriage enjoyed by local television broadcasters under the "must carry" rules is designed to ensure that the signals of local
broadcasters reach cable households and enjoy advantageous channel placement. Furthermore, cable operators, DBS operators and direct-to-home satellite, known as DTH, operators
must offer to their subscribers more Canadian programming than non-Canadian programming services.

Also
important to broadcasting operations in Canada are the specialty (or thematic) programming service access rules, which require cable systems with more than 6,000 subscribers
operating in a French-language market to offer each analog French-language Canadian specialty channel licensed, other than certain
religious programming services, to the extent of available channels. Similarly, DTH satellite operators must, by regulation, distribute all Canadian specialty channels. Moreover, all licensed
specialty channels must be carried by cable operators when digital distribution is offered. These rules seek to ensure wider carriage for certain Canadian specialty channels than might otherwise be
secured through negotiation. However, Category Two digital specialty channels do not benefit from any regulatory assistance to guarantee distribution on cable or direct broadcast satellite
distribution undertakings.

As
far as distribution operations are concerned, 5% of gross broadcast revenues must be put aside for funding the production of Canadian programming. Canadian cable distribution
undertakings entered a competitive market in 1997 when satellite and microwave distributors were licensed. Any competing distributors are regulated by comparable rules and all programming services
must be made available to all distributors.

The
introduction of competition in the broadcast distribution field could have a material adverse effect on this segment of our business. Diversification of broadcast distribution to
include two-way and interactive broadcast and telecommunications services has been undertaken prior to the introduction of competition in order to develop new markets and, therefore,
compensate for the loss of cable subscribers. At the present time, the CRTC, through an exemption order, does not regulate the content of the Internet or interactive television and does not regulate
broadcast distribution via the Internet. However, the CRTC may review any of its exemption orders at any time. In addition, Internet retransmitters are explicitly excluded from the compulsory license
requirements of the Copyright Act.

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A
House of Commons Committee has been studying the current state and future direction of Canada's broadcasting system and the efficacy of theBroadcasting
Actin meeting policy objectives, including the restrictions on foreign ownership. The broadcasting distribution industry has promoted the following issues relating to the
broadcasting system: the elimination of the foreign ownership restrictions for telecommunication and broadcast distribution undertakings, the inclusion of the concept of competition under the Broadcasting Act,and the amendment to theRadiocommunications Act(Canada) so that signal theft is more
clearly identifiable by the courts. The House of Commons Committee will study certain issues including (1) patterns of media ownership, (2) cross-media ownership and vertical integration
and (3) Canadian content and cultural diversity. The introduction of new laws, regulations or policies with respect to these matters could have a material adverse effect on our business,
financial condition or results of operations.

Changes
to the regulations and policies governing broadcast television, specialty channels and program distribution through cable and DTH satellite services, the introduction of new
regulations or policies or terms of license or treatment of the tax deductibility of advertising expenditures could have a material adverse effect on our business, financial condition or results of
operations.

There
are also indirect restrictions on the foreign ownership of Canadian newspapers by virtue of provisions of theIncome Tax Act(Canada) which limits the deductibility by Canadian taxpayers of advertising expenditures relating to non-Canadian newspapers.

The CRTC may not renew our existing broadcast and distribution licenses or grant us new licenses on acceptable terms, or at all.

Our
CRTC broadcasting and distribution licenses must be renewed from time to time, typically every seven years, and cannot be transferred without regulatory approval.

While
CRTC regulations and policies do not require CRTC approval before a broadcaster purchases an unregulated media entity, such as a newspaper, the CRTC may consider the issue of our
cross-media ownership at license renewal proceedings, and may also consider the issue in deciding whether to grant new licenses to us. The CRTC has established a policy for the promotion of diversity
in broadcasting expression at a local and national level, primarily with respect to news editorial voices, and has the power to preserve diversity of news editorial voices and prevent or address the
emergence of undue competitive advantage on behalf of one licensee where it is found to exist. The CRTC may require us to take measures which could have a material adverse effect on the integration of
our assets, our employees and our ability to realize certain of the anticipated benefits of our acquisitions.

Our
inability to renew any of our licenses or acquire new interests or licenses on acceptable terms, or at all, could have a material adverse effect on our business, financial condition
or results of operations.

We are subject to a variety of environmental laws and regulations.

We are subject to a variety of environmental laws and regulations. Failure to comply with present or future laws or regulations could result in substantial
liability to us. Our properties, as well as areas surrounding those properties, particularly those in areas of long-term industrial use, may have had historic uses, or may have current
uses, in the case of surrounding properties, which may affect our properties and require further study or remedial measures. We cannot assure you that all environmental liabilities have been
determined, that any prior owner of our properties did not create a material environmental condition not known to us, or that a material environmental condition does not otherwise exist at any of our
properties.

ITEM 4  INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

Our legal and commercial name is Quebecor Media Inc. Our registered office is located at 300 Viger Avenue East, Montréal,
Québec, Canada H2X 3W4, and our telephone number is (514) 380-1999. Our corporate website can be accessed through quebecor.com. The information found on our corporate website is,
however, not part of this
annual report. Our agent for service of process in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

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The
Company was incorporated in Canada on August 8, 2000 under Part 1A of the Companies Act (Québec). In connection with our formation, our parent company
Quebecor Inc. transferred all the shares of its wholly-owned subsidiary Quebecor Communications Inc., or QCI, to us. The assets of QCI, on the date of the transfer in
October 2000, included: a 70% interest in Sun Media Corporation, or Sun Media, a 57.2% interest in Nurun Inc., or Nurun, all the assets of the CANOE network and all the assets of our
Leisure and Entertainment segment. Concurrently, we sold our interest in our subsidiary TQS Inc. to Quebecor Inc., which subsequently sold such interest to a private consortium. In
addition, Quebecor Inc. and Capital Communications CDPQ Inc., a wholly-owned subsidiary of Caisse de dépôt et placement du Québec, which we
refer to as Capital CDPQ in this annual report, contributed $0.9 billion and $2.8 billion, respectively, in cash in exchange for common shares of the capital stock of Quebecor Media. In
December 2001, QCI was liquidated into the Company, its parent.

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In October 2000, we acquired all of the outstanding shares of Groupe Vidéotron for $5.3 billion. At the time of this acquisition, the assets of Groupe
Vidéotron included all of the shares of Vidéotron ltée (or Vidéotron), a 99.9% voting interest in TVA Group Inc. (or TVA), Le
SuperClub Vidéotron ltée (or Le SuperClub Vidéotron), Protectron inc., a 66.7% voting interest in Vidéotron
Télécom ltée (or Vidéotron Télécom) a 54.0% voting interest in Netgraphe Inc. and a minority interest
in Microcell Telecommunications Inc. The transaction was financed with $3.7 billion in cash from the subscriptions by Quebecor Inc. and Capital CDPQ and borrowings under our
$2.1 billion credit facility dated October 23, 2000, which we refer to as the QMI Credit Facility. Pursuant to Canadian law, at the close of the takeover bid for Groupe
Vidéotron, all the shares of Vidéotron and TVA were deposited with trustees pending the approval by the CRTC of the transfer of the operating licenses owned by
Vidéotron and TVA. Approval for the transfer of the Vidéotron operating licenses was received in May 2001. On July 5, 2001, we received CRTC approval for
the transfer of the TVA operating licenses to the Company, subject to a condition requiring that by September 21, 2001: (i) TQS Inc. be placed in trust and (ii) a third
party not associated with Quebecor Inc. or any of its affiliates files an application with the CRTC to acquire TQS Inc. In September 2001, the said condition was satisfied, the
trust arrangement was terminated and the control of the shares of TVA was passed to us. In December 2002, Groupe Vidéotron was liquidated into the Company, its parent.

Following
the buyout of the minority shareholders of Sun Media in June 2001, our ownership interest in Sun Media increased to 100%.

In
July 2001, we issued US$715.0 million in aggregate principal amount of 111/8% Senior Notes and US$295.0 in aggregate principal amount of
133/4% Senior Discount Notes. Both the Senior Notes and the Senior Discount Notes are unsecured, and each are due July 15, 2011, with cash interest payable
semi-annually in arrears on January 15 and July 15 of each year except that, in the case of the Senior Discount Notes, interest will accrue, prior to July 15, 2006, in
the form of an increase in the accreted value, representing amortization of original issue discount of such Senior Discount Notes. The net proceeds thereof were used to reduce our indebtedness under
the QMI Credit Facility.

On
February 7, 2003, Sun Media issued US$205 million in aggregate principal amount of 75/8% Senior Notes and contracted new bank credit facilities totaling
$425 million. The Senior Notes are unsecured, and are due February 15, 2013, with cash payable semi-annually in arrears on February 15 and August 15 of each
year, beginning on August 15, 2003. The net proceeds from the sale of Senior Notes and the new bank credit facilities were used to pay down in full all Sun Media loans and to pay a
$260 million dividend to Quebecor Media, of which $150 million will be used to reduce the long-term debt of Vidéotron.

During
our financial year ended December 31, 2002, we proceeded with several business acquisitions, divestitures and combinations through our direct and indirect subsidiaries.
Among other transactions, Vidéotron Télécom acquired most of the strategic assets of Toronto-based Stream Intelligent Networks in April 2002 as well
as fiber optic cable routes from 360networks. In January 2002, Mindready Solutions Inc., or Mindready, acquired certain operating assets from Nortel Networks Limited.
Vidéotron increased its ownership interest in Télécable Charlevoix (1997) inc. and the Company increased its ownership interest in TVA (through
TVA's share repurchase and cancellation program). In the third quarter of 2002, Netgraphe Inc. announced the sale of itsMicanoa.comportal to
Grupo Vertice, a Spanish information and training firm. In November 2002, the Company sold its 80% interest in legal publisher Wilson & Lafleur. In 2002, business acquisitions amounted
to $14.2 million and business divestitures amounted to $6.7 million. See "Item 5  Operating and Financial Review and
Prospects  Liquidity and Capital Resources  Investing Activities" and the consolidated financial statements (see pages F1
to F43 of this annual report).

In
addition, in May 2002, we sold Publicor, an established magazine publisher in the province of Québec, to TVA in order to bring all of the Company's
magazine publishing operations together under TVA Publishing Inc., or TVA Publishing. In September 2002, TVA and Radio Nord Communications Inc. signed a
60%/40% agreement to purchase, subject to CRTC approval, certain radio broadcasting stations from Astra Media Inc.

In
May 2002, Vidéotron sold its cable television and Internet installation and repair operations to a subsidiary of Entourage Technology Solutions Inc.
Concurrently with the sale of the assets related to the installation and repair business of Vidéotron, Vidéotron and Alentron (a subsidiary of Entourage Technology
Solutions Inc.) entered into a services agreement pursuant to which Alentron provides installation and repair

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services to Vidéotron. Since May 8, 2002, the Company has been experiencing a work stoppage in the operations of its Cable Television segment (approximately 1,401 employees). As
a result of the work stoppage, the Company experienced, during the first three months of the work stoppage, disrupted service and property damage. As of March 27, 2003, an agreement in
principle has been ratified by the Cable Television employees under work stoppage. Pursuant to the terms of the agreement in principle, the Company has agreed to renegotiate the services agreement
with Entourage Technology Solutions Inc. subject to certain conditions. This agreement in principle would require Vidéotron to resume cable television and Internet installation
and repair services.

BUSINESS OVERVIEW

We are a leading Canadian-based, multi-platform media company with interests in cable operations, newspaper publishing, television broadcasting, business
telecommunications, leisure and entertainment, and new media services. Through these interests, we hold leading positions in the creation, promotion and distribution of news, entertainment and
Internet related services that are designed to appeal to audiences in every demographic category. In addition, we are the largest French-language media company in North America.

We
were formed in August 2000 to facilitate the growth and integration of our established, complementary media assets. Our operating subsidiaries have created leading positions in
several Canadian media sectors, particularly in the Province of Québec. Through Vidéotron, we are the largest cable operator in the Province
of Québec and the third largest cable operator in Canada based on number of basic cable subscribers. Through Sun Media, we are the largest newspaper publisher in the Province of
Québec and the second largest newspaper publisher in Canada, and we have established the number one or two market position in each of our eight urban daily markets, in each case, in
terms of weekly circulation. Through TVA, we are the largest privately-owned television broadcaster in Québec, the largest French-language television broadcaster in North America and,
through TVA and LCN, we are the largest private producer of French-language television programming in North America. In the new media sector, we have developed, through Netgraphe Inc. and its
subsidiaries, two of Canada's leading English and French-language Internet news and information portals, as well as leading sites dedicated to automobiles, employment, personals and classifieds and,
through Nurun and its subsidiaries, including Mindready, we provide Web integration and technology services. We are also a leading book and magazine publisher, and we own and operate the largest
retail music and video store chains in Québec.

We
believe our diversified portfolio of media assets provides us with a number of competitive advantages, including the ability to:



For
the twelve-month period ended December 31, 2002, we generated revenues of approximately $2.3 billion and an operating income of approximately $605 million.
Operating income means earnings before amortization charges, financial expenses, reserves for restructuring of operations and special charges, write-down of goodwill, gains on sale of
businesses and other assets and gains on dilution from issuance of capital stock by subsidiaries, and income taxes. Special charges include mark-to-market of investments, a
write down of property, as well as non-monetary compensation charges. Equity income (or loss) from non-consolidated subsidiaries and non-controlling interest are
not considered in the computation of operating income. Operating income is not a measure of results that is consistent with generally accepted accounting principles. It is not intended to be regarded
as an alternative to other financial operating performance measures

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or to the statement of cash flows as a measure of liquidity. It is not intended to represent funds available for debt service, dividends, reinvestment or other discretionary uses, and should not be
considered in isolation as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. Operating income is used by the Company because management
believes it is a meaningful measure of performance. Operating income is commonly used in the sectors in which the Company is engaged and by the investment community to analyze and compare companies.
It also facilitates year-over-year comparison of results, since operating income excludes, among other things, unusual items that are not readily comparable from year to year.
The Company's definition of operating income may not be identical to similarly titled measures reported by other companies.

OUR STRATEGY

Our objective is to increase revenues and profitability by leveraging the integration and growth opportunities presented by our collection of leading media
assets. We attribute our strong historical results and positive outlook for growth and profitability to our ability to develop and execute forward-looking business strategies. The key elements of our
strategy are to:



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Through
our direct and indirect interests in several businesses, we now operate in the following segments: Cable Television, Newspapers, Broadcasting, Leisure and Entertainment, Business
Telecommunications, and New Media Services, which includes Internet/Portals and Web Integration/Technology.

CABLE TELEVISION

We are the largest cable operator in the Province of Québec and the third largest cable operator in Canada based on number of cable subscribers,
with approximately 1.4 million basic cable subscribers. We hold cable licenses that cover approximately 80% of Québec's 2.8 million homes passed by cable, including
licenses for the Greater Montréal area, the second largest urban area in Canada. The Greater Montréal area cluster represents the largest contiguous cluster in Canada and
one of the largest contiguous clusters in North America. This concentration provides us with improved operating efficiencies and is a key element in the development and launch of our bundled service
offerings. In 1995, we launched an aggressive modernization program to upgrade our network. The network modernization program, which was completed as of December 31, 2001, has provided us with
one of the largest bi-directional hybrid fiber coaxial (HFC) networks in North America, with approximately 97% of our systems upgraded to two-way capability, and 72% of our
systems upgraded to 750 MHz of capacity. Our broadband coverage is the most extensive in the Province of Québec, allowing us to become the largest provider of
high-speed Internet access services in Québec.

We
offer customers a bundled package of services including analog or digital television cable, high-speed and dial-up Internet access, premium programming and
selected interactive television services. In addition to offering a wide range of English-language programming, we are the largest distributor of French-language programming in Canada. It is estimated
that over 80% of the Québec population is French-speaking. We believe that our bundled package of services together with our focus on customer service and the breadth of our
French-language offering, result in higher customer satisfaction, increased use of our services and higher customer retention in a competitive environment.

In
May 2002, Vidéotron sold its cable television and Internet installation and repair operations to a subsidiary of Entourage Technology Solutions Inc.
Concurrently with the sale of the assets related to the installation and repair business of Vidéotron, Vidéotron and Alentron (a subsidiary of Entourage Technology
Solutions Inc.) entered into a services agreement pursuant to which Alentron provides installation and repair services to Vidéotron. Since May 8, 2002, the Company has
been experiencing a work stoppage in the operations of its Cable Television segment (approximately 1,401 employees). As a result of the work stoppage, the Company experienced, during the first three
months of the work stoppage, disrupted service and property damage. As of March 27, 2003, an agreement in principle has been ratified by the Cable Television employees under work stoppage.
Pursuant to the terms of the agreement in principle, the Company has agreed to renegotiate the services agreement with Entourage Technology Solutions Inc. subject to certain conditions. This
agreement in principle would require Vidéotron to resume its cable television and Internet installation and repair services.

For
the twelve-month period ended December 31, 2002, our cable operations generated revenues and an operating income of $716 million and $263 million, respectively.

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Business Strategy

Our objective is to maximize revenues and operating cash flow by leveraging our strong market position and highly advanced broadband network. To achieve this
objective we are pursuing the following strategy:



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Broadcast Distribution Industry Overview

Competition to the cable industry was introduced in Canada in 1997. The table below indicates, for each of the years set forth, the breakdown of distribution
subscriptions in Canada:

Number of Basic Cable Subscribers and Market Share (%)

|                     |  | 2001      |  | 2000 |  | 1999      |  | 1998
|-------------------- |  | --------- |  | ---- |  | --------- |  | ----
|
|Class 1, Cable       |  | 6,837,679 |  | 72.8 |  | 6,943,468 |  | 77.4
|Class 2, Cable       |  | 340,920   |  | 3.6  |  | 366,396   |  | 4.1 
|Class 3, Cable       |  | 606,643   |  | 6.5  |  | 696,317   |  | 7.8 
|Sub-total Cable      |  | 7,785,242 |  | 82.9 |  | 8,006,181 |  | 89.2
|MMDS(1)              |  | 86,773    |  | 0.9  |  | 83,913    |  | 0.9 
|DTH or DBS(2)        |  | 1,519,620 |  | 16.2 |  | 880,092   |  | 9.8 
|Satellite Television |  | 1,344     |  | 0.0  |  | 2,678     |  | 0.0 
|Total                |  | 9,392,979 |  | 100  |  | 8,972,864 |  | 100 

Source: CRTC Financial Database

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Cable Television Industry Overview

Cable television has been available in Canada for almost 50 years and, as such, it is a well developed market. As of August 31, 2001, there were
approximately 8.2 million cable television customers in Canada, representing a basic cable penetration rate of 72% of homes passed. The Canadian cable television market is fairly concentrated
as the four largest cable service providers serve approximately 7 million customers, or approximately 86% of total basic cable subscribers. As of August 31, 2001, total industry revenue
was estimated to be over $3.6 billion and is expected to grow significantly going forward as Canadian cable operators have aggressively upgraded their networks and have begun deploying new
products and services, such as high-speed Internet access and digital television services. The following table summarizes recent annual key statistics for the Canadian and
U.S. cable television industries.

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|                        |  | Year Ended December 31, |     
|----------------------- |  | ----------------------- | ----
|
|
|Canada                  |  |                         |     
|Industry Revenue        |  | $                       | 3.6 
|Homes Passed            |  |                         | 10.0
|Basic Cable Subscribers |  |                         | 7.2 
|Basic Penetration (%)   |  |                         | 71.5
|U.S.                    |  |                         |     
|Industry Revenue        |  | $                       | 43.5
|Homes Passed            |  |                         |    
|Basic Cable Subscribers |  |                         | 73.0
|Basic Penetration (%)   |  |                         |    

Source of Canadian data: CRTC. Source of U.S. data: Paul Kagan Associates, Inc., Kagan World Media, a Media Central/Primedia Company, and Nielson Media Research.

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The traditional cable business, which is the delivery of video via hybrid fiber coaxial networks, is fundamentally similar in the U.S. and Canada.
Different economic and regulatory conditions, however, have given rise to important differences. Canadian operators have more limited revenue sources than U.S. operators due to Canadian
regulations which prevent cable operators from generating revenue from local advertising. Notwithstanding the foregoing, Canadian cable television operators enjoy certain advantages relative to their
U.S. counterparts. These include a less competitive environment due primarily to the fact that competition in Canada was only recently permitted in the industry. Canadian operators also
commenced network capacity upgrades to facilitate the delivery of new broadband services, such as high-speed Internet access, earlier than their U.S. counterparts.

A
significant portion of Canada's cable television subscribers are based in Québec. As of September 30, 2001, Québec was home to approximately 24% of
Canada's population and approximately 24% of basic cable subscribers. Basic cable penetration in Québec, which was approximately 64% as of December 31, 2001, has traditionally
been lower than in other populated provinces in Canada, principally due to the higher concentration of French-speaking Canadians in Québec. It is estimated that over 80% of
Québec's population
is French-speaking. Contrary to the English-speaking provinces of Canada, where programming in English comes from all over North America, programming in French is available "off-air" in
most of Québec's French-speaking communities. The arrival of a variety of French-language specialty programming services not available on the air has contributed to a slight cable
penetration increase in the 1990s.

Expansion of Digital Distribution

In order to compete with the direct broadcast satellite offers, the cable industry began deploying digital technology which allows for a large number of services
to be carried. Not including analog distribution in Canada, digital subscribership as of June 2002 was as follows:

|              |  | Number of Digital Subscribers and Share (%)
|------------- |  | -------------------------------------------
|
|
|Digital Cable |  | 989,305                                    
|DTH(1)        |  | 1,339,418                                  
|MMDS(2)       |  | 42,413                                     
|Total         |  | 2,371,136                                  

Source: Mediastats.

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Expansion of Digital Programming

In the last two years, the choice and range of television programming has expanded substantially in Canada. In November 2000, the CRTC released its
decisions on the applications for new digital pay and specialty television channels. In total, the CRTC approved 21 Category One licenses (16 English-language and five French-language) and 262
Category Two licenses, as well as two pay-per-view and four video-on-demand applications. Cable service providers using digital technology will be
required to carry all of the approved Category One services appropriate to their markets while Category Two licensees who do not have guaranteed distribution rights must negotiate with cable service
providers for access. In June 2001, another 12 Category Two licenses were approved by the CRTC. The increase in programming content as a result of the launch of approximately fifty of these
programming services is believed to be a key factor in driving increases in digital cable penetration in Canada. French-language digital programming services have not yet been launched.

In
September 2001, Canadian cable service providers, including Vidéotron, significantly expanded their digital programming offering through the launch of many of
the new digital channels licensed by the CRTC in November 2000. Since September 2001, we have launched over 30 new English-language digital channels, significantly increasing the
programming offered to our digital subscribers. We also expect to launch additional French-language specialty channels in the third quarter of 2003. We believe the launch of these digital channels and
the future increase in French-language programming will help to augment the penetration of our digital television service among our subscribers.

Products and Services

We currently offer our customers analog cable television services and programming as well as new and advanced high-bandwidth products and services
such as high-speed Internet access, digital television, premium programming and selected interactive television services. We continue to focus on our high-speed Internet access
and digital television services, both of which are increasingly desired by customers. In addition, in the third quarter of 2001, we launched additional interactive services providing
e-mail, Internet access and other functionality through the television receiver. With our interactive platform currently in place, we will be able to successfully deploy additional
value-added services such as video-on-demand as well as interactive programming and advertising.

Traditional Cable Television Services

Customers subscribing to our traditional analog "basic" and analog "extended basic" services generally receive a line-up of between 49 and 59 channels
of television programming, depending on the bandwidth capacity of their local cable system. Customers who pay additional amounts can also subscribe to additional channels, either individually or in
packages. For any additional programming, customers must rent or buy a set top box. We tailor our channels to satisfy the specific needs of the different customer segments we serve.

Our
cable television service offerings include the following:



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Advanced Products and Services

Cable's high bandwidth is a key factor in the successful delivery of advanced products and services. Several emerging technologies and increasing Internet usage
by our customer base have presented us with significant opportunities to expand our sources of revenue. In most of our systems, we currently offer a variety of
advanced products and services including high-speed Internet access, digital television and selected interactive services. We intend to continue to develop and deploy additional services
to further broaden our service offering.





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The
following table summarizes our subscriber statistics for our analog and digital cable and advanced products and services.

|                            |  | As of and for the Year Ended December 31,
|--------------------------- |  | -----------------------------------------
|
|Video services              |  |                                          
|Basic analog cable          |  |                                          
|Homes passed(1)             |  | 2,329,023                                
|Basic subscribers(2)        |  | 1,440,184                                
|Penetration(3)              |  | 61.8%                                    
|Digital cable               |  |                                          
|Digital subscribers         |  | 170,729                                  
|Penetration(4)              |  | 11.9%                                    
|Number of digital terminals |  | 182,010                                  
|Data services               |  |                                          
|Dial-up Internet access     |  |                                          
|Dial-up subscribers         |  | 43,627                                   
|Penetration(4)              |  | 3.0%                                     
|High-speed Internet access  |  |                                          
|Cable modem subscribers     |  | 305,556                                  
|Penetration(4)              |  | 21.2%                                    

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Pricing of Our Products and Services

Our revenues are derived principally from the monthly fees our customers pay for cable services. The rates we charge vary based on the market served and the level
of service selected. Rates are usually adjusted annually. As of December 31, 2002, the average monthly fee for basic and extended basic service was $20.98
and $31.10 and the average monthly fee for basic and extended basic digital service was $10.99 and $45.50. A one-time installation fee, which may be waived in part during certain
promotional periods, is charged to new customers. Monthly fees for converters and remote control tuning devices, and administrative fees for delinquent payments for service, are also charged. Except
in respect of our Internet access services, customers are typically free to discontinue service at any time without additional charge, but they may be charged a reconnection fee to resume service.

The
CRTC only regulates rates for basic cable service. The fees for services offered in discretionary packages, including Canadian and U.S. specialty television services, are
based upon rates negotiated between us and the providers of programming services. In addition, fees for extended cable service (over and above basic cable service rates), pay-television
and pay-per-view services, and rentals for set top boxes are priced by us on a discretionary basis and are not regulated by the CRTC.

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Although
our service offerings vary by market, because of differences in the bandwidth capacity of the cable systems in each of our markets and competitive and other factors, our
services are typically offered at monthly price ranges as follows:

Service

Price RangeBasic analog cable

$15.10  $26.85Extended basic analog cable

$24.29  $37.91Basic digital cable

$  9.99  $11.99Extended basic digital cable

$27.00  $64.00Pay-Television

$  6.00  $19.95Pay-Per-View (per movie or event)

$  3.99  $79.95Dial-up Internet access

$  9.95  $22.95High-speed Internet access

$29.95  $54.95


Our Network Technology

As of December 31, 2002, our cable systems consisted of approximately 7,500 km of fiber optic cable and 25,000 km of coaxial cable, passing over
2.3 million homes and serving approximately 1.4 million subscribers. Our network is the largest broadband network in Québec covering over 80% of cable homes passed, and
one of the more advanced broadband networks in North America with over 97% two-way capability at present.

The
following table summarizes the current technological state of our systems, based on the percentage of our customers who have access to the bandwidths listed below and
two-way capability.

|                  |  | Under 450 MHz |  | 480 to 625 MHz |  | 750 MHz |  | Two-Way Capability
|----------------- |  | ------------- |  | -------------- |  | ------- |  | ------------------
|December 31, 2000 |  | 7%            |  | 21%            |  | 72%     |  | 92%               
|December 31, 2001 |  | 3%            |  | 25%            |  | 72%     |  | 97%               
|December 31, 2002 |  | 3%            |  | 23%            |  | 74%     |  | 97%               

Our
cable television networks are comprised of four distinct parts including signal acquisition networks, main headends, distribution networks and subscriber drops. The signal
acquisition network picks up a wide variety of television, radio and multimedia signals. These signals and services originate from either a local source or content provider or are picked up from
distant sites chosen for satellite or "off-air" reception quality and transmitted to the main headends by way of "off-air" links, coaxial links or fiber optic relay systems.
Each main headend processes, modulates, scrambles and combines the signals in order to distribute them throughout the network. The first stage of this distribution consists of either a fiber optic
link or a very high capacity microwave link which distributes the signals to distribution or secondary headends. The signal thereafter uses the hybrid fiber coaxial cable network made of
wide-band amplifiers and coaxial cables capable of serving up to 30 km in radius from the distribution or secondary headends to the subscriber drops. The subscriber drop brings the signal
into the subscriber's television set directly or, depending on the area or the services selected, through various types of subscriber equipment including set top boxes.

Since
1995, we have invested in a modernization program to upgrade our network to enable us to develop and deploy new advanced products and services. Our modernization program was
complete as of December 31, 2001. As a result, we are now able to deliver simultaneously up to 75 analog channels and over 200 digital channels in the Greater Montréal area and
in western Québec, and up to 49 analog channels and over 70 digital channels in other urban areas in Québec, and provide two-way capability throughout our
entire network. We have adopted the hybrid fiber coaxial network architecture as the standard for our ongoing system upgrades. Hybrid fiber coaxial network architecture combines the use of fiber optic
cable with coaxial cable. Fiber optic cable has excellent broadband frequency characteristics, noise immunity and physical durability and can carry hundreds of video and data channels over extended
distances. Coaxial cable is less expensive and requires greater signal amplification in order to obtain the desired transmission levels for delivering channels. In most systems, we deliver our signals
via fiber optic cable from the headend to a group of nodes to the homes passed served by that node. Our system design provides for cells of approximately 1,000 homes each to be served by

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fiber optic cable. To allow for this configuration, secondary headends were put into operation in the Greater Montréal area and in the Greater Québec City area. Remote
secondary headends must also be connected with fiber optic links. The loop structure of the two-way networks brings reliability through redundancy, the cell size improves flexibility and
capacity, while the reduced number of amplifiers separating the home from the headend improves signal quality and reliability. Our network design provides us with significant flexibility to offer
customized programming to individual cells of 1,000 homes, which is critical to our ability to deploy certain advanced services in the future, including video-on-demand and the
continued expansion of our interactive services.

We
believe that our network design provides high capacity and superior signal quality and will enable us to provide advanced cable services while also providing sufficient capacity for
the continued expansion of our service offering in the future.

Marketing and Customer Care

Our long term marketing objective is to increase our cash flow through deeper market penetration of our services and continued growth in revenue per subscriber.
We believe that customers will come to view their cable connection as the best distribution channel to the home for a multitude of services. To achieve this objective, we are pursuing the following
strategies:



We
plan to invest increasing amounts of time, effort and financial resources in marketing new and existing services. To increase customer penetration and increase the number of services
used by our customers, we will use coordinated marketing techniques, including door-to-door solicitation, telemarketing, media advertising, e-marketing and direct
mail solicitation.

Maximizing
customer satisfaction is a key element of our business strategy. In support of our commitment to customer satisfaction, we operate a 24-hour customer service
hotline seven days a week for nearly all of our systems. We currently have five operational call centers and we are implementing various initiatives to improve customer service and satisfaction. For
example, we recently interconnected our call centers in two of our major regions (Montréal and Hull) to enhance our call handling capabilities and efficiency. Our customer care
representatives continue to receive extensive training to develop customer contact skills and product knowledge which are key contributors to high rates of customer retention as well as to selling
additional services and higher levels of service to our customers. We also are implementing Web-based customer service capabilities. To assist us in our marketing efforts, we utilize
surveys, focus groups and other research tools as part of our efforts to determine and proactively respond to customer needs.

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Programming

We believe that offering a wide variety of conveniently scheduled programming is an important factor influencing a customer's decision to subscribe to and retain
our cable services. We devote significant resources to obtaining access to a wide range of programming that we believe will appeal to both existing and potential customers. We rely on extensive market
research, customer demographics and local programming preferences to determine our channel and package offerings. The CRTC currently limits distribution of foreign content in Canada and, as a result,
we are limited in our ability to provide such
programming to our customers (see "Item 4  Information on the Company  Business
Overview  Regulation"). We obtain basic and premium programming from a number of suppliers, including TVA.

Since
September 2001, we significantly expanded the programming available to our subscribers through the launch of over 30 English-language channels in digital format.
Furthermore, we believe the recent launch of these digital channels, the continued launch of digital channels in the future and the increase in French-language programming, will help to increase the
penetration of our digital television service among our subscribers.

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Our programming contracts generally continue for a fixed period of time, up to three years, and are subject to negotiated renewal. Programming tends to be made available to us for a flat
fee per customer. Our overall programming costs have increased in recent years and are expected to continue to increase due to factors including, but not limited to, additional programming being
provided to customers as a result of system rebuilds that increase channel capacity, increased costs to produce or purchase specialty programming and inflationary or negotiated annual increases.

Competition

We face competition in the areas of price, service offerings and service reliability. We compete with other providers of television signals and other sources of
home entertainment. In addition, as we expand into additional services such as interactive services, we may face additional competition. We operate in a competitive business environment which can
adversely affect our business and operations. Our principal competitors include off-air television and providers of other entertainment, direct broadcast satellite, digital subscriber
line, private cable, other cable distribution and wireless distribution.



NEWSPAPER

Through our newspaper publishing operations, we are the largest newspaper publisher in the Province of Québec and the second largest newspaper
publisher in Canada, with a 21% market share in terms of weekly circulation, according to statistics published by the Canadian Newspaper Association. We publish 15 paid daily newspapers and serve
eight of the top 11 urban markets in Canada. Each of our eight urban daily newspapers

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ranks either first or second in its market in terms of paid circulation. We also publish 175 weekly newspapers and shopping guides and 18 other specialty publications, including a free daily commuter
newspaper.

For
the year ended December 31, 2002, our newspaper operations generated revenues of $854 million and an operating income of $222 million. For this same period, we
derived 68% of our revenues from advertising, 20% from circulation, and 12% from commercial printing and distribution operations.

Business Strategy

Our objective is to increase our profitability and cash flow by pursuing the following business and operating strategies:



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Canadian Newspaper Publishing Industry Overview

Newspaper publishing is the oldest and largest segment of the advertising-based media industry in Canada. The industry is dominated by a small number of major
newspaper publishers of which we are the second largest in Canada with a combined weekly circulation (paid and unpaid) of more than ten million copies.

The
newspaper market consists primarily of two segments, broadsheet and tabloid newspapers, which vary in format. With the exception of the broadsheetThe London
Free Press, all of our urban paid daily newspapers are tabloids.

Newspaper
companies derive revenue principally from advertising and circulation. According to industry sources, in 2001, the total Canadian daily newspaper industry revenue was
$3.2 billion, with 79% derived from advertising and the remaining 21% coming from circulation. Total advertising revenue for the daily newspaper industry was $2.5 billion in 2001, which
represented 23.7% of total Canadian advertising spending. Including revenues from non-daily newspapers, advertising revenues for the newspaper industry as a whole in 2001 were estimated to
be approximately $3.3 billion, representing a 31% share of total Canadian advertising spending. From 1995 to 2000, advertising revenue for daily newspapers increased at an average annual growth
rate of 6.3%. In 2001, as a result of a weakening economy and the events of September 11, daily newspaper advertising revenues declined by 3.1% compared to 2000. Zenith Media estimates that
newspaper advertising revenues have remained flat in 2002. In 2001, total Canadian daily newspaper circulation revenue decreased by 1.5% to $682 million despite a marginal increase in
circulation volume.

Circulation
revenues are derived from single copy newspaper sales made through retailers and vending boxes and home delivery newspaper sales to subscribers.

Advertising
revenues and, to a lesser extent, circulation revenues are cyclical and are generally affected by changes in national and regional economic conditions. Recent statistics
indicate that economic growth in Canada increased in 2002 relative to 2001. In addition, recent forecasts by the Bank of Canada project that Canadian Real Gross Domestic Product will grow at an
average annual rate of approximately 3.0% in 2003. Zenith Media forecasts that newspaper advertising revenues in Canada will grow at a compound annual growth rate of 2.5% between 2002 and 2004.

Newspaper Operations

We operate our newspaper businesses in urban and community markets. A majority of our newspapers in the Community Newspaper Group are clustered around our eight
urban dailies in the Urban Daily Group. We have strategically established our community newspapers near our regional printing facilities in suburban and rural markets across Canada and in Florida.
This geographic clustering enables us to realize operating efficiencies and economic synergies through sharing of management, accounting and human resources as well as production and printing
functions. For the twelve-months ended December 31, 2002, the Urban Daily Group accounted for 75.1% of our newspaper operating income with the Community Newspaper Group accounting for the
remaining 24.9%.

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The
following table summarizes our principal sources of revenue for the past three fiscal years (in millions). Revenues of Sun Media are included in our results of operations since the
date of acquisition of Sun Media in January 1999.

|                              |  | Fiscal Year Ended December 31,
|----------------------------- |  | ------------------------------
|
|
|Revenues                      |  |                               
|Advertising                   |  | $                             
|Circulation                   |  | $                             
|Commercial Printing and Other |  | $                             
|                              |  |                               
|Total                         |  | $                             
|                              |  |                               

The Urban Daily Group

On a combined weekly basis, the eight daily newspapers in our Urban Daily Group circulate approximately 6.4 million copies. These newspapers hold either
the number one or number two position in each of their respective markets in terms of circulation. In addition, on a combined basis, over 50% of our readers do not read our principal competitor's
newspaper in each of our urban daily markets, according to data from the NADbank® 2002 Study.

With
the exception of the broadsheetThe London Free Press, the Urban Daily Group newspapers are morning tabloids published seven days a
week. These are mass circulation newspapers that provide succinct and complete news coverage with an emphasis on local news, sports and entertainment. The tabloid format makes generous use of color,
photographs and graphics. Each newspaper contains inserts that feature subjects of interest such as fashion, lifestyle and special sections. During 2002, the Urban Daily Group launched a quarterly
publication with a circulation of 500,000 copies to be distributed to its subscribers across Canada. In 2002, the Urban Daily Group also launched a free weekly newspaper in London, and it currently
publishes a free Monday to Friday commuter newspaper in Montréal and two free weekly shopping guides. In addition, the Urban Daily Group includes the distribution businesses operated
through Messageries Dynamiques and Dynamic Press Group.

Circulation
is defined as average sales of a newspaper per issue. Readership (as opposed to paid circulation) is an estimate of the number of people who read or looked into an average
issue of a newspaper and is measured by a continuous independent survey conducted by NADbank Inc. According to the NADbank® 2002 Study, the estimates of readership are based upon
the number of people responding to the Newspaper Audience Databank survey circulated by NADbank Inc. who report having read or looked in to one or more issues of a given newspaper during a
given period equal to the publication interval of the newspaper.

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The
following chart lists our paid daily newspapers and their respective readership in 2002 as well as their market position by paid circulation during that period:

|                       |                          | 2002 Average Daily Readership |           |          
|---------------------- | ------------------------ | ----------------------------- | --------- | ---------
|
|
|Le Journal de Montréal |                          | 706,600                       |           | 454,800  
|Le Journal de Québec   |                          | 225,600                       |           | 151,500  
|The London Free Press  |                          | 173,600                       |           | 95,900   
|The Toronto Sun        |                          | 699,300                       |           | 1,018,900
|The Edmonton Sun       |                          | 160,000                       |           | 193,900  
|The Calgary Sun        |                          | 166,400                       |           | 213,000  
|The Winnipeg Sun       |                          | 116,300                       |           | 121,200  
|The Ottawa Sun         |                          | 109,200                       |           | 93,800   
|                       |                          |                               |           |          
|                       | Total Average Readership |                               | 2,357,000 |          
|                       |                          |                               |           |          

---

ThroughLe Journal de MontréalandLe Journal de
Québecwe have established market leading positions in Québec's two main urban markets, Montréal and Québec City.
According to the Audit Bureau of Circulations,Le Journal de Montréalranks second in paid circulation, afterThe
Toronto Star, among non-national Canadian dailies and first among French-language dailies in North America.

The London Free Pressis one of Canada's oldest daily newspapers and our only daily that is a broadsheet newspaper. The London Free Pressis the only local daily
newspaper in its market.

The Toronto Sunis the third largest non-national daily newspaper in Canada in terms of circulation, according to the Audit
Bureau of Circulations. The Toronto newspaper market is very competitive.The Toronto Suncompetes with Canada's largest newspaper, The Toronto Star,and
to a lesser extent withThe Globe and MailandThe
National Post. As a tabloid newspaper,The Toronto Sunhas a unique format compared to these broadsheet competitors.

Our
dailies in Edmonton, Calgary, Winnipeg and Ottawa have established a number two position and compete against a broadsheet newspaper in each of their respective markets.

Advertising and Circulation

Advertising revenue is the largest source of revenue for the Urban Daily Group. Advertising rates are based upon the size of the market in which each newspaper
operates, circulation, readership, demographic composition of the market and the availability of alternative advertising media. Our strategy is to maximize advertising revenue by providing advertisers
with a range of pricing and marketing alternatives to better enable them to reach their target audience. Our newspapers offer a variety of advertising alternatives, including full-run
advertisements in regular sections of the newspaper targeted to different readers (including food, real estate and travel), geographically-targeted inserts, special interest pullout sections and
advertising supplements.

Our
principal categories of advertising revenues are classified, retail and national advertising. Classified advertising has traditionally accounted for the largest share of our
advertising revenues in our urban daily newspapers (44.4% in the year ended December 31, 2002) followed by retail advertising (35.6% in the same period) and national advertising (17.5% in the
same period). Classified advertising is made up of four principal sectors: automobiles, private party, recruitment and real estate. Automobile advertising is the largest classified advertising
category, representing about 45.7% of all of our classified advertising in terms of revenue for the year ended December 31, 2002. Retail advertising is display advertising principally placed by
local businesses and organizations. Our retail advertisers are principally department stores, electronics stores and furniture stores. National advertising is display advertising primarily from
advertisers promoting products or services on a
national basis. Our national advertisers are principally in the automotive sector. During 1999, we implemented an advertising initiative to maximize national and multi-market advertising sales by our
publications. As a result

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of the initiative, our newspaper network has attracted major customers in several sectors of the Canadian economy, including the automobile, financial services, microcomputers and telecommunications
industries.

We
believe our advertising revenues are diversified not only by category (classified, retail and national), but also by customer and geography. For the year ended December 31,
2002, our top ten advertisers accounted for approximately 7% of the total advertising revenue and approximately 5% of overall revenue. In addition, because we sell advertising in numerous regional
markets in Canada, the impact on us of a decline in any one market can be offset by strength in the others.

Circulation
sales are the second-largest source of revenue for the Urban Daily Group. The Urban Daily Group's newspapers are available through newspaper boxes and retail outlets Monday
through Sunday. We offer daily home delivery in every market, except in Toronto, whereThe Toronto Sunis home-delivered only on Sunday and
in certain designated markets on Saturday. Our circulation revenues are derived from single copy sales and subscription sales. Our strategy is to increase circulation revenue by adding newspaper boxes
and point-of-sale locations, as well as expanding home delivery. In addition, to increase readership, we are expanding coverage of local news in our newspapers and targeting
editorial content to identified groups through the introduction of niche products, such asAt Homemagazine,Amateur
SportsandVotre Argent.

Competition

The Canadian newspaper industry is mature and dominated by a small number of major publishers. According to the Canadian Newspaper Association, our 21.0% market
share of paid weekly newspaper circulation is exceeded only by CanWest Media Inc. with a 30.1% market share, and followed by Torstar Corporation (13.8%), Power Corporation (9.2%), Bell
Globemedia (6.4%) and Osprey Media (4.7%). In addition to competing directly with other dailies published in their respective markets, each of our newspapers in the Urban Daily Group competes for
advertising revenue with weekly newspapers, magazines, direct marketing, radio, television and other advertising media. Competition for newspaper advertising is largely based upon readership,
circulation, demographic composition of the market, price and content of the newspaper. Competition for circulation is largely based on price, editorial content, quality of delivery service and
availability of publications. The high cost associated with starting a major daily newspaper operation represents a barrier to entry by potential new competitors to our Urban Daily Group.

The Community Newspaper Group

In total, the Community Newspaper Group consists of seven daily community newspapers, 172 community weekly newspapers and shopping guides, and 16 farming and
other specialty publications. We also own three additional community weekly newspapers and shopping guides, and two specialty publications which are included in the Urban Daily Group. The Community
Newspaper Group also distributes coupons, product samples and other direct mail promotional material through NetMedia, its distribution sales arm.

The
total average weekly circulation of the publications in our Community Newspaper Group for the year ended December 31, 2002 was 3.0 million free copies and 548,200 paid
copies. The table below sets forth the

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average daily paid circulation and geographic location of the daily newspapers published by the Community Newspaper Group in 2002:

|Publication                       |                                      | Location                     |  | Average Daily Paid Circulation
|--------------------------------- | ------------------------------------ | ---------------------------- |  | ------------------------------
|The Brockville Recorder and Times |                                      | Brockville, Ontario          |  | 13,100                        
|Stratford Beacon Herald           |                                      | Stratford, Ontario           |  | 11,300                        
|The Daily Herald Tribune          |                                      | Grande Prairie, Alberta      |  | 9,200                         
|St. Thomas Time-Journal           |                                      | St. Thomas, Ontario          |  | 8,400                         
|Fort McMurray Today               |                                      | Fort McMurray, Alberta       |  | 7,100                         
|The Daily Miner & News            |                                      | Kenora, Ontario              |  | 4,600                         
|The Daily Graphic                 |                                      | Portage La Prairie, Manitoba |  | 3,600                         
|                                  |                                      |                              |  |                               
|                                  | Total Average Daily Paid Circulation |                              |  |                               
|                                  |                                      |                              |  |                               

The
weekly and specialty publications of the Community Newspaper Group are distributed throughout Canada and in Florida. The number of weekly publications on a regional basis is as
follows:

Province or State

Number of
PublicationsAlberta

44British Columbia

6Florida

8Manitoba

12Ontario

39New Brunswick

1Québec

56Saskatchewan

6Total Publications

172


Sun
Media recently entered into a letter of intent for the sale of its Florida operations. The sale is subject to certain conditions, including satisfactory due diligence by the buyer.
We expect to close the sale of our Florida operations in the first half of 2003.

Our
community newspaper publications generally offer news, sports and special features, and place emphasis on local information. These newspapers cultivate reader loyalty and create
franchise value by emphasizing local news, thereby differentiating themselves from national newspapers.

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Advertising and Circulation

Substantially all of the Community Newspaper Group's advertising revenues are derived from local retailers and classified advertisers. Advertising rates and rate
structures vary among the different publications of the Community Newspaper Group. The Community Newspaper Group publishes advertising supplements with specialized themes such as agriculture, tourism,
home improvement and gardening to encourage advertisers to purchase additional linage in these special editions.

Circulation
revenue in the Community Newspaper Group is generated from home delivery sales and single copy sales through retailers and vending racks. In 2002, nearly 85% of the community
newspaper publications were distributed free of charge.

Competition

A majority of the Community Newspaper Group's publications maintain the number one positions in the markets that they serve. Our community publications are
generally located in small towns and are typically the only daily or weekly newspapers of general circulation published in their respective communities, although some face competition from daily or
weekly publications published in nearby locations and circulated in markets where we publish our daily or weekly publications. Historically, the Community Newspaper Group's publications have been a
consistent source of cash flow.

Seasonality and Cyclicality

Canadian newspaper publishing company operating results tend to follow a recurring seasonal pattern with higher advertising revenue in the spring and in the fall.
Accordingly, the second and fourth fiscal quarters are typically our strongest revenue quarters of the year, with the fourth quarter generally being the strongest. Due to the seasonal retail decline
and generally poor weather, the first fiscal quarter has historically been our weakest revenue quarter.

Our
newspaper business is cyclical in nature. Because we are dependent upon advertising sales for a substantial portion of our revenue, our operating results are sensitive to prevailing
economic conditions, including changes in regional and national economic conditions.

Production and Other Operations

We own 27 Web press and eleven sheet fed press operations located throughout Canada and in Florida. These operations provide commercial printing services for both
the internal printing needs of the Company and for third parties. The Canadian printing facilities include 15 printing facilities for the daily publications, and 17 other printing facilities operated
by the Community Newspaper Group in six provinces. Our facility in Bradenton, Florida serves the Florida Sun publications.

Our
third-party commercial printing provides us with an additional revenue source while using existing equipment with excess capacity. In our third-party commercial printing operations,
we compete with other newspaper publishing companies as well as with commercial printers. However, we have the advantage of: (1) owning modern equipment; (2) being able to price projects
on a variable cost basis because our core newspaper business covers overhead expenses; and (3) being the only local provider of commercial printing service in some of our markets.

The
Urban Daily Group includes the distribution businesses of Messageries Dynamiques and Dynamic Press Group. Messageries Dynamiques is a distributor of dailies, magazines and other
electronic and print media and reaches approximately 250,000 households and 13,500 retail outlets through its operations. We hold Dynamic Press Group in partnership with a division of The Jim Pattison
Group of Vancouver. Dynamic Press Group distributes English-language printed matter to more then 300 outlets in Québec.

Raw Materials

Newsprint is our second-largest expense, after personnel costs, and represents our largest raw material expense. Newsprint expense represented 19.7% of our total
operating expenses for the year ended December 31,

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2001 and 16.4% of our total operating expenses for the year ended December 31, 2002. We seek to manage the effects of newsprint price increases through a combination of, among other things,
technology improvements, including Web width reduction, inventory management, incentive programs and, when possible, advertising and circulation price increases. In addition, to obtain more favorable
pricing and to provide for a more secure supply, we have entered into a long-term agreement expiring December 31, 2005 with a newsprint manufacturer for the supply of most of our
newsprint purchases. This agreement enables us to obtain more favorable pricing by combining our purchases with the Canadian purchases of Quebecor World Inc., the largest commercial printer and
image management company in the world. This agreement provides for a discount to market prices above a minimum threshold. We are committed to purchase a minimum number of metric tonnes of newsprint
per year under this agreement. This agreement will satisfy most of our anticipated newsprint requirements through the end of 2005. Please see
"Item 7  Major Shareholders and Related Party Transactions  Related Party Transactions".

Aside
from newsprint, the only raw materials of significance to us are ink and press plates, which together accounted for approximately 2.7% of the total operating expenses from our
newspaper publishing operations in 2002.

BROADCASTING

We are the largest privately-owned broadcaster of French-language entertainment, information and public affairs programs in North America. In the Fall of 2002, we
had a 36% market share of French-speaking viewers in the Province of Québec and 44% of the television advertising spending for French-speaking viewers in Québec. In Fall
2002, we also aired eight of the ten most popular TV programs in the Province of Québec, including"KM/H", Histoires de filles, Les Poupées
Russes,andJuste pour rire. Since May 1999, the TVA network, which consists of ten stations, has been included in the
basic channel line-up of most cable providers across Canada, enabling us to reach a significant portion of the French-speaking population in Canada.

The
CRTC has authorized over 300 Category Two digital specialty services for which carriage is optional, and 21 Category One digital specialty services that cable and satellite service
operators are required to carry. TVA and its different partners obtained 11 of the new digital specialty services, including six Category One services, three French-language and three
English-language, and five Category Two services, two French-language and three English-language. As of December 31, 2002, approximately 50 English-language services had been launched; none of
the French-language services had been launched as of December 31, 2002 because the number of French-language households equipped with digital set top boxes was considered insufficient.

TVA
is also engaged in publishing through its subsidiary TVA Publishing, which leads the French-language newsstand magazine market in Québec.

For
the twelve-month period ended December 31, 2002, our television operations generated revenues of $323 million and operating income of $79 million.

Canadian Television Industry Overview

Canada has a well-developed cable television market that provides viewers with a range of viewing alternatives. Most Canadian cable subscribers have
access to 30 Canadian specialty channels as well as a number of U.S. broadcast and cable channels. As of August 31, 2002, there were approximately 8.2 million cable households in
Canada, representing a basic cable penetration rate of 72%, and approximately 2.1 million direct broadcast satellite subscribers.

There
are four French-language broadcast networks in the Province of Québec: Societé Radio-Canada, Réseau TQS,
Télé-Québec and us. In addition to French-language programming, there are three English-language national
broadcast networks in the Province of Québec: the Global Television Network, CTV and the Canadian Broadcasting Company, known as CBC. Global Television Network and CTV are privately
held commercial networks. CBC and Radio-Canada are government-owned and financed by a combination of federal government grants and commercial revenue. French-language viewers in the Province of
Québec also have access to U.S. networks, either directly over the air or via broadcast distributors.

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Drama
and comedy programming is the most popular genre with francophone viewers, with news and other information programming being the second most popular. Viewing trends by francophone
viewers are predominantly to Canadian programs in all genres, with the exception of drama and comedy programs where the viewing has remained evenly split between Canadian and foreign programs.
According to BBM and the CRTC, viewing of Canadian programs by francophone viewers increased to 78% in 2001 from 75% in 2000.

The
following table sets forth the relative audience share of French-language viewers in the Province of Québec for Fall 2002:

|Network                                  |  | Share of Province of Québec Television
|---------------------------------------- |  | --------------------------------------
|TVA                                      |  | 36%                                   
|Societé Radio-Canada                     |  | 17%                                   
|Réseau TQS                               |  | 14%                                   
|Télé-Quebec                              |  | 3%                                    
|English-language Canadian stations       |  | 4%                                    
|United States stations                   |  | 2%                                    
|French-language specialty cable channels |  | 19%                                   
|Others                                   |  | 5%                                    

Source: BBM Fall 2002 Survey.

New Television Policy in 2002: Digital TV

On June 12, 2002 the CRTC announced a framework (Public Notice CRTC 2002-31) for the broadcast of digital, over-the-air
television services and the transition of over-the-air television broadcasting from analog to digital. The CRTC is prepared to give fast-track consideration to
applications for broadcasting licenses to carry on digital television (DTV) based on the Advanced Television Systems Committee transmission standard (A/53). The transition from analog to digital
television in Canada will be voluntary, market-driven and without mandated deadlines. Licensees who wish to use digital television facilities to provide programming consisting essentially of a
simulcast of their existing analog services will qualify for licensing. The CRTC will give fast track consideration to applications by existing over-the-air broadcasters.
Should an existing broadcaster fail to apply for a transitional digital television license within a reasonable period, or otherwise demonstrate that it is not prepared to transition on a timely basis,
the CRTC may consider applications by prospective new entrants predicated on the Department of Industry's spectrum allotment.

All
programming produced in the 16:9 aspect ratio will have to be broadcast in that ratio on transitional DTV undertakings. It is expected that, by the end of 2007, two thirds of each
broadcaster's schedule, and two thirds of new Canadian content productions, should be available in the HDTV format. All of the programming on the digital service that is not duplicated on the analog
service must be in the HDTV format. All Canadian programs aired during the evening broadcast period by the licensee of a transitional DTV undertaking, whether duplicated or not, are to be broadcast in
the HDTV version.

Television Broadcasting

Our network of ten stations, which consists of six owned and four affiliated stations, is available to a significant portion of the French-speaking population in
Canada.

Our
owned and operated stations include: CFTM-TV in Montréal, CFCM-TV in Québec City, CHLT-TV in Sherbrooke,
CHEM-TV in Trois-Rivières, CFER-TV in Rimouski-Matane-Sept-Iles and CJPM-TV in Saguenay (formerly
Chicoutimi-Jonquière). Our four affiliated stations are CFEM-TV in Rouyn-Noranda, CHOT-TV in Gatineau (formerly Hull), CHAU-TV in Carleton and
CIMT-TV in Rivière-du-Loup, of which we own a 45% interest of the latter two. Approximately 85% to 95% of our network's broadcast schedule is
originated from our main station in Montréal. Our signal is transmitted from transmission and retransmission sites authorized by the CRTC and is also retransmitted elsewhere in Canada
as a distant signal by various modes of authorized distribution: cable, direct-to-home satellite distribution and multi-channel multipoint distribution services. We have the
number-one market share in each of our six markets.

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Programming

We produce a variety of French-language programming, including a broad selection of entertainment, news and public affairs programming. In the fall of 2002, we
had 23 of the top 30 French-language television shows during prime time. We actively promote our programming and seek to develop viewer loyalty by offering a consistent programming schedule.

A
majority of our programming is produced by our wholly-owned subsidiary, JPL Production Inc. Through JPL Production Inc., we produced approximately 1,400 hours of
original programming in 2002. Our programming consists primarily of soap operas, variety shows and quiz shows. The remainder of our programming is comprised of foreign and independently produced
programming.

Specialty Broadcasting

Through various subsidiaries, QMI controls or participates in numerous satellite to cable programming services, including the following:

|Type of Service                                                      |  | Language |  | QMI Interest
|-------------------------------------------------------------------- |  | -------- |  | ------------
|Analog Specialty Services:                                           |  |          |  |             
| LCN  Le Canal Nouvelles                                           |  | French   |  | 100%        
| Pulse 24 (CP 24)                                                   |  | English  |  | 29.9%       
| Canal Évasion                                                      |  | French   |  | 8.3%        
|Category One Digital Specialty Services:                             |  |          |  |             
| MenTV (M)                                                          |  | English  |  | 51%         
| Mystery (13th Street)                                              |  | English  |  | 45.05%      
|Pay Per View Services (Terrestrial & direct broadcasting satellite): |  |          |  |             
| Canal Indigo                                                       |  | French   |  | 20%         

Le Canal Nouvelles LCN

Le Canal Nouvelles LCN is a 24-hour broadcast format of 15-minute information segments comprised of news, sports and weather components,
updated on a regular basis. LCN went on the air on September 8, 1997 and had 1.5 million subscribers as of August 31, 2002. LCN's revenues are derived from affiliate agreements
and sale of air-time to national advertisers.

Pulse 24 (CP 24)

Through Sun Media, we own a 29.9% interest in Pulse 24. Pulse 24 operates CP 24, a regional, 24-hour local news channel in Canada offering viewers a
variety of parallel and simultaneous continuous streams of information with an enriched visual screen. In addition to regular news, the enriched screen delivers attractive graphics and text which
provide continuously updated information: date, time, weather forecasts, headlines, sports scores, stock market quotations and key indices. CP 24 is distributed via cable and satellite systems to
homes across Ontario.

Canal Évasion

Canal Évasion is a national French-language television specialty service that is dedicated exclusively to tourism, adventure and travel.

MenTV

MenTV is national English-language Category 1 specialty television service dedicated to the Canadian man's lifestyle with programming related to the luxury
market, the gourmet market, men's beauty and fitness, the book and music market, outdoor adventures and leisure sports.

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Mystery TV

Mystery TV (formerly called 13th Street) is a national English-language Category 1 specialty television service devoted to mystery and suspense
programming. The service nurtures and encourages short form Canadian
mysteries. It provides a wide assortment of genre-specific programs including movies, television series, short films and documentaries that focus exclusively on the delivery of entertaining
programming relating to suspense, espionage and classic mysteries.

Canal Indigo

Canal Indigo is a pay-per-view television service that offers mainly block buster feature films which have been exhibited in theatres as
well as Canadian-based events targeting the French-language market.

Canadian Public Affairs Channel (CPAC)

Through a consortium of cable operators, QMI has a 21.7% equity in the Canadian Public Affairs Channel (CPAC), a national bilingual public affairs programming
service showing House of Commons debates and consisting exclusively of long-form programming focusing on local, regional, national and international civic affairs.

Home Shopping Service/Infomercials

In April 1998, we signed an agreement with Home Shopping Service S.A., a subsidiary of Groupe M6 of France, to pursue a joint venture called Home
Shopping Service Canada. Through this agreement, we operate Boutique TVA, a daily one-hour home shopping program broadcast on the TVA Network. We also operate Canal TVAchats, a
24-hour infomercial and tele-shopping channel. On March 18, 2003, TVA purchased from Home Shopping Service S.A. its 50% interest in Home Shopping Service Canada.
TVA now owns 100% of Home Shopping Service Canada.

Advertising Sales and Revenue

We derive a majority of our revenues from the sale of air-time to national, regional and local advertisers. For the twelve-month period ended
December 31, 2002, we derived approximately 65% of our advertising revenues from national advertisers and 35% from regional and local advertisers. Based on information provided by the TVB Time
Sales Report, we estimate our share of the Province of Québec French-language broadcast television advertising market was 44% in 2002.

Book and Magazine Publishing

Through the Groupe Vidéotron acquisition, we also acquired TVA Publishing, a subsidiary of TVA that was formed when TVA acquired Trustar Limited,
or Trustar, in January 2000. TVA Publishing now owns and
operates eight weekly and monthly publications which focus on entertainment, television and the Internet. TVA Publishing is the leading publisher in Québec and we expect to leverage its
focus on arts and entertainment across our television and Internet programming. In May 2002, Publicor, a subsidiary of Quebecor Media that publishes primarily interior design, home improvement
and women's magazines, including well known French-language titles such as Les idées de ma maison, Décoration Chez-Soi, Renovation-Bricolage, Clin d'oeil,
Filles d'aujourd'hui and Femmes Plus, and other special editions and seasonal publications, was combined with TVA Publishing. Publicor was also involved in contract publishing and collaborated with
other members of the Quebecor Media group of companies combining traditional print with new media to offer clients additional alternatives to reach their target audience effectively. TVA Publishing,
which now includes all of the operations of Publicor, represents approximately 80% of magazines newsstand sales of French-language magazines in Québec.

Ownership

We have a 99.9% voting and a 36.1% equity ownership interest in TVA.

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LEISURE AND ENTERTAINMENT

We have established a leading retail and distribution presence in the Leisure and Entertainment segment with approximately 185 retail locations offering numerous
cross-selling and cross-promotion opportunities. Our activities in the Leisure and Entertainment sector include book publishing, book, music and multimedia distribution, the retail sale of magazines,
books, videos, CDs, DVDs, games, software and video rentals. This segment consists of Québec-Livres, Le SuperClub Vidéotron, Archambault Group Inc., and several
other companies. Our Leisure and Entertainment segment generated revenues of $245 million and operating income of $29 million for the twelve-month period ended December 31, 2002.

Music, Book, Software and Magazine Retail

Archambault Group Inc. is the largest chain of music stores in Québec with 12 megastores. During fiscal year 2000, Archambault
Group Inc. also became one of the largest computer books and software retailers through the acquisition of Camelot-Info Inc. and the largest independent English-language
bookstore in Québec through the acquisition of Paragraphe Bookstore Inc. Archambault Group Inc.'s products are also distributed through its Websites archambault.ca, Camelot.ca and
paragraphbooks.com.

In
addition, Archambault Group Inc. is the largest independent music distributor in Canada through its two labels, Select and Musicor with over 800 artists, mostly
French-speaking. Archambault Group Inc. is a wholesaler serving approximately 450 locations in Québec through its Trans-Canada division. We own approximately 94.5% of the issued
and outstanding shares of Archambault Group Inc.

Through
the acquisition of Groupe Vidéotron, we acquired Le SuperClub Vidéotron, the largest chain of stores specializing in the rental and retail sale of
videocassettes in Québec, with approximately 174 locations and a market share of approximately 30%. With nearly all of its service points located in markets serviced by our cable
operations, Le SuperClub Vidéotron also serves as a showcase and a valuable distribution network for the growing array of products and services offered by our cable segment.

We
are also involved in book publishing and distribution. We own several publishing houses forming Québec's largest book publishing group in general literature. In 2002,
we published, reissued and reprinted a total of 928 titles and sold over 3.0 million copies. Through Québec-Livres, our book distribution division, we operate one of the largest
book distributors in Québec and represent several renowned European and Québec-based publishers. We distribute software and French-language books to approximately 1,900
retail outlets in Canada.

BUSINESS TELECOMMUNICATIONS

Vidéotron Télécom is a provider of a full range of business telecommunications services including local switch dial
tone, long distance, high speed data transmission, Internet connectivity and Internet hosting, to customers that include businesses and governmental end users and other telecommunications service
providers in Canada. Vidéotron Télécom's regional network has over 8,400 km/cable in Québec and 2,000 km/cable in Ontario and reaches more
than 80% of business located in the metropolitan areas of Québec and Ontario. In 2001, we underwent a major restructuring of our business telecommunications operations and refocused
Vidéotron Télécom's primary mission on the offering of high-speed telecommunications services to large business users and telecommunications
carriers. As part of such restructuring, Vidéotron Télécom sold its telephone equipment and maintenance contracts in May 2001.

Our
business telecommunications segment generated revenues of $92 million and operating profit of $27 million for the twelve month period ended December 31, 2002.

In
April 2002, Vidéotron Télécom acquired most of the assets of Toronto-based Stream Intelligent Network Corporation. In
December 2002, Vidéotron Télécom announced that it had acquired fiber optic routes from 360networks, including approximately 1,200 kilometers of
fiber-optic routes extending further across Ontario and to border points of the United States.

Vidéotron
Télécom is now focusing its development efforts on its core customer base, i.e. telecommunications local and long distance
carriers, wholesalers of long distance telecommunications

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services, wireless operators and Internet service providers, and other high-end users of business telecommunication services.

Ownership

We own a 66.7% voting and a 100% equity interest in Vidéotron Télécom.

NEW MEDIA SERVICES

Internet/Portals

Netgraphe Inc. is an integrated company offering various services such as e-commerce, information, communication and consulting in information
technology. With 5.5 million unique on-line visitors per month, Netgraphe Inc. is one of the leading Internet communications, commerce and media companies in Canada. We own
two of the largest Internet portals in Canada as measured by page views, as well as leading sites dedicated to automobiles, employment, classifieds and personals. We provide communications,
commerce and media services through our media and commerce properties. We also offer IT consulting services for e-commerce, outsourcing, integration and secure transaction environments.
Our Internet/Portals segment generated revenues of $27 million and operating losses of $2.6 million for the twelve-month period ended December 31, 2002.

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In May 2001, we successfully completed the combination of our CANOE assets with the operations of Netgraphe Inc. We believe that this business combination will allow
Netgraphe Inc., through the consolidation of complementary products, technologies and resources, to achieve a leadership position in the Canadian Internet market.

Media Properties

Netgraphe Inc.'s media properties include the following portals and destination sites:



Commerce Properties

Netgraphe Inc.'s commerce properties include the following sites:



Ownership

As of December 31, 2002, we hold, directly and indirectly, a voting interest in Netgraphe Inc. of approximately 97.6% and an equity interest of
approximately 75.2%.

Web Integration/Technology

Through our ownership interest in Nurun, we provide Web integration and technology services in North America and Europe. The Nurun network consists of
approximately 660 employees and provides various services to companies, including interactive, customer relationship and data management strategies designed to support multi-channel sales and
marketing activities. In addition, we provide technology services through Mindready Solutions Inc., a leading supplier of test engineering systems and embedded systems and real-time
communications for the advanced electronics industry. Our Web Integration/Technology segment generated revenues of $80 million and operating losses of $11 million for the twelve-month
period ended December 31, 2002.

Nurun

Nurun is a leading Web integrator with operations in Canada, Europe and the United States. Nurun enables its clients to capitalize on the opportunities offered by
the Internet and Web technology so that they can develop new markets and marketing channels and improve the efficiency of their administrative processes relating to customers, business partners and
employees. Nurun offers businesses a complete range of Web-based solutions and process re-engineering consultation services, including e-commerce, Web site design,
customer relationship management, intranet/extranet tools, digital branding, automated publishing solutions, online marketing and systems integration. Nurun's worldwide network of professionals
specializes in four core disciplines: strategy, marketing, technology and user experience.

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Nurun
has rapidly pursued its growth as a Web integrator and interactive agency by acquiring the following companies in the course of the last two years: EntreVision Inc., one of
Canada's leading organizations in e-business solutions; Cythère S.A., the largest independent Web solutions integrator in France; Quam S.r.l., an Italian new
media agency with proven multimedia expertise and Imagix Multi Média Inc., specialists in audio-visual communication and multimedia production.

Nurun's
clients include multi-national corporations, such as Evian, L'Oréal, Essilor, MTV Italia, Telecom Italia, Biotherm, Danone, Club Med, General
Motors, IBM, Air Canada Holidays, Europcar and Pleasant Holidays.

Mindready

Mindready is a leading supplier of test engineering systems, automation systems and embedded systems for original equipment manufacturers, or OEMs, and
electronics manufacturing service providers in the advanced electronics industry. OEMs and electronics manufacturing service providers use Mindready's services and products to help them design,
manufacture and test complex electronics products.

Mindready's
clients operate in the telecommunications, automotive, medical, industrial and aerospace industries, and include companies such as Nortel Networks Limited,
Sanmina-SCI Corporation, (now Solectron Corporation), Visteon Corporation, Alcatel, Keopsys Inc., Intense Inc., Infinera Inc., Hyperchip Inc. and Celestica.
Sales to Nortel represented approximately 31% of total sales for the year ended December 31, 2002.

In
December 2000, Mindready became a public company whose shares are listed on the Toronto Stock Exchange.

Ownership

We own approximately 57.3% of the issued and outstanding shares of Nurun. Nurun owns approximately 66.7% of the issued and outstanding shares of Mindready and has
an approximate 81.0% voting interest.

INTELLECTUAL PROPERTY

We use a number of trademarks for our products and services. Many of these trademarks are registered by us in the appropriate jurisdictions. In addition, we have
legal rights in the unregistered marks arising from their use. We have taken affirmative legal steps to protect our trademarks and we believe our trademarks are adequately protected.

Television
programming and motion pictures are granted legal protection under the copyright laws of the countries in which we operate, and there are substantial civil and criminal
sanctions for unauthorized duplication and exhibition. The content of our newspapers and Web sites is similarly protected by copyright. We own copyright in each of our publications as a whole, and in
all individual content items created by our employees in the course of their employment, subject to very limited exceptions. We have entered into licensing agreements with wire services, freelancers
and other content suppliers on terms that are sufficient to meet the need of our publishing operations. We believe we have taken appropriate and reasonable measures to secure, protect and maintain our
rights or obtain agreements from licensees to secure, protect and maintain copyright protection of content produced or distributed by us.

We
have registered a number of domain names under which we operate Web sites associated with our television, publishing and Internet operations. As every Internet domain name is unique,
our domain names cannot be registered by other entities as long as our registrations are valid.

REGULATION

Ownership and Control of Canadian Broadcast Undertakings

Subject to any directions issued by the Governor in Council (effectively the Federal Cabinet), the CRTC regulates and supervises all aspects of the Canadian
broadcasting system.

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The
Governor in Council, through an Order-in-Council referred to as the Direction to the CRTC (Ineligibility of
Non-Canadians), has directed the CRTC not to issue, amend or renew a broadcasting license to an applicant that is a non-Canadian. Canadian, a defined
term in the CRTC Direction, means, among other things, a citizen or a permanent resident of Canada, a qualified corporation, a Canadian government, a non-share capital corporation of which
a majority of the directors are appointed or designated by statute or governmental authorities, or a mutual insurance company, pension fund society or cooperative of which not less than 80% of the
directors or members are Canadian. A qualified corporation is one incorporated or constituted in Canada, of which the chief executive officer or other presiding officer and 80% of the directors are
Canadian, and not less than 80% of the issued and outstanding voting shares and not less than 80% of the votes are beneficially owned and controlled, directly or indirectly, by Canadians. In addition,
in order for a subsidiary to be a qualified corporation, Canadians must beneficially own and control, directly or indirectly, not less than 662/3% of the issued and outstanding voting
shares and not less than 662/3% of the votes of the parent company that controls the subsidiary, and neither the parent company nor its directors or similar officers may exercise
control or influence over any programming decisions of the subsidiary if Canadians beneficially own and control less than 80% of the issued and outstanding shares and votes of the parent corporation,
if the chief executive officer of the parent corporation is a non-Canadian or if less than 80% of the parent corporation's directors are Canadian. There are no specific restrictions on the
number of
non-voting shares which may be owned by non-Canadians. Finally, an applicant seeking to acquire, amend or renew a broadcasting license must not otherwise be controlled in fact
by non-Canadians, a question of fact which may be determined by the CRTC in its discretion. Vidéotron and TVA are qualified Canadian corporations.

Regulations
made under theBroadcasting Actrequire the prior approval of the CRTC of any transaction that directly or indirectly results
in (i) a change in effective control of the broadcasting undertaking of a licensee, (ii) a person or a person and its associates acquiring control of 30% or more of the voting interests
of a licensee or of a person who has, directly or indirectly, effective control of a licensee, or (iii) a person or a person and its associates acquiring 50% or more of the issued common shares
of the licensee or of a person who has direct or indirect effective control of a licensee. In addition, if a transaction results in a person or a person and its associates acquiring control of at
least 20% but less than 30% of the voting interests of a licensee, or of a person who has, directly or indirectly, effective control of the licensee, the CRTC must be notified of the transaction. If a
transaction increases control to over 40%, the CRTC must be notified.

Largely
similar foreign ownership restrictions to non-Canadians apply to telecommunications common carriers pursuant to regulations made under the Telecommunications Act(Canada).

Licensing of Canadian Broadcast Undertakings

The CRTC has responsibility for the issuance, amendment, renewal, suspension and revocation of Canadian broadcasting licenses. A television broadcasting license
grants the right to a broadcaster to transmit a television signal on a specific frequency within a defined geographic area and at a set power level. The geographic area may be expanded if the
television service is distributed as a "distant signal" by a distribution undertaking. A specialty television license grants the right to a programming undertaking to transmit programming to the
public through a distribution undertaking such as cable or direct-to-home satellite service. Broadcasting licenses may be issued for periods not exceeding seven years and are
usually renewed, except in cases of a serious breach of the conditions attached to the license or the regulations of the CRTC. The CRTC is required to hold a public hearing in connection with the
issuance, suspension or revocation of a license and may hold public hearings in other circumstances.

In
order to conduct our business, we must maintain our licenses in good standing. Failure to meet the terms of our licenses may result in their short-term renewal,
suspension, revocation or non-renewal. Conditions may be imposed by the CRTC on broadcasting licenses which may affect the licensee's profitability.

Jurisdiction over Canadian Broadcast Undertakings

Vidéotron's distribution undertakings and TVA's programming undertakings are subject to theBroadcasting
Actand regulations made under theBroadcasting Actthat empower the CRTC, subject to directions from the Governor in Council,
to regulate and supervise all aspects of the Canadian broadcasting system in order to

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implement the policy set out in that Act. Certain of TVA's and Vidéotron's undertakings are also subject to the Radiocommunication Act, which empowers Industry Canada to establish and
administer the technical standards that networks and transmission must respect, namely, maintaining the technical quality of signals.

The
CRTC has, among other things, the power under theBroadcasting Actand regulations to issue, subject to appropriate conditions, amend,
renew, suspend and revoke broadcasting licenses, approve certain changes in corporate ownership and control, and establish and oversee compliance with regulations and policies concerning broadcasting,
including various programming and distribution requirements, subject to certain directions from the Federal Cabinet.

In
a series of decisions the CRTC has determined that the carriage of "non-programming" services by cable companies results in the company being regulated as a carrier under
theTelecommunications Act.This applies to a company serving its own customers or allowing a third party to use its distribution network to provide
non-programming services to subscribers.

Canadian Broadcast Distribution (Cable Television)

Distribution of Canadian Content

The CRTC decided that it would not be in the interest of the Canadian broadcasting system to permit the distribution of certain non-Canadian
pay-television movie channels and specialty programming services that could be considered competitive with licensed Canadian pay-television and specialty services. Therefore,
pay-television movie channels and certain specialty programming services available in the United States are not approved for distribution in Canada. The CRTC has prepared a list of
non-Canadian programming services eligible for distribution in Canada on a discretionary user-pay basis to be linked along with Canadian pay-television services or
with Canadian specialty services. The CRTC currently permits the linkage of up to one non-Canadian service for one Canadian specialty service and up to five non-Canadian
services for every one Canadian pay-television service. In addition, the number of Canadian services received by a cable television subscriber must exceed the total number of
non-Canadian services received.

1998 Broadcasting Distribution Regulations

The Broadcasting Distribution Regulations enacted in 1998, also called the 1998 Regulations, apply to distributors of broadcasting services or broadcasting
distribution undertakings (BDUs) in Canada. The 1998 Regulations promote competition between service providers and the development of new technologies for the distribution of such services while
ensuring that quality Canadian programs are exhibited. The 1998 Regulations introduced important new rules, including the following:



The
1998 Regulations provide equitable opportunities for all distributors of broadcasting services. As a general rule, new entrants have to meet the same signal carriage and substitution
requirements that are imposed on existing cable television systems. The 1998 Regulations prohibit a distributor from giving an undue preference to any person, including itself, or subjecting any
person to an undue disadvantage. This gives the CRTC the ability to address complaints of anti-competitive behavior on the part of certain distributors.



All
distributors, except those with less than 2,000 subscribers, are required to contribute at least 5% of their gross annual broadcast revenues to the creation and presentation of
Canadian programming, including community programming. However, the allocation of these contributions can vary depending on the type and size of the distribution system involved.



The
CRTC determined that the inside wiring portion of cable networks creates a bottleneck facility that could affect competition if open access is not provided to other distributors.
Incumbent cable companies may retain the ownership of the inside wiring but must allow usage by competitive undertakings to which the cable company may charge a just and reasonable fee for the use of
the inside wire. On August 25, 2000, the CRTC

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initiated a proceeding to establish the regulatory framework for access to multi-dwelling units inside wire and riser space. On September 3, 2002, the CRTC established a fee of $0.52 per
subscriber per month for the use of cable inside wire in multi-dwelling units (Public Notice CRTC 2002-51).

The
CRTC directed the Inside Wire Sub-Committee of the CRTC Interconnection Steering Committee, or the CISC, to draft a specific set of administrative and reporting
procedures that reflect the determinations reached in its public notice and to propose procedures by June 2003. These would include the use of Customer Service Groups already developed for
third party access to high speed Internet service, ensuring non-disclosure of competitors' clientele to Vidéotron's Marketing Department.

New Canadian Broadcast Distribution Policies for 2002

The following is a summary of recent CRTC pronouncements and determinations relating to Canadian broadcasting distribution:



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Rates

Vidéotron's revenue related to cable television is derived mainly from (a) monthly subscription fees for basic cable service;
(b) fees for premium services such as specialty services, pay television and pay-per-view television; and (c) installation and additional outlets charges.

The
CRTC does not regulate the fees charged by new broadcast distribution undertakings and does not regulate the fees charged by cable providers for optional services. The fees charged
by Class 1 (6,000 subscribers or more) cable providers are regulated by the CRTC until true competition exists in a particular service area, which occurs when the number of subscribers for
basic cable service has decreased by at least 5% since the date on which a competitor started offering its basic cable service in the particular area.

Moreover,
for all intents and purposes, the CRTC does not regulate installation fees; however, installation fees have to be limited to an amount that does not exceed the average actual
cost incurred to install and connect the outlet.

A
Class 1 cable distributor may, while respecting certain procedures, increase its rate so as to recover the pass-through portion, namely the charge that the firm
collects from the subscribers for any particular programming service exhibited on Vidéotron's basic service. Moreover, in the event that distribution may be compromised as a result of
the economic difficulties encountered by a Class 1 cable distributor, a request for a rate increase may be submitted to the CRTC. Any increase that satisfies the criteria then in effect will be
approved.

Royalties for the retransmission of distant signals

Further to the implementation of the Canada-U.S. Free Trade Agreement, which we refer to as the FTA, in 1989, the Copyright Act (Canada) was
amended to require retransmitters, including Canadian cable television operators, to pay royalties in respect of the retransmission of distant television and radio signals.

Since
this legislative amendment, the Copyright Act empowers the Copyright Board of Canada to quantify the amount of royalties payable to retransmit these signals and to allocate them
among collective societies

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representing the holders of copyright in the works thus retransmitted. Cable television operators cannot automatically recover such paid retransmission royalties from their customers, although such
charges might be a component of an application for a basic cable service rate increase based on economic need.

Distant
signal retransmission royalties vary from $0.20 per subscription per month for systems serving areas with fewer than 1,500 subscribers to $0.70 per subscriber per month for more
than 6,000 subscribers, except in French-speaking markets where the maximum rate is $0.35 per subscriber per month. All of Vidéotron's
undertakings operate in French-language markets.

In
addition, the Copyright Act was amended, in particular, to define copyright as including the exclusive right to "communicate protected works to the public by telecommunication". Prior
to the amendment, it was generally believed that copyright holders did not have an exclusive right to authorize the transmission of works carried on radio and television station signals when these
signals were not broadcast but rather transmitted originally by cable television operators to their customers. However, at the request of the Society of Composers, Authors and Music Publishers of
Canada, or SOCAN, the Copyright Board approved Tariff 17A in 1996 in order to obtain the payment of royalties from transmitters, including members of the Canadian Cable Television Association, which
we refer to as the CCTA, that transmit musical works to the subscribers when transmitting television services on a subscription basis.

Tariff
17 fixed the monthly rate per subscriber, in the case of cable systems serving 6,001 or more subscribers, at $0.047, $0.055, $0.058, $0.064, $0.070 and $0.076, respectively, for
each of the 1990 to 1995 calendar years. However, the Copyright Board of Canada did not establish the allocation of the payable royalties between cable television operators, pay television and
specialty programming service providers. The CCTA and the programming service providers have signed agreements that establish the split with the Canadian specialty programming service providers and
set up a royalty payment mechanism. These agreements do not cover royalties payable for American specialty programming and the Canadian pay television services, which correspond, according to Tariff
17, to 2.1% of affiliation payments during 1996 and 1.8% of 1996 monthly affiliation payments for the remainder of the tariff (i.e. 1997-2000). The royalties payable with
respect to these services, and the split with the programming service providers, are covered by another agreement.

The
Copyright Board of Canada rendered a decision on February 16, 2001 regarding the rates that will apply under SOCAN's Tariff 17A for the calendar years 1996 to 2000. The
royalty payable by small transmission systems is $10 per year. The monthly royalty payable by transmission systems (other than small transmission systems) for the signals of Canadian and American pay
services is 2.1% of the transmitter's affiliation payments to these services in 1996 and 1.8% for the remainder of the tariff period. For all other signals transmitted, the monthly royalty payable by
a transmitter is based on the total number of premises served in the system's licensed area and varies from $0.028 to $0.095 for 1996 to $0.044 to $0.155 for 2000. Royalties payable by a system
located in a francophone market are calculated at a rate equal to 85% of the rate otherwise payable.

The
Copyright Board of Canada also rendered a decision on March 16, 2002 regarding two new tariffs for the years 1997-1998 to 2002, which provide for the payment of
royalties from programming and distribution undertakings focusing on pay audio services. It fixes the royalties payable to SOCAN and to the Neighboring Rights Collective of Canada, or NRCC,
respectively, at 11.115% and 5.265% of the affiliation payments payable during a month by a distribution undertaking for the transmission for private or domestic use of a pay audio signal. The
royalties payable to SOCAN and NRCC by a small cable transmission system, an unscrambled low or very low power television station or by equivalent small transmission systems are fixed by the Board at
5.56% and 2.63%, respectively, of the affiliation payments payable during a year by the distribution undertaking for the transmission for private or domestic use of a pay audio signal.

Tariffs
of the Copyright Board of Canada are generally applicable until a public process is held and a decision of the Copyright Board is rendered for a renewed tariff. Renewed tariffs
are often applicable retroactively. Provisions for possible tariff increases are taken by Vidéotron.

Access by third parties to HFC

On July 6, 1999, the CRTC required certain of the largest cable television operators, including Vidéotron, to submit tariffs for
high-speed Internet access services, known as open access or third party access, in order to

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allow competing retail Internet service providers to offer such services over a cable infrastructure. Vidéotron's proposal was approved in part by the CRTC in August 2000. This
decision approves the terms and per end-user rates to charge to Internet service providers for access to cable company facilities used to provide
cable modem Internet services. Other technical, operational and business policies to implement access services are being addressed by the CISC.

Vidéotron
took part in technical tests intended to interconnect the networks of the cable television operators with certain competing Internet service providers. These
tests were successfully concluded in the third quarter of 2000. Vidéotron is also actively participating in the CISC Working Group responsible for implementing the technical and
operational terms and conditions of interconnection. The work of the CISC Working Group is ongoing and some issues have been contentious. Once the conditions of facilities-based interconnection are
approved by the CRTC, which could occur in 2003, actual access to the headend of our HFC network will be ordered by the CRTC and provided by Vidéotron at a regulated tariff.

Until
facilities-based access to the cable network headend is provided, the CRTC is requiring cable distributors to allow third party retail Internet service providers to resell their
retail high-speed Internet services at a discount of 25% off the lowest retail Internet service rate charged by Vidéotron to its cable subscribers during a
one-month period. Vidéotron expects resale and facilities-based access to increase its penetration in certain markets for retail high-speed Internet services at
lower customer acquisition costs, and is actively pursuing those business opportunities. The resale obligation will cease to be mandated once facilities-based access is available to Internet service
providers.

Winback restrictions

In February 2001, the CRTC announced "winback" restrictions on certain cable television operators, including Vidéotron, in the Internet
service market. The restrictions limit a cable operators' ability to "win back" Internet service subscribers who have chosen to switch to another Internet service provider within 90 days of the
subscriber's switch.

Right to access for telecommunications and broadcast networks infrastructures

The CRTC has concluded that some provisions of theTelecommunications Actmay be characterized as encouraging
joint use of existing support structures to facilitate efficient deployment of cable distribution undertakings by Canadian carriers. Vidéotron accesses these support structures in
exchange for a tariff that is regulated by the CRTC. If it were not possible to agree on the use or conditions of access with a support structure owner, Vidéotron could apply to the
CRTC for a right of access to a supporting structure of a transmission line.

Canadian Telecommunications Services

Jurisdiction

With certain exceptions, companies that own or operate transmission facilities in Canada that are used to offer telecommunications services to the public for
compensation are deemed "telecommunications common carriers" under theTelecommunications Actadministered by the CRTC.

TheTelecommunications Act, which came into force on October 25, 1993, as amended, provides for the regulation of facilities-based
telecommunications common carriers under federal jurisdiction. Under theTelecommunications Act, the CRTC may exempt any class of Canadian
telecommunications carriers from the application of theTelecommunications Actif the CRTC is satisfied that such an exemption is consistent with
implementation of the Canada telecommunications policy objectives. The CRTC must refrain from regulating certain telecommunications services or classes of services provided by Canadian carriers, if it
finds that such service or class is or will be subject to competition sufficient to protect the interests of users. The CRTC is prohibited from making a determination to refrain if refraining from
regulation could likely impair unduly the establishment or continuance of a competitive market for a particular service or class of services.

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Overview

Competition in the Canadian long-distance and local telephony markets is guided to a large extent by the principles set out in Telecom Decision CRTC
92-12, which removed the telephone companies' monopoly in the provision of public long-distance voice telecommunications services, Review of Regulatory Framework, Telecom
Decision CRTC 94-19, which sets out the principles for a new, pro-competitive regulatory framework, and Local Competition Telecom Decision CRTC 97-8, which
establishes the policy framework for local exchange competition. This latter decision, along with four others (Telecom Decision CRTC 97-9, CRTC Telecom Orders 97-590 and
97-591, as well as CRTC Public Notice 1997-49) comprise the Local Competition Decisions (the "LC Decisions"), which set out many of the terms and conditions for competitive
entry in the market for local telephony services. A number of technical, operating and other details are being established through subsequent proceedings and meetings of the CISC.

Price-Cap regulation

On May 30, 2002, the CRTC issued a price cap decision (Telecom Decision CRTC 2002-34) in which it revised the initial price regulation regime
governing the Incumbent Local Exchange Carriers (ILECs) and established a new regime that will apply through 2006. The new price regulation regime includes a total of eight baskets and service groups
and a number of service-specific rate element constraints. Competitor Services, which have been separated into two categories, are now subject to different treatment. Services in the Category I
Competitor Services group, which are considered as essential services, generally are to be priced at cost plus a 15% mark-up and, with respect to rate increases, are limited to
inflation less a productivity offset, except for a limited number of services that are already priced to reflect productivity gains. The rates for services in Category II
Competitor Services are capped at existing levels and will be priced on a case-by-case basis. In addition, the CRTC introduced a competitor Digital Network Access
service priced
as an essential service and established a follow-up proceeding (Telecom Public Notice CRTC 2002-4) on related matters.

Amendments to the Affiliate rule

Following a complaint by Vidéotron Télécom, the CRTC revised the affiliate rule and imposed regulatory safeguards
with respect to (a) incumbent affiliates, (b) bundling by Bell Canada and related matters, and (c) conditions on access to all ILEC-tariffed services by ILEC
affiliates who are not Canadian carriers and who are under common control with such ILEC. In order to prohibit an ILEC from using an affiliate to evade regulatory rules designed to promote
competition, the provision of telecommunications services by a non-regulated ILEC affiliate (rather than the ILEC itself) must be approved by the CRTC. The rates, terms and conditions of
service provided by the non-regulated ILEC affiliate must be identical to the rates, terms and conditions which would apply if the telecommunications services in question were provided to
the public by the ILEC itself.

Local Interconnection Regime

In a proceeding initiated by Public Notice CRTC 2001-126, the CRTC has reviewed the existing rules regarding trunking arrangements and point of
interconnection (POI). In lieu of requiring one POI per exchange and separate trunk groups for a variety of types of traffic, the CRTC is assessing if it may be desirable to establish rules that would
require fewer POIs and permit alternative trunking arrangements to reduce the number of trunk groups required.

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Contribution regime reform

When long-distance competition was established in Canada, the CRTC established a requirement for the payment of a subsidy or "contribution" by
interexchange carriers and resellers to ILECs for the maintenance of affordable local telephone service. In 2000, the CRTC replaced the per minute contribution regime with a revenue-based mechanism
under which companies contribute a percentage of their eligible revenues. The revenue-based contribution mechanism was implemented as of January 1, 2001, using an interim 2001 revenue
percentage charge of 4.5%. The contribution applies to virtually all telecommunications service providers, although an exemption is provided for service providers with less than $10 million in
gross Canadian telecommunications services revenues, intercarrier payments and revenues from certain services (such as retail Internet access services). For both 2002 and 2003, the revenue percentage
charge is 1.3%.

Canadian Broadcast Programming (Television Station)

Programming of Canadian Content

CRTC regulations require licensees of television stations to maintain a specified percentage of Canadian content in their programming. Television broadcasters are
subject to regulatory requirements that, over the broadcast year and over any six-month period specified in the license, a minimum of 60% of the aggregate programming shown during the
broadcast day (a continuous 18-hour period between 6:00 a.m. and 1:00 a.m. the following day) must be of Canadian origin. Canadian origin is most commonly achieved on the
basis of a points system requiring that a number of creative and production staff be Canadian and that specified Canadian production expenditure levels be met. In addition, not less than 50% of the
aggregate programming between the hours of 6:00 p.m. and 12:00 midnight over the broadcast year must be of Canadian origin. Specialty cable television channels also have to maintain a specified
percentage of Canadian content in their programming, generally set forth in their conditions of license.

On
September 1, 2000, the CRTC introduced a new policy regarding Canadian television. While the overall Canadian content requirements remain the same, under the new policy,
broadcasters are required to broadcast a minimum of eight hours per week of priority programming during prime time, from 7:00 p.m. to 11:00 p.m. To permit greater flexibility in meeting
these requirements, the definitions of priority programs and
prime time have been expanded. Priority programming now includes Canadian-produced drama, music and dance, variety and long-form documentaries, but does not include news and information or
sports programming. However, quantitative commitments and fixed spending requirements have been eliminated. In addition, the CRTC has eliminated general fixed spending requirements and has invited
television broadcasting companies to request the removal of any spending requirements pertaining to specific Canadian programming categories embodied in the conditions of their respective licenses.

Advertising

The CRTC also regulates the quantity and content of television advertising. A television licensee shall not broadcast more than 12 minutes of advertising during
any hour subject to certain exceptions for unpaid public service announcements and promotions for upcoming Canadian programs. Advertising content is regulated by various federal and provincial
statutes and regulations, as well as by standards in the Canadian television broadcasting industry.

Canadian Publishing

Federal or provincial law does not directly regulate the publication of newspapers in Canada. There are, however, indirect restrictions on the foreign ownership
of Canadian newspapers by virtue of certain provisions of theIncome Tax Act(Canada). TheIncome
Tax Act(Canada) limits the deductibility by Canadian taxpayers of advertising expenditures which are made in a newspaper other than a "Canadian issue of a Canadian
newspaper". For any given publication to qualify as a Canadian issue of a Canadian newspaper, the entity that publishes it, if publicly traded, must ultimately be controlled by Canadian citizens and,
if a private company, must be at least 75% owned by Canadians. In addition, the publication must, with limited exceptions, be printed and published in Canada. All of our newspapers qualify as
"Canadian issues of Canadian newspapers" and, as a result, our advertisers generally have the right to deduct their advertising expenditures with us for Canadian tax

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purposes. TheForeign Publishers Advertising Services Act(Canada) prohibits "foreign publishers" of periodicals other than newspapers from supplying
advertising services directed at the Canadian market to Canadian advertisers. As we are not a "foreign publisher", our magazines are not subject to such prohibition.

ORGANIZATIONAL STRUCTURE

The following chart illustrates the relationship among Quebecor Media and its significant subsidiaries as of March 1, 2003, all of which were incorporated
or organized in Canada or in various Canadian provinces. In each case, unless otherwise indicated, Quebecor Media owns a 100% equity and voting interest in its subsidiaries. Where applicable, the
number on the left indicates the percentage of equity owned directly and indirectly by Quebecor Media and the number on the right indicates the percentage of voting rights held.

GRAPHIC

This
chart is a simplification of our corporate structure and omits certain of our subsidiaries.

PROPERTY, PLANTS AND EQUIPMENT

Our corporate offices are located in leased space at 300 Viger Avenue East, Montréal, Québec, Canada H2X 3W4.

We
own several buildings in Montréal, the largest one being located in Montréal at 405 Ogilvy Avenue (with 297,000 square feet). Our main
back-up headend facilities are located in Montréal (with 27,000 square feet). We also own or lease a significant number of smaller locations for signal reception sites,
customer service and business offices.

Our
newspapers' properties are owned by Sun Media. Sun Media's principal business office is located at 333 King Street East, Toronto, Ontario. Our community newspapers operate from 137
owned and leased locations with building space totaling approximately 807,000 square feet located in the communities in which they serve.

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The following list sets forth certain information relating to Sun Media's main plants and other buildings of its eight urban dailies.

Address

Use of Property

Floor Space (sq. ft.)Toronto, Ontario
333 King Street East

Operations building, including printing plant
-The Toronto Sun

251,900London, Ontario
369 York Street

Operations building, including printing plant
-The London Free Press

150,100Montréal, Québec
4545 Frontenac Street

Operations building, including printing plant
-Le Journal de Montréal

162,000Calgary, Alberta
2615-12 Street NE

Operations building, including printing plant
-The Calgary Sun

90,000Vanier, Québec
450 Bechard Avenue

Operations building, including printing plant
-Le Journal de Québec

73,900Winnipeg, Manitoba
1700 Church Avenue

Operations building, including printing plant
-The Winnipeg Sun

63,400Edmonton, Alberta
9300-47 Street

Printing plant
-The Edmonton Sun

54,200Edmonton, Alberta
4990-92 Avenue

Operations building (leased until Dec. 2003)
-The Edmonton Sun

45,200Ottawa, Ontario
380 Hunt Club Road

Operations building (leased until Oct. 2003)
-The Ottawa Sun

22,000Gloucester, Ontario
4080 Belgreen Drive

Printing plant
-The Ottawa Sun

22,600


Our
television broadcasting operations are mainly carried out in Montréal in four buildings owned by us which represent a total of approximately 560,000 square feet. We
also own buildings in Québec City, Chicoutimi, Trois-Rivières, Rimouski and Sherbrooke for local broadcasting and lease space in Montréal for TVA
Publishing and TVA Films.

We
generally lease space for the business offices and retail outlets for the operation of our Leisure and Entertainment segment. Business offices for our New Media operations are
also primarily leased.

Our
credit facilities and those of our subsidiaries are generally secured by charges over all of our assets or those of our subsidiaries, as the case may be. Please see the description
of our debt instruments under "Item 10  Additional Information  Material Contracts" of this annual report.

ITEM 5  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

CORPORATE STRUCTURE

Quebecor Media is a subsidiary of Quebecor Inc. incorporated under Part 1A of the Companies Act (Québec) in August 2000,
engaged in the Cable Television, Newspapers, Broadcasting, Leisure and Entertainment, Business Telecommunications and New Media Services (including Web Integration/Technology and
Internet/Portals) business segments. We are aggressively developing a convergence strategy to capture synergies among all of the Company's media properties.

In
May 2002, following the sale of Publicor by Quebecor Media to TVA, all of our magazines were brought together under TVA Publishing, solidifying TVA Publishing's leading
position among Québec magazine publishers. Then, in September 2002, a new company formed by TVA and Radio Nord Communications inc. entered into an agreement to acquire the
Radiomédia chain of radio stations and CFOM-FM from Astral Media. The agreement is conditional upon CRTC approval.

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In
October 2000, Quebecor Inc. transferred all the shares of its wholly owned subsidiary QCI to the Company. At the time of the transfer, the assets of QCI included
interests of 70% in Sun Media, 57.2% in Nurun, all of the assets of the CANOE network and all of the assets of the Leisure and Entertainment segment. The transfer was accounted for using the
continuity of interest method. Therefore, the book value of the subsidiary's net assets was used at the time of the transfer. The figures provided in our consolidated financial statements for purposes
of comparison present the results of operations and cash flow of QCI from January 2000 to the time of the transfer.

Before
the transfer of the shares of QCI to the Company, we transferred our interest in our wholly owned broadcasting subsidiary, TQS Inc., to Quebecor Inc. Following the
sale of TQS Inc. to Quebecor Inc., our financial statements excluded TQS Inc.'s results as of the date of the transfer to Quebecor Inc.

Also,
in October 2000, Quebecor Inc. and Capital CDPQ, a subsidiary of the Caisse de dépôt et placement du Québec, made cash
injections of $0.9 billion and $2.8 billion, respectively, in consideration of shares of Quebecor Media. This capital, combined with new bank credit facilities, enabled us to acquire all
of the outstanding shares of Groupe Vidéotron for a total consideration of $5.3 billion.

Final
acquisition of control over Groupe Vidéotron's cable television and broadcasting subsidiaries was subject to approval by the CRTC. In May 2001, the CRTC
approved the transfer of control over the cable television subsidiaries. In September 2001, all of the conditions established by the CRTC for the transfer of control over TVA (pursuant to the
CRTC approval granted in July 2001) were satisfied. In accordance with Canadian GAAP and U.S. GAAP, the results of the Cable Television segment and of TVA have been included in our
consolidated results since May 2001 and September 2001, respectively. The investments in these subsidiaries were accounted for on an equity basis from the date of the acquisition of
Groupe Vidéotron in October, 2000. Our consolidated financial statements for 2001, therefore, report the operating results and cash flow of the Cable Television segment from
May 2001 to December 2001 and the operating results and cash flow of TVA from September 2001 to December 2001.

At
the time of the acquisition of Groupe Vidéotron, management's intention was to divest itself of Vidéotron Télécom, a
subsidiary of Groupe Vidéotron that provides high-speed telecommunications services to other carriers and large businesses. As a result of the uncertain business environment
in the telecommunications industry, we were unable to close the sale of Vidéotron Télécom on favorable terms. We, therefore, decided to retain
Vidéotron Télécom and develop its full potential. Vidéotron Télécom's operating results have therefore been
included in our consolidated financial statements since November 2001.

Quebecor
Media's share in the earnings of some subsidiaries has varied over the past three years. Our share in the earnings of Sun Media, which was acquired in 1999, increased to 100%
following the buyout of the 30% interest held by minority shareholders of Sun Media in June 2001. Our share in the earnings of Netgraphe Inc., which was acquired in 2000 as part of the
acquisition of Groupe Vidéotron, increased from 39.8% to 75.2% as a result of the sale of CANOE's assets in exchange for the stock of Netgraphe Inc. in
March 2001. Our share in the earnings of TVA increased from 35.5% as at December 31, 2001 to 36.1% as at December 31, 2002, as a result of the repurchase of shares for
cancellation by the subsidiary.

We
exercise direct and indirect controlling interests in four public companies. As of December 31, 2002, Quebecor Media held, directly or indirectly, 57.26%, 99.91%, 97.61% and
80.95% of the voting rights of Nurun, TVA, Netgraphe Inc. and Mindready, respectively.

Subsequent Events

After the end of the 2002 financial year, Quebecor Inc. contributed $216.1 million to the share capital of Quebecor Media in exchange for
216,145,684 Cumulative First Preferred Shares, Series B, of Quebecor Media, enabling us to reduce our $429 million term loan, which is due in April 2003, by the same amount. See
"Item 7  Major Shareholders and Related Party Transactions  Major Shareholders." Quebecor Inc. will make an
additional contribution of $19.0 million prior to the April 2003 payment date.

On
February 7, 2003, Sun Media closed a private placement of 75/8% Senior Notes for a net amount of US$201.5 million and contracted new bank credit
facilities totaling $425 million. The proceeds from the sale of Senior Notes and the new bank credit facilities were used to pay down in full all Sun Media loans and to pay a

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$260 million dividend to Quebecor Media, of which $150 million will be used to reduce the long-term debt of Vidéotron ltée. This payment on
Vidéotron's debt will be in addition to debt reductions totalling $168 million made by Vidéotron in 2002.

After
the financial operations carried out in 2002 and the beginning of 2003, we have reduced our debt by a total of nearly $430 million, using our cash flow and the injection of
capital by our parent company.

OPERATING RESULTS

Operating income means earnings before amortization charges, financial expenses, reserves for restructuring of operations and special charges,
write-down of goodwill, gains on sale of businesses and other assets and gains on dilution from issuance of capital stock by subsidiaries, and income taxes. Special charges include
mark-to-market of investments, a write down of property, as well as non-monetary compensation charges. Equity income (or loss) from non-consolidated
subsidiaries and non-controlling interest are not considered in the computation of operating income. Operating income is not a measure of results that is consistent with generally accepted
accounting principles. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It is not
intended to represent funds available for debt service, dividends, reinvestment or other discretionary uses, and should not be considered in isolation as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. Operating income is used by the Company because management believes it is a meaningful measure of performance. Operating income is
commonly used in the sectors in which the Company is engaged and by the investment community to analyze and compare
companies. It also facilitates year-over-year comparison of results, since operating income excludes, among other things, unusual items that are not readily comparable from
year to year. The Company's definition of operating income may not be identical to similarly titled measures reported by other companies.

YEAR ENDED 2002 COMPARED TO YEAR ENDED 2001

The Company's revenues amounted to $2.27 billion during the 2002 financial year, compared with $1.84 billion in 2001, an increase of
$433.5 million. The increase stems from the inclusion of the results of the Cable Television segment and of TVA following the transfer of control in 2001, the inclusion of the Business
Telecommunications segment in the consolidated results since November 2001, and higher revenues in the Newspapers segment, particularly from advertising. These factors were partially offset by
lower business volume in the New Media Services segment, particularly in Web Integration/Technology.

We
generated operating income of $604.9 million during the 2002 financial year, compared with $408.9 million in 2001. The $196.0 million increase was mainly due to
the inclusion of the results of the Cable Television, Broadcasting and Business Telecommunications segments for the full 12 months of 2002, combined with significantly improved operating
results in the Newspapers and New Media Services segments (including Web Integration/Technology and Internet/Portals). Lower newsprint prices and effective cost-containment measures
introduced in 2001 and continued in 2002 contributed to these improvements.

We
recorded a net loss of $213.9 million in 2002, compared with $444.2 million in 2001. In accordance with new accounting rules, the Company did not record any amortization
of goodwill in 2002. Excluding goodwill amortization, net of non-controlling interest, the net loss would have been $275.7 million in 2001.

Amortization
charges increased by $81.2 million in 2002 to $245.5 million. Financial expenses increased by $34.6 million from $287.8 in 2001 to $322.4 million
in 2002. The higher amortization charges and financial expenses mainly reflect the inclusion of the results of the Cable Television, Broadcasting and Business Telecommunications segments, including in
the latter case interest on redeemable preferred shares, which rose from $3.4 million in 2001 to $21.6 million in 2002. The higher financial expenses also reflect our issuance in
July 2001 of Senior Notes and Senior Discount Notes for a net amount of US$850 million, the proceeds from which were used to repay loans bearing lower interest. The increases in
financial expenses were, however, offset by the impact of lower interest rates and reduced debt levels.

Reserves
for the restructuring of operations and special charges totalled $39.3 million in 2002, compared with $152.1 million in 2001.

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In
2002, we recorded reserves for restructuring in the Newspapers ($2.2 million), Broadcasting ($3.0 million), Business Telecommunications ($1.3 million), Web
Integration/Technology ($5.6 million) and Internet/Portals ($1.5 million) segments. Reserves for restructuring and other charges in the amount of $2.3 million incurred
during the 2000 and 2001 financial years were reversed in the Web Integration/Technology and Internet/Portals segments. We also recorded special charges of $13.3 million and $9.0 million
in 2002 for the mark-to-market of temporary investments and a write-down of a property, respectively. Finally, the Web Integration/Technology segment recorded a
non-monetary compensation charge of $5.7 million in connection with shares subject to escrow agreements with shareholders/sellers of certain acquired businesses.

In
2001, we recorded a special charge of $99.8 million for the mark-to-market of temporary investments. Restructuring reserves were recorded in the
Newspapers ($17.8 million), Web Integration/Technology ($3.7 million) and Internet/Portals ($5.4 million) segments. The Web Integration/Technology segment also recorded a
non-monetary compensation charge of $25.4 million.

In
2002, the Company adopted the new recommendations in Section 3062 of the Canadian Institute of Chartered Accountants (CICA) Handbookconcerning
goodwill. The Company recorded a $187.0 million charge for the goodwill impairment loss in the Cable Television
($68.0 million), Business Telecommunications ($107.6 million), Web Integration/Technology ($8.9 million) and Internet/Portals ($2.5 million) segments.

In
2001, in view of the slowdown in the Internet/Portals and Web Integration/Technology segments, we recorded a write-down of goodwill for those segments in the amounts of
$118.4 million and $28.5 million respectively. The write-downs were based on an analysis of undiscounted future cash flow and reflected management's best estimates and hypotheses. The
amounts were calculated in accordance with the accounting standards in effect up to December 31, 2001.

We
realized a gain on the sale of businesses of $3.6 million in 2002, compared with a gain on dilution of $1.5 million as a result of a stock issue by a subsidiary in 2001.

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RESTRICTED AND UNRESTRICTED SUBSIDIARIES

We are subject to certain reporting requirements pursuant to the indentures governing the Company's Senior Notes and Senior Discount Notes issued in
July 2001. Under the indentures, the Company has designated Netgraphe Inc., Nurun, 3662527 Canada Inc. (parent company of Vidéotron
Télécom Ltd.) and its subsidiary Vidéotron Télécom Ltd. as "Unrestricted Subsidiaries." Therefore, the
financial condition and results of operations of the Company and its Restricted Subsidiaries must be disclosed separately from the financial condition and results of operations of the Unrestricted
Subsidiaries.

RESTRICTED SUBSIDIARIES AND THE COMPANY

In 2002, we and our restricted subsidiaries posted revenues of $2.11 billion, compared with $1.68 billion in 2001, and operating income of
$590.9 million, compared with $441.6 million in the previous year.

Cable Television

Vidéotron, a wholly owned subsidiary of the Company, is the largest cable operator in Québec and the third-largest in Canada. Its
state-of-the-art network extends to 2.3 million homes and serves approximately 1.4 million subscribers, including over 171,000 subscribers to its iLLICOdigital television service.
Vidéotron is also engaged in interactive multimedia development and Internet service provider
services; 350,000 customers subscribe to its dial-up and high-speed cable modem Internet access services.

As
noted above, Vidéotron's results have been included in the Cable Television segment's results since May 2001. In 2002, Vidéotron generated
revenues of $715.6 million and operating income of $262.7 million. On a comparable basis, the 2001 figures were $709.6 million and $271.9 million, respectively.

Revenues
grew by $6.0 million, or 0.8%, in 2002. Despite aggressive competition from satellite television services and the problems caused by the labor conflict between
Vidéotron and its unionized employees, Vidéotron had 57,000 new customers subscribe for itsiLLICOdigital television
service and lost 136,000 subscribers to its analog cable television service, for a net loss of 79,000 customers. At the same time,
Vidéotron gained 77,000 new customers for its high-speed cable Internet access service, which now serves 306,000 subscribers. The $35.9 million increase in revenues
from high-speed cable Internet access services, which generates higher ARPU (average rate per unit), more than made up for the net loss in revenues from cable television services. The
higher revenues also offset the $3.0 million in credits granted to subscribers during the labor dispute, the decrease in installation revenues and the decline in revenues from Videoway, Telemax
and pay-per-view.

Operating
income decreased by $9.2 million, or 3.4%, in 2002, on a comparable basis. The impact on operating income of the net loss of cable television customers, combined with
the lower profit margin, due primarily to the migration of customers from analog to digital services, was fully offset by the subscription by new customers for Internet access services, which generate
higher profit margins. At the same time, efficiencies of more than $20.0 million yielded by the cost rationalization program implemented since the acquisition by the Company and an
$8.3 million refund of property taxes paid on the network in previous years, which was received in 2002, were not enough to offset the additional costs incurred during the financial year. These
included charges of $18.5 million related to the maintenance of operations during the labor dispute, the impact of reduced capitalization of certain operating expenses following completion of
the network modernization program, and the costs of improving customer service.

The
2002 financial year was marked by the labor dispute between Vidéotron and its unionized employees, which began on May 8, 2002. Operating conditions became more
difficult and the labor dispute resulted in certain inconveniences for our subscribers. Vidéotron also stepped up efforts to develop its customer base for value-added services and
continued expanding its product line. Vidéotron enhanced itsiLLICOdigital television service by launching the new i GAMES portal,
introduced EXTRÊME, a new ultra-high-speed Internet package, and made five additional French-language European channels available to iLLICOsubscribers. To make itsiLLICOservice still more attractive, Vidéotron added to
its product line a Personal Video Recorder (PVR) capable of storing up to 50 hours of programming on its hard disk. In addition, starting in winter 2003,

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Vidéotron will begin to introduce Video on Demand, a technological innovation exclusive toiLLICOthat makes over 400 films available at
all times, with the same viewing options as a VCR or DVD player.

Newspapers

In the Newspapers segment, Sun Media is Canada's largest national chain of tabloids and community newspapers. It publishes metropolitan dailies in eight of the
country's 11 largest markets, as well as 175 weekly newspapers and shopping guides and 18 other specialty publications across Canada and in Florida.

The
Newspapers segment's revenues amounted to $853.6 million in 2002, compared with $838.1 million in 2001, an increase of $15.5 million or 1.8%. Increases of 4.0%
and 2.1% in advertising and circulation revenues, respectively, were partially offset by decreased printing revenues. Six of the group's eight metropolitan dailies increased their revenues.

Operating
income grew to $222.3 million in 2002, an increase of $21.5 million or 10.7%. The Newspapers segment's operating margin was 26.0% in 2002, compared with 24.0% in
2001. The increase in operating
income was mainly due to lower newsprint prices, effective cost containment measures introduced in 2001 and continued in 2002, and to higher revenues. These factors were, however, partially offset by
the Company management fees in the amount of $5.1 million, an increase in payroll due to normal adjustments in hourly rates, higher fringe benefits and pension costs, and wages related to new
publications. Investments in distribution operations also contributed to the increase in costs.

The
metropolitan dailies made a particularly significant contribution to the improved profitability, with a 19.6% increase in operating income, while the community newspapers posted a
10.2% increase in operating income. All the metropolitan dailies improved their profitability, with increases of 8.4% in the Eastern Group, 22.9% at The Toronto Sun, 23.3% at The London Free Press and
30.1% in the Western Group. Le Journal de Montréal remains the segment's flagship publication with the highest revenues and operating margin of all of Sun Media's metropolitan dailies.
It is noteworthy that, in a fiercely competitive market, Québec community newspapers increased their revenues by 11.1% and their profitability by 19.9% in 2002.

In
2002, Sun Media renegotiated its newsprint supply contracts with its suppliers in order to extend their duration and obtain greater volume discounts.

The
Newspapers segment plans to carry out a computer-to-plate project for six of its metropolitan dailies during the 2003 financial year. The $6.3 million
investment is expected to yield annual savings of $2.6 million.

Broadcasting

TVA is Québec's largest television broadcaster with a market share of more than 35%; its network of 10 stations consists of six owned and four
affiliate stations. It is engaged in publishing through subsidiary TVA Publishing inc., which dominates the French-language news-stand magazine market in Québec, in
merchandising and in infomercials. TVA also holds interests in analog specialty channels such asLe Canal Nouvelles(LCN).

As
noted above, TVA's results have been included in the Broadcasting segment since September 2001. In 2002, TVA generated revenues of $323.4 million and operating income of
$78.9 million. In 2001, the figures were $322.3 million and $70.6 million, respectively, on a comparable basis.

Increased
broadcasting and publishing revenues almost entirely offset the decrease in production and international distribution operations resulting from the reorganization carried out
in 2001.

In
broadcasting operations, the general interest channels' advertising revenues increased by $8.4 million in 2002 and the English-language specialty channels, which have been on
the air since January 2002, recorded revenues of $2.0 million. The increase in publishing revenues was primarily due to the acquisition of Publicor by TVA Publishing in the second
quarter of 2002.

The
growth in operating income in 2002 stemmed from, among other things, the higher revenues, the increased profitability of TVA's broadcasting operations as a result of lower operating
costs and the addition of Publicor's results to the Broadcasting segment's consolidated figures.

Two
important events occurred at TVA during the 2002 financial year.

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First,
as noted above, in May 2002, TVA acquired Publicor, the publisher of popular magazines such asLes idées de ma maison,
Décoration chez-soi, Rénovation-Bricolage, Filles d'aujourd'hui, Clin d'oeil, Femmes Plusand a host of special editions and seasonal
publications, from the Company. The celebrity news weeklyÉchos-Vedettes, a Québec institution since 1963, was also
included in the transaction. Combining Publicor with TVA Publishing has solidified TVA Publishing's position as the number one magazine publisher in Québec.

Then,
in September 2002, a new company formed by TVA (60%) and Radio Nord Communications inc. (40%) entered into an agreement to acquire the Radiomédia AM
radio stations and CFOM-FM from Astral Media Inc. The agreement is conditional upon CRTC approval. For Quebecor Media and TVA, the acquisition is a first foray into radio. It will
add further depth to Quebecor's multimedia offering to advertisers and enhance the quality and strength of Radiomédia's Québec-wide chain of information radio
stations.

The
BBM ratings for fall 2002, released at the beginning of 2003, again confirmed TVA's dominant position among Québec general interest television networks. TVA's network
has a 36% market share in the Québec market as a whole was, once again, greater than that of its two main rivals, SRC (17%) and Réseau TQS (14%), combined. Eight of the
top ten shows aired on TVA. Among specialty channels, LCN also performed strongly, achieving a substantial increase in viewing hours.

Leisure and Entertainment

The Company's operations in the Leisure and Entertainment segment consist primarily of distribution of music and retailing of books, magazines and music
(Archambault Group Inc.); rentals and sales of video cassettes and DVDs (Le SuperClub Vidéotron chain of video stores); and book publishing (ten associated publishing houses) and
distribution (Québec-Livres).

In
2002, the segment's revenues totalled $244.5 million, compared with $260.1 million in the previous year. The $15.6 million decrease resulted mainly from the
transfer of Publicor magazines from the Leisure and Entertainment segment to the Broadcasting segment in May 2002, which is described above under Broadcasting.

Operating
income remained virtually unchanged, increasing from $28.8 million to $29.0 million. The significant improvement in the profitability of music and book publishing
segments made up for the loss of income resulting from the transfer of the Publicor magazines. It should be noted that revenues and operating income for the previous year included the results of St.
Remy Média Inc., which was sold at the end of 2001.

In
the Music segment, Archambault Group Inc.'s revenues rose by $7.9 million and its operating income by 28.0% in 2002. Its retail sales increased significantly,
particularly sales of CDs, books, musical instruments and pianos, magazines and sheet music. It also recorded higher distribution revenues as a result of a number of successful releases distributed by
Distribution Select, particularly toward the end of 2002. On the whole, Archambault Group Inc. succeeded in improving its profitability as a result of increased revenues, stringent control over
operating expenses and the reorganization of its distribution operations. In October 2002, Archambault Group Inc. opened its twelfth superstore in the Complexe Les Ailes shopping centre
in downtown Montréal and, in December 2002, Archambault Group Inc. relocated and expanded its store in Trois-Riviéres, Québec.

Sales
at the Le SuperClub Vidéotron chain increased by $1.7 million in 2002 and operating income remained stable. Revenues from sales of Vidéotron
products, including broadcasting and Internet access services, almost tripled during the year. Higher revenues from fees and from sales of new and pre-viewed videos and DVDs made up for
the decrease in rental revenues.

Not
counting St. Remy Média's 2001 results, the Books segment increased its revenues by $3.8 million and its operating income by 74.4% in 2002. Stronger sales of
school books and successful new releases contributed to the improved results.

During
the year, Éditions Quebecor Média reorganized its publishers of general literature, bringing them under one roof and a single management structure.
The goal was to increase the commercial strength of the largest group of publishing houses in Québec. In November 2002, the Company sold its 80% interest in legal publisher
Wilson & Lafleur to the Wilson family, which founded the company. The Company was a partner in the development of this major Québec publishing house for 17 years.

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UNRESTRICTED SUBSIDIARIES

In 2002, the Unrestricted Subsidiaries recorded revenues of $196.7 million, compared with $170.7 million during 2001. Operating income amounted to
$14.0 million, compared with an operating loss of $32.8 million during 2001.

Business Telecommunications

Vidéotron Telecom Ltd. is a business telecommunications leader with a 10,000-km network that reaches more than 80% of businesses
located in the metropolitan areas of Québec and Ontario. Vidéotron Télécom's extensive network supports direct connectivity with networks in
Ontario, eastern Québec, the Maritimes and the United States. Through partnerships, Vidéotron Télécom can serve its customers around the
world.

As
noted above, Vidéotron Télécom's operating results have been included in Quebecor Media's consolidated results since November 2001.
Vidéotron Télécom's revenues were $91.9 million in 2002, versus $96.7 million in 2001, on a comparable basis. The decrease in revenues from
point-to-point telecommunications and the impact on revenues of the discontinuation of certain operations in 2001 were not entirely offset by the contribution of businesses
acquired in 2002 and higher revenues from Internet communications.

Operating
income amounted to $27.3 million in 2002, compared with $23.4 million in the previous year, an increase of $3.9 million or 16.6%. The improvement in
profitability was mainly due to the considerable reduction in labor costs and higher profit margins, which outweighed costs caused by vandalism against Vidéotron
Télécom's network during the labor dispute at Vidéotron.

In
April 2002, Vidéotron Télécom acquired most of the strategic assets of Toronto-based Stream Intelligent Networks. The transaction
increased Vidéotron Télécom's penetration in the Montréal-Ottawa-Toronto triangle, the country's largest business telecommunications market.
Then, in December 2002, Vidéotron Télécom expanded its coverage by acquiring two fiber-optic routes stretching a total of 1,200 km across southern
Ontario and into the United States. The two transactions demonstrate Vidéotron Télécom's commitment to expansion in the Ontario marketplace.

New Media Services

The Company's New Media Services segment include the following two operations:

Web Integration/Technology

The Web Integration/Technology segment includes Nurun, which is engaged in Web, intranet, extranet and B2C e-commerce development,
e-marketing and customer relationship management (CRM) strategies, and interactive television concepts and operations, and Nurun's subsidiary, Mindready, which is a leading supplier of
test engineering systems, automation systems and embedded systems.

The
Web Integration/Technology segment posted revenues of $79.8 million in 2002, compared with $129.1 million in 2001. The $34.9 million decrease in the revenues of
Mindready, which resulted from slumping demand from telecommunications companies (which account for 90% of Mindready's business),
accounted for a majority of the decrease. Sales generated by Nurun's e-Business Services segment declined by $14.4 million due to a decrease in business at all offices and the
discontinuance of some operations that no longer fit into Nurun's long-term development plans, including the sale of Flow Systems Corporation and the closing of Nurun's office in Chile.

Operating
losses amounted to $10.7 million, compared with $15.4 million in 2001. The lower operating loss in 2002 was mainly due to the recording of special charges related
to the restructuring of operations in 2001 under operating expenses, and lower operating expenses and improved profit margins in 2002, which more than made up for the decrease in revenues.

Therefore,
despite an exceedingly difficult business environment for Web-related service companies, Nurun's e-Business Services segment generated operating income
in each of the last three quarters of 2002. It did so by practicing careful management and concentrating on its core mission of offering Web services and relational marketing solutions to major
world-wide brands. At the same time, Nurun continued energetically

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marketing its services to public and parapublic organizations. In November 2002, Nurun signed a contract worth nearly $3 million with the Québec Pension Plan, a large
Québec government agency, to develop Web-based transactional services.

Mindready
reduced its staff in Europe and North America under the restructuring plan developed in 2002. Mindready made an effort to diversify its customer base and its vertical markets.
As of the end of 2002, 43% of its revenues derived from sources such as aerospace (24%), automobiles (8%), industry and medical services (11%), all expanding markets where the engineering solutions
provided by Mindready are in demand.

Internet/Portals

In the Internet/Portals segment, Netgraphe Inc. operates the CANOE network of sites, which consists of the Canoe.ca and Canoe.qc.ca general interest
portals, the Toile du Québec (toile.com) indexing and search engine, the Webfin.com and megagiciel.com sites as well as specialty sites relating to employment (Jobboom.com), personals
(matchcontact.com) and automobiles (Autonet.ca). In addition, the network includes the largest source for classified ads in Canada, ClassifiedExtra.ca, and a virtual store, Shop.canoe.ca.

The
Internet/Portals segment's revenues were virtually unchanged at $26.8 million in 2002, compared with $27.4 million in 2001. The world wide decline in revenues from
advertising banners on general interest portals in 2002 was, therefore, offset by the significant increase in revenues from the specialty sites Jobboom.com, MatchContact.com and Autonet.ca.

However,
the most notable event of 2002 in the segment was the sharp reduction in operating losses from $21.5 million in 2001 to $2.6 million in 2002, an
$18.9 million improvement. This performance reflects the success of the multi-stage restructuring process which was launched in 2001 and continued during the 2002
financial year. Lower payroll and advertising/promotion expenses combined with increased revenues from specialty sites, contributed to the improvements.

The
Internet/Portals segment reached the breakeven point, in terms of operating income, during the last two quarters of 2002. The turnaround in Netgraphe Inc.'s financial
performance was due to the factors noted above. During the 2002 financial year, Netgraphe Inc. carried out a reorganization of its properties. Its general interest portals Canoe.ca and
Canoe.qa.ca were converted into virtual gateways to the Company's properties. The refocusing of Netgraphe Inc.'s operations necessitated a reserve for restructuring of $1.5 million and
is expected to yield annual savings of over $7 million.

In
July 2002, Netgraphe Inc. announced a financing agreement in the amount of $6.0 million, relating to the issuance by Netgraphe Inc. of 8% convertible
Senior Debentures to Quebecor Media and 9085-3011 Québec inc. (formerly InfiniT inc.). The purpose of the arrangement was to improve Netgraphe Inc.'s
financial condition and enable it to pursue its development.

In
the third quarter of 2002, Netgraphe Inc. announced the sale of its Micanoa.com portal to Grupo Vertice, a Spanish information and training firm. The sale was part of
Netgraphe Inc.'s strategy of concentrating on the development of its network of sites in Québec and the rest of Canada.

Throughout
the financial year, Netgraphe Inc. continued to work on maximizing opportunities for convergence with other Quebecor Media companies, particularly Sun Media and TVA.

Financial Expenses

Financial expenses rose from $287.8 million to $322.4 million in 2002. The $34.6 million increase was due primarily to the inclusion of the
results of the Cable Television, Broadcasting and Business Telecommunications segments for the full year, including, in the latter case, interest on redeemable preferred shares, which increased from
$3.4 million in 2001 to $21.6 million in 2002. The increase in financial expenses was also due to the issuance in July 2001 by the Company of Senior Notes and Senior Discount
Notes in the net amount of US$850 million, the proceeds from which were used to repay loans bearing lower interest. These factors were, however, partially offset by the impact of lower interest
rates on the floating-rate portion of the debt, lower debt levels and the restatement of 2001 financial expenses as a result of the retroactive application of the new accounting policy
concerning foreign currency translation.

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YEAR ENDED 2001 COMPARED TO YEAR ENDED 2000

During the 2001 financial year, the Company and its subsidiaries carried out a series of initiatives to improve their financial condition and pay down the bank
credits contracted at the time of acquisition of Groupe Vidéotron.

On
June 21, 2001, the Company reached agreement with the minority shareholders of Sun Media to acquire their 30% minority interests. To do so, Quebecor Inc. and Capital
CDPQ made an injection of capital in the aggregate amount of $375 million into the Company. Following the transaction, Sun Media became a wholly owned subsidiary of the Company.

On
June 29, 2001, the Company contracted a $430 million bridge loan with a term of 21 months. On July 5, 2001, Vidéotron closed a term credit
in the amount of US$264 million; a portion of the proceeds was distributed to Quebecor Media in order to pay down part of its debt.

Then,
on July 6, 2001, the final stage of the refinancing plan was completed when the Company closed a private placement, denominated in US dollars, coming due in 2011. The net
proceeds of US$850 million were applied to the repayment of Quebecor Media's debt.

Quebecor
Media recorded revenues of $1.84 billion in the 2001 financial year, compared with $1.24 billion in 2000. The Company generated operating income of
$408.9 million in 2001, compared with $195.8 million in 2000. The increase in revenues and operating income was primarily due to the consolidation of the results of the subsidiaries
acquired in the acquisition of Groupe Vidéotron.

The
Company posted a net loss of $444.2 million in 2001, compared with $193.0 million in 2000. The 2001 results were affected by an increase in amortization expenses,
including amortization of goodwill (a difference of $214.6 million), and in financial expenses (an increase of $191.3 million), mainly as a result of the acquisition of Groupe
Vidéotron. Reserves for restructuring and special charges increased ($45.5 million), as did write-downs of goodwill ($20.1 million).

The
Cable Television segment contributed $476.5 million to revenues and $183.2 million to operating income from May to December 2001. On a comparable basis,
Vidéotron's revenues increased by $50.6 million or 7.7% in 2001 from the 2000 figure of $659.0 million. Operating income, which was $234.9 million in 2000, rose by
$37.0 million, or 15.8%, mainly as a result of the growing customer base for the high-speed Internet access service.

The
Newspapers segment generated revenues of $838.1 million in 2001. The 1.4% decrease from the $850.1 million figure reported in 2000 was mainly due to a 6% decline in
circulation revenues. The segment's operating income decreased by 2.2% to $200.8 million in 2001, primarily as a result of higher newsprint prices in the first three quarters of 2001, which
were largely offset by the positive impact of restructuring programs.

The
Broadcasting segment's revenues were $114.7 million in 2001, compared with $39.4 million in the 2000 financial year. The growth mainly reflects the addition of TVA's
results for the months of September through December 2001. The segment's operating income amounted to $28.7 million in 2001, compared with an operating loss of $4.5 million in
2000.

In
the Leisure and Entertainment segment, revenues increased by 15.4% to $260.1 million in 2001. Operating income grew 61.1% to $28.8 million in 2001, compared with
$17.9 million in 2000. The increases stemmed mainly from the inclusion of the results of Le SuperClub Vidéotron as of October 2000, following the acquisition of Groupe
Vidéotron. The increase in operating income was also due to improved profitability in the Magazines and Music segments.

Vidéotron
Télécom's revenues, which were included in the Company's consolidated financial statements as of November 2001, amounted to
$14.6 million in 2001, while operating income was $4.1 million. On a comparable basis, Vidéotron Télécom's revenues increased 17% to a total
of $96.7 million in 2001. Its operating income quintupled, increasing from $4.5 million in 2000 to $23.4 million in 2001. The improvement in operating income was due to stringent
control of expenses and the successful recovery plan adopted by Vidéotron Télécom in 2001.

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The
Web Integration/Technology segment generated revenues of $129.1 million in 2001, compared to the $127.5 million figure reported in 2000. It recorded an operating loss
of $15.4 million in 2001, compared with a small operating income of $146,000 in 2000. The results reflected difficult market conditions in the e-Business segment and decreased
operating income at Mindready.

The
revenues of the Internet/Portals segment were $27.4 million in 2001, compared with $11.6 million in 2000. The increase mainly resulted from the inclusion of the results
of Netgraphe Inc., a subsidiary of Groupe Vidéotron, in the Company's results for the full year in 2001. The operating loss was $21.5 million, compared with
$21.7 million in 2000. On March 6, 2001, Netgraphe Inc. and the Company announced the closing of a consolidation agreement under which CANOE's assets were sold to
Netgraphe Inc. in consideration for Netgraphe Inc. stock.

The
increase in financial expenses in 2001, compared with 2000, was due to higher debt levels as a result of the acquisition of Groupe Vidéotron by Quebecor Media on
October 23, 2000.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Operations generated cash flow of $401.2 million in 2002, compared with $281.8 million in 2001. The difference of $119.4 million was caused
primarily by the inclusion of the cash flow of the Cable Television, Broadcasting and Business Telecommunications segments for the full year in 2002, combined with the significant improvement in the
operating results of the Newspapers, Web Integration/Technology and Internet/Portals segments. These increases were partially offset by a net change in non-cash balances related to
operations, which decreased by $78.4 million in 2002 compared with 2001, as a result of decreased investment in working capital in 2001.

Operations
generated negative cash flow of $26.1 million in 2000. The $307.9 million difference in cash flow compared to 2001 resulted mainly from the additional
contribution from subsidiaries acquired as part of the acquisition of Group Vidéotron and from lower working capital requirements.

Operating
working capital was negative by $478.8 million at December 31, 2002, compared with a positive amount of $52.8 million at December 31, 2001. The
decrease in working capital was mainly due to the recording of a $429.0 million term loan maturing in April 2003 under short-term debt and a $141.1 million increase in
the short-term portion of the long-term debt of Vidéotron, Sun Media and their subsidiaries.

Financing Activities

In 2002, Quebecor Media's long-term consolidated debt and bank debt decreased by $213.7 million. Vidéotron and Sun Media
accounted for most of the decrease, with reductions of $168.0 million and $39.4 million, respectively.

Immediately
after the end of the 2002 financial year, Quebecor Inc. contributed $216.1 million to the share capital of Quebecor Media, which enabled Quebecor Media to repay
the same amount of a $429.0 million term loan coming due in April 2003. Including the reduction in the term loan, the Company decreased its debt by a total of nearly $430 million.

On
February 7, 2003, Sun Media closed a private placement of Senior Notes maturing in 2013 and bearing interest at 75/8%, for a net amount of
US$201.5 million, and contracted new bank credit facilities totaling $425.0 million; more than 95% of the principal does not come due until 2008 or 2009. The proceeds from the sale of
Senior Notes and the new bank credit facilities were used to pay down all Sun Media's debt, on which substantial amortization payments would have been due in 2003 and 2005, and which would have been
repayable in full in 2007. In addition, Sun Media paid a $260 million dividend to the Company, of which $150 million will be used to reduce the long term debt of Vidéotron
ltée.

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Investing Activities

Investment expenses increased from $123.8 million in 2001 to $141.6 million in 2002. The increase was due to the inclusion of the Cable Television,
Broadcasting and Business Telecommunications segments, which was partially offset by lower investment expenses in the Newspapers, Web Integration/Technology and Internet/Portals segments. The amount
of capital expenditures for each business segment is included in the segmented information of the financial statements. For a description of commitments for material expenditures, see note 18
to the consolidated financial statements (see pages F1 to F43 of this annual report).

Financial Position

At December 31, 2002, the Company and its subsidiaries had cash, cash equivalents and liquid investments with remaining maturities greater than three
months totalling $275.7 million, consisting mainly of short-term investments. The Company and its subsidiaries also had unused lines of credit of $275.0 million available,
for total available liquid assets of $550.7 million.

At
the same date, the consolidated debt, including the short-term portion of the long-term debt, totalled $3.51 billion, including Sun Media's
$515.1 million debt, Vidéotron's $1.12 billion debt, TVA's $51.2 million debt, Senior Notes in an aggregate amount of $1.39 billion and a term loan of
$429.0 million. The average term to maturity of the Company's consolidated debt is 5.3 years as at December 31, 2002.

The
consolidated debt portfolio of the Company is managed in order to reduce currency risk exposure and, as a result, more than 90% of U.S. dollar-denominated debt has been fully
hedged against currency fluctuations. The interest profile of our consolidated debt is approximately 57% fixed and 43% floating. See
"Item 11  Quantitative and Qualitative Disclosures About Market Risk" of this annual report.

Management
believes that cash flow from operations and available sources of financing should be sufficient to cover cash requirements for capital investment, interest payments and
mandatory debt repayment. The Company has access, subject to certain conditions, to 50% of the revolving credit facilities of Sun Media and Vidéotron in order to serve the interest on
the Senior Notes and the Senior Discount Notes. However, we do not anticipate that we will need to use such revolving credit facilities to service our obligations. Management believes also that the
financing activities carried out after the end of the 2002 financial year and discussed
under Financing Activities above have enhanced the Company's financial flexibility by reducing its debt ratio through the injection of capital, by rescheduling debts on which substantial amortization
payments are due in the coming years, and by facilitating the circulation of liquid assets between the Company and its subsidiaries.

Contractual Requirements and Other Commercial Commitments

Contractual Obligations

Our material obligations under firm contractual arrangements, including commitments for future payments under long-term debt arrangements and
operating lease arrangements, as of December 31, 2002, are summarized below and are fully disclosed in notes 13 and 18 to our consolidated financial statements (see pages F1 to
F43 of this annual report).

|                                   |  | Payments Due By Period
|---------------------------------- |  | ----------------------
|
|
|Long-term debt                     |  |                       
|Operating leases                   |  |                       
|                                   |  |                       
|Total contractual cash obligations |  | $                     
|                                   |  |                       

We
rent equipment and premises under various operating leases. As of December 31, 2002, minimum payments under these leases over the next five years and thereafter were
approximately $295.4 million in aggregate.

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Subsequent Events Affecting the Chart Above

After the end of the 2002 financial year, Quebecor Inc. contributed $216.1 million to the share capital of Quebecor Media, enabling us to reduce by
$216.1 million our $429 million term loan, under the Credit Agreement dated as of June 29, 2001 among Quebecor Media, RBC Dominion Securities Inc., Royal Bank of Canada,
the guarantors thereto and the co-arrangers and lenders thereto, which is due in April 2003. See "Item 7  Major Shareholders and
Related Party Transactions  Major Shareholders." Quebecor Inc. will make an additional contribution of $19.0 million prior to the April 2003
payment date. Capital CDPQ and Caisse de dépôt et placement du Québec have undertaken to pay the balance of the principal of the $429 million term
loan (approximately $194 million), and interest, if any, to RBC Dominion Securities Inc. and Royal Bank of Canada.

On
February 7, 2003, Sun Media closed a private placement of Senior Notes maturing in 2013 and bearing interest at 75/8%, for a net amount of
US$201.5 million, and contracted new bank credit facilities totaling $425.0 million; more than 95% of the principal does not come due until 2008 or 2009. The proceeds from the sale of
Senior Notes and the new bank credit facilities were used to pay down all Sun Media's debt, on which substantial amortization payments would have been due in 2003 and 2005, and which would have been
repayable in full in 2007.

The
Sun Media refinancing enables us to delay, until 2008 and after, some of our payments due on our long-term debt, thereby reducing the amount of our
pre-2008 payments due on our long-term debt. Payments due in less than one year on our long-term debt will be reduced by $57.4 million. Payments due on our
long-term debt in the period of one to three years will be reduced by $233.5 million. Payments due on our long term debt in the period of three to five years will be reduced by
$207.6 million. Payments due on our long term debt in the period after five years will increase proportionately.

Other Commercial Commitments

Newsprint represents a significant input and component of operating costs for the Newspapers segment. The Company uses several newsprint manufacturers to supply
its requirements, and has entered into a long-term agreement with one company to supply the majority of its newsprint purchases up to December 2005. The Company's annual minimum
purchase requirement under the agreement is approximately 125,400 tonnes of
newsprint. The Broadcasting segment made a commitment to invest $48,900,000 over an eight-year period in the Canadian TV industry and in the Canadian communications industry to promote TV
content and the development of communications. As at December 31, 2002, the balance to be invested amounted to $45,560,668. In September 2002, TVA and one of its partners signed a
60%/40% agreement to purchase some radio broadcasting stations from Astra Media Inc. The transaction, which amounts to $12,750,000, is subject to the approval of the CRTC.

Related Party Transactions

The Company and its subsidiaries have incurred expenses for commercial printing services with Quebecor World Inc., a subsidiary of Quebecor Inc. The
Company conducts all of its business with the Company on a commercial, arm's length basis. Such commercial printing services are undertaken in the ordinary course of business. The total expenses for
commercial printing services with Quebecor World Inc. in 2002 was $57.9 million.

RISKS AND UNCERTAINTIES

In the normal course of business, Quebecor Media and its subsidiaries are exposed to fluctuations in interest rates and exchange rates. Quebecor Media manages
this exposure through staggered debt maturities and an optimal balance of fixed and variable rate obligations. As at December 31, 2002, Quebecor Media and its subsidiaries,
Vidéotron and Sun Media, were using financial derivatives instruments to reduce their exchange rate and interest rate exposure. See
"Item 11  Quantitative and Qualitative Disclosures About Market Risk" of this annual report.

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While
these agreements expose the Company and the subsidiaries to risk of non-performance by a third party, the Company and the subsidiaries believe that the possibility of
incurring such loss is remote due to the creditworthiness of the parties they deal with. The Company does not hold or issue any derivative financial instruments for trading purposes. A description of
the financial derivatives used by the Company as at December 31, 2002 is included in note 19 to the consolidated financial statements (see pages F1 to F43 of this annual report).

Concentration
of credit risk with respect to trade receivables is limited as a result of the Company's diverse operations and large customer base. As of December 31, 2002, the
Company had no significant concentration of credit risk. We believe that the product and geographic diversity of its customer base contributes to reducing its credit risk, as well as the impact of a
potential change in its local market or product-line demand.

TREND INFORMATION

Our business is cyclical in nature. We are dependent on advertising and, in our Newspapers segment in particular, circulation sales; therefore, operating results
are sensitive to prevailing economic conditions, especially in Ontario, Québec and Alberta. In the Newspapers segment, circulation, measured in terms of copies sold has been generally
declining in the industry over the last ten years. Our advertising and circulation revenues in the Newspapers segment have improved since 2001, and we expect that they will continue to improve in
2003.

Furthermore,
competition continues to be intense in the cable television, broadcasting and newspaper industries.

Newsprint
prices have had a significant effect on our operating results as newsprint is the principal raw material in the Newspapers segment. The newsprint industry is highly cyclical,
and newsprint prices have historically experienced significant volatility caused by supply and demand imbalances. Since a period of relatively high prices in 1995, during which prices peaked at US$755
per metric tonne, the industry has experienced two further full pricing cycles. Over the twelve month period from June 2001 to June 2002, newsprint prices declined 28%, from US$625 to
US$450 per metric tonne. In July 2002, newsprint producers announced a US$50 per metric tonne price increase, which was partially implemented in October 2002, and we expect that prices
will continue to increase in early 2003.

In
addition, our business has experienced and is expected to continue to experience significant fluctuations in operating results due to, among other things, seasonal advertising
patterns and seasonal influences on people's reading and viewing habits.

CRITICAL ACCOUNTING POLICIES

The Securities and Exchange Commission has issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting
Policies" ("FRR 60"), suggesting that companies provide additional disclosures and commentary on those accounting policies considered most critical. FRR 60 considers an accounting policy to be
critical if it is important to the Company's financial condition and results, and requires significant judgement and estimates on the part of management in its application. Quebecor Media believes the
following represent the critical accounting policies of the Company as contemplated by FRR 60. The Company's significant accounting policies are described in Note 1 to the Company's
consolidated financial statements (see pages F1 to F43 of this annual report).

Goodwill

As noted below under "Change in accounting policies," we adopted the new rules for measuring goodwill impairment in 2002.

In
the first step of the goodwill impairment test, the fair value of a reporting unit is compared with its carrying amount. To determine the fair value of the reporting unit, the Company
used a combination of valuation methods including discounted cash flows, EBITDA multiples and market price.

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The
discounted cash flows method involves the use of estimates such as the timing of the cash flows, expected variations in the amount or timing of those cash flows, the time value of
money as represented by the risk-free interest rate, and the risk premium associated with the asset or liability.

The
EBITDA multiples method requires the availability of fair values of enterprises with comparable operations and economic characteristics, as well as of recent EBITDA multiples.

The
market price method must take into account the fact that the price of an individual share may not be representative of the fair value of the business unit as a whole, due to factors
such as synergies, control premium and temporary market price fluctuation.

Therefore,
determining the fair value of a reporting unit requires judgement and involves significant reliance on estimates and assumptions.

When
the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is carried out. The fair value of the reporting unit's goodwill
should be compared with its carrying amount in order to measure the amount of the impairment loss, if any.

The
fair value of goodwill is determined in the same manner as in a business combination. An enterprise allocates the fair value of a reporting unit to all of the assets and liabilities
of the unit, whether or not recognized separately, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the
reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the fair value of goodwill.

The
judgement used in determining the fair value of the reporting unit and in allocating this fair value to the assets and liabilities of the reporting unit may affect the value of the
goodwill impairment to be recorded.

Business Combination

The acquisition of Groupe Vidéotron was accounted for by Quebecor Media using the purchase method of accounting. Under the purchase method of
accounting, the purchase price of approximately $5.3 billion was allocated to the underlying net identifiable assets, based on their estimated fair values. The excess of the purchase price over
the estimated fair values of the acquired identifiable net assets was recorded as goodwill. The judgements made in determining the estimated fair value and the expected useful lives of each acquired
asset and liability can significantly impact net income, since different assets may have different useful lives. Also, future income taxes on temporary differences between the book and tax value of
most of the assets are recorded in the purchase price equation, while no future income taxes are recorded on the difference between the book value and the tax value of goodwill. Consequently, to the
extent that greater value is ascribed to long-lived assets than to shorter lived assets under the purchase method, less amortization may be recorded in a given period.

Determining
the fair value of certain acquired assets and liabilities requires judgement and involves significant reliance on estimates and assumptions. We used primarily the discounted
cash flow approach in estimating the value of acquired intangible assets.

The
estimates and assumptions used in the allocation of purchase price of Group Vidéotron at the date of acquisition may also have an impact on the amount of goodwill
impairment to be recognized if any, after the date of acquisition, as discussed above under "goodwill".

Future Income Taxes

Quebecor Media is required to assess the ultimate realization of future income tax assets generated from temporary differences between book basis and tax basis of
assets and liabilities and losses carry-forward in the future. This assessment is judgmental in nature and is dependent on assumptions and estimates regarding the availability and character of future
taxable income. As at December 31, 2002, we recorded a valuation allowance of $169.3 million. The ultimate amount of future income tax assets realized could be materially different from
those recorded, as influenced by future operations of the Company.

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CHANGE IN ACCOUNTING POLICIES

In 2002, the Company made certain changes to its accounting policies in order to conform to new Canadian Institute of Chartered Accountants
(CICA) accounting standards. The changes are described in greater detail in Note 1(b) to the Company's consolidated financial statements
(see pages F1 to F43 of this annual report).

The
Company completed the goodwill impairment tests for each of its operating units, in accordance with the new recommendations in Section 3062 of the CICA Handbook, and charged
$2.14 billion to opening retained earnings, net of non-controlling interest of $18.8 million, in order to account for the goodwill impairment loss in the Cable Television
($1.936 billion), the Business Telecommunications ($164.9 million), the Web Integration/Technology ($20.4 million) and the Internet/Portals ($41.8 million) segments.

In
accordance with the transitional provisions contained in Section 3062 of the CICA Handbook, an impairment loss recognized during the financial year in which the new
recommendations are initially applied is recognized as the effect of a change in accounting policy and charged to opening retained earnings, without restatement of prior periods. However, under
generally accepted accounting principles in the United States, an impairment loss recognized as a result of a transitional goodwill impairment test is recognized as the effect of a change in
accounting policies in the statement of operations above the caption "Net income."

RECENT ACCOUNTING PRONOUNCEMENTS

Recent Canadian GAAP Accounting Pronouncements

In December 2002, the Canadian Institute of Chartered Accountants issued section 3063,Impairment or Disposal of
Long-Lived Assets, of the CICA Handbook and revised section 3475,Disposal of Long-Lived Assets and Discontinued
Operations, of the CICA Handbook. Together, these two sections supersede the write-down and disposal provisions of section 3061, Property, Plant and Equipment, as well as
section 3475,Discontinued Operations, of the CICA
Handbook. Section 3063 amends existing guidance on long-lived asset impairment measurement and establishes standards for the recognition, measurement and disclosure of the
impairment of long-lived assets held for use by us. It requires that an impairment loss be recognized when the carrying amount of an asset to be held and used exceeds the sum of the
undiscounted cash flows expected from its use and disposal; the impairment recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Section 3475
provides a single accounting model for long-lived assets to be disposed of by sale. Section 3475 provides specified criteria for classifying an asset as
held-for-sale and requires assets classified as held-for-sale to be measured at the lower of their carrying amounts or fair value, less costs to sell.
Section 3475 also broadens the scope of businesses that qualify for reporting as discontinued operations to include any disposals of a component of an entity, that comprises operations and cash
flows that can be clearly distinguished from the rest of the Company, and changes the timing of recognizing losses on these operations. The new standards contained in section 3063 on the
impairment of long-lived assets held for use are applicable for years beginning on or after April 1, 2003; however, early application is permitted. The revised standards contained
in section 3475 on disposal of long-lived assets and discontinued operations are applicable to disposal activities initiated under an exit plan committed to on or after
May 1, 2003; however, early application is permitted. We intend to adopt both of these standards as of January 1, 2003.

In
November 2001, the Canadian Institute of Chartered Accountants issued Accounting Guideline 13,Hedging Relationships, and in
November 2002 the Canadian Institute of Chartered Accountants amended the effective date of this guideline. This accounting guideline establishes new criteria for hedge accounting and will
apply to all hedging relationships in effect on or after January 1, 2004. On January 1, 2004, we will re-assess all hedging relationships to determine whether the criteria
are met or not and will apply the new guidance on a prospective basis. To qualify for hedge accounting, the hedging relationship must be appropriately documented at the
inception of the hedge and there must be reasonable assurance, both at the inception and throughout the term of the hedge, that the hedging relationship will be effective. Effectiveness requires a
high correlation of changes in fair values or cash flows between the hedged item and the hedging item. Since the new Canadian criteria for hedge accounting are consistent with existing
U.S. criteria for qualifying for hedge accounting, with which we comply, we do not anticipate any material impact from adopting this accounting guideline.

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In
February 2003, the Canadian Institute of Chartered Accountants issued Accounting Guideline 14, Disclosure of Guarantees, which requires certain disclosures to be made by a
guarantor in its interim and annual financial statements for years beginning on or after January 1, 2003 about its obligations under guarantees. We are currently assessing the impact of the new
standard.

Recent U.S. GAAP Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued FAS 143,Accounting for Asset Retirement
Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. FAS 143 requires us to record the fair value of an asset retirement obligation as a liability in the period in which we incur a legal obligation associated with the
retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The fair value of the liability is added to the
carrying amount of the associated asset, and this additional carrying amount is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the
obligation will be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. If the obligation is settled for other
than the carrying amount of the liability, we will recognize a gain or loss on settlement. We are required and plan to adopt the provisions of FAS 143 for the quarter ending March 31,
2003. To accomplish this, we must identify all legal obligations for asset retirement obligations, if any, and determine the fair value of these obligations on the date of adoption. The determination
of fair value is complex and will require us to gather market information and develop cash flow models. Additionally, we will be required to develop processes to track and monitor these obligations.
Because of the effort necessary to comply with the adoption of FAS 143, we are currently assessing the impact of the new standard.

In
April 2002, the Financial Accounting Standards Board issued FAS 145, which rescinded FAS 4,Reporting Gains and Losses from Extinguishment of
Debt. FAS 145 addresses, among other things, the income statement treatment of gains and losses related to debt extinguishments, requiring that such expenses no longer
be treated as extraordinary items, unless the items meet the definition of extraordinary in APB Opinion No. 30,Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions. Upon adoption, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented, that does not meet the criteria
in APB Opinion No. 30 for classification as an extraordinary item, is required to be reclassified. The new presentation requirements must be adopted for fiscal years beginning after
May 15, 2002, with early application encouraged. We will adopt the requirements of FAS 145 for U.S. GAAP purposes in the year ended December 31, 2003.

In
July 2002, the Financial Accounting Standards Board issued FAS 146,Accounting Costs Associated with Exit or Disposal
Activities, which is effective for exit or disposal activities that are initiated after December 31, 2002. FAS 146 nullifies EITF No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in Restructuring).
The principal difference between FAS 146 and EITF 94-3 related to the recognition of a liability for a cost associated with an exit or disposal activity. FAS 146
requires that a liability be recognized for exit or disposal costs only when the liability is incurred, whereas under EITF 94-3 the liability was recognized when a company commits
to an exit plan, and that the liability be initially measured at fair value. We are currently assessing the impact of the new standard.

In
November 2002, the Financial Accounting Standards Board issued FIN 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, which requires certain disclosures to be made by a guarantor in its interim and annual financial statements for periods ending
after December 15, 2002 about its obligations under guarantees. FIN 45 also requires the recognition of a liability by a guarantor at the inception of certain guarantees entered into or
modified after December 31, 2002. FIN 45 requires the guarantor to recognize a liability for the non-contingent component of certain guarantees; that is, it requires the recognition
of a liability for the obligation to stand ready to perform in the event that specified triggering events or conditions occur. The initial measurement of this liability is the fair value of the
guarantee at inception. We are currently assessing the impact of the new standard.

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ITEM 6  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

The following table sets forth certain information concerning our directors and senior executive officers as of March 1, 2003:

|Name and Municipality of Residence                                        |  | Age |  | Position                                                      
|------------------------------------------------------------------------- |  | --- |  | --------------------------------------------------------------
|Claude Bergeron
Montréal, Québec                                          |  | 45  |  | Director                                                      
|André Bourbonnais(1)(2)
Saint-Lambert, Québec                             |  | 40  |  | Director                                                      
|Marc Doré
Kirkland, Québec                                                |  | 37  |  | Vice President, Taxation and Real Estate                      
|Mark D'Souza
Kirkland, Québec                                             |  | 42  |  | Vice President and Treasurer                                  
|Serge Gouin(1)(2)
Outremont, Québec                                       |  | 59  |  | Director and Chairman of the Board of Directors               
|Claude Hélie(3)
Longueuil, Québec                                         |  | 58  |  | Interim Chief Financial Officer                               
|Luc Lavoie
Montréal, Québec                                               |  | 47  |  | Executive Vice President, Corporate Affairs                   
|Samuel Minzberg
Westmount, Québec                                         |  | 53  |  | Director                                                      
|Jean-Louis Mongrain
Longueuil, Québec                                     |  | 59  |  | Director                                                      
|The Right Honourable Brian Mulroney,
P.C., C.C., L.L.D.
Westmount, Québec |  | 63  |  | Director                                                      
|Jean Neveu(1)(2)
Longueuil, Québec                                        |  | 62  |  | Director                                                      
|Érik Péladeau
Rosemere, Québec                                            |  | 47  |  | Director and Vice Chairman of the Board of Directors          
|Pierre Karl Péladeau
Montréal, Québec                                     |  | 41  |  | Director and President and Chief Executive Officer            
|Denis Sabourin
Kirkland, Québec                                           |  | 42  |  | Senior Manager Control                                        
|Louis Saint-Arnaud
Mont-Saint-Hilaire, Québec                             |  | 56  |  | Vice President, Legal Affairs and Secretary                   
|Richard Soly
Montréal, Québec                                             |  | 65  |  | Executive Vice President, Marketing & Contents                
|Julie Tremblay
Montréal, Québec                                           |  | 43  |  | Vice President, Human Resources                               
|Claudine Tremblay
Nuns' Island, Verdun, Québec                            |  | 49  |  | Assistant Corporate Secretary and Director, Corporate Services
|Edouard G. Trépanier
Boucherville, Québec                                 |  | 52  |  | Vice President, Regulatory Affairs                            

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Claude Bergeronhas served as a Director of Quebecor Media since August 2000. Mr. Bergeron
has been Vice President, Legal Affairs of Caisse de dépôt et placement du Québec since 1993. He began working at Caisse de
dépôt et placement du Québec in 1988 as Senior Legal Counsel. Mr. Bergeron began his career in the General Counsel department of the
Québec Department of Revenue as an Assistant Director and Division Chief.

André Bourbonnaiswas appointed as a director of Quebecor Media on December 13, 2002. He serves as a member of the
Audit Committee and the Compensation and Human Resources Committee of Quebecor Media. Mr. Bourbonnais is a member of the Québec Bar and a graduate of the London School of
Economics and Political Science. After working at the Montréal law firm Stikeman Elliott, he became an Associate and
later a Partner at Transact International, a mergers and acquisitions consultancy company in Monaco. He returned to Montréal in 1993 and joined Teleglobe Inc., where he was
successively Senior Legal Counsel, Executive Vice President, and Chief Legal Officer and Secretary. He then became Senior Vice President and Chief Legal Officer of Cirque du Soleil.
Mr. Bourbonnais joined Capital CDPQ in 2001 as President of CDP Capital  Financial Services and in December 2002 was named President of CDP
Capital  Communications.

Marc Doréhas served as Vice President, Taxation and Real Estate of Quebecor Media since February 2001.
Mr. Doré was successively Director of Taxation of Donohue Inc. from December 1996 to May 2000 and Director of Taxation of Quebecor World Inc. from
May 2000 to March 2001. Mr. Doré acts as director, and interim President and Chief Executive Officer of Mindready since September 2002.

Mark D'Souzahas served as Vice-President and Treasurer of Quebecor Media and Quebecor Inc. since April 2002. He
was Chief Financial Officer of Quebecor World Europe from June 2000 to April 2002. He was Vice President and Treasurer of Quebecor World Inc. from September 1997 to
June 2000. Prior to joining the Quebecor group of companies, he served as Finance Director of Société Générale de Financement du
Québec from March 1995 to September 1997, and served in Corporate Finance positions at the Royal Bank of Canada and Union Bank of Switzerland from July 1989 to
March 1995.

Serge Gouinwas appointed Chairman of the Board of Directors of Quebecor Media on January 7, 2003. He is also a member of the Audit
Committee and the Compensation and Human Resources Committee, of which he is the Chairman. He has served as a Director of Quebecor Media since May 2001. In July 2001, Mr. Gouin was
appointed to the position of Chairman of the Board of Directors of Vidéotron. Mr. Gouin has been Vice Chairman of Salomon Smith Barney Canada Inc. since 1998. From 1991 to
1996, Mr. Gouin served as President and Chief Operating Officer of Groupe Vidéotron in Montreal. From 1987 to 1991, Mr. Gouin was President and Chief Executive Officer of
Télé Métropole Inc. in Montreal.

Claude Hélieserved as Executive Vice President and Chief Financial Officer of Quebecor Media from September 2000 to the
date of his resignation, February 17, 2003. Since his resignation, Mr. Helie has been acting as interim Chief Financial Officer of the Company. Mr. Helie has been the Executive
Vice President and Chief Financial Officer of Quebecor World Inc. since February 17, 2003. Mr. Hélie has been the Executive Vice President and Chief Financial
Officer of Quebecor Inc. since April 2000. He was Vice President and Chief Financial Officer of Donohue Inc. from July 1994 to April 2000.

Luc Lavoiehas been Executive Vice President, Corporate Affairs, of Quebecor Inc. since March 2001. He was previously the
Executive Vice President of National Public Relations, first in the Ottawa office of National Public Relations, which he helped launch, and then in the Montréal office. In that
capacity, he advised executives and policy-makers across North America. Before joining National Public Relations, Mr. Lavoie was Canada's Commissioner General to the Universal Exposition in
Seville, Spain.

Samuel Minzbergwas appointed as a director of Quebecor Media in June 2002. Mr. Minzberg is a senior partner with Davies
Ward Phillips & Vineberg. From January 1, 1998 to December 31, 2002, he was President and Chief Executive Officer of Claridge Inc., a management and holding company on
behalf of the Charles R. Bronfman Family. Until December 31, 1997 he was a partner at Davies Ward Phillips & Vineberg (Montreal), and was Chairman of such firm. He received a B.A.,
B.C.L. and LL.B from McGill University.

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Jean-Louis Mongrainwas appointed as a director of Quebecor Media on December 13, 2002. Mr. Mongrain is an
experienced banker, who successively worked for the Royal Bank of Canada and the Laurentian Bank. Mr. Mongrain graduated from Sherbrooke University where he obtained a master's degree in
commerce. He worked for more than 10 years for the Royal Bank of Canada where he occupied various functions in the commercial and corporate banking sectors. After that, he worked for the
Laurentian Bank from 1989 to 2000 where he served as head of the credit functions of the bank as well as President of the credit committee. He was responsible for the updating of the credit policies
and was also involved in several due diligence investigations in connection with various acquisitions.

The Right Honourable Brian Mulroneyhas served as a Director of Quebecor Media since January 2001. Mr. Mulroney served as Chairman
of the Board of Sun Media from January 2000 to June 2001. Since 1993, Mr. Mulroney has been a Senior Partner with the law firm of Ogilvy Renault in Montréal,
Québec. Prior to that, Mr. Mulroney was the Prime Minister of Canada from 1984 until 1993. Mr. Mulroney practiced law in Montréal and served as President of
the Iron Ore Company of Canada before entering politics in 1983. Mr. Mulroney became the Chairman of the Board of Directors of Quebecor World Inc. in April, 2002. Mr. Mulroney
serves as a director of a number of public corporations including Quebecor Inc., Quebecor World Inc., Barrick Gold Corporation, TrizecHahn Corporation, and Archer Daniels Midland
Company.

Jean Neveuhas served as a Director of Quebecor Media since January 2001. Mr. Neveu is a member of the Audit Committee and the
Compensation and Human Resources Committee of the Board of Directors; he is the Chairman of the Audit Committee. Mr. Neveu has been the Chairman of Quebecor Inc. since 1999 and he was
the Chairman of Quebecor World Inc. from 1990 to April 2002. Mr. Neveu joined Quebecor Inc. in 1969 as Controller and held several different management positions before leaving in
1979 to join a major magazine publisher and distributor. In 1988, Mr. Neveu returned to Quebecor Inc. to become Vice President, Dailies and later became Senior Vice President of
Quebecor Inc. In December 1997, he was appointed to the position of President and Chief Executive Officer of Quebecor Inc. He was the President of Quebecor Inc. from 1998
to 1999.

Érik Péladeauhas served as Vice Chairman and a member of the Board of Directors of Quebecor Media since
January 2001. Mr. Péladeau is currently Vice Chairman of the Board of Quebecor Inc., a position he has held since April 1999, Vice Chairman of the Board and Senior
Executive Vice President of Quebecor World Inc., a position he has held since October 2001, and Chairman of the Board of Group Lelys Inc. Mr. Péladeau has
worked in the Quebecor group of companies for 25 years. In November 1984, Mr. Péladeau left the Quebecor group of companies to start Group Lelys Inc., a
printing plant specializing in labels. In 1988, he returned to Quebecor Inc. as Assistant Vice President for its printing division and has held several other management positions since then.
Mr. Péladeau is a member of several boards and he is a member of the Executive Committee and the Board of Directors of Quebecor World Inc. Érik
Péladeau is the brother of Pierre Karl Péladeau.

Pierre Karl Péladeauhas served as President, Chief Executive Officer and a member of the Board of Directors of Quebecor
Media since 2000. Mr. Péladeau is also the President and Chief Executive Officer of Quebecor Inc., the Chairman of the Board of Sun Media, and the Chairman of the Board of
Nurun. Effective
July 20, 2001, Mr. Péladeau was appointed President and Chief Executive Officer of Vidéotron ltée. Mr. Péladeau joined
Quebecor Inc.'s communications division in 1985 as Vice President, Operations. In 1991, he was named President of Quebecor Group Inc. In 1995, Mr. Péladeau helped
establish Quebecor Printing Europe and, as its President, oversaw its growth through a series of acquisitions in France, the United Kingdom, Spain and Germany to become Europe's largest printer by
1997. In 1997, Mr. Péladeau became Executive Vice President and Chief Operating Officer of Quebecor Printing Inc. (now named Quebecor World Inc.). In 1999,
Mr. Péladeau became President and Chief Executive Officer of Quebecor Inc. Mr. Péladeau sits on the boards of numerous members of the Quebecor group
of companies and is active in many charitable and cultural organizations. Pierre Karl Péladeau is the brother of Érik Péladeau.

Denis Sabourinjoined Quebecor Media as Senior Manager, Control in 2001. Mr. Sabourin is also Senior Manager, Control of
Quebecor Inc. Prior to joining Quebecor Media, Mr. Sabourin served as corporate controller of Compagnie Unimédia (previously known as Unimédia Inc.)
from 1994 to 2001.

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Louis Saint-Arnaudhas served as the Vice President, Legal Affairs and Secretary of Quebecor Media since 2001. Mr. Saint-Arnaud is
also the Vice President, Legal Affairs of Quebecor Inc. Mr. Saint-Arnaud has worked in the Quebecor group of companies, at his current position and others for the past five years.

Richard Solyis the President and founder of Le Super Club Vidéotron. Since 2001, he has served as President of the Leisure
and Entertainment segment of Quebecor Media. He was appointed in September 2002 as the Executive Vice President, Marketing & Contents, of Quebecor Media. Mr. Soly is also a member
of the board of directors of the Retail Counsel of Canada, and President of the Conseil Québécois du Commerce de Détail (the Business Retail Council of
Québec).

Julie Tremblayhas served as the Vice President, Human Resources of Quebecor Media since 2001. Ms. Tremblay is also the Vice
President, Human Resources of Quebecor Inc. Ms. Tremblay has held such position or other occupations within the Quebecor group of companies for the past five years.

Claudine Tremblayhas served as the Director, Corporate Services and Assistant Secretary of Quebecor Media since 2001. Ms. Tremblay
is also Director, Corporate Services and Assistant Secretary of Quebecor Inc. Ms. Tremblay has held such position or other occupations within the Quebecor group of companies for the past
five years.

Edouard G. Trépanieris the Vice President, Regulatory Affairs, of Quebecor Media. Since 1994,
Mr. Trépanier has supervised the Broadcast Regulatory Affairs division at Vidéotron. Prior to joining Vidéotron, Mr. Trépanier
worked as a television producer for TVA, the Rogers Parliamentary Bureau and the Canadian Broadcasting Company in Ottawa. He has also held several positions at the Canadian Radio-television and
Telecommunications Commission, namely, as an Analyst responsible for regulating cable industry for the Québec region, Senior Analyst for French-language "off air" and specialty
television, and eventually, Director in charge of Pay and Specialty Service issues.

Board of Directors

In accordance with our charter, our Board of Directors may consist of at least one director and no more than 20 directors. Our Board of Directors presently
consists of nine directors. Each director serves a one-year term and holds office until the next annual general shareholders' meeting or until the election of his or her successor, unless
he or she resigns or his or her office becomes vacant by reason of death, removal or other cause. Pursuant to a Consolidated and Amended Shareholders' Agreement dated December 11, 2000, among
Quebecor Inc., certain wholly-owned subsidiaries of Quebecor Inc., Capital CDPQ and the Company, the Board of Directors of the Company is composed of five nominees of
Quebecor Inc. and four nominees of Capital CDPQ.

COMPENSATION

Compensation of Directors

Our directors who are employees are not entitled to receive any additional compensation for serving as our directors. All other directors are each entitled to
receive from Quebecor Media an annual director's fee of $20,000 and an attendance fee of $1,200 for each board or committee meeting attended, each payable quarterly. All of our directors are
reimbursed for travel and other reasonable expenses incurred in attending board meetings. During the financial year ended December 31, 2002, nine directors received an aggregate cash
compensation of $249,898 in payment of their annual and attendance fees.

In
addition to the compensation described above, directors of the Company who are also directors of Quebecor Inc., namely The Right Honourable Brian Mulroney, Érik
Péladeau and Pierre Karl Péladeau, participate in a Directors' Deferred Stock Unit Plan, which we refer to as the DSUP plan. Under this plan, each director receives a
portion of his or her compensation in the form of units, such portion representing at least 50% of the annual retainer of $25,000. Subject to certain conditions, each director may elect to receive in
the form of units any percentage, up to 100%, of the total fees payable for his or her services as a director, including the balance of the annual retainer, meeting attendance fees and any other fees
payable to the director.

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Under
the DSUP, directors are credited, on the last day of each fiscal quarter of Quebecor Inc., a number of units determined on the basis of the amounts payable to such director
in respect of such fiscal quarter, divided by the value of a unit. The value of a unit means the weighted average trading price of the Class B Shares of Quebecor Inc. on The Toronto
Stock Exchange over the five trading days immediately preceding such date. The units take the form of a credit to the account of the director, who may not convert such units into cash as long as he or
she remains a director.

Under
the DSUP, all of the units credited to the director are redeemed by Quebecor Inc. and the value of these units are paid when the director ceases to serve as a director of
Quebecor Inc. For purposes of redemption of units, the value of a unit corresponds to the market value of a Class B Shares at the redemption date, being the closing price of the
Class B Shares on The Toronto Stock Exchange on the last trading day preceding such date.

Units
entitle the holders thereof to dividends which will be paid in the form of additional units at the same rate as applicable to dividends paid on the Class B Shares.

No
units held by directors of Quebecor Media who also sit on the Board of Directors of Quebecor Inc. have been redeemed in 2002.

As
of December 31, 2002, The Right Honourable Brian Mulroney held 4,355 units under the DSUP, Érik Péladeau held 2,660 units under the DSUP and
Pierre Karl Péladeau held 3,119 units under the DSUP.

Compensation of Executive Officers

Compensation of our senior executive officers is composed primarily of base salary and the payment of cash bonuses. Cash bonuses are generally tied with the
achievement of financial performance indicators and personal objectives, and they may vary from 20% to 100% of base salary depending upon the level of responsibilities of the senior executive officer.
Our executive compensation package is also complemented by long-term incentives in the form of options to purchase common shares of the Company to be issued pursuant to Quebecor Media's
Stock Option Plan.

For
the financial year ended December 31, 2002, ten senior executive officers (excluding senior executive officers of our subsidiaries) received an aggregate cash compensation of
$3,413,058 for services they rendered in all capacities during 2002, which amount includes the base salary and the cash bonuses paid to such senior executive officers.

Quebecor Media's Stock Option Plan

On January 29, 2002, the Company established a stock option plan to attract, retain and motivate directors, executive officers and key contributors to the
success of the Company and its subsidiaries. The Compensation and Human Resources Committee of the Company is responsible for the administration of this stock option plan and, as such, will designate
the participants under this stock option plan, determine the number of options granted, the vesting schedule, the expiry date and any other conditions relating to such options.

All
of the options granted under this stock option plan entitle the holder thereof to acquire common shares of the Company. Each option may be exercised within a maximum period of ten
years following the date of grant at an exercise price not lower than, as the case may be, the fair market value of the common shares as determined by the Board of Directors (if the common shares of
Quebecor Media are not listed at the time of the grant) or the trading price (as defined in this stock option plan) of the common shares on the stock exchanges where such shares are listed at time of
the grant. Unless authorized by the Compensation and Human Resources Committee for a change in control transaction, no option may be exercised by an optionee if the shares of Quebecor Media have not
been listed on a recognized stock exchange. At December 31, 2007, if the shares of the Company have not been so listed, optionees will have until January 31, 2008 to exercise their
vested options (the "Private Company Window"). At the time an optionee exercises his or her option, such optionee may request to receive a cash amount (a "Cash Exercise") representing the difference
between the exercise price of the option and the fair market value or the trading price, as the case may be, of the underlying common shares at the time of exercise. For any Cash Exercises, and in
particular for the anticipated multiple Cash Exercises if the Private Company Window is in effect, the Company may elect to pay all amounts owing in several installments if

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prudent to do so having regard to its financial situation. Options not exercised prior to their term will be forfeited and may be re-issued pursuant to this stock option plan.

Except
under specific circumstances and unless the Compensation and Human Resources Committee decides otherwise, options vest over a five year period in accordance with one of the
following vesting schedules as determined by the Compensation and Human Resources Committee at the time of grant: (i) equally over five years with the first 20% vesting on the first anniversary
of the date of the grant, (ii) equally over four years with the first 25% vesting on the second anniversary of the date of the grant, and (iii) equally over three years with the first
33% vesting on the third anniversary of the date of the grant.

The
maximum number of common shares of the Company that may be issued under this stock option plan is 433,000,000 common shares (representing 6.7% of all of the outstanding shares of the
Company) and no optionee may hold options representing more than 5% of the outstanding shares of the Company.

A
total of 75,056,600 options were granted to our nine senior executive officers of the Company during the financial year ended 2002.

Quebecor Inc.'s Stock Option Plan

Quebecor Inc.'s stock option plan is designed to offer to the officers, directors, senior employees and key employees of Quebecor Inc. or its
subsidiaries the opportunity to benefit from the appreciation in value of the class B subordinated voting shares of Quebecor Inc. Under this stock option plan, stock options to purchase
of a maximum of 6,500,000 class B subordinated voting shares of Quebecor Inc. may be granted.

Upon
the recommendation of the Compensation and Human Resources Committee of Quebecor Inc., the Board of Directors of Quebecor Inc. designates from time to time the
executives to whom options will be granted and the number of shares covered by each option. The options may not be exercised after the tenth
anniversary date of granting. The number of options so granted is based on individual merit and on the optionee's level of responsibility. No optionee may hold options covering more than 5% of the
outstanding shares of Quebecor Inc.

The
exercise price of each class B subordinated voting share of Quebecor Inc. covered by an option granted pursuant to the stock option plan is equal to the weighted
average trading price of such shares on The Toronto Stock Exchange over the last five trading days immediately preceding the date of grant of the option.

During
the financial year ended December 31, 2002, 155,000 options to purchase class B subordinated voting shares of Quebecor Inc. were granted to three senior
executive officers of Quebecor Media and its subsidiaries at an exercise price of $20.5089 per share. As of February 26, 2003, a total of 1,178,500 options to purchase class B
subordinated voting shares of Quebecor Inc. were held by four senior executive officers of Quebecor Media and its subsidiaries and 377,349 options to purchase class B subordinated voting
shares of Quebecor Inc. were held by non-executive directors of Quebecor Media.

The
closing sale price of the class B subordinated voting shares of Quebecor Inc. on The Toronto Stock Exchange on February 26, 2003, was $18.20 per share.

Pension Benefits

Quebecor Media maintains a pension plan for its non-unionized employees. Such plan provides higher pension benefits to eligible executive officers
than the pension benefits provided to other employees, such higher pension benefits being equal to 2% of average salary over the best five consecutive years of salary (including bonuses), multiplied
by the number of years of membership in the plan as an executive officer. The pension so calculated is payable at the normal retirement age, which is 65 years of age, or sooner at the election
of the executive officer, and from the age of 61 years of age without actuarial reduction. In addition, the pension may be deferred, but not beyond the age limit under the provisions of the
Income Tax Act (Canada), in which case the pension is adjusted to take into account the delay in payment thereof in relation to the normal retirement age. The maximum pension payable under such
pension plan is as prescribed by the Income Tax Act (Canada). An executive officer contributes to the plan an amount equal to 5% of his or her salary not exceeding $86,111

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(the salary generating the maximum qualified pension in accordance with the Income Tax Act), being a maximum of $4,305 per year.

In
addition, Vidéotron maintains a pension plan for its non-unionized employees. The plan provides pension benefits equal to 2% of salary (excluding bonuses)
for each year of membership in the plan. The pension so calculated is payable at the normal retirement age, which is 65 years of age, or sooner at the election of the executive officer, subject
to an early retirement reduction. In addition, the pension may be deferred, but not beyond the age limit under the provisions of the Income Tax Act (Canada), in which case the pension is
adjusted to take into account the delay in payment thereof in relation to the normal retirement age. The maximum pension payable under such pension plan is as prescribed by the Income Tax Act
(Canada). An
executive officer contributes to the plan an amount equal to 5% of his or her salary up to a maximum of $3,500 per year.

The
total amount set aside or accrued by the Company in 2002 to provide the pension benefits was $9.9 million. For a description of the amount set aside or accrued for pension
plans and post-retirement benefits by the Company see note 21 to the consolidated financial statements (see pages F1 to F43 of this annual report).

The
table below indicates the annual pension benefits that would be payable at the normal retirement age of 65 years:

|                |  | Years of Membership
|--------------- |  | -------------------
|
|
|$86,111 or more |  | $                  

Supplemental Retirement Benefit Plan for Designated Executives

In addition to the pension plans in force, Quebecor Inc. and Quebecor Media provide supplemental retirement benefits to certain designated
executives. Three senior executive officers of Quebecor Media and its subsidiaries are participants under the Quebecor Inc. plan and one senior executive officer of Quebecor Media and
its subsidiaries is a participant under the Quebecor Media plan.

The
pensions of the three senior executive officers who participate in the Quebecor Inc. plan are calculated on the basis of their respective average salaries (including bonuses)
for the best five consecutive years. The pension is payable for life without reduction from the age of 61. In case of death after retirement and from date of death, the plan provides for the payment
of a joint and survivor pension to the eligible surviving spouse representing 50% of the retiree's pension for a period of 10 years. As of December 31, 2002, one of such senior executive
officers had a credited service of approximately 14.8 years while the other two senior executive officers had credited service of two years.

The
pension of the senior executive officer who participates in Quebecor Media's plan is calculated on the basis of his average salary (excluding bonuses) for the best five
consecutive years. The pension so calculated is payable at the normal retirement age, which is 65 years of age, or sooner at the election of the executive officer, subject to an early
retirement reduction. In case of death after retirement and from the date of death, the plan provides for the payment of a joint and survivor pension to the eligible surviving spouse representing 60%
of the retiree's pension. As of December 31, 2002, such senior executive officer had a credited service of approximately 13.4 years.

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The
table below indicates the annual pension benefits that would be payable under both Quebecor Inc.'s and Vidéotron's plans at the normal retirement age of
65 years:

|           |  | Years of Credited Service
|---------- |  | -------------------------
|
|
|$300,000   |  | $                        
|$400,000   |  | $                        
|$500,000   |  | $                        
|$600,000   |  | $                        
|$800,000   |  | $                        
|$1,000,000 |  | $                        
|$1,200,000 |  | $                        
|$1,400,000 |  | $                        

Liability Insurance

Quebecor Inc. has purchased liability insurance for the benefit of its directors and officers, its subsidiaries, including the Company, and certain
associated companies, against certain liabilities incurred by them in such capacity. This insurance provides coverage of US$150,000,000 per event and policy year. For the financial year ended
December 31, 2002, the amount of the premium paid by Quebecor Inc. was US$486,066. A deductible of US$500,000 applies when Quebecor Inc. is authorized or obliged to indemnify the
persons insured.

BOARD PRACTICES

Reference is made to "Item 6  Directors, Senior Management and
Employees  Directors and Senior Management" for the current term of office, if applicable, and the period during which the Company's directors and senior
management have served in that office.

We
currently have three committees of the Board of Directors, the Audit Committee, the Compensation and Human Resources Committee and the Executive Committee. Both the Audit Committee
and the Compensation and Human Resources Committee are composed of Mssrs. Serge Gouin, Jean Neveu and André Bourbonnais. Mr. Neveu is the Chairman of our Audit Committee, and
Mr. Gouin is the Chairman of our Compensation and Human Resources Committee.

The
current mandate of the Audit Committee is to review the Company's annual and quarterly financial statements before they are submitted to the Board of Directors, to discuss with the
independent auditors the scope of their audit and to review their recommendations and the responses of the Company's management thereto. This committee is also responsible for ensuring that the
Company has in place adequate and efficient internal control systems to monitor the Company's financial information and that transactions involving the Company with related parties are made on terms
that are fair for the Company. This committee examines the audit fees to be paid to the independent auditors and submits the appropriate recommendations to the Board of Directors. It also reviews the
scope of the audit and the results of the examinations conducted by the Company's internal audit department.

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At its meeting held on February 7, 2003, the Audit Committee of the Board of Directors examined the draft Audit Committee mandate that the Company may adopt to comply with the
requirements of the Sarbanes-Oxley Act of 2002, which was adopted in the United States on July 30, 2002. Certain provisions of the Sarbanes-Oxley Act of 2002 apply to the Company as a "foreign
private issuer". At its next meeting, scheduled to be held in May 2003, the Audit Committee will examine a new version of the draft Audit Committee mandate.

Our
Compensation and Human Resources Committee was formed with the mandate to examine and decide upon the global compensation and benefits policies of the Company and those of its
subsidiaries which did not have their own compensation committee, and to formulate appropriate recommendations to the Board of Directors, inter alia, concerning long-term compensation in the form
of stock option grants. The Compensation and Human Resources Committee is
also responsible for the review, on an annual basis, of the compensation of the directors of the Company.

EMPLOYEES

As of March 1, 2003, we were employing approximately 11,325 employees, of which approximately 4,419 were under collective bargaining agreements. The
following table sets forth certain information relating to our employees in each of our operations as of March 1, 2003:

|Operations                  |  | Total number of employees |  | Number of employees under collective agreements |     |  | Number of collective agreements |    
|--------------------------- |  | ------------------------- |  | ----------------------------------------------- | --- |  | ------------------------------- | ---
|Cable Television(1)         |  | 1,899                     |  | 1,482                                           | (2) |  | 4                               | (3)
|Newspapers                  |  | 5,677                     |  | 1,706                                           |     |  | 46                              | (4)
|Broadcasting                |  | 1,239                     |  | 792                                             |     |  | 10                              | (5)
|Leisure and Entertainment   |  | 1,084                     |  | 241                                             |     |  | 6                               | (6)
|Business Telecommunications |  | 522                       |  | 185                                             |     |  | 2                               |    
|New Media Services          |  | 833                       |  | 13                                              |     |  | 1                               | (7)
|Other                       |  | 71                        |  |                                                |     |  |                                |    
|Total                       |  | 11,325                    |  | 4,419                                           |     |  | 69                              |    

---

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As of March 1, 2003, collective bargaining agreements covering approximately 2,329 of our employees had expired or were under negotiation.
As of March 23, 2003, an agreement in principle was ratified for the renewal of one expired collective bargaining agreement (representing approximately 493 employees in the Broadcasting
segment). The Company is currently negotiating new collective bargaining agreements with union representatives with a view to significantly increasing productivity and reducing the Company's labor
costs. Since May 8, 2002, the Company has been experiencing a work stoppage in the operations of its Cable Television segment (approximately 1,401 employees). As of March 27, 2003, an
agreement in principle has been ratified by the Cable Television employees under work stoppage. The Company's inability to negotiate acceptable new agreements with respect to any of the above
agreements could result in strikes or other form of work stoppage. Please see our risk factors relating to strikes and labor protests under "Item 3  Key
Information" of this annual report.

SHARE OWNERSHIP

Except as disclosed under "Item 7  Major Shareholders and Related Party Transactions" of this annual report, none of
the Company's equity securities are held by any of our directors or senior executive officers.

ITEM 7  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

As of March 1, 2003, Quebecor Inc. held, directly and indirectly, 3,644,001,268 common shares of the Company, representing approximately a 54.72%
voting and equity interest in the Company. The remaining
45.28% voting and equity interest, or 3,015,236,907 common shares, was held by Capital CDPQ. Capital CDPQ is a wholly-owned subsidiary of Caisse de dépôt et placement du
Québec.

Certain
of our indirect, wholly-owned subsidiaries, namely Sun Media, Bowes Publishers Limited and Sun Media (Toronto) Corporation, also own collectively 1,950,000 of Cumulative First
Preferred Shares, Series A, the Series A Shares, of Quebecor Media. The Series A Shares are non-voting shares. Holders of Series A Shares are entitled to a
cumulative annual dividend of 12.5% per share. Holders may require the Company to redeem the Series A Shares at any time at a price of $1,000 per share plus any accumulated and unpaid
dividends. In addition, Quebecor Media may, at its option, redeem the Series A Shares at a price of $1,000 per share plus any accumulated and unpaid dividends. See
"Item 8  Financial Information  Dividend Policy" below and
"Item 10  Memorandum and Articles of Association" for a more detailed description of the Series A Shares.

A
wholly-owned subsidiary of Quebecor Inc., 4032667 Canada Inc., holds 216,145,684 Cumulative First Preferred Shares, Series B, the Series B Shares, of
Quebecor Media. The Series B Shares are non-voting shares. Holders of Series B Shares are entitled to a dividend, as determined by the Board of Directors of Quebecor Media.
Holders may require the Company to redeem the Series B Shares at any time at a price of $1.00 per share plus any unpaid dividends. In addition, Quebecor Media may, at its option, redeem the
Series B Shares at a price of $1.00 per share plus any unpaid dividends. The Series B Shares are convertible into common shares in certain circumstances. See
"Item 5  Operating and Financial Review and Prospects  Subsequent Events" above. See
"Item 8  Financial Information  Dividend Policy" and
"Item 10  Memorandum and Articles of Association" for a more detailed description of the Series B Shares.

To
the knowledge of our directors and officers, the only person who beneficially owns or exercises control or direction over more than 10% of the shares of any class of voting shares of
Quebecor Inc. is Les Placements Péladeau Inc., a corporation controlled by Fiducie Spéciale Pierre-Péladeau a trust constituted for the
benefit of Messrs. Erik Péladeau and Pierre Karl Péladeau. As of March 1, 2003, Les Placements Péladeau Inc. held a total of
17,465,264 Class A Shares and 19,800 Class B Shares of Quebecor Inc., representing approximately 27.06% of

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all outstanding equity shares and approximately 64.72% of the voting rights attached to all outstanding shares of Quebecor Inc.

Consolidated and Amended Shareholders' Agreement

Quebecor Inc., Capital CDPQ and the Company, inter alia, entered into a shareholders' agreement, dated October 23, 2000, as consolidated and
amended by a shareholders' agreement dated December 11, 2000 which sets forth the rights and obligations of Quebecor Inc. and Capital CDPQ as shareholders of the Company. Except as
specifically provided in the shareholders' agreement, the rights thereunder apply only to shareholders holding at least 10% of the equity shares of the Company, which we refer to as QMI Shares, on a
fully-diluted basis.

The
shareholders' agreement provides, among other things, for:



The
shareholders' agreement provides that once the Company becomes a reporting issuer and has a 20% public "float" of QMI Shares, certain provisions of the shareholders' agreement will
cease to apply, including the consent rights described under items (iv) (d) and (e) above.

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In
a separate letter agreement, dated December 11, 2000, Quebecor Inc. and Capital CDPQ agreed, subject to applicable laws, fiduciary obligations and existing agreements,
to attempt to apply the same board representation and consent rights as set forth in the shareholders agreement to the Company's reporting issuer (public) subsidiaries so long as Capital CDPQ holds at
least 20% of the QMI Shares on a fully-diluted basis (10% as it relates to TVA).

RELATED PARTY TRANSACTIONS

During the financial year ended December 31, 2002, the Company and its subsidiaries or affiliates was not a party nor did enter into any transaction with
an insider or associate of the Company, any director or senior executive or any associate or affiliate of such director or senior executive, which has materially affected, or any proposed transaction
that could materially affect, the Company or any of its subsidiaries or affiliates, except for:

Management Arrangements

Quebecor Inc. has entered into management arrangements with the Company and certain of its subsidiaries. Under these arrangements, Quebecor Inc.,
the Company and certain of its subsidiaries provide mutual management services on a cost reimbursement basis. The expenses subject to reimbursement included the salaries of the executive officers of
the Company who also serve as executive officers of Quebecor Inc. In 2002, Quebecor Media received a total of $3.0 million as management fees from Quebecor Inc.

Quebecor
Media has been invoiced for management fees of $600,000 and $500,000 by Quebecor Inc. and Capital CDPQ, respectively, for services rendered in 2002.

Lease Arrangements

Quebecor Inc. and other related parties of the Company lease office spaces to the Company. In 2002, the total annual rent expense with Quebecor Inc.
and such other related parties was approximately $1,061,000.

Commercial Printing and Other Services

The Company and its subsidiaries have incurred expenses for commercial printing services and have earned revenue for advertising and other services from Quebecor
World Inc., a subsidiary of Quebecor Inc. The total purchases and revenues with Quebecor World Inc. in 2002 were $57.9 million and $600,000, respectively.

Caisse de dépôt et placement du Québec

Caisse de dépôt et placement du Québec and its subsidiary Capital CDPQ may have from time to time equity interests
in, or be creditors of, our subsidiaries.

ITEM 8  FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

The consolidated balance sheets of the Company as at December 31, 2001 and 2002 and the consolidated statements of operations, retained earnings and cash
flows of the Company for the years ended December 31, 2000, 2001 and 2002, as well as the auditors' report thereon, are presented at Item 17 of this annual report.

Legal Proceedings

On March 13, 2002, a suit was filed with the Superior Court of Montréal by Investissement Novacap inc., Telus
Québec inc. and Paul Girard against Vidéotron. This action alleges that we wrongfully terminated our obligations under a share purchase agreement entered into in
August 2000. The plaintiffs in this suit are seeking damages for an amount of approximately $26 million. We believe this action is unfounded, and we intend to vigorously defend our
position in this litigation.

In
the normal course of business, we are also a party to various legal proceedings which we do not expect will have a material adverse effect on our business, financial condition or
results of operations.

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Dividend Policy

The outstanding share capital of the Company is composed of Common Shares and Cumulative First Preferred Shares, consisting of Series A Shares and
Series B Shares.

Holders
of Series A Shares of the Company are entitled to receive fixed cumulative preferential dividends at a the rate of 12.5% per share per annum. The dividends declared on the
Series A Shares are payable semi-annually on a cumulative basis on January 14 and July 14 of each year. No dividends may be paid on any shares ranking junior to the
Series A Shares unless all dividends which shall have become payable on the Series A Shares have been paid or set aside for payment.

Holders
of Series B Shares of the Company are entitled to receive a cash dividend, when, as and if declared by the board of directors. The dividend shall be payable only upon
conversion of the Series B Shares into Common Shares. Dividends will be determined by the Board of Directors in accordance with the Articles of Incorporation of the Company.

Holders
of Common Shares are entitled, subject to the rights of the holders of any Cumulative First Preferred Shares, to receive such dividends as the Board of Directors of the Company
shall determine.

SIGNIFICANT CHANGES

Except as otherwise disclosed in this annual report, there has been no material adverse change in the financial position of the Company since December 31,
2002.

ITEM 9  THE OFFER AND LISTING

OFFER AND LISTING DETAILS

Not applicable.

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PLAN OF DISTRIBUTION

Not applicable.

MARKETS

Senior Notes / Senior Discount Notes

In July 2001, we issued 111/8% Senior Notes due 2011 and 133/4% Senior Discount Notes due 2011. In connection with the
issuance of the 111/8% Senior Notes due 2011 and 133/4% Senior Discount Notes due 2011, we entered into a registration rights agreement pursuant to which we agreed to
deliver a prospectus and to use our best efforts to complete an exchange offer and to register our new 111/8% Senior Notes due 2011 and 133/4% Senior Discount Notes due
2011. The prospectus was filed with the Securities and Exchange Commission on September 5, 2001 and the exchange offer pursuant to which the unregistered 111/8% Senior Notes due
2011 and 133/4% Senior Discount Notes due 2011 were exchanged for the registered 111/8% Senior Notes due 2011 and 133/4% Senior Discount Notes due 2011,
respectively, was completed on October 10, 2001. As a result, the Company issued US$715.0 million in aggregate principal amount of Senior Notes and US$295.0 in aggregate principal amount
of Senior Discount Notes. Both the Senior Notes and the Senior Discount Notes are unsecured, and each are due July 15, 2011, with cash interest payable semi-annually in arrears on
January 15 and July 15 of each year except that, in the case of the Senior Discount Notes, interest will accrue, prior to July 15, 2006, in the form of an increase in the accreted
value, representing amortization of original issue discount of such Senior Discount Notes.

There
is currently no established trading market for our 111/8% Senior Notes due 2011 and our 133/4% Senior Discount Notes due 2011. There can be no
assurance as to (1) the liquidity of any market that may develop for the Senior Notes and the Senior Discount Notes, (2) the ability of the holders of the Senior Notes and the Senior
Discount Notes to sell them or (3) the prices at which any sales may be made. We do not presently intend to apply for a listing of the Senior Notes or the Senior Discount Notes on any national
securities exchange or to quote them on a quotation system. The record holder of the Senior Notes and the Senior Discount Notes is Cede & Co., a nominee of The Depository Trust Company.

SELLING SHAREHOLDERS

Not applicable.

DILUTION

Not applicable.

EXPENSES OF THE ISSUER

Not applicable.

ITEM 10  ADDITIONAL INFORMATION

SHARE CAPITAL

Not applicable.

MEMORANDUM AND ARTICLES OF ASSOCIATION

The Articles of Incorporation of the Company and the various Articles of Amendment to the Articles of Incorporation filed by the Company are incorporated by
reference from the registration statement of the Company filed with the Securities and Exchange Commission on September 5, 2001 (Registration No. 333-13792). In addition, the
Articles of Amendment to the Articles of Incorporation of the Company, which were filed by the Company on February 3, 2003, are included in this annual report as a Exhibit 1.2. The
Articles of Incorporation of the Company and the various Articles of Amendment to the Articles of Incorporation filed

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by the Company are collectively referred to as the "Articles". The following is a summary of certain provisions of the Articles and the by-laws of the Company:



Common Shares



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For
a description of the Consolidated and Amended Shareholders' Agreement among the holders of Common Stock of the Company, see
"Item 7  Major Shareholders and Related Party Transactions  Major Shareholders" in this annual report.

Cumulative First Preferred Shares

The Board of Directors may issue the Cumulative First Preferred Shares at any time and from time to time in one or more series. Unless the Articles otherwise
provide, the Cumulative First Preferred Shares of each series shall rank on parity with the Cumulative First Preferred Shares of every other series with respect to priority in the payment of
dividends, return of capital and in the distribution of assets of the Company in the event of liquidation or dissolution of the Company. Unless the Articles otherwise provide, the Cumulative First
Preferred Shares shall be entitled to priority over the Common Shares and any other class of shares of the Company, with respect to priority in the payment of dividends, return of capital and in the
distribution of assets of the Company in the event of liquidation or dissolution of the Company.

As
long as there are Cumulative First Preferred Shares outstanding, the Company shall not, unless consented by the holders of the Cumulative First Preferred Shares and upon compliance
with the provisions of the Companies Act, (a) create any other class of shares ranking in priority to the outstanding Cumulative First Preferred Shares or having the same rank,
(b) voluntarily liquidate or dissolve the Company or execute any decrease of capital involving the distribution of assets on any other shares of its capital stock or (c) repeal, amend or
otherwise alter any provisions of the Articles relating to the Cumulative First Preferred Shares.

Cumulative First Preferred Shares, Series A (Series A Shares)



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For
a description of the Cumulative First Preferred Shares, Series A, see "Item 7  Major Shareholders and Related Party
Transactions  Major Shareholders" in this annual report.

Cumulative First Preferred Shares, Series B (Series B Shares)



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MATERIAL CONTRACTS

The following is a summary of each material contract, other than contracts entered into in the ordinary course of business, to which the Company or any of its
subsidiaries is a party, for the two years preceding publication of this annual report.









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86

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EXCHANGE CONTROLS

There are currently no laws, decrees, regulations or other legislation in Canada that restricts the export or import of capital, or affects the remittance of
dividends, interest or other payments to non-resident holders of the Company's securities, other than withholding tax requirements.

There
is no limitation imposed by Canadian law or by the Articles of Incorporation or other charter documents of the Company on the right of a non-resident to hold voting
shares of the Company, other than as provided by the Investment Canada Act, as amended (the "Act"), as amended by the North American Free Trade Agreement Implementation Act (Canada), and the World
Trade Organization (WTO) Agreement Implementation Act. The Act requires notification and, in certain cases, advance review and approval by the Government of Canada of the acquisition by a
"non-Canadian" of "control of a Canadian business," all as

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defined in the Act. Generally, the threshold for review will be higher in monetary terms for a member of the WTO or NAFTA.

TAXATION

The following is a summary of certain U.S. federal income tax consequences applicable to an investment in the Notes by a U.S. Holder. This summary
is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the Code, Treasury Regulations, Internal Revenue Service, rulings and judicial decisions now in effect. All of these
are subject to change, possibly with retroactive effect, or different interpretations. For purposes of this summary, the term "U.S. Holder" means the beneficial holder of a Note who or that for
U.S. federal income tax purposes is:



This
summary does not cover all aspects of U.S. federal income taxation that may be relevant to particular U.S. Holders in light of their specific circumstances (for
example, U.S. Holders subject to the alternative minimum tax provisions of the Code) or to investors that may be subject to special treatment under U.S. federal income tax law,
including:



The
summary also does not discuss any aspect of state, local or foreign law, or U.S. federal estate and gift tax law as applicable to U.S. Holders. In addition, it is
limited to U.S. Holders who purchase and hold the Notes as "capital assets" within the meaning of the Code, generally, property held for investment.

You should consult your own tax advisor regarding the Federal, state, local and foreign tax consequences of the purchase, ownership and disposition of the
Notes.

Interest on the Notes

Except as described under "Constant Yield Election" below, interest (other than original issue discount described below) on the Notes will be taxable to a
U.S. Holder as ordinary income at the time it is received or accrued, in accordance with the U.S. Holder's method of accounting for tax purposes. Interest on the Notes will constitute
income from sources outside the United States and, with certain exceptions, will be "passive" or "financial services" income, which is treated separately from other types of income for purposes of
computing the foreign tax credit allowable to a U.S. Holder under the federal income tax laws.

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Original Issue Discount

Some or all of the Notes are issued with more than ade minimisamount of original issue discount ("OID"). A
U.S. Holder will be required to include such OID in its gross income as described below (regardless of the U.S. Holder's normal method of accounting for tax purposes). In general, OID
will be included in a U.S. Holder's income as ordinary interest income as it accrues on the basis of a constant yield to maturity; on this basis, OID is generally includable in income in
advance of the receipt of cash representing such OID.

The
total amount of OID on a Note will equal the excess of that Note's "stated redemption price at maturity" over its "issue price". The stated redemption price at maturity of a Note
equals the sum of all payments other than any "qualified stated interest" payments, which are payments of stated interest that are unconditionally payable in cash or in property (other than debt
instruments of the issuer) at least annually at a single fixed rate (or one or more qualifying floating rates). All other payments, including payments of interest that does not constitute qualified
stated interest, will be treated as part of the Note's stated redemption price at maturity. The issue price of a Note is generally equal to the first price at which a substantial number of Notes were
sold in the offering of the Notes.

A
U.S. Holder must include in gross income, for all days during its taxable year in which it holds a Note having OID, the sum of the "daily portions" of that OID. The daily
portions are determined by allocating to each day in an "accrual period" (generally, the period between interest payments or compounding dates) a pro rata portion of the OID that accrued during
such accrual period. The amount of OID that will accrue during an accrual period is the excess of (i) the product of the Note's "adjusted issue price" at the beginning
of the accrual period and its yield to maturity (determined on the basis of compounding at the end of each accrual period and properly adjusted for the length of the particular accrual period), over
(ii) the qualified stated interest allocable to such period. The adjusted issue price of a Note is the sum of its issue price, plus prior accruals of OID, reduced by the total payments made
with respect to such Note in all prior periods and on the first day of the current accrual period (other than payments of qualified stated interest). Each payment on a note (other than a payment of
qualified stated interest) will be treated as a payment of OID (which was previously includable in income) to the extent that OID has accrued as of the date such payment is due and has not been
allocated to prior payments, and any excess will be treated as a payment of principal.

OID
will be sourced and categorized in the same manner as interest income (see "Interest on the Senior Notes" above) for U.S. foreign tax credit purposes.

Market Discount

Except as described under "Constant Yield Election" below, if a U.S. Holder of a Note purchases it at market discount (generally, at a price below its
stated principal amount, or adjusted issue price in the case of a Note having OID) in excess of ade minimisamount and later recognizes gain upon a
disposition or retirement of the Note, then the lesser of the gain recognized or the portion of the market discount that accrued on a rateable basis generally will be treated as ordinary income at the
time of the disposition. Moreover, any market discount on a Note may be taxable to a U.S. Holder to the extent of appreciation at the time of certain otherwise non-taxable
transactions (e.g., gifts). In addition, a U.S. Holder of a market discount debt instrument may be required to defer a portion of any interest
expense that otherwise may be deductible on any indebtedness incurred or maintained to purchase or carry the debt instrument until the holder disposes of the debt instrument in a taxable transaction.

Acquisition Premium

A U.S. Holder that purchases a Note at a premium (generally an amount paid in excess of all amounts payable on the instrument after the purchase, other
than qualified stated interest) may elect to amortize such excess ("bond premium"). If a U.S. Holder elects to amortize bond premium, the amount required to be included in the
U.S. Holder's income each year with respect to interest on the Note will be reduced by the amount of bond premium allocable, based on the U.S. Holder's yield to maturity, to that year.
The election will apply to all debt instruments, other than bonds the interest on which is excludable from gross income, held by the U.S. Holder at the beginning of the first taxable year to
which the election applies or later acquired by the holder. The election is irrevocable without the consent of the IRS. Generally, a U.S. Holder that purchases a

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Note with bond premium that does not elect to amortize the bond premium will recognize a loss when the Note is sold, exchanged, retired or otherwise disposed of, while the interest from the note will
be fully taxable when paid.

Constant Yield Election

A U.S. Holder may elect to treat all stated and unstated interest, OID and market discount (as adjusted by any acquisition premium) on a Note as OID and
calculate the amount includable in gross income under the method described above. The election must be made for the taxable year in which the U.S. Holder acquires the Note, generally applies to
all market discount instruments acquired by the U.S. Holder in that taxable year or thereafter, and may not be revoked without the consent of the IRS.

Certain Reporting Requirements

The Company will report annually to the Internal Revenue Service ("IRS") and to record U.S. Holders of Notes, other than corporations and other exempt
holders, the amount of OID accrued with respect to a Note during the calendar year. The amount reported by the Company may not equal the amount of income required to be included in income by a
U.S. holder. First, the Company has determined that its rights or obligations to repurchase Notes prior to maturity will not affect the computation of OID on the Notes, but the IRS may
challenge that determination and assert that OID should be computed in a different manner. Further, if the Company optionally redeems any of the Notes, then Notes that are not redeemed, if any, will
be deemed to have been reissued on the date of such optional redemption solely for purposes of determining accrual of OID on the Notes. Second, a U.S. Holder who purchases a Note after its
initial issuance with acquisition premium, bond premium or market discount generally will be required to include in income amounts in respect of the Note that differ from the OID reported to such
holder. U.S. Holders who acquire Notes with acquisition premium, bond premium or market discount should consult their tax advisors regarding their Notes, including the availability of certain
elections.

Sale, Exchange or Retirement of a Note

A U.S. Holder generally will recognize gain or loss upon the sale, exchange, redemption, retirement or other disposition of a Note, measured by the
difference, if any, between:



Any
such gain or loss will generally be capital gain or loss and will generally be long-term capital gain or loss if the Note has been held or deemed held for more than
12 months at the time of the disposition. Net capital gains of individuals may be taxed at lower rates than items of ordinary income. The ability of a U.S. Holder to offset
capital losses against ordinary income is limited. Any gain or loss recognized by a U.S. Holder on the sale or other disposition of a Note generally will be treated as income from sources
within the United States or loss allocable to income from sources within the United States. A U.S. Holder's adjusted tax basis in a Note will generally equal its cost to the U.S. Holder,
increased by any OID or market discount included in the U.S. Holder's income with respect to the Note and reduced by the sum of (i) any payment (other than a payment of qualified stated
interest) made, and (ii) any bond premium that has reduced the U.S. Holder's income with respect to the Note.

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Information Reporting and Backup Withholding

A U.S. Holder of the Notes may be subject to "backup withholding" with respect to certain "reportable payments," including interest payments, payments with
respect to OID and, under certain circumstances, principal payments on the Notes. These backup withholding rules apply if the Holder, among other things:



A
U.S. Holder that does not provide us with its correct TIN also may be subject to penalties imposed by the IRS. Any amount withheld from a payment to a U.S. Holder under
the backup withholding rules is creditable against the U.S. Holder's federal income tax liability, provided that the required information is furnished to the IRS. Backup withholding will not
apply, however, with respect to payments made to certain U.S. Holder, including corporations and tax-exempt organizations, provided their exemptions from backup withholding are
properly established.

We
will report to the U.S. Holders of Notes and to the IRS the amount of any "reportable payments" for each calendar year and the amount of tax withheld, if any, with respect to
these payments.

DIVIDENDS AND PAYING AGENTS

Not applicable.

STATEMENT BY EXPERTS

Not applicable.

DOCUMENTS ON DISPLAY

We file reports and other information with the United States Securities and Exchange Commission. These reports include certain financial and statistical
information about us and may be accompanied by exhibits. You may read and copy any document we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the SEC's Public Reference Room. Any documents referred to in this annual report may also be
inspected at our offices at 300 Viger Avenue East, Montréal, Québec, Canada H2X 3W5.

SUBSIDIARY INFORMATION

Not applicable.

ITEM 11  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE INFORMATION ABOUT MARKET RISK

Quebecor Media uses certain financial instruments such as interest rate swap and cap agreements, and currency swap agreements to manage interest rate and foreign
exchange exposure. These instruments are used solely to reduce or eliminate the financial risks associated with Quebecor Media's obligations and are not used for trading or speculation purposes.

The
table below provides information on the derivative financial instruments and other financial instruments that are sensitive to changes in interest rates and foreign currencies as of
the date shown. Weighted average variable rates were based on average interest rates applicable to the loans.

92

---

The
market risks faced by Quebecor Media would not be materially different than on December 31, 2002.

|                         |                                     | December 31, 2002 |          
|------------------------ | ----------------------------------- | ----------------- | ---------
|
|
|
|
|Debt:                    |                                     |                   |          
|                         | Revolving bank credit facility(2)   |                   | 2003-2005
|                         | Term bank credit facility(2)        |                   | 2003-2009
|                         | Senior Secured Notes(3)(4)          |                   | 2007     
|                         | Senior and Senior Discount Notes(3) |                   | 2011     
|                         | Senior Subordinated Notes(3)        |                   | 2007     
|                         | Other Debt                          |                   | 2003-2005
|                         |                                     |                   |          
|                         |                                     |                   |          
|                         |                                     |                   |          
|Interest rate contracts: |                                     |                   |          
|                         | Interest rate swap agreements(5)(6) |                   | 2003-2006
|                         |                                     |                   |          

---

93

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|                         |                                     | December 31, 2001 |          
|------------------------ | ----------------------------------- | ----------------- | ---------
|
|
|
|Debt:                    |                                     |                   |          
|                         | Revolving bank credit facility(2)   |                   | 2002-2005
|                         | Term bank credit facility(2)        |                   | 2003-2009
|                         | Senior Secured Notes(3)(4)          |                   | 2007     
|                         | Senior and Senior Discount Notes(3) |                   | 2011     
|                         | Senior Subordinated Notes(3)        |                   | 2007     
|                         | Other Debt                          |                   | 2002-2005
|                         |                                     |                   |          
|                         |                                     |                   |          
|                         |                                     |                   |          
|Interest rate contracts: |                                     |                   |          
|                         | Interest rate swap agreements(5)(6) |                   | 2002-2006
|                         |                                     |                   |          
|                         | Interest rate cap agreements(5)(7)  |                   | 2002     
|                         |                                     |                   |          

---

Material Limitations

Fair value estimates are made at a specific point in time and are based on relevant market information about the financial instruments. These estimates are
subjective in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Principal Repayments

As of December 31, 2002, the aggregate amount of minimum principal payments required in each of the next five years and thereafter based on borrowing
levels as at that date, and the payment requirements under the credit facility and the Exchange Notes are as follows:

|Year Ending December |  | Thousands $
|-------------------- |  | -----------
|2003                 |  |            
|2004                 |  |            
|2005                 |  |            
|2006                 |  |            
|2007                 |  |            
|Thereafter           |  |            
|                     |  |            
|                     |  | $          
|                     |  |            

94

---

On
February 7, 2003, Sun Media closed a private placement of Senior Notes maturing in 2013 and bearing interest at 75/8%, for a net amount of
US$201.5 million, and contracted new bank credit facilities totaling
$425.0 million; more than 95% of the principal does not come due until 2008 or 2009. The proceeds from the sale of Senior Notes and the new bank credit facilities were used to pay down all
Sun Media's debt, on which substantial amortization payments would have been due in 2003 and 2005, and which would have been repayable in full in 2007.

The
Sun Media refinancing enables us to delay, until 2008 and after, some of our payments due on our long-term debt, thereby reducing the amount of our
pre-2008 payments due on our long-term debt. Payments due in 2003, 2004, 2005 and 2007 will be reduced by $57.4 million, $76.5 million, $157.0 million and
$211.1 million, respectively and payments due in 2006 will increase by $3.5 million. Payments due on our long term debt in the period after five years will increase proportionately.

Qualitative Information About Market Risk

Quebecor Media's exposure to market risk associated with changes in interest rates relates primarily to debt obligations. Quebecor Media manages interest rate
risk by borrowing a combination of fixed and floating rate obligations depending upon market conditions, as well as entering into interest rate swap and cap agreements.

Interest Rate Risk

Quebecor Media's bank credit facilities bear interest at a floating rate based on bankers' acceptances, the London Interbank Offered Rate (LIBOR) and/or bank
prime rate plus the applicable margin. Quebecor Media has entered into a number of interest rate swap and cap agreements to reduce its exposure to changes in interest rates on the bank credit
facilities. The interest rate swap agreements have the effect of converting the interest on $415.0 million of the term credit facilities from a floating rate plus the applicable margin, to a
weighted average fixed interest rate of 4.65% plus the applicable margin, and converting the interest on US$231.4 million of the term credit facility from a floating rate of LIBOR plus 2.75% to
the bankers' acceptances rate plus 3.11% on $365 million. The interest rate cap agreements, which matured in 2002, had the effect of limiting interest on $100.0 million of the term bank
credit facility to a maximum of 5.31% plus the applicable margin.

Furthermore,
Sun Media's Senior Subordinated Notes bear interest at a coupon rate of 9.5%, payable in US dollars. The Company has entered into fixed and variable interest rate swap
agreements for 100% of the Senior Subordinated Notes. As at December 31, 2002, the effective interest rate on the Notes was 8.6%, reflecting the fair market value premium that was recorded on
the date of the Sun Media acquisition by Quebecor Inc. The effect of these interest rate swap agreements is to convert the interest rate on US$118.5 million of Senior Subordinated Notes
from a fixed rate of 9.5% to a weighted average fixed interest rate of 9.51% on $161.4 million. These agreements also convert the interest rate on US$32.5 million of Senior Subordinated
Notes from a fixed rate of 9.5% per annum to a floating interest rate equal to the bankers' acceptances rate plus 2.94% per annum on $44.3 million.

The
Company's Senior Notes bear interest, payable in cash, of 11.125% on US$715 million. The Senior Discount Notes bear interest at a rate of 13.75% (face amount of
US$295 million). The Company has entered
into fixed interest rate swap agreements for 100% of the Senior Notes and the Senior Discount Notes. The effect of these interest rate swap agreements is to convert the interest rate on the Senior
Notes from a fixed rate of 11.125% to a fixed interest rate of 11.9% on $1,090.8 million, and to convert the interest rate of the Senior Discount Notes from 13.75% to 14.6%.

Foreign Currency Exchange Risk

Virtually all of Quebecor Media's revenue is received in Canadian dollars and, as a result, has relatively little exposure to foreign currency exchange risk with
respect to sales made. However, the Company's Senior Secured Notes, Senior Notes, Senior Discount Notes, Senior Subordinated Notes and US$231.4 million of the term credit facility are
denominated in US dollars and any interest, principal and premium thereon must be paid in US dollars. The Company has entered into foreign exchange swap agreements for 100% of those US dollar-
denominated debt obligations, except for the Senior Secured Notes of CF Cable TV Inc. which are not hedged.

95

---

Therefore, fluctuations of the Canadian dollar against the U.S. dollar will generate foreign exchange economic gains or losses on the Senior Secured Notes exclusively.

Commodity Price Risk

The Newspapers segment has signed various purchase contracts with newsprint manufacturers at current market price less a volume discount. Management mitigates the
commodity price risk through a centralized purchase department in order to benefit from volume rebates based on total consumption requirements of its different newsprint operations.

Credit Risk

Concentrations of credit risk with respect to trade receivables are limited due to the Company's diverse operations and large customer base. As of
December 31, 2002, Quebecor Media had no significant concentrations of credit risk. The Company believes that the product and diversity of its customer base is instrumental in reducing its
credit risk, as well as the impact of a potential change in its local market or product-line demand.

ITEM 12  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

These have been no material modifications to the rights of security holders.

USE OF PROCEEDS

Not applicable.

ITEM 15  CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and interim Chief Financial Officer have concluded, based on their evaluation as of a date within 90 days of the
filing date of this report, that the Company's disclosure controls and procedures (as defined in 13a-14 of the Securities Exchange Act of 1934, as amended) are effective. There have been
no significant changes in the internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

ITEM 16  [RESERVED]

Not
applicable.

PART III

ITEM 17  FINANCIAL STATEMENTS

The audited consolidated balance sheets of the Company, as of December 31, 2002 and 2001 and the consolidated statements of operations, (deficit) retained
earnings and cash flows of the Company for the years ended December 31, 2002, 2001 and 2000, including the notes thereto and together with the auditors' report thereon, are included at pages F1
to F43 to this annual report.

96

---

ITEM 18  FINANCIAL STATEMENTS

Not applicable.

ITEM 19  EXHIBITS

EXHIBITS

The following documents are filed as exhibits to this Form 20-F:

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                           
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*1.1           |  | Articles of Incorporation of Quebecor Media Inc. (translation).                                                                                                                                                                                                                                                                                                                                       
|1.2            |  | Certificate of Amendment of Articles of Incorporation filed February 3, 2003 (translation).                                                                                                                                                                                                                                                                                                           
|*1.3           |  | By-laws of Quebecor Media Inc. (translation).                                                                                                                                                                                                                                                                                                                                                         
|*2.1           |  | Form of Senior Note (included in Exhibit A to Exhibit 2.3 below).                                                                                                                                                                                                                                                                                                                                     
|*2.2           |  | Form of Senior Discount Note (included in Exhibit A to Exhibit 2.4 below).                                                                                                                                                                                                                                                                                                                            
|*2.3           |  | Senior Note Indenture dated as of July 6, 2001 by and between Quebecor Media Inc. and National City Bank, as trustee.                                                                                                                                                                                                                                                                                 
|*2.4           |  | Senior Discount Note Indenture dated as of July 6, 2001 by and between Quebecor Media Inc. and National City Bank, as trustee.                                                                                                                                                                                                                                                                        
|*2.5           |  | Indenture relating to $150,000,000 91/2% Senior Subordinated Notes due 2007 dated as of February 19, 1997 between Sun Media Corporation and United States Trust Company of New York, together with the First
Supplemental Indenture dated as of December 15, 1997, the Second Supplemental Indenture dated as of December 31, 1998 and the Third Supplemental Indenture dated as of February 28, 1999.
|*2.6           |  | Indenture relating to $90,000,000 91/2% Senior Subordinated Notes due 2007 dated as of February 19, 1997 between Sun Media Corporation and United States Trust Company of New York, together with the First
Supplemental Indenture dated as of December 15, 1997, the Second Supplemental Indenture dated as of December 31, 1998 and the Third Supplemental Indenture dated as of February 28, 1999. 
|*2.7           |  | Form of 91/2% Senior Subordinated Notes due 2007 (included in Exhibit A to Exhibit 2.5 above).                                                                                                                                                                                                                                                                                                        
|*2.8           |  | Form of 91/2% Senior Subordinated Notes due 2007 (included in Exhibit A to Exhibit 2.6 above).                                                                                                                                                                                                                                                                                                        
|**2.9          |  | Indenture relating to $205,000,000 75/8% Senior Notes due 2013 dated as of February 7, 2003 among Sun Media Corporation, the subsidiary guarantors signatory thereto and National City Bank, as
trustee.                                                                                                                                                                                              
|**2.10         |  | Form of 75/8% Senior Note due 2013 of Sun Media Corporation being registered pursuant to the Securities Act of 1933 (included in Exhibit A to Exhibit 2.9 above).                                                                                                                                                                                                                                     
|**2.11         |  | Subordination Agreement dated as of February 7, 2003 among Sun Media Corporation, Quebecor Media Inc. and National City Bank.                                                                                                                                                                                                                                                                         
|*3.1           |  | Shareholders' Agreement dated December 11, 2000 by and among Quebecor Inc., Capital Communications CDPQ Inc. and Quebecor Media, together with a summary thereof in the English language.                                                                                                                                                                                                             
|*3.2           |  | Letter Agreement dated December 11, 2000 between Quebecor Inc. and Capital Communications CDPQ Inc. (translation).                                                                                                                                                                                                                                                                                    
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                       

97

---

|*4.1  |  | Lease Agreement dated November 24, 1993 between Le Groupe Vidéotron ltée and National Bank of Canada for the property located at 300 Viger Avenue East, Montréal, Province of Québec, Canada, together with a summary
thereof in the English language.                                                       
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*4.2  |  | Credit Agreement dated as of June 29, 2001 among Quebecor Media Inc, RBC Dominion Securities Inc., Royal Bank of Canada, the guarantors thereto and the co-arrangers and lenders thereto.                                                                                                                    
|*4.3  |  | Credit Agreement dated as of November 28, 2000 among Vidéotron ltée, RBC Dominion Securities Inc., Royal Bank of Canada and the co-arrangers and lenders thereto, together with the First Amending Agreement dated as of
January 5, 2001 and the Second Amending Agreement dated as of June 29, 2001.        
|*4.4  |  | Amended and Restated Credit Agreement dated as of April 1, 2000 among Sun Media Corporation, Royal Bank of Canada and Credit Suisse First Boston Canada and the lenders thereto, together with the Amending Agreement dated as of March 31, 2001
and the Second Amending Agreement dated as of June 29, 2001.
|*4.5  |  | Newsprint Supply Agreement dated as of January 1, 2000 among Sun Media Corporation, Donohue Forest Products and Quebecor Printing Inc., together with an English summary of the agreement.                                                                                                                   
|**4.6 |  | Credit Agreement dated as of February 7, 2003 among Sun Media Corporation, Bank of America, N.A., Banc of America Securities LLC and Credit Suisse First Boston Corporation, as arrangers, Bank of America, N.A., as administrative agent, and
certain other financial institutions signatory thereto.       
|**4.7 |  | Subordination Agreement for Existing Back-To-Back Securities dated as of February 7, 2003 between Sun Media Corporation and Quebecor Media Inc.                                                                                                                                                              
|8.1   |  | Subsidiaries of Quebecor Media Inc. as of March 1, 2003.                                                                                                                                                                                                                                                     
|10.1  |  | Certification of Chief Executive Officer of Quebecor Media Inc. pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                     
|10.2  |  | Certification of the interim Chief Financial Officer of Quebecor Media Inc. pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                         

---

98

---



SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

| |  | QUEBECOR MEDIA INC.
| |  | -------------------
| |  | By:                
| |  |                    
| |  |                    
| |  |                    

Dated:
March 31, 2003

CERTIFICATION

I,
Pierre Karl Péladeau, certify that:





99

---

Date:
March 31, 2003

| |  | /s/ Pierre Karl Péladeau
| |  | ------------------------
| |  |                         
| |  | Pierre Karl Péladeau    
| |  | Chief Executive Officer 

CERTIFICATION

I,
Claude Hélie, certify that:





Date:
March 31, 2003

| |  | /s/ Claude Hélie               
| |  | -------------------------------
| |  |                                
| |  | Claude Hélie                   
| |  | Interim Chief Financial Officer

100

---

Consolidated Financial Statements of

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

Years ended December 31, 2002, 2001 and 2000

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    Consolidated Financial Statements    Years ended December 31, 2002, 2001 and 2000

|Auditors' Report to the Shareholders of Quebecor Media Inc. |                                                        | 
|----------------------------------------------------------- | ------------------------------------------------------ | 
|Financial Statements                                        |                                                        | 
|                                                            | Consolidated Statements of Operations                  | 
|                                                            | Consolidated Statements of (Deficit) Retained Earnings | 
|                                                            | Consolidated Statements of Cash Flows                  | 
|                                                            | Consolidated Balance Sheets                            | 
|                                                            | Segmented Information                                  | 
|                                                            | Notes to Consolidated Financial Statements             | 

---

AUDITORS' REPORT TO THE SHAREHOLDERS OF QUEBECOR MEDIA INC.

We
have audited the consolidated balance sheets of Quebecor Media Inc. and its subsidiaries as at December 31, 2002 and 2001 and the consolidated statements of operations,
(deficit) retained earnings and cash flows for the years ended December 31, 2002, 2001 and 2000. 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 generally accepted auditing standards in Canada and in the United States. 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 December 31, 2002 and 2001 and the
results of its operations and its cash flows for the years ended December 31, 2002, 2001 and 2000 in accordance with Canadian generally accepted accounting principles.

|(Signed KPMG LLP)     |  | 
|--------------------- |  | 
|Chartered Accountants |  | 
|Montréal, Canada      |  | 
|February 7, 2003      |  | 

---



QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF OPERATIONS    Years ended December 31, 2002, 2001 and 2000  (in thousands of dollars)

|                                                                     |  | 2002 |           | 2001 |   | 2000      |  
|-------------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | -
|
|Revenues                                                             |  | $    | 2,274,862 |      | $ | 1,841,362 |  
|Cost of sales and selling and administrative expenses                |  |      | 1,669,941 |      |   | 1,432,479 |  
|                                                                     |  |      |           |      |   |           |  
|Operating income before undernoted items                             |  |      | 604,921   |      |   | 408,883   |  
|Amortization                                                         |  |      | (245,491  | )    |   | (164,280  | )
|Financial expenses (note 2)                                          |  |      | (322,357  | )    |   | (287,772  | )
|Reserve for restructuring of operations and special charges (note 3) |  |      | (39,337   | )    |   | (152,113  | )
|Write-down of goodwill (note 3 (g))                                  |  |      | (187,035  | )    |   | (146,930  | )
|Gains on sale of businesses and other assets and gains on dilution   |  |      | 3,577     |      |   | 1,479     |  
|                                                                     |  |      |           |      |   |           |  
|Loss before income taxes                                             |  |      | (185,722  | )    |   | (340,733  | )
|Income taxes (credit) (note 4)                                       |  |      | 13,409    |      |   | (4,540    | )
|                                                                     |  |      |           |      |   |           |  
|                                                                     |  |      | (199,131  | )    |   | (336,193  | )
|Equity (loss) income from non-consolidated subsidiaries (note 5)     |  |      |          |      |   | (17,477   | )
|Non-controlling interest                                             |  |      | (14,767   | )    |   | 36,441    |  
|                                                                     |  |      |           |      |   |           |  
|Loss before amortization of goodwill                                 |  |      | (213,898  | )    |   | (317,229  | )
|Amortization of goodwill, net of non-controlling interest            |  |      |          |      |   | (126,941  | )
|                                                                     |  |      |           |      |   |           |  
|Net loss                                                             |  | $    | (213,898  | )    | $ | (444,170  | )
|                                                                     |  |      |           |      |   |           |  

See accompanying notes to consolidated financial statements.

F-1

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF (DEFICIT) RETAINED EARNINGS    Years ended December 31, 2002, 2001 and 2000  (in thousands of dollars)

|                             |                                                                                                           | 2002 |            | 2001       |   | 2000     |       
|---------------------------- | --------------------------------------------------------------------------------------------------------- | ---- | ---------- | ---------- | - | -------- | ------
|
|Balance at beginning of year |                                                                                                           |      |            |            |   |          |       
|                             | As previously reported                                                                                    |      | $          | (411,485   | ) | $        | 19,934
|                             | Restatement due to a change in accounting policy regarding foreign currency translation (note 1 (b) (ii)) |      |            | (10,226    | ) |          | 2,525 
|                             |                                                                                                           |      |            |            |   |          |       
|                             | As restated                                                                                               |      |            | (421,711   | ) |          | 22,459
|                             | Restatement due to a change in accounting policy regarding goodwill (note 1(b) (i))                       |      |            | (2,144,344 | ) |          |      
|                             |                                                                                                           |      |            |            |   |          |       
|                             |                                                                                                           |      | (2,566,055 | )          |   | 22,459   |       
|Net loss                     |                                                                                                           |      | (213,898   | )          |   | (444,170 | )     
|                             |                                                                                                           |      |            |            |   |          |       
|Balance at end of year       |                                                                                                           | $    | (2,779,953 | )          | $ | (421,711 | )     
|                             |                                                                                                           |      |            |            |   |          |       

See accompanying notes to consolidated financial statements.

F-2

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF CASH FLOWS    Years ended December 31, 2002, 2001 and 2000  (in thousands of dollars)

|                                                                                               |                                                                                                                  | 2002                                                                 |         | 2001     |         | 2000    |           
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------- | -------- | ------- | ------- | ----------
|
|Cash flows related to operations:                                                              |                                                                                                                  |                                                                      |         |          |         |         |           
|                                                                                               | Net loss                                                                                                         |                                                                      | $       | (213,898 | )       | $       | (444,170  
|                                                                                               | Adjustments for:                                                                                                 |                                                                      |         |          |         |         |           
|                                                                                               |                                                                                                                  | Amortization of property, plant and equipment                        |         |          | 221,506 |         |           
|                                                                                               |                                                                                                                  | Amortization and write-down of goodwill and deferred charges         |         |          | 211,020 |         |           
|                                                                                               |                                                                                                                  | Amortization of deferred financing costs and long-term debt discount |         |          | 48,381  |         |           
|                                                                                               |                                                                                                                  | Non-monetary compensation charges                                    |         |          | 5,661   |         |           
|                                                                                               |                                                                                                                  | Write-down of temporary investments and a property                   |         |          | 22,258  |         |           
|                                                                                               |                                                                                                                  | Interest on redeemable preferred shares                              |         |          | 21,650  |         |           
|                                                                                               |                                                                                                                  | Gains (losses) on foreign currency translation on long term debt     |         |          | (2,211  | )       |           
|                                                                                               |                                                                                                                  | Gains on sale of businesses and other assets and gains on dilution   |         |          | (1,696  | )       |           
|                                                                                               |                                                                                                                  | Future income taxes                                                  |         |          | 14,317  |         |           
|                                                                                               |                                                                                                                  | Equity loss (income) from non-consolidated subsidiaries              |         |          |        |         |           
|                                                                                               |                                                                                                                  | Non-controlling interest                                             |         |          | 14,767  |         |           
|                                                                                               |                                                                                                                  | Other                                                                |         |          | 720     |         |           
|                                                                                               |                                                                                                                  |                                                                      |         |          |         |         |           
|                                                                                               |                                                                                                                  |                                                                      | 342,475 |          |         | 144,604 |           
|                                                                                               | Net change in non-cash balances related to operations (net of the effect of business acquisitions and disposals) |                                                                      |         | 58,744   |         |         | 137,191   
|                                                                                               |                                                                                                                  |                                                                      |         |          |         |         |           
|                                                                                               | Cash flows provided by (used for) operations                                                                     |                                                                      |         | 401,219  |         |         | 281,795   
|Cash flows related to financing activities:                                                    |                                                                                                                  |                                                                      |         |          |         |         |           
|                                                                                               | Net decrease in bank indebtedness                                                                                |                                                                      |         | (24,932  | )       |         | (10,627   
|                                                                                               | Issuance of long-term debt                                                                                       |                                                                      |         | 25,783   |         |         | 2,103,440 
|                                                                                               | Repayment of long-term debt                                                                                      |                                                                      |         | (225,091 | )       |         | (2,152,870
|                                                                                               | Deferred financing costs                                                                                         |                                                                      |         |         |         |         | (41,542   
|                                                                                               | Proceed from issuance of capital stock                                                                           |                                                                      |         | 31,869   |         |         | 417,500   
|                                                                                               | Dividends paid to non-controlling shareholders                                                                   |                                                                      |         | (5,879   | )       |         | (1,331    
|                                                                                               | Decrease in advances receivable from parent company                                                              |                                                                      |         | 4,262    |         |         | 2,468     
|                                                                                               | Issuance of capital stock by subsidiaries                                                                        |                                                                      |         |         |         |         | 1,627     
|                                                                                               |                                                                                                                  |                                                                      |         |          |         |         |           
|                                                                                               | Cash flows (used by) provided by financing activities                                                            |                                                                      |         | (193,988 | )       |         | 318,665   
|Cash flows related to investing activities:                                                    |                                                                                                                  |                                                                      |         |          |         |         |           
|                                                                                               | Business acquisitions and disposals, net of cash and cash equivalents acquired (note 6)                          |                                                                      |         | (14,189  | )       |         | (379,273  
|                                                                                               | Proceeds from disposal of businesses                                                                             |                                                                      |         | 6,745    |         |         |          
|                                                                                               | Acquisitions of property, plant and equipment                                                                    |                                                                      |         | (141,550 | )       |         | (123,760  
|                                                                                               | Additions to others assets                                                                                       |                                                                      |         | (27,971  | )       |         | (17,194   
|                                                                                               | Net decrease in amounts receivable from non-consolidated subsidiaries                                            |                                                                      |         |         |         |         |          
|                                                                                               | (Increase) decrease of temporary investments                                                                     |                                                                      |         | (68,108  | )       |         | 43,890    
|                                                                                               | Proceeds from disposal of assets                                                                                 |                                                                      |         | 12,656   |         |         | 76,999    
|                                                                                               | Interests charges capitalized to investments in subsidiaries held for resale                                     |                                                                      |         |         |         |         | (27,456   
|                                                                                               | Others                                                                                                           |                                                                      |         | 5,975    |         |         | (11,346   
|                                                                                               |                                                                                                                  |                                                                      |         |          |         |         |           
|                                                                                               | Cash flows used by investing activities                                                                          |                                                                      |         | (226,442 | )       |         | (438,140  
|                                                                                               |                                                                                                                  |                                                                      |         |          |         |         |           
|Net (decrease) increase in cash and cash equivalents                                           |                                                                                                                  |                                                                      | (19,211 | )        |         | 162,320 |           
|Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies |                                                                                                                  |                                                                      | (284    | )        |         | (726    | )         
|Cash and cash equivalents at beginning of year                                                 |                                                                                                                  |                                                                      | 207,773 |          |         | 46,179  |           
|                                                                                               |                                                                                                                  |                                                                      |         |          |         |         |           
|Cash and cash equivalents at end of year                                                       |                                                                                                                  | $                                                                    | 188,278 |          | $       | 207,773 |           
|                                                                                               |                                                                                                                  |                                                                      |         |          |         |         |           

See accompanying notes to consolidated financial statements.

F-3

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED    Years ended December 31, 2002, 2001 and 2000  (in thousands of dollars)

|                                                                     |                                                                                                                | 2002                                                          |         | 2001 |        | 2000    |  
|-------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------- | ---- | ------ | ------- | -
|
|Additional information on the consolidated statements of cash flows: |                                                                                                                |                                                               |         |      |        |         |  
|                                                                     | Changes in non-cash balances related to operations (net of the effect of business acquisitions and disposals): |                                                               |         |      |        |         |  
|                                                                     |                                                                                                                | Accounts receivable                                           |         | $    | 10,655 |         | $
|                                                                     |                                                                                                                | Inventories and investments in televisual products and movies |         |      | 9,850  |         |  
|                                                                     |                                                                                                                | Accounts payable and accrued charges                          |         |      | 36,983 |         |  
|                                                                     |                                                                                                                | Other                                                         |         |      | 1,256  |         |  
|                                                                     |                                                                                                                |                                                               |         |      |        |         |  
|                                                                     |                                                                                                                | $                                                             | 58,744  |      | $      | 137,191 |  
|                                                                     |                                                                                                                |                                                               |         |      |        |         |  
|Cash interest payments                                               |                                                                                                                | $                                                             | 123,583 |      | $      | 198,005 |  
|Cash payments for income taxes                                       |                                                                                                                |                                                               | 27,551  |      |        | 13,520  |  
|                                                                     |                                                                                                                |                                                               |         |      |        |         |  

See accompanying notes to consolidated financial statements.

F-4

---



QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        December 31, 2002 and 2001  (in thousands of dollars)

| |                                                                                           | 2002                                                                   |   | 2001      |           
| | ----------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | - | --------- | ----------
|
| | Assets                                                                                    |                                                                        |   |           |           
| | Current assets:                                                                           |                                                                        |   |           |           
| |                                                                                           | Cash and cash equivalents (note 20)                                    |   | $         | 188,278   
| |                                                                                           | Temporary investments (market value of $87,856 ($34,260 in 2001))      |   |           | 87,798    
| |                                                                                           | Accounts receivable (note 7)                                           |   |           | 329,764   
| |                                                                                           | Income taxes receivable                                                |   |           | 28,781    
| |                                                                                           | Inventories and investments in televisual products and movies (note 8) |   |           | 156,922   
| |                                                                                           | Prepaid expenses                                                       |   |           | 18,570    
| |                                                                                           | Future income taxes (note 4)                                           |   |           | 31,870    
| |                                                                                           |                                                                        |   |           |           
| |                                                                                           |                                                                        |   | 841,983   |           
| | Portfolio investments (market value of $15,867 ($15,188 in 2001))                         |                                                                        |   | 15,867    |           
| | Advances receivable from parent company, without terms of repayment, prime rate less 1.4% |                                                                        |   | 26,094    |           
| | Property, plant and equipment (note 10)                                                   |                                                                        |   | 1,680,306 |           
| | Goodwill, (notes 1 (b) (ii) and 11)                                                       |                                                                        |   | 3,883,366 |           
| | Future income taxes (note 4)                                                              |                                                                        |   | 97,867    |           
| | Other assets (note 12)                                                                    |                                                                        |   | 239,167   |           
| |                                                                                           |                                                                        |   |           |           
| |                                                                                           |                                                                        | $ | 6,784,650 |           
| |                                                                                           |                                                                        |   |           |           
| | Liabilities and Shareholders' Equity                                                      |                                                                        |   |           |           
| | Current liabilities:                                                                      |                                                                        |   |           |           
| |                                                                                           | Bank indebtedness                                                      |   | $         | 13,143    
| |                                                                                           | Accounts payable and accrued charges                                   |   |           | 699,232   
| |                                                                                           | Income and other taxes                                                 |   |           | 9,340     
| |                                                                                           | Advances payable to parent company and companies under common control  |   |           | 22,628    
| |                                                                                           | Future income taxes (note 4)                                           |   |           | 857       
| |                                                                                           | Current portion of long-term debt (notes 13 and 22)                    |   |           | 575,552   
| |                                                                                           |                                                                        |   |           |           
| |                                                                                           |                                                                        |   | 1,320,752 |           
| | Long-term debt (notes 13 and 22)                                                          |                                                                        |   | 2,931,044 |           
| | Redeemable preferred shares (note 14)                                                     |                                                                        |   | 254,233   |           
| | Other liabilities                                                                         |                                                                        |   | 51,409    |           
| | Future income taxes (note 4)                                                              |                                                                        |   | 258,464   |           
| | Non-controlling interest (note 15)                                                        |                                                                        |   | 195,144   |           
| | Shareholders' equity:                                                                     |                                                                        |   |           |           
| |                                                                                           | Capital stock (note 16)                                                |   |           | 1,341,836 
| |                                                                                           | Contributed surplus (notes 4 and 16)                                   |   |           | 3,214,562 
| |                                                                                           | Deficit                                                                |   |           | (2,779,953
| |                                                                                           | Translation adjustment                                                 |   |           | (2,841    
| |                                                                                           |                                                                        |   |           |           
| |                                                                                           |                                                                        |   | 1,773,604 |           
| |                                                                                           |                                                                        |   |           |           
| | Commitments and contingencies (note 18)                                                   |                                                                        |   |           |           
| | Subsequent events (note 22)                                                               |                                                                        |   |           |           
| |                                                                                           |                                                                        | $ | 6,784,650 |           
| |                                                                                           |                                                                        |   |           |           

See accompanying notes to consolidated financial statements.

| | On behalf of the Board of Directors, |                             
| | ------------------------------------ | ----------------------------
| | (Signed)JEAN NEVEU,Director          | (Signed)SERGE GOUIN,Director

F-5

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES        SEGMENTED INFORMATION        Years ended December 31, 2002, 2001 and 2000  (in thousands of dollars)

Quebecor Media Inc. (the "Company") operates in the following industry segments: Cable Television, Newspapers, Broadcasting, Leisure and Entertainment, Business Telecommunications, Web
Integration/Technology and Internet/Portals. The Cable Television segment offers services in television distribution in Canada and also operates in the Internet access provider industry. The
Newspapers segment includes the publishing and distribution of daily and weekly newspapers, principally in Canada, and also in the State of Florida in the United States. The Broadcasting segment
operates French-language general-interest television networks, specialized television networks and magazine publishing in Canada. The Leisure and Entertainment segment, which has operations solely in
Canada, combines book publishing, retail sales and the rental of videocassettes, DVD and games, and book and music distribution. The Business Telecommunications segment operates in Canada and offers
to enterprises, through its network, business-to-business connections, Internet connections, website hosting and telephone services through its network. The Web
Integration/Technology segment offers e-commerce solutions through a combination of strategy, technology integration, IP solutions and creativity on the Internet and is active in Canada,
the United States and Europe. The Internet/Portals segment operates Internet sites in Canada, including French-language and English-language portals and specialized sites.

These segments are managed separately since they all require specific market strategies. The Company assesses the performance of each segment based on operating
income before amortization, financial expenses, reserve for restructuring of operations and special charges, write-down of goodwill, gains on sale of businesses and other assets and gains
on dilution.

The
accounting policies of each segment are identical to the accounting policies used for the consolidated financial statements.

Segment
income includes income from sales to third parties and intersegment sales. These sales are accounted for at prices similar to those prevailing on the open market.

|          |                             | 2002 |           | 2001    |   | 2000      |        
|--------- | --------------------------- | ---- | --------- | ------- | - | --------- | -------
|Revenues: |                             |      |           |         |   |           |        
|          | Cable Television            |      | $         | 715,647 |   | $         | 476,484
|          | Newspapers                  |      |           | 853,610 |   |           | 838,135
|          | Broadcasting                |      |           | 323,355 |   |           | 114,657
|          | Leisure and Entertainment   |      |           | 244,550 |   |           | 260,053
|          | Business Telecommunications |      |           | 91,933  |   |           | 14,567 
|          | Web Integration/Technology  |      |           | 79,787  |   |           | 129,128
|          | Internet/Portals            |      |           | 26,759  |   |           | 27,423 
|          | Head Office                 |      |           | 2,191   |   |           | 4,838  
|          | Intersegment                |      |           | (62,970 | ) |           | (23,923
|          |                             |      |           |         |   |           |        
|          |                             | $    | 2,274,862 |         | $ | 1,841,362 |        
|          |                             |      |           |         |   |           |        

F-6

---

|                                                                                                                                                                                                                      |                             | 2002 |         | 2001    |   | 2000    |        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ---- | ------- | ------- | - | ------- | -------
|Operating income before amortization, financial expenses, reserve for restructuring of operations and special charges, write-down of goodwill and gains on sale of businesses and other assets and gains on
dilution: |                            
|                                                                                                                                                                                                                      | Cable Television            |      | $       | 262,683 |   | $       | 183,160
|                                                                                                                                                                                                                      | Newspapers                  |      |         | 222,333 |   |         | 200,844
|                                                                                                                                                                                                                      | Broadcasting                |      |         | 78,898  |   |         | 28,718 
|                                                                                                                                                                                                                      | Leisure and Entertainment   |      |         | 28,972  |   |         | 28,774 
|                                                                                                                                                                                                                      | Business Telecommunications |      |         | 27,291  |   |         | 4,074  
|                                                                                                                                                                                                                      | Web Integration/Technology  |      |         | (10,736 | ) |         | (15,384
|                                                                                                                                                                                                                      | Internet/Portals            |      |         | (2,582  | ) |         | (21,450
|                                                                                                                                                                                                                      |                             |      |         |         |   |         |        
|                                                                                                                                                                                                                      |                             |      | 606,859 |         |   | 408,736 |        
|General corporate (expenses) income                                                                                                                                                                                   |                             |      | (1,938  | )       |   | 147     |        
|                                                                                                                                                                                                                      |                             |      |         |         |   |         |        
|                                                                                                                                                                                                                      |                             | $    | 604,921 |         | $ | 408,883 |        
|                                                                                                                                                                                                                      |                             |      |         |         |   |         |        

|              |                             | 2002 |         | 2001    |   | 2000   
|------------- | --------------------------- | ---- | ------- | ------- | - | -------
|Amortization: |                             |      |         |         |   |        
|              | Cable Television            |      | $       | 151,316 |   | $      
|              | Newspapers                  |      |         | 27,035  |   |        
|              | Broadcasting                |      |         | 10,766  |   |        
|              | Leisure and Entertainment   |      |         | 10,582  |   |        
|              | Business Telecommunications |      |         | 35,053  |   |        
|              | Web Integration/Technology  |      |         | 4,712   |   |        
|              | Internet/Portals            |      |         | 3,762   |   |        
|              | Head Office                 |      |         | 2,265   |   |        
|              |                             |      |         |         |   |        
|              |                             | $    | 245,491 |         | $ | 164,280
|              |                             |      |         |         |   |        

|                                            |                             | 2002 |         | 2001   |   | 2000   
|------------------------------------------- | --------------------------- | ---- | ------- | ------ | - | -------
|Additions to property, plant and equipment: |                             |      |         |        |   |        
|                                            | Cable Television            |      | $       | 93,060 |   | $      
|                                            | Newspapers                  |      |         | 10,309 |   |        
|                                            | Broadcasting                |      |         | 6,300  |   |        
|                                            | Leisure and Entertainment   |      |         | 9,552  |   |        
|                                            | Business Telecommunications |      |         | 20,871 |   |        
|                                            | Web Integration/Technology  |      |         | 1,333  |   |        
|                                            | Internet/Portals            |      |         | 100    |   |        
|                                            | Head Office                 |      |         | 25     |   |        
|                                            |                             |      |         |        |   |        
|                                            |                             | $    | 141,550 |        | $ | 123,760
|                                            |                             |      |         |        |   |        

F-7

---

|        |                             | 2002 |           | 2001     
|------- | --------------------------- | ---- | --------- | ---------
|
|Assets: |                             |      |           |          
|        | Cable Television            |      | $         | 3,918,341
|        | Newspapers                  |      |           | 1,539,454
|        | Broadcasting                |      |           | 507,406  
|        | Leisure and Entertainment   |      |           | 191,804  
|        | Business Telecommunications |      |           | 325,307  
|        | Web Integration/Technology  |      |           | 89,647   
|        | Internet/Portals            |      |           | 33,176   
|        | Head Office                 |      |           | 179,515  
|        |                             |      |           |          
|        |                             | $    | 6,784,650 |          
|        |                             |      |           |          

F-8

---



QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES        Notes to Consolidated Financial Statements        Years ended December 31, 2002, 2001 and 2000        (Tabular amounts are expressed in
thousands of dollars.)



1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:





2002

2001

2000(restated, note 1 (b) (ii))

(restated, note 1 (b) (ii))Net loss, as reported

$
(213,898
)
$
(444,170
)
$
(192,989
)Goodwill amortization, net of non-controlling interest





168,480


59,705Net loss, adjusted

$
(213,898
)
$
(275,690
)
$
(133,284
)




F-9

---



Balance as at January 1, 2002 as previously reported

Restatement due to a change in accounting policy

Balance as at January 1, 2002
as restatedCable Television

$
4,604,172

$
(1,936,000
)
$
2,668,172Newspapers


1,000,483





1,000,483Broadcasting


164,289





164,289Leisure and Entertainment


98,232





98,232Business Telecommunications


273,437


(164,910
)

108,527Web Integration/Technology


29,179


(20,424
)

8,755Internet/Portals


70,478


(41,784
)

28,694Total

$
6,240,270

$
(2,163,118
)
$
4,077,152








F-10

---









F-11

---













F-12

---



Asset

Estimated useful lifeBuildings

25 to 40 yearsMachinery and equipment

3 to 20 yearsReceiving, distribution and telecommunications networks

3 to 20 years






F-13

---



2.    FINANCIAL EXPENSES:

2002

2001

2000(restated,
note 1 (b) (ii))Interest on long-term debt

$
255,799

$
273,763

$
81,394Interest on redeemable preferred shares


21,650


3,438


Interest on bank indebtedness


200


815


474Investment income


(6,945
)

(23,086
)

Amortization of deferred financing costs and long-term debt discount


48,381


48,972


6,316(Gains) losses on foreign currency translation on long-term debt


(2,211
)

17,066


Interest on advances payable and due to parent company








14,127Interest on note receivable from parent company


(762
)

(1,555
)

Other


6,245


(4,185
)

(264
)322,357


315,228


102,047Interest capitalized to investments in subsidiaries held for resale





(27,456
)

(5,610
)$
322,357

$
287,772

$
96,437


F-14

---

3.    RESERVE FOR RESTRUCTURING OF OPERATIONS AND SPECIAL CHARGES:









F-15

---









4.    INCOME TAXES:

2002

2001

2000Current

$
(908
)
$
3,290

$
16,561Future


14,317


(7,830
)

765$
13,409

$
(4,540
)
$
17,326


F-16

---



2002

2001

2000(restated, note 1 (b) (ii))

(restated, note 1 (b) (ii))Statutory tax rate

35.2
%
36.4
%
37.6
%Increase (reduction) resulting from:Effect of non-deductible charges and/or resulting from tax rate reduction

(40.9
)
(24.5
)
(45.0
)Change in valuation allowance

(7.5
)
(9.6
)
(8.1
)Other

6.0

(1.2
)
(0.4
)Effective tax rate before the following item

(7.2
)
1.1

(15.9
)Effect of the non-taxable gains on dilution



0.2

4.8Effective tax rate

(7.2)
%
1.3
%
(11.1)
%




2002

2001Future tax assets:Loss carryforwards in the future

$
238,664

$
250,354Pension expenses and postretirement benefits


10,338


8,369Goodwill


1,192


Differences between book and tax bases of investments


3,999


Other


23,577


12,424277,770


271,147Valuation allowance


(169,291
)

(150,163
)108,479


120,984Future tax liabilities:Goodwill





(3,411
)Differences between book and tax bases of property, plant and equipment


(232,720
)

(245,411
)Differences between book and tax bases of investments





(409
)Other


(5,343
)

(4,612
)(238,063
)

(253,843
)Net future tax liabilities

$
(129,584
)
$
(132,859
)


F-17

---



2002

2001Future tax assets:Current

$
31,870

$
22,440Long-term


97,867


84,891129,737


107,331Future tax liabilities:Current


(857
)

(926
)Long-term


(258,464
)

(239,264
)(259,321
)

(240,190
)Net future tax liabilities

$
(129,584
)
$
(132,859
)




5.    INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIES:



F-18

---



2001AssetsCurrent assets

$
274,681Property, plant and equipment


1,303,987Goodwill


4,839,968Other assets


207,2996,625,935LiabilitiesCurrent liabilities


386,274Long-term debt


1,017,099Future income taxes


264,552Non-controlling interest


103,6441,771,569Net assets

$
4,854,366




2001

2000(restated, note 1 (b) (ii))

(restated, note 1 (b) (ii))Revenues

$
436,128

$
205,209Operating expenses


(306,560
)

(145,292
)Amortization


(48,685
)

(24,700
)Financial expenses


(30,589
)

(11,575
)Income before income taxes


50,294


23,642Income taxes (credit)(1)


21,822


(7,500
)28,472


31,142Non-controlling interest


(4,410
)

(4,000
)Income before amortization of goodwill


24,062


27,142Amortization of goodwill, net of non-controlling interest


(41,539
)

(24,300
)Net (loss) income and equity (loss) income from non-consolidated subsidiaries

$
(17,477
)
$
2,842


6.    BUSINESS AND ASSETS ACQUISITIONS AND DISPOSALS:



F-19

---



2002

2001

2000Assets acquired:Cash and cash equivalents

$


$


$
14,299Temporary investments








222,111Non-cash current operating assets


1,559


6,520


46,250Investments in subsidiaries held for resale








389,034Property, plant and equipment


2,492


266


73,116Investments in non-consolidated subsidiaries








5,007,779Goodwill


2,131


253,441


320,421Non-monetary compensation








83,915Future income taxes








862Non-controlling interest





122,946


6,069Other


543





1,714Liabilities assumed:Bank indebtedness








(346,630
)Non-cash current operating liabilities


(283
)

(2,359
)

(163,196
)Amounts payable to non-consolidated subsidiaries








(90,984
)Long-term debt








(9,245
)Other liabilities


96


(19
)

(61
)Future income taxes








(868
)Non-controlling interest


7,651





(143,242
)Net assets acquired at fair value

$
14,189

$
380,795

$
5,411,344Consideration:Cash

$
14,189

$
379,273

$
5,310,719Common shares








95,295Balance of purchase price payable





1,522


5,330$
14,189

$
380,795

$
5,411,344


F-20

---





7.    ACCOUNTS RECEIVABLE:

2002

2001Trade

$
304,606

$
331,912Other


25,158


8,690$
329,764

$
340,602


8.    INVENTORIES AND INVESTMENTS IN TELEVISUAL PRODUCTS AND MOVIES:

2002

2001Raw materials and supplies

$
36,156

$
46,090Work in process


8,044


8,113Finished goods


51,018


53,106Investments in televisual products and movies


61,704


59,441$
156,922

$
166,750


9.    INVESTMENTS IN SUBSIDIARIES HELD FOR RESALE:



F-21

---



Revenues

$
82,129Operating expenses


(63,237
)Amortization


(28,952
)Financial revenues


1,090Operating loss before other expenses


(8,970
)Other expenses


(17,186
)Loss before income taxes


(26,156
)Income taxes


5,843Loss before amortization of goodwill


(20,313
)Amortization of goodwill


(938
)Net loss

$
(21,251
)


F-22

---



AssetsCurrent assets

$
68,098Other assets


45,063Property, plant and equipment


242,848Goodwill


267,558623,567LiabilitiesCurrent liabilities


28,035Long-term debt


274Future income taxes


4,496Redeemable preferred shares


229,162261,967Net assets

$
361,600


10.  PROPERTY, PLANT AND EQUIPMENT:

2002Cost

Accumulated amortization

Net amountLand

$
38,903

$


$
38,903Buildings and leasehold improvements


193,028


40,351


152,677Machinery and equipment


684,964


264,725


420,239Receiving, distribution and telecommunication networks


1,225,487


161,590


1,063,897Projects under development


4,590





4,590$
2,146,972

$
466,666

$
1,680,306


2001Cost

Accumulated amortization

Net amountLand

$
40,641

$


$
40,641Buildings and leasehold improvements


202,345


25,272


177,073Machinery and equipment


678,118


180,366


497,752Receiving, distribution and telecommunication networks


1,152,488


56,529


1,095,959Projects under development


7,154





7,154$
2,080,746

$
262,167

$
1,818,579


F-23

---

11.  GOODWILL:



Balance as at January 1,2002 as restated,

Purchases (disposal) of business

Transfer between segments/Adjustment to purchase price allocation(1)

Write-down

Translation adjustments

Balance as at December 31, 2002(note 1(b)(i))Cable Television

$
2,668,172

$


$
(155
)
$
(68,000
)
$


$
2,600,017Newspapers


1,000,483


(415
)










1,000,068Broadcasting


164,289


1,604


(7,343
)







158,550Leisure and Entertainment


98,232


(467
)

(114
)







97,651Business Telecommunications


108,527








(107,627
)




900Web Integration/Technology


8,755








(8,894
)

139


Internet/Portals


28,694








(2,514
)




26,180Total

$
4,077,152

$
722

$
(7,612
)
$
(187,035
)
$
139

$
3,883,366


---

12.  OTHER ASSETS:

2002

2001(restated,
note 1 (b) (ii))Deferred financing costs, net of accumulated amortization

$
57,101

$
68,980Deferred pension charge


13,992


14,639Deferred start-up costs, net of accumulated amortization


9,272


15,885Broadcasting licenses


71,401


69,853Cross-currency interest rate swap agreements


38,974


55,002Cross-currency swap agreement


8,948


15,275Equipment subsidies


34,801


19,577Other


4,678


8,730$
239,167

$
267,941


F-24

---

13.  LONG-TERM DEBT:

Effective interest rate as at December 31, 2002

Years of maturity

2002

2001Quebecor Media Inc.:Credit facility (i)

4.83% to 5.50%

2003

$
428,961

$
428,961Senior notes (ii)

11.50%

2011


1,099,486


1,112,526Senior Discount Notes (iii)

13.75%

2011


291,557


256,5691,820,004


1,798,056Vidéotron ltée and its subsidiaries (iv):Credit facility (v)

4.28% to 5.00%

2005 - 2009


995,846


1,157,262Senior Secured First Priority Notes (vi)

7.59%

2007


123,755


130,3231,119,601


1,287,585Sun Media Corporation and its subsidiaries (iv):Senior bank credit facility (vii)

3.80%

2004 - 2005


300,514


337,755Senior Subordinated Notes (viii)

8.60%

2007


214,633


216,757515,147


554,512TVA Group Inc. and its subsidiaries (iv):Revolving term-bank loan (ix)

2.81% to 4.50%

2005


51,220


43,575Other subsidiaries of Quebecor Media Inc. (iv):Miscellaneous debt

6.80 to 9.70%

2003 - 2005


624


11,6603,506,596


3,695,388Less current portion:Quebecor Media Inc.






428,961


Vidéotron ltée and its subsidiaries






86,145


4,252Sun Media Corporation and its subsidiaries






60,000


5,000Other subsidiaries of Quebecor Media Inc.






446


5,799575,552


15,051$
2,931,044

$
3,680,337




F-25

---







F-26

---



2003

$
575,5522004


194,5532005


326,1542006


151,2092007


489,5982008 and thereafter


1,769,530


14.  REDEEMABLE PREFERRED SHARES:



15.  NON-CONTROLLING INTEREST:



Subsidiary

Segment

Non-controlling interestTVA Group Inc.

Broadcasting

63.90%Nurun Inc.

Web Integration/Technology

42.74%Netgraphe Inc.

Internet/Portals

24.82%


16.  CAPITAL STOCK:





2002

20016,659,238,175 Common Shares (6,511,130,301 in 2001)

$
1,341,836

$
3,984,967




F-27

---



17.  SHARE PURCHASE PLANS:



Outstanding optionsExercise price

Number

Weighted average years to maturity$0.231

143,598,300

9.27 years0.238

987,400

9.32 years0.311

5,096,400

9.23 years$0.234

149,682,100

9.27 years


F-28

---











F-29

---









2002Pro forma net loss

$
(214,014
)




F-30

---



18.  COMMITMENTS AND CONTINGENCIES:



2003

$
57,1042004


43,8402005


33,9712006


28,1702007


24,3702008 and thereafter


107,985










F-31

---





19.  FINANCIAL INSTRUMENTS:





Notional amount

Annual effective interest rate

Annual nominal interest rate

Exchange rate of interest and capital payments per CDN dollar for one US dollarQuebecor Media Inc.:Senior Notes

US$
715,000

12.3%

11.9%

1.5255Senior Discount Notes

US$
295,000

14.6%

14.6%

1.5822
(1)Vidéotron ltée and its subsidiaries:Term credit B

US$
231,390

Bankers'
Acceptance
3 months plus
3.11%

Bankers'
Acceptance
3 months plus
3.11%

1.5389Sun Media Corporation and its subsidiaries:Subordinated Notes

US$
118,500

9.51%

9.50%

1.3622Subordinated Notes

US$
32,500

Bankers'
Acceptance
3 months
plus 2.94%

9.50%

1.3622






F-32

---



Maturity

Notional amount

Pay/ receive

Fixed rate

Floating rateQuebecor Media Inc.:February 2003

$
100,000

Pay fixed /
receive floating

2.65%

Bankers' acceptance
3 monthsVidéotron ltée and its subsidiaries:March 2005

$
135,000

Pay fixed /
receive floating

4.01 - 5.05%

Bankers' acceptance
3 monthsMay 2004

$
90,000

Pay fixed /
receive floating

5.49%

Bankers' acceptance
3 monthsMarch 2006

$
90,000

Pay fixed /
receive floating

5.41%

Bankers' acceptance
3 months






2002

2001Carrying value

Fair value

Carrying value

Fair valueQuebecor Media Inc.:Long-term debt(1)

$
(1,820,004
)
$
(1,706,808
)
$
(1,798,056
)
$
(1,915,639
)Cross-currency interest rate swap agreements


38,974


103,382


55,002


(20,554
)Interest rate swap agreements





44





Vidéotron ltée and its subsidiaries:Long-term debt1


(1,119,601
)

(1,121,697
)

(1,287,585
)

(1,291,482
)Cross-currency swap agreement


8,948


8,336


15,275


11,206Interest rate swap agreement





(13,438
)




(13,243
)Sun Media Corporation and its subsidiaries:Long-term debt1


(515,147
)

(543,433
)

(554,512
)

(582,770
)Interest rate swap agreements











(1,171
)Interest rate cap agreements








172


Cross-currency interest rate swap agreement





55,355





43,390




F-33

---



20.  RELATED PARTY TRANSACTIONS:



21.  PENSION PLANS AND POSTRETIREMENT BENEFITS:



F-34

---



Pension benefits

Postretirement benefits2002

2001

2002

2001Change in benefit obligations:Benefit obligations at beginning of year

$
340,173

$
172,885

$
20,097

$
11,216Service costs


9,270


7,561


1,035


1,353Interest costs


23,643


17,672


1,365


1,299Plan participants' contributions


5,797


4,837


231


Plan amendments


7,734


5,928





4,344Acquisition





153,302





3,266Curtailment loss (gain)


115


253





(467
)Actuarial loss (gain)


1,052


(6,436
)

4,175


201Change in assumptions


(6,514
)

2,120


953


101Benefits and settlements paid


(23,688
)

(16,594
)

(1,047
)

(1,216
)Transfer to another plan





(1,355
)




Benefit obligations at end of year

$
357,582

$
340,173

$
26,809

$
20,097


Pension benefits

Postretirement benefits2002

2001

2002

2001Change in plan assets:Fair value of plan assets at beginning of year

$
336,498

$
178,320

$


$
Actual return on plan assets


(11,766
)

5,230





Employer contributions


9,936


7,186


816


1,216Plan participants' contributions


5,797


4,837


231


Actuarial gain


1,121








Acquisition





158,108





Benefits and settlements paid


(23,688
)

(16,594
)

(1,047
)

(1,216
)Transfer from (to) another plan


1,615


(589
)




Fair value of plan assets at end of year

$
319,513

$
336,498

$


$





Pension benefits

Postretirement benefits2002

2001

2002

2001Reconciliation of funded status:Excess of benefit obligations over fair value of plan assets at end of year

$
(38,069
)
$
(3,675
)
$
(26,809
)
$
(20,097
)Unrecognized actuarial loss


32,887


9,904


5,245


242Unrecognized net transition (asset) obligation





(7,656
)




911Unrecognized prior service cost


13,937


10,520


(2,171
)

(1,690
)Valuation allowance


(18,811
)

(11,360
)

49


Net amount recognized

$
(10,056
)
$
(2,267
)
$
(23,686
)
$
(20,634
)


F-35

---



Pension benefits

Postretirement benefits2002

2001

2002

2001Benefit obligations

$
(220,794
)
$
(84,585
)
$
(26,809
)
$
(20,097
)Fair value of plan assets


171,538


52,492





Funded status  plan deficit

$
(49,256
)
$
(32,093
)
$
(26,809
)
$
(20,097
)




Pension benefits

Postretirement benefits2002

2001

2002

2001Accrued benefit liability

$
(24,048
)
$
(16,906
)
$
(23,686
)
$
(20,634
)Prepaid benefit costs


13,992


14,639





Net amount recognized

$
(10,056
)
$
(2,267
)
$
(23,686
)
$
(20,634
)




Pension benefits

Postretirement benefits2002

2001

2000

2002

2001

2000Service costs

$
9,270

$
7,561

$
4,681

$
1,035

$
1,353

$
1,505Interest costs


23,643


17,672


11,664


1,365


1,299


1,109Expected return on plan assets


(26,598
)

(19,997
)

(12,854
)







Amortization of prior service costs


3,847


655





(64
)

(1,075
)

(93
)Amortization of transitional obligations





(167
)










Curtailment loss (gain)


37


385








(467
)

Valuation allowance


349


1,368


928








Amortization of actuarial loss (gain)


29


(675
)

(14
)

62





Net periodic costs

$
10,577

$
6,802

$
4,405

$
2,398

$
1,110

$
2,521




Pension benefits

Postretirement benefits2002

2001

2000

2002

2001

2000Discount rate

6.75
%
6.79
%
7.00
%
6.75
%
6.75
%
7.00
%Expected return on plan assets

7.75

7.83

8.00





Rate of compensation increase

3.53

3.0 - 4.0

3.0 - 4.5

3.53

3.0 - 4.0

3.0 - 4.5


F-36

---



Postretirement benefitsSensitivity analysis

1%
increase

1%
decreaseEffect on service and interest costs

$
3,755

$
(2,849
)Effect on benefit obligation


640


(255
)


22.  SUBSEQUENT EVENTS:







F-37

---





2002

2001

2000(restated, note 1
(b)(ii))

(restated, note 1 (b)(ii))Net loss, as reported in the consolidated statements of operations per GAAP in Canada

$
(213,898
)
$
(444,170
)
$
(192,989
)Adjustments:Development, pre-operating and start-up costs (i)


(16,554
)

324


204Pension and postretirement benefits (ii)


(955
)

(597
)

(393
)Equity loss from non-consolidated subsidiaries (iii)





(11,043
)

(20,638
)Capitalization of hook-up costs, net of amortization (iv)


(5,076
)

(3,951
)

Change in fair value of the ineffective portion of a derivative instrument (v)


5,226


(10,181
)

Temporary investments (vi)


(1,654
)

1,712


Income taxes (vii)


7,167


15,050


950Cumulative effect of change in accounting policy (viii)


(2,144,344
)




Interest on redeemable preferred shares (ix)


21,650


3,438


Other


(104
)

(487
)

(2,346
)Net loss, as adjusted per GAAP in the United States (in Canadian dollars)

$
(2,348,542
)
$
(449,905
)
$
(215,212
)






2002

2001

2000(restated, note 1
(b)(ii))

(restated, note 1 (b)(ii))Net loss, as adjusted per GAAP in the United States

$
(2,348,542
)
$
(449,905
)
$
(215,212
)Derivative instruments (v)


138,400


(72,326
)

Pension and post-retirement benefits (ii)


(6,852
)




Translation adjustment(1)


(333
)

(1,165
)

(1,160
)Income taxes (vii)


(447
)

(710
)

Comprehensive loss per GAAP in the United States

$
(2,217,774
)
$
(524,106
)
$
(216,372
)


---



F-38

---



2002

2001

2000(restated, note 1 (b)(ii))

(restated, note 1 (b)(ii))Accumulated other comprehensive loss at beginning of year

$
(75,544
)
$
(1,343
)
$
(183
)Changes in translation adjustment


(333
)

(1,165
)

(1,160
)Changes in pension and post-retirement benefits (ii)


(6,852
)




Changes in derivative instruments


138,400


(72,326
)

Changes in income taxes (vii)


(447
)

(710
)

Accumulated other comprehensive income (loss) at end of year

$
55,224

$
(75,544
)
$
(1,343
)




2002

2001Canada

United States

Canada

United States(restated, note 1 (b)(ii))

(restated, note 1 (b)(ii))Current assets

$
841,983

$
842,041

$
804,588

$
806,128Property, plant and equipment


1,680,306


1,665,791


1,818,579


1,809,140Goodwill


3,883,366


3,879,897


6,240,270


6,236,802Future income tax assets


97,867


114,397


84,891


93,924Other assets


239,167


317,229


267,941


202,371Long-term debt


(2,931,044
)

(2,972,688
)

(3,680,337
)

(3,720,968
)Other liabilities


(51,409
)

(72,824
)

(47,891
)

(45,364
)Future income tax liabilities


(258,464
)

(259,302
)

(239,264
)

(239,531
)Non-controlling interest


(195,144
)

(193,977
)

(210,665
)

(209,605
)Deficit


2,779,953


2,824,082


421,711


453,890Accumulated other comprehensive income (loss)


2,841


(55,224
)

2,508


75,544






F-39

---





24.  RESTRICTED AND UNRESTRICTED SUBSIDIARIES:



F-40

---



2002

2001

2000(restated, note 1 (b) (ii))

(restated, note 1 (b) (ii))Revenues

$
2,114,542

$
1,678,424

$
1,112,699Cost of sales and selling and administrative expenses


1,523,594


1,236,781


895,360Operating income before undernoted items


590,948


441,643


217,339Amortization


(201,629
)

(146,210
)

(32,471
)Financial expenses


(303,609
)

(282,975
)

(95,248
)Reserve for restructuring of operations and special charges


(14,586
)

(18,045
)

Write-down of goodwill


(68,000
)




Gains on sale of businesses and other assets and gains on dilution


3,479





19,872Income (loss) before income taxes


6,603


(5,587
)

109,492Income taxes


12,303


15,863


27,637(5,700
)

(21,450
)

81,855Equity loss from non-consolidated subsidiaries





(17,477
)

2,842Non-controlling interest


(35,960
)

(17,318
)

(40,956
)Loss before amortization of goodwill


(41,660
)

(56,245
)

43,741Amortization of goodwill, net of non-controlling interest





(107,170
)

(21,037
)Net loss

$
(41,660
)
$
(163,415
)
$
22,704




2002

2001

2000(restated, note 1 (b)(ii))

(restated, note 1 (b)(ii))Cable Television

$
262,683

$
183,160

$
Newspapers


222,333


200,844


205,327Broadcasting


78,898


28,718


(4,468
)Leisure and Entertainment


28,972


28,774


17,916592,886


441,496


218,775General corporate (expenses) income


(1,938
)

147


(1,436
)$
590,948

$
441,643

$
217,339


F-41

---



2002

2001(restated, note 1 (b)(ii))AssetsCurrent assets

$
728,236

$
681,415Property, plant and equipment


1,440,656


1,558,625Goodwill


3,856,286


5,867,176Other assets


312,441


314,5426,337,619


8,421,758LiabilitiesCurrent liabilities


837,360


721,130Long-term debt


2,930,890


3,250,431Non-controlling interest


156,953


120,892Other liabilities


309,687


281,7884,234,890


4,374,241Net investment in Restricted Subsidiaries and the Company

$
2,102,729

$
4,047,517




2002

2001

2000(restated, note 1
(b)(ii))

(restated, note 1, (b)(ii))Revenues

$
196,662

$
170,666

$
134,674Cost of sales and selling and administrative expenses


182,689


203,426


156,208Operating income before undernoted items


13,973


(32,760
)

(21,534
)Amortization


(43,862
)

(18,070
)

(8,757
)Financial expenses


(18,748
)

(4,797
)

(1,189
)Reserve for restructuring of operations and special charges


(24,751
)

(134,068
)

(106,593
)Write-down of goodwill


(119,035
)

(146,930
)

(126,865
)Gains on sale of businesses and other assets and gains on dilution


98


1,479


Loss before income taxes


(192,325
)

(335,146
)

(264,938
)Income taxes


1,106


(20,403
)

(10,311
)(193,431
)

(314,743
)

(254,627
)Non-controlling interest


21,193


53,759


53,293Loss before amortization of goodwill


(172,238
)

(260,984
)

(201,334
)Amortization of goodwill, net of non-controlling interest





(19,771
)

(14,359
)Net loss

$
(172,238
)
$
(280,755
)
$
(215,693
)


F-42

---



|                            |  | 2002 |         | 2001 |   | 2000    |  
|--------------------------- |  | ---- | ------- | ---- | - | ------- | -
|
|Business Telecommunications |  | $    | 27,291  |      | $ | 4,074   |  
|Web Integration/Technology  |  |      | (10,736 | )    |   | (15,384 | )
|Internet/Portals            |  |      | (2,582  | )    |   | (21,450 | )
|                            |  |      |         |      |   |         |  
|                            |  | $    | 13,973  |      | $ | (32,760 | )
|                            |  |      |         |      |   |         |  



2002

2001(restated, note 1 (b)(ii))AssetsCurrent assets

$
124,593

$
156,440Property, plant and equipment


239,650


259,954Goodwill


27,080


373,094Other assets


66,554


83,834457,877


873,322LiabilitiesCurrent liabilities


494,238


63,903Long-term debt and other liabilities


154


429,906Redeemable preferred shares


254,233


232,583Non-controlling interest


38,191


89,773Other liabilities


186


5,367787,002


821,532Net investment in Unrestricted Subsidiaries

$
(329,125
)
$
51,790


F-43

---

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