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, 2003                 
|  | 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)

PROVINCE OF 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.

123,602,807 Common Shares
1,590,000 Cumulative First Preferred Shares, Series A
0 Cumulative First Preferred Shares, Series B
0 Cumulative First Preferred Shares, Series C
0 Cumulative First Preferred Shares, Series D

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                                                                      |  | ii 
|-------------------------------------------------------------------------------------- |  | ---
|Forward-Looking Statements                                                             |  | ii 
|Industry and Market Data                                                               |  | ii 
|Presentation of Financial Information                                                  |  | ii 
|Exchange Rate Information                                                              |  | iii
|PART I                                                                                
|Item 1  Identity of Directors, Senior Management and Advisers                         |  | 1  
|Item 2  Offer Statistics and Expected Timetable                                       |  | 1  
|Item 3  Key Information                                                               |  | 1  
|Item 4  Information on the Company                                                    |  | 10 
|Item 5  Operating and Financial Review and Prospects                                  |  | 54 
|Item 6  Directors, Senior Management and Employees                                    |  | 77 
|Item 7  Major Shareholders and Related Party Transactions                             |  | 87 
|Item 8  Financial Information                                                         |  | 91 
|Item 9  The Offer and Listing                                                         |  | 92 
|Item 10  Additional Information                                                       |  | 93 
|Item 11  Quantitative and Qualitative Disclosures About Market Risk                   |  | 109
|Item 12  Description of Securities Other than Equity Securities                       |  | 111
|PART II                                                                               
|Item 13  Defaults, Dividend Arrearages and Delinquencies                              |  | 111
|Item 14  Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 111
|Item 15  Controls and Procedures                                                      |  | 111
|Item 16A  Audit Committee Financial Expert                                            |  | 112
|Item 16B  Code of Ethics                                                              |  | 112
|Item 16C  Principal Accountant Fees and Services                                      |  | 112
|Item 16D  Exemptions From the Listing Standards for Audit Committees                  |  | 113
|Item 16E  Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |  | 113
|PART III                                                                              
|Item 17  Financial Statements                                                         |  | 113
|Item 18  Financial Statements                                                         |  | 113
|Item 19  Exhibits                                                                     |  | 113

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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.

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, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 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 that 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 statistics and market data used in this annual report were obtained from internal surveys, market research, publicly available information and industry
publications. Industry publications generally state that the information contained in them has been obtained from sources believed to be reliable, but that the accuracy and completeness of this
information is not guaranteed. Similarly, internal surveys and industry and market data, while believed to be reliable, have not been independently verified, and we make no representation as to the
accuracy of this information.

Information
contained in this document concerning the media industry, our general expectations concerning this industry and our market positions and market shares may also be based on
estimates and assumptions made by us based on our knowledge of the industry and which we believe to be reliable. We believe, 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.

PRESENTATION OF FINANCIAL INFORMATION

We state our financial statements in Canadian dollars. In this annual report, references to Canadian dollars, Cdn$ or $ are to the currency of Canada, and
references to U.S. dollars or US$ are to the currency of the United States. Our consolidated financial statements have been prepared in accordance with the accounting principles
generally accepted in Canada, or Canadian GAAP. For a discussion of the principal differences between Canadian GAAP and the accounting principles generally accepted in the United States, or
U.S. GAAP, see note 28 to our audited consolidated financial statements.

We
use certain financial measures that are not calculated in accordance with Canadian GAAP or U.S. GAAP to assess our financial performance. We use such non-GAAP
financial measures because we believe that they are meaningful measures of our performance. Our method of calculating these non-GAAP financial measures may differ from the methods used by
other companies and, as a result, the non-GAAP financial measures presented in this annual report may not be comparable to other similarly titled measures disclosed by other companies. We
provide a definition of the non-GAAP financial measures as well as other measures used in this annual report and a reconciliation to the most directly comparable Canadian GAAP and
U.S. GAAP financial measures in footnote 3 to the tables under "Item 3. Key Information  Selected Financial Data." and "Item 5. Operating
and Financial Review and Prospects".

Unless
otherwise indicated, information provided in this annual report, including all operating data presented, is as of December 31, 2003.

ii

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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 U.S. 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 15, 2004, the inverse of the noon buying rate was $1.00 equals US$0.7506.

Average(1)

High

Low

Period EndYear EndedDecember 31, 2003

0.7136

0.7738

0.6349

0.7738December 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

0.6925


Average(2)

High

Low

Period EndMonth EndedFebruary 29, 2004

0.7520

0.7629

0.7439

0.7460January 31, 2004

0.7719

0.7880

0.7496

0.7539December 31, 2003

0.7612

0.7738

0.7460

0.7738November 30, 2003

0.7616

0.7708

0.7484

0.7708October 31, 2003

0.7564

0.7667

0.7418

0.7579September 30, 2003

0.7335

0.7424

0.7207

0.7404


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iii

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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

Our selected historical consolidated financial data presented below under the captions "Statement of Income Data" for the years ended December 31, 2003,
2002 and 2001 and "Balance Sheet Data" as of December 31, 2003 and 2002 are derived from our audited financial statements included in Item 17 of this annual report. The selected
consolidated statement of income data presented below for the years ended December 31, 2000 and 1999 and consolidated balance sheet data as of December 31, 2000 and 1999 are derived from
our 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-79).

Our
consolidated financial statements have been prepared in accordance with Canadian GAAP. For a discussion of the principal differences between Canadian GAAP and U.S. GAAP, see
note 28 to our consolidated financial statements contained in "Item 17. Financial Statements" of this annual report.

|                                                                                            |  | Years Ended December 31,
|------------------------------------------------------------------------------------------- |  | ------------------------
|
|
|STATEMENTS OF INCOME DATA (CANADIAN GAAP):                                                  |  |                         
|Revenues                                                                                    |  | $                       
|Cost of sales, selling and administrative expenses                                          |  |                         
|Amortization                                                                                |  |                         
|Financial expenses                                                                          |  |                         
|Reserve for restructuring of operations, impairment of assets and other special charges     |  |                         
|Write-down of goodwill                                                                      |  |                         
|(Losses) gains on sale of businesses and other assets and gains on dilution                 |  |                         
|Net gain on debt refinancing and on repurchase of redeemable preferred shares of subsidiary |  |                         
|Income taxes (credit)                                                                       |  |                         
|Amortization of goodwill, net of non-controlling interest                                   |  |                         
|Other expenses (revenues)                                                                   |  |                         
|Net income (loss)                                                                           |  | $                       
|OTHER FINANCIAL DATA (CANADIAN GAAP):                                                       |  |                         
|Operating income(2)                                                                         |  | $                       
|Additions to property, plant and equipment                                                  |  |                         

|                                     |  | As at December 31,
|------------------------------------ |  | ------------------
|
|
|BALANCE SHEETS DATA (CANADIAN GAAP): |  |                   
|Cash and cash equivalents            |  | $                 
|Total assets                         |  |                   
|Total debt                           |  |                   
|Capital stock                        |  |                   
|Shareholders' equity                 |  |                   

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|                                                                                        |  | Years Ended December 31, |        
|--------------------------------------------------------------------------------------- |  | ------------------------ | -------
|
|
|STATEMENTS OF INCOME DATA (U.S. GAAP):                                                  |  |                          |        
|Revenues                                                                                |  | $                        | 2,319.6
|Cost of sales, selling and administrative expenses                                      |  |                          | 1,705.1
|Amortization                                                                            |  |                          | 227.5  
|Financial expenses                                                                      |  |                          | 467.5  
|Reserve for restructuring of operations, impairment of assets and other special charges |  |                          | 1.6    
|Write-down of goodwill                                                                  |  |                          | 0.5    
|(Losses) gains on sale of businesses and other assets and gains on dilution             |  |                          | (1.1   
|Net loss on debt refinancing                                                            |  |                          | (9.6   
|Income taxes (credit)                                                                   |  |                          | (13.7  
|Amortization of goodwill, net of non-controlling interest                               |  |                          |       
|Other expenses (revenues)                                                               |  |                          | 16.9   
|Net income (loss)                                                                       |  | $                        | (96.5  
|OTHER FINANCIAL DATA (U.S. GAAP):                                                       |  |                          |        
|Operating income(2)                                                                     |  | $                        | 614.5  
|Additions to property, plant and equipment                                              |  |                          | 131.8  
|Comprehensive loss                                                                      |  |                          | (155.7 

|                                |  | As at December 31,
|------------------------------- |  | ------------------
|
|
|BALANCE SHEET DATA (U.S. GAAP): |  |                   
|Cash and cash equivalents       |  | $                 
|Total assets                    |  |                   
|Total debt                      |  |                   
|Capital stock                   |  |                   
|Shareholders' equity            |  |                   

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2

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3

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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, 2003, we had approximately $2.76 billion of consolidated
long-term debt. Our substantial indebtedness could have significant consequences, including the following:



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, 2003, we would have had approximately $46.6 million available for additional borrowings under our credit facility and our wholly-owned subsidiaries would have had
approximately $290.5 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:



4

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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 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 will need a significant amount of cash to service our debt. Our ability to generate cash depends on many factors beyond our control.

Our
ability to meet our debt service requirements will depend on our ability to generate cash. Our ability to generate cash depends on many factors beyond our control, such as
competition, general economic conditions and newsprint prices. We cannot provide assurance that we will generate sufficient cash flow from operations or that future distributions will be available to
us in amounts sufficient to pay our indebtedness or to fund our other liquidity needs.

We depend, to a certain extent, on our subsidiaries for cash needed to service our obligations.

We
need the cash generated by our subsidiaries from their operations and their borrowings to service our obligations. Our subsidiaries' ability to make payments to us will depend upon
their operating results and will also be subject to applicable laws and contractual restrictions. Some of our subsidiaries may be subject to loan agreements and indentures that restrict sales of
assets and prohibit or significantly restrict the payment of dividends or the making of distributions, loans or advances to shareholders and partners.



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, or SMATV, and over-air television broadcasters. We also face competition from illegal providers of cable
television services or pirate systems that enable customers to access programming services from U.S. and Canadian DBS without paying any fee. 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, customers, 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.

5

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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 we 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, in October 2000 contributed approximately $1.22 billion, or 53%, to our revenue for the year ended December 31, 2003. 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.



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.



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.

6

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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 customers 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.



Approximately 39% of our employees are represented by collective bargaining agreements. As of March 1, 2004, collective bargaining agreements covering
approximately 900 of our employees had expired or were under negotiation. We are currently negotiating new collective bargaining agreements with union representatives with a view to significantly
increasing productivity and reducing our labor costs.

From
May 2002 to April 2003, we experienced a work stoppage in the operations of our Cable Television segment (approximately 1,401 employees). As a result of the work
stoppage, we experienced, during the first three months of the work stoppage, disrupted service and property damage. In April 2003, we entered into two new collective bargaining agreements with
1,700 unionized employees in the Montréal and Quebec City regions, which ended the labor dispute that began in May 2002. The new collective bargaining agreements will expire on
December 31, 2006.

Our
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 services, or DTH, 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 serve our cable customers through a single clustered network, which may be more vulnerable to widespread disruption.

We
provide our cable products and services through a primary headend and eight regional headends in our single clustered network. This characteristic means that a failure in our primary
headend could prevent us from delivering some of our products and services throughout our network until we have resolved the failure, which may result in significant customer dissatisfaction.

7

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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, purchases of set-top boxes and cable modems
that accounted for approximately US$30 million in 2003 and certain capital expenditures, are received or denominated in Canadian dollars. A large portion of our debt is denominated in
U.S. dollars, 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, among other matters, 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, among other things, the
distribution of Canadian and non-Canadian programming 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. See "Item 4. Information on the Company  Regulation."

Our
broadcasting distribution and Internet access service operations are regulated respectively by theBroadcasting Act(Canada) and the Telecommunications 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 theBroadcasting 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. We are also subject to technical requirements and performance standards for cable television systems under theRadiocommunication
Act(Canada) administered by Industry Canada.

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 customers, 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.

8

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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 MDS 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 MDS operators must offer to their customers 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 customers 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,
DBS 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 by broadcasting distribution undertakings, or BDUs.

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 began operations. Any competing distributors are regulated by comparable rules and all programming services
must be made available to all BDUs.

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 customers. 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.

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 implementation of harsher penalties for signal theft under theRadiocommunications
Act(Canada). The House of Commons Committee will study certain issues including (a) patterns of media ownership, (b) cross-media ownership and vertical
integration and (c) 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 DBS 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. For a more complete description of the regulatory environment affecting our business, see "Item 4. Information on the Company  Regulation."

At
the present time, through an exemption order, the CRTC does not regulate the content of the Internet or interactive television and does not regulate broadcast distribution via the
Internet. However, the CRTC has a policy of reviewing its exemption orders every five years.

9

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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. 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. Under our Senior Notes and Senior Discount
Notes, our agent for service of process in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

Quebecor
Media Inc. was incorporated in Canada on August 8, 2000 under Part 1A of theCompanies 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, which made QCI our wholly-owned subsidiary. The assets of QCI, as of 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., or Capital CDPQ,
a wholly-owned subsidiary of Caisse de dépôt et placement du Québec 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 Quebecor Media Inc.

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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 the acquisition, the assets of Groupe
Vidéotron included all of the shares of Vidéotron ltée, a 99.9% voting interest in TVA Group Inc., or TVA, Le SuperClub Vidéotron
ltée, Protectron Inc., a 66.7% voting interest in Vidéotron Télécom ltée, 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 ltée, which we refer to as Vidéotron, and TVA Group Inc., or TVA, were
deposited with trustees pending the approval by the CRTC of the transfer of the operating licenses owned by Vidéotron and TVA. We received approval for the transfer of the
Vidéotron operating licenses in May 2001. On July 5, 2001, we received CRTC approval for the transfer of the TVA operating licenses, subject to the condition that:
(i) TQS Inc., another subsidiary of Quebecor 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 Quebecor Media Inc.

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 million 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.

Early
in the 2003 financial year, Quebecor Media shareholders injected a total of $431.9 million into the Company's share capital. At the beginning of 2003, Quebecor Inc.
contributed $216.1 million to the share capital of Quebecor Media in the form of redeemable preferred shares, enabling the Company to repay part of the $429.0 million term loan that came
due in April 2003. On April 22, 2003, common shares in an aggregate amount of $215.8 million were issued. The proceeds were used to pay down the balance of the above-noted
$429.0 million term loan. On the same date, the redeemable preferred shares issued in early 2003 were converted into common shares.

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 was used to reduce the long-term debt of Vidéotron.

On
October 8, 2003, Vidéotron issued US$335 million in aggregate principal amount of 67/8% Senior Notes and amended the terms of its credit
agreement to provide for a Term C loan of $368.1 million. The Senior Notes are unsecured and are due January 15, 2014, with cash payable semi-annually in arrears on
January 15 and July 15 of each year, beginning July 15, 2004. The net proceeds from the offering of the Senior Notes and the Term C loan of $368.1 million were used to
fully repay the then outstanding balances under Vidéotron's credit facilities and for general corporate purposes.

On
December 5, 2003, we effected a reverse stock split pursuant to which each issued and outstanding share of common stock of Quebecor Media was converted into
1/70th of a share of common stock of Quebecor Media. On December 5, 2003, we had 8,652,196,704 issued and outstanding shares of common stock which were consolidated into
123,602,807 issued and outstanding shares of common stock.

During
our financial year ended December 31, 2003, we proceeded with several business acquisitions, divestitures and combinations through our direct and indirect subsidiaries,
including, among others, the following:



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Business Overview

We are a leading Canadian-based media company with interests in cable distribution, newspaper publishing, television broadcasting, business telecommunications,
book and magazine publishing, 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.

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 distributor of pay-television services in the
Province of Québec and the third largest distributor of pay-television services in Canada based on the number of cable customers. 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 andLe Canal Nouvelles, 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 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:



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For
the twelve-month period ended December 31, 2003, we generated revenues of approximately $2.32 billion and an operating income of approximately $611.7 million.

As
calculated in our consolidated financial statements, operating income (or loss) means earnings before amortization, financial expenses, reserves for restructuring of operations,
impairment of assets and other special charges, write-down of goodwill, gains (losses) on sale of businesses and other assets, gains (losses) on dilution, net gain on debt refinancing and
on repurchase of redeemable preferred shares of a subsidiary, and income taxes. Equity income (or loss) from non-consolidated subsidiaries and non-controlling interest and the
results of discontinued operations are not considered in the computation of operating income. Since the third quarter of 2003, amortization charges applicable to videocassettes owned by Superclub
Vidéotron, which were previously recorded under amortization, have been entered under cost of sales. Operating income (or loss) for prior periods of 2003 and for the 2002 and 2001
financial years has been reclassified to reflect the change. See "Item 17. Financial Statements."

Operating
income (or loss) 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. We use operating income
(or loss) because management believes it is a meaningful measure of performance. Operating income (or loss) is commonly used in the sectors in which we are 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. Our definition of operating income (or loss) may not be identical to similarly titled measures reported by other companies.

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Cable Television

We are the largest distributor of pay-television services in the Province of Québec and the third largest cable operator in Canada
based on the number of cable customers. We hold cable licenses that cover approximately 80% of Québec's 3.0 million homes passed by cable according to 2002 CRTC data, including
licenses for the greater Montréal area, the second largest urban area in Canada. The greater Montréal area represents one of the largest contiguous clusters in Canada and
is among the largest in North America as measured by the number of cable customers. This concentration provides us with improved operating efficiencies and is a key element in the development and
launch of our bundled service offerings. In 2001, we substantially completed our network modernization program, which 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 74% of our customers served by systems upgraded to 750 MHz.

As
of December 31, 2003, we had approximately 1.4 million basic cable customers, representing a basic penetration rate of 61.0%. Through our extensive broadband coverage,
we also offer digital television and high-speed Internet access services to approximately 97% of our total homes passed. We have rapidly grown our digital customer base in recent years,
and at December 31, 2003, we had 239,673 digital customers, representing 16.7% of our basic customers and 10.2% of our total homes passed. We have also rapidly grown our high-speed
Internet access customer base, and at December 31, 2003, we had 406,277 high-speed Internet access customers, representing 28.4% of our basic customers and 17.3% of our total homes
passed. We believe that the continued increase in the penetration of our digital television and high-speed Internet access services will result in increased average revenue per customer.

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We
offer our advanced products and services, which include video-on-demand and selected interactive television services, as a bundled package that is unique among
the competitors in our market. We differentiate our services by offering a higher speed Internet access product and the widest range of French-language programming in Canada. We believe that our
bundled packages of products and services, together with our focus on customer service and the breadth of our French-language offerings, have resulted in improved customer satisfaction, increased use
of our services and higher customer retention.

From
May 8, 2002 to April 2003, we experienced a work stoppage in the operations of our Cable Television segment (approximately 1,401 employees). In April 2003, we
entered into two new collective bargaining agreements with 1,700 unionized employees in the Montréal and Quebec City regions, which ended the labor dispute that began in
May 2002. We believe these agreements have resulted in operating expenses that are approximately $20 million lower, on an annualized basis, than what we would have incurred under our
previous labor agreements. The new collective bargaining agreements will expire on December 31, 2006. See "Item 4. Information on the
Company  Employees."

On
October 8, 2003, Vidéotron issued US$335 million in aggregate principal amount of 67/8% Senior Notes and amended the terms of its credit
agreement to provide for a Term C loan of $368.1 million. The Senior Notes are unsecured and are due January 15, 2014, with cash payable semi-annually in arrears on
January 15 and July 15 of each year, beginning July 15, 2004. The net proceeds from the offering of the Senior Notes and the Term C loan of $368.1 million were used to
fully repay the then outstanding balances under Vidéotron's credit facilities and for general corporate purposes.

On
October 7, 2003, immediately prior to the completion of the offering of Vidéotron's Senior Notes, Quebecor Media transferred its wholly-owned subsidiaries Le
SuperClub Vidéotron ltee, or Superclub Vidéotron, and Vidéotron TVN Inc. to Vidéotron ltée for $141.9 million.
As consideration, Vidéotron issued to Quebecor Media an additional 354,813 shares of common stock of Vidéotron. Through SuperClub Vidéotron, we also own
the largest chain of video stores in Québec, with 180 retail locations (of which 137 are franchised) and more than 1.3 million video club rental members. With approximately 80%
of its retail locations located in our markets, SuperClub Vidéotron is both a showcase and a valuable and cost-effective distribution network for our growing array of
advanced products and services. The financial results of the Cable Television segment for the year ended December 31, 2003 and for prior periods have been restated to reflect the inclusion of
Superclub Vidéotron.

For
the year ended December 31, 2003, our cable operations generated revenues of $805.0 million and operating income of $275.3 million.

Broadcast Distribution Industry Overview



Cable television has been available in Canada for almost 50 years and is a well developed market. Competition in the cable industry was first introduced in
Canada in 1997. As of August 31, 2002, there were approximately 7.0 million cable television customers in Canada, representing a basic cable penetration rate of 68.6% of homes passed.
The Canadian cable television market is fairly concentrated with the four largest cable service providers serving 6.7 million customers, or approximately 96% of total basic cable customers. For
the twelve months ended August 31, 2002, total industry revenue was estimated to be over $3.9 billion and is expected to grow significantly in the future because Canadian cable operators
have aggressively upgraded their networks and have begun launching and 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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|                      |  | Twelve Months Ended August 31, |     
|--------------------- |  | ------------------------------ | ----
|
|
|Canada                |  |                                |     
|Industry Revenue      |  | $                              | 2.7 
|Homes Passed          |  |                                | 9.5 
|Basic Cable Customers |  |                                | 7.2 
|Basic Penetration (%) |  |                                | 75.7

|                      |  | Twelve Months Ended December 31,
|--------------------- |  | --------------------------------
|
|
|U.S.                  |  |                                 
|Industry Revenue      |  | US$30.3                         
|Homes Passed          |  | 95.6                            
|Basic Cable Customers |  | 65.1                            
|Basic Penetration (%) |  | 68.1                            

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 and NCTA.

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The traditional cable business, which is the delivery of video via hybrid fiber coaxial network, is fundamentally similar in the U.S. and Canada.
Different economic and regulatory conditions, however, have given rise to important differences between the two markets. 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. However, the lack of local advertising revenues allows Canadian cable operators to benefit
from lower programming costs as compared to U.S. cable operators.

A
significant portion of Canada's cable television customers are based in Québec. As of August 31, 2002, Québec was home to approximately 24% of
Canada's population and approximately 23.5% of its basic cable customers. Basic cable penetration in Québec, which was approximately 60.4% as of August 31, 2002, 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 not available "off air" contributed to
a slight cable penetration increase in the 1990s. See " Regulation" for more information on the regulatory framework governing Canada's cable industry.



In order to compete with the direct broadcast satellite offerings, the cable industry began deploying digital technology which allows for a large number of
programming channels and advanced services to be offered.

In
addition, in the last three 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 licenses. Cable service providers using digital technology are 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. The
increase in programming content as a result of the launch of approximately 50 of these programming services is believed to be a key factor in driving increases in digital cable penetration in Canada.

16

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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. Since September 2001, we have launched over 30 new English-language and four new French-language digital channels, significantly increasing the
programming offered to our digital customers. We also expect to launch additional French-language specialty channels in 2004. We believe the launch of these digital channels and the future increase in
French-language programming will help to improve the penetration of our digital television service among our customers.

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. With our advanced broadband network, we will be able to successfully increase penetration of value-added services
such as video-on-demand, high definition television, personal video recorders, as well as interactive programming and advertising.



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:





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.

17

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18

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

|                            |  | As of December 31, |  
|--------------------------- |  | ------------------ | -
|
|Video services              |  |                    |  
|Basic analog cable          |  |                    |  
|Homes passed(1)             |  | 2,309,850          |  
|Basic customers(2)          |  | 1,565,321          |  
|Penetration(3)              |  | 67.8               | %
|Digital cable               |  |                    |  
|Digital customers           |  | 31,727             |  
|Penetration(4)              |  | 2.0                | %
|Number of digital terminals |  | 33,888             |  
|Data services               |  |                    |  
|Dial-up Internet access     |  |                    |  
|Dial-up customers           |  | 72,720             |  
|High-speed Internet access  |  |                    |  
|Cable modem customers       |  | 52,996             |  
|Penetration(3)              |  | 2.3                | %

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In the quarter ended December 31, 2003, we recorded a net increase of 10,295 basic cable customers. During the same period, we also
recorded net growth of 27,752 customers of our high-speed Internet access service and 26,470 customers of our digital television service, the latter of which includes customers who have
upgraded from our analog cable service.



Through SuperClub Vidéotron, we also own the largest chain of video stores in Québec, with 180 retail locations (of which 137 are
franchised) and more than 1.3 million video club rental members. With approximately 80% of its retail locations located in our markets, SuperClub Vidéotron is both a showcase and
a valuable and cost-effective distribution network for our growing array of advanced products and services.



Archambault Group Inc., a subsidiary of Quebecor Media Inc., was granted a video-on-demand service license by the CRTC in
July 2002. Effective March 1, 2003, Vidéotron entered into an affiliation agreement with Archambault Group Inc., which expires in 2008 but is subject to renewal,
granting Vidéotron the non-exclusive right to offer Archambault Group Inc.'s video-on-demand services to customers of
Vidéotron. In conjunction with the affiliation agreement between Archambault Group Inc. and Vidéotron, Vidéotron also entered into an administrative
services agreement with Archambault Group Inc. Pursuant to this administrative services agreement, Vidéotron has agreed to provide various administrative services to Archambault
Group Inc. to enable it to manage its operations.

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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, 2003, the average monthly fees for basic and extended basic service were $21.89 and $34.72, respectively, and the
average monthly fees for basic and extended basic digital service were $11.08 and $38.44, respectively. A one-time installation fee, which may be waived in part during certain promotional
periods, is charged to new customers. Monthly fees, for rented equipment, such as set-top boxes and cable modems, 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.

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

$
15.07  $26.85Extended basic analog cable

$
24.88  $37.91Basic digital cable

$
9.99  $11.99Extended basic digital cable

$
27.99  $64.94Pay-television

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

$
3.99  $79.95Video-on-demand (per movie or event)

$
0.99  $  9.99Dial-up Internet access

$
9.95  $22.95High-speed Internet access

$
24.95  $69.95


Our Network Technology

As of December 31, 2003, our cable systems consisted of approximately 7,500 km of fiber optic cable and 25,000 km of coaxial cable, passing approximately
2.4 million homes and serving approximately 1.4 million customers. Our network is the largest broadband network in Québec covering over 80% of cable homes passed, and one
of the most 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%               
|December 31, 2003 |  | 3%            |  | 23%            |  | 74%     |  | 97%               

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Our
cable television networks are comprised of four distinct parts including signal acquisition networks, main headends, distribution networks and customer 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. Each main headend is connected to the primary headend in order to receive the
digital MPEG2 signals and the IP Backbone for the Internet
services. This connection is provided by Vidéotron Télécom Ltée through its inter-city fiber 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. After that, the signal 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 customer drops. The
customer drop brings the signal into the customer's television set directly or, depending on the area or the services selected, through various types of customer equipment including
set-top boxes.

Since
1995, we have invested over $294 million in a modernization program to upgrade our network to enable us to develop and deploy new advanced products and services. Our
modernization program was substantially completed 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 most of our network. In December 2003, we decided to upgrade our two-way capability network in Quebec City to increase the bandwidth from
480 MHz to 750 MHz or greater, and we estimate that $29.1 million of capital expenditures over two years will be required. We are also currently contemplating similarly
upgrading our two-way capability network in central Québec. If we were to proceed with such upgrade, we estimate that approximately $15 million of capital
expenditures over two years would be required.

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 fiber optic
cable. To allow for this configuration, secondary headends were put into operation in the greater Montréal area and in the greater Quebec 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
also believe that our network design provides high capacity and superior signal quality that will enable us to provide to our current and future customers new advanced products and
services in addition to those currently offered by us.

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 customer. 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:



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We
plan to invest increasing amounts of time, effort and financial resources in marketing new and existing services. To increase both customer penetration and 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, on December 1, 2003, we interconnected all of our call centers 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 products and services and higher
levels of service to our customers. We have also implemented 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.

Programming

We believe that offering a wide variety of conveniently scheduled programming is an important factor in 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 regulates the distribution of foreign content in Canada and,
as a result, we are limited in our ability to provide such programming to our customers. We obtain basic and premium programming from a number of suppliers, including TVA Group.

Since
September 2001, we have significantly expanded the programming available to our customers through the launch of over 30 English-language and four French-language digital
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 customers.

Our
programming contracts generally provide for a fixed term of up to seven 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 may 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.

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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. We also face competition from illegal providers of cable television services or pirate systems that enable customers to access
programming services from U.S. and Canadian direct broadcast satellite services without paying any fee.



Newspapers

Through our newspaper publishing operations, we are the largest newspaper publisher in Québec and the second largest newspaper publisher in Canada,
with a 21.5% market share in terms of weekly paid circulation, according to statistics published by the Canadian Newspaper Association. We publish 17 paid daily newspapers and serve eight of the top
eleven urban markets in Canada. Each of our eight urban daily newspapers ranks either first or second in its market in terms of paid circulation. We also publish 171 weekly newspapers and
shopping guides and 18 other specialty publications, including two free daily commuter newspapers. We publish the second and third largest non-national dailies in Canada based on weekly
paid circulation:Le Journal de Montréal, with a paid circulation of 1.9 million copies, andThe Toronto
Sun, with a paid circulation of 1.5 million copies. The combined weekly paid circulation of our daily newspapers is approximately 6.9 million copies.

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In
addition, we provide a range of commercial printing and other related services to third parties through our national network of production and printing facilities and distribute
newspapers and magazines for other publishers across Canada.

On
February 7, 2003, Sun Media issued US$205.0 million (or Cdn $312.2 million) in aggregate principal amount of 75/8% Senior Notes due 2013 and
entered into a new credit facility that provides for a term loan of US$230.0 million (or Cdn $349.0 million) and a revolving facility of $75.0 million. The net proceeds from the
sale of the notes and the new credit facility were used to pay down in full all outstanding Sun Media loans and to pay a $260.0 million dividend to Quebecor Media.

In
May 2003, Sun Media completed the sales of its operating assets in Florida and British Columbia, Canada. The total cash consideration on these sales was $22.4 million,
resulting in a gain on sale of a business of $0.5 million, after a $2.8 million tax charge.

In
November 2003, Sun Media acquired 100% of the outstanding shares of Annex Publishing & Printing Inc. for total cash consideration of $34.2 million.
Following the acquisition, Annex Publishing & Printing Inc. was subsequently amalgamated with Sun Media's wholly-owned subsidiary, Bowes Publishers Limited. The newspaper operations of
Annex Printing and Publishing are located in southern Ontario and include two daily newspapers, one semi-weekly and six weekly publications, two shopping guides, as well as a commercial
printing operation. The publications are: Simcoe Reformer, The Woodstock Sentinel-Review, The Tillsonburg News, Tillsonburg Independent News, The Oxford Review, The Tuesday Times Reformer, The Delhi
News Record, The Ingersoll Times, Norwich Gazette, Lakeshore Shopper and Oxford Shipping News.

For
the year ended December 31, 2003, our newspaper operations generated revenues of $845.9 million and an operating income of $224.8 million. For this same period,
we derived 69.4% of our revenues from advertising, 19.5% from circulation, and 11.1% from commercial printing and distribution operations.

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, with a combined average weekly circulation (paid and unpaid) of more than 12 million copies. According to the Canadian Newspaper
Association, our 21.5% market share of paid weekly newspaper circulation is exceeded only by CanWest Media Inc., with a 33.2% market share, and followed by Torstar Corporation (13.8%), Power
Corporation (9.3%), Bell Globe Media (6.1%), and Osprey Media (4.6%).

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 Sun Media's urban paid daily newspapers are tabloids.

Newspaper
companies derive revenue principally from advertising and circulation. According to industry sources, in 2002, 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 Canadian daily newspaper industry was $2.5 billion in
2002, which represented 23.0% of total Canadian advertising spending. From 1997 to 2002, advertising revenues for daily newspapers increased at an average annual rate of 1.8%.

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Advertising and Circulation

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 2003 relative to 2002. In addition, recent forecasts by the Bank of Canada project that economic growth will average
2.75% in 2004 and 3.75% in 2005. The improvement in the Canadian economy is expected to result in increased advertising expenditures.

Advertising
revenue is Sun Media's largest source of revenue. 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.

Sun
Media's 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 (45% in the year ended December 31, 2003) followed by retail advertising (35% in the same period) and national advertising (17% 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 47% of all of our classified advertising in terms of revenue for the year ended December 31, 2003. 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.

In
the smaller community papers, substantially all of the advertising revenues are derived from local retailers and classified advertisers. These newspapers publish advertising
supplements with specialized themes such as agriculture, tourism, home improvement and gardening to encourage advertisers to purchase additional linage in these special editions.

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,
2003, our top ten national 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 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 Sun Media. In the large urban markets newspapers are available through newspaper boxes and retail outlets Monday through
Sunday. We offer daily home delivery in every market, except Toronto, whereThe Toronto Sunis home-delivered only on Sunday and in certain
designated areas on Saturday. We derive our circulation revenues 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.

The
majority of the community newspaper publications are distributed free of charge through a controlled distribution system. This enables the publisher to better identify the clientele
targeted by advertisers.

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. This geographic
clustering enables us to realize operating efficiencies and economic synergies through sharing of management, production, printing, and distribution, as well as accounting and human resources
functions.

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On a combined weekly basis, the eight paid daily newspapers in our Urban Daily Group circulate approximately 6.5 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.

Our
Urban Daily Group is comprised of eight daily paid newspapers, two free daily commuter newspapers, and three free weekly publications. With the exception of the broadsheet The London
Free Press, the paid daily 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 extensive use of color, photographs and graphics. Each newspaper contains inserts that feature subjects of interest such as fashion, lifestyle
and special sections. 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 into one or more issues of a given newspaper during a given
period equal to the publication interval of the newspaper.

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 Readership |           | Market Position by Paid Circulation(1)
|---------------------- | ------------------------ | ----------------------- | --------- | --------------------------------------
|
|
|Le Journal de Montréal |                          | 679,500                 |           | 448,500                               
|Le Journal de Québec   |                          | 222,800                 |           | 149,800                               
|The Ottawa Sun         |                          | 94,300                  |           | 76,100                                
|The Toronto Sun        |                          | 652,200                 |           | 966,100                               
|The London Free Press  |                          | 175,800                 |           | 97,000                                
|The Winnipeg Sun       |                          | 115,700                 |           | 118,700                               
|The Edmonton Sun       |                          | 159,000                 |           | 177,600                               
|The Calgary Sun        |                          | 155,600                 |           | 180,000                               
|                       |                          |                         |           |                                       
|                       | Total Average Readership |                         | 2,254,900 |                                       

---

Le Journal de Montréal.Le Journal de
Montréalis published seven days a week and is widely distributed by Messageries Dynamiques, which specializes in the distribution of publications. According to
the Audit Bureau of Circulations,Le Journal de Montréalranks second in paid circulation, among non-national Canadian
dailies and first among French-language dailies in North America. The average daily circulation ofLe Journal de Montréalexceeds the
circulation of each of its main competitors in Montréal,La Presse,The Gazetteand Le Devoir,
according to the Audit Bureau of Circulations.

The
following chart reflects the average daily circulation ofLe Journal de Montréalfor the periods indicated:

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|                       |  | Year Ended December 31,
|---------------------- |  | -----------------------
|
|Le Journal de Montréal |  |                        
|Saturday               |  | 316,400                
|Sunday                 |  | 267,800                
|Monday to Friday       |  | 260,900                

Le Journal de Québec.Le Journal de Québecis published seven days a
week and is widely distributed by Messageries Dynamiques.Le Journal de Québecis the number one newspaper in its market. The average
daily circulation ofLe Journal de Québecexceeds the circulation of its main competitor,Le
Soleil, according to the Audit Bureau of Circulations.

The
following chart reflects the average daily paid circulation ofLe Journal de Québecfor the periods indicated:

|                     |  | Year Ended December 31,
|-------------------- |  | -----------------------
|
|Le Journal de Québec |  |                        
|Saturday             |  | 121,700                
|Sunday               |  | 98,600                 
|Monday to Friday     |  | 96,200                 

The Ottawa Sun.The Ottawa Sunis published seven days a week and is distributed throughout the
Ottawa region through its own distribution network.The Ottawa Sunis the number two newspaper in its market, according to the Audit Bureau of
Circulations, and competes daily with the English language broadsheet,The Ottawa Citizen, and also with the French language paper, Le Droit.

The
following chart reflects the average daily paid circulation ofThe Ottawa Sunfor the periods indicated:

|                 |  | Year Ended December 31,
|---------------- |  | -----------------------
|
|The Ottawa Sun   |  |                        
|Saturday         |  | 45,200                 
|Sunday           |  | 52,900                 
|Monday to Friday |  | 49,600                 

The Ottawa Sunalso publishesThe Ottawa Pennysaver, a free weekly community shopping
guide with circulation of approximately 180,000.

The Toronto Sun.The Toronto Sunis published seven days a week and has its own distribution network
to serve the greater metropolitan Toronto area.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 Sunis unique in that Monday to Friday all circulation sales are from vending boxes and retail outlets. Home delivery is
available on Sunday and in some designated areas on Saturday.

The
Toronto newspaper market is very competitive.The Toronto Suncompetes with Canada's largest newspaper,The
Toronto Starand to a lesser extent withThe Globe & MailandThe National
Post, which are national newspapers. As a tabloid newspaper,The Toronto Sunhas a unique format compared to these broadsheet
competitors. The competitiveness of the Toronto newspaper market is further increased by several free publications, includingMetro, a free weekday
commuter newspaper, and niche publications relating to, for example, entertainment and television.

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The
following chart reflects the average daily circulation ofThe Toronto Sunfor the periods indicated:

|                 |  | Year Ended December 31,
|---------------- |  | -----------------------
|
|The Toronto Sun  |  |                        
|Saturday         |  | 169,700                
|Sunday           |  | 367,800                
|Monday to Friday |  | 215,300                

The London Free Press.The London Free Press, one of Canada's oldest daily newspapers, emphasizes
national and local news, sports and entertainment and is distributed throughout the London area through its own network. It is the only local daily newspaper in its market.

The
following chart reflects the average daily circulation ofThe London Free Pressfor the periods indicated:

|                      |  | Year Ended December 31,
|--------------------- |  | -----------------------
|
|The London Free Press |  |                        
|Saturday              |  | 116,000                
|Sunday                |  | 62,700                 
|Monday to Friday      |  | 93,900                 

During
2002,The London Free PresslaunchedLondon This Week, a free weekly community
newspaper with a circulation of approximately 105,000 copies, according to internal statistics.London This Weekcompetes with another free weekly
publication,The Londoner.The London Free Pressalso publishesThe London
Pennysaver, a free weekly community shopping guide with circulation of approximately 149,000, according to internal statistics.

The Winnipeg Sun.The Winnipeg Sunis published seven days a week. It serves the metropolitan
Winnipeg area and has its own distribution network.The Winnipeg Sunoperates as the number two newspaper in the Winnipeg market according to the Audit
Bureau of Circulations and competes withThe Winnipeg Free Press.

The
following chart reflects the average daily circulation ofThe Winnipeg Sunfor the periods indicated:

|                 |  | Year Ended December 31,
|---------------- |  | -----------------------
|
|The Winnipeg Sun |  |                        
|Saturday         |  | 44,400                 
|Sunday           |  | 58,100                 
|Monday to Friday |  | 45,900                 

The Edmonton Sun.The Edmonton Sunis published seven days a week and is distributed throughout
Edmonton through its own distribution network.The Edmonton Sunis the number two newspaper in its market, according to the Audit Bureau of
Circulations, and competes with Edmonton's broadsheet daily,The Edmonton Journal.

The
following chart reflects the average daily circulation ofThe Edmonton Sunfor the periods indicated:

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|                 |  | Year Ended December 31,
|---------------- |  | -----------------------
|
|The Edmonton Sun |  |                        
|Saturday         |  | 72,700                 
|Sunday           |  | 104,700                
|Monday to Friday |  | 73,800                 

The Calgary Sun.The Calgary Sunis published seven days a week and is distributed throughout Calgary
through its own distribution network.The Calgary Sunis the number two newspaper in its market, according to the Audit Bureau of Circulations and
competes with Calgary's broadsheet daily,The Calgary Herald.

The
following chart reflects the average daily circulation ofTheCalgary Sunfor the
periods indicated:

|                 |  | Year Ended December 31,
|---------------- |  | -----------------------
|
|The Calgary Sun  |  |                        
|Saturday         |  | 67,200                 
|Sunday           |  | 98,400                 
|Monday to Friday |  | 67,500                 

24 Heures.In October 2003, Sun Media re-launched its Montréal commuter paper, Montréal Métropolitain, changing
the name to24 Heures. The new
publication is a free daily newspaper with an average circulation of 120,000 copies, according to internal statistics.24 Heuresis a glossy, tabloid
newspaper which competes withMetro, another free paper in Montréal.

24 Hours.In November 2003, we launched a new commuter paper in Toronto,24
Hours, a free daily newspaper with an average weekday circulation of 229,000 copies according to internal statistics. The editorial content of24
Hoursconcentrates on the Greater Toronto Area and competes withMetro.

Competition.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. The high cost associated with
starting a major daily newspaper operation represents a barrier to entry to potential new competitors of our Urban Daily Group.

ThroughLe Journal de MontréalandLe Journal de Québec, we
have established market leading positions in Quebec's two main urban markets, Montreal and Quebec City.Le Journal de Montréalranks
second in circulation afterThe Toronto Staramong non-national Canadian dailies and is first among French-language dailies in North
America.

The London Free Pressis one of Canada's oldest daily newspapers and our only daily broadsheet newspaper. It is the only local daily
newspaper in its market, although it competes with daily newspapers from surrounding markets.

The Toronto Sunis the third largest non-national daily newspaper in Canada in terms of circulation. The Toronto newspaper
market is very competitive.The Toronto Suncompetes withThe Toronto Starand to a lesser extent with The Globe &
MailandThe National Post. As a tabloid newspaper,The
Toronto Sunoffers readers and advertisers an alternative format to the broadsheet format of other newspapers in the Toronto market.

Each
of Sun Media's dailies in Edmonton, Calgary, Winnipeg and Ottawa competes against a broadsheet newspaper and has established a number two position in its market.

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In total, the Community Newspaper Group consists of nine daily community newspapers, 168 community weekly newspapers and shopping guides, and 16 farming and other
specialty publications. The Community Newspaper Group also includes NetMedia, its distribution sales arm.

The
total average weekly circulation of the publications in our Community Newspaper Group for the year ended December 31, 2003 was approximately 2.9 million free copies and
approximately 684,000 paid copies. The table below sets forth the average daily paid circulation and geographic location of the daily newspapers published by the Community Newspaper Group in 2003:

|Newspaper                         |                                      | Location                     |  | Average Daily Paid
Circulation
|--------------------------------- | ------------------------------------ | ---------------------------- |  | ------------------------------
|The Brockville Recorder and Times |                                      | Brockville, Ontario          |  | 12,100                        
|Stratford Beacon Herald           |                                      | Stratford, Ontario           |  | 10,800                        
|The Daily Herald Tribune          |                                      | Grande Prairie, Alberta      |  | 8,600                         
|St. Thomas Time-Journal           |                                      | St. Thomas, Ontario          |  | 7,900                         
|Fort McMurray Today               |                                      | Fort McMurray, Alberta       |  | 6,400                         
|The Daily Miner & News            |                                      | Kenora, Ontario              |  | 4,800                         
|The Daily Graphic                 |                                      | Portage La Prairie, Manitoba |  | 3,200                         
|Simcoe Reformer                   |                                      | Simcoe, Ontario              |  | 6,300                         
|Woodstock Sentinel-Review         |                                      | Woodstock, Ontario           |  | 6,600                         
|                                  |                                      |                              |  |                               
|                                  | Total Average Daily Paid Circulation |                              |  |                               

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

|Province      |                    | Number of
Publications
|------------- | ------------------ | ----------------------
|Alberta       |                    | 42                    
|Manitoba      |                    | 12                    
|Ontario       |                    | 49                    
|New Brunswick |                    | 1                     
|Québec        |                    | 58                    
|Saskatchewan  |                    | 6                     
|              | Total Publications |                       

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

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.

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Other Operations



Sun Media's national network of production and printing facilities enables it to provide printing services for web press (coldset and heatset) and sheetfed
products, and graphic design for print and electronic medium. Web presses utilize rolls of newsprint, whereas sheetfed presses use individual sheets of paper. Heatset web presses, which involve a more
complex process than coldset web presses, are generally associated with printing on glossy paper. We own 25 web press and 11 sheet fed press operations located throughout Canada. These operations
provide commercial printing services for both our internal printing needs and for third parties. Our printing facilities include 15 printing facilities for the daily publications, and 16 other
printing facilities operated by the Community Newspaper Group in five provinces.

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: (a) owning modern equipment; (b) being able to price projects
on a variable cost basis because our core newspaper business covers overhead expenses; and (c) 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 distributes dailies, magazines and other electronic
and print media and reaches approximately 250,000 households and 13,500 retail outlets through its operations in Québec. 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 than 300 outlets in Québec.

Similarly,
the Community Newspaper Group operates the distribution business of NetMedia, which distributes coupons, flyers, product samples and other direct mail promotional material.
Through its own branch system and its associated distributors, the Community Newspaper Group currently has the potential to provide advertising customers with distribution to over nine million
Canadian households.

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 quarters, with the fourth quarter generally being the strongest. Due to the seasonal retail decline and generally poor
weather, the first quarter has historically been our weakest quarter.

Our
newspaper business is cyclical in nature. Our operating results are sensitive to prevailing local, regional and national economic conditions because of our dependence on advertising
sales for a substantial portion of our revenue.

Raw Materials

Newsprint is our second-largest expense, after personnel costs, and represents our largest raw material expense. Newsprint expense represented 16.4% of our total
operating expenses (before depreciation, amortization and restructuring charges) for the year ended December 31, 2002 and 16.2% for the year ended December 31, 2003. The newsprint
industry is highly cyclical, and newsprint prices have historically experienced significant volatility. 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 all of our newsprint purchases. This agreement enables us to obtain a discount to market prices, as well as providing additional volume rebates for purchases
above certain thresholds by combining our purchases with the Canadian purchases of Quebecor World Inc., an affiliated company. This agreement will satisfy most of our anticipated newsprint
requirements through the end of 2005.

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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 2003.

Broadcasting

We are the largest privately-owned broadcaster of French-language entertainment, information and public affairs programs in North America. In the Fall of 2003, we
had a 34% market share of French-speaking viewers in the Province of Québec and approximately 43% of television advertising spending for French-speaking viewers in
Québec. In the Fall of 2003, we aired nine of the ten most popular TV programs in the Province of Québec, including "Occupation Double",
"Histories de Filles", "Les Poupées Rousses"and "Tribu.com". 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.

Through
various subsidiaries, we control or participate in seven satellite to cable or analogue specialty programming services, includingLe Canal
Nouvelles, or LCN, a French-language headline news service, Pulse 24 (CP 24), an English-language Ontario news service,Canal
Évasion, a French-language travel and tourism service,Canal Indigo, a French-language
pay-per-view service,illico sur Demande, a multilingual Video-on-demand service, CPAC
(Canadian Public Affairs Channel) also known as Canada's Political Channel, a national bilingual public affairs programming service, andCanal TVAchats,
a French-language infomercial and tele-shopping channel. The CRTC allows "analogue specialty services" to be distributed both via conventional analog cable and digital
set-top-boxes.

The
CRTC has authorized almost 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. "Digital speciality services" are television, essentially thematic, services for which the CRTC has restricted distribution to the public via digital set top boxes
only. Cable operators cannot distribute these services on conventional analog cable. We and our subsidiaries obtained control over 12 of the new digital specialty services and equity participation in
one digital service. TVA has a dominant position in each service. As of December 31, 2003, approximately 57 English-language services had been launched; none of the French-language services had
been launched as of December 31, 2003 because the number of French-language households equipped with digital set-top boxes was considered insufficient.

In
September 2002, TVA and Radio Nord Communications Inc. signed a 60%/40% agreement to purchase, subject to CRTC approval, the Radiomédia chain of radio
stations and CFOM-FM from Astral Media. In June 2003, the CRTC denied approval of the September 2002 transaction.

For
the twelve-month period ended December 31, 2003, our television operations generated revenues of $340.9 million and operating income of $81.5 million.

Canadian Television Industry Overview

Canada has a well-developed cable television market that provides viewers with a range of viewing alternatives.

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
Societé Radio-Canada are government-owned and financed by a combination of federal government grants and advertising 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.

Drama
and comedy programming is the most popular genre with French-speaking viewers, with news and other information programming being the second most popular. Viewing trends by
French-speaking viewers are predominantly to French 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 the Bureau of Broadcast Measurement and the CRTC, viewing of Canadian programs by French-speaking viewers remained at approximately 70% in 2002.

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The
following table sets forth the relative audience share of French-language viewers in the Province of Québec as of the Fall of 2003:

|Network                                  |  | Share of Province of
Québec Television
|---------------------------------------- |  | --------------------------------------
|TVA                                      |  | 34%                                   
|Societé Radio-Canada                     |  | 13%                                   
|Réseau TQS                               |  | 17%                                   
|Télé-Quebec                              |  | 3%                                    
|English-language Canadian stations       |  | 5%                                    
|United States stations                   |  | 2%                                    
|French-language specialty cable channels |  | 20%                                   
|Others                                   |  | 6%                                    

Source: BBM Fall 2003 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 move to digital broadcasting
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 ten Québec 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 2003, we
had 22 of the top 30 French-language television shows during prime time according to BBM surveys. We actively promote our programming and seek to develop viewer loyalty by offering a consistent
programming schedule.

JPL Production Inc.

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 2003. 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           |  | Voting Interest
|-------------------------------------------------------------------- |  | ------------------ |  | ---------------
|Analog Specialty Services:                                           |  |                    |  |                
| LCN Le Canal Nouvelles                                            |  | French             |  | 99.9%          
| Pulse 24 (CP 24)                                                   |  | English            |  | 29.9%          
|Canal Évasion                                                       |  | French             |  | 8.3%           
|Category One Digital Specialty Services:                             |  |                    |  |                
|MenTV (M)                                                           |  | English            |  | 51.0%          
|Mystery (13th Street)                                               |  | English            |  | 50.1%          
|Pay Per View Services (Terrestrial & direct broadcasting satellite): |  |                    |  |                
|Canal Indigo                                                        |  | French             |  | 20.0%          
|Video-on Demand Services:                                            |  |                    |  |                
|illicosur Demande                                                  |  | French and English |  | 99.9%          

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Le Canal Nouvelles, or 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 1.6 million customers as of August 31,
2003. LCN's revenues are derived from affiliate agreements and sale of air-time to national advertisers.



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.

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



MenTVis a 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.



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 Indigois 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.



Through a consortium of cable operators, QMI has a 21.7% equity interest 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.



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 operateLa Boutique TVA, a daily one-hour home tele-shopping service
broadcast on the TVA Network. We also operateCanal 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.



In December 2000, TVA became authorized to operate three Category One Digital Specialty Services:LCN
Affaires, a national French-language specialty service devoted to the economy, business and personal finance;Télé Ha!
Ha!, a national French-language service devoted to humor and comedy; and13e rue, a national French-language service consisting
of mystery, fantasy, suspense and horror. TVA also obtained five Category Two services: Digipix, a national English-language service dedicated to experimental digital audio-visual productions; Front
Row, a national English-language pay television service comprising of a mix of documentaries, mini-series, music specials / shows, and feature films;Game
One, a national French-language service dedicated exclusively to video games; Game One, a national English-language service dedicated exclusively to video games; and Première Loge, a national French-language pay television service including documentaries, shows, mini-series and movies.
Another subsidiary of Quebecor Media also obtained authorization to operate three digital Category Two programming services: Téléservice, a national French-language service providing
practical advice and useful information on
do-it-yourself projects, home maintenance and related topics;Canal F, a national French-language service devoted to the life
and interests of women; andLe Canal Nature, a national French-language service devoted to animals and their environment. None of these eleven
television programming services were operational as of December 31, 2003.

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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, 2003, we derived approximately 70% of our advertising revenues from national advertisers and 30% 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 43% in 2003.

Book and Magazine Publishing

In connection with the acquisition of Groupe Vidéotron, we also acquired TVA Publishing, a subsidiary of TVA that was formed when TVA acquired
Trustar Limited, or Trustar, in January 2000. 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 asLes 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 and
owns and operates 45 weekly and monthly publications. 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.

Ownership

We have a 99.9% voting and a 37.6% equity ownership interest in TVA.

Leisure and Entertainment

Our activities in the Leisure and Entertainment segment include book publishing, book, music and multimedia distribution, the retail sale of magazines, books,
videos, CDs, DVDs, games and software. Until October 2003, this segment consisted of Archambault Group Inc., SuperClub Vidéotron, CEC Publishing,
Québec-Livres and other companies. In October 2003, Superclub Vidéotron was transferred to Vidéotron and is now part of the Cable Television
segment. Our Leisure and Entertainment segment generated revenues of $205.0 million and operating income of $14.7 million for the twelve-month period ended December 31, 2003.

Music, Book, Software and Magazine Retail

Archambault Group Inc. is the largest chain of music and book stores in Québec with 18 retail locations, consisting of 13 Archambault
megastores, four Camelot-Info stores and one Paragraphe bookstore. Archambault Group Inc. is also one of the largest computer books and software retailers, through
Camelot-Info Inc. Archambault Group Inc.'s products are also distributed through its Websitesarchambault.ca, Camelot.ca and
paragraphbooks.com.

Archambault
Group Inc. is also the largest independent music distributor in Canada through its label Select, which has over 850 artists, mostly French-speaking. Archambault
Group Inc. is a wholesaler serving approximately 500 locations in Québec through its Trans-Canada division. In 2003, Archambault entered the recording business, through its
Musicor label, and, in that year, achieved the status of largest independent producer in Québec. The Musicor label sold more than 500,000Star
AcademieCDs and approximately 200,000 CDs by the winner ofStar Academie, Wilfred Le Bouthillier.

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 2003,
we published, reissued and reprinted a total of 583 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.

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In
January 2004, Archambault Group launched a new music download service with per-track fees, known as archambaultzik.ca.

Video-On-Demand Services

Archambault Group Inc. was granted a video-on-demand service license by the CRTC in July 2002. Effective March 1,
2003, Vidéotron and Archambault Group Inc. entered into an affiliation agreement, pursuant to which Vidéotron was granted the non-exclusive right to
offer Archambault Group Inc.'s video-on-demand services to customers of Vidéotron, and a video-on-demand services agreement,
pursuant to which Vidéotron provides administrative services to Archambault Inc. See "Item 4. Information on the Company  Cable
Television".

Ownership

We own 100% of the issued and outstanding shares of Archambault Group Inc.

Business Telecommunications

Vidéotron Télécom ltée, or VTL, 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 most of the businesses located in the major metropolitan areas of Ontario.

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 focusing its development efforts on its core customer base, i.e. telecommunications local and long distance
carriers, wholesalers of long distance telecommunications services, wireless operators and Internet service providers, and other high-end users of business telecommunication services. In
addition, VTL has entered into several contracts with Vidéotron for the provision or exchange of telecommunications services.

In
December 2003, Quebecor Media's wholly-owned subsidiary, 9101-0827 Quebec Inc. announced its agreement to purchase the preferred shares of 3662527
Canada Inc., of which Vidéotron Télécom is a wholly-owned subsidiary, from The Carlyle Group for a purchase price with a value estimated at
$125 million.

Our
business telecommunications segment generated revenues of $77.7 million and operating profit of $14.4 million for the twelve month period ended December 31,
2003.

Ownership

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

New Media Services

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 600 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 $66.3 million and operating income of $1.0 million for the twelve-month
period ended December 31, 2003.

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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.

Nurun's
clients include multi-national corporations, such as L'Oréal, Danone, Pleasant Holidays, Bombardier, General Motors, Telecom Italia, Air France,
Europcar, Hydro Quebec and Pfizer.



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, SCI
Systems, Inc., Northrop Grumman, Remotec UK, Bose Corporation, Honeywell, Harris Communications and Celestica. Sales to Nortel represented approximately 24% of total sales for the year ended
December 31, 2003.

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



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.

Internet/Portals

Netgraphe Inc. is an integrated company offering e-commerce, information, communication and IT consulting. Netgraphe owns the CANOE network,
which, according to comScore Media Metrix in October 2003, serves over 6.2 million Internet users per month and comprises all of its public and commercial Web sites. Netgraphe also owns
Jobboom Publishing, Quebec's leader in employment and career publishing, and the IT-consulting firm Progisia Informatique. Brought together, Netgraphe's complementary operations form one
of the most complete portfolios of Internet-related properties in Canada. Our Internet/Portals segment generated revenues of $28.2 million (approximately $6.6 million relating to
Netgraphe's consulting services operations and $21.6 million relating to its Internet services operations) and operating income of $3.1 million for the year ended December 31,
2003.

The
CANOE network includes all of Netgraphe's information and service sites for the general public. As such, it is one of the most popular Internet destinations in Canada, in both the
English- and French-speaking markets, and a key vehicle for Internet users and advertisers alike. Advertising revenues constitutes a large portion of Netgraphe's annual revenues.

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





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





As of December 31, 2003, we hold, directly and indirectly, a voting interest in Netgraphe Inc. of approximately 97.8% and an equity interest of
approximately 75.5%.

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.

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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.

Environment

Our operations are subject to federal, provincial, state and local laws and regulations relating to the protection of the environment, including those governing
the discharge of pollutants into the air and water, the management and disposal of hazardous materials, the recycling of wastes and the cleanup of contaminated sites. Laws and regulations relating to
workplace safety and worker health, which, among other things, regulate employee exposure to hazardous substances in the workplace, also govern our operations.

Compliance
with these laws has not had, and management does not expect it to have, a material effect upon our capital expenditures, net income or competitive position. Environmental laws
and regulations and their interpretation, however, have changed rapidly in recent years and may continue to do so in the future. Our properties, as well as areas surrounding our properties, may have
had historic uses, including uses related to historic publishing operations, or may have current uses (in the case of surrounding properties) that may affect these properties and require further study
or remedial measures. No material studies or remedial measures are currently anticipated or planned by us or required by regulatory authorities with respect to our properties. However, 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 as to any such property.

Regulation

Ownership and Control of Canadian Broadcast Undertakings

Subject to any directions issued by the Governor in Council (effectively the Federal Cabinet), the Canadian Radio-television and Telecommunications Commission,
referred to as the CRTC, regulates and supervises all aspects of the Canadian broadcasting system.

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 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, regulation or specified governmental authorities, or a qualified mutual insurance company, qualified pension fund society or qualified
cooperative of which not less than 80% of the directors or members are Canadian. A qualified corporation is one incorporated or continued in Canada, of which the chief executive officer (or if there
is no chief executive officer, the person performing functions similar to those performed by a chief executive officer) and not less than 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 to the above requirements,
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 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. Control is defined broadly in the Direction to mean control in any manner that results in control in fact, whether directly through the ownership
of securities or indirectly through a trust, agreement or arrangement, the ownership of a corporation or otherwise. Vidéotron and TVA are qualified Canadian corporations.

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Regulations
made under theBroadcasting Act(Canada) require the prior approval of the CRTC of any transaction that directly or indirectly
results in (i) a change in effective control of the broadcasting distribution 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 any act, agreement or 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. Similarly, if any act, agreement or transaction results in a person or a person and its associates acquiring control of 40% or more but less than 50% of the voting
interests of a licensee, or a person who has directly or indirectly effective control of the licensee, the CRTC must be notified.



In November 2002, the federal Minister of Industry initiated a review of the existing foreign ownership restrictions applicable to telecommunications
carriers. In April 2003, the House of Commons Standing Committee on Industry, Science and Technology released a report of its study of the issue of foreign direct investment restrictions
applicable to telecommunications common carriers. The House of Commons Standing Committee on Industry, Science and Technology recommended, among other things, that the Government of Canada remove the
existing foreign ownership restrictions in the telecommunications industry and ensure that any changes made to the Canadian ownership and control requirements applicable to telecommunications common
carriers be applied equally to broadcasting distribution undertakings. In June 2003, the House of Commons Standing Committee on Canadian Heritage released a report of its review of the Broadcasting Act(Canada) and, among other things, recommended that the current restrictions on foreign ownership relating to broadcasting, cable and
telecommunications remain. In September 2003, the Canadian government announced it intended to launch an expedited analysis of these reports and this issue and pledged to be in a position to
consider potential solutions by the spring of 2004. We cannot predict, what, if any, changes will result from these reports.

Jurisdiction Over Canadian Broadcasting Undertakings

Vidéotron's cable distribution undertakings and TVA's programming activities are subject to theBroadcasting
Act(Canada) and regulations made under theBroadcasting Act(Canada) that 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 implement the policy set out in that Act. Certain of Vidéotron's and TVA's
undertakings are also subject to theRadiocommunication Act(Canada), 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 Act(Canada) and 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(Canada).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 customers, such as providing access to high-speed Internet services.

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Canadian Broadcast Programming (Television Stations)



CRTC regulations require licensees of television stations to maintain a specified percentage of Canadian content in their programming. Television broadcasters are
subject to regulations requiring 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 the conditions of their license.

On
September 1, 2000, the CRTC introduced a new policy regarding Canadian television. While the overall Canadian content requirements remain the same, the new policy required
broadcasters 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. 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.



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.



Broadcasting licensees are subject to annual license fees payable to the CRTC. The license fees consist of two fees. One fee allocates the CRTC's regulatory costs
for the year to licensees based on a licensee's proportion of the gross revenue derived during the year from the licensed activities of all licensees whose gross revenues exceed specific exemption
levels. The other fee, for a broadcasting distribution undertaking, is 1.365% of the amount by which its gross revenue derived during the year from its licensed activity exceeds $175,000. Our
broadcasting distribution activities are subject to both fees.

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Canadian Broadcast Distribution (Cable Television)



The CRTC has responsibility for the issuance, amendment, renewal, suspension and revocation of Canadian broadcasting licenses, including licenses to operate a
cable distribution undertaking. A cable distribution undertaking distributes broadcasting services to customers predominantly over closed transmission paths. A license to operate a cable distribution
undertaking gives the cable television operator the right to distribute television programming services in its licensed service area. 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.

Cable
systems with 2,000 customers or less and operating their own local headend are exempted from the obligation to hold a license pursuant to an exemption order issued by the CRTC in
2001 and amended in 2002. These cable systems will continue to have to comply with a number of programming carriage requirements set out in the exemption order and comply with the Canadian ownership
and control requirements in the Direction. We operate 16 of these small cable systems.

Cable
systems with between 2,000 and 6,000 customers (generally Class 2 cable systems or Class 3 cable systems not exempt under the CRTC's exemption for small cable
undertakings) are also exempted from holding a license pursuant to a CRTC public notice issued in 2003. Cable distribution undertakings that are fully interconnected with other broadcasting
distribution undertakings will be ineligible for this exemption unless the aggregate number of customers served by the interconnected broadcast distribution undertakings is less than 6,000. It is
expected that the CRTC will issue a proposed exemption order in 2004. Ten of Vidéotron's networks will benefit from the exemption by having reduced administrative costs and regulatory
burdens.

In
September 2003, the CRTC adopted amendments to the Broadcasting Distribution Regulations that permit the CRTC to implement its regional licensing model for cable distribution
undertakings (Broadcasting Public Notice CRTC 2003-48). The CRTC believes that the regional licensing approach will result in greater efficiencies for the licensees of cable distribution
undertakings as well as for itself and reflects the current trend toward consolidation in the cable industry and growing interconnection between systems.

In
November 2003, the CRTC finalized the regulatory framework that will govern the distribution of digital signals by over the air television stations (Broadcasting Public Notice
CRTC 2003-61). The CRTC requires broadcasting distribution undertakings to distribute the primary digital signal of a licensed over-the-air television service in
accordance with the priorities that currently apply to the distribution of the analog version of the services. The CRTC expects all broadcasting distribution undertakings to implement the necessary
upgrades. Analog carriage should be phased out once 85% of a particular broadcasting distribution undertaking's customers have digital receivers or set-top boxes that can convert digital
signals to analog. Exempt undertakings will not be required to duplicate mandatory services in digital format. A further proceeding will establish a licensing framework governing the transition of pay
and specialty services to high definition, or HD, signals. It will also establish a framework to govern the distribution of such services by broadcasting distribution undertakings. According to the
CRTC, the time period during which broadcasters and distributors will have to provide services in both analog and digital formats will depend on the speed with which customers convert from analog to
digital. A shorter transition period will reduce the overall costs of the transition for both broadcasters and distributors.

In
order to conduct our business, we must maintain our distribution undertaking licenses in good standing. Failure to meet the terms of our licenses may result in their
short-term renewal, suspension, revocation or non-renewal. We hold a separate license for each of our 35 cable systems with greater than 2,000 customers and have never failed
to obtain a license renewal for those cable systems.

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Canadian Broadcast Distribution (Cable Television)



The Broadcasting Distribution Regulations made by the CRTC pursuant to theBroadcasting Act(Canada) mandate the
types of Canadian and non-Canadian programming services respectively that can be distributed by broadcasting distribution undertakings, including cable television systems. In summary, each
cable television system is required to distribute all of the Canadian programming services that the CRTC has determined are appropriate for the market it serves, which includes local and regional
television stations, certain specialty channels and pay television channels, and a pay-per-view service, but does not include Category 2 digital services and
video-on-demand services.

As
revised from time to time, the CRTC has issued 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 customer must exceed the total number of non-Canadian services received. 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.

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 customers
(Class 1 cable systems) operating in a French-language market to offer each analog French-language Canadian specialty service licensed, other than certain religious programming services, to the
extent of availability of channels. Moreover, all Canadian specialty channels, other than Category 2 digital specialty channels, must be carried by broadcast distributors with more than 2,000
customers (Class 1 and Class 2 cable
systems) 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 2 digital specialty channels do not benefit from any regulatory assistance to guarantee distribution on cable or DTH satellite distribution undertakings apart from the requirement that
a distributor offer at least five non-related Category 2 digital specialty channels for every Category 2 digital specialty channel it distributes in which it owns, directly
or indirectly, more than 10% of the equity.



The Broadcasting Distribution Regulations enacted in 1998, also called the 1998 Regulations, apply to distributors of broadcasting services or broadcasting
distribution undertakings in Canada. The 1998 Regulations promote competition between broadcasting distribution undertakings 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:





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Our 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, video-on-demand and pay-per-view television; and (c) installation and additional outlets
charges.

The
CRTC does not regulate the fees charged by non-cable broadcast distribution undertakings and does not regulate the fees charged by cable providers for
non-basic services. The basic service fees charged by Class 1 (6,000 customers or more) cable providers are regulated by the CRTC until true competition exists in a particular
service area, which occurs when:



For
most of our service areas, the basic service fees for our customers have been deregulated.

The
CRTC further restricts installation fees to an amount that does not exceed the average actual cost incurred to install and connect the outlet to a household situated in a residential
area.

Subject
to certain notice and other procedural requirements, for Class 1 cable systems still regulated, we may increase our basic service rates so as to pass through to customers
increases in CRTC authorized fees to be paid to specialty programming services distributed on our basic service. However, the CRTC has the authority to suspend or disallow such an increase.

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In the event that distribution services may be compromised as a result of economic difficulties encountered by a Class 1 cable distributor, a request for a rate increase may be
submitted to the CRTC. The CRTC may approve an increase if the distributor satisfies the criteria then in effect for establishing economic need.



Certain copyrights in television and pay audio programming are administered collectively and tariff rates are established by the Copyright Board of Canada.
Tariffs set by the Copyright Board 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.



Further to the implementation in 1989 of the Canada-U.S. Free Trade Agreement, theCopyright
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, theCopyright Act(Canada) empowers the Copyright Board of Canada to quantify the amount of royalties
payable to retransmit these signals and to allocate them among collective societies representing the holders of copyright in the works thus retransmitted. Regulated 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
television signal retransmission royalties vary from $100 per year for Class 3 cable systems and from $0.30 to $0.65 per customer per month for Class 2 cable
systems serving areas with fewer than 1,500 customers and to $0.70 per customer per month for more than 6,000 customers (Class 1 cable systems), except in French-language markets. In
French-language markets, there is a 50% rebate for Class 1 and Class 2 cable systems, where the maximum rate is $0.35 per customer per
month. The same pricing structure, with lower rates, applies for distant radio signal transmission. All of Vidéotron's undertakings operate in French-language markets. Recently, the
collective societies representing copyright holders filed with the Copyright Board of Canada a tariff request to increase to $1.00 per customer per month the distant signal
retransmission royalty applicable to systems of more than 6,000 customers for the years 2003 to 2008. A public hearing relating to such request has been scheduled for 2005.



In addition, theCopyright Act(Canada) 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, or the CCTA, that transmit musical works to the customers when transmitting television services on a subscription basis.

Tariff
17A, regarding the retransmission of music, fixed the monthly rate per customer, in the case of cable systems serving 6,001 or more customers, 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. Vidéotron is no longer a member of the CCTA, but it has renewed its agreement with the applicable collective
society. A project tariff has been filed by SOCAN for a rate in 2004 that is approximately ten times the current rate. These agreements do not cover royalties payable for American specialty
programming and the Canadian pay-television services, which correspond, according to Tariff 17A, to 2.1% of affiliation payments during 1996 and 1.8% of 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. A project tariff has been filed by SOCAN for 2.6% of affiliation payments in 2004. Further to Tariff 17A, neighboring rights for music transmission will also need to be paid under Tariff
17. The claimants are asking for 20% of the programming payments. The rate fixed by the Copyright Board will be split between the pay audio services and the transmitters.

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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 French-language market are calculated at a rate equal to 85% of the rate otherwise payable.

In
April and May 2003, the Copyright Board held a hearing to determine pay and specialty royalty rates for 2001 through 2004. No decision has yet been rendered.



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 Neighbouring 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.
Royalties payable by a system located in a French-language market are calculated at a rate equal to 85% of the rate otherwise payable. Further to Tariff 17A, neighboring rights for music transmission
will also need to be paid under Tariff 17A. The claimants are asking for 20% of the programming payments. The rate fixed by the Copyright Board will be split between the pay audio services and the
transmitters.



In 1996, SOCAN proposed a tariff (Tariff 22) to be applied against Internet service providers, or ISPs, in respect of composer/publishers rights in musical
works communicated over the Internet to ISPs' customers.

SOCAN's
proposed tariff was challenged by a number of industry groups and companies, including the CCTA. In 1999, the Copyright Board decided that ISPs should not be liable for the
communication of musical works by their customers, although they might be liable if they themselves operated a musical website. In 2002, the Canadian Federal Court of Appeal partially overturned the
Copyright Board and held that ISPs could be liable where they cached musical works. An appeal from the decision of the Federal Court of Appeal was launched by both SOCAN and by the ISP group that
includes the CCTA. The appeal was heard by the Supreme Court of Canada in December 2003 and a ruling is expected in 2004. If the Supreme Court of Canada were to uphold the decision of the
Federal Court of Appeal or allow the appeal by SOCAN and extend liability to ISPs, then the dispute would return to the Copyright Board for a determination of the royalties to be paid retroactively
back to 1996.

Other
collectives have since 1999 also proposed tariffs to be applied against ISPs in respect of communications of sound recordings and performers' performances as well as reproductions
of copyright works made in the course of providing Internet services. All such tariffs have been on hold pending the resolution of the Tariff 22 proceedings. If these tariffs proceed to a hearing, it
is possible that additional royalties will be required to be paid by ISPs retroactive to when the tariffs were first proposed.

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In a letter decision dated April 1, 1999, the CRTC established rules, referred to as the winback rules, that prohibit the targeted marketing by incumbent
cable companies of customers who have cancelled basic cable service. These rules require us and other incumbent cable companies to refrain for a period of 90 days from: (a) directly
contacting customers who, through an agent, have notified their cable company of their intention to cancel basic cable service; and (b) offering discounts or other inducements not generally
offered to the public, in instances when customers personally initiate contact with the cable company for the purpose of canceling basic cable service. The CRTC is currently reviewing these winback
rules and has issued a call for comments on whether it should maintain its current rules prohibiting the targeted marketing by incumbent cable companies of customers who have cancelled basic cable
service and whether the rules should be changed.

In
February 2001, the CRTC also announced similar "winback" restrictions on certain cable television operators, including us, in the Internet service market. These restrictions
limit cable operators' ability to "win back" Internet service customers who have chosen to switch to another Internet service provider within 90 days of the customer's switch.

Canadian Telecommunications Services



The provision of telecommunications services in Canada is regulated by the Canadian Radio-television and Telecommunications Commission (the "CRTC") pursuant to
theTelecommunications Act(Canada). 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 Act(Canada)
administered by the CRTC and are subject to regulation. Cable operators offering telecommunications services are deemed "Broadcast Carriers."

TheTelecommunications Act(Canada), 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(Canada), the CRTC may exempt any class
of Canadian telecommunications carriers from the application of theTelecommunications Act(Canada) if 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.

In
the Canadian telecommunications market, Vidéotron Télécom operates as a Canadian telecommunications common carrier, while
Vidéotron operates as a Canadian broadcast carrier.



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, andLocal
CompetitionTelecom 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.

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On June 30, 2003, the CRTC issued Telecom Decision 2003-45 which stated that the provision of telecommunications services by a Local Exchange
carrier ("LEC") in a Multi-Dwelling Unit ("MDU") is subject to the condition that all LECs wishing to serve end-users in that MDU be able to access end-users in that MDU on a
timely basis, by means of resale, leased facilities or their own facilities, at their choice, under reasonable terms and conditions. By this decision, the CRTC provided the industry with general
guidelines for establishing building access agreements between LECs and building owners, and clearly prohibited building owners from charging access fees or forming exclusive or preferred access
arrangements with a LEC. The CRTC also indicated that it was prepared to issue orders to address situations where LECs are prevented from providing telecommunications services in an MDU, if, following
an application, it was determined that access to an MDU was not or would not likely be provided on a reasonable basis. Contesting the CRTC's jurisdiction, on September 8, 2003, the Federal
Court of Appeal granted leave to appeal of the CRTC's Decision 2003-45 to two Canadian building owners associations, namely the Canadian Institute of Public and Private Real Estate
Companies ("CIPPREC") and the Building Owners and Managers Association ("BOMA").



In Decision CRTC 2001-23, the CRTC provided the industry with general guidelines for establishing new rights-of-way agreements
between carriers and municipalities and other public administrations. Among other things, in this decision the CRTC stated that carriers should not pay annual access fees to municipalities and limited
municipalities to recovery of their causal costs associated with carriers exercising their right of access. In December 2002, the Federal Court of Appeal dismissed the Federation of Canadian
Municipalities ("FCM") appeal of Decision CRTC 2001-23, and on September 4, 2003, the Supreme Court dismissed the FCM's application for leave to appeal from the judgement of the
Federal Court of Appeal. As a result, the jurisdiction of the CRTC over the municipal rights-of-way has been confirmed.



On December 4, 2003, the CRTC issued Telecom Decision CRTC 2003-82 in which it indicated that it was prepared to consider, on a case by case
basis, applications from Canadian carriers seeking to establish that municipal consent was not obtained on terms acceptable to the carrier, if the applicant succeeds in demonstrating that the signed
Municipal Access Agreement does not represent proof that the Canadian carrier has obtained, on terms acceptable to it, the consent of the municipality to construct a transmission line. On
March 5, 2004, the Federal Court of Appeal dismissed the applications brought by the FCM and several municipalities for leave to appeal Telecom Decision 2003-82 and stated that the
court, before deciding a regarding this issue, should wait until the CRTC has, in a CRTC decision, explained the legal basis for it decisions and the relevant regulatory context.



The CRTC has concluded that some provisions of theTelecommunications Act(Canada) may be characterized as
encouraging joint use of existing support structures of telephone utilities to facilitate efficient deployment of cable distribution undertakings by Canadian carriers. We access 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, we could apply to the CRTC for a
right of access to a supporting structure of a telephone utility. The Supreme Court of Canada, however, has held on May 16, 2003 that the CRTC does not have jurisdiction under the Telecommunications Act(Canada) to establish the terms and conditions of access to the support structure of hydro-electricity utilities. Terms of access
to the support structures of hydro-electricity utilities will need to be negotiated with those utilities.

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In 2002, the CRTC issued Telecom Decision CRTC 2002-34 in which, among others things, it ordered Incumbent Local Exchange Carriers ("ILECs") to
introduce a Competitive Digital Network Access (CDNA) service for the exclusive use of the ILEC competitors. The initial purpose of this service was to provide access between an
end-customer premise to a competitor's switch within the same ILEC serving wire centre area or to the ILEC serving wire centre. The CRTC also initiated in 2002 a proceeding (Telecom Public
Notice CRTC 2002-4) to examine the ILEC proposed CDNA tariffs and several issues related to the CDNA service.

On
December 23, 2002, the CRTC approved by Telecom Decision CRTC 2002-78, on an interim basis, substantial reduced rates for the access and link components of the
ILECs' CDNA service, effective 1 June 2002, based on the ILECs' cost studies filed in the CDNA proceeding. These interim CDNA tariffs inevitably constituted a benchmark in the wholesale
market. As a result, several telecommunication service providers requested that the DNA-equivalent access services provided to them be competitively priced to the new CDNA prices.
Consequently, alternative suppliers of DNA-equivalent access services, like Vidéotron Télécom, were severely impacted.

One
of the central issues of the CDNA proceeding was to determine whether or not the intra-exchange component of the DNA service and digital inter-exchange transport services in
metropolitan and EAS areas should be made available as part of the CDNA service. If the same pricing approach is expanded to other DNA services as result of this proceeding, it could be expected that
a downward price spiral appears in both wholesale and retail markets. The CDNA proceeding ended in December 2003.



In a proceeding initiated by Public Notice CRTC 2001-126 (December 19, 2001), the CRTC has reviewed the existing local interconnection 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. The proceeding ended in
January 2003 and it is expected that the CRTC decision will be released in the course of the year 2004.



In Canada, access to the Internet is a telecommunication service. While Internet access services are not regulated on a retail (price and terms of service) basis,
Internet access for third parties is mandated and tariffed according to conditions approved by the CRTC for cable operators.

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 allow competing retail ISPs, 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 ISPs 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 CRTC Interconnection Steering Committee, or CISC, and
Vidéotron is actively participating in a CISC Working Group relating to technical and operational issues.

Vidéotron
took part in technical tests intended to interconnect the networks of the cable television operators with certain competing ISPs. 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 later this year, actual access to the headend of our HFC network will be ordered by the CRTC and provided by Vidéotron at a regulated tariff.

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Until
facilities-based access to the cable network headend is provided, the CRTC is requiring cable distributors to allow third-party retail ISPs 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 customers 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 ISPs.



In November 2002, the federal Minister of Industry initiated a review of the existing foreign ownership restrictions applicable to the telecommunications
carriers. The House of Commons Standing Committee on Industry, Science and Technology issued a report on April 28, 2003 recommending the removal of foreign ownership restrictions in the
telecommunications industry. However, the House of Commons Standing Committee on Canadian Heritage instead recommended the status quo regarding foreign ownership levels for broadcasting and
telecommunications companies. Indicating in its response to the Industry Committee's report that it had the responsibility to determine how best to reconcile the committees' conflicting
recommendations, the Canadian government undertook to launch an expedited analysis of this question, with a view to examining possible solutions in the spring of 2004.



In 1995, the SOCAN filed a project tariff with the Copyright Board of Canada, which we refer to as Tariff 22, seeking retribution for the transmission of music
over the Internet. The rate requested was 3.2% of the ISP revenues or $0.25 per customer per month if the ISP offers advertising. Beginning in 2002, the SOCAN has sought 10% of the ISP revenues. The
Copyright Board has decided to first establish the liability between the music provider and the ISP who acts as a telecommunications provider without any right to interfere in the content. The
Copyright Board has opted for a shared responsibility. Both SOCAN and the CCTA filed appeals with the Canadian Federal Court of Appeal and, subsequently, the Supreme Court of Canada in
December 2003. A decision is expected in 2004. Once a decision is rendered, the Copyright Board will study the proposed rates.

At
the same time, the Neighbouring Rights Collective of Canada, or NRCC, has applied for a tariff for incidental rights regarding the transmission of music on the Internet. The Copyright
Board has refused to process the application until Tariff 22 is established. The NRCC claims 5% of the ISP's revenues.

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 purposes. The Foreign 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.

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Organizational Structure

The
following chart illustrates the relationship among Quebecor Media and its significant subsidiaries as of December 31, 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.

Quebecor Inc.,
a communications holding company, owns 54.72% of Quebecor Media and CDP Capital-Communications owns 45.28% of Quebecor Media. Quebecor Inc.'s primary assets
are its interests in Quebecor Media and Quebecor World Inc., one of the largest commercial printers in the world. CDP Capital-Communications is a wholly-owned subsidiary of Caisse de
dépôt et placement du Québec, Canada's largest pension fund with over $130 billion in assets under management.

Property, Plants and Equipment

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

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We
own several buildings in Montréal, the largest of which is located at 405 Ogilvy Avenue (with 297,000 square feet). Our primary headend is housed in
Montréal (with approximately 27,850 square feet). We also own or lease a significant number of smaller locations for signal reception sites, customer service and business offices. We
generally lease space for the business offices and retail locations for the operation of our video stores.

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
various owned and leased locations with building space totaling approximately 807,000 square feet located in the communities in which they serve. The following table presents the addresses and sizes
of the main facilities and other buildings of our eight urban dailies. No other single property used in the Newspapers segment exceeds 50,000 square feet. Details are provided regarding the square
footage occupied by us, primary use of the property and current press capacity. Unless stated otherwise, we own all of the properties listed below.

|Address                                 |  | Use of Property                                                       |  | Press Capacity(1)                                         |  | Floor Space (sq. ft.)
|--------------------------------------- |  | --------------------------------------------------------------------- |  | --------------------------------------------------------- |  | ---------------------
|Toronto, Ontario
333 King Street East   |  | Operations building, including printing plant
The Toronto Sun        |  | 4 Metro presses
 32 units
1 Metroliner press
 8 units   |  | 239,500              
|London, Ontario
369 York Street         |  | Operations building, including printing plant
The London Free Press  |  | 2 Headliner presses
 12 units
1 Urbanite press
 8 units |  | 150,100              
|Montréal, Québec
4545 Frontenac Street  |  | Operations building, including printing plant Le Journal de Montréal |  | 3 Metro presses
&
2 Cosmo presses
 30 units              |  | 162,000              
|Calgary, Alberta
2615-12 Street NE      |  | Operations building, including printing plant
The Calgary Sun        |  | 1 Headliner press
 7 units                               |  | 90,000               
|Vanier, Québec
450 Bechard Avenue       |  | Operations building, including printing plant
Le Journal de Québec   |  | 2 Urbanite presses
 22 units                             |  | 73,900               
|Winnipeg, Manitoba
1700 Church Avenue   |  | Operations building, including printing plant
The Winnipeg Sun       |  | 1 Urbanite press
 10 units                               |  | 63,400               
|Edmonton, Alberta
9300-47 Street        |  | Printing plant
The Edmonton Sun                                      |  | 1 Metro press
 8 units                                   |  | 50,700               
|Edmonton, Alberta
4990-92 Avenue        |  | Operations building (leased until Dec. 2013)
The Edmonton Sun        |  | n/a                                                       |  | 45,200               
|Ottawa, Ontario
6 Antares Drive         |  | Operations building (leased until Oct. 2013)
The Ottawa Sun          |  | n/a                                                       |  | 19,300               
|Gloucester, Ontario
4080 Belgreen Drive |  | Printing plant
The Ottawa Sun                                        |  | 1 Urbanite press
 14 units                               |  | 22,600               

---

53

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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

Quebecor Media Inc. ("Quebecor Media" or "the Company"), a subsidiary of Quebecor Inc. incorporated under Part 1A of the Companies
Act(Québec) in August 2000, is one of Canada's largest media companies. Its principal lines of business are Cable
Television, Newspapers, Broadcasting, Leisure and Entertainment, Business Telecommunications, Web Integration/Technology, and Internet/Portals. Quebecor Media is pursuing a convergence strategy to
capture synergies among all of its media properties.

2003 Overview

In 2003, Quebecor Media experienced major advances, particularly in the Cable Television segment, which achieved significant progress in the growth of its
customer base and in labor relations. During the year 2003, Vidéotron ltée ("Vidéotron") recruited 101,000 new customers to its cable Internet access
service and 69,000 customers to itsillicodigital television service, increases of 33% and 40%, respectively, in comparison with 2002.
During the last six months of the 2003 financial year, Vidéotron gained almost twice as many customers toillicoas it lost
to its analog cable service; Vidéotron's net gain of 22,000 customers was its first net gain in two years. The settlement of the labor dispute between Vidéotron and its
unionized employees in the Montréal and Québec City areas, which occurred in April 2003 was also noteworthy. With the signing of the new collective bargaining
agreements, Vidéotron now enjoys greater flexibility in operational management and benefits from a more efficient cost structure.

The
refinancing of Vidéotron and Sun Media Corporation ("Sun Media") on highly advantageous terms was another highlight of the 2003 financial year. These transactions
optimized Quebecor Media's capital structure and reduced its short-term debt repayment obligations. Following the refinancings, Vidéotron and Sun Media can now distribute
their cash surpluses to Quebecor Media in full, subject to compliance with certain financial ratios. Moreover, the two subsidiaries' combined debt repayment obligations have been reduced to only
$53.5 million per year for the next four years. Following the refinancing operations, Standard & Poor's upgraded the corporate credit ratings of Quebecor Media and its
Vidéotron and Sun Media subsidiaries one level to BB- in all three cases.

Finally,
the resounding success ofStar Académie, a variety program featuring talented young singers, confirmed the lead of
TVA Group Inc. ("TVA Group") in the Québec television market. The program attracted audiences of over 3 million and captured an audience share as high as 83% in 2003. This
media phenomenon had a powerful impact on some of the Company's other segments: the celebrity weeklies published by TVA Publishing Inc. ("TVA Publishing") achieved record sales; the Musicor and
Select units of Archambault Group Inc. ("Archambault Group"), which produced and distributed theStar AcadémieCD, increased their
revenues; Vidéotron's high-speed Internet access service, which offered exclusive backstage webcam feeds, grew its customer base; and Netgraphe Inc. ("Netgraphe")
realized increased revenues for the development of online voting and video tools. In 2003,Star Académietherefore provided Quebecor
Media the opportunity to capitalize on its convergence strategy.

During
the 2003 financial year, Quebecor Media generated revenues of $2.32 billion, compared with $2.28 billion in 2002, an increase of $41.7 million or 1.8%.
Operating income increased $50.7 million, or 9.0%, to $611.7 million. Net income was $203.9 million, compared with a net loss of $229.8 million during the 2002 financial
year, a $433.7 million improvement.

54

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Other
highlights of 2003 at Quebecor Media and its subsidiaries included:



Changes in Accounting Policies in the Cable Television Segment

During the fourth quarter of 2003, the Company revised its accounting for equipment sales to customers and hook-up costs in the Cable Television
segment. Until the end of the third quarter of 2003, the cost of subsidies granted to customers on equipment sold was capitalized and amortized over three years on a straight-line basis,
and the cost of reconnecting customers was capitalized to fixed assets and depreciated over three years or four years on a straight-line basis.

The
Company changed its accounting policies in order to expense, as they are incurred, the costs of customers' subsidies and the costs of reconnecting customers. These changes, which are
described in greater detail under the heading "Changes in Accounting Policies" below, have been applied retroactively. The following table shows the effects of these changes in accounting policies on
the Company's revenues, operating income and net income for the financial years ended December 31, 2003, 2002 and 2001.

Table 1  Impact of change in accounting policy in the Cable Television segment  2003 - 2001

|                          |  | Revenues |         | Operating income |   | Net income |  
|------------------------- |  | -------- | ------- | ---------------- | - | ---------- | -
|2003 financial year       |  |          |         |                  |   |            |  
|Previously stated balance |  | $        | 2,300.2 |                  | $ | 653.9      |  
|Difference                |  |          | 19.4    |                  |   | (42.2      | )
|                          |  |          |         |                  |   |            |  
|Restated balance          |  |          | 2,319.6 |                  |   | 611.7      |  
|                          |  |          |         |                  |   |            |  
|                          |  |          |         |                  |   |            |  

55

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|2002 financial year       |  |  |         |  |  |       |   |  |        |  
|------------------------- |  |  | ------- |  |  | ----- | - |  | ------ | -
|Previously stated balance |  |  | 2,252.5 |  |  | 598.7 |   |  | (214.0 | )
|Difference                |  |  | 25.4    |  |  | (37.7 | ) |  | (15.8  | )
|                          |  |  |         |  |  |       |  
|Restated balance          |  |  | 2,277.9 |  |  | 561.0 |   |  | (229.8 | )
|                          |  |  |         |  |  |       |  
|2001 financial year       |  |  |         |  |  |       |   |  |        |  
|Previously stated balance |  |  | 1,814.1 |  |  | 400.0 |   |  | (444.2 | )
|Difference                |  |  | 10.9    |  |  | (11.3 | ) |  | (5.3   | )
|                          |  |  |         |  |  |       |  
|Restated balance          |  |  | 1,825.0 |  |  | 388.7 |   |  | (449.5 | )
|                          |  |  |         |  |  |       |  

The
Company chose to implement this change in accounting policy in the fourth quarter of 2003, in accordance with the provisions of theCanadian Institute of
Chartered Accountants Handbook(the "CICA Handbook"), Section 1506,Accounting
Changes, which require that changes in accounting policies be applied retroactively, except where certain conditions apply. Had the Company not made this accounting change in
2003, it would have been required to do so on January 1, 2004, the date on which the newCICA HandbookSection 1100, Generally Accepted Accounting
Principles, came into effect. Under the provisions of Section 1100, the change would have been applied on a
prospective basis and would have complicated year-over-year comparisons of operating results for periods in which different accounting principles were used.

Changes in Corporate Structure

On November 3, 2003, Sun Media, the Company's subsidiary in the Newspapers segment, acquired Annex Publishing & Printing Inc., for a cash
consideration of $34.2 million. The acquisition of the business, concentrated in southern Ontario, added two dailies, nine other publications and a commercial printing facility to Sun Media's
assets.

In
the third quarter of 2003, the operations of Le SuperClub Vidéotron ltée ("SuperClub Vidéotron"), previously part of the Leisure and
Entertainment segment, were transferred to the Cable Television segment. Segment results for prior periods of 2003 and for the 2002 and 2001 financial years have been reclassified to reflect the
change.

On
July 24, 2003, the Company increased its interest in CEC Publishing Inc. ("CEC Publishing"), part of the Leisure and Entertainment segment, from 50% to 100% for a cash
consideration of $15.0 million.

In
May 2003, Sun Media sold its interests in businesses it operated in Florida, and British Columbia for a cash consideration of $22.4 million. The purpose of the
transactions was to refocus Sun Media's operations on Canadian geographic markets where it was already firmly established.

On
March 14, 2003, Nurun Inc. ("Nurun") disposed of its interest in Nurun Technologie S.A., for a cash consideration of $0.3 million.

In
accordance with the new recommendations contained in Section 3475,Disposal of Long-Lived Assets and Discontinued
Operations, of the CICAHandbook,the operating results and cash flows of the Newspapers and Web Integration/Technology segments
for prior periods of 2003 and for the 2002 and 2001 financial years have been reclassified in order to present the operating results and cash flows of the divested businesses as separate line items
for discontinued operations on the income and cash flow statements.

56

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In
May 2002, following Quebecor Media's sale of Publicor to TVA Group, all the Company's magazines were brought together under TVA Publishing. The move strengthened TVA
Publishing's position as the largest magazine publisher in Québec.

Quebecor
Media's share in the earnings of some subsidiaries has varied over the past three years. Quebecor Media's share in the earnings of Sun Media increased to 100% following the
buyout of the 30% interest held by minority shareholders in June 2001. Quebecor Media's share in the earnings of Netgraphe increased from 39.8% to 75.5% as a result of the sale of CANOE's
assets in exchange for Netgraphe stock in March 2001.

Quebecor
Media has direct and indirect controlling interests in four public companies. As of December 31, 2003, Quebecor Media held, directly or indirectly, 57.26%, 99.91%, 97.75%
and 80.95% of the voting rights of Nurun, TVA Group, Netgraphe and Mindready Solutions Inc. ("Mindready Solutions"), respectively.

Operating Results

As set forth in its consolidated financial statements and in its analysis of operating results, the Company defines operating income (or loss) as earnings (or
loss) before amortization, financial expenses, reserves for restructuring of operations, impairment of assets and other special charges, write-down of goodwill, gains (losses) on sales of
businesses and other assets, gains (losses) on dilution, net gain on debt refinancing and on repurchase of redeemable preferred shares of a subsidiary, and income taxes. Equity income (or loss) from
non-consolidated subsidiaries, non-controlling interest and the results of discontinued operations are not considered in the computation of operating income. Since the third
quarter of 2003, amortization charges applicable to videocassettes owned by SuperClub Vidéotron, previously recorded under amortization, have been entered under cost of sales. Operating
income (or loss) for prior periods of 2003 and for the 2002 and 2001 financial years has been reclassified to reflect the change.

Operating
income (or loss) as defined above 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 or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles.
The Company uses operating income (or loss) because management believes it is a meaningful measure of performance. Operating income (or loss) is commonly used by the investment community to analyze
and compare the performance of companies in the industries in which the Company is engaged. The Company's definition of operating income (or loss) may not be identical to similarly titled measures
reported by other companies. The operating income for Quebecor Media and its segments is presented on pages F-1 to F-79 to this annual report.

The
Company uses free cash flow from operations as a measure of liquidity at the segment level. The Company defines free cash flow from operations as the cash flows provided by
continuing operations minus additions to property, plant and equipment and deferred charges plus proceeds from disposal of assets. Free cash flow from operations is used to represent funds available
for business acquisitions, the payment of equity dividends, and the repayment of long-term debt, subject to restrictions imposed by its credit facilities and the credit facilities of its
subsidiaries. Free cash flow from operations is not a measure of liquidity 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. The Company's definition of free cash flow from operations may not be identical to
similarly titled measures reported by other companies.

2003/2002 Financial Year Comparison

The Company's revenues totalled $2.32 billion in the financial year ended December 31, 2003, compared with $2.28 billion in 2002. The
$41.7 million, or 1.8%, increase was due to $24.0 million revenue growth in the Cable Television segment, which was propelled by a 35% ($47.8 million) increase in revenues from
Internet access services and a 51% ($26.7 million) increase in revenues from the illicoTM digital television service. Higher revenues in the Broadcasting ($17.5 million), Newspapers
($14.3 million) and Internet/Portals ($1.4 million) segments also contributed to the increase in consolidated revenues. These increases more than offset revenue decreases in the Business
Telecommunications and Web Integration/Technology segments.

57

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Operating
income was $611.7 million in 2003, an increase of $50.7 million, or 9.0%, compared with 2002. The improvement derived primarily from a $39.8 million
(16.9%) increase in operating income in the Cable Television segment as a result of the higher revenues noted above and reduced operating expenses. Stronger results in the Web Integration/Technology,
Newspapers, Internet/Portals and Broadcasting segments also contributed to the increase. These improvements were partially offset by a decline in operating income in the Business Telecommunications
segment.

The
Company recorded net income of $203.9 million in 2003, compared with a $229.8 million net loss in 2002, for a $433.7 million improvement. The turnaround in
profitability was mainly due to the higher operating income, the recording of a $144.1 million net gain on settlement of debt and purchase of redeemable preferred shares of a subsidiary, as
well as decreases in financial expenses, in reserves for restructuring and special charges, and in income tax. Quebecor Media also recorded a write-down of goodwill in the amount of
$187.0 million in 2002.

Amortization
charges were virtually unchanged at $227.5 million, compared with $226.1 million in 2002.

Financial
expenses decreased by $23.2 million from $323.2 million in 2002 to $300.0 million in 2003. The decline was due to the Company's lower debt levels, and also
to a gain on exchange in the amount of $22.0 million realized on the conversion of the unhedged portion of the long-term debt, compared with a $2.2 million gain in 2002.

Reserves
for restructuring of operations and special charges totalled $1.6 million in 2003, compared with $39.2 million in 2002. In 2003, the Company recorded reserves for
restructuring in the amount of $0.3 million in the Web Integration/Technology and Internet/Portals segments, and write-downs of temporary investments, immovables and other assets totalling
$1.3 million.

In
2002, the Company recorded reserves for restructuring totalling $11.2 million in the Newspapers ($2.2 million), Broadcasting ($3.0 million), Business
Telecommunications ($1.4 million) and Web Integration/Technology ($4.6 million) segments. It also recorded write-downs of temporary investments and other assets totalling
$22.3 million. In addition, the Web Integration/Technology segment recognized a non-monetary compensation charge of $5.7 million in connection with shares subject to escrow
agreements with shareholders and sellers of certain acquired businesses.

In
2002, the Company adopted the new recommendations in Section 3062 of theCICA Handbookconcerning goodwill. The Company recorded
a $187.0 million charge for the goodwill impairment losses 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 2003, a $0.5 million charge was recorded for goodwill impairment in the Internet/Portals segment.

The
net gain on settlement of debt and purchase of redeemable preferred shares of a subsidiary recorded in 2003 included a gain of $153.7 million, without any tax consequences,
realized on the repurchase of the preferred shares of Vidéotron Télécom held by The Carlyle Group, a gain of $7.5 million related to the refinancing
of Sun Media, and a $17.1 million loss related to the refinancing of Vidéotron.

The
$17.6 million favorable difference in income tax charges in 2003 compared with 2002 results mainly from the recording in 2003 of tax benefits related to previously unrecorded
operating losses.

In
2003, the Company recorded a $1.1 million loss on disposal when it divested itself of the Business Telecommunications segment's Mensys subsidiary, compared with gains on
disposal of $3.6 million in 2002.

Restricted and Unrestricted Subsidiaries

The Company is 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 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. As required by the indentures, Netgraphe and Nurun have been designated "Unrestricted Subsidiaries."

58

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Following
the acquisition by Quebecor Media of the preferred shares held by The Carlyle Group, 3662527 Canada Inc. (the parent company of Vidéotron
Télécom) and its subsidiary Vidéotron Télécom were categorized as Restricted Subsidiaries. For the purpose of disclosure of
the financial condition and results of operations of the Company, its Restricted Subsidiaries and its Unrestricted Subsidiaries, the figures for prior periods of 2003 and for the 2002 and 2001
financial years have been restated to reflect the impact of the new designation.

Restricted Subsidiaries and the Company

In 2003, the Company and its restricted subsidiaries generated revenues of $2.23 billion, compared with $2.18 billion in 2002, and operating income
of $607.6 million, compared with $573.5 million in the previous year.



Vidéotron, a wholly owned subsidiary of Quebecor Media, is the largest cable operator in Québec and the third-largest in Canada. Its
state-of-the-art network passes 2.3 million homes and serves approximately 1.4 million customers, including 240,000 customers to its illicodigital television service. Vidéotron
is also involved in interactive multimedia development and ISP services, with
406,000 customers to its high-speed cable modem Internet access service and 29,000 customers to its dial-up Internet access service. Its Le SuperClub Vidéotron
stores are engaged in sales and rentals of DVDs, video cassettes and video games.

In
2003, Vidéotron recorded revenues of $805.0 million, compared with $781.0 million in the previous year, an increase of $24.0 million (3.1%).
Internet access services and theillicodigital television service realized significant revenue increases of $47.8 million and
$26.7 million, respectively, for growth rates of 35% and 51%, respectively. These increases more than offset the decrease in revenues from analog cable television and other services, including
rentals and installation. The revenues of SuperClub Vidéotron rose 5.5% to $40.4 million, due in large part to higher in-store retail sales and higher revenues from
games.

The
higher revenues from Vidéotron's Internet andillicodigital television services stemmed mainly from
growth in the customer base as a result of successful new marketing strategies for value-added products, as well as higher rates. The number of customers to cable Internet access services increased by
101,000, or 33%, from 306,000 to 406,000, compared to an increase of 77,000 customers in 2002. As of December 31, 2003, there were 240,000 illico customers compared with 171,000 at the same
date in 2002; the increase of 69,000, or 40%, was also an improvement over 2002, when
57,000 new customers were recruited.

While
Vidéotron enrolled up 69,000 new customers toillicoin 2003, it lost 76,000 analog cable service
customers, for a net loss of 7,000 customers, a substantial improvement over the net loss of 79,000 customers in 2002. Vidéotron's performance in the last two quarters of 2003 is
particularly noteworthy. During the third and fourth quarters of 2003, Vidéotron's cable television services posted net customer growth for the first time since the third quarter of
2001, that is, in exactly two years. In fact, in the last six months of 2003, Vidéotron gained nearly twice as manyillico
customers (46,000) as it lost to its analog cable television service (24,000), for a net gain of 22,000 customers.

Vidéotron
capitalized on its network's two-way capabilities in 2003 by successfully rolling out its video on demand service ("VoD"), which is now available to
more than 90% of households in Vidéotron's service area. VoD is an interactive service that gives customers access to hundreds of films and special events. Vidéotron
became the first company in Québec to offer VoD service on a large scale. The innovative product promises to spur the development of the illicoservice by setting it apart from competitive
services.

59

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Net
monthly average revenue per user rose 7.3% to $43.40 as of December 31, 2003, compared with $40.45 on the same date of the previous year.

The
Cable Television segment recorded total operating income of $275.3 million in 2003. The increase of $39.8 million (16.9%) from the $235.5 million figure reported
in 2002 was due primarily to the growth in the customer base for high-speed Internet access andillicoservices, higher rates
for Internet services, and the favorable impact on the gross margin of the renegotiated service agreement with Vidéotron Télécom. It also reflects the
recording in 2002 of $18.5 million in charges related to the labor dispute that ended in April 2003, which were, however, partially offset by receipt of an $8.3 million refund of
property tax paid on the network. Finally, the favorable settlement of disputes concerning fees and the reduction of other operating expenses also contributed to the increase. The positive 2003
performance was partially offset by the effect on operating income of decreased revenues from analog cable television, rentals and installation services, and the unfavorable impact of the change in
the capitalization policy.

SuperClub
Vidéotron's operating income rose 4.5%. The increased profitability of in-store rentals and sales, and higher revenues from fees and discounts, more
than offset the unfavorable impact of the shortening of the amortization period for videocassettes owned by SuperClub Vidéotron.

Vidéotron's
average operating margin for all operations increased to 34.2% in 2003, compared with 30.2% one year earlier.

Vidéotron
generated free cash flow from operations of $88.4 million in 2003, compared with $136.6 million in 2002 and $50.8 million in 2001. The
impact of the net change in non-cash balances related to operations reduced free cash flow from operations by $45.2 million in 2003, compared to positive $57.8 million in
2002. The increase in free cash flow from operations between 2002 and 2003, excluding the impact of the net change in non-cash balances related to operations, was due primarily to the
improved results. When excluding these same elements, the reduction in additions to property, plant and equipment explains the increase in free cash flow from operations between 2001 and 2002.
Vidéotron's capacity to generate free cash flow from operations, first demonstrated in early 2001, was maintained in 2003, as Table 2 below demonstrates. Key financial ratios
(debt/operating income, interest coverage) continued to show improvement during 2003; by these measures, Vidéotron ranks among the industry leaders in North America.

Table 2  Cable Television segment  Free cash flow from operations  ($ million)

|                                                                      |  | 2003  |   | 2002  |   | 2001   |  
|--------------------------------------------------------------------- |  | ----- | - | ----- | - | ------ | -
|
|Cash flow from continuing operating activities before undernoted item |  | 220.4 |   | 168.8 |   | 190.1  |  
|Net change in non-cash balances related to operations                 |  | (45.2 | ) | 57.8  |   | (4.6   | )
|                                                                      |  |       |   |       |   |        |  
|Cash flow from continuing operating activities                        |  | 175.2 |   | 226.6 |   | 185.5  |  
|Additions to property, plant and equipment, and deferred charges      |  | (90.6 | ) | (94.1 | ) | (140.3 | )
|Proceeds from disposal of assets                                      |  | 3.8   |   | 4.1   |   | 5.6    |  
|                                                                      |  |       |   |       |   |        |  
|Free cash flow from operations                                        |  | 88.4  |   | 136.6 |   | 50.8   |  
|                                                                      |  |       |   |       |   |        |  

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With
respect to labor relations, Vidéotron and its employees in the Montréal and Québec City areas signed a new collective bargaining
agreement on April 29, 2003, ending the labor dispute that began in May 2002. The new labor contracts enable Vidéotron to reduce costs, enhance productivity, and exercise
greater flexibility in the management of its operations. On May 12, 2003, Alentron, a subsidiary of Entourage Technology Solutions, and Vidéotron agreed to cancel the services
contract signed in May 2002. Among other things, the agreement called for the managers and unionized employees who had been transferred to Alentron at the time of the business sale, concurrent
with the signing of the services contract, to return to Vidéotron.



In the Newspapers segment, Sun Media is Canada's largest national chain of tabloids and community newspapers. It publishes metropolitan dailies in 8 of the
country's 11 largest markets. In all, Sun Media publishes 19 metropolitan dailies including two free commuter dailies and 187 community weeklies and specialty publications across Canada. Sun Media is
also engaged in the distribution of newspapers and magazines. In addition, it offers commercial printing and related services to other publishers through its national printing and production platform.
Sun Media also has an interest in the southern Ontario all-news channel CablePulse 24.

The
Newspapers segment reported total revenues of $845.9 million in 2003, compared with $831.6 million in 2002, a $14.3 million (1.7%) increase. The 2.8% growth in
advertising revenues more than made up for a 1.7% decrease in circulation revenues. Revenues increased 1.2% at the metropolitan dailies and revenues of the community weeklies and speciality
publications increased 4.6% including the favorable impact of the acquisition of Annex Publishing and Printing Inc. in 2003. Within the metropolitan dailies segment, the newspapers in the
eastern group (Le Journal de Montréal,Le Journal de Québecand The Ottawa Sun) realized an
average revenue increase of 2.6%.

Operating
income amounted to $224.8 million in the Newspapers segment in 2003, compared with $219.4 million in the previous year, an increase of $5.4 million or
2.5%. Sun Media re-launched its Montreal free commuter paper,Montreal Metropolitain, changing its name to24
heures, and launched a new free commuter daily,24 Hours,in Toronto. The operating losses incurred by the two publications
reduced the segment's consolidated operating income in 2003. The increase in operating income, excluding the impact of the two new publications, was due to the higher revenues, the contribution of the
acquired businesses, a decrease in newsprint prices, and a reduction in operating expenses. Among the metropolitan dailies,The Edmonton Sunand Le Journal de
Québecposted profitability increases of 6.6% and 5.2%, respectively.

In
2003, Sun Media also launched two new weeklies, which are inserted in the Saturday edition ofLe Journal de Montréaldistributed in the Sherbrooke and Trois-Rivières areas, two of the largest urban centres in Québec.

As
set forth in table 3 below, Sun Media generated free cash flow from operations of $211.0 million in 2003, compared with $194.9 million in 2002 and $121.4 million
in 2001. The favorable difference of $27.5 million in 2003 over 2002 as a result of the change in non-cash balances related to operations should be noted. The increase in 2002 over
2001 derived mainly from higher operating income in 2002 and from disbursements related to restructuring programs in 2001. Sun Media continues to post operating margins that are among the best in the
industry in Canada.

Table 3  Newspapers segment  Free cash flow from operations  ($ million)

|                                                                      |  | 2003  |   | 2002  |   | 2001  |  
|--------------------------------------------------------------------- |  | ----- | - | ----- | - | ----- | -
|Cash flow from continuing operating activities before undernoted item |  | 206.8 |   | 211.8 |   | 142.8 |  
|Net change in non-cash balances related to operations                 |  | 18.2  |   | (9.3  | ) | (3.2  | )
|                                                                      |  |       |   |       |   |       |  
|Cash flow from continuing operating activities                        |  | 225.0 |   | 202.5 |   | 139.6 |  
|Additions to property, plant and equipment, and deferred charges      |  | (14.3 | ) | (9.9  | ) | (18.9 | )
|Proceeds from disposal of assets                                      |  | 0.3   |   | 2.3   |   | 0.7   |  
|                                                                      |  |       |   |       |   |       |  
|Free cash flow from operations                                        |  | 211.0 |   | 194.9 |   | 121.4 |  
|                                                                      |  |       |   |       |   |       |  

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In
2003, Sun Media completed certain transactions in order to divest itself of non-core assets and to strengthen its operations in Canadian geographic markets where it is
already firmly established.

In
May 2003, Sun Media announced the sale of its interest in Florida Sun Publications Inc. to U.S.-based Independent Publications. Florida Sun Publications Inc.
operated seven weekly publications and a commercial printing plant. In the same month, Bowes Publishers Ltd., a wholly owned subsidiary of Sun Media, announced the sale of its assets in British
Columbia, which included five weeklies and a printing plant, to Black Press Ltd. Total proceeds from disposal amounted to $22.4 million. The sale generated a $0.5 million gain on
sale of a business, after a $2.8 million tax charge.

In
November 2003, Sun Media acquired the newspaper operations of Annex Publishing & Printing Inc. for a cash consideration of $34.2 million. The properties,
located in southern Ontario, Canada, include two dailies, a semi-weekly publication, six weeklies and two newspaper supplements, as well as a commercial printing facility with rotary
presses.

With
respect to technological development, the Newspapers segment completed its computer-to-plate ("CTP") project, as planned, with the addition of CTP equipment
at its metropolitan dailies in Toronto, Edmonton and Calgary.Le Journal de MontréalandLe Journal de
Québecalready have this state-of-the-art equipment.



TVA Group is the largest privately-owned producer and broadcaster of French-language entertainment, information and public affairs programming in North America.
It is sole owner of 6 of the 10 television stations in the TVA network and of the analog specialty channelLe Canal Nouvelles, or LCN. TVA Group also
holds interests in 2 other TVA network affiliated stations, as well as in theCanal Évasionspecialty channel, the Indigo
pay-per-view service, and the English-language digital specialty channelsmentvand Mystery. TVA Group is also engaged in teleshopping services. TVA
Publishing, the largest publisher of French-language magazines in
Québec, publishes general interest and entertainment weeklies and monthlies. TVA Films distributes films and television products in Canada's English- and French-language markets.

The
Broadcasting segment reported revenues of $340.9 million in 2003, an increase of $17.5 million or 5.4% from revenues of $323.4 million in 2002. The improvement
was caused primarily by a $12.3 million (5.3%) increase in broadcasting revenues resulting mainly from higher advertising revenues, as well as the full inclusion of the revenues of
TVAchats inc., operator of theLa Boutique TVAteleshopping service, since May 2003 (TVA Group previously held a 50% interest). Publishing
revenues rose by $12.8 million (19.8%), mainly because of the inclusion of Publicor's results following Quebecor Media's sale of Publicor by Quebecor Media to TVA Publishing in May 2002,
as well as increased magazine sales propelled by the success ofStar AcadémieandOccupation
Double, two popular television programs which aired on the TVA network in 2003.The strong results posted by the broadcasting
and publishing operations outweighed a decrease in distribution revenues, which had been expected in view of TVA Group's repositioning in that field.

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The
segment's operating income amounted to $81.5 million, compared with $78.9 million in 2002. The 3.3% increase stemmed from a 13.9% improvement in operating income from
publishing operations, which resulted from the inclusion of Publicor's results and higher profits at the magazines that covered theStar
Académiephenomenon. The broadcasting operation's higher revenues were largely offset by increased operating expenses, including programming costs.

The
highlight of the 2003 financial year at TVA Group was the programStar Académie,which was broadcast on the TVA network
from February 16 to April 20, 2003. At its height,Star Académiewas seen by nearly half of the French-speaking population
of Québec. One of the Sunday evening specials ofStar Académiehad more than 3-million viewers, setting an
all-time record for a program carried by the TVA network. In the fall of 2003, TVA scored another resounding success with the reality television showOccupation
Double.

The
BBM People Meter ratings for the Fall 2003 season, released at the beginning of 2004, again confirmed TVA's strong competitive advantage in Québec. The TVA network
ranked first in reality television, news, drama, comedy and variety programming.Occupation Doublewas the top-rated show of the season. TVA
had 9 of the top 10 programs, 15 of the top 20, and 20 of the top 30. Its audience share of 34% again exceeded that of its two main rivals, TQS (17%) and Radio-Canada (13%), combined. TVA was first in
the morning, daytime and evening dayparts, seven days a week.



The Company's operations in the Leisure and Entertainment segment consist primarily of:



In
2003, the Leisure and Entertainment segment's revenues totalled $205.0 million, compared with $206.3 million in 2002. Archambault Group's revenues grew 10.4%; sales at
Archambault retail outlets increased 7.4%, partly as a result of the addition of new points of sale.

The
new music recording and distribution operations, conducted by Musicor and Select, respectively, accounted for nearly half the increase in Archambault Group's revenues. The strong
performance derived in large part from the success of theStar AcadémieCD, which was the top-selling CD in
Québec in 2003 and was certified quintuple platinum, with more than 500,000 copies sold, and the CD released by Wilfred LeBouthillier, the winner of the first season of Star
Académie. With respect to distribution revenues, the success of the soundtrack of the musical comedyDon Juanwas
also a factor.

Increased
revenues at Archambault Group were partially offset by decreased distribution revenues in the Books segment, the impact of the transfer of Publicor to TVA Publishing, the sale
of Wilson & Lafleur ltée, a legal publishing house, and the closing of DM Diffusion Multimédia. The latter three events occurred in 2002.

The
Leisure and Entertainment segment generated operating income of $14.7 million in 2003, compared with $14.5 million in 2002. Archambault Group and the Books segment
increased their operating income by 11.6% and 18.3%, respectively. The higher operating income at Archambault Group was mainly due to the contribution of the new music recording activities, the
increased profitability of distribution activities, and the contribution of the new retail points of sale. The positive impact resulting from the reorganization of the group of publishing houses was
the main reason for the rise in operating income in the Books segment.

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On
October 15, 2003, the Company announced that it had acquired the 50% equity interest in CEC Publishing held by Hachette Livre S.A for a cash consideration of
$15.0 million and had become the sole shareholder of CEC Publishing, a standard-setter in textbook publishing in Québec for nearly 50 years.

In
January 2004, Archambault Group launched a new music download service with per-track fees. Thearchambaultzik.casection of thearchambault.casite, which will offer more than 300,000 tracks and albums of all kinds, is intended to address the problem of music
piracy. The service was launched in cooperation with Québec's main independent labels and the major international labels, including Universal, Sony, BMG, Warner and EMI.



Vidéotron Télécom is a business telecommunications provider with an 11,000-km network that reaches more
than 80% of businesses located in Québec's metropolitan areas and most businesses in Ontario's largest metropolitan centres. Vidéotron
Télécom's extensive network supports direct connectivity with networks in Ontario, eastern Québec, the Maritimes and the U.S. Through partnerships,
Vidéotron Télécom can serve customers around the world.

Vidéotron
Télécom's revenues decreased by $14.2 million in 2003 to $77.7 million. The decline was primarily due to a decline in
Internet-related revenues as a result of the renegotiation of the services agreement with Vidéotron and other factors, as well as lower point-to-point revenues
in Québec because of decreased demand, and lower revenues from telephone services.

Operating
income amounted to $14.4 million, compared with $27.3 million in 2002. The decline was due to the decreased revenues, lower operating margins resulting from the
unfavorable market conditions, lower capitalization, and dispute settlement costs incurred in 2003. The 2002 results were affected by acts of vandalism committed during the labour dispute at
Vidéotron.

In
2003, Vidéotron Télécom won one of its legal disputes with Ontario property management firms. In February 2003,
Vidéotron Télécom filed suit against two Toronto-area developers, including Oxford Properties Group Inc. ("Oxford"), which were charging
Vidéotron Télécom access fees it considered arbitrary, discriminatory and unreasonable. On June 6, 2003, the Ontario Superior Court issued an
injunction requiring Oxford to allow Vidéotron Télécom access to its buildings so it can offer tenants business telecommunications services.

On
December 19, 2003, Vidéotron Télécom sold its subsidiary, Mensys Business Solutions Center Ltd., a provider of software
solutions for municipalities that did not fit into the Company's operations, for a cash consideration of $2.0 million.

Finally,
on December 22, 2003, Quebecor Media closed an agreement to acquire the preferred shares of 3662527 Canada Inc. (the parent company of Vidéotron
Télécom) held by The Carlyle Group for a consideration with an estimated value of $125.0 million. The transaction will help align Vidéotron
Télécom's business objectives with those of Quebecor Media as a whole. It removes the uncertainty surrounding Vidéotron
Télécom's offering of business and residential telecommunications services and is expected to create additional synergies with the Company's other properties. Finally, it
will permit the harmonization of the Company's business strategies in the telecommunications field and faster development of telephony, Internet access and data transmission services.

Unrestricted Subsidiaries

In 2003, the Unrestricted Subsidiaries recorded revenues of $94.5 million, compared with $101.6 million during 2002. Operating income amounted to
$4.1 million, compared with a loss of $12.5 million during 2002.



The Web Integration/Technology segment includes two companies. Nurun is engaged in Web, intranet, extranet and business to consumer (B2C) e-commerce
development; e-marketing and customer relationship management (CRM) strategies; and interactive television concepts and operations. Nurun's subsidiary, Mindready Solutions, is engaged in
test engineering and real-time communications solutions.

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In
2003, the Web Integration/Technology segment recorded revenues of $66.3 million, compared with $74.8 million in 2002. The decrease was caused by reduced demand in the IT
and Internet advertising markets, particularly in the Toronto, Canada and Milan, Italy markets, combined with lower revenues at Mindready Solutions. Mindready Solutions' decreased revenues from test
systems were partly offset by increased revenues from embedded systems.

The
highlight of the 2003 financial year in the Web Integration/Technology segment was the turnaround in profitability. The segment generated $1.0 million in operating income,
compared with a $9.9 million operating loss in 2002. It was the first time the segment was operating income positive, on an annual basis, in its history as a subsidiary of Quebecor Media.

The
turnaround was mainly due to improved results at Mindready Solutions, which reduced its operating loss from $11.4 million in 2002 to $0.1 million in 2003 by increasing
its gross margin from 27% in 2002 to 35% in 2003 and reducing its administrative, selling, and research and development expenses. In 2002, Mindready Solutions' results were also affected by a
write-down of current assets and a charge for unoccupied office space.

In
view of the adverse market conditions, the Web Integration/Technology segment sold Paris-based Nurun Technologies S.A and closed Mindready Solutions' Paignton, United Kingdom
office during 2003 in order to reduce costs and streamline operations.

Nurun's
e-Business Services segment generated operating income of $1.1 million in 2003, compared with $1.4 million in 2002. Increased operating income at
Nurun's Montréal, New York, Paris and Milan offices, coupled with lower corporate expenses, did not entirely offset the impact of the sale of Flow Systems Corporation in 2002 and
reversals of reserves recorded in the same year. Those reversals were made necessary by the reappraisal in 2002 of the risk factors that had been determined as of December 31, 2001. Despite the
difficult and constricted business environment for Web agencies around the world, Nurun's e-Business Services segment has succeeded in generating operating income for the past seven
quarters.



Netgraphe is an integrated company offering e-commerce, information, communication and IT consulting services. Netgraphe owns the CANOE network, which
serves over 6.2 million Internet users per month and includescanoe.ca,canoe.qc.ca, La Toile du
Québec (toile.com),money.canoe.ca(webfin.comin French) andmegagiciel.com. Netgraphe also operates a string of e-commerce
sites:jobboom.com(employment),autonet.ca(automobiles), flirt.canoe.caandreseaucontact.com(dating), classifiedextra.caandclasseesextra.ca(classifieds).

In
addition, Netgraphe operates thetva.canoe.comandlcn.canoe.comsites, as well as two
sites for popular TVA programs, occupationdouble.comandstaracademie.ca. Netgraphe's subsidiary,
Progisia Informatique, offers IT consulting services in areas including e-commerce, outsourcing, integration and secure transaction environments.

Netgraphe's
revenues grew 5.2% from $26.8 million in 2002 to $28.2 million in 2003. Revenues increased by 18.1% at the special-interest portals and by 14.8% at the
general-interest portals. The special-interest portalflirt.canoe.ca/ReseauContact.comcontinued its growth with a 64% revenue increase. Revenues from
Netgraphe's general-interest portals in Montréal rose 25.2%. These factors more than offset the decrease in the Progisia consulting services subsidiary's revenues due to fierce
competition in that market, as well as the impact of the sale of the Micanoa.com portal in Spain in 2002, which no longer fitted into Netgraphe's long-term strategic positioning.

Operating
income amounted to $3.1 million, compared with a $2.6 million loss in 2002, a $5.7 million improvement. The excellent performance was mainly due to higher
revenues, the successful restructuring measures implemented since the second quarter of 2001, and the strict cost controls that ensued. At the special-interest sites, gross margin increased from 29.5%
in 2002 to 36.8% in 2003.

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Netgraphe
reported net income in the last three quarters of the 2003 financial year. It also generated net income for the financial year as a whole for the first time since it was
founded in 1999.

Financial Expenses

Financial expenses decreased by $23.2 million from $323.2 million in 2002 to $300.0 million in 2003, due primarily to the Company's lower
debt levels, which resulted from, among other things, the repayment of a $429.0 million term loan which came due in April 2003. The more favorable impact of the conversion of the
unhedged portion of the long-term debt, compared with 2002, was also a factor in the decrease in financial expenses. A $22.0 million gain on exchange was recorded under this heading
in 2003, compared with $2.2 million in 2002.

2002/2001 Financial Year Comparison

In October 2000, Quebecor Media acquired all the outstanding shares of Le Groupe Vidéotron ltée ("Groupe
Vidéotron"). Final acquisition of control over Groupe Vidéotron's cable television and broadcasting subsidiaries was subject to approval by the Canadian Radio-television
and Telecommunications Commission ("CRTC"). In May 2001, the CRTC approved the transfer of control over the cable television subsidiaries. In September 2001, the conditions set by the
CRTC under the approval granted in July 2001 for the transfer of control over TVA Group were satisfied.

In
accordance with Canadian generally accepted accounting principles, the results of the Cable Television segment and of TVA Group have been included in the 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.

At
the time of the acquisition of Groupe Vidéotron, management's intention was to divest itself of the Vidéotron Télécom
subsidiary. In view of the uncertain business environment in the telecommunications industry, the Company was unable to close the sale of its investment on favorable terms. It therefore decided to
keep Vidéotron Télécom and develop its full potential. The investment in Vidéotron Télécom, which was recorded
at realizable value until October 2001, has therefore been included in the Company's consolidated results since that date.

Quebecor
Media's consolidated financial statements for 2001 therefore report the operating results and cash flows of the Cable Television segment from May to December 2001, of the
Broadcasting segment from September to December 2001, and of the Business Telecommunications segment from November to December 2001. The following discussion of segmented results reports
the results of these segments on a comparable basis and therefore considers the operating results for full 12-month periods in 2002 and 2001.

Quebecor
Media posted revenues of $2.28 billion in the 2002 financial year, compared with $1.83 billion in 2001. The $452.9 million increase was due primarily to the
inclusion of the results of the Cable Television segment, TVA Group and the Business Telecommunications segment for the full year, as well as higher revenues in the Newspapers segment. These factors
partially offset lower sales in the Web Integration/Technology segment.

Operating
income was $561.0 million in 2002, compared with $388.7 million in 2001. The $172.3 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 segment. These
factors were partially offset by the lower revenues generated by the Web Integration/Technology and Internet/Portals segments. Lower newsprint prices and effective cost-containment
measures introduced in 2001 and continued in 2002 also contributed to the improvement.

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The Company recorded a net loss of $229.8 million in 2002, compared with $449.5 million in 2001. In accordance with new accounting rules, the Company stopped recording
amortization of goodwill in 2002. Excluding goodwill amortization, net of non-controlling interest, the net loss would have been $281.0 million in 2001.

The
2002 results were affected by increases in amortization expenses (+ $74.4 million) and financial expenses (+ $34.8 million), mainly as a result of
the inclusion of the results of the Cable Television, Broadcasting and Business Telecommunications segments. The higher financial expenses also derived from the issuance in July 2001 of Senior
Notes and Senior Discount Notes for net proceeds of US$850 million, which were used to repay loans bearing lower interest.

Reserves
for restructuring of operations and special charges decreased by $112.9 million in 2002 from $152.1 million in 2001 to $39.2 million in 2002. In 2001, the
Company recorded a mark-to-market of temporary investments in the amount of $99.8 million. Reserves for restructuring were also 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 $25.4 million
non-monetary compensation charge.

In
2002, the Company recorded a $187.0 million charge for the goodwill impairment losses 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, an increase of $40.0 million compared with the total
write-down of $147.0 million recorded in 2001 in the Internet/Portals ($118.5 million) and Web Integration/Technology ($28.5 million) segments.

In
the Cable Television segment, revenues increased by $15.6 million or 2.0%, on a comparable basis, to $781.0 million in 2002. The impact of aggressive competition from
satellite television operators and difficulties caused by the labor dispute between Vidéotron and its unionized employees were more than offset by increased revenues from cable Internet
access services. Operating income declined by $28.4 million or 10.8%, again on a comparable basis, to $235.5 million in 2002. Efficiencies yielded by Quebecor Media's
operating-cost-containment program were not enough to offset certain additional costs incurred during the year, including costs related to the labor dispute and costs related
to customer equipment.

The
Newspapers segment generated revenues of $831.6 million in 2002, an increase of $16.7 million or 2.0%, due mainly to increases in advertising revenues (4.0%) and
circulation revenues (2.1%). Operating income rose $21.6 million (10.9%) to $219.4 million, due primarily to lower newsprint prices, effective cost-containment efforts and
higher revenues, partially offset by higher operating costs.

In
the Broadcasting segment, TVA Group's revenues were $323.4 million in 2002, versus $322.8 million in 2001, on a comparable basis. Higher broadcasting and publishing
revenues were almost entirely offset by lower revenues from production and international distribution operations. TVA Group generated $78.9 million in operating income in 2002, versus
$69.5 million in the previous year, on a comparable basis. The increase in operating income in 2002 stemmed primarily from the higher revenues, the increased profitability of TVA's broadcasting
operations, and the inclusion of Publicor's results in the Broadcasting segment's consolidated results.

In
the Leisure and Entertainment segment, revenues amounted to $206.3 million in 2002, compared with $223.5 million in the previous year. The $17.2 million decrease
mainly reflects the transfer of Publicor magazines from the Leisure and Entertainment segment to the Broadcasting segment. As a result of the strong performance of Archambault Group and the Books
segment, operating income increased to $14.5 million from $14.2 million in 2001, despite the transfer of Publicor.

Vidéotron
Télécom's revenues totalled $91.9 million in 2002 compared to $96.7 million in 2001, on a comparable basis. Operating
income increased by $3.9 million, or 16.7%, from $23.4 million in 2001 to $27.3 million in 2002, mainly because of lower labor costs and higher operating margins, which outweighed
the impact of the decrease in revenues and of costs related to acts of vandalism against Vidéotron Télécom's network during the labor dispute at
Vidéotron. In 2002, Vidéotron Télécom acquired Toronto-based Stream Intelligent Networks Corporation and two fibre-optic routes stretching
across southern Ontario and into the United States in order to expand its business into the Ontario market.

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The
Web Integration/Technology segment's revenues were $74.8 million in 2002, compared with $122.1 million in 2001. The decrease stemmed mainly from the sharp decline in
the revenues of Mindready Solutions as a result of the collapse in demand from telecommunications companies, lower demand in e-Business Services, and the discontinuance of some operations.
The operating loss was $9.9 million, compared with $15.6 million in 2001. The reduced operating loss in 2002 was mainly due to reduced operating expenses, the recording of special
charges for the restructuring of operations in 2001, and higher operating margins.

The
Internet/Portals segment's revenues were virtually unchanged in 2002, at $26.8 million. A decline in revenues from general-interest portals was offset by a significant
increase in revenues from the special-interest sites. The segment's operating loss was reduced from $21.5 million in 2001 to $2.6 million in 2002, a favorable variance of
$18.9 million. This strong performance stemmed from the success of the restructuring process launched in 2001. Lower payroll and advertising/promotion expenses, combined with increased revenues
from the special-interest sites, contributed to the dramatic improvement. In 2002, Netgraphe reorganized its properties and converted thecanoe.caand canoe.qc.cageneral-interest portals into virtual gateways to Quebecor Media's other properties.

The
$34.8 million increase in financial expenses in 2002 mainly reflected the inclusion of the results of the Cable Television, Broadcasting and Business Telecommunications
segments for the full year, as well as the issuance in July 2001 of Senior Notes and Senior Discount Notes for net proceeds of US$850 million, 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 retroactive application of the new accounting policy on foreign currency translation.

Liquidity and Capital Resources

Operating Activities

Continuing operating activities provided cash flows totalling $363.7 million in 2003, compared with $369.9 million in 2002. The positive impact of
the improved operating results was offset by the deferral of changes in non-cash balances related to operations recorded in the Cable Television segment between the fourth quarter of 2002
and the first quarter of 2003. The change in non-cash balances related to operations in the Cable Television segment increased cash flows by $81.1 million in the last quarter of
2002 and used $61.6 million in cash flows in the first quarter of 2003.

There
was a favorable difference of $95.5 million in cash flows provided by continuing operating activities in 2002 as compared with 2001, due primarily to the inclusion of the
cash flows of the Cable Television, Broadcasting and Business Telecommunications segments for 12 months in 2002, combined with improved results. These increases were partially offset by an
unfavorable difference due to decreased investment in working capital in 2001.

At
December 31, 2003, working capital was $49.0 million, whereas it was negative by $502.3 million at the same date in 2002. The difference mainly reflects the
impact of the repayment by Quebecor Media of the $429.0 million term loan that came due in April 2003. The refinancing of Sun Media and Vidéotron, which reduced
short-term debt repayment requirements, also contributed to the improvement in working capital. The recording under current liabilities of the additional $68.7 million payable to
The Carlyle Group in respect of the purchase of the preferred shares held by The Carlyle Group in Vidéotron Télécom was offset by a reduction in accounts
payable and accrued charges, due mainly to the deferral of payments to suppliers.

Financing Activities

Quebecor Media's consolidated long-term debt (excluding redeemable preferred shares) and consolidated bank debt were reduced by $758.7 million
in 2003. The reduction reflects the repayment of the $429.0 million term loan that came due in April 2003, debt repayments of $120.0 million in aggregate made from free cash flow
from continuing operations, and the positive impact of exchange rate fluctuations on the value of the portion of the debt denominated in foreign currency. However, the last factor was offset by an
equal change in the value of the cross-currency swap agreements used to hedge that debt against exchange rate fluctuations. The carrying value of the cross-currency swap agreements was
$185.9 million at the end of 2003 and is entered under short-term liabilities and other liabilities.

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Some
of these cross-currency swap agreements are subject to a floor limit on negative fair value, below which the Company can be required to make prepayments to restore the fair value.
Such prepayments are offset by equal reductions in the Company's commitments under the agreements. Because of the appreciation of the Canadian dollar against the US dollar in 2003, Quebecor Media and
Vidéotron had to make prepayments of $123.6 million and $13.5 million, respectively, under these swap agreements. These prepayments were financed from the Company's cash
assets and from the existing credit facilities of the Company and its subsidiary. The $13.5 million prepayment on Vidéotron's cross currency swap arrangements was fully offset
when the swap arrangements were redeemed as part of the refinancing of Vidéotron.

In
2003, the Company renegotiated the cross-currency swap agreements to raise the fair value floor by $182.0 million to $282.0 million. The fair value of the cross-currency
swap agreements subject to prepayments was negative $221.7 million as of December 31, 2003. The cross-currency swap arrangements of Sun Media and, since Vidéotron's
refinancing in October 2003, Vidéotron are no longer subject to such calls.

Quebecor
Media and its subsidiaries carried out a number of financing and refinancing operations during the 2003 financial year.

On
December 22, 2003, Quebecor Media closed an agreement to acquire all the preferred shares of 3662527 Canada Inc., the parent company of Vidéotron
Télécom, held by The Carlyle Group for a consideration with an estimated value of $125.0 million. On the same date, a $55.0 million payment was made to The
Carlyle Group. The additional amount payable, which will be adjusted based on the value of Quebecor Media's common shares, is payable on demand at any time after December 15, 2004, but no later
than December 15, 2008. The preferred shares acquired from The Carlyle Group were recorded on the balance sheet at a value of $278.7 million and entered under liabilities. Following the
transaction, a $153.7 million gain, without any tax consequences, was recorded on Quebecor Media's consolidated statement of income.

On
October 8, 2003, Vidéotron successfully completed the refinancing of its term credit facilities. The refinancing entailed the issuance of a private placement of
$335.0 million aggregate principal amount of 67/8% Senior Notes due January 15, 2014, which yielded net proceeds of US$331.9 million before transaction fees. The
refinancing also involved the establishment of new bank credit facilities consisting of a five-year $100 million revolving credit facility and a five-year $368.1 million term loan. The
proceeds from the refinancing were used to repay in full Vidéotron's borrowings under its previous credit facilities.

On
February 7, 2003, Sun Media closed a private placement of US$201.5 million aggregate principal amount of 7.625% Senior Notes due 2013, and contracted new bank credit
facilities totalling $425.0 million, more than 95% of the principal of which does not come due until 2008 or 2009. The proceeds from the sale of the Senior Notes and the new bank credit
facilities were used to pay off Sun Media's debt, on which substantial amortization payments would have been due in 2003 through 2005, and which was repayable in full in 2007, as well as to pay a
$260.0 million dividend to Quebecor Media, of which $150.0 million was used to reduce Vidéotron's long-term debt. In November 2003, Sun Media was able
to renegotiate its bank credit facilities at a more advantageous interest rate due to favorable market conditions and Sun Media's improved risk profile.

These
refinancing operations completed another important stage in the optimization of Quebecor Media's capital structure. As a result of the refinancing, Vidéotron and Sun
Media extended the maturity dates of their long-term debt and significantly reduced their short-term debt repayment obligations. As a result of the Vidéotron
refinancing, Standard & Poor's upgraded the corporate credit ratings of Quebecor Media and its Sun Media and Vidéotron subsidiaries by one level to BB- in all three
cases.

Finally,
early in the 2003 financial year, Quebecor Media shareholders injected a total of $431.9 million into the Company's share capital. At the beginning of 2003,
Quebecor Inc. contributed $216.1 million to the share capital of Quebecor Media in the form of redeemable preferred shares, enabling the Company to repay part of the
$429.0 million term loan that came due in April 2003. On April 22, 2003, common shares in an aggregate amount of $215.8 million were issued. The proceeds were used to pay
down the balance of the above-noted $429.0 million term loan. On the same date, the redeemable preferred shares issued in early 2003 were converted into common shares.

In
2002, Quebecor Media's consolidated long-term debt and consolidated bank debt were reduced by $213.7 million. The Vidéotron and Sun Media
subsidiaries were responsible for most of the decrease in debt, with reductions of $168.0 million and $39.4 million, respectively.

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Investing Activities

Business acquisitions (including buyouts of minority interests) and additions to property, plant and equipment increased from $149.2 million in 2002 to
$208 million in 2003.

Business
acquisitions totalled $76.2 million in 2003 compared to $14.2 million in 2002. The 2003 acquisitions were mainly comprised of the acquisition of Annex
Publishing & Printing Inc. by Sun Media in 2003 for a cash consideration of $34.2 million, and the increase in Quebecor Media's interest in TVA Group under TVA Group's share
repurchase and cancellation program. In 2003, 1,452,200 TVA Group Class B Non-Voting Shares were repurchased for $25.8 million in cash (compared with $7.9 million in
2002). The business acquisitions also included the buyout of the 50% interest in CEC Publishing held by Hachette Livre S.A. for a cash consideration of $15.0 million and the buyout of
minority interests in Archambault Group for $2.7 million in cash.

Additions
to property, plant and equipment, which had totalled $135.0 million in 2002, amounted to $131.8 million in 2003. Decreased capital expenditures in the Cable
Television and Business Telecommunications segments were partially offset by an increase in the Newspapers segment.

Additions
to property, plant and equipment increased from $129.7 million in 2001 to $135.0 million in 2002 primarily because of the inclusion of the Cable Television,
Broadcasting and Business Telecommunications segments for the full year in 2002, which was partially offset by decreased expenditures in the Cable Television and Newspapers segments. In 2001, business
acquisitions consisted mainly in the amounts paid to buy out the minority shareholders in Sun Media.

Financial Position

At December 31, 2003, the Company and its wholly owned subsidiaries had cash, cash equivalents and liquid investments with remaining maturities greater
than three months totalling $245.2 million, consisting mainly of short-term investments. The Company and its wholly owned subsidiaries also had unused lines of credit of
$221.3 million available, for total available liquid assets of $466.5 million.

At
December 31, 2003, the consolidated debt, including the short-term portion of the long-term debt, totalled $2.76 billion. The debt portfolio is
comprised, primarily of revolving and term bank credit facilities, Senior Notes, Senior Discount Notes and Senior Secured Notes. The consolidated debt included Sun Media's $551.7 million debt,
Vidéotron's $886.7 million debt and TVA Group's $24.4 million debt, as well as Quebecor Media Senior Notes and Senior Discount Notes in an aggregate amount of
$1.20 billion and Quebecor Media's $97.0 million revolving credit facility.

The
Company tries to spread the maturity profile of its debt portfolio in order to reduce the refinancing risk. The Company also uses a combination of fixed and floating rate debt, as
well as derivative instruments, in an effort to mitigate exposure to fluctuations in interest rates. As at December 31, 2003, the weighted average maturity of the Company's consolidated debt
was approximately 6.5 years and its fixed-to-floating debt mix was 69% fixed to 31% floating.

Management
believes that cash flow from operations and available sources of financing is sufficient to cover cash requirements for capital investment, interest payments and mandatory
debt repayment. The Company has access to the cash flow generated by its subsidiaries by way of dividends declared by its public subsidiaries and, dividends and advances from its private subsidiaries.
In addition, the Company has access to 50% of the Revolving Credit Facility of its Newspaper and Cable private operations. However, the Company's subsidiaries may have restrictions, based on
contractual debt obligations, regarding dividends and advances to the Company. Management believes that the financing activities carried out in 2003 and discussed under "Financing Activities" above
have enhanced the Company's financial flexibility by reducing its long-term debt, extending debt maturities on which substantial amortization payments were due in the coming years, and
facilitating the circulation of liquid assets between the Company and its subsidiaries.

Contractual Obligations

As of December 31, 2003, material contractual obligations included commitments for future payments under long-term debt arrangements and
operating lease agreements. These obligations are summarized in Table 4 below and are fully disclosed in notes 17 and 23 to the Company's consolidated financial statements on
page F-42 and F-59, respectively.

Table 4  Contractual obligations  ($ millions)

|                                   |  | Payments due, by period
|---------------------------------- |  | -----------------------
|
|Long-term debt                     |  |                        
|Operating leases                   |  |                        
|Pension requirements               |  | $                      
|                                   |  |                        
|Total contractual cash obligations |  |                        
|                                   |  |                        

The
Company rents premises and equipment under various operating leases. As of December 31, 2003, minimum payments under these leases over the next five years and thereafter total
$171.5 million.

Newsprint
represents a significant input and component of operating costs for the Newspapers segment. Sun Media uses several newsprint producers to supply its requirements and has
entered into a long-term agreement with one company to supply the majority of its newsprint purchases through December 2005. Sun Media's annual purchases under the agreement are
approximately 125,400 tons of newsprint.

The
Broadcasting segment made a commitment to invest $48.9 million over an 8-year period in the Canadian television industry and the Canadian telecommunications
industry in order to promote television content and the development of communications. As at December 31, 2003, the balance to be invested amounted to $32.9 million.

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 Quebecor World Inc. on a commercial, arm's length basis and records the transactions at exchange value. Such commercial printing services are undertaken in the ordinary course
of business. The total expenses for commercial printing services with Quebecor World amounted to $58.3 million in 2003, compared with $57.9 million in 2002 and $54.8 million in
2001.

Off-Balance Sheet Arrangements

Operating leases

The Company has guaranteed a portion of the residual values of certain assets under operating leases with expiry dates between 2004 and 2010, to the benefit of
the lessor. If the fair value of the assets, at the end of their respective lease terms, is less than the residual value guaranteed, then the Company must, under certain conditions, compensate the
lessor for a portion of the shortfall. The maximum exposure in respect of these guarantees is $8.9 million. As at December 31, 2003, the Company has not recorded a liability associated
with these guarantees, since the Company does not expect to make any payments pertaining to the guarantees of these leases.

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Sub-lease agreements

The Company has, for some of its assets under operating leases, entered into sub-lease agreements with expiry dates between 2004 and 2005. If the
sub-lessee defaults under the agreement, the Company must, under certain conditions, compensate the lessor for the default. The maximum exposure in respect of these guarantees is
$0.5 million. As at December 31, 2003, the Company has not recorded a liability associated with these guarantees, since it is not probable that the sub-lessee will default
under the agreement. Recourse against the sub-lessee is also available, up to the total amount due.

Business and asset disposals

In the sale of all or part of a business or an asset, in addition to possible indemnification relating to failure to perform covenants and breach of
representations or warranties, the Company may agree to indemnify against claims related to its past conduct of the business. Typically, the term and amount of such indemnification will be limited by
the agreement. The nature of these indemnification agreements prevents the Company from estimating the maximum potential liability it could be required to pay to guaranteed parties. The Company has
not accrued an amount in respect of this item in the consolidated balance sheet.

Long-term debt

Under the terms of their respective U.S. indebtedness, the Company and certain of its subsidiaries have agreed to indemnify their respective lenders
against changes in withholding taxes. These indemnifications extend for the term of the indebtedness and do not have a limit on the maximum potential liability. The nature of the indemnification
agreement prevents the Company from estimating the maximum potential liability it could be required to pay to lenders. Should such amounts become payable, the Company and its subsidiaries would have
the option of repaying these debts. No amount has been accrued in the consolidated financial statements with respect to these indemnifications.

Suppliers

In the normal course of its operations, the Company enters into contractual agreements with suppliers. In some cases, the Company agrees to provide
indemnifications in the event of legal procedures initiated against them. In some other cases, the Company provides indemnification to courterparties for damages resulting from suppliers. The nature
of the indemnification agreements prevents the Company from estimating the maximum potential liability it could be required to pay. No amount has been accrued in the consolidated financial statements
with respect to these indemnifications.

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 maturities and an optimal balance of fixed and variable rate obligations. As at December 31, 2003, Quebecor Media and its subsidiaries, Vidéotron
and Sun Media, were using derivative financial instruments to reduce their exchange rate and interest rate exposure.

While
these agreements expose the Company and the subsidiaries to the risk of non-performance by a third party, the Company and its subsidiaries believe that the possibility
of incurring such loss is remote due to the creditworthiness of the parties with whom they deal. 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, 2003 is provided in note 1(s) to the consolidated financial statements and in "Item 11.
Quantitative and Qualitative Disclosure about Market Risk.

Concentration
of credit risk with respect to trade receivables is limited due to the Company's diverse operations and large customer base. As of December 31, 2003, the Company had
no significant concentration of credit risk. Quebecor Media believes 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.

Regulation

The Company is subject to extensive government regulation mainly through theBroadcasting Actand the Telecommunications Actboth administered by the Canadian Radio-television and Telecommunicatons Commission ("CRTC"). Changes to the regulations and
policies governing broadcast television, speciality channels and program distribution through cable and DBS 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 effect on our business, financial condition or results of operations.

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Trend Information

The Company's business is cyclical in nature. It is dependent on advertising and, in the 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. Advertising and circulation revenues in the Newspapers segment have improved since 2001, and the Company expects that they will continue to
improve in 2004.

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

Newsprint
prices have had a significant effect on the Company's 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 $950 per metric ton, the industry has experienced two further full pricing cycles. Over the twelve-month period from August 2002 to August 2003, newsprint prices rose $95 from $650 to
$745 per metric ton. Newsprint prices closed at $735 per metric ton on December 31, 2003 and the Company expects that prices will increase during 2004.

In
addition, the Company's 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 reading and viewing habits.

Critical Accounting Estimates

Goodwill

Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment
test is carried out in two steps.

In
the first step, the fair value of a reporting unit is compared with its carrying amount. To determine the fair value of the reporting unit, the Company uses a combination of valuation
methods including discounted future cash flows, operating income multiples and market price.

The
discounted cash flows method involves the use of estimates such as the amount and 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
operating income multiples method requires the availability of fair values of enterprises with comparable and observable economic characteristics, as well as of recent operating
income 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 complete reliance on estimates and assumptions.

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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. The Company 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

Business acquisitions are accounted for by Quebecor Media using the purchase method of accounting. Under the purchase method, the purchase price is allocated to
the acquired assets and assumed liabilities based on their estimated fair values at the date of acquisition. The excess of the purchase price over the sum of the values ascribed to the acquired assets
and assumed liabilities is recorded as goodwill. The judgements made in determining the estimated fair value and the expected useful life of each acquired asset, and the estimated fair value of each
assumed liability, can significantly impact net income, because of, among other things, the impact of the useful lives of the acquired assets, since different assets may have different useful lives.
Also, future income taxes on temporary differences between the book and tax value 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 future periods.

Determining
the fair value of certain acquired assets and liabilities requires judgment and involves complete reliance on estimates and assumptions. The Company uses primarily the
discounted future cash flow approach in estimating the value of acquired intangible assets.

The
estimates and assumptions used in the allocation of the 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 the 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, 2003, the Company recorded a valuation allowance of $132.3 million. The ultimate amount of future income tax assets realized could be
materially different from those recorded, as influenced by future operating results of the Company.

Changes in Accounting Policies

In 2003, 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 notes 1(b) and 1(c) to the Company's annual consolidated financial statements on pages F-9
to F-13.

In
the fourth quarter of 2003, the Company revised its accounting for equipment sales to customers and hook-up costs. Until the end of the third quarter of 2003, the cost of
subsidies granted to customers on the equipment sold was capitalized and amortized over three years on a straight-line basis, and the cost of reconnecting customers, which included
material, direct labor and certain overhead charges, was capitalized to fixed assets and depreciated over three or four years on a straight-line basis.

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The
Company has changed its accounting policies in order to expense, as they are incurred, the costs of customers' subsidies and the costs of reconnecting customers. These changes have
been applied retroactively and had the following effects for the financial years ended December 31, 2003, 2002 and 2001, respectively:



As
at December 31, 2003, fixed assets decreased by $5.9 million, other assets decreased by $47.6 million, while income tax and other tax liabilities decreased by
$4.4 million, long-term future income tax liabilities decreased by $12.9 million and deficit increased by $36.2 million. As at December 31, 2002, fixed assets
decreased by $3.8 million, other assets decreased by $29.1 million, while long-term future income tax liabilities decreased by $11.2 million and deficit increased by
$21.7 million. Consequently, deficit decreased by $5.9 million and $0.6 million as at December 31, 2001 and January 1, 2001, respectively.

Effective
January 1, 2003, TVA Group, Nurun, Mindready Solutions and Netgraphe changed the method of accounting for employee stock option plans and decided to adopt the fair value
based method on a prospective basis. Employee stock option awards granted, modified or settled prior to January 1, 2003 are not recognized according to the fair value method but according to
the settlement method. Thus, the fair value method is applied only to employee stock options granted after December 31, 2002.

In
2002, the Company completed the goodwill impairment tests for each of its operating units, in accordance with the recommendations in Section 3062, Goodwill and Other Intangible Assets, of theCICA 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 ($1.94 billion), Business
Telecommunications ($164.9 million), Web Integration/Technology ($20.4 million) and Internet/Portals ($41.8 million) segments.

In
accordance with the transitional provisions contained in Section 3062 of theCICA Handbook,an impairment loss recognized during
the financial year in which the new recommendations are initially applied was 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."

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Recent Accounting Developments in Canada

Primary source of Generally Accepted Accounting Principles ("Canadian GAAP"):

In July 2003, the CICA issued Section 1100 of theCICA Handbookentitled Generally Accepted Accounting
Principles("Canadian GAAP"). This section establishes standards for financial reporting in accordance with Canadian GAAP,
and provides guidance on sources to consult when selecting accounting policies and determining appropriate disclosures, when a matter is not dealt with explicitly in the primary sources of Canadian
GAAP. The standards in Section 1100 are applicable to financial periods starting on or after October 31, 2003. The Company will implement the standards of Section 1100 in the
first quarter of 2004, and they should not have a material impact on the Company's consolidated financial statements.

Asset retirement obligations

In March 2003, the CICA issued Section 3110 of theCICA Handbook, entitled Asset Retirement
Obligations. This section establishes standards for the recognition, measurement and disclosure of liabilities for asset retirement
obligations and the associated asset retirement costs. The standards require an entity to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred
and when a reasonable estimate of fair value can be made. The standards define the fair value as the amount at which that liability could be settled in a current transaction between willing parties,
other than in a forced or liquidation transaction. An entity is subsequently required to allocate that asset retirement cost to amortize it over its useful life. The standards in Section 3110
are applicable to financial periods starting on or after January 1, 2004. The Company will implement the new standards in the first quarter of 2004, and is currently evaluating the impact of
these new standards.

Presentation and disclosure of financial instruments

In June 2003, the CICA amended the standards on the presentation and disclosure of financial instruments included in Section 3860 of the CICA Handbook,entitledFinancial Instruments  Disclosure and
Presentation. The new standards require obligations that may be settled, at the issuer's option, by a variable number of the issuer's own equity instruments to be presented as
liabilities. Thus securities issued by an enterprise that give the issuer unrestricted rights to settle the principal amount in cash or in the equivalent value of its own equity instruments will no
longer be presented as equity. These revised standards are applicable to financial periods starting on or after November 1, 2004. The Company does not intend to apply them prior to that date.

Variable interest entities

In June 2003, the CICA issued Accounting Guideline No 15,Consolidation of Variable Interest Entities,("AcG-15"), in order to address the consolidation of variable interest entities ("VIEs"). VIEs are entities that have insufficient equity and/or their equity investors lack one or more of
the specified essential characteristics of a controlling financial interest. The guideline provides specific guidance for determining when an entity is a VIE and when it should be consolidated. Every
enterprise that has a contractual, ownership, or other financial interest in or with any entity, special-purpose or otherwise, must determine whether that interest exposes the enterprise to expected
losses or expected residual gains of the entity in or with which it has that interest. If the entity is a VIE, the enterprise with the majority of the expected losses or expected residual returns
consolidates the VIE. This guideline is harmonized with the corresponding US GAAP. The guideline will apply to financial periods beginning on or after November 1, 2004. The Company does not
intend to apply it prior to that date.

Long-lived assets

In December 2002, the Section 3063 of theCICA Handbook, entitledImpairment
or Disposal of Long-lived Assetswas issued. 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 the Company. It requires that an impairment loss be recognized when the
carrying amount of a long-lived asset to be held and used exceeds the sum of the undiscounted cash flows expected from its use and eventual disposal; an impairment should be measured as
the amount by which the carrying amount of a long-lived asset exceeds its fair value. This guideline is harmonized with the corresponding US GAAP. The new standards in Section 3063
are applicable for financial periods beginning on or after April 1, 2003. The Company will implement the new standards in the first quarter of 2004, and is currently evaluating the impact of
these new standards.

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Recent U.S. GAAP Pronouncements

SFAS 148, Accounting for Stock-Based Compensation 
Transition and Disclosure  an Amendment of SFAS No. 123

In December 2002, the Financial Accounting Standards Board ("FASB") issued this statement, which provides alternative methods of transition for an entity
that voluntary changes to the fair-value-based method of accounting for stock-based employee compensation, in a fiscal year beginning before December 16, 2003. Three methods are
available:



If
an entity elects to adopt the fair-value-based method in fiscal years beginning after December 15, 2003, the change may not be reported using the prospective
method. Quebecor Media accounts for all stock option plans using the fair-value-based method. Therefore, this statement will not have an impact on the Company's consolidated financial
statements.

SFAS 149, Amendment of Statement 133 
Derivative Instruments and Hedging Activities

This statement amends the financial accounting and reporting for derivative instruments to clarify the definition of a derivative, expand the nature of exemptions
from the statement, clarify the application of hedge accounting when using certain instruments, clarify when an embedded derivative with an underlying that is an interest rate or interest rate index
is not considered clearly and closely related to the host contract, and modify the cash flow presentation of derivative instruments that contain financing elements.

The
statement is effective for derivative transactions and hedging relationships entered into or modified after June 30, 2003. This statement does not have a material impact on
the Company's consolidated financial statements.

Forward-Looking Statements

This report contains forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to known and unknown risks and uncertainties that could cause the Company's actual results to differ materially from those set forth in the forward-looking
statements. These risks include changes in customer demand for the Company's products, changes in raw material and equipment costs and availability, seasonal fluctuations in customer orders, pricing
actions by competitors, and general changes in the economic environment.

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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 15, 2004:

|Name and Municipality of Residence                                        |  | Age |  | Position(4)                                       
|------------------------------------------------------------------------- |  | --- |  | --------------------------------------------------
|André Bourbonnais(1)(2)
Saint-Lambert, Québec                             |  | 42  |  | Director                                          
|Guy Coulombe
Montréal, Québec                                             |  | 67  |  | Director                                          
|Serge Gouin(2)
Outremont, Québec                                          |  | 60  |  | Director and President and Chief Executive Officer
|Jean La Couture, FCA(1)
Montréal, Québec                                  |  | 57  |  | Director                                          
|Samuel Minzberg
Westmount, Québec                                         |  | 54  |  | Director                                          
|Jean-Louis Mongrain(1)
Longueuil, Québec                                  |  | 60  |  | Director                                          
|The Right Honourable Brian Mulroney,
P.C., C.C., L.L.D.
Westmount, Québec |  | 64  |  | Director                                          
|Jean Neveu(2)
Longueuil, Québec                                           |  | 63  |  | Director                                          
|Érik Péladeau
Rosemere, Québec                                            |  | 48  |  | Director and Chairman of the board of directors   
|Pierre Karl Péladeau
Montréal, Québec                                     |  | 42  |  | Director                                          
|Sylvie Cordeau
Montréal, Québec                                           |  | 39  |  | Vice President, Communications                    
|Mark D'Souza
Beaconfield, Québec                                          |  | 43  |  | Vice President and Treasurer                      
|Michel Éthier
Montréal, Québec                                            |  | 49  |  | Vice President, Taxation                          
|Luc Lavoie
Montréal, Québec                                               |  | 48  |  | Executive Vice President, Corporate Affairs       

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|Jacques Mallette
Boucherville, Québec          |  | 46 |  | Executive Vice President and Chief Financial Officer(3)       
|---------------------------------------------- |  | -- |  | --------------------------------------------------------------
|Denis Sabourin
Kirkland, Québec                |  | 43 |  | Vice President and Corporate Controller                       
|Louis Saint-Arnaud
Mont-Saint-Hilaire, Québec  |  | 57 |  | Vice President, Legal Affairs and Secretary                   
|Richard Soly
Montréal, Québec                  |  | 66 |  | Executive Vice President, Marketing & Contents                
|Claudine Tremblay
Nuns' Island, Verdun, Québec |  | 50 |  | Director, Corporate Services and Assistant Corporate Secretary
|Edouard G. Trépanier
Boucherville, Québec      |  | 53 |  | Vice President, Regulatory Affairs                            

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André Bourbonnais, Director.    Mr. Bourbonnais has been a
director of Quebecor Media since December 13, 2002. He serves as a member of our audit committee and our compensation and human resources committee. 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 Inc. Mr. Bourbonnais joined CDPQ in 2001 as President of CDP Capital, Financial Services and in December 2002 he was named President of CDP
Capital Communications. Mr. Bourbonnais is a member of the Québec Bar and a graduate of the London School of Economics and Political Science.

Guy Coulombe, Director.    Mr. Coulombe has been a director of Quebecor Media since May 5, 2003.
Mr. Coulombe has served as a member of the board of directors of several companies, including Canadian National, Domtar and Consolidated Bathurst, where he aided in the amalgamation process
with other companies in the forestry industry. He also served as Chairman of the board of directors of TV5 Canada, where, in collaboration with France, Belgium and Switzerland, he aided in the
management of French-language television in Canada and its implementation in Latin America and the United States.

Serge Gouin, Director and President and Chief Executive Officer.    Mr. Gouin has been a Director of Quebecor Media since
May 25, 2001, and he was appointed President and Chief Executive Officer on March 12, 2004. From January 2003 to March 12, 2004, he served as Chairman of the board of
directors of Quebecor Media. He also chairs the compensation and human resources committee. Following his appointment as our President and Chief Executive Officer on March 12, 2004,
Mr. Gouin intends to resign from the compensation and human resources committee. His successor will be appointed following his resignation. In July 2001, Mr. Gouin was appointed
to the position of Chairman of the board of directors of Vidéotron. Mr. Gouin is an Advisory Director of Citigroup Global Markets Canada Inc. 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. Mr. Gouin is also a member of the board of directors of Astral Media Inc., Cott Corporation, Onex
Corporation and Cossette Communication Group Inc.

Jean La Couture, FCA, Director.    Mr. La Couture has been a director of Quebecor Media and the Chairman of its audit
committee since May 5, 2003. Mr. La Couture, a Fellow Chartered Accountant, is President of Private Hearing Ltd., a mediation and negotiation firm, and President of Top Management
Services Inc., a management firm. He also acts as President for the "Regroupement des assureurs de personnes à charte du Québec (RACQ)". From 1972 to 1994, he was
President and Chief Executive Officer of three organizations, including The Guarantee Company of North America, a Canadian specialty insurance company from 1990 to 1994. Mr. La Couture
also serves as director on the board of directors of several corporations, including Quebecor Inc., Groupe Pomerleau (a Quebec-based construction company), Innergex Power Income Fund,
Vidéotron, our subsidiary, and ISACSOFT Inc.

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Samuel Minzberg, Director.    Mr. Minzberg has been a director of Quebecor Media since June 27, 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.

Jean-Louis Mongrain, Director.    Mr. Mongrain has been a director of Quebecor Media since
December 13, 2002. He has been a member of Quebecor Media's audit committee since May 5, 2003. 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 Mulroney, Director.    Mr. Mulroney has served as a Director of Quebecor Media since
January 31, 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 Neveu, Director.    Mr. Neveu has served as a Director of Quebecor Media since January 29, 2001.
Mr. Neveu is a member of the compensation and human resources committee of the board of directors. 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. He was the interim President and Chief Executive Officer of Quebecor World Inc. from March 18, 2003 to
March 12, 2004. 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 Péladeau, Director and Chairman of the board of
directors.    Mr. Péladeau has served as a member of the board of directors of Quebecor Media since January 29, 2001. He was appointed Chairman of the board of
directors of Quebecor Media on March 12, 2004. Prior to his appointment as Chairman of the Board of Directors, Mr. Péladeau served as Vice Chairman of the Board of
Directors of Quebecor Media (from January 2001 to March 12, 2004). 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, including the board of directors of Quebecor World Inc.
Érik Péladeau is the brother of Pierre Karl Péladeau.

Pierre Karl Péladeau, Director.    Mr. Péladeau has served a member of the board of
directors of Quebecor Media since August 18, 2000. From August 18, 2000 to March 12, 2004, Mr. Péladeau also served as the President and Chief Executive
Officer of Quebecor Media. Mr. Péladeau is also the President and Chief Executive Officer of Quebecor Inc. and, since March 12, 2004, Quebecor World Inc. He
serves as the Chairman of the Board of Sun Media, and the Chairman of the Board of Nurun. Mr. Péladeau joined Quebecor's communications division in 1985 as Assistant to the
President. From 1989 until 1991, Mr. Péladeau was Vice-President, Operations of Quebecor Group Inc., and he was appointed President in 1991. In 1994,
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 one of Europe's largest printers by 1997. In 1997, Mr. Péladeau became Executive Vice President and Chief Operating Officer of Quebecor Printing Inc.
(which has since become Quebecor World Inc.). In 1999, Mr. Péladeau became President and Chief Executive Officer of Quebecor Inc. Mr. Péladeau
was also the President and Chief Executive Officer of Vidéotron from July 2001 until June 2003. 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.

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Sylvie Cordeau, Vice President, Communications.    Ms. Cordeau was appointed Vice President, Communications of Quebecor
Media as of March 14, 2003. She is responsible for communications for the Quebecor Media group of companies. She also remains involved in the corporate communications and the philanthropic
activities of Quebecor Inc. Ms. Cordeau has worked in the Quebecor group of companies for the past five years, and has performed various functions within management. Prior to her
appointment as Vice President, Communications, Ms. Cordeau was Executive Adviser, Office of the President of Quebecor Inc. Ms. Cordeau is a member of the Quebec Bar Association
and holds a Master's Degree in International and European Law from the Université Catholique de Louvain in Belgium.

Mark D'Souza, Vice President and Treasurer.    Mr. D'Souza has 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.

Michel Éthier, Vice President, Taxation.    Mr. Éthier became Vice President, Taxation of
Quebecor Media in March 2004. From 1988 to 2000, Mr. Éthier was Director, Taxation of Le Groupe Vidéotron ltée. Following the purchase of Le
Groupe Vidéotron ltée by Quebecor Media in October 2000, Mr. Éthier became Senior Director, Taxation of Quebecor Media. From 1983 to 1988,
Mr. Éthier was Senior Tax Advisor of Gaz Metropolitain Inc. and from 1978 to 1983, he was, successively, auditor and tax specialist for Coopers & Lybrand, Chartered
Accountants. Mr. Éthier has been a member of the Canadian Institute of the Chartered Accountants since 1980.

Luc Lavoie, Executive Vice President, Corporate Affairs.    Mr. Lavoie has been Executive Vice President, Corporate
Affairs, of Quebecor Media 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.

Jacques Mallette, Executive Vice President and Chief Financial Officer.    Mr. Mallette has been Executive Vice President
and Chief Financial Officer of Quebecor Media since March 24, 2003. He is also the Executive Vice President and Chief Financial Officer of Quebecor Inc., Sun Media,
Vidéotron and certain of our other subsidiaries. Mr. Mallette also serves as a director of a number of our subsidiaries, including Vidéotron. Prior to joining the
Quebecor group of companies, Mr. Mallette was President and Chief Executive Officer of Cascades Boxboard Group Inc., where he started as Vice President and Chief Financial Officer in
1994. He was also Vice-President, Finance and Treasurer of Pétromont inc. and Corporate Controller for the Société
générale de financement du Québec (SGF). Mr. Mallette has been a member of the Canadian Institute of Chartered Accountants since 1982.

Denis Sabourin, Vice President and Corporate Controller.    Mr. Sabourin was Senior Manager, Control from 2001 until his
recent appointment as Vice President and Corporate Controller. Mr. Sabourin is also Vice President and Corporate Controller 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.

Louis Saint-Arnaud, Vice President, Legal Affairs and Secretary.    Mr. Saint-Arnaud has 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.

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Richard Soly, Executive Vice President, Marketing and Content.    Mr. Soly has been Executive Vice President, Marketing
and Content of Quebecor Media since September 2002. Mr. Soly is also a member of the board of directors of the Retail Counsel of Canada, President of the Conseil
Québécois du Commerce de Détail (the Business Retail Council of Québec) and President and founder of Superclub Vidéotron.

Claudine Tremblay, Director, Corporate Services and Assistant Corporate Secretary.    Ms. Tremblay has served as the
Director, Corporate Services and Assistant Corporate Secretary of Quebecor Media since 2001. Ms. Tremblay is also Director, Corporate Services and Assistant Corporate Secretary of
Quebecor Inc. Ms. Tremblay has worked in the Quebecor group of companies, at her current position and others, for the past five years.

Edouard G. Trépanier, Vice President, Regulatory Affairs.    Mr. Trépanier has been the
Vice President, Regulatory Affairs of Quebecor Media since April 2002. 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 the 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 ten 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 as of December 11, 2000,
as amended, among Quebecor Inc., certain wholly-owned subsidiaries of Quebecor Inc., Capital CDPQ and Quebecor Media, our board of directors is composed of nominees of both
Quebecor Inc. and of Capital CDPQ. On May 5, 2003, our shareholders, acting by written resolution, increased the size of the board of directors to ten directors from nine directors and
established the composition of the board of directors as six nominees of Quebecor Inc. and four nominees of Capital CDPQ. See "Item 7. Major Shareholders and Related Party
Transactions  Major Shareholders" below for a description of the Consolidated and Amended Shareholders Agreement and the May 5, 2003 shareholders
resolution increasing the size of the board of directors to ten.

Compensation

Compensation of Directors

Our directors who are employees of QMI are not entitled to receive any additional compensation for serving as our directors. Each director is entitled to receive
from Quebecor Media an annual director's fee of $20,000. Directors are also entitled to receive an attendance fee of $1,200 for each board or committee meeting attended (other than the audit
committee) and an attendance fee of $1,500 for each audit committee meeting attended, each payable quarterly. All of our directors are reimbursed for travel and other reasonable expenses incurred in
attending board meetings. Mr. Jean Neveu, who serves as chairman of the board of directors of our parent company, Quebecor Inc., receives compensation from Quebecor Inc. and does
not receive from us any annual fees or attendance fees. In addition, Mr. Neveu's compensation is not subject to the Directors' Deferred Stock Unit Plan, which we refer to as the DSUP plan.

During
the financial year ended December 31, 2003, nine directors received an aggregate cash compensation of $309,676 in payment of their annual fee and attendance fees. None of
our directors have service contracts with us or any of our subsidiaries that provide for benefits upon termination of employment.

In
addition to the compensation described above, our directors who are also directors of Quebecor Inc. (other than Mr. Neveu), namely Jean La Couture, The Right Honourable
Brian Mulroney, Érik Péladeau and Pierre Karl Péladeau, participate in 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 $35,000. 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. were redeemed in 2003.

As
of December 31, 2003, Jean La Couture held 708 units under the DSUP, The Right Honourable Brian Mulroney held 6,876 units under the DSUP, Érik
Péladeau held 3,649 units under the DSUP and Pierre Karl Péladeau held 5,639 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 to 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 our common shares to be issued pursuant to Quebecor Media's Stock Option
Plan.

For
the financial year ended December 31, 2003, ten senior executive officers (excluding senior executive officers of our subsidiaries) received an aggregate cash compensation of
$5,087,012 for services they rendered in all capacities during 2003, which amount includes the base salary and the cash bonuses paid to such senior executive officers.



On January 29, 2002, we established a stock option plan to attract, retain and motivate our directors, executive officers and key contributors. The
compensation and human resources committee is responsible for the administration of this stock option plan and, as such, designates the participants under the stock option plan and determines the
number of options granted, the vesting schedule, the expiration date and any other terms and conditions relating to the options.

All
of the options granted under this stock option plan entitle the holder thereof to acquire common shares of Quebecor Media. 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 our common shares 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 our shares have not been listed on a recognized stock
exchange. At December 31, 2009, if our shares have not been so listed, optionees will have until January 31, 2010 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, we may elect to pay all amounts owing in several installments if 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.

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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.

Following
the reverse stock split in December 2003, the maximum number of common shares of Quebecor Media that may be issued under this stock option plan is 6,185,714 common
shares (representing 5% of all of the outstanding shares of Quebecor Media) and no optionee may hold options representing more than 5% of the outstanding shares of Quebecor Media. See "Item 4.
Information on the Company  History and Development of the Company" for details regarding the reverse stock split.

A
total of 233,810 options were granted to six senior executive officers of Quebecor Media during the financial year ended 2003.



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
a maximum of 6,202,612 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, 2003, 30,000 options to purchase class B subordinated voting shares of Quebecor Inc. were granted to one senior
executive officer of Quebecor Media and its subsidiaries at an exercise price of $16.8635 per share. As of February 27, 2004, a total of 1,151,000 options to purchase class B
subordinated voting shares of Quebecor Inc. were held by three senior executive officers of Quebecor Media and its subsidiaries.

The
closing sale price of the class B subordinated voting shares of Quebecor Inc. on The Toronto Stock Exchange on February 27, 2004, was $27.45 per share.



Quebecor Media maintains a pension plan for its non-unionized employees. The pension 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 the 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 age 61, 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 theIncome 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 $4,583 in 2004.

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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 theIncome
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 theIncome 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 Quebecor Media in 2003 to provide the pension benefits was $13.5 million. For a description of the amount set aside or accrued for pension
plans and post-retirement benefits by Quebecor Media see note 26 to the consolidated financial statements on pages F-65 to F-67 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
|--------------- |  | -------------------
|
|
|$91,667 or more |  | $                  



In addition to the pension plans in force, Quebecor Inc. and Quebecor Media (through Vidéotron's plan) provide supplemental retirement
benefits to certain designated executives. Seven senior executive officers of Quebecor Media are participants under the Quebecor Inc. plan and one senior executive officer of Quebecor Media is
a participant under the Vidéotron plan.

The
pensions of the seven 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 age 61. 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 50% of the retiree's pension for a period of 10 years. As of December 31, 2003, one of such senior executive
officers had a credited service of approximately 16.8 years while the other six senior executive officers had credited service of less than three years.

The
pension of the senior executive officer who participates in Vidéotron'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, 2003, such senior executive officer had a credited service of approximately 14.4 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 |  | $                        



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, 2003, the amount of the premium paid by Quebecor Inc. was US$2,483,640. 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 " Directors and Senior Management" above for the current term of office, if applicable, and the period during which
our directors and senior management have served in that office.



Our audit committee is composed of Messrs. Jean La Couture, André Bourbonnais and Jean-Louis Mongrain. Mr. La Couture is
the Chairman of our audit committee and the "audit committee financial expert" as defined in Item 16A of Form 20-F.

Our
board of directors adopted the mandate of our audit committee in light of the Sarbanes-Oxley Act of 2002. In general, our audit committee assists our board of directors in overseeing
our financial controls and reporting. Our audit committee also oversees our compliance with financial covenants and legal and regulatory requirements governing financial disclosure matters and
financial risk management.

The
current mandate of our audit committee provides, among other things, that our audit committee reviews our annual and quarterly financial statements before they are submitted to our
board of directors, as well as the financial information contained in our annual reports on Form 20-F, our management's discussion and analysis of financial conditions and results
of operations, our quarterly reports furnished to the SEC under cover of Form 6-K and other documents containing similar information before their public disclosure or filing
with regulatory authorities; reviews our accounting policies and practices; and discusses with our independent auditors the scope of their audit and reviews their recommendations and the responses of
our management to their recommendations. Our audit committee is also responsible for ensuring that we have in place adequate and efficient internal control and management information systems to
monitor our financial information and to ensure that our transactions with related parties are made on terms that are fair for us. Our audit committee pre-approves all audit services and
permitted non-audit services and pre-approves all the fees pertaining to those services that are payable to our independent auditors, and it submits the appropriate
recommendations to our board of directors in connection with these services and fees. Our audit committee also reviews the scope of the audit and the results of the examinations conducted by our
internal audit department. In addition, our audit committee recommends the appointment of our independent auditors, subject to our sole shareholder's approval. It also reviews and approves our Code of
Ethics for its Chief Executive Officer, Chief Financial Officer, controller, principal financial officer and other persons performing similar functions.

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Our compensation and human resources committee is composed of Messrs. Serge Gouin, André Bourbonnais and Jean Neveu. Mr. Gouin is the
Chairman of our compensation and human resources committee. Following his appointment as our President and Chief Executive Officer on March 12, 2004, Mr. Gouin intends to resign from the
compensation and human resources committee. His successor will be appointed following his resignation. Our compensation and human resources committee was formed with the mandate to examine and decide
upon the global compensation and benefits policies of us and those of our subsidiaries, and to formulate appropriate recommendations to the board of directors, among other things, concerning
long-term compensation in the form of stock option grants. Our compensation and human resources committee is also responsible for the review, on an annual basis, of the compensation of our
directors.

Employees

As of March 1, 2004, we employed approximately 12,225 employees, of which approximately 4,800 were under collective bargaining agreements. The following
table sets forth certain information relating to our employees in each of our operating segments as of March 1, 2004:

|Operations                  |  | Total number
of employees |  | Number of employees under
collective agreements |  | Number of
collective agreements |    
|--------------------------- |  | ------------------------- |  | ----------------------------------------------- |  | ------------------------------- | ---
|Cable Television            |  | 2,304                     |  | 1,825                                           |  | 4                               |    
|Newspapers                  |  | 5,824                     |  | 1,872                                           |  | 47                              | (1)
|Broadcasting                |  | 1,252                     |  | 759                                             |  | 13                              | (2)
|Leisure and Entertainment   |  | 1,546                     |  | 215                                             |  | 6                               | (3)
|Business Telecommunications |  | 449                       |  | 149                                             |  | 2                               |    
|New Media Services          |  | 772                       |  | 13                                              |  | 1                               | (4)
|Other                       |  | 78                        |  |                                                |  |                                |    
|Total                       |  | 12,225                    |  | 4,833                                           |  | 73                              |    

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As of March 1, 2004, collective bargaining agreements covering approximately 900 of our employees had expired or were under negotiation. We
are currently negotiating new collective bargaining agreements with union representatives with a view to significantly increasing productivity and reducing the Company's labor costs. From
May 2002 to April 2003, Quebecor Media experienced a work stoppage in the operations of our Cable Television segment (approximately 1,401 employees). In April 2003, we entered
into two new collective bargaining agreements with 1,700 unionized employees in the Montréal and Quebec City regions, which ended the labor dispute that began in May 2002. The
new collective bargaining agreements will expire on December 31, 2006. Our 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  Risk Factors" of this
annual report.

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Share Ownership

Except as disclosed under "Item 7. Major Shareholders and Related Party Transactions  Major Shareholders" of
this annual report, none of our equity securities are held by any of our directors or senior executive officers. For a description of Quebecor Media's stock option plan, see
" Compensation" above.

ITEM 7  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

As a result of a reverse stock split on December 5, 2003, our common shares were consolidated on the basis of seventy (70) issued and outstanding
common shares prior to the consolidation for one (1) issued and outstanding common share after consolidation. See "Item 4  Information on the
Company  History and Development of the Company" for more information regarding the reverse stock split. As of March 1, 2004, Quebecor Inc. held,
directly and indirectly, 67,636,713 common shares of our company, representing approximately a 54.72% voting and equity interest in us. The remaining 45.28% voting and equity interest, or 55,966,094
common shares, was held by Capital CDPQ. The primary assets of Quebecor Inc., a communications holding company, are its interests in us and Quebecor World Inc., one of the world's
largest commercial printers. Capital CDPQ is a wholly-owned subsidiary of Caisse de dépôt et placement du Québec, Canada's largest pension fund with
approximately $130 billion in assets under management. Capital CDPQ specializes in financing for companies in the telecommunications, media and cultural industry sectors.

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, 2004, 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 all outstanding equity shares and approximately 65.13% of the voting
rights attached to all outstanding shares of Quebecor Inc.

As
of the date of this annual report, certain of our indirect, wholly-owned subsidiaries, namely Sun Media Corporation, Bowes Publishers Limited and Sun Media (Toronto) Corporation, also
own collectively 1,140,000 of our Cumulative First Preferred Shares, Series A, which we refer to as the Series A Shares, or 100% of the issued and outstanding Series A
Shares. 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 us 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, we may, at our 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. As of December 31, 2003, Sun Media Corporation, Bowes Publishers Limited and Sun Media (Toronto)
Corporation owned collectively 1,590,000 Series A Shares, but on January 14, 2004, Sun Media
divested itself of 450,000 Series A Shares and used the proceeds to redeem $450.0 million principal amount of its convertible obligations.

On
April 22, 2003, all of our then-outstanding Cumulative First Preferred Shares, Series B, which we refer to as the Series B Shares, that were held by
our wholly-owned subsidiary, 4032667 Canada Inc., were converted, in accordance with their terms, into common shares of Quebecor Media. As of the date of this annual report, there are no issued
and outstanding Series B Shares.

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As of the date of this annual report, 9101-0835 Quebec Inc., one of our indirect, wholly-owned subsidiaries, holds 70,000 of our Cumulative First Preferred Shares,
Series C, which we refer to as the Series C Shares, or 100% of the issued and outstanding Series C Shares. The Series C Shares are non-voting shares.
Holders of Series C Shares are entitled to a cumulative annual dividend of 11.25% per share. Holders may require us to redeem the Series C Shares at any time at a price of $1,000 per
share plus any accumulated and unpaid dividends. In addition, we may, at our option, redeem the Series C Shares at a price of $1,000 per share plus any accumulated and unpaid dividends. The
Series C Shares were issued in January 2004. See "Item 8. Financial Information  Dividend Policy" below and "Item 10. Memorandum and
Articles of Association" for a more detailed description of the Series C Shares.

As
of the date of this annual report, Vidéotron (1998) ltée, one of our indirect, wholly-owned subsidiaries, holds 1,100,000 of our Cumulative First
Preferred Shares, Series D, which we refer to as the Series D Shares, or 100% of the issued and outstanding Series D Shares. The Series D Shares are
non-voting shares. Holders of Series D Shares are entitled to a cumulative annual dividend of 11.0% per share. Holders may require us to redeem the Series D Shares at any
time at a price of $1,000 per share plus any accumulated and unpaid dividends. In addition, we may, at our option, redeem the Series D Shares at a price of $1,000 per share plus any accumulated
and unpaid dividends. The Series D Shares were issued in January 2004. See "Item 8. Financial Information  Dividend Policy" below and
"Item 10. Memorandum and Articles of Association" for a more detailed description of the Series D Shares.

Consolidated and Amended Shareholders' Agreement

We entered into a shareholders' agreement, dated October 23, 2000, with Quebecor Inc., Capital CDPQ and certain of our wholly-owned subsidiaries, 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 our shareholders. Except
as specifically provided in the shareholders' agreement, the rights thereunder apply only to shareholders holding at least 10% of our equity shares, which we refer to as QMI Shares, on a fully-diluted
basis.

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



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The
shareholders' agreement provides that once we become a reporting issuer and have a 20% public "float" of QMI Shares, certain provisions of the shareholders' agreement will cease to
apply, including the consent rights described under subsections (d)(4) and (f) in the description of the shareholders agreement above.

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 our reporting issuer (public) subsidiaries so long as Capital CDPQ holds at least 20%
of the QMI Shares on a fully-diluted basis or, in the case of TVA only, 10%.

On
May 5, 2003, our board of directors, by resolution, increased the total number of directors on the board of directors from nine to ten and determined that the 10th director
would be a nominee of Quebecor Inc. Following the resolution, our board of directors consists of ten directors, of which six are nominees of Quebecor Inc. and four are nominees of
Capital CDPQ. See "Item 6. Directors, Senior Management and Employees  Directors and Senior Management."

Certain Relationships and Related Party Transactions

The following describes some transactions in which we and our directors, executive officers and affiliates are involved. We believe that each of the transactions
described below was on terms no less favorable to us than could have been obtained from independent third parties.

Management Arrangements

Quebecor Inc. has entered into management arrangements with Quebecor Media and certain of its subsidiaries. Under these management arrangements,
Quebecor Inc., Quebecor Media and certain of its subsidiaries provide mutual management services on a cost reimbursement basis. The expenses subject to reimbursement include the salaries of our
executive officers who also serve as executive officers of Quebecor Inc. In 2003, Quebecor Media received a total of $3.0 million in management fees from Quebecor Inc.

We
have incurred management fees of $0.6 million and $0.5 million by Quebecor Inc. and Capital CDPQ, respectively, for services rendered in 2003.

Lease Arrangements

Quebecor Inc. and other parties related to us lease office spaces to us. In 2003, the total annual rent expense paid to Quebecor Inc. and other
related parties was approximately $0.1 million.

Commercial Printing and Other Services

We and our subsidiaries have incurred expenses for commercial printing services and have earned revenue for advertising and other services from Quebecor
World Inc., another subsidiary of Quebecor Inc. The total purchases and revenues with Quebecor World Inc. in 2003 were $58.3 million and $2.2 million, respectively.

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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.

Subordinated Loan Agreement with Vidéotron

On March 24, 2003, we entered into a subordinated loan agreement with Vidéotron pursuant to which we agreed to provide
Vidéotron with a subordinated loan in the principal amount of $150.0 million bearing interest at the three-month bankers' acceptance rate plus a 1.5% margin. The proceeds of this
subordinated loan were used to reduce outstanding indebtedness under Vidéotron's credit facilities. As a condition to the completion of the offering of Vidéotron's senior
notes in October 2003, the terms of this subordinated loan were amended such that interest throughout the term of the loan is payable in cash at Vidéotron's option.
Vidéotron's obligations under this loan are subordinated in right of payment to the prior payment in full of all its existing and future indebtedness under its credit facilities. In
addition, the holders of all our other senior indebtedness, including the senior notes issued by Vidéotron, will be entitled to receive payment in full of all amounts due on or in
respect of all of Vidéotron's other existing and future senior indebtedness before we are entitled to receive or retain payment of principal under this loan. The subordinated loan
agreement also provides that, for so long as indebtedness, obligations and liabilities are due and owing to the creditors under Vidéotron's credit facilities, Quebecor Media shall not
be entitled to enforce its rights under the subordinated loan agreement without the prior consent of the administrative agent under the credit facilities.

Issuance and Redemption of Convertible Obligations and Investment in Quebecor Media

In July 2001, Sun Media issued a $1.6 billion convertible obligation to Quebecor Media, and Sun Media used the proceeds to invest in
$1.6 billion of the Quebecor Media preferred shares for tax planning purposes. In November 2002, Sun Media issued a new convertible obligation to Quebecor Media in the amount of
$350.0 million, and Sun Media used the proceeds to invest in $350.0 million of the Quebecor Media preferred shares. In July 2003 Sun Media redeemed $360.0 million and in
January 2004 Sun Media redeemed $450.0 million of the convertible obligations, using the proceeds from sales of our Quebecor Media preferred shares.

On
July 9, 2001, Sun Media invested in Quebecor Media preferred shares, at a cost of $1.6 billion, using the proceeds from the issuance of the convertible obligation. The
shares are redeemable at the option of Quebecor Media or retractable at Sun Media's option at the paid-up value, are non-voting, and carry a 12.5% annual fixed cumulative
preferential dividend payable semi-annually. On November 28, 2002, Sun Media issued a new 12.15% convertible obligation to Quebecor Media in the principal amount of
$350.0 million. This convertible obligation has substantially similar terms to that issued in July 2001 and matures on November 28, 2008. Sun Media used the proceeds to subscribe
to an additional $350.0 million of the Quebecor Media preferred shares. On July 31, 2003, Sun Media sold $360.0 million of our Quebecor Media preferred shares and used the
proceeds to redeem $360.0 million principal amount of the convertible obligations. On January 14, 2004, Sun Media sold an additional $450.0 million of our Quebecor Media preferred
shares and used the proceeds to redeem $450.0 million principal amount of the convertible obligations. At December 31, 2003, Sun Media had a receivable from Quebecor Media of
$90.9 million, representing the cumulative declared, but unpaid, dividend on these shares.

Payment of Dividends

In the year ended December 31, 2003, Sun Media paid dividends of $151.2 million, or $119.94 per common share, to Quebecor Media in connection with
its ownership of Sun Media's 1,261,000 common shares. Sun Media paid dividends of $70.9 million, or $56.26 per common share, to Quebecor Media during the year ended December 31, 2002.

Sun
Media also paid a dividend of $260.0 million to Quebecor Media as part of the refinancing transaction in February 2003. Of the total dividend of $260.0 million,
Quebecor Media used $150.0 million to repay debt of Sun Media's affiliate, Vidéotron, and the balance was used by Quebecor Media for general corporate purposes.

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In
addition, Vidéotron declared and paid a dividend of $20.0 million to Quebecor Media in 2003.

Interests of Experts and Counsel

Not applicable.

ITEM 8  FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information

The consolidated balance sheets of Quebecor Media as at December 31, 2002 and 2003 and the consolidated statements of operations, retained earnings and
cash flows of Quebecor Media for the years ended December 31, 2001, 2002 and 2003, 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 in an amount of approximately $26 million. We believe this action is unfounded, and we intend to vigorously defend our
position in this litigation.

In
1999, Regional Cablesystems Inc. (now Persona Communications Inc.) initiated an arbitration involving Vidéotron by which it claims an amount of
$8.6 million as a reduction of the purchase price of the shares of Northern Cable Holding which was sold to Regional Cable Systems by a subsidiary of Vidéotron in 1998. It is not
possible at this stage to determine the outcome of this claim.

In
November 2001, a sale service agreement with Voca-tel Communications Inc., a supplier, was terminated and Vidéotron is being sued for breach
of contract for an amount of $4.7 million. It is not possible to determine the outcome of this claim.

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.

Dividend Policy

Our outstanding share capital consists of common shares and Cumulative First Preferred Shares, consisting of Series A Shares, Series B Shares,
Series C Shares and Series D Shares. Following the reverse stock split in December 2003 and as of December 31, 2003, we had:



Holders
of our Series A Shares 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.

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Holders
of our Series B Shares 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 our Articles of Incorporation.

Holders
of our Series C Shares are entitled to receive fixed cumulative preferential dividends at a the rate of 11.25% per share per annum. The dividends declared on the
Series C Shares are payable semi-annually on a cumulative basis on June 20 and December 20 of each year. No dividends may be paid on any shares ranking junior to the
Series C Shares unless all dividends which shall have become payable on the Series C Shares have been paid or set aside for payment.

Holders
of our Series D Shares are entitled to receive fixed cumulative preferential dividends at a the rate of 11.0% per share per annum. The dividends declared on the
Series D Shares are payable semi-annually on a cumulative basis on June 20 and December 20 of each year. No dividends may be paid on any shares ranking junior to the
Series D Shares unless all dividends which shall have become payable on the Series D Shares have been paid or set aside for payment.

Holders
of common shares are entitled, subject to the rights of the holders of any Cumulative First Preferred Shares, to receive such dividends as our board of directors shall determine.

Significant Changes

Except as otherwise disclosed in this annual report, there has been no material adverse change in our financial position since December 31, 2003.

ITEM 9  THE OFFER AND LISTING

Offer and Listing Details

Not applicable.

Plan of Distribution

Not applicable.

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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, we 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 (a) the liquidity of any market that may develop for the Senior Notes and the Senior Discount Notes, (b) the ability of the holders of the Senior Notes and the Senior
Discount Notes to sell them or (c) 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

Our Articles of Incorporation and the various Articles of Amendment to the Articles of Incorporation filed by us are incorporated by reference from our
registration statement filed with the Securities and Exchange Commission on September 5, 2001 (Registration No. 333-13792). In addition, our Articles of Amendment to the
Articles of Incorporation, which were filed on February 3, 2003, are included as Exhibit 1.2 to our annual report for the fiscal year ended December 31, 2002 which was
filed with the SEC on March 31, 2003, as amended. The Articles of Amendment to the Articles of Incorporation, which were filed on December 5, 2003 and January 16, 2004, are
included in this annual report as exhibits. The Articles of Incorporation of Quebecor Media and the various Articles of Amendment to the Articles of Incorporation filed by Quebecor Media are
collectively referred to as the "Articles". The following is a summary of certain provisions of the Articles and our bylaws.

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Common Shares



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

Cumulative First Preferred Shares

Our board of directors may issue 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 our assets in the event of our liquidation or dissolution. Unless the Articles otherwise provide, the Cumulative First Preferred Shares shall be entitled to
priority over our common shares and any other class of our shares, with respect to priority in the payment of dividends, return of capital and in the distribution of our assets in the event of
liquidation or dissolution.

As
long as there are Cumulative First Preferred Shares outstanding, we shall not, unless consented to by the holders of the Cumulative First Preferred Shares and upon compliance with the
provisions of theCompanies Act(Québec), (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 our company or execute any decrease of capital involving the distribution of assets on any other shares of
our 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 Series A Shares, 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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For
a description of the Series B Shares, see "Item 7. Major Shareholders and Related Party Transactions  Major Shareholders"
in this annual report.

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



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

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



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



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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 we or any of our subsidiaries
is a party, for the two years preceding publication of this annual report.







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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 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:



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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.

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.

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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 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:

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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.

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.

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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. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of this Internet site is http://www.sec.gov. 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.

108

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ITEM 11  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We use certain financial instruments such as interest rate and cross-currency swaps to manage interest rate and foreign exchange risk exposures. These instruments
are used solely to reduce or eliminate the financial risks associated with our obligations and are not used for trading or speculation purposes.



Most of our revenues and expenses, other than interest expense on U.S. dollar-denominated debt, are received or denominated in Canadian dollars. A large
portion of our debt is denominated, and interest, principal and premium thereon, if any, must be paid in U.S. dollars. We have entered into transactions to hedge the foreign currency risk
exposure on 100% of our U.S. dollar-denominated debt obligations, except for the Senior Secured First Priority Notes of one of Vidéotron's subsidiaries. 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.



Our revolving and term bank credit facilities bear interest at floating rates based on the following reference rates: (i) bankers' acceptances rate (BA),
(ii) London Interbank Offered Rate (LIBOR) and (iii) bank prime rate (Prime). Our Senior, Senior Discount and Senior Secured First Priority Notes bear interest at fixed rates. We have
entered into various interest rate and cross-currency interest rate swap agreements in order to manage our cash flow and fair value risk exposure to changes in interest rates. The interest rate and
cross-currency interest rate swap agreements have the effect of converting the interest (i) from a floating rate of BA plus a premium on $315.0 million of the term credit facilities into
a fixed weighted average rate of 5.28% plus a premium, (ii) from a floating rate of LIBOR plus 2.25% on US$220.9 million, amortizing on a quarterly basis until 2009, of the term credit
facilities, into a floating rate of BA plus 2.69% on $335.2 million, amortizing on a quarterly basis until 2009, (iii) from a fixed rate of 7.625% on US$ 155 million of the
Senior
Notes into a fixed rate, from 2003 to 2008, of 8.17% on $236.0 million and into a floating rate, from 2008 to 2013, of BA plus 3.70%, (iv) from a fixed rate of 7.625% on
US$50 million of the Senior Notes into a floating rate, from 2003 to 2013, of BA plus 3.70% on $76.1 million, (v) from a fixed rate of 6.875% on US$200 million of the
Senior Notes into a floating rate, from 2003 to 2014, of BA plus 2.73% on $268.5 million, (vi) from a fixed rate of 6.875% on US$135 million of the Senior Notes into a fixed rate,
from 2003 to 2014, of 7.66% on $181.2 million, (vii) from a fixed rate of 11.125% on US$715 million of the Senior Notes into a fixed rate, from 2001 to 2011, of 12.0% on
$1,090.7 million, and (viii) from a fixed rate of 13.75%, with interest payments from 2007 to 2011, on US$295 million of the Senior Discount Notes into a fixed rate of 14.60%,
with interest payments from 2007 to 2011, on $466.8 million.



Through our Newspaper operations, we have entered into various purchase contracts with newsprint manufacturers at current market price less a volume discount.
Management mitigates the commodity price risk through centralized purchases in order to benefit from volume rebates based on total consumption requirements.



Concentration of credit risk with respect to trade receivables is limited due to our diverse operations and large customer base. As of December 31, 2003,
we had no significant concentration of credit risk. We believe that the products and diversity of our customer base is instrumental in reducing our credit risk exposure, as well as the impact of a
potential change in our local markets or product-line demand.

We
are exposed to credit risk in the event of non-performance by counterparties in connection with our cross-currency and interest rate swap agreements. We do not obtain
collateral or other security to support financial instruments subject to credit risk, but we mitigate this risk by dealing only with major Canadian and U.S. financial institutions and,
accordingly, do not anticipate loss for non-performance.

109

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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.

The
market risks that we face as of the date of this annual report on Form 20-F would not be materially different than on December 31, 2003.

|                         |                                           | December 31, 2003 |          
|------------------------ | ----------------------------------------- | ----------------- | ---------
|
|
|
|Debt:                    |                                           |                   |          
|                         | Revolving Term bank loan(2)               |                   | 2004-2006
|                         | Credit facilities(2)                      |                   | 2004-2009
|                         | Senior Secured First Priority Notes(3)(4) |                   | 2007     
|                         | Senior and Senior Discount Notes(3)       |                   | 2011-2014
|                         | Other Debt                                |                   | 2004     
|                         |                                           |                   |          
|                         |                                           |                   |          
|                         |                                           |                   |          
|Interest rate contracts: |                                           |                   |          
|                         | Interest rate swap agreements(5)(6)       |                   | 2004-2006
|                         |                                           |                   |          

---

|                         |                                           | December 31, 2002 |          
|------------------------ | ----------------------------------------- | ----------------- | ---------
|
|
|
|Debt:                    |                                           |                   |          
|                         | Revolving Term bank loan(2)               |                   | 2003-2005
|                         | Credit facilities(2)                      |                   | 2003-2009
|                         | Senior Secured First Priority 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
|                         |                                           |                   |          

---

110

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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, 2003, 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, are as follows:

Year ending December 312004

$
60.02005


144.22006


77.92007


154.12008


159.12009 and Thereafter


2,161.5


ITEM 12  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

A. None.

B.
Not applicable.

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

Our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in
Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective as of the end of the period covered by this annual report and
that there have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15 or 15d-16 under the Exchange Act) that occurred
during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

111

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ITEM 16A  AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that we have at least one audit committee financial expert (as defined in Item 16A of Form 20-F)
and that Mr. Jean La Couture is our "audit committee financial expert" serving on the audit committee of our board of directors.

ITEM 16B  CODE OF ETHICS

We have adopted a code of ethics (as defined in Item 16B of Form 20-F) that applies to our Chief Executive Officer, Chief Financial
Officer, principal accounting officer, controller and persons performing similar functions. We have filed a copy of this code of ethics as an exhibit to this annual report on
Form 20-F.

ITEM 16C  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee establishes the independent auditors' compensation. In 2003, the Audit Committee also established a policy to pre-approve all
audit services, determining which non-audit services the independent auditors are prohibited from providing and authorizing permitted non-audit services to be performed by the
independent auditors; however, only to the extent those services are permitted by the Sarbanes-Oxley Act. KPMG LLP has served as our independent public accountant for each of the fiscal years
in the three-year period ended December 31, 2003, for which audited financial statements appear in this annual report on Form 20-F. For the years ended
December 31, 2003 and 2002, the aggregate fees billed by KPMG LLP and its affiliates are as follows:

|                      |  | 2002 |           | 2003
|--------------------- |  | ---- | --------- | ----
|Audit Fees(1)         |  | $    | 1,556,000 |     
|Audit-related Fees(2) |  |      | 214,000   |     
|Tax Fees(3)           |  |      | 274,000   |     
|All Other Fees(4)     |  |      | 23,000    |     
|Total                 |  | $    | 2,067,000 |     

---

112

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ITEM 16D  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

PART III

ITEM 17  FINANCIAL STATEMENTS

Our audited consolidated balance sheets as of December 31, 2003 and 2002 and the consolidated statements of income, deficit and cash flows for the years
ended December 31, 2003, 2002 and 2001, including the notes thereto and together with the auditors' report thereon, are included at pages F-1 to F-79 to
this annual report.

ITEM 18  FINANCIAL STATEMENTS

Not applicable.

ITEM 19  EXHIBITS

EXHIBITS

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

|Exhibit
Number |  | Description                                                                                                                                                                                                                                     
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1            |  | Articles of Incorporation of Quebecor Media Inc. (translation) (incorporated by reference to Exhibit 3.1 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement
No. 333-13792).            
|1.2            |  | Certificate of Amendment of Articles of Incorporation filed February 3, 2003 (translation) (incorporated by reference to Quebecor Media's annual report on Form 20-F for fiscal year ended December 31, 2002 which was filed on
March 31, 2003).
|1.3            |  | By-laws of Quebecor Media Inc. (translation) (incorporated by reference to Exhibit 3.2 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement
No. 333-13792).                              
|1.4            |  | Certificate of Amendment of Articles of Incorporation filed December 5, 2003 (translation).                                                                                                                                                     
|1.5            |  | Certificate of Amendment of Articles of Incorporation filed January 16, 2004 (translation).                                                                                                                                                     
|2.1            |  | Form of Senior Note (included in Exhibit A to Exhibit 2.3 below) (incorporated by reference to Exhibit 4.1 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement
No. 333-13792).          
|2.2            |  | Form of Senior Discount Note (included in Exhibit A to Exhibit 2.4 below) (incorporated by reference to Exhibit 4.2 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration
Statement No. 333-13792). 

113

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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.3  |  | Senior Note Indenture dated as of July 6, 2001 by and between Quebecor Media Inc. and National City Bank, as trustee (incorporated by reference to Exhibit 4.3 to Quebecor Media Inc.'s Registration Statement on Form F-4
dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                 
|2.4  |  | Senior Discount Note Indenture dated as of July 6, 2001 by and between Quebecor Media Inc. and National City Bank, as trustee (incorporated by reference to Exhibit 4.4 to Quebecor Media Inc.'s Registration Statement on
Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                        
|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 (incorporated by reference to Exhibit 4.6
to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).
|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 (incorporated by reference to Exhibit 4.7
to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792). 
|2.7  |  | Form of 91/2% Senior Subordinated Notes due 2007 (included in Exhibit A to Exhibit 2.5 above) (incorporated by reference to Exhibit 4.8 to Quebecor Media Inc.'s Registration Statement on
Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                                        
|2.8  |  | Form of 91/2% Senior Subordinated Notes due 2007 (included in Exhibit A to Exhibit 2.6 above) (incorporated by reference to Exhibit 4.9 to Quebecor Media Inc.'s Registration Statement on
Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                                        
|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 (incorporated by
reference to Exhibit 4.2 to Sun Media Corporation's Registration Statement on Form F-4 dated April 10, 2003, Registration Statement No. 333-103998).                                                                                                                                                                                              
|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) (incorporated by reference to Exhibit A to
Exhibit 4.2 to Sun Media Corporation's Registration Statement on Form F-4 dated April 10, 2003, Registration Statement No. 333-103998).                                                                                                                                                                                                                        
|2.11 |  | Form of 67/8% Senior Notes due January 15, 2014 of Vidéotron Ltée being registered pursuant to the Securities Act of 1933 (incorporated by reference to Exhibit A to Exhibit 4.3
to Vidéotron's Registration Statement on Form F-4 dated January 8, 2004, Registration Statement No. 333-110697).                                                                                                                                                                                                                                                                          
|2.12 |  | Form of Notation of Guarantee by the subsidiary guarantors of the 67/8% Senior Notes due January 15, 2014 of Vidéotron Ltée (incorporated by reference to Exhibit E to Exhibit 4.3
to Vidéotron's Registration Statement on Form F-4 dated January 8, 2004, Registration Statement No. 333-110697).                                                                                                                                                                                                                                                                        
|2.13 |  | Indenture dated as of October 8, 2003 by and among Vidéotron Ltée, the subsidiary guarantors signatory thereto and Wells Fargo Bank Minnesota, N.A., as trustee (incorporated by reference to Exhibit 4.3 to Vidéotron's
Registration Statement on Form F-4 dated January 8, 2004, Registration Statement No. 333-110697).                                                                                                                                                                                                                                                 
|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 (incorporated by reference to Exhibit 9.1
to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                             

114

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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2 |  | Letter Agreement dated December 11, 2000 between Quebecor Inc. and Capital Communications CDPQ Inc. (translation) (incorporated by reference to Exhibit 9.2 to Quebecor Media Inc.'s Registration Statement on Form F-4
dated September 5, 2001 Registration Statement 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3.3 |  | Written Resolution adopted by the Shareholders of Quebecor Media Inc. on May 5, 2003 relating to the increase in the size of the board of directors of Quebecor Media Inc. (translation).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|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 (incorporated by reference to Exhibit 10.3 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|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 (incorporated by reference to Exhibit 10.4
to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|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 (incorporated by reference to Exhibit 10.5 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001,
Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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 (incorporated by reference to Exhibit 10.6 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement
No. 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|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 (incorporated by reference to Exhibit 10.1
to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|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 (incorporated by reference to Exhibit 10.4 to Sun Media Corporation's Registration Statement on Form F-4 dated April 10, 2003, Registration Statement
No. 333-103998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.7 |  | Sixth Amending Agreement, dated as of October 8, 2003, to the Credit Agreement dated as of November 28, 2000, as amended by the First Amending Agreement dated as of January 5, 2001, a Second Amending Agreement dated as of June 29,
2001, a Third Amending Agreement dated December 12, 2001 and accepted by the Lenders as of December 21, 2001, a Fourth Amending Agreement dated as of December 23, 2002 and a Fifth Amending Agreement dated as of March 24, 2003,
among Vidéotron Ltée, Royal Bank of Canada, as administrative agent, and the financial institutions signatory thereto and acknowledged by Le SuperClub Vidéotron ltée, Groupe de Divertissement SuperClub inc.,
Vidéotron (1998) ltée, CF Cable TV Inc., Vidéotron (Regional) Ltd, Télé-Câble Charlevoix (1997) inc., Vidéotron TVN inc. and Câblage QMI inc., as guarantors (the
"Guarantors"), and by Quebecor Media Inc. (incorporated by reference to Exhibit 10.1 to Vidéotron's Registration Statement on Form F-4 dated January 8, 2004, Registration Statement No. 333-110697).

115

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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.8  |  | Form of Amended and Restated Credit Agreement (the "Credit Agreement") entered into as of November 28, 2000, as amended by a First Amending Agreement dated as of January 5, 2001, as Second Amending Agreement dated as of June 29, 2001,
a Third Amending Agreement dated December 12, 2001 and accepted by the Lenders as of December 21, 2001, a Fourth Amending Agreement dated as of December 23, 2002, a Fifth Amending Agreement dated as of March 24, 2003, and a Sixth
Amending Agreement dated as of October 8, 2003, among Vidéotron Ltée, Royal Bank of Canada, as administrative agent, and the financial institutions signatory thereto (incorporated by reference to Schedule 2 to
Exhibit 10.1 to Vidéotron's Registration Statement on Form F-4 dated January 8, 2004, Registration Statement No. 333-110697).
|4.9  |  | Form of Guarantee by the Guarantors of the Credit Agreement (incorporated by reference to Schedule D of Exhibit 10.5 to Quebecor Media's Registration Statement on Form F-4 dated September 5, 2001, Registration Statement
No. 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.10 |  | Form of Share Pledge of the shares of Vidéotron Ltée and the Guarantors of the Credit Agreement. (incorporated by reference to Schedule E of Exhibit 10.5 to Vidéotron's Registration Statement on Form F-4 dated
September 5, 2001, Registration Statement No. 333-13792).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.11 |  | Share Purchase Agreement dated December 22, 2003 between Carlyle VTL Holdings, L.P. and Carlyle Partners III (Vidéotron), L.P., and Quebecor Media Inc. and 9101-0827 Québec Inc. relating to the purchase
9101-0827 Québec Inc. of 5,000 Class C Preferred Shares of 3662527 Canada Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.12 |  | First Amending Agreement to the Credit Agreement, dated as of December 2, 2003, among Sun Media Corporation, Bank of America, N.A., as administrative agent, and certain other financial institutions signatory thereto (incorporated by reference to
Exhibit 4.4 to Sun Media Corporation's Annual Report on Form 20-F filed March 30, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|8.1  |  | Subsidiaries of Quebecor Media Inc. as of March 1, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|11.1 |  | Code of Ethics.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|12.1 |  | Certification of Serge Gouin, Chief Executive Officer of Quebecor Media Inc., pursuant to 15 U.S.C. Section 78(m)(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|12.2 |  | Certification of Jacques Mallette, Chief Financial Officer of Quebecor Media Inc., pursuant to 15 U.S.C. Section 78(m)(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|13.1 |  | Certification of Serge Gouin, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|13.2 |  | Certification of Jacques Mallette, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

116

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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 29, 2004

117

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Consolidated Financial Statements of

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

Years ended December 31, 2003, 2002 and 2001

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    Consolidated Financial Statements    Years ended December 31, 2003, 2002 and 2001

Auditors'
Report to the Shareholders of Quebecor Media Inc.

|Financial Statements |                                            | 
|-------------------- | ------------------------------------------ | 
|                     | Consolidated Statements of Income          | 
|                     | Consolidated Statements of Deficit         | 
|                     | 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, 2003 and 2002 and the consolidated
statements of income, deficit and cash flows for the years ended December 31, 2003, 2002 and 2001. 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, 2003 and 2002 and the
results of its operations and its cash flows for the years ended December 31, 2003, 2002 and 2001 in accordance with Canadian generally accepted accounting principles.

|(Signed) KPMG LLP     |  | 
|--------------------- |  | 
|Chartered Accountants |  | 
|Montréal, Canada      |  | 
|February 2, 2004      |  | 

---



QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF INCOME    Years ended December 31, 2003, 2002 and 2001  (in millions of Canadian dollars)

|                                                                                                       |  | 2003 |         | 2002 |   | 2001    |  
|------------------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | - | ------- | -
|
|Revenues                                                                                               |  | $    | 2,319.6 |      | $ | 2,277.9 |  
|Cost of sales and selling and administrative expenses                                                  |  |      | 1,707.9 |      |   | 1,716.9 |  
|                                                                                                       |  |      |         |      |   |         |  
|Operating income before undernoted items                                                               |  |      | 611.7   |      |   | 561.0   |  
|Amortization                                                                                           |  |      | (227.5  | )    |   | (226.1  | )
|Financial expenses (note 2)                                                                            |  |      | (300.0  | )    |   | (323.2  | )
|Reserve for restructuring of operations, impairment of assets and other special charges (note 3)       |  |      | (1.6    | )    |   | (39.2   | )
|Write-down of goodwill (note 4)                                                                        |  |      | (0.5    | )    |   | (187.0  | )
|(Losses) gains on sale of businesses and other assets and gains on dilution (note 5)                   |  |      | (1.1    | )    |   | 3.6     |  
|Net gain on debt refinancing and on repurchase of redeemable preferred shares of a subsidiary (note 6) |  |      | 144.1   |      |   |        |  
|                                                                                                       |  |      |         |      |   |         |  
|Income (loss) before income taxes                                                                      |  |      | 225.1   |      |   | (210.9  | )
|Income taxes (credit) (note 7)                                                                         |  |      | (12.4   | )    |   | 5.2     |  
|                                                                                                       |  |      |         |      |   |         |  
|                                                                                                       |  |      | 237.5   |      |   | (216.1  | )
|Equity loss from non-consolidated subsidiaries (note 8)                                                |  |      |        |      |   |        |  
|Non-controlling interest                                                                               |  |      | (34.1   | )    |   | (15.2   | )
|                                                                                                       |  |      |         |      |   |         |  
|Income (loss) before amortization of goodwill                                                          |  |      | 203.4   |      |   | (231.3  | )
|Amortization of goodwill, net of non-controlling interest                                              |  |      |        |      |   |        |  
|                                                                                                       |  |      |         |      |   |         |  
|Income (loss) from continuing operations                                                               |  |      | 203.4   |      |   | (231.3  | )
|Income from discontinued operations (note 9)                                                           |  |      | 0.5     |      |   | 1.5     |  
|                                                                                                       |  |      |         |      |   |         |  
|Net income (loss)                                                                                      |  | $    | 203.9   |      | $ | (229.8  | )
|                                                                                                       |  |      |         |      |   |         |  

See accompanying notes to consolidated financial statements.

F-1

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF DEFICIT    Years ended December 31, 2003, 2002 and 2001  (in millions of Canadian dollars)

|                                                                                                                    |                        | 2003 |          | 2002     |   | 2001     |       
|------------------------------------------------------------------------------------------------------------------- | ---------------------- | ---- | -------- | -------- | - | -------- | ------
|
|Balance at beginning of year                                                                                        |                        |      |          |          |   |          |       
|                                                                                                                    | As previously reported |      | $        | (2,780.0 | ) | $        | (421.7
|Restatement due to a change in accounting policies (note 1(c))                                                      |                        |      | (21.7    | )        |   | (5.9     | )     
|                                                                                                                    |                        |      |          |          |   |          |       
|As restated                                                                                                         |                        |      | (2,801.7 | )        |   | (427.6   | )     
|Reduction due to a change in accounting policy regarding goodwill, net of non-controlling interest of $18.8 million |                        |      |         |          |   | (2,144.3 | )     
|                                                                                                                    |                        |      |          |          |   |          |       
|                                                                                                                    |                        |      | (2,801.7 | )        |   | (2,571.9 | )     
|Net income (loss)                                                                                                   |                        |      | 203.9    |          |   | (229.8   | )     
|                                                                                                                    |                        |      |          |          |   |          |       
|Balance at end of year                                                                                              |                        | $    | (2,597.8 | )        | $ | (2,801.7 | )     
|                                                                                                                    |                        |      |          |          |   |          |       

See accompanying notes to consolidated financial statements.

F-2

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF CASH FLOWS    Years ended December 31, 2003, 2002 and 2001  (in millions of Canadian dollars)

|                                            |                                                                            | 2003                                                                                                   |       | 2002     |        | 2001  |       
|------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ----- | -------- | ------ | ----- | ------
|
|Cash flows related to operations:           |                                                                            |                                                                                                        |       |          |        |       |       
|                                            | Income (loss) from continuing operations                                   |                                                                                                        | $     | 203.4    |        | $     | (231.3
|                                            | Adjustments for:                                                           |                                                                                                        |       |          |        |       |       
|                                            |                                                                            | Amortization of property, plant and equipment                                                          |       |          | 216.0  |       |       
|                                            |                                                                            | Amortization of deferred charges and write-down of goodwill                                            |       |          | 12.0   |       |       
|                                            |                                                                            | Amortization of deferred financing costs and long-term debt discount                                   |       |          | 53.7   |       |       
|                                            |                                                                            | Non-monetary compensation charges                                                                      |       |          |       |       |       
|                                            |                                                                            | Write-down of temporary and portfolio investments, and of a property                                   |       |          | 0.9    |       |       
|                                            |                                                                            | Interest on redeemable preferred shares of a subsidiary                                                |       |          | 24.5   |       |       
|                                            |                                                                            | (Gains) losses on foreign currency translation of long-term debt                                       |       |          | (22.0  | )     |       
|                                            |                                                                            | Losses on sale of businesses and other assets and gains on dilution                                    |       |          | 20.3   |       |       
|                                            |                                                                            | Net gain on debt refinancing and on repurchase of redeemable preferred shares of a subsidiary (note 6) |       |          | (144.1 | )     |       
|                                            |                                                                            | Future income taxes                                                                                    |       |          | (28.0  | )     |       
|                                            |                                                                            | Equity loss from non-consolidated subsidiaries                                                         |       |          |       |       |       
|Non-controlling interest                    |                                                                            |                                                                                                        | 34.1  |          |        | 15.2  |       
|Others                                      |                                                                            |                                                                                                        | 11.8  |          |        | 1.3   |       
|                                            |                                                                            |                                                                                                        |       |          |        |       |       
|                                            |                                                                            |                                                                                                        | 382.6 |          |        | 312.1 |       
|                                            | Net change in non-cash balances related to operations                      |                                                                                                        |       | (18.9    | )      |       | 57.8  
|                                            |                                                                            |                                                                                                        |       |          |        |       |       
|                                            | Cash flows provided by continuing operations                               |                                                                                                        |       | 363.7    |        |       | 369.9 
|                                            | Cash flows (used in) provided by discontinued operations (note 9)          |                                                                                                        |       | (0.1     | )      |       | 1.2   
|                                            |                                                                            |                                                                                                        |       |          |        |       |       
|                                            | Cash flows provided by operations                                          |                                                                                                        |       | 363.6    |        |       | 371.1 
|Cash flows related to financing activities: |                                                                            |                                                                                                        |       |          |        |       |       
|                                            | Net decrease in bank indebtedness                                          |                                                                                                        |       | (8.9     | )      |       | (24.9 
|                                            | Issuance of long-term debt                                                 |                                                                                                        |       | 1,645.4  |        |       | 25.8  
|                                            | Repayment of long-term debt                                                |                                                                                                        |       | (2,053.3 | )      |       | (225.1
|                                            | Repurchase of redeemable preferred shares of a subsidiary (notes 6 and 16) |                                                                                                        |       | (55.0    | )      |       |      
|                                            | Deferred financing costs                                                   |                                                                                                        |       | (22.1    | )      |       |      
|                                            | Payments under cross-currency swap agreements                              |                                                                                                        |       | (118.1   | )      |       |      
|                                            | Proceeds from issuance of capital stock                                    |                                                                                                        |       | 431.9    |        |       | 31.9  
|                                            | Issuance of capital stock by subsidiaries                                  |                                                                                                        |       | 1.2      |        |       |      
|                                            | Dividends paid to non-controlling shareholders                             |                                                                                                        |       | (5.4     | )      |       | (5.9  
|                                            | Decrease in advances receivable from parent company                        |                                                                                                        |       | 26.1     |        |       | 4.2   
|                                            |                                                                            |                                                                                                        |       |          |        |       |       
|                                            | Cash flows (used in) provided by financing activities                      |                                                                                                        |       | (158.2   | )      |       | (194.0
|                                            |                                                                            |                                                                                                        |       |          |        |       |       
|Sub-total, balance carried forward          |                                                                            | $                                                                                                      | 205.4 |          | $      | 177.1 |       

F-3

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED    Years ended December 31, 2003, 2002 and 2001  (in millions of Canadian dollars)

|                                                                                                               |                                                                              | 2003                                                          |       | 2002   |       | 2001  |       
|-------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------------------------- | ----- | ------ | ----- | ----- | ------
|
|Sub-total, balance brought forward                                                                             |                                                                              | $                                                             | 205.4 |        | $     | 177.1 |       
|Cash flows related to investing activities:                                                                    |                                                                              |                                                               |       |        |       |       |       
|                                                                                                               | Business acquisitions, net of cash and cash equivalents acquired (note 5)    |                                                               |       | (76.2  | )     |       | (14.2 
|                                                                                                               | Proceeds from disposal of businesses and other assets (notes 5 and 9)        |                                                               |       | 24.7   |       |       | 6.6   
|                                                                                                               | Additions to property, plant and equipment                                   |                                                               |       | (131.8 | )     |       | (135.0
|                                                                                                               | Additions to others assets                                                   |                                                               |       | (1.4   | )     |       | (6.5  
|                                                                                                               | (Increase) decrease in temporary investments                                 |                                                               |       | (106.8 | )     |       | (68.1 
|                                                                                                               | Proceeds from disposal of assets                                             |                                                               |       | 4.3    |       |       | 14.7  
|                                                                                                               | Additions to long-term investments                                           |                                                               |       | (1.5   | )     |       |      
|                                                                                                               | Interests charges capitalized to investments in subsidiaries held for resale |                                                               |       |       |       |       |      
|                                                                                                               | Others                                                                       |                                                               |       | 0.2    |       |       | 6.2   
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|                                                                                                               | Cash flows used in investing activities                                      |                                                               |       | (288.5 | )     |       | (196.3
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|Net (decrease) increase in cash and cash equivalents                                                           |                                                                              |                                                               | (83.1 | )      |       | (19.2 | )     
|Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies                 |                                                                              |                                                               | (1.6  | )      |       | (0.3  | )     
|Cash and cash equivalents at beginning of year                                                                 |                                                                              |                                                               | 188.3 |        |       | 207.8 |       
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|Cash and cash equivalents at end of year                                                                       |                                                                              | $                                                             | 103.6 |        | $     | 188.3 |       
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|Cash and cash equivalents consist of:                                                                          |                                                                              |                                                               |       |        |       |       |       
|                                                                                                               | Cash                                                                         |                                                               | $     | 43.0   |       | $     | 22.8  
|                                                                                                               | Cash equivalents                                                             |                                                               |       | 60.6   |       |       | 165.5 
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|Cash and cash equivalents at end of year                                                                       |                                                                              | $                                                             | 103.6 |        | $     | 188.3 |       
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|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                                           |       | $      | 11.6  |       | $     
|                                                                                                               |                                                                              | Inventories and investments in televisual products and movies |       |        | 15.6  |       |       
|                                                                                                               |                                                                              | Accounts payable and accrued charges                          |       |        | (80.9 | )     |       
|                                                                                                               |                                                                              | Other                                                         |       |        | 34.8  |       |       
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|                                                                                                               |                                                                              | $                                                             | (18.9 | )      | $     | 57.8  |       
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|Non-cash transaction related to financing activities:                                                          |                                                                              |                                                               |       |        |       |       |       
|                                                                                                               | Issuance of additional amount payable                                        |                                                               | $     | 70.0   |       | $     |      
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       
|Cash interest payments                                                                                         |                                                                              | $                                                             | 234.1 |        | $     | 123.6 |       
|Cash payments (net of refunds) for income taxes                                                                |                                                                              |                                                               | (20.9 | )      |       | 27.6  |       
|                                                                                                               |                                                                              |                                                               |       |        |       |       |       

See accompanying notes to consolidated financial statements.

F-4

---

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES    CONSOLIDATED BALANCE SHEETS    December 31, 2003 and 2002  (in millions of Canadian dollars)

|                                                                              |                                                                       | 2003                                                                                        |         | 2002     |      
|----------------------------------------------------------------------------- | --------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------- | -------- | -----
|
|                                                                              | Assets                                                                |                                                                                             |         |          |      
|                                                                              | Current assets:                                                       |                                                                                             |         |          |      
|                                                                              |                                                                       | Cash and cash equivalents (note 1 (h))                                                      |         | $        | 103.6
|                                                                              |                                                                       | Temporary investments (market value of $194.6 million ($87.9 million in 2002)) (note 1 (i)) |         |          | 194.2
|                                                                              |                                                                       | Accounts receivable (note 10)                                                               |         |          | 316.9
|                                                                              |                                                                       | Income taxes receivable                                                                     |         |          | 18.2 
|                                                                              |                                                                       | Inventories and investments in televisual products and movies (note 11)                     |         |          | 126.1
|                                                                              |                                                                       | Prepaid expenses                                                                            |         |          | 22.9 
|                                                                              |                                                                       | Future income taxes (note 7)                                                                |         |          | 68.6 
|                                                                              |                                                                       |                                                                                             |         |          |      
|                                                                              |                                                                       |                                                                                             | 850.5   |          |      
|Long-term investments (market value of $12.8 million ($12.6 million in 2002)) |                                                                       |                                                                                             | 12.8    |          |      
|Advances receivable from parent company (note 25)                             |                                                                       |                                                                                             |        |          |      
|Property, plant and equipment (note 13)                                       |                                                                       |                                                                                             | 1,562.9 |          |      
|Future income taxes (note 7)                                                  |                                                                       |                                                                                             | 96.8    |          |      
|Other assets (note 14)                                                        |                                                                       |                                                                                             | 172.7   |          |      
|Goodwill (note 15)                                                            |                                                                       |                                                                                             | 3,906.2 |          |      
|                                                                              |                                                                       |                                                                                             |         |          |      
|                                                                              |                                                                       | $                                                                                           | 6,601.9 |          | $    
|                                                                              |                                                                       |                                                                                             |         |          |      
|Liabilities and Shareholders' Equity                                          |                                                                       |                                                                                             |         |          |      
|Current liabilities:                                                          |                                                                       |                                                                                             |         |          |      
|                                                                              | Bank indebtedness                                                     |                                                                                             | $       | 4.2      |      
|                                                                              | Accounts payable and accrued charges                                  |                                                                                             |         | 514.4    |      
|                                                                              | Deferred revenue                                                      |                                                                                             |         | 119.9    |      
|                                                                              | Income and other taxes                                                |                                                                                             |         | 17.9     |      
|                                                                              | Advances payable to parent company and companies under common control |                                                                                             |         | 16.4     |      
|                                                                              | Future income taxes (note 7)                                          |                                                                                             |         |         |      
|                                                                              | Additional amount payable (note 16)                                   |                                                                                             |         | 68.7     |      
|                                                                              | Current portion of long-term debt (note 17)                           |                                                                                             |         | 60.0     |      
|                                                                              |                                                                       |                                                                                             |         |          |      
|                                                                              |                                                                       |                                                                                             | 801.5   |          |      
|Long-term debt (note 17)                                                      |                                                                       |                                                                                             | 2,696.8 |          |      
|Redeemable preferred shares of a subsidiary (note 18)                         |                                                                       |                                                                                             |        |          |      
|Other liabilities (note 19)                                                   |                                                                       |                                                                                             | 236.2   |          |      
|Future income taxes (note 7)                                                  |                                                                       |                                                                                             | 270.6   |          |      
|Non-controlling interest (note 20)                                            |                                                                       |                                                                                             | 201.8   |          |      
|Shareholders' equity:                                                         |                                                                       |                                                                                             |         |          |      
|                                                                              | Capital stock (note 21)                                               |                                                                                             |         | 1,773.7  |      
|                                                                              | Contributed surplus (notes 7 and 21)                                  |                                                                                             |         | 3,220.6  |      
|                                                                              | Deficit                                                               |                                                                                             |         | (2,597.8 | )    
|                                                                              | Translation adjustment                                                |                                                                                             |         | (1.5     | )    
|                                                                              |                                                                       |                                                                                             |         |          |      
|                                                                              |                                                                       |                                                                                             | 2,395.0 |          |      
|Guarantees (note 1 (b) (iii))                                                 |                                                                       |                                                                                             |         |          |      
|Commitments and contingencies (note 23)                                       |                                                                       |                                                                                             |         |          |      
|Subsequent events (note 27)                                                   |                                                                       |                                                                                             |         |          |      
|                                                                              |                                                                       |                                                                                             |         |          |      
|                                                                              |                                                                       | $                                                                                           | 6,601.9 |          | $    
|                                                                              |                                                                       |                                                                                             |         |          |      

See accompanying notes to consolidated financial statements.

|On behalf of the Board of Directors, |                                
|------------------------------------ | -------------------------------
|                                     | (Signed)JEAN LA COUTUREDirector

F-5

---



QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES        SEGMENTED INFORMATION        Years ended December 31, 2003, 2002 and 2001  (in millions of Canadian 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 operates in the internet access
provider industry and the rental of videocassettes, DVDs and games and retail stores. The Newspapers segment includes the publishing and distribution of daily and weekly newspapers in Canada. The
Broadcasting segment operates French-language general-interest television networks, specialized television networks and magazine publishing and movies distribution in Canada. The Leisure and
Entertainment segment, which has operations solely in Canada, combines book publishing and distribution, and music production and 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. The Web
Integration/Technology segment offers e-commerce solutions through a combination of strategies, 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, impairment of assets and other special charges, write-down of goodwill, (losses) gains on sale of businesses and
other assets and gains on dilution and net gain on debt refinancing and on repurchase of redeemable preferred shares of a subsidiary.

During
the year ended December 31, 2003, the Company changed its organizational structure. Accordingly, the operations of Le SuperClub Vidéotron
ltée, which were previously included in the Leisure and Entertainment segment, are now included in the Cable Television segment. The Company reclassified the figures for the previous
years in its consolidated financial statements to reflect this change.

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.

|          |                             | 2003 |         | 2002
(restated
note 1 (c)) |   | 2001
(restated
note 1 (c)) |      
|--------- | --------------------------- | ---- | ------- | -------------------------- | - | -------------------------- | -----
|Revenues: |                             |      |         |                            |   |                            |      
|          | Cable Television            |      | $       | 805.0                      |   | $                          | 781.0
|          | Newspapers                  |      |         | 845.9                      |   |                            | 831.6
|          | Broadcasting                |      |         | 340.9                      |   |                            | 323.4
|          | Leisure and Entertainment   |      |         | 205.0                      |   |                            | 206.3
|          | Business Telecommunications |      |         | 77.7                       |   |                            | 91.9 
|          | Web Integration/Technology  |      |         | 66.3                       |   |                            | 74.8 
|          | Internet/Portals            |      |         | 28.2                       |   |                            | 26.8 
|          | Head Office                 |      |         | 0.3                        |   |                            | 2.2  
|          | Inter-segment               |      |         | (49.7                      | ) |                            | (60.1
|          |                             |      |         |                            |   |                            |      
|          |                             | $    | 2,319.6 |                            | $ | 2,277.9                    |      
|          |                             |      |         |                            |   |                            |      

F-6

---

Operating
income before amortization, financial expenses, reserve for restructuring of operations, impairment of assets and other special charges, write-down of goodwill,
(losses) gains on sale of businesses and other assets and gains on dilution and net gain on debt refinancing and on repurchase of redeemable preferred shares of a subsidiary:

|                                    |                             | 2003 |       | 2002
(restated
note 1 (c)) |   | 2001
(restated
note 1 (c)) |      
|----------------------------------- | --------------------------- | ---- | ----- | -------------------------- | - | -------------------------- | -----
|Cable Television                    |                             | $    | 275.3 |                            | $ | 235.5                      |      
|                                    | Newspapers                  |      |       | 224.8                      |   |                            | 219.4
|                                    | Broadcasting                |      |       | 81.5                       |   |                            | 78.9 
|                                    | Leisure and Entertainment   |      |       | 14.7                       |   |                            | 14.5 
|                                    | Business Telecommunications |      |       | 14.4                       |   |                            | 27.3 
|                                    | Web Integration/Technology  |      |       | 1.0                        |   |                            | (9.9 
|                                    | Internet/Portals            |      |       | 3.1                        |   |                            | (2.6 
|                                    |                             |      |       |                            |   |                            |      
|                                    |                             |      | 614.8 |                            |   | 563.1                      |      
|General corporate (expenses) income |                             |      | (3.1  | )                          |   | (2.1                       | )    
|                                    |                             |      |       |                            |   |                            |      
|                                    |                             | $    | 611.7 |                            | $ | 561.0                      |      
|                                    |                             |      |       |                            |   |                            |      

|              |                             | 2003 |       | 2002
(restated
note 1 (c)) |   | 2001
(restated
note 1 (c))
|------------- | --------------------------- | ---- | ----- | -------------------------- | - | --------------------------
|Amortization: |                             |      |       |                            |   |                           
|              | Cable Television            |      | $     | 141.8                      |   | $                         
|              | Newspapers                  |      |       | 27.6                       |   |                           
|              | Broadcasting                |      |       | 12.2                       |   |                           
|              | Leisure and Entertainment   |      |       | 4.1                        |   |                           
|              | Business Telecommunications |      |       | 35.9                       |   |                           
|              | Web Integration/Technology  |      |       | 3.3                        |   |                           
|              | Internet/Portals            |      |       | 1.3                        |   |                           
|              | Head Office                 |      |       | 1.3                        |   |                           
|              |                             |      |       |                            |   |                           
|              |                             | $    | 227.5 |                            | $ | 226.1                     
|              |                             |      |       |                            |   |                           

|                                            |                             | 2003 |       | 2002
(restated
note 1 (c)) |   | 2001
(restated
note 1 (c))
|------------------------------------------- | --------------------------- | ---- | ----- | -------------------------- | - | --------------------------
|Additions to property, plant and equipment: |                             |      |       |                            |   |                           
|                                            | Cable Television            |      | $     | 90.8                       |   | $                         
|                                            | Newspapers                  |      |       | 14.4                       |   |                           
|                                            | Broadcasting                |      |       | 5.7                        |   |                           
|                                            | Leisure and Entertainment   |      |       | 1.3                        |   |                           
|                                            | Business Telecommunications |      |       | 17.9                       |   |                           
|                                            | Web Integration/Technology  |      |       | 0.9                        |   |                           
|                                            | Internet/Portals            |      |       | 0.3                        |   |                           
|                                            | Head Office                 |      |       | 0.5                        |   |                           
|                                            |                             |      |       |                            |   |                           
|                                            |                             | $    | 131.8 |                            | $ | 135.0                     
|                                            |                             |      |       |                            |   |                           

F-7

---

|        |                             | 2003 |         | 2002
(restated
note 1 (c))
|------- | --------------------------- | ---- | ------- | --------------------------
|Assets: |                             |      |         |                           
|        | Cable Television            |      | $       | 3,927.0                   
|        | Newspapers                  |      |         | 1,450.9                   
|        | Broadcasting                |      |         | 477.9                     
|        | Leisure and Entertainment   |      |         | 108.7                     
|        | Business Telecommunications |      |         | 318.7                     
|        | Web Integration/Technology  |      |         | 78.3                      
|        | Internet/Portals            |      |         | 36.2                      
|        | Head Office                 |      |         | 204.2                     
|        |                             |      |         |                           
|        |                             | $    | 6,601.9 |                           
|        |                             |      |         |                           

F-8

---



QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES        Notes to Consolidated Financial Information        Years ended December 31, 2003, 2002 and 2001  (in millions of Canadian dollars)



1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:







F-9

---







F-10

---



F-11

---



Nurun Inc.

Mindready
Solutions Inc.Weighted average fair value of options at grant date

$1.02

1.71Risk free interest rate

4.25%

4.25%Dividend yield

0%

0%Expected volatility

90%

90%Expected life

5 years

5 years




F-12

---









F-13

---







F-14

---





F-15

---



F-16

---











F-17

---









F-18

---



F-19

---









Asset

Estimated
useful lifeBuildings

25 to 40 yearsMachinery and equipment

3 to 20 yearsReceiving, distribution and telecommunications networks

3 to 20 years




F-20

---







F-21

---







F-22

---



2003

2002

2001Interest on long-term debt

$
242.0

$
255.8

$
273.8Interest on redeemable preferred shares


27.5


21.7


3.4Interest on bank indebtedness


0.2


0.2


0.8Investment income


(6.3
)

(6.9
)

(23.1
)Amortization of deferred financing costs and long-termdebt discount


53.7


48.4


49.0(Gains) losses on foreign currency translationon unhedged long-term debt


(22.0
)

(2.2
)

17.1Interest on note receivable from parent company


(1.0
)

(0.8
)

(1.6
)Other


5.9


7.0


(3.5
)300.0


323.2


315.9Interest capitalized to investments in subsidiariesheld for resale








(27.5
)$
300.0

$
323.2

$
288.4


F-23

---

3.     RESERVE FOR RESTRUCTURING OF OPERATIONS, IMPAIRMENT OF ASSETS AND OTHER SPECIAL CHARGES:









F-24

---





F-25

---





Restructuring charges

Other special charges

TotalBalance as at December 31, 2002

$
9.2

$
1.4

$
10.6Additional reserve


0.6


1.3


1.9Utilized in 2003:Cash


(3.8
)




(3.8
)Non-cash





(1.3
)

(1.3
)Reversal:Non-cash


(0.3
)




(0.3
)Balance as at December 31, 2003

$
5.7

$
1.4

$
7.1




Restructuring charges

Other special charges

Total2004

$
1.2

$
1.4

$
2.62005


0.8





0.82006


0.8





0.82007


0.6





0.62008


0.5





0.52009 and thereafter


1.8





1.8$
5.7

$
1.4

$
7.1


F-26

---

4.     WRITE-DOWN OF GOODWILL:



5.     BUSINESS ACQUISITIONS AND DISPOSALS:



F-27

---





F-28

---



F-29

---





2003

2002

2001Assets acquired:Cash and cash equivalents

$
2.4

$


$
Non-cash current operating assets


10.0


1.6


6.5Property, plant and equipment


2.6


2.5


0.3Goodwill


36.2


2.1


253.4Non-controlling interest


23.3





122.9Other


14.8


0.5


89.3


6.7


383.1Liabilities assumed:Non-cash current operating liabilities


(5.9
)

(0.3
)

(2.3
)Other liabilities


(0.1
)

0.1


Future income taxes


(4.7
)




Non-controlling interest





7.7


(10.7
)

7.5


(2.3
)Net assets acquired at fair value

$
78.6

$
14.2

$
380.8Consideration:Cash

$
78.6

$
14.2

$
379.3Balance of purchase price payable








1.5$
78.6

$
14.2

$
380.8


F-30

---



6.     NET GAIN ON DEBT REFINANCING AND ON REPURCHASE OF REDEEMABLE PREFERRED SHARES OF A SUBSIDIARY:





F-31

---





7.     INCOME TAXES:



2003

2002
(restated
note 1 (c))

2001
(restated
note 1 (c))Current

$
15.2

$
(1.3
)
$
3.2Future


(27.6
)

6.5


(9.8
)$
(12.4
)
$
5.2

$
(6.6
)




2003

2002
(restated note 1 (c))

2001
(restated note 1 (c))Statutory tax rate

33.1%

35.2%

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

2.7

(35.5
)
(24.1
)Change in valuation allowance

(20.0
)
(6.6
)
(9.4
)Other

(0.1
)
4.4

(1.2
)Effective tax rate before the following item

15.7

(2.5
)
1.7Effect of the non-taxable net gain on debt refinancing and on repurchase of redeemable preferred shares

(21.2
)


Effect of the non-taxable gains on dilution





0.2Effective tax rate

(5.5
)%
(2.5
)%
1.9%


F-32

---



2003
(restated note 1 (c))

2002
(restated note 1 (c))Future income tax assets:Loss carryforwards

$
243.8

$
238.7Property, plant and equipment


37.1


30.2Pension plan liability and postretirement benefits


11.5


10.3Goodwill and other assets


50.2


50.6Deferred charges


21.2


1.0Accounts payable and accrued charges


21.9


24.5Long-term investments


2.4


4.0Other


6.3


8.1394.4


367.4Valuation allowance


(132.3
)

(169.3
)262.1


198.1Future income tax liabilities:Goodwill


(52.4
)

(49.4
)Property, plant and equipment


(313.2
)

(261.8
)Other


(1.7
)

(5.3
)(367.3
)

(316.5
)Net future income tax liabilities

$
(105.2
)
$
(118.4
)




2003

2002Future income tax assets:Current

$
68.6

$
31.9Long-term


96.8


97.9165.4


129.8Future income tax liabilities:Current





(0.9
)Long-term


(270.6
)

(247.3
)(270.6
)

(248.2
)Net future income tax liabilities

$
(105.2
)
$
(118.4
)


F-33

---



8.     INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIES:



F-34

---



2001
(restated note 1 (c))Revenues

$
441.5Cost of sales and selling and administrative expenses


(317.7
)Amortization


(45.2
)Financial expenses


(30.6
)Income before income taxes


48.0Income taxes


21.027.0Non-controlling interest


(4.4
)Income before amortization of goodwill


22.6Amortization of goodwill, net of non-controlling interest


(41.5
)Net loss and equity loss from non-consolidated subsidiaries

$
(18.9
)


9.     DISCONTINUED OPERATIONS:



F-35

---



2003

2002

2001Revenues

$
8.0

$
27.0

$
30.2Cost of sales and selling and administrative expenses


(7.4
)

(24.9
)

(27.0
)Operating income before undernoted items


0.6


2.1


3.2Amortization


(0.2
)

(0.6
)

(0.6
)Financial (expenses) income


(0.1
)

0.4


0.2Reserve for restructuring of operations





(0.2
)

Income before income taxes


0.3


1.7


2.8Income taxes


0.2


0.6


0.30.1


1.1


2.5Non-controlling interest


0.1


0.4


(0.1
)Gain on disposal of businesses (net of income taxes of $2.8 million)


0.3





Income from discontinued operations

$
0.5

$
1.5

$
2.4




2003Accounts receivable

$
5.5Inventories


0.5Prepaid expenses


0.1Property, plant and equipment


5.6Goodwill


10.1Other assets


2.0Total assets


23.8Accounts payable and accrued charges


(4.2
)Net assets

$
19.6


F-36

---

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

2003

2002

2001Cash flows related to operations:Income from discontinued operations

$
0.5

$
1.5

$
2.4Adjustments for:Amortization


0.2


0.6


0.6Non-controlling interest


0.1


(0.4
)

0.1Other


0.1


(0.1
)

0.1Net changes in non-cash balances related to operations


(1.0
)

(0.4
)

(1.6
)Cash flows (used in) provided by discontinued operations

$
(0.1
)
$
1.2

$
1.6


10.   ACCOUNTS RECEIVABLE:

2003

2002Trade

$
297.4

$
304.6Other


19.5


25.2$
316.9

$
329.8


11.   INVENTORIES AND INVESTMENTS IN TELEVISUAL PRODUCTS AND MOVIES:

2003

2002Raw materials and supplies

$
38.1

$
36.2Work in process


7.5


8.0Finished goods


51.6


51.0Investments in televisual products and movies


28.9


29.0$
126.1

$
124.2


F-37

---



12.     INVESTMENTS IN SUBSIDIARIES HELD FOR RESALE:



Period from January 1 to October 31, 2001Revenues

$
82.1Cost of sales and selling and administrative expenses


(63.2
)Amortization


(29.0
)Financial revenues


1.1Operating loss before other expenses


(9.0
)Other expenses


(17.2
)Loss before income taxes


(26.2
)Income tax credit


5.8Loss before amortization of goodwill


(20.4
)Amortization of goodwill


(0.9
)Net loss

$
(21.3
)


13.     PROPERTY, PLANT AND EQUIPMENT:

2003Cost

Accumulated amortization

Net amountLand

$
37.5

$


$
37.5Buildings and leasehold improvements


174.9


30.5


144.4Machinery and equipment


685.4


384.3


301.1Receiving, distribution and telecommunication networks


1,263.6


190.0


1,073.6Projects under development


6.3





6.3$
2,167.7

$
604.8

$
1,562.9


F-38

---

2002
(restated note 1(c))Cost

Accumulated amortization

Net amountLand

$
38.9

$


$
38.9Buildings and leasehold improvements


193.0


40.4


152.6Machinery and equipment


685.0


264.6


420.4Receiving, distribution and telecommunication networks


1,203.6


143.6


1,060.0Projects under development


4.6





4.6$
2,125.1

$
448.6

$
1,676.5


14.     OTHER ASSETS:

2003

2002
(restated
note 1(c))Deferred financing costs, net of accumulated amortization

$
49.3

$
57.1Deferred pension charge


10.1


14.0Deferred start-up costs, net of accumulated amortization


4.6


9.3Broadcasting licenses


71.4


71.4Cross-currency swap agreement





47.9Investments in televisual products and movies


19.8


23.7Customer relationships


9.7


Other


7.8


13.5$
172.7

$
236.9


15.     GOODWILL:



2003Balance as at December 31, 2002

Business acquisitions (disposals)

Discontinued operations

Write-down

Other

Balance as at December 31, 2003Cable Television

$
2,662.7

$


$


$


$
(1.6
)
$
2,661.1Newspapers


1,000.1


20.8


(10.1
)







1,010.8Broadcasting


158.6


6.7








(0.3
)

165.0Leisure and Entertainment


34.9


8.7











43.6Business Telecommunications


0.9


(0.9
)










Internet/Portals


26.2








(0.5
)




25.7Total

$
3,883.4

$
35.3

$
(10.1
)
$
(0.5
)
$
(1.9
)
$
3,906.2


F-39

---

2002Balance as at January 1, 2002Business acquisitions (disposals)

Write-down

Other

Balance as at December 31, 2002Cable Television

$
2,730.9

$


$
(68.0
)
$
(0.2
)
$
2,662.7Newspapers


1,000.5


(0.4
)







1,000.1Broadcasting


164.3


1.6





(7.3
)

158.6Leisure and Entertainment


35.5


(0.5
)




(0.1
)

34.9Business Telecommunications


108.5





(107.6
)




0.9Web Integration/Technology


8.8





(8.9
)

0.1


Internet/Portals


28.7





(2.5
)




26.2Total

$
4,077.2

$
0.7

$
(187.0
)
$
(7.5
)
$
3,883.4


F-40

---

16.     ADDITIONAL AMOUNT PAYABLE:



F-41

---

17.     LONG-TERM DEBT:

Effective
interest rate as at December 31, 2003

Years of maturity

2003

2002Quebecor Media Inc.:Credit facility (i)

4.19% to 4.35%

2004-2005

$
97.0

$
429.0Senior Notes (ii)

11.50%

2011


917.2


1,099.5Senior Discount Notes (iii)

13.75%

2011


279.6


291.61,293.8


1,820.1Vidéotron ltée and its subsidiaries (iv):Credit facilities (v)

3.86% to 5.00%

2008


355.7


Senior Notes (vi)

7.00%

2014


430.4


Senior Secured First Priority Notes (vii)

7.59%

2007


100.6


123.8Credit facilities  repaid in full in 2003 (viii)









995.8886.7


1,119.6Sun Media Corporation and its subsidiaries (iv):Credit facilities (ix)

3.41%

2008 - 2009


288.0


Senior Notes (x)

7.88%

2013


263.7


Senior Credit facility  repaid in full in 2003 (xi)









300.5Senior Subordinated Notes  repaid in full in 2003 (xii)









214.6551.7


515.1TVA Group Inc. and its subsidiaries (iv):Revolving term-bank loan (xiii)

2.76% and 4.5%

2006


24.4


51.2Other subsidiaries of Quebecor Media Inc. (iv):Miscellaneous debt

6.8% to 9.7%

2004


0.2


0.62,756.8


3,506.6Less current portion:Quebecor Media Inc.






6.3


429.0Vidéotron ltée and its subsidiaries






50.0


86.1Sun Media Corporation and its subsidiaries






3.5


60.0Other subsidiaries of Quebecor Media Inc.






0.2


0.560.0


575.6$
2,696.8

$
2,931.0


F-42

---



F-43

---



F-44

---



F-45

---





2004

$
60.02005


144.22006


77.92007


154.12008


159.12009 and thereafter


2,161.5


18.     REDEEMABLE PREFERRED SHARES OF A SUBSIDIARY:



F-46

---

19.   OTHER LIABILITIES:

2003

2002Pension plan liability

$
13.0

$
24.1Postretirement benefits


25.3


23.7Cross-currency swap agreements


181.9


Other


16.0


3.6$
236.2

$
51.4


20.   NON-CONTROLLING INTEREST:



Subsidiary

Segment

Non-controlling interestTVA Group Inc.

Broadcasting

62.39%Nurun Inc.

Web Integration/Technology

42.74%Netgraphe Inc.

Internet/Portals

24.55%


21.   CAPITAL STOCK:





F-47

---





Common Shares

Preferred B SharesNumber

Amount

Number

AmountBalance as at December 31, 2001

93,016,147

$
3,984.9



$
Issuance of new shares

2,115,825


31.9




Reduction of stated capital




(2,675.0
)



Balance as at December 31, 2002

95,131,972


1,341.8




Issuance of new shares

14,221,664


215.8

216,145,684


216.1Conversion of Preferred B Shares into Common Shares

14,249,171


216.1

(216,145,684
)

(216.1
)Balance as at December 31, 2003

123,602,807

$
1,773.7



$





F-48

---



22.   SHARE PURCHASE PLANS:





F-49

---



2003

2002Options

Weighted average exercise price

Options

Weighted average exercise priceBalance at beginning of year

2,138,291

$
16.37



$
Granted

827,060


18.21

2,146,639


16.37Cancelled

(357,814
)

16.51

(8,348
)

16.17Balance at end of year

2,607,537

$
16.93

2,138,291

$
16.37Vested options at end of year

52,304

$
16.20



$





Outstanding options

Vested optionsExercise price

Number

Weighted average years to maturity

Number

Exercise price$15.19

313,293

9.41



$
16.17

1,747,603

8.27

49,483


16.1716.66

14,105

8.32

2,821


16.6619.46

271,064

9.60




21.42

199,461

9.93




21.77

62,011

8.23




$15.19 to 21.77

2,607,537

8.67

52,304

$
16.20




F-50

---



2003

2002Options

Exercise price

Options

Exercise priceBalance at end of year

15,000

$
27.64

15,000

$
27.64Vested options at end of year

3,750

$
27.64



$





Outstanding options

Vested optionsExercise price

Number

Weighted average years to maturity

Number

Exercise price27.64

15,000

7.20

3,750

$
27.64


F-51

---





2003

2002Options

Weighted average exercise price

Options

Weighted average exercise priceBalance at beginning of year

347,050

$
15.69

378,050

$
17.86Granted






60,000


10.82Exercised

(86,750
)

13.44

(1,000
)

6.88Cancelled

(10,000
)

25.20

(90,000
)

21.65Balance at end of year

250,300

$
16.09

347,050

$
15.69Vested options at end of year

145,300

$
18.92

219,550

$
17.55




Outstanding options

Vested optionsRange of exercise price

Number

Weighted average years to maturity

Weighted average exercise price

Number

Weighted average exercise price$3.43 to 7.72

1,800

1.64

$
3.58

1,800

$
3.587.73 to 11.59

64,000

6.03


10.82

4,000


10.8711.60 to 17.40

77,500

6.92


14.00

32,500


14.0017.41 to 25.50

107,000

6.40


20.97

107,000


20.97$3.43 to 25.50

250,300

6.43

$
16.09

145,300

$
18.92


F-52

---





2003

2002Options

Weighted average exercise price

Options

Weighted average exercise priceBalance at beginning of year

50,000

$
18.85

90,000

$
21.81Cancelled






(40,000
)

25.50Balance at end of year

50,000

$
18.85

50,000

$
18.85Vested options at end of year

50,000

$
18.85

50,000

$
18.85




Outstanding options

Vested optionsRange of exercise price

Number

Weighted average years to maturity

Weighted average exercise price

Number

Weighted average exercise price$18.85

50,000

0.80

$
18.85

50,000

$
18.85






F-53

---







2003

2002Options

Weighted average exercise price

Options

Weighted average exercise priceBalance at beginning of year

634,950

$
13.78

556,616

$
22.42Granted

324,500


1.32

351,500


1.86Cancelled

(275,450
)

14.98

(273,166
)

16.05Balance at end of year

684,000

$
7.38

634,950

$
13.78Vested options at end of year

190,626

$
17.19

186,050

$
23.26


F-54

---



Outstanding options

Vested optionsRange of exercise price

Number

Weighted average years to maturity

Weighted average exercise price

Number

Weighted average exercise price1.05

213,000

5.0

$
1.02

18,250

$
0.962.79

283,000

4.8


1.95

40,750


2.346.27

75,200

3.1


6.20

42,700


6.159.30

24,500

2.0


9.19

22,500


9.2012.15

11,550

2.8


11.53

8,863


11.5456.35

76,750

2.1


45.04

57,563


45.04$0.96 to 56.35

684,000

4.6

$
7.38

190,626

$
17.19






F-55

---



2003

2002Options

Weighted average exercise price

Options

Weighted average exercise priceBalance at beginning of year

316,341

$
8.12

624,650

$
8.73Granted

120,809


1.61

56,500


2.57Cancelled

(69,563
)

8.53

(364,809
)

8.29Balance at end of year

367,587

$
5.90

316,341

$
8.12Vested options at end of year

155,726

$
8.67

120,739

$
9.24




Outstanding options

Vested optionsRange of exercise price

Number

Weighted average years to maturity

Weighted average exercise price

Number

Weighted average exercise price$1.00 to 1.74

118,659

9.5

$
1.61

3,291

$
1.002.00 to 2.89

49,790

8.3


2.66

16,295


2.714.98

40,220

7.6


4.98

20,110


4.989.98 to 12.00

158,918

6.7


10.36

116,030


10.37$1.00 to 12.00

367,587

7.1

$
5.90

155,726

$
8.67




F-56

---



2003

2002Options

Weighted average exercise price

Options

Weighted average exercise priceBalance at beginning of year

278,109

$
10.31

682,829

$
6.11Cancelled

(19,939
)

3.44

(404,720
)

3.22Balance at end of year

258,170

$
10.84

278,109

$
10.31Vested options at end of year

255,769

$
10.88

200,939

$
9.90




Outstanding options

Vested optionsRange of exercise price

Number

Weighted average year to maturity

Weighted average exercise price

Number

Weighted average exercise price$2.05

7,684

0.60

$
2.05

7,684

$
2.055.15

1,282

0.87


5.15

1,282


5.156.80 to 9.40

150,204

0.49


8.43

147,803


8.4615.25

99,000

0.25


15.25

99,000


15.25$2.05 to 15.25

258,170

0.40

$
10.84

255,769

$
10.88


F-57

---



2003

2002 (restated note 1 (c))Pro forma income (loss) from continuing operations

$
203.4

$
(231.4
)Pro forma net income (loss)


203.9


(229.9
)




F-58

---





23.     COMMITMENTS AND CONTINGENCIES:





2004

$
45.12005


29.32006


22.22007


16.62008


12.42009 and thereafter


45.9








F-59

---





24.     FINANCIAL INSTRUMENTS:



Currency (sold/bought)

Maturing

Exchange rate

Notional amountSun Media Corporation$ / US$

February 15, 2013

1.5227

US$205.0


F-60

---



Period
covered

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

2001 to 2011

US$715.0

12.4%

12.0%

1.5255Senior Discount Notes

2001 to 2011

US$295.0

14.6%

14.6%

1.5822
(1)Vidéotron ltée and its subsidiaries:Senior Notes

2003 to 2014

US$200.0

Bankers' Acceptances 3 months plus 2.73%

6.875%

1.3425Senior Notes

2003 to 2014

US$135.0

7.66%

6.875%

1.3425Sun Media Corporation and its subsidiaries:Senior Notes

2003 to 2008

US$155.0

8.17%

7.625%

1.5227Senior Notes

2008 to 2013

US$155.0

Bankers' Acceptances 3 months plus 3.70%

7.625%

1.5227Senior Notes

2003 to 2013

US$50.0

Bankers' Acceptances 3 months plus 3.70%

7.625%

1.5227Term-loan B credit facility

2003 to 2009

US$220.3

Bankers' Acceptances 3 months plus 2.69%

LIBOR
plus 2.25%

1.5175


---



F-61

---





Maturity

Notional
amount

Pay/
receive

Fixed
rate

Floating
rateVidéotron ltée and its subsidiariesMarch 2005

$
135.0

Pay fixed/
receive floating

4.01% to 5.05%

Bankers' acceptance
3 monthsMay 2004

$
90.0

Pay fixed/
receive floating

5.49%

Bankers' acceptance
3 monthsMay 2006

$
90.0

Pay fixed/
receive floating

5.41%

Bankers' acceptance
3 months


F-62

---





2003

2002Carrying
value

Fair value

Carrying
value

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

$
(1,293.8
)
$
(1,518.9
)
$
(1,820.1
)
$
(1,706.8
)Cross-currency interest rate swap agreements


(80.9
)

(221.7
)

39.0


103.4Interest rate swap agreements











0.1Vidéotron ltée and its subsidiaries:Long-term debt(1)


(886.7
)

(912.1
)

(1,119.6
)

(1,121.7
)Cross-currency swap agreement








8.9


8.3Interest rate swap agreement





(9.5
)




(13.4
)Cross-currency interest rate swap agreement


(15.3
)

(21.5
)




Sun Media Corporation and its subsidiaries:Long-term debt(1)


(551.7
)

(574.8
)

(515.1
)

(543.4
)Cross-currency interest rate swap agreement


(89.7
)

(122.8
)




55.4


---

F-63

---





25.     RELATED PARTY TRANSACTIONS:



F-64

---

26.     PENSION PLANS AND POSTRETIREMENT BENEFITS:



|                                   |                                          | Pension benefits |       | Postretirement benefits |  
|---------------------------------- | ---------------------------------------- | ---------------- | ----- | ----------------------- | -
|
|Change in benefit obligations:     |                                          |                  |       |                         |  
|                                   | Benefit obligations at beginning of year |                  | $     | 357.6                   |  
|                                   | Service costs                            |                  |       | 8.1                     |  
|                                   | Interest costs                           |                  |       | 24.2                    |  
|                                   | Plan participants' contributions         |                  |       | 6.5                     |  
|                                   | Plan amendments                          |                  |       | 2.2                     |  
|                                   | Acquisition                              |                  |       | 2.1                     |  
|                                   | Curtailment loss (gain)                  |                  |       | 3.0                     |  
|                                   | Actuarial loss (gain)                    |                  |       | 0.1                     |  
|                                   | Change in assumptions                    |                  |       | 24.8                    |  
|                                   | Benefits and settlements paid            |                  |       | (21.4                   | )
|                                   | Other                                    |                  |       | 0.8                     |  
|                                   |                                          |                  |       |                         |  
|Benefit obligations at end of year |                                          | $                | 408.0 |                         | $
|                                   |                                          |                  |       |                         |  

|                                         |                                                | Pension benefits |       | Postretirement benefits |  
|---------------------------------------- | ---------------------------------------------- | ---------------- | ----- | ----------------------- | -
|
|Change in plan assets:                   |                                                |                  |       |                         |  
|                                         | Fair value of plan assets at beginning of year |                  | $     | 319.5                   |  
|                                         | Actual return on plan assets                   |                  |       | 51.6                    |  
|                                         | Employer contributions                         |                  |       | 13.5                    |  
|                                         | Plan participants' contributions               |                  |       | 6.5                     |  
|                                         | Actuarial gain                                 |                  |       | 4.8                     |  
|                                         | Acquisition                                    |                  |       | 2.0                     |  
|                                         | Benefits and settlements paid                  |                  |       | (21.4                   | )
|                                         | Transfer from another plan                     |                  |       |                        |  
|                                         | Other                                          |                  |       | 0.6                     |  
|                                         |                                                |                  |       |                         |  
|Fair value of plan assets at end of year |                                                | $                | 377.1 |                         | $
|                                         |                                                |                  |       |                         |  

F-65

---



Pension benefits

Postretirement benefits2003

2002

2003

2002Reconciliation of funded status:Excess of benefit obligations over fair value of plan assets at end of year

$
(30.9
)
$
(38.1
)
$
(28.6
)
$
(26.8
)Unrecognized actuarial loss


33.5


32.9


4.7


5.2Unrecognized net transition (asset) obligation


(6.7
)




0.7


Unrecognized prior service cost


15.0


13.9


(2.2
)

(2.2
)Valuation allowance


(13.8
)

(18.8
)




0.1Other








0.1


Net amount recognized

$
(2.9
)
$
(10.1
)
$
(25.3
)
$
(23.7
)




Pension benefits

Postretirement benefits2003

2002

2003

2002Benefit obligations

$
(247.4
)
$
(220.8
)
$
(28.6
)
$
(26.8
)Fair value of plan assets


209.0


171.5





Funded status  plan deficit

$
(38.4
)
$
(49.3
)
$
(28.6
)
$
(26.8
)




Pension benefits

Postretirement benefits2003

2002

2003

2002Accrued benefit liability(1)

$
(7.6
)
$
(24.1
)
$
(25.3
)
$
(23.7
)Prepaid benefit costs


4.7


14.0





Net amount recognized

$
(2.9
)
$
(10.1
)
$
(25.3
)
$
(23.7
)


---

F-66

---



|                                              |  | Pension benefits |       | Postretirement benefits |  
|--------------------------------------------- |  | ---------------- | ----- | ----------------------- | -
|
|Service costs                                 |  | $                | 8.1   |                         | $
|Interest costs                                |  |                  | 24.2  |                         |  
|Expected return on plan assets                |  |                  | (24.7 | )                       |  
|Amortization of prior service costs (benefit) |  |                  | 1.2   |                         |  
|Amortization of transitional obligations      |  |                  | (0.5  | )                       |  
|Curtailment (gain) loss                       |  |                  | (0.2  | )                       |  
|Valuation allowance                           |  |                  | 1.1   |                         |  
|Amortization of actuarial loss (gain)         |  |                  | 0.8   |                         |  
|Other                                         |  |                  | 0.4   |                         |  
|                                              |  |                  |       |                         |  
|Net periodic costs                            |  | $                | 10.4  |                         | $
|                                              |  |                  |       |                         |  



|                                  |  | Pension benefits |   | Postretirement benefits |  
|--------------------------------- |  | ---------------- | - | ----------------------- | -
|
|Discount rate                     |  | 6.25             | % | 6.75                    | %
|Expected return on plan assets(1) |  | 7.75             |   | 7.75                    |  
|Rate of compensation increase     |  | 3.25             |   | 3.53                    |  

---



|                                     |  | Postretirement benefits |    
|------------------------------------ |  | ----------------------- | ---
|
|Effect on service and interest costs |  | $                       | 0.5
|Effect on benefit obligation         |  |                         | 5.5

F-67

---

27.   SUBSEQUENT EVENTS:



F-68

---

28.   SIGNIFICANT DIFFERENCES BETWEEN GAAP IN CANADA AND IN THE UNITED STATES:



2003

2002
(restated
note 1 (c))

2001
(restated
note 1 (c))Net income (loss), as reported in the consolidated statements of income per GAAP in Canada

$
203.9

$
(229.8
)
$
(449.5
)Adjustments:Development, pre-operating and start-up costs (i)


3.2


4.6


0.5Pension and postretirement benefits (ii)


(0.4
)

(1.0
)

(0.6
)Equity loss from non-consolidated subsidiaries (iii)








0.1Change in fair value of and the ineffective portion of a derivative instrument (iv)


(167.5
)

145.4


(66.5
)Temporary investments (v)





(1.7
)

1.7Income taxes (vi)


1.3


(1.1
)

14.5Cumulative effect of change in accounting policy (vii)





(2,144.3
)

Gain on repurchase of redeemable preferred shares of a subsidiary (viii)


(153.7
)




Other


16.7


19.5


(6.4
)Net loss, as adjusted per GAAP in the United States (in Canadian dollars)

$
(96.5
)
$
(2,208.4
)
$
(506.2
)


F-69

---





2003

2002

2001Net loss, as adjusted per GAAP in the United States

$
(96.5
)
$
(2,208.4
)
$
(506.2
)Translation adjustment1


1.3


(0.3
)

(1.2
)Pension and post-retirement benefits (ii)


(0.1
)

(6.9
)

Derivative instruments (iv)


(63.9
)

11.9


3.2Income taxes (vi)


3.5


(0.4
)

(0.6
)Comprehensive loss per GAAP in the United States

$
(155.7
)
$
(2,204.1
)
$
(504.8
)






2003

2002
(restated
note 1 (c))

2001
(restated
note 1 (c))Translation adjustment

$
(1.5
)
$
(2.8
)
$
(2.5
)Pension and post-retirement benefits (ii)


(7.0
)

(6.9
)

Derivative instruments (iv)


(48.7
)

15.2


3.3Income taxes (vi)


2.3


(1.2
)

(0.8
)Accumulated other comprehensive income (loss) at end of year

$
(54.9
)
$
4.3

$



F-70

---



20022003Canada
(restated
note 1(c))

United States
(restated
note 1(c))Canada

United StatesProperty, plant and equipment

$
1,562.9

$
1,562.9

$
1,676.5

$
1,665.8Goodwill


3,906.2


3,901.5


3,883.4


3,879.9Future income tax assets


96.8


97.8


97.9


114.4Other assets


172.7


168.0


236.9


377.1Long-term debt


(2,696.8
)

(2,676.1
)

(2,931.0
)

(2,972.7
)Other liabilities


(236.2
)

(396.1
)

(51.4
)

(72.8
)Future income tax liabilities


(270.6
)

(265.8
)

(247.3
)

(259.3
)Non-controlling interest


(201.8
)

(200.6
)

(195.3
)

(194.1
)Contributed surplus


(3,220.6
)

(3,374.3
)

(3,214.6
)

(3,214.6
)Deficit


2,597.8


2,839.7


2,801.7


2,740.2Accumulated other comprehensive (income) loss


1.5


54.9


2.8


(4.3
)






2003

2002

2001RevenuesManagement fees

$
17.1

$
12.7

$
4.0Interest on loan with subsidiaries


5.5





32.8Other


20.1


30.7


42.7


43.4


36.8ExpensesGeneral and administrative


(40.5
)

(46.3
)

(11.3
)Depreciation and amortization


(1.7
)

(0.6
)

Financial


(181.2
)

(191.7
)

(172.8
)(223.4
)

(238.6
)

(184.1
)Loss before undernoted items


(180.7
)

(195.2
)

(147.3
)Write down of fixed assets and others





(7.7
)

Loss before income taxes


(180.7
)

(202.9
)

(147.3
)Income (credit) taxes


(28.2
)

0.3


(152.5
)

(203.2
)

(147.3
)Equity income (loss) from subsidiaries


356.4


(26.6
)

(302.2
)Net income (loss)

$
203.9

$
(229.8
)
$
(449.5
)




2003

2002

2001Cash flows related to operationsNet income (loss)

$
203.9

$
(229.8
)
$
(449.5
)Amortization


50.0


44.0


40.9Other


(382.9
)

(0.2
)

302.6Net change in non-cash balances related to operations


(86.4
)

4.1


42.9Cash flows used in operations


(215.4
)

(181.9
)

(63.1
)Cash flows related to financing activitiesProceeds from issuance of capital stock


431.9


381.9


2,017.5Repurchases of capital stock


(360.0
)




Issuance of long-term debt


97.0





1,719.7Repayment of long-term debt


(429.0
)

(1.4
)

(2,010.9
)Payments under cross-currency swaps agreements


(118.8
)




Net decrease in bank indebtedness





(2.8
)

(0.5
)(Increase) decrease in advances to subsidiaries


(150.2
)

5.9


505.6(Decrease) increase in advances from subsidiaries


(1.2
)

21.5


(96.0
)Deferred financing costs








(40.2
)Cash flows (used in) provided by financing activities


(530.3
)

405.1


2,095.2Cash flows related to investing activitiesAcquisitions of investments


(17.7
)

(354.6
)

(1,975.0
)Proceeds from disposal of investments


361.0


36.3


(Increase) decrease in temporary investments


(18.4
)




Equity distribution from subsidiaries


433.4


138.9


4.4Interest capitalized to investment held for resale








(27.5
)Other


3.8


0.8


(1.7
)Cash flows provided by (used in) investing activities


762.0


(178.6
)

(1,999.8
)Net increase (decrease) in cash and cash equivalents


16.3


44.6


32.3Cash and cash equivalents at beginning of year


76.9


32.3


Cash and cash equivalents at end of year

$
93.2

$
76.9

$
32.3


F-71

---



2003

2002AssetsCurrent assets

$
348.4

$
245.3Advances to subsidiaries


172.0


22.7Investments in subsidiaries


3,648.5


3,699.5Convertible obligation  Sun Media Corporation (ix)


1,590.0


1,950.0Other assets


71.6


105.9$
5,830.5

$
6,023.4Liabilities and Shareholders' equityCurrent assets

$
180.6

$
639.9Long-term debt


1,287.6


1,391.0Advances from subsidiaries


280.0


281.3Other liabilities


97.3


9.3Shareholders' equity (ix)


3,985.0


3,701.9$
5,830.5

$
6,023.4






F-72

---





F-73

---



F-74

---



29.   RESTRICTED AND UNRESTRICTED SUBSIDIARIES:



F-75

---



2003

2002
(restated
note 1(c))

2001
(restated
note 1(c))Revenues

$
2,230.0

$
2,182.0

$
1,679.3Cost of sales and selling and administrative expenses


(1,622.4
)

(1,608.5
)

(1,253.5
)Operating income before undernoted items


607.6


573.5


425.8Amortization


(222.9
)

(217.7
)

(139.7
)Financial expenses


(299.8
)

(325.4
)

(287.0
)Reserve for restructuring of operations, impairment of assets, and other special charges


(0.9
)

(16.0
)

(17.8
)Write-down of goodwill





(175.6
)

(Losses) gains on sale of businesses and other assets


(1.1
)

3.5


Net gain on debt refinancing and on repurchase of Redeemable preferred shares of a subsidiary


144.1





Income (loss) before income taxes


227.0


(157.7
)

(18.7
)Income taxes (credit)


(12.9
)

4.1


12.7239.9


(161.8
)

(31.4
)Equity loss from non-consolidated subsidiaries








(18.9
)Non-controlling interest


(35.5
)

(36.0
)

(10.3
)Income (loss) before amortization of goodwill


204.4


(197.8
)

(60.6
)Amortization of goodwill, net of non-controlling interest








(111.7
)Income (loss) from continuing operations


204.4


(197.8
)

(172.3
)Income from discontinued operations


0.7


2.0


2.2Net income (loss)

$
205.1

$
(195.8
)
$
(170.1
)


F-76

---



2003

2002
(restated
note 1(c))

2001
(restated
note 1(c))Cable Television

$
275.3

$
235.5

$
180.7Newspapers


224.8


219.4


197.8Broadcasting


81.5


78.9


28.7Leisure and Entertainment


14.7


14.5


14.2Business Telecommunications


14.4


27.3


4.1610.7


575.6


425.5General corporate (expenses) income


(3.1
)

(2.1
)

0.3$
607.6


573.5

$
425.8




2003

2002
(restated
note 1(c))AssetsCurrent assets

$
769.9

$
744.8Property, plant and equipment


1,558.1


1,668.1Other assets


279.8


345.5Goodwill


3,880.5


3,857.26,488.3


6,615.6LiabilitiesCurrent liabilities


774.8


847.2Long-term debt


2,696.8


2,930.9Redeemable preferred shares





254.2Other liabilities


506.8


298.7Non-controlling interest


165.5


157.14,143.9


4,488.1Net investment in Restricted Subsidiaries and the Company

$
2,344.4

$
1,127.5


F-77

---



2003

2002
(restated
note 1(c))

2001
(restated
note 1(c))Revenues

$
94.5

$
101.6

$
149.5Cost of sales and selling and administrative expenses


(90.4
)

(114.1
)

(186.6
)Operating income (loss) before undernoted items


4.1


(12.5
)

(37.1
)Amortization


(4.6
)

(8.4
)

(12.0
)Financial expenses


(0.2
)

2.2


(1.4
)Reserve for restructuring of operations, impairment of assets, and other special charges


(0.7
)

(23.2
)

(134.3
)Write-down of goodwill


(0.5
)

(11.4
)

(147.0
)Gains on sale of businesses and other assets and gains on dilution





0.1


1.5Loss before income taxes


(1.9
)

(53.2
)

(330.3
)Income taxes (credit)


0.5


1.1


(19.3
)(2.4
)

(54.3
)

(311.0
)Non-controlling interest


1.4


20.8


46.7Loss before amortization of goodwill


(1.0
)

(33.5
)

(264.3
)Amortization of goodwill, net of non-controlling interest








(15.3
)Loss from continuing operations


(1.0
)

(33.5
)

(279.6
)Loss from discontinued operations


(0.2
)

(0.5
)

0.2Net loss

$
(1.2
)
$
(34.0
)
$
(279.4
)




2003

2002
(restated
note 1(c))

2001
(restated
note 1(c))Web Integration/Technology

$
1.0

$
(9.9
)
$
(15.6
)Internet/Portals


3.1


(2.6
)

(21.5
)$
4.1

$
(12.5
)
$
(37.1
)


F-78

---



2003

2002AssetsCurrent assets

$
82.0

$
65.5Property, plant and equipment


4.8


8.4Other assets


2.5


28.0Goodwill


25.7


26.2115.0


128.1LiabilitiesCurrent liabilities


28.1


465.4Long-term debt and other liabilities





0.1Non-controlling interest


36.3


38.264.4


503.7Net investment in Unrestricted Subsidiaries

$
50.6

$
(375.6
)


F-79

---

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