##### 



FORM 20-F

[  ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2003

OR

[  ] 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 333-13878

CanWest Media Inc.

(Exact name of Registrant as specified in its charter)


(Translation of Registrants name into English)
Canada
(Jurisdiction of incorporation or organization)
31st Floor, TD Centre
201 Portage Avenue
Winnipeg, Manitoba, Canada R3B 3L7
(Address of principal executive offices)


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

10 5/8% Series B Senior Subordinated Notes due 2011

7 5/8% Series B Senior Notes due 2013
(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.

22,786 common shares

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.

Yes   [X]         No  [  ]

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

Item 17  [X ]         Item 18    [  ]





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##### 

TABLE OF CONTENTS



|                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|INTRODUCTION                                                                         
|FORWARD-LOOKING STATEMENTS                                                           
|ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                     
|ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE                                    
|ITEM 3.   KEY INFORMATION                                                            
|SELECTED HISTORICAL FINANCIAL DATA                                                   
|EXCHANGE RATE DATA                                                                   
|INDUSTRY DATA                                                                        
|ITEM 4.    INFORMATION ON THE COMPANY                                                
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 
|TRENDS                                                                               
|OUTLOOK                                                                              
|CRITICAL ACCOUNTING POLICIES                                                         
|LIQUIDITY AND CAPITAL RESOURCES                                                      
|CONTRACTUAL OBLIGATIONS AND COMMITMENTS                                              
|NETWORK TEN                                                                          
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            
|ITEM 8. FINANCIAL INFORMATION                                                        
|ITEM 9. THE OFFER AND LISTING                                                        
|ITEM 10. ADDITIONAL INFORMATION                                                      
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|PART II                                                                              
|ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             
|ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|ITEM 15. CONTROLS AND PROCEDURES                                                     
|ITEM 16. [RESERVED]                                                                  
|ITEM 17. FINANCIAL STATEMENTS                                                        
|CONSOLIDATED BALANCE SHEETS                                                          
|CONSOLIDATED STATEMENTS OF EARNINGS                                                  
|CONSOLIDATED STATEMENTS OF RETAINED EARNINGS                                         
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                           
|STATEMENTS OF FINANCIAL PERFORMANCE                                                  
|STATEMENTS OF FINANCIAL POSITION                                                     
|STATEMENTS OF CASH FLOWS                                                             
|NOTES TO THE FINANCIAL STATEMENTS                                                    
|ITEM 18. FINANCIAL STATEMENTS                                                        
|ITEM 19. EXHIBITS                                                                    
|SIGNATURES                                                                           
|SECOND SUPPLEMENTAL INDENTURE                                                        
|FIFTH SUPPLEMENTAL INDENTURE                                                         
|LETTER AGREEMENT                                                                     
|LETTER AGREEMENT                                                                     
|SENIOR SECURED CREDIT FACILITIES: AMEND AGREE #3                                     
|SENIOR SECURED CREDIT FACILITIES: AMEND AGREE #4                                     
|STATEMENT REGARDING COMPUTATION OF RATIOS                                            
|CERTIFICATIONS                                                                       
|CERTIFICATIONS                                                                       
|CERTIFICATION                                                                        
|CERTIFICATION                                                                        

TABLE OF CONTENTS




INTRODUCTION

This Annual Report on Form 20-F relates to CanWest Media Inc. and its
subsidiaries (referred to herein as the Company or CanWest). On September
24, 2001, the Registration Statement on Form F-4 that CanWest filed to register
exchange notes for the initial senior subordinated notes, or the notes, that it
issued on May 17, 2001 became effective. As a result, CanWest Media Inc. became
a reporting company under the Exchange Act. In addition, on July 17, 2003 the
Company filed a registration statement on Form F-4 with the SEC to register
exchange notes for the initial senior notes, or senior notes, issued on April
3, 2003.

As used in this annual report CanWest Publications refers to the newspapers
and Internet assets acquired by us from Hollinger International Inc., Southam
Inc., Hollinger Canadian Newspapers, Limited Partnership and HCN Publications
Company on November 16, 2000, including a 100% interest in the National Post
and excluding those publications that have since been sold by the Company (see
Item 4. Information on the Company, A. History and Development of the Company,
Recent Events).

The information required for some items in this annual report is not
applicable to the Company. Not applicable means that the response to the
referenced item is omitted either in reliance on the instructions to this form
or because the information sought by the referenced item does not apply to the
Company or the Company has no relevant information to disclose.




FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements. Whenever a statement is
not simply a statement of historical fact (such as a statement that includes
the words believe, expect, anticipate, estimate, project, and other
similar expressions), the Companys expectations may not be correct, even
though it believes on the date of this annual report that they are reasonable.
The Company does not guarantee that the transactions and events described in
this annual report will happen as described (or that they will happen at all).
Read this annual report completely and with the understanding that actual
future results may be materially different from what the Company expects. The
Company will not update these forward- looking statements, even though the
Companys situation may change in the future, except as required by law.

Whether actual results will conform with the Companys present expectations and
predictions is subject to a number of risks and uncertainties including:



| |  |  | the significant considerations, including the risk factors,
discussed in this annual report (See Item 3.D. Risk Factors);
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys outstanding indebtedness and its leverage;
| | - |  | --------------------------------------------------------



| |  |  | risks related to the Companys ability to incur substantially more indebtedness;
| | - |  | --------------------------------------------------------------------------------



| |  |  | restrictions imposed by the terms of the Companys indebtedness;
| | - |  | ----------------------------------------------------------------



| |  |  | risks related to the Companys ability to successfully implement its business and operating strategies;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | risks related to the Companys ability to effectively manage its growth; and
| | - |  | ----------------------------------------------------------------------------



| |  |  | the highly competitive nature of the industry in which the Company operates.
| | - |  | ----------------------------------------------------------------------------

2



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##### 



ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.   KEY INFORMATION



|A. |  | Selected Financial Data
|-- |  | -----------------------

The following tables set forth selected historical financial data for the
Company. The Companys selected historical financial data presented for, and as
of the year end of, each of the years ended August 31, 1999 through 2003, are
derived from the Companys audited financial statements, which were audited by
PricewaterhouseCoopers LLP, independent accountants.

The selected historical financial data are not necessarily indicative of the
Companys future results of operation. The financial statements of the Company
have been prepared in Canadian dollars and in accordance with Canadian GAAP.
The selected historical financial data in the following tables should be read
in conjunction with the Companys audited financial statements and the notes
thereto and Managements Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere in this annual report. (See Item 5
Operating and Financial Review and Prospects and Item 8 Financial Information)

3



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##### 



SELECTED HISTORICAL FINANCIAL DATA

(dollars in thousands)


CanWest Media Inc.

For the fiscal year ended August 31,1999
    
    2000
    
    2001
    
    2002
    
    2003Operating Data:(1)Revenue
    
    $
    555,005
    
    
    $
    620,269
    
    
    $
    1,767,306
    
    
    $
    2,120,344
    
    
    $
    2,096,061Operating expenses
    
    
    406,978
    
    
    
    478,953
    
    
    
    1,333,236
    
    
    
    1,649,294
    
    
    
    1,616,846Operating profit before amortization
    
    
    148,027
    
    
    
    141,316
    
    
    
    434,070
    
    
    
    471,050
    
    
    
    479,215Amortization of intangibles and
goodwill
    
    
    14,465
    
    
    
    20,077
    
    
    
    89,319
    
    
    
    17,500
    
    
    
    17,500Other amortization
    
    
    19,491
    
    
    
    22,551
    
    
    
    64,768
    
    
    
    80,100
    
    
    
    77,187114,071
    
    
    
    98,688
    
    
    
    279,983
    
    
    
    373,450
    
    
    
    384,528Financing expenses
    
    
    42,580
    
    
    
    59,813
    
    
    
    268,843
    
    
    
    255,006
    
    
    
    248,478Investment and other income
    
    
    (22,473
    )
    
    
    (103,901
    )
    
    
    (31,582
    )
    
    
    (37,084
    )
    
    
    10,24393,964
    
    
    
    142,776
    
    
    
    42,722
    
    
    
    155,528
    
    
    
    125,807Provision for (recovery of) income
Taxes
    
    
    40,679
    
    
    
    41,757
    
    
    
    (27,280
    )
    
    
    47,610
    
    
    
    39,130Earnings before the following
    
    
    53,285
    
    
    
    101,019
    
    
    
    70,002
    
    
    
    107,918
    
    
    
    86,677Minority interests
    
    
    9,791
    
    
    
    2,174
    
    
    
    (3,196
    )
    
    
    4,330
    
    
    
    Interest in earnings (loss) of
Network TEN
    
    
    68,749
    
    
    
    72,194
    
    
    
    52,567
    
    
    
    (11,815
    )
    
    
    101,339Interest in earnings (loss) of other
Equity accounted affiliates
    
    
    
    
    
    
    2,286
    
    
    
    (14,491
    )
    
    
    (1,523
    )
    
    
    (1,332
    )Realized translation adjustments
    
    
    (1,500
    )
    
    
    (1,300
    )
    
    
    (7,200
    )
    
    
    (1,000
    )
    
    
    922Net earnings for the year
    
    $
    130,325
    
    
    $
    176,373
    
    
    $
    97,682
    
    
    $
    97,910
    
    
    $
    187,606Net earnings from continuing operations
    
    $
    130,325
    
    
    $
    176,373
    
    
    $
    97,682
    
    
    $
    97,910
    
    
    $
    187,606Cash flows from:Operating activities
    
    $
    118,037
    
    
    $
    128,267
    
    
    $
    190,743
    
    
    $
    186,723
    
    
    $
    275,083Investing activities
    
    
    (234,242
    )
    
    
    (681,191
    )
    
    
    (2,104,325
    )
    
    
    374,325
    
    
    
    145,761Financing activities
    
    
    110,127
    
    
    
    589,841
    
    
    
    1,855,351
    
    
    
    (522,702
    )
    
    
    (355,172
    )Balance Sheet Data (at period end):Intangibles and goodwill
    
    $
    428,900
    
    
    $
    1,453,143
    
    
    $
    3,877,579
    
    
    $
    3,675,654
    
    
    $
    3,518,581Total assets
    
    
    1,616,911
    
    
    
    2,779,111
    
    
    
    6,151,300
    
    
    
    5,712,866
    
    
    
    5,612,257Long- term debt
    
    
    544,675
    
    
    
    1,168,282
    
    
    
    2,907,527
    
    
    
    2,379,459
    
    
    
    2,384,146Equity instruments
    
    
    11,591
    
    
    
    11,591
    
    
    
    1,277,756
    
    
    
    1,371,442
    
    
    
    1,191,004Shareholders equity
    
    
    686,596
    
    
    
    812,211
    
    
    
    2,144,415
    
    
    
    2,259,230
    
    
    
    2,227,554U.S. GAAP Data:Operating income
    
    $
    115,139
    
    
    $
    102,020
    
    
    $
    283,633
    
    
    $
    364,052
    
    
    $
    379,645Net earnings for the year
    
    
    137,508
    
    
    
    212,674
    
    
    
    17,492
    
    
    
    22,547
    
    
    
    80,362Total assets
    
    
    1,600,204
    
    
    
    2,825,592
    
    
    
    6,126,503
    
    
    
    5,798,123
    
    
    
    5,635,134Long term debt
    
    
    535,423
    
    
    
    1,123,903
    
    
    
    3,685,624
    
    
    
    3,320,781
    
    
    
    2,942,327Shareholders equity
    
    
    673,558
    
    
    
    858,038
    
    
    
    1,232,493
    
    
    
    1,371,810
    
    
    
    1,443,413Other Financial Data:EBITDA(2)
    
    $
    148,027
    
    
    $
    141,316
    
    
    $
    434,070
    
    
    $
    471,050
    
    
    $
    479,215Distributions from Network TEN
    
    
    60,001
    
    
    
    75,259
    
    
    
    71,096
    
    
    
    60,984
    
    
    
    33,378Capital expenditures and other
Investments
    
    
    17,658
    
    
    
    14,617
    
    
    
    43,469
    
    
    
    57,459
    
    
    
    42,451Fixed charge coverage
    
    
    4.7
    
    
    
    4.6
    
    
    
    1.1
    
    
    
    1.3
    
    
    
    1.2Reconciliation
of Non GAAP financial
Measure (2)Operating Income
    
    
    114,071
    
    
    
    98,688
    
    
    
    279,983
    
    
    
    373,450
    
    
    
    384,528Amortization
    
    
    33,956
    
    
    
    42,628
    
    
    
    154,087
    
    
    
    97,600
    
    
    
    94,687EBITDA
    
    $
    148,027
    
    
    $
    141,316
    
    
    $
    434,070
    
    
    $
    471,050
    
    
    $
    479,215




|(1) |  | Operating data and results in the periods presented were impacted by the
following business acquisitions and divestitures:
|--- |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | In March 2000, the Company acquired nine television stations from
WIC Western International Communications Ltd, or WIC;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | In November 2000, the Company acquired CanWest Publications;
| | - |  | ------------------------------------------------------------



| |  |  | In January 2001, the Company acquired the remaining shares of
RadioWorks New Zealand Limited, a New Zealand national radio operation;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------

4



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##### 





| |  |  | In March 2001, the Company restructured its controlling interest in
Irelands TV3, at which time it began to proportionately consolidate its
results;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In August 2001, the Company disposed of ROBTv, a specialty cable
channel;
| | - |  | -------------------------------------------------------------------------



| |  |  | In September 2001 and October 2001, the Company disposed of its
television stations, CFCF (Montreal) and CKVU (Vancouver);
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | In September 2001, the Company gained effective control of the
National Post and began consolidating its financial results (the
Company acquired the remaining 50% not already owned in April 2002);
and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In August 2002 and February 2003, the Company disposed of certain
community newspapers.
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | Operating data and results under Canadian GAAP for the fiscal year ended
August 31, 2001 were impacted by the adoption of new standards in respect of
accounting for income taxes.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating data and results under Canadian and U.S. GAAP for the fiscal year
ended August 31, 2002 were impacted by the adoption of new standards in
respect of accounting for goodwill and other intangibles. Net earnings,
adjusted to exclude amortization of goodwill and indefinite life
intangibles, for the years ended August 31, 2001, 2000, 1999 would have
increased by $69,079, $16,035, and $18,909, respectively under Canadian
GAAP.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operating data and results under Canadian and U.S. GAAP for the fiscal year
ended August 31, 2003 were impacted by the implementation by Network TEN and
its wholly controlled Australian entities of a new income tax consolidation
regime provided for under enacted changes to Australian tax law.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Accounting Standards Board will be issuing amendments to Section 3860,
Financial Instruments  Disclosure and Presentation, in January 2004,
requiring that an entity account for certain financial instruments that may
be settled in cash or by an issuers own equity instruments, at the issuers
discretion as liabilities. The amended section will be effective for fiscal
years beginning on or after November 1, 2004. The application of this
standard by the Company effective September 1, 2005 may result in the
reclassification of the Companys junior subordinated notes as liabilities.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) |  | EBITDA represents net earnings from continuing operations before realized
currency translation adjustments, interest in earnings of Network TEN and
other equity accounted affiliates, minority interests, provision for
(recovery of) income taxes, investment and other income, financing
expenses, and amortization. EBITDA is not a recognized measure of
financial performance under Canadian GAAP. Management utilizes EBITDA as a
measure of segment profitability in making strategic resource allocations.
In addition, the Company and its lenders and investors use EBITDA to
measure performance against the Companys various leverage covenants.
Investors are cautioned, however, that EBITDA should not be construed as
an alternative to operating income (earnings before interest and taxes,
EBIT) or net earnings determined in accordance with GAAP as an indicator
of the Companys performance. The Companys method of calculating EBITDA
may differ from other companies and, accordingly, EBITDA may not be
comparable to measures used by other companies. A reconciliation of EBITDA
to operating income is provided above.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EXCHANGE RATE DATA

The Company prepares its financial statements in Canadian dollars. In this
annual report, unless otherwise specified, all dollar amounts are expressed in
Canadian dollars. The following tables set forth, for the periods and dates
indicated, information concerning the exchange rates between U.S. dollars and
Canadian dollars based on the noon ratesof exchange as reported by the Bank of
Canada, expressed in U.S. dollars per Cdn$1.00. No representation is made that
the Canadian dollar amounts, on the one hand, or the U.S. dollar amounts, on
the other hand, referred to in this annual report could be or could have been
converted into U.S. dollars or Canadian dollars, as the case may be, at any
particular rate or at all.

Years ended August 31,1999
    
    2000
    
    2001
    
    2002
    
    2003High for period
    
    $
    0.6891
    
    
    $
    0.6969
    
    
    $
    0.6695
    
    
    $
    0.6618
    
    
    $
    0.7495Low for period
    
    
    0.6423
    
    
    
    0.6629
    
    
    
    0.6242
    
    
    $
    0.6199
    
    
    $
    0.6273End of period
    
    
    0.6682
    
    
    
    0.6793
    
    
    
    0.6300
    
    
    $
    0.6331
    
    
    $
    0.7220Average for period(1)
    
    
    0.6643
    
    
    
    0.6805
    
    
    
    0.6448
    
    
    $
    0.6372
    
    
    $
    0.6790


5



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##### 





|(1) |  | The average of the noon buying rates on the last business day of each
month during the period.
|--- |  | ----------------------------------------------------------------------------------------------

Month endedAugust 31,
    
    Sept. 30,
    
    Oct . 31,
    
    Nov. 30,
    
    Dec. 31,
    
    Jan. 31,2003
    
    2003
    
    2003
    
    2003
    
    2003
    
    2004High for period
    
    
    0.7228
    
    
    
    0.7423
    
    
    
    0.7670
    
    
    
    0.7708
    
    
    
    0.7738
    
    
    
    0.7879Low for period
    
    
    0.7093
    
    
    
    0.7206
    
    
    
    0.7418
    
    
    
    0.7486
    
    
    
    0.7464
    
    
    
    0.7497


In this annual report, A$ means Australian dollars, Cdn$ or $ means
Canadian dollars,  means Euros, Ire£ means Irish punts, NZ$ means New
Zealand dollars and US$ means U.S. dollars.

On February 24, 2004, the Bank of Canada noon rate for Canadian dollars
was:



| |  |  | A$0.9645 per Cdn$1.00;
| | - |  | ----------------------



| |  |  | Euro 0.5933 per Cdn$1.00;
| | - |  | -------------------------



| |  |  | NZ$1.0904 per Cdn$1.00; and
| | - |  | ---------------------------



| |  |  | US$0.7530 per Cdn$1.00.
| | - |  | -----------------------

INDUSTRY DATA

Unless otherwise indicated in this annual report:



| |  |  | Individual newspaper circulation figures are from the Audit Bureau
of Circulations, an independent research organization that audits the
circulation of print media vehicles, including newspapers; industry-wide newspaper industry advertising revenue, circulation revenue,
circulation and median newspaper price data are from the Canadian
Newspaper Association, a not-for-profit industry association
representing Canadian newspaper publishers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Broadcasting viewership data for Canada is from Nielsen Media
Research Limited, a company that provides television audience
measurement and related services, and BBM Bureau of Measurement, a not-for-profit broadcast research company that provides ratings
information for the television, radio and interactive media industries.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Broadcasting viewership data for Australia is from OzTam Pty
Limited, a Company that provides television audience data and related
services, and for New Zealand and the Republic of Ireland is from AC
Nielsen Corporation, a company that provides market research,
information and analysis to the consumer products and services
industries.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Broadcasting viewership data for Northern Ireland is from the
Broadcasters Audience Research Board Ltd., a company that provides
television audience data for the United Kingdom.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Radio listenership data for New Zealand is from the New Zealand
Radio Broadcasters Association, an industry association.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

Although the Company believes these independent sources are generally
reliable, the accuracy and completeness of this information is not guaranteed
and has not been independently verified.



|B. |  | Capitalization and Indebtedness
|-- |  | -------------------------------

Not applicable.

6



---



##### 





|C. |  | Reasons for the Offer and Use of Proceeds
|-- |  | -----------------------------------------

Not applicable.



|D. |  | Risk Factors
|-- |  | ------------

The Companys substantial debt could adversely affect its financial condition.

The Company now has a substantial amount of debt. As of August 31, 2003, it had
$2,447 million in long term debt (including the current portion) and
shareholders equity of $2,228 million, resulting in a total debt to
capitalization ratio of 52%.

The Companys substantial indebtedness could have important consequences. For
example, it could:



| |  |  | make it more difficult for the Company to satisfy its obligations
with respect to the US$425.0 million 10 5/8% senior subordinated notes
due 2011, its obligations with regard to the US$200.0 million 7 5/8%
senior unsecured notes due 2013 and its obligations under the Companys
senior credit facility;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | require the Company to dedicate a substantial portion of its cash
flow from operations to payments on debt, which will reduce amounts
available for working capital, capital expenditures, marketing, product
and program development and other general corporate purposes. The
Company estimates cash flow requirements to service existing debt over
the twelve months ending August 31, 2004 to be $268 million, including
scheduled repayments under the senior credit facility of $38 million.
Scheduled annual repayments beyond August 2004 under the senior credit
facility are as follows:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Years ending:

August 2005
    
    $47 millionAugust 2006
    
    $57 millionAugust 2007
    
    $34 millionAugust 2008
    
    $138 millionAugust 2009
    
    $854 million


In addition, at August 31, 2003 the Company had $250 million drawn under the
revolving portion of its credit facility, which matures in November 2006.



| |  |  | limit the Companys flexibility in planning for, or reacting to,
changes in its business and the industry in which it operates;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | increase the Companys vulnerability to general adverse economic and industry conditions;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | place the Company at a competitive disadvantage compared to its competitors with less debt; and
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | limit the Companys ability to borrow additional funds.
| | - |  | -------------------------------------------------------

In addition, a portion of the Companys debt, including debt under the senior
credit facility, bears interest at variable rates. An increase in the interest
rates on the debt will reduce the funds available to repay the notes and other
debt and for operations and future business opportunities and will intensify
the consequences of the Companys leveraged capital structure.

In connection with the financing of the acquisition of our publishing assets,
we issued a series of junior subordinated debentures, which we refer to as the
CMI notes, to our immediate parent in an aggregate principal amount of $766.8
million ($275.0 million of obligations under the CMI notes were repaid with a
portion of the proceeds of the 7 5/8% Senior Unsecured Notes). Because we have
the option of paying all of our principal and interest obligations under the
CMI notes with cash or shares, under Canadian GAAP, they are reflected as
shareholders equity and are

7



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##### 



therefore not included in the foregoing discussion of our debt. However, under
U.S. GAAP, the CMI notes would be reflected as long-term debt, the effect of
which, at August 31, 2003 would be to increase our total debt by $752.2 million
to $3,199.4 million, and decrease total shareholders equity to $1,475.4
million, resulting in a total debt to total capitalization ratio of 68%. Under
Canadian GAAP, the interest on the CMI notes (net of income taxes) is charged
to retained earnings, while under U.S. GAAP, such interest is charged to
earnings. For the year ended August 31, 2003 the ratio of the Companys
earnings to fixed charges was 1.2x under Canadian GAAP.

The Company may not successfully implement the strategies relating to its
acquisitions or achieve the anticipated benefits from these acquisitions.

The acquisitions of our publishing assets forms part of a set of business
strategies which are based on developing a comprehensive platform of media
assets. The Company continues to refine its strategies, which include the
offering of multi-platform advertising solutions, the pursuit of
cross-promotional opportunities and enhanced content development. The Company
believes that its convergence and synergy strategies will enable it to achieve
efficiencies. However, these strategies are still under development. There can
be no assurances that the Company will be able to fully develop or implement
these strategies or that the Company will realize the anticipated benefits of
these strategies. Implementation of these strategies could also be affected by
a number of factors beyond the Companys control, including operating
difficulties, increased operating costs, regulatory developments, general or
local economic conditions or increased competition. In addition, the Companys
ability to achieve other anticipated benefits from its recent acquisitions,
including cost savings and operating efficiencies, will depend, in large part,
on its ability to successfully integrate certain of the operations of the
acquired assets with its existing operations. The success of the integration of
the acquired assets will also require the dedication of management and other
personnel resources, which may temporarily distract their attention from
day-to-day business. There can be no assurances that the Company will
accomplish the integration of any acquired assets successfully.

The Company may not be able to effectively manage growth.

The Company has recently experienced substantial growth in its business and has
significantly expanded its operations both domestically and internationally.
The Company has made a number of other acquisitions in the past and it plans to
continue to make acquisitions in the future. Certain of these acquisitions have
involved expansion into businesses in which the Company has historically had
limited or no involvement. The Company intends to continue to increase business
in Canada and in foreign markets, further expand the types of businesses in
which it engages and make selective acquisitions. This growth and expansion has
placed, and will continue to place, a significant demand on management
resources. To manage growth effectively, the Company must maintain a high level
of content quality, efficiency and performance and must continue to enhance its
operational, financial and management systems, and attract, train, motivate and
manage its employees. The Company may not be able to effectively manage this
expansion and any failure to do so could have a material adverse effect on its
business, financial condition or results of operations.

The Company operates in highly competitive industries.

Participants in the broadcasting and publishing industries depend primarily
upon the sale of advertising and paid subscriptions to generate revenue.
Competition for advertising, subscribers, viewers, listeners, readers and
distribution is intense and comes from broadcast television stations and
networks and specialty cable channels; radio; local, regional and national
newspapers; direct mail; and other communications and advertising media that
operate in these markets. The Companys competitors include both
privately-owned companies and government-owned market participants. In
addition, there is increasing consolidation in the Canadian broadcasting,
publishing and other media industries and competitors increasingly include
market participants with interests in multiple industries and media. There can
be no assurances that existing and future competitors will not pursue or be
capable of achieving similar or competitive business strategies. Some
competitors have greater financial and other resources than the Company.
Competing successfully depends on a number of factors, including the Companys
ability to secure popular television programs and high quality editorial
content, the Companys ability to achieve high distribution levels and
subscriptions and the Companys ability to generate advertising revenue. There
can be no assurances that the Company will be able to compete successfully in
the future against existing or potential

8



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competitors, or that increased competition will not have a material adverse
effect on its business, financial condition or results of operations.

The Company competes and will continue to compete with alternative technologies
and it may be required to invest a significant amount of capital to address
continued technological development.

The media industry continues to experience 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 the Companys
business, financial condition or results of operation. The continued growth of
the Internet has presented alternative content distribution options that
compete with traditional media. Further, in each of the Companys broadcasting
markets, industry regulators have authorized direct-to-home satellite,
microwave and cable services, and may authorize other alternative methods of
transmitting television, radio and other content with improved speed and
quality. The Company may not be able to successfully compete with existing or
newly developed alternative technologies or may be required to acquire, develop
or integrate new technologies. The cost of the acquisition, development or
implementation of new technologies could be significant and the Companys
ability to fund such implementation may be limited and could have a material
adverse effect on its ability to successfully compete in the future.

Revenue is subject to cyclical and seasonal variations and is generated
primarily from advertisers.

The Companys business is cyclical in nature. Because it depends upon the sale
of advertising for a substantial portion of revenue, the Companys operating
results are 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 both
capital and labor intensive and, as a result, newspapers have relatively high
fixed cost structures. During periods of economic contraction, revenue may
decrease while some costs remain fixed, resulting in decreased earnings.
Similarly, because a substantial portion of revenue is derived from retail
advertisers, which have historically been sensitive to general economic cycles,
the Companys business, financial condition or results of operation could be
materially adversely affected by a downturn in the retail sector.

The Companys business has experienced and is expected to continue to
experience significant seasonality due to, among other things, seasonal
advertising patterns and seasonal influences on peoples viewing, reading and
listening habits. Typically, revenue is lowest during the fourth quarter of the
fiscal year, which ends in August, and highest during the first quarter of the
fiscal year.

Acts of terrorism and other political and economic developments could adversely
affect revenue.

The Companys revenue and profitability depend on the sale of advertising. The
Companys revenues were negatively affected by the impact of the September 11th
tragedy on advertising expenditures and, more recently, were modestly affected
by war in Iraq in early 2003. If there are further acts of terrorism or other
hostilities, or if other future financial, political, economic and other
uncertainties arise, this could lead to a reduction in advertising
expenditures, which could materially adversely affect the Companys business,
financial condition or results of operations.

The Company may be adversely affected by variations in television programming
acquisition costs.

The most significant cost in the broadcasting businesses is television
programming. There can be no assurances that the Companys broadcasting
operations will not be exposed in the future to volatile or increased
television programming costs which may adversely affect its 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. In addition, the production and
distribution costs of television and other forms of entertainment, as well as
television programming costs, may increase. 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 revised amortization
periods or impairments that would increase operating costs.

9



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The Company may be adversely affected by strikes and other labor protests.

The Company estimates over half of its employees are represented by collective
bargaining agreements. Any strikes or other forms of labor protest could
disrupt operations and could have a material adverse effect on the Companys
business, financial condition or results of operations. The CHAN television
station in Vancouver, as well as the newspapers in Vancouver, The Vancouver Sun
and The Province; The Times Columnist(Victoria), the Calgary Herald; and the
Ottawa Citizenhave each been subject to a strike over the past five years.
These strikes have varied in duration with the longest continuing for
approximately six months (at the Calgary Herald).

Approximately 55% of our Canadian broadcasting employees are employed under a
total of 15 collective agreements. Three of these agreements are in
negotiation or conciliation, and an additional three agreements will expire in
2004. Approximately 53% of our Canadian publishing employees are employed under
49 collective agreements. Six of these agreements are in negotiation; an
additional one will expire in 2004; and 25 will expire in 2005. There can be
no assurances that any of these collective agreements will be renewed on
satisfactory terms or at all, or that we will not experience any strike or
other forms of labor protest. During 2001, one of our broadcast unions applied
to consolidate 12 of our bargaining units (representing approximately 900
employees) into a single bargaining unit. Any strike or other form of labor
protest could have a material adverse effect on our business, financial
condition or results of operations.

The Company may be adversely affected by variations in the cost of newsprint.

Newsprint expense represents one of the Companys largest raw material expenses
and, after wages and employee benefits expense and programming acquisition
costs, is the Companys most significant operating cost. Newsprint costs vary
widely from time to time and price changes in newsprint can significantly
affect the overall earnings of the publishing operations. There can be no
assurances that the publishing operations will not be exposed in the future to
volatile or increased newsprint costs which could have a material adverse
effect on the Companys business, financial condition or results of operations.

A significant portion of the Companys cash flow from operations has
historically been attributable to distributions from Australias Network TEN;
there can be no assurances that such distributions will continue at the same
level or at all.

Distributions from The Ten Group Pty. Limited, referred to herein as Network
TEN, in the form of dividends and interest payments have historically
represented a significant portion of the Companys cash flow from operations
activities. Distributions from Network TEN amounted to $33.4 million in the
year ended August 31, 2003. Dividends declared by Network TEN in June, October
and December, 2003 resulted in the receipt of approximately $100.0 million by
the Company in December 2003 and January 2004. Network TEN maintains an A$700
million credit facility; as of August 31, 2003, A$175 million was outstanding
under this facility. Additional loans under Network TENs credit facility would
increase Network TENs interest expense and could reduce the amount of cash
available for distribution by Network TEN. The Company does not own a majority
or controlling voting interest in Network TEN, nor does it exercise control
over its management, strategic direction or daily operations. There can be no
assurance that distributions from Network TEN will continue at a similar level
or at all. A significant decline in distributions from Network TEN could have
a material adverse effect on the Companys ability to service its indebtedness.

The Company may be adversely affected by foreign exchange fluctuations.

Fluctuations in the values of the currencies of Australia, New Zealand, Ireland
and the United Kingdom relative to the Canadian dollar have affected the
comparison of Canadian dollar translated amounts over periods of time. The most
significant impact relates to the Australian dollar as a result of the
Companys economic interest in Network TEN. For example, the average rate of
exchange used to translate results from Network TEN increased 7% in fiscal
2003, compared to fiscal 2002. Had the average exchange rate remained constant
over the two years, the Companys interest in the earnings of Network TEN in
fiscal 2003 would have been $7.1 million lower. Additionally, as of August 31,
2003, since the Companys initial acquisition of Network TEN in 1992, it has
realized a total of $10.7 million in currency translation losses arising from
distributions made by Network TEN to the Company.

10



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Virtually all of the revenue is generated in the local currencies of countries
in which the Company operates, while certain programming and other expenses are
incurred in US dollars. In addition, a significant portion of the Companys
borrowing is denominated in U.S. dollars and interest, principal and premium,
if any, on such borrowing must be paid in US dollars. As a result the Company
is exposed to foreign currency exchange risk. In addition a significant
portion of the Companys borrowing is denominated in U.S. dollars, and
interest, principal and premium, if any, on such borrowing must be paid in U.S.
dollars. The Company has entered into cross currency interest rate swaps,
which convert the U.S. dollar principal and interest payable under the senior
credit facility, the notes and the senior notes into Canadian dollar
obligations, to hedge the foreign exchange rate risk and cash flow risk, with
the exception of US$41.8 million in notes which are not hedged. In fiscal 2004
the Company has been required to make payments of a net amount of $18 million
to recoup on the swaps in order to maintain the fair value of its interest rate
and cross currency swaps within the limits prescribed under its senior credit
facility. There can be no assurances that exchange rate fluctuations in the
future will not have a material adverse effect on the Companys ability to make
payments in respect of the notes and the senior notes, as the Company may be
required to provide additional cash or other collateral to secure its
obligations in respect of its hedging transactions.

Changes in government regulation could adversely affect the Companys business,
financial condition or results of operations.

Changes to the regulations and policies governing broadcast television,
specialty cable channels and program distribution through cable and
direct-to-home satellite services, the introduction of new regulations or
policies or terms of licenses or treatment of the tax deductibility of
advertising expenditures could have a material adverse effect on the Companys
business, financial condition or results of operation.

Broadcasting operations are generally subject to extensive government
regulation. Regulations govern the issuance, amendment, renewal, transfer and
ownership of broadcast licenses in virtually all jurisdictions and, in some
jurisdictions, govern the timing and content of programming; the timing,
content and amount of commercial advertising; and the amount of foreign versus
domestically produced programming. In many jurisdictions, including Australia,
Canada and Northern Ireland, there are significant restrictions on the ability
of foreign entities to own or control broadcasting businesses.

The Companys Canadian television operations are regulated pursuant to the
Broadcasting Act(Canada). The Canadian Radio-television and
Telecommunications Commission, or CRTC, which administers the Broadcasting Act
(Canada), among other things, grants, amends and renews broadcasting licences,
approves certain changes in corporate ownership and control and may determine
and implement broadcasting regulations and policies pursuant to the
Broadcasting Act(Canada), subject to certain directions from the federal
cabinet. Television broadcasting operations in Canada are also subject to
simultaneous program substitution requirements, cable priority carriage rules,
specialty service access rules, content rules and foreign ownership
restrictions, all of which the Company must comply with. Changes to the
regulations and policies governing broadcast television, specialty cable
channels and program distribution through cable and direct-to-home satellite
services or the introduction of new regulations, policies or terms of licence
or changes to the treatment of tax deductibility of advertising expenditures
could have a material adverse effect on our business, financial conditions or
results of operations.

In June 2003, a House of Commons committee, the Standing Committee on Canadian
Heritage, released the findings of its study of the current state and future
direction of Canadas broadcasting system and the efficacy of the Broadcasting
Act in meeting policy objectives, which commenced in May 2001. Included among
the broad ranging issues considered by the Committee were cross-media
ownership, foreign ownership, licence fees, program funding, community, local
and regional broadcasting, the effectiveness of the CRTC, digital transmission,
performance measurement and Canadian content and cultural diversity. In
November 2003 the Government responded to the Report. The Government response
did not deal substantively with any of the issues identified in the Heritage
Committee report, but did indicate that a number of them will be the subjects
of further study. Among others, the Government indicated that it would give
further consideration to the issues involved in cross media ownership. The
Government committed to do an analysis of foreign ownership restrictions. The
Government further agreed that additional efforts needed to be made to attract
increased audiences for Canadian programming and to centralize the assessment
and certification of Canadian content. The introduction of new laws,
regulations or policies with respect to these matters could have a material
adverse effect on the Companys business, financial condition or results of
operation.

11



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The Companys operations outside of Canada are also subject to government
regulation. In Australia, the Companys investments are subject to statutes and
regulation regarding licensing, programming standards, ownership and control of
commercial broadcasting services and administering the allocation of
broadcasting frequency spectrum. Although the New Zealand radio and television
broadcasting industry was deregulated in 1989, the Companys New Zealand
operations remain subject to broadcasting standards and to general legislation
concerning foreign investment in New Zealand. Television broadcasting in the
Republic of Ireland is regulated with respect to, among other things,
licensing, ownership and control, advertising and programming. The Companys
Northern Ireland operations are subject to rules regarding licensing, foreign
and other ownership restrictions, program quality, production and content
quotas. There can be no assurances that any changes to the rules and
regulations affecting the Companys operations outside of Canada will not have
a material adverse effect on the business, financial condition or results of
operations of the Companys non-Canadian subsidiaries and investments or the
Companys ability to maintain its ownership interests in its non-Canadian
subsidiaries and investments.

The CRTC and other applicable broadcasting regulatory authorities may not renew
the Companys existing broadcasting licenses or grant it new licenses on
acceptable terms, or at all.

The Companys CRTC broadcasting licenses must be renewed from time to time,
typically every seven years, and cannot be transferred without regulatory
approval. The CRTC considered the Companys applications for the renewal of the
licenses for all of its Canadian television stations, except CJNT (Montreal)
(the license for which expires in 2007) in 2001. New licenses were granted with
effect from September 1, 2001 for the maximum seven year term. The Companys
license for Global Prime was renewed in 2004, for the maximum seven year term
and the Companys licences for our Category 1 and Category 2 digital specialty
channels expire in 2007.

While CRTC regulations and policies do not require CRTC approval before a
broadcaster purchases an unregulated media entity, such as a newspaper, the
CRTC considered the issue of the Companys cross-media ownership at license
renewal proceedings. The CRTC has expressed its support for the promotion of
diversity in broadcasting expression at a local and national level, primarily
with respect to news voices, and has the power to preserve diversity of voices
and prevent or address the emergence of undue competitive advantage on behalf
of one licensee where it is found to exist. As a condition of the recent
license renewals, the CRTC directed the Company to abide by its proposed code
of conduct respecting the maintenance of separate management over the
television and print news operations. There can be no assurances that, in
future license renewal proceedings, the CRTC will not require the Company to
take measures which could have a material adverse effect on the integration of
CanWest Publications with the Companys broadcasting assets and the Companys
ability to continue to realize certain of the anticipated benefits of acquiring
CanWest Publications.

The licenses held by Network TENs stations in Sydney, Melbourne, Brisbane and
Perth were renewed in 2002 and will be subject to renewal by the Australian
Broadcasting Authority in 2007. The license for Network TENs Adelaide station
is subject to renewal in 2004. Licenses in other jurisdictions are also subject
to renewal from time to time.

The Companys inability to renew any of its licenses or acquire new interests
or licenses on acceptable terms, or at all, could have a material adverse
effect on its business, financial condition or results of operations. To date,
the Company has not had a licence renewal declined.

The Commissioner under the Competition Act (Canada) retains the right to
challenge a transaction such as the acquisition of CanWest Publications at any
time up to three years after the closing of the transaction.

Under the Competition Act, a transaction satisfying prescribed thresholds is
subject to mandatory pre-merger notification to the Commissioner of Competition
and observance of a prescribed short-form or long-form waiting period during
which the parties are prohibited from closing the transaction. Alternatively,
if the Commissioner is satisfied by the parties to a proposed transaction that
there would not be sufficient grounds on which to challenge the transaction
before the Competition Tribunal, the Commissioner may issue an advance ruling
certificate, or an ARC, which exempts the transaction from the pre-merger
notification requirements. Where the Commissioner determines the proposed
transaction is likely to prevent or lessen competition substantially, the
Commissioner may apply to the Competition Tribunal for an order prohibiting it
or an order permitting it provided certain assets are divested and

12



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other conditions are satisfied. Where the Commissioner has completed his review
and determined that grounds do not exist to challenge a proposed transaction,
the Commissioner typically advises the parties in writing that, at that time,
the Commissioner will not apply to the Competition Tribunal for an order in
respect of the transaction. Such a no-action letter remains subject to the
Commissioners statutory right to challenge a transaction at any time up to
three years after a transaction has been substantially completed. However, if
the parties apply for and the Commissioner issues an ARC, and the transaction
is substantially completed within one year after the ARC is issued, the
Commissioner may not apply to the Competition Tribunal for an order in respect
of the transaction solely on the basis of information that is the same or
substantially the same as the information on the basis of which the ARC was
issued.

If the Commissioner successfully challenges a completed transaction, the
Competition Tribunal may issue an order requiring divestiture of assets or
shares or dissolution of the merger. Also, with the consent of the parties, the
Competition Tribunal may issue an order to take such other action as is deemed
necessary to remedy any substantial lessening or prevention of competition the
Competition Tribunal determines would result from or would be likely to result
from the completion of the transaction.

The acquisitions of the publishing assets and the remaining 50% interest in the
National Postwere subject to pre-merger notifications under the Competition
Act. The Commissioner issued a no-action letter prior to the closing of the
acquisition of the publishing assets and issued an ARC prior to the acquisition
of the remaining 50% interest in the National Post. Certain conditions, which
were formalized in the form of written undertakings from the Company to the
Commissioner, have been satisfied. However, the Commissioner retains the right
to challenge our acquisition of the remaining 50% interest in the NationalPost
on the basis of new information at any time up to three years after it was
completed in March 2002, a right the Commissioner retains in every transaction
where an ARC has been issued.

CanWest Global Communications Corp. may not be successful in defending a
lawsuit which has been commenced against CanWest Global Communications Corp.
and certain of its subsidiaries.

On March 5, 2001, certain plaintiffs who owned a 29.3% interest in CanWest
Broadcasting Ltd. or CBL filed a statement of claim with the Ontario Superior
Court of Justice against CanWest Global Communications Corp., certain of its
subsidiaries and Israel Asper. The plaintiffs claim, among other things, that
the defendants:



| |  |  | have acted in a manner that is oppressive and unfairly prejudicial
to the plaintiffs;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | have improperly favored the interests of the defendants over the
interests of CBL and the plaintiffs (including the diversion of
corporate opportunities);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | owe fiduciary duties to the plaintiffs; and
| | - |  | -------------------------------------------



| |  |  | have wrongly terminated certain contracts with the plaintiffs and
replaced them with non-arms length contracts.
| | - |  | ----------------------------------------------------------------------------------------------------------------

The plaintiffs are seeking, among other things, damages of $345.0 million
(including aggravated and punitive damages).

At the time of the commencement of the action, the Company owned 70.67% of CBL
and the plaintiffs owned the minority interest. CBL owned the Global Television
Network stations in British Columbia (CKVU), Manitoba (CKND) and Saskatchewan
(CFRE and CFSK). On May 1, 2001, CBL amalgamated with one of the Companys
indirect wholly-owned subsidiaries to continue as CBL Amalco. Under the terms
of the amalgamation agreement, the Company received all of the shares of CBL
Amalco and the minority shareholders of CBL received special preference shares
of CanWest Global Communications Corp. CanWest Global Communications Corp.
redeemed the special preference shares for $57.7 million on December 18, 2002.
There can be no assurances as to the outcome of the lawsuit, the timing or
amounts of any payments the Company may make in connection with the lawsuit
(including litigation expenses), whether any additional allegations or claims
will be made, how long the suit will last or as to any of the other risks
inherent in any litigation. There can be no assurances that CanWest Global
Communications Corp. and the other defendants will be successful in defending
this lawsuit. While the Company

13



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believes these claims to be substantially without merit, a significant adverse
result could have a material adverse effect on the Companys business,
financial condition or results of operations. Specifically, the lawsuit could
adversely affect the value of the Companys equity interests in its
subsidiaries named as defendants.

The Company does not control and is not permitted to control some of its
broadcasting assets.

The Company does not own a majority voting interest in Australias Network TEN,
nor does it control its management or strategic direction, and the Company is
not permitted under Australian law to own more than 15% of the equity of
Network TEN. The Company does not own a majority interest in Northern Irelands
UTV, nor does it have any representation on its board of directors. The Company
does not own a majority interest in TV3. There can be no assurances that any or
all of Network TEN, UTV and TV3 will not take any actions that could have a
material adverse effect on the Companys economic or ownership interest in such
entities.

The Company may be adversely affected by changes in government incentive
programs for Canadian program production.

The CRTC requires Canadian broadcasters to broadcast certain amounts of content
of Canadian origin. Often, a portion of the production budgets of Canadian
programs is financed by Canadian government agencies and incentive programs,
such as the Canadian Television Fund, Telefilm Canada and federal and
provincial tax credits. There can be no assurances that such financing will
continue to be available at current levels, or at all. Reductions or other
changes in the policies of Canada or its provinces in connection with their
incentive programs could have an adverse effect on the Companys business,
financial condition or results of operations.

The Company is subject to extensive environmental and other regulations.

The Company is subject to a variety of Canadian and foreign environmental laws
and regulations concerning emissions to the air, water and sewer discharges,
handling, storage and disposal of wastes, recycling, remediation of
contaminated sites, or otherwise relating to protection of the environment.
Environmental laws and regulations and their interpretation have changed
rapidly in recent years and may continue to do so in the future. Failure to
comply with present or future laws or regulations could result in substantial
liability. The Companys 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 its properties and require further study or
remedial measures. There can be no assurances that all environmental
liabilities have been identified, that any prior owner of the properties did
not create a material environmental condition not known to the Company, or that
a material environmental condition does not otherwise exist at any of its
properties.

ITEM 4.    INFORMATION ON THE COMPANY



|A. |  | History and Development of the Company
|-- |  | --------------------------------------

CanWest Media Inc., or the Company, is an international media company with
interests in broadcast television, newspapers, radio, specialty cable channels
and Internet websites in Canada, Australia, New Zealand, the Republic of
Ireland and Northern Ireland. Since its incorporation in 2000, the majority of
the Companys revenue has been derived from its Canadian television operations
and its Canadian publishing operations, the latter of which were acquired at
the end of 2000 for approximately $3.1 billion. Prior to such acquisition, the
Company did not have any significant publishing operations.

On September 28, 2000, the Company was incorporated in Canada under the Canada
Business Corporations Act(Canada) as an indirect wholly-owned subsidiary of
CanWest Global Communications Corp., to acquire 100% of the common shares of
Global Television Network Inc., a wholly-owned subsidiary of CanWest Global
Communications Corp. and to consummate the acquisition of CanWest Publications
described below. The Companys corporate and principal office is located on the
31st Floor TD Centre, 201 Portage Avenue, Winnipeg, Manitoba, R3B 3L7. The
Companys telephone number is (204) 956-2025. The Company appointed CanWest
International Corp., a Delaware corporation, as its authorized agent. CanWest
International Corp.s address is c/o Corporation Service Company, 2711
Centerville Road, Wilmington, Delaware 19808.

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In Canada, through its 100% ownership of Global Television Network Inc.
(GTNI), the Company owns 100% of Global Communications Limited (GCL). GCL
owns and operates 16 Canadian television stations, eleven of which comprise the
Global Television Network (Global Television). Of the remaining stations,
three comprise the Companys CH network and two are affiliated with another
network. In addition to the conventional free-to-air television stations, GCL
owns Global Prime, a specialty television channel, and GTNI has varying
interests in seven partnerships which own and operate digital specialty
television channels as follows: Lonestar (100%); DejaView (100%); Fox Sports
World Canada (100%); Xtreme Sports (100%); mentv (49%); Mystery TV (45.05%);
and CoolTV (100%). GCL owns and operates COOL FM a jazz radio station and The
Beat, a contemporary urban radio station. GCL owns and operates, through
wholly-owned subsidiaries, 12 daily metropolitan Canadian newspapers, several
non-daily newspaper and other publications businesses, and The National Post
Company which produces the National Post, a Canadian daily national newspaper.
GCL also owns 100% of canada.com New Media Inc., which owns and operates
canada.com, a full-service Internet portal and a number of websites affiliated
with the Companys media properties. Additionally, the Companys electronic
publishing arm consists of FP Data Group and Infomart.

Internationally, the Company owns CanWest Television NZ Limited which owns and
operates New Zealands 3 and C4 Television Networks; CanWest Radio NZ Limited
(CanWest Radio NZ) which owns and operates the More FM and RadioWorks
networks throughout New Zealand. The Company also has significant investments
in Australia, in The TEN Group Pty. Limited (Network TEN), in the Republic of
Ireland, in TV3 Television Network Limited (TV3 Ireland) and in Northern
Ireland, in Ulster Television plc. (UTV). The Companys Interactive division
holds interests in Internet Broadcasting Systems Inc.

Recent Developments

Refinancing of Senior Secured Credit Facility

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

Sale of Shares of SBS Broadcasting S.A.

In July 2003, the Company sold its holding of 2,032,300 common shares of SBS
Broadcasting S.A. to a U.S. institutional investor for US$16.10 per share. The
net proceeds from the transaction, approximately US$32.7 million ($44.1
million), were used to reduce corporate debt.

Debt Offering

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

Radio Application Approved

In August 2002 the Company received its first broadcast licence for radio in
Canada, 99.1 COOL FM, a jazz station, in its home city of Winnipeg. The
station launched in February 2003. In January 2004, the Company launched its
second radio station in Canada, The Beat, a contemporary urban station in the
Kitchener-Waterloo region.

Sale of Certain Community Newspapers

In February 2003, the Company sold community newspapers and related assets in
Ontario to Osprey Media Inc. for cash proceeds of approximately $193.5 million.
The sale included daily newspapers such as the St. Catharines Standard, the
Brantford Expositor,the Niagara Falls Review, and the Welland Tribune. The
transaction included a number of other periodicals as well as commercial
printing operations in Hamilton. Revenue and EBITDA generated from these
properties in fiscal 2002 were approximately $87 million and $22 million
respectively.

15



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In August 2002 the Company sold all of its community newspapers and related
assets in Atlantic Canada and Saskatchewan to GTC Transcontinental Group Ltd.
for cash proceeds of approximately $257 million. The sale included daily
newspapers such as the Halifax Daily News, Charlottetown Guardian, St. Johns
Telegram, New Glasgow Evening News, Cape Breton Post, Truro Daily News, Prince
Albert Daily Herald, and the Moose Jaw Times. The transaction also included
other weeklies, monthlies, shoppers and insert publications, as well as
commercial printing operations in Prince Edward Island and Saskatchewan.
Revenue and EBITDA generated from these properties in fiscal 2002 were
approximately $94 million and $30 million, respectively.

The proceeds from these sales were used to reduce senior bank debt.

Integrated Management Structure for Canadian Media Operations

In January 2003, the Company announced the implementation of a new management
structure for its Canadian Media business to further integrate its broadcasting
and publishing operations, an important step in its multi-platform media
strategy. Under the new structure, the Companys Canadian broadcast and
publishing operations will be operated under the common leadership of Rick
Camilleri, Chief Operating Officer. Gerry Noble, former President and Chief
Executive Officer of the Companys broadcasting operations remained with the
Company as special advisor until August, 2003. The Company appointed Robert
Calvert as Senior Vice President, Operations, and John Burgis as Executive Vice
President, Business Services and Finance. Both Robert Calvert and John Burgis
have over 20 years of experience in the newspaper publishing and television
broadcasting industries, respectively, largely with the Companys Canadian
media operations.

Election under Australian Tax Consolidation Legislation

During the year ended August 31, 2003, Network TEN and its wholly controlled
Australian entities implemented a new income tax consolidation regime provided
for under enacted changes to Australian tax law. During the application of the
new regime, the tax values of certain assets were reset. This resulted in the
revision of goodwill and intangible assets of approximately $47.3 million, and
equivalent additional future income tax liabilities. In addition, the new
regime allowed for the uplift in the tax value of certain assets; as a result,
a non-recurring income tax recovery of $63.9 million was recorded related to
reduction of future tax liabilities.

Settlement of Tax Dispute by Network TEN

On August 30, 2002 Network TEN settled a long-standing dispute with the
Australian Tax Office (ATO) over the deductibility of debenture interest
payments. The settlement resulted in a non-recurring tax expense to Network TEN
of A$36 million, including costs incurred in respect of the dispute. Due to a
change in legislation, debenture interest payments made by Network TEN will not
be deductible after June 30, 2004.

Acquisition of Eye Corp. by Network TEN

In August 2002, Network TEN bought the remaining 40% interest in Eye Corp,
Australias second largest outdoor advertising company. Network TEN had
acquired its original 60% interest in December 2000. The total purchase price
of A$189.9 million for the 100% interest was paid in cash with available funds,
including draws under Network TENs credit facility. Eye Corp.s outdoor
signage and airport, point of purchase and shopping center advertising
complement Network TENs broadcasting operations and provide Network TEN with
enhanced multi-media advertising opportunities. Eye Corp. operates an extensive
out-of-home advertising network across Australia, and to a lesser extent, in
several South East Asian countries including Indonesia and Malaysia. During
2002, Network TEN wrote down its investment in Eye Corp. by A$178 million.

16



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|B. |  | Business Overview
|-- |  | -----------------

The Companys Markets

General

The Company operates in the commercial television markets in Canada, Australia,
New Zealand and Ireland, the commercial radio market in New Zealand and the
newspaper publishing industry in Canada. Currently, these countries have
well-developed economies and advertising markets. Commercial television
stations (stations which derive most of their revenue from the sale of
advertising time) began broadcasting on a regular basis in the United States in
the 1940s, Canada and Australia in the 1950s, and in New Zealand and Ireland
in the 1960s.

The following table sets forth demographic and market information for calendar
year 2002 for the countries in which CanWest currently operates:

Selected Market Information

Daily
    
    DailyTotal Major Media
    
    Television
    
    Newspaper
    
    Newspaper
    
    Out-of-Home
    
    RadioAdvertising
    
    Advertising
    
    Advertising
    
    Circulation
    
    Advertising
    
    AdvertisingPopulation
    
    Expenditures
    
    Expenditures
    
    Expenditures
    
    Revenue
    
    Expenditures
    
    Expenditures(millions)
    
    (millions)
    
    (millions)
    
    (millions)
    
    (millions)
    
    (millions)
    
    (millions)Canada
    
    
    31.4
    
    
    
    C$7,047
    
    
    
    C$2,612
    
    
    
    C$2,510
    
    
    
    C$674
    
    
    
    C$273
    
    
    
    C$1,094Australia
    
    
    19.6
    
    
    
    A$7,359
    
    
    
    A$2,490
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    A$271
    
    
    
    n/aNew Zealand
    
    
    4.0
    
    
    
    NZ$1,565
    
    
    NZ$516
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    NZ$203Ireland
    
    
    3.9
    
    
    
    700
    
    
    
    165
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a


Television Ratings and Transmission

Revenue in the broadcasting industry is derived primarily from the sale of
broadcast air time. The advertising rates that a television station can command
are based, to a large extent, on the stations share of the total potential
audience in the market (the stations ratings), the demographic and
socio-economic composition of its audience and the price and availability of
advertising time on competing networks or in suitable alternative media.
Advertising agencies and media buyers use ratings to direct their clients
advertising expenditures to the appropriate audience. The size and demographics
of the audience that a network can offer to potential advertisers in turn
depends upon the attractiveness to potential viewers of the television
networks programming.

For potential advertisers, the two most important measurement statistics for
television audiences are rating points and share. One rating point equals one
per cent of a defined population within a defined geographic area viewing a
particular program for a specified time period. Rating points in the aggregate
measure the size of the actual viewing audience as a percentage of the total
potential viewing audience. Share indicates the percentage of people within a
defined population who are viewing television and who are tuned to a particular
program for a specific time period in a specific area, and thus measures the
market share held by a particular program relative to the actual viewing
audience.

The two basic methods of television transmission in use in CanWests existing
markets are: (i) over-the-air television broadcasting, which can be either
local or national in scope (these operations are often referred to as
terrestrial broadcast operations), and (ii) satellite-to-cable and direct
satellite (direct-to-home) broadcasting. In over-the-air broadcasting, the
station operator broadcasts its signal at an established frequency and power
via one or more land-based transmitters, each with a limited geographic range.
In satellite-to-cable broadcasting, the station operator transmits its signal
to a satellite which redirects the signal to either a ground based antenna
which is connected to a cable system or directly to a home television via a
satellite receiver. In satellite-to-cable and direct-to-home broadcasting, the
signal can originate from the territory where the viewer is situated or can be
broadcast from abroad. While over-the-air broadcasters can typically be
received by virtually all of the television households in the geographic area
covered by their broadcast signal, satellite broadcasters can be received only
by television households connected to a cable system or households that have
satellite receivers and, if the signals are encrypted, signal decoders.

17



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Newspaper Advertising, Circulation and Distribution

Revenue in the newspaper industry is derived primarily from advertising and
circulation. Advertising and circulation comprised 79% and 18% respectively of
the Companys newspaper revenues for the year ended August 31, 2003.

Advertising revenues are generated through the sale of retail, classified and
national advertising. Retail advertising is display advertising, typically
placed by local merchants such as department and grocery stores. Classified
advertising includes advertisements listed together in sequence by category,
such as automobile sales, real estate sales or help wanted. National
advertising is advertising principally from advertisers promoting a product on
a national basis.

Newspaper distribution is carried out primarily by a system of independent
carriers, wholesalers and dealers, through which newspapers are delivered to
individual subscribers. Single copies are also sold through vending boxes and
retail outlets in the relevant circulation area.

Revenue

Until November 2000 CanWest operated primarily within the television
broadcasting industry in Canada, Australia, New Zealand and the Republic of
Ireland and Northern Ireland. The consolidated financial statements include the
accounts of the Company and its subsidiaries. The consolidated financial
statements for August 31, 2001 include the accounts of CanWest Publications
from November 16, 2000, the date of acquisition. The Company accounts for its
interest in Network TEN using the equity basis of accounting. The Company
accounted for its interest in the National Post using the equity basis of
accounting until September 1, 2001, and subsequently consolidated its interest.
The Companys investment in UTV is accounted using the cost basis of
accounting.

Geographic and industry segment revenues for the last three fiscal years is
presented below.

For the years ended August 31(in thousands of dollars)2003
    
    2002
    
    2001Canada- Television
    
    
    730,407
    
    
    
    691,888
    
    
    
    701,027- Publishing & Online
    
    
    1,164,012
    
    
    
    1,270,336
    
    
    
    919,9231,894,419
    
    
    
    1,962,224
    
    
    
    1,620,950New Zealand- Television
    
    
    95,752
    
    
    
    69,079
    
    
    
    58,436- Radio
    
    
    73,400
    
    
    
    60,724
    
    
    
    56,864Ireland
    
    
    32,490
    
    
    
    28,317
    
    
    
    31,0562,096,061
    
    
    
    2,120,344
    
    
    
    1,767,306


For the years ended August 31, 2003, 2002, and 2001 the Companys equity
interest in the earnings of Australias Network TEN was $101,339,000, a loss of
$11,815,000 and earnings of $52,567,000, respectively.

Canadian Operations

Canadian Television Industry

General

The Canadian television broadcasting industry is currently comprised of: (i)
three English-language national networks, including Global Television, and one
French-language national network; (ii) two French-language networks based in
Quebec; and (iii) a number of local stations, including those of the Company.

Two of the four national networks are government-owned and operated by the
Canadian Broadcasting Corporation (the CBC). The CBC operates one network in
English and one in French and both are financed by a combination

18



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of parliamentary grants and commercial revenues. CTV Television Network Inc.
(CTV) is Canadas third national network.

In addition to receiving signals from Canadian broadcasters, virtually all
populated areas of Canada have access either directly by over-the-air
broadcasts or through cable television to the signals of U.S. border stations.
These stations are usually affiliated with one of four national U.S. commercial
networks (ABC, CBS, Fox or NBC) or with the Public Broadcasting System.
Numerous Canadian and American English-language and French-language specialty
programming services are also available via cable service in most areas on
either basic or optional cable service basis. The extensive penetration of
cable television in most Canadian cities has resulted in most television
viewers in those areas having a wide range of viewing options. In the fall of
2000 the CRTC awarded a total of 283 new digital specialty cable channels,
which will increase the viewing options available to Canadians over time. Of
the new licences granted, approximately 48 new digital specialty channels have
been launched to date.

The following table reflects the respective share of the English-language
audience held by the major Canadian networks and station groups in Spring 2003
as a percentage of both Canadian television and total television viewership:

Network or Station
    
    Share of CanadianGroup
    
    Television
    
    Share of Total TelevisionGlobal Television
Network
    
    
    20.8
    %
    
    
    14.0
    %CTV
    
    
    21.0
    %
    
    
    14.1
    %CBC
    
    
    9.0
    %
    
    
    6.1
    %CHUM
    
    
    8.5
    %
    
    
    5.7
    %Other broadcast
stations
    
    
    6.5
    %
    
    
    4.4
    %Specialty cable
channels
    
    
    34.2
    %
    
    
    23.0
    %TotalEnglish-language
broadcasting
    
    
    100.0
    %
    
    
    67.2
    %


Source: Bureau of Broadcast Measurement (BBM) sweeps, Monday to Sunday, 6:00
a.m. to 2:00 a.m. adults ages 18 to 49.

Simultaneous Program Substitution

A significant aspect of over-the-air broadcasting operations in Canada is the
regulatory requirement of simultaneous program substitution or simulcasting.
Due to Canadas geographic proximity to the United States, the Cable Television
Regulations in Canada require that cable television systems with over 2,000
subscribers must substitute the Canadian over-the-air broadcast of a U.S.
program, including the Canadian commercials, for the broadcast of an identical
program by a U.S. station when the two programs are broadcast at the same time.
Direct-to-home satellite services also have program substitution obligations
under these regulations. This effectively means that the Canadian stations
signal and advertisements appear on two or more channels simultaneously,
including the originating Canadian channel and the channel of the U.S. station
for whose signal it is being substituted. In so doing, Canadian over-the-air
broadcasters, which have purchased exclusive local broadcast rights from U.S.
programming distributors or producers, are compensated to some degree for the
encroachment by U.S. broadcasters via cable and direct-to-home satellite
services.

Television broadcasting in Canada is subject to cable priority carriage rules,
whereby cable systems with over 2,000 subscribers must carry the signals of
local broadcasters as part of their basic service. The guaranteed carriage
enjoyed by local television broadcasters under these rules is designed to
ensure that they reach cable households and enjoy advantageous channel
placement.

In markets with significant cable television penetration, broadcasting a
Canadian signal simultaneously on two or more cable channels can substantially
increase the potential size of a Canadian broadcasters audience, and thus

19



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rating points and share. As a result, advertisers are prepared to pay more for
broadcast airtime in simulcast programs. Canadian broadcasters generally
attempt to maximize the number of simulcast programs in their schedules.

Also important to television broadcasting operations is the specialty service
access rules, which require cable systems with more than 6,000 subscribers
operating in an English-language market to deliver each English-language
specialty service licenced for the area, other than certain religious services,
to the extent of available channels. Similarly, direct-to-home satellite
services, must, by regulation, distribute all Canadian Specialty services,
other than certain religious services. These rules help to ensure wider
carriage for Canadian specialty services than might otherwise be secured
through negotiation with the cable companies.

The CRTC has indicated that it intends to merge the licences held by operators
of multiple cable systems into a maximum of three licences per operator in a
given region. However, the CRTC has stated that rules related to the carriage
of programming services and program substitution must be maintained within the
regional licencing context.

In addition, Canadian broadcasters are required to show specified percentages
of programming of Canadian origin during a broadcast day and, specifically,
during the evening period.

Canadian Television Operations

General

The Company, through its principal broadcasting subsidiaries in Canada, is
currently licensed to provide over-the-air English-language television
broadcasting services through 16 television stations located in eight of
Canadas ten provinces. The Companys broadcast interests have developed
through the acquisition and turnaround of financially distressed stations, the
start-up of new stations, and the acquisition of stations previously owned by
WIC.

CanWests national network of stations, Global Television, includes eleven
stations and broadcasts to all major metropolitan markets in Canada, including
Toronto, Montreal, Vancouver, Ottawa, Calgary, Edmonton, Quebec and Winnipeg.
Global Television Network stations reach an estimated 23.6 million persons, or
approximately 97% of Canadas English-language market, and is targeted to
appeal to adults ages 18 to 49.

Two independent stations, CHCH in Hamilton and CHEK in Victoria, are regional
stations offering a broad range of entertainment, news and information
programming. CHCH reaches 90% of viewers in the province of Ontario, or
approximately 10.4 million people, and CHEK reaches 81% of viewers in British
Columbia, or approximately 3.1 million people. The acquisition of these
stations from WIC provides second stations in Canadas three largest
English-language markets: Toronto/Hamilton, Vancouver/Victoria and Ottawa/Hull.
The Companys CH brand stations, including CHCH and CHEK are targeted at the
adult audience ages 25 to 54, a more mature demographic group than the 18 to 49
year old audience targeted by the Global Television Network. A third
independent station, CH-Horizon in Montreal, Quebec, broadcasts a schedule
consisting primarily of multi-cultural programming.

CanWest also owns two stations affiliated with the CBC, which were acquired as
part of the WIC transaction.

CanWest also owns Global Prime, a Canadian cable specialty channel providing
entertainment and information programming to the baby boomer generation.

In November 2000, the CRTC awarded licences to operate three new digital
Category 1 specialty channels and 27 new digital Category 2 specialty channels
to the Company and various third parties who will hold interests in the
entities holding the licences. Cable and Satellite service operators are
legally required to carry Category 1 channels, and can carry Category 2
channels at their option. From time to time the CRTC may award additional
licences. The Company launched two Category 1 services, mentv and Mystery TV
and four Category 2 channels, Lonestar, DejaView, Fox Sports World Canada and
Xtreme Sports in September 2001. In September 2003, the Company launched
CoolTV, a category 2 channel.

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Operating Strategy

The key elements of the Companys operating strategy are to: (i) broadcast
top-rated series programming targeting the adult 18 to 49 year old or 25 to 54
year old demographic; (ii) purchase national rights to such programming; and
(iii) maximize simulcasting programming opportunities. The Company emphasizes
the broadcasting and aggressive promotion of top-rated series programming and
seeks to develop viewer loyalty by offering a regular, consistent programming
format, which the Company calls appointment television. By purchasing
national broadcasting rights to such programming, the Company is able to
control its distribution throughout Canada, including its syndication to
affiliated or non-competing stations, which in turn, decreases programming
costs for the Companys owned stations. In addition, the Company controls
programming costs by producing only its news and sports programming in-house
and by entering into partnership agreements with production companies to
acquire or produce programming. The Company further offsets programming costs
through the sale of syndication rights and the sublicensing to non-competing
broadcasters of regional broadcasting rights for programming for which it has
national rights. The Company also seeks to produce high quality Canadian news
and series programming of relevance to local and national audiences and
believes that success in this area represents a growth opportunity.

CanWest attempts to simulcast its US-originated programming whenever possible
in order to maximize ratings and share through the inclusion of the additional
audience available from the duplication of its signal on cable television.
CanWest believes that it has greater flexibility than its competitors in
coordinating its program schedules to match those of U.S. broadcasters.

Advertising Market

In 2002, English-language and French-language television advertising
expenditures in Canada were approximately $2.6 billion, representing
approximately 37% of major media advertising expenditures of $7.0 billion.
Television advertising expenditures in 2002 included approximately $508 million
related to specialty channels.

CanWest derives its revenue in Canada primarily from the sale of broadcast
airtime to national, regional and local advertisers. CanWest Media Sales
Limited (CanWest Media), a wholly owned subsidiary of the Company, is the
principal national advertising sales representative for each of the Companys
stations and also represents other, non-competing television broadcasters.
CanWest Media is the largest television advertising sales representation
company in Canada in terms of sales revenues. CanWest Media, through its
offices in Toronto and Montreal, is responsible for the Companys sales to
national advertisers while sales to regional and local advertisers are made by
each stations local staff. In fiscal 2003, approximately 91% of the revenue
delivered from the sale of broadcast airtime related to sales to national
advertisers and 9% related to sales to regional and local advertisers. By
condition of its broadcasting licences in Ontario and Quebec, Global Television
can sell broadcast airtime only to national advertisers. Based on information
provided by the CRTC, the Company estimates its share of the Canadian
English-language television advertising market (conventional and specialty) was
29% in 2002.

CanWest believes that its significant presence in the three largest
English-speaking markets in Canada position it to benefit from the continuing
shift in advertising expenditures towards major markets at the expense of
secondary markets. In addition, management believes that CanWest offers an
advantage to national advertisers over its competitors in that such advertisers
need only to deal with one agent, CanWest Media, when purchasing broadcast
airtime. In contrast, a purchaser of national advertising from one of its
competitors may be required to purchase broadcast airtime at both the network
level and from selected local affiliates.

Ratings

According to independent surveys, Global Television enjoyed high ratings and
strong audience shares during fiscal 2003.

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The following table sets forth the relative ranking and audience share of the
Companys originating broadcast television stations in each of their respective
Demographic Market Areas or Extended Market Areas for Fall 2002/Spring 2003:

Stations in
    
    Rank in
    
    AudienceCall Sign
    
    DMA/EMA
    
    DMA/EMA(1)
    
    Share(1)Global Television
Network:Global Ontario
    
    CIII
    
    
    14
    
    
    
    2
    
    
    
    11.2
    %Global Quebec
    
    CKMI
    
    
    8
    
    
    
    2
    
    
    
    10.8
    %Global Vancouver
    
    CHAN
    
    
    13
    
    
    
    1
    
    
    
    12.2
    %Global Calgary
    
    CICT
    
    
    8
    
    
    
    2
    
    
    
    15.1
    %Global Edmonton
    
    CITV
    
    
    8
    
    
    
    1
    
    
    
    14.7
    %Global Winnipeg
    
    CKND
    
    
    8
    
    
    
    2
    
    
    
    12.9
    %Global Halifax
    
    CIHFNS
    
    
    8
    
    
    
    2
    
    
    
    10.9
    %Global Saskatoon
    
    CFSK
    
    
    7
    
    
    
    2
    
    
    
    11.3
    %Global Regina
    
    CFRE
    
    
    7
    
    
    
    2
    
    
    
    9.7
    %Global Saint John
    
    CIHF-NB
    
    
    8
    
    
    
    1
    
    
    
    9.8
    %Global Lethbridge
(2)(3)
    
    CISA
    
    
    9
    
    
    
    1
    
    
    
    15.3
    %CH Television
System:Montreal, Quebec
    
    CJNT
    
    
    8
    
    
    
    7
    
    
    
    2.8
    %Hamilton, Ontario(4)
    
    CHCH
    
    
    14
    
    
    
    4
    
    
    
    5.2
    %Victoria, British
Columbia (6)
    
    CHEK
    
    
    13
    
    
    
    5
    
    
    
    5.6
    %CBC Affiliates:Kelowna, British
Columbia (5)
    
    CHBC
    
    
    8
    
    
    
    5
    
    
    
    4.7
    %Red Deer, Alberta
    
    CKRD
    
    
    8
    
    
    
    4
    
    
    
    3.8
    %




|(1) |  | Monday to Sunday, Central Prime Time (8:00 p.m. to 11:00 p.m. in all
markets except Saskatchewan and Manitoba where, due to time zone
differences with U.S. border stations, Central Prime Time is 7:00 p.m. to
10:00 p.m.) For Toronto/Hamilton and Vancouver/Victoria September 2, 2002
to December 22, 2002 and January 6, 2003 to May 25, 2003 BBM Meter
Research adults ages 18 to 49 All other markets: Fall 2002 and Spring
2003
average BBM Sweeps, adults ages 18 to 49
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | BBM Area 8021  Lethbridge
area                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(3) |  | CISA is a repeater of CICT Calgary                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(4) |  | Rank and Share in the Toronto/Hamilton EMA                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(5) |  | North Okanagan County                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(6) |  | Rank and Share in Vancouver EMA                                                                                                                                                                                                                                                                                                                                                                                                                                                 

22



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The following table sets forth Global Televisions audience shares and that of
its competitors in each of the Toronto/Hamilton and Vancouver/Victoria markets
for the 2002 and 2003 broadcast years, BBM Meter data:

Audience Share in Selected Major Markets

Audience Share(1)Prime-time:7PM-11PM(2)
    
    Rank(3)
    
    6AM-MIDNIGHT(2)
    
    Rank(3)2002/2003
    
    2001/2002
    
    2002/2003
    
    2002/2003
    
    2001/2002
    
    2002/2003%
    
    %
    
    
    
    
    
    %
    
    %Toronto/Hamilton:CTV-CFTO
    
    
    11.7
    
    
    
    11.4
    
    
    
    1
    
    
    
    9.8
    
    
    
    10.0
    
    
    
    1Global Ontario  CIII
    
    
    10.7
    
    
    
    11.9
    
    
    
    2
    
    
    
    8.8
    
    
    
    9.5
    
    
    
    2Independent  CITY
    
    
    8.7
    
    
    
    8.5
    
    
    
    3
    
    
    
    7.8
    
    
    
    8.1
    
    
    
    3CBC  CBLT
    
    
    5.3
    
    
    
    8.8
    
    
    
    4
    
    
    
    4.0
    
    
    
    6.8
    
    
    
    5Independent  CHCH
    
    
    5.1
    
    
    
    4.7
    
    
    
    5
    
    
    
    4.2
    
    
    
    3.8
    
    
    
    4Independent  CKVR
    
    
    2.9
    
    
    
    2.6
    
    
    
    6
    
    
    
    2.3
    
    
    
    2.5
    
    
    
    7Fox  WUTV
    
    
    2.7
    
    
    
    3.0
    
    
    
    7
    
    
    
    3.2
    
    
    
    3.4
    
    
    
    6Rogers  CFMT
    
    
    1.7
    
    
    
    1.9
    
    
    
    8
    
    
    
    2.3
    
    
    
    2.7
    
    
    
    7Vancouver/Victoria:Global Vancouver-
CHAN
    
    
    11.6
    
    
    
    13.0
    
    
    
    1
    
    
    
    11.8
    
    
    
    12.4
    
    
    
    1Independent  CIVT
    
    
    9.8
    
    
    
    8.3
    
    
    
    2
    
    
    
    6.6
    
    
    
    6.1
    
    
    
    2CBC  CBUT
    
    
    8.0
    
    
    
    7.6
    
    
    
    3
    
    
    
    6.5
    
    
    
    8.0
    
    
    
    3Independent  CHEK
    
    
    5.6
    
    
    
    5.1
    
    
    
    4
    
    
    
    4.3
    
    
    
    4.2
    
    
    
    4CHUM-CKVU
    
    
    5.5
    
    
    
    5.6
    
    
    
    5
    
    
    
    4.1
    
    
    
    4.0
    
    
    
    5CHUM  CIVI
    
    
    3.4
    
    
    
    3.1
    
    
    
    6
    
    
    
    2.5
    
    
    
    2.2
    
    
    
    6Independent  KVOS
    
    
    1.6
    
    
    
    1.9
    
    
    
    7
    
    
    
    2.0
    
    
    
    2.4
    
    
    
    7




|(1) |  | Audience share among adults 18 to 49                 
|--- |  | -----------------------------------------------------
|   
|(2) |  | 09/16/2002 to 05/25/2003 and 09/17/2001 to 05/26/2002
|   
|(3) |  | Based upon figures reported in this table            

Programming

Substantially all of the Companys acquired programming is purchased for
national exposure in Canada and the majority of the programming is produced
within Canada and the United States. In order to gain economies of scale, the
programming is often purchased for multiple levels, including telecast rights
for our specialty and digital television channels as well as conventional
television outlets. Many of the Companys programming agreements are for
multi-year program supply. Such agreements are currently held with several
major non-Canadian studios, including Sony Pictures Television (Columbia), Fox,
Vivendi Universal, Paramount, CBS and NBC. These agreements require suppliers
to provide, and the Company to buy, pre-agreed amounts of programming over one
or more years. These agreements have provided price stability for the Companys
program acquisitions and have enhanced our ability to retain highly-rated US
network series programming and to acquire desirable new programming while, at
the same time, helping to soften the effect of the very cyclical nature of most
television programs.

Both Global Television and the independent stations broadcast many of the most
popular programs in Canada. Among the many hit shows in our current program
schedules are a combination of recent entrants and established programs,
including Survivor, Frasier, Friends, Will and Grace, Everybody Loves Raymond,
60 Minutes, Fear Factor, The Simpsons, NYPD Blue, Gilmore
Girls, The Practice, Boston Public, That 70s Show, Malcolm in the Middle,and
24.Global Television is also Canadas television source for world class
sporting events such as NFL football (including the Super Bowl), Molson Indy,
the Masters Golf Tournamentand the Wimbledon Tennis Finals. In 2002, Global
Television introduced Global Showcase, a series of Canadian documentaries from

23



---



##### 



independent producers across all the regions of Canada. Several of the programs
have aired to strong national acclaim, including On Wings and Dreams,which was
nominated for a Gemini Award in 2002. The two Canadian
hour-long action series, Mutant Xand Andromedaare also generating very
positive audience reaction.

Since launching the Global Nationalnews in September 2001, during what must
rank as one of the most intense news gathering periods in the history of
television, (Global Nationalanchor Kevin Newman was the first Canadian
national newscaster on the air with the devastating news from New York on
September 11, 2001), it has gained stature among its peers and with its
audience. The BBM has placed Global Nationalas the number two national
newscast in Canada  and the audience growth continues. Global National,
Canadas only national dinner-hour newscast, has already been recognized with
two Gemini nominations and two major Radio Television News Director Association
awards. Strategically, Global Nationalhas enhanced the news brand and
credibility of many of Global Televisions local television news and public
affairs programs. Each of the local stations maintains local news teams which
coordinate with national news bureaus in Ottawa and Calgary and international
news bureaus in Washington, D.C., and London, England. Local news is in
increasingly high demand in virtually all of the Companys television markets.

Canadian Publishing Industry

General

The Canadian newspaper industry is comprised of over 100 daily paid circulation
newspapers and numerous non-daily paid and free-distribution publications. The
industry is mature and is dominated by a small number of major publishers.
CanWest is the largest newspaper publisher in Canada, with 29% of daily
newspaper circulation (including the National Post), ahead of Quebecor Inc.
(21%), Torstar Corporation (14%), Power Corporation (9%), Bell Globemedia (6%),
Osprey Media (6%), and others (15%).

Total Canadian daily newspaper industry revenue was $3.2 billion in 2002, with
79% derived from advertising and the balance of 21% coming from circulation.
Advertising revenue and, to a lesser extent, circulation revenue are cyclical
and dependent upon general economic conditions. Historically, increases in
advertising revenue have corresponded with periods of economic growth, while
decreases have corresponded with general economic downturns and regional and
local recessions. Daily newspaper advertising revenue decreased by 0.3%, or
$8.5 million in 2002 following a decrease by 3%, or $80 million in 2001. The
decline in 2001 followed six successive years of growth from the $1.8 billion
posted in 1994. Most of the losses in 2001 were attributable to declines in
national and classified lineage.

Daily newspaper circulation revenue decreased slightly from $692.7 million in
1995 to $673.8 million in 2002 as price increases offset receding demand. The
median single copy price for a weekday edition of a Canadian daily newspaper
increased from $0.65 in 1995 to $0.75 in 2002, partly in an attempt by
newspaper publishers to offset the impact of significant increases in newsprint
prices during earlier periods. Average daily newspaper circulation declined
3.5% in 2002 to 5.0 million copies from 5.2 million copies in 2001.

CanWests Publishing Operations

General

CanWest is the largest publisher of daily newspapers in Canada, as measured by
circulation, revenue and EBITDA. The Companys publications include 10 daily
newspapers, all of which serve markets also reached by the Companys broadcast
television signals. In addition, the Company owns and operates several small
market daily newspapers, non-daily newspapers, shopping guides and other
newspaper-related publications. The Company also owns the National Post, one of
Canadas two national daily newspapers.

The Companys newspapers (including the National Post)have an average daily
paid circulation of 1.4 million copies, representing 34.8% of Canadas daily
average English-language newspaper circulation, and an estimated average daily
readership of 3.0 million people. Most of the Companys newspapers have the
highest circulation among publications in their markets and many of its
publications serving smaller cities and towns are the only

24



---



##### 



general circulation newspapers published in their markets. The high cost
associated with starting a major daily newspaper operation constitutes a
barrier to entry by potential new competitors to larger daily newspapers. While
Internet advertising may become more competitive in the future, it has not yet
had a significant impact on revenue or EBITDA of CanWest Publications.

The following table provides circulation statistics for the six months ended
September 30, 2003 for the major newspapers (excluding the National Post):

AverageNewspaper
    
    CMA
    
    Daily Circulation
    
    Market PositionThe Vancouver Sun
    
    Vancouver, British
Columbia
    
    
    197,047
    
    
    
    1The Province
    
    Vancouver, British
Columbia
    
    
    166,894
    
    
    
    2The Gazette
    
    Montreal, Quebec
    
    
    142,885
    
    
    
    1
    (1)Ottawa Citizen
    
    Ottawa, Ontario
    
    
    135,000
    
    
    
    1The Edmonton Journal
    
    Edmonton, Alberta
    
    
    130,238
    
    
    
    1Calgary Herald
    
    Calgary, Alberta
    
    
    116,106
    
    
    
    1The Windsor Star
    
    Windsor, Ontario
    
    
    74,764
    
    
    
    1The Times Colonist
    
    Victoria, British Columbia
    
    
    70,465
    
    
    
    1The Star Phoenix
    
    Saskatoon, Saskatchewan
    
    
    55,459
    
    
    
    1The Leader Post
    
    Regina, Saskatchewan
    
    
    50,558
    
    
    
    1




| |  | (1)    Number one English-language newspaper; number three overall.
Source: September 30, 2003 ABC FAS-FAX, released November 3, 2003
| |  | -------------------------------------------------------------------------------------------------------------------------------------

The National Postis a Canadian national newspaper with an average daily
circulation of 251,517 for the six months ended September 30, 2003. The
National Postwas developed from The Financial Post, a daily business newspaper
based in Toronto. Since its launch on October 27, 1998, the National Posthas
established a large national readership with attractive demographics.

The National Postssole competitor as a national newspaper is The Globe and
Mail. In Toronto, the National Postcompetes with the Toronto Star, The Sun
and The Globe and Mail.

The National Postis printed at CanWests facilities in Calgary, Regina,
Montreal and Ottawa, and by third-party printing contractors in Vancouver,
Toronto, Borden and St. Johns.

Raw Material

Newsprint comprised approximately $137 million, or 15% of the total costs of
CanWest Publications for the year ending August 31, 2003. Newsprint is a
commodity subject to considerable price volatility. For example, the average
price of newsprint decreased by 4% in the twelve months ending August 31, 2003
compared to the prior year. Subsequent to August 31, 2003 prices have increased
by about 5%. CanWest Publications papers use approximately 186,000 tonnes of
newsprint per year.

Internet Operations

The Companys Internet operations include the following:



| |  |  | canada.com
| | - |  | ----------



| |  |  | canada.comis Canadas most comprehensive Internet network and portal,
with an average of 115 million page views and 3 million unique users per
month. Canada.com is a full service portal for personalized information
and services including travel, automobiles (Driving), careers
(Careerclick.com), sports (including hockey site Faceoff.com) finance,
free e-mail, search, shopping, and many additional services. Canada.com
also provides up-to-date international, national and local news coverage
from over 30 of our
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25



---



##### 





| |  |  | newspapers, Global Television News, wire services, and its own
interactive news bureaus. City portals offer local news, weather, and
services information.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | FP DataGroup
| | - |  | ------------



| |  |  | The Financial Post DataGroup is an unbiased source for corporate and
financial information on publicly traded Canadian companies and mutual
funds. FP Data Group offers a full range of financial information
products both online and in print. Money managers, investment
professionals, individual investors and information professionals use FP
DataGroup products to make investment decisions and perform in-depth
research on companies and industries.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Infomart
| | - |  | --------



| |  |  | Infomart is an aggregator of same day and archival Canadian news,
business information and corporate data, providing clients with access to
more than 200 full-text news and business sources  from major Canadian
dailies and newswires, to regional community papers, TV and radio
transcripts, corporate databases, specialty trade journals and magazines.
Infomart.ca provides a range of work modules that support desktop and
cross-organizational research, media-monitoring, and distribution of
results.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other
| | - |  | -----



| |  |  | The company holds minority interests in several Internet companies,
including Internet Broadcasting Systems of Minneapolis, which specializes
in developing web sites for local U.S.-based television stations and
their immediate markets; and LifeServ Corporation of Chicago, which
provides online content and planning tools for people experiencing life
events such as weddings, home-buying or having a child.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Australian Operations

Australian Television Industry

Australia has five national broadcast networks and several unaffiliated local
commercial stations. Two of the national broadcast networks, the Australian
Broadcasting Corporation and the Special Broadcasting System, are
government-owned and largely commercial-free.

Three national networks, Seven, Nine and Network TEN, are privately-owned and
broadcast commercial television to substantially all of the Australian
population, including the major metropolitan areas of Sydney, Melbourne,
Brisbane, Adelaide and Perth. Affiliated broadcasters serve rural areas and
broadcast programs purchased from some or all of these three networks.

Australia has one metropolitan pay television operator and one regional pay
television operator, who broadcasts primarily via cable and direct home
satellite delivery technologies. In 2003, there were approximately 700,000
cable subscribers, located primarily in metropolitan markets, and 750,000
satellite subscribers, located primarily in rural areas. While pay television
operators have been permitted to broadcast paid advertising since July 1997,
federal legislation requires that subscription fees remain the predominant
source of revenue for pay television operators.

Network TEN  Acquisition

In 1992, the Company organized a consortium, which acquired Network TEN for
total consideration of $208 million (A$236 million), including the provision of
acquisition financing by Westpac Banking Corporation of $128 million (A$145
million). Since the acquisition, which was effective October 1992, management
of Network TEN has sought earnings growth through the implementation of a
strategy which focuses upon controlling operating costs, targeting selected
demographic groups and expanding signal coverage through the acquisition of its
affiliated stations in Perth and Adelaide, and strategic alliances with
affiliates in regional markets. Over the period since acquisition, Network
TENs results have improved dramatically and distributions to date to
securities holders far exceed the original investments.

26



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In addition, Network TEN holds a 24.3% share interest in Television and Media
Services Limited (TMS). TMS provides the television and video industry with
facilities, studio and field production and post-production of television
programming and advertising.

Network TEN, through its wholly owned stations, now has signal coverage
reaching approximately 65% of the Australian population of 20 million. Through
program supply contracts with its affiliates, Network TEN augments its audience
coverage, with signal coverage reaching approximately 90% of the Australian
population.

Operating Strategy

The operating strategy of Network TEN is to (i) purchase programming targeted
to a particular demographic niche, (ii) effectively market the network and its
programming to its advertisers and (iii) control all operating and
administrative expenses. Network TENs programming strategy focuses upon
attracting viewers between the ages of 16 to 39, a key demographic segment for
Australian advertisers. Network TEN reaches its chosen niche audience through a
combination of Australian-produced programming, U.S. network series and other
non-Australian programming. Network TEN also uses a counter-programming
strategy to attract viewers in demographic groups not served by programming on
other networks at particular times. Network TEN seeks sponsorship of its
programming by advertisers and employs on-air promotion as well as radio and
print advertising to market both the network and its programming.

Australian programming is generally more expensive to produce than foreign
programs are to acquire, but domestically produced programming generally rates
more highly than foreign programming. As a result, Network TEN has sought to
implement a mix of domestic and foreign programming to achieve higher ratings
at the lowest possible cost.

Network TEN seeks to control programming costs by producing only news and some
sports programming in-house and by purchasing independently sourced and
produced content, including Australian and non-Australian programs. As part of
this strategy, in fiscal 1995 Network TEN sold its studio production business
and outside broadcast facilities to TMS in exchange for a shareholding interest
in TMS. Network TEN commissions independent production companies to produce
Australian programming and purchases national rights to programming. For
commissioned programs, Network TEN maintains an active role in creative aspects
of the programs. In addition, Network TEN enters into multi-year supply
agreements with several major U.S. programming suppliers as well as other
non-Australian production companies in order to acquire desirable programming
at fixed prices.

Television Advertising Market

In 2003, television advertising expenditures in Australia generated
approximately A$2.9 billion, representing approximately 35% of total major
media advertising expenditures of approximately A$8.3 billion. The cities of
Adelaide, Brisbane, Melbourne, Perth and Sydney, which are all reached by
Network TENs signal, account for approximately 78% of all television
advertising expenditures in Australia.

The Australian television industry generates more than 90% of its total revenue
from the sale of advertising time. The table below sets forth advertising
market shares of Australias three commercial networks based upon industry
information available to the Company:

27



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##### 



Television Advertising Market Shares

Twelve months ended June 30,2003
    
    2002
    
    2001(1)
    
    2000
    
    1999%
    
    %
    
    %
    
    %
    
    %NetworkNetwork TEN
    
    
    29
    
    
    
    27
    
    
    
    23
    
    
    
    24
    
    
    
    26Nine
    
    
    39
    
    
    
    39
    
    
    
    38
    
    
    
    41
    
    
    
    41Seven
    
    
    32
    
    
    
    34
    
    
    
    39
    
    
    
    35
    
    
    
    33




|SOURCE: |  | CTVA                                                  
|------- |  | ------------------------------------------------------
|       
|        |  | (1) Includes the Sydney 2000 Olympics, aired by Seven.

Ratings

The table below sets forth commercial network audience shares for calendar
years: 16-39 year olds (Sunday-Saturday 6:00 pm  10:30 pm) for each of the
three national commercial networks:

Audience Share

2003(1)
    
    2002
    
    2001
    
    2000(2)
    
    1999%
    
    %
    
    %
    
    %
    
    %NetworkNetwork TEN
    
    
    37
    
    
    
    38
    
    
    
    34
    
    
    
    31
    
    
    
    30Nine
    
    
    35
    
    
    
    34
    
    
    
    33
    
    
    
    36
    
    
    
    37Seven
    
    
    28
    
    
    
    28
    
    
    
    33
    
    
    
    33
    
    
    
    33




---

Source: 2001-2003 OzTam television ratings; 1998-2000 AC Nielsen television ratings data.


|(1) |  | To November 15, 2003                             
|--- |  | -------------------------------------------------
|   
|(2) |  | Excluding the impact of the Sydney 2000 Olympics.

Since audience share is the principal factor by which television advertising is
bought in Australia, there is a strong correlation between audience and revenue
shares. While overall audience share is the most frequently published
statistic, advertisers are increasingly looking to the demographic and
socio-economic sub-groups that make up the overall audience share. Network TEN
has attempted to differentiate itself from other broadcasters by focusing
primarily on demographics and only secondarily on overall audience share.

Programming

Network TEN sources programming material from international and Australian
sources. Both prime-time and off peak schedules include a mix of local and
international content, appealing predominantly to the under 40s audience.
Local content regulations also place certain minimum requirements on drama,
documentary and childrens programming as well as an overall domestic quota.
Although Australian programming is generally more expensive to acquire than
foreign programming, it usually attracts more viewers. As a result, Network
TEN schedules a mix of Australian and foreign shows to maximize ratings while
controlling costs.

Network TEN purchases most of its non-Australian programming from major U.S.
studios. It has acquired Australian rights to shows that are popular with its
target audience, such as Charmed, Everybody Loves Raymond, Becker, Queer Eye
for the Straight Guy, The Guardian, The Simpsons,and the Law & Order
franchise. By

28



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##### 



obtaining run of series commitments, Network TEN ensures these series remain
with the network for as long as they are produced. In addition, Network TEN
enters into multi-year supply agreements with U.S. and other non-Australian
production companies in order to acquire Australian rights to desirable
programming at fixed prices.

Network TEN produces news, local sports and a limited number of other programs
in-house, while entertainment programs are acquired from independent Australian
producers. In-house productions include the sports programs Sports Tonightand
RPM, the news program Meet the Press,the afternoon childrens programs Totally
Wildand Cheez TVand the breakfast program Good Morning Australia.
Entertainment programs commissioned from Australian production companies
include Australian Idol, Big Brother, The Secret Life of Us, Neighbours, The
Paneland Rove Live.For commissioned programs, Network TEN typically
maintains an active role in the creative process. Network TEN seeks
sponsorship of certain of its programs by advertisers and employs on-air
promotion as well as radio and print advertising to market both the network and
its programming.

Domestic production is a combination of news, sport, drama, light entertainment
and childrens programming. News and some sport is produced internally, but
most entertainment programming is acquired from independent producers.
Australia has a large and efficient independent production sector that supplies
programming to all commercial and government broadcasters.

Network TEN is the major broadcaster of Australias top football code, the AFL.
TEN has exclusive free-to-air coverage of the finals series, including the
Grand Final. Motorsport has surged in popularity through the Networks
coverage of the Formula One, World Motorcycle Championships, the Indy Cars, the
World and Australian Rally Championshipsand the V8s.

Australian Out-of-Home and Eye Corp.

Eye Corp is one of Australias premier out-of-home advertising companies. In
December 2000, Network TEN acquired a 60% interest in Eye Corp and then in
August 2002 acquired the remaining 40% interest.

Eye Corp, which was created from the consolidation of several smaller players
has become the second largest entity in the marketplace, following APN News and
Media Limited, which management estimates controls 60% of the domestic market.

Eye Corps operations are comprised of five divisions: (i) Eye Drive,which
has Australias second largest stable of large format outdoor signage, and
includes inventory of nearly 400 sites; (ii) Eye Fly, which has more than 800
strategically located signs within all of Australias domestic and
international air terminals, with the exception of Perth international, giving
Fly 98% of the Australian airport market; (iii) Eye Shop which controls two and
half thousand eyelites through more than 60 leading centres across Australia
and New Zealand; (iv) Adval is a visual merchandising and point-of-sale
supplier to leading retailers, and (v) the overseas division has made
substantial inroads into southeast Asian markets, including Indonesia, Malaysia
and Myanmar, and encompasses large format outdoor advertising and internal
airport signage.

New Zealand Operations

New Zealand Television Industry

The New Zealand television industry currently consists of five national
free-to-air networks, TV1, TV2, 3, C4 and Prime TV and several smaller regional
broadcasters. TVNZ (which consists of TV1 and TV2) is government-owned,
although it operates as a commercial enterprise. 3 and C4, both of which are
owned and operated by the Company, are the only privately owned, VHF national
commercial broadcast television networks in New Zealand. Prime TV, a company
affiliated with Australias Nine Network launched its free-to-air service on
UHF frequencies in 1998.

SKY Network, the leading pay service operating in New Zealand, operates dual
playout signals on both UHF terrestrial frequency and digital satellite DTH.
The terrestrial service transmits seven SKY channels while the digital DTH
service offers 71 channels. In total, the SKY service has approximately 39%
penetration or 543,000

29



---



##### 



subscribers. Relatively few New Zealand homes have access to cable television.
All five national free-to-air networks are also carried on SKY Satellite.

Operating Strategy

3s operating strategy is to: (i) focus on mainstream demographics, (ii)
improve air time inventory management, (iii) increase broadcasts of certain
sports and special events programming and (iv) attract advertiser sponsorship
on certain programs. 3 has also acquired and aired sports and special event
programming. 3 targets the 18 to 49 year old core demographic. Since October
2003, TV4 has rebranded its evening programs as C4 and changed its
programming to a youth music format to target the important 15-29 age
demographic in urban markets.

In 1993, 3 embarked upon a campaign to extend its signal coverage and presently
reaches approximately 98% of the New Zealand population. This increase in
coverage was funded in part by New Zealand On-Air, a government body
established to promote the expansion of broadcasting throughout the country.
C4 reaches approximately 75% of the New Zealand population.

Television Advertising Market

For the twelve months to December 31, 2002, gross television advertising
expenditures generated approximately NZ$516 million, representing approximately
33% of total expected advertising expenditures of NZ$1.565 billion.

Television advertising in New Zealand experienced strong growth during the
1991-1997 period, which management attributes primarily to (i) deregulation of
the New Zealand economy, which has led to significant increases in advertising
expenditures to challenge and protect many long-held New Zealand brand
monopolies, (ii) the launch of TV3 in late 1989, which broke a 24-year
government-owned television monopoly, and (iii) general improvement in the New
Zealand economy. During the 1998 to 2001 period the television advertising
market was relatively constant ranging between NZ$473 million and NZ$501
million. The television advertising market for 2002 has improved with
8% growth recorded.

The New Zealand television industry generates its revenue from the sale of
advertising time. The distribution between TVNZ and 3 and C4 of their combined
television market share (based on revenue) as estimated by management is set
out below:

Advertising Market ShareYear ended March 312003
    
    2002
    
    2001
    
    2000
    
    1999%
    
    %
    
    %
    
    %
    
    %3/C4
    
    
    27.3
    
    
    
    25.1
    
    
    
    24.8
    
    
    
    24.7
    
    
    
    25.9TVNZ
    
    
    72.7
    
    
    
    74.9
    
    
    
    75.2
    
    
    
    75.3
    
    
    
    74.1


30



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##### 



Ratings

The table below sets forth audience shares of New Zealands commercial
television networks during prime-time viewing hours:

Audience Share(1)Year ended March 312003
    
    2002
    
    2001
    
    2000
    
    1999%
    
    %
    
    %
    
    %
    
    %3
    
    
    25
    
    
    
    23
    
    
    
    22
    
    
    
    23
    
    
    
    23C4
    
    
    3
    
    
    
    4
    
    
    
    3
    
    
    
    3
    
    
    
    4TV1
    
    
    29
    
    
    
    30
    
    
    
    33
    
    
    
    31
    
    
    
    31TV2
    
    
    31
    
    
    
    31
    
    
    
    33
    
    
    
    33
    
    
    
    32SKY/Other
    
    
    12
    
    
    
    12
    
    
    
    9
    
    
    
    10
    
    
    
    10


Source: AC Nielsen

(1) Among adults 18 to 49
(Sunday  Saturday 6:00 p.m. to 10:30 p.m.)

Similar to Network TENs strategy in Australia, 3 and C4 have differentiated
themselves from other broadcasters by focusing primarily on demographics and
secondarily on audience share.

Programming

3s long-term programming strategy is designed to improve the ratings
performance of both domestic productions and foreign series among its targeted
demographic audience. This strategy has focused upon increasing the amount of
local production, adding sports programming, building evenings with time blocks
of compatible programming and encouraging audience loyalty by offering a
regular consistent programming format. An important factor in 3s audience
share growth has been its increased development of domestically produced
programs. 3 has developed and promoted a nightly news hour and the current
affairs program 20/20and 60 Minutesattracted funding from the government
production agency, New Zealand On-Air, for developing new domestic programming.
Local productions include the popular documentary series Inside New Zealand,
The Strip, Hot Propertyand Target.

In September 1999, 3 announced a major sporting rights deal which substantially
increased viewership and sales and promotional opportunities. 3 New Zealand
completed a deal with pay TV operator, SKY Television that made the network New
Zealands leading free-to-air sports broadcaster. Since December 1, 1999, 3
has carried a comprehensive and exclusive free-to-air schedule of domestic
Cricket and Rugby games. The deal with SKY has seen 3 add extensive coverage
of cricket test matches, one-day international cricket, Super 12 rugby matches,
and the prestigious international rugby matches featuring the world famous New
Zealand All-Blacks. The agreement to broadcast the cricket and rugby matches
is part of a larger commercial arrangement between 3 and SKY offering long-term
benefits for both, including carriage of 3 on SKYs digital platform.

The deal significantly enhances revenues and is a major draw for audiences
throughout the year. It also provides all of CanWests media operations in New
Zealand with beneficial promotional opportunities. 3 believes that the sports
broadcasts help create a solid foundation for future growth.

3 and C4 continue to offer viewers a combination of popular U.S. and foreign
programming with excellent domestic productions. Among the shows on the
schedule for TV3 this season: CSI, That 70s Show, Boston Public, Charmed, SVU
- Special Victims Unit, Law and Orderand Sex and The City. TV4 programming is
primarily music, augmented by shows such as Southparkand Jackass.

3 has developed strong relationships with distributors and major studios to
secure ongoing supply of foreign programming including features. These
arrangements include Universal and Carsey-Werner. In addition, 3 has entered
into a multi-year supply agreement with FOX Studios, which provides strong
movie titles and series programming.

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New Zealand Radio Industry

The New Zealand radio broadcasting industry has been through significant
changes commencing with the passing of the Broadcasting Act 1989 (the 1989
Act) which came into force on July 1, 1989. The 1989 Act repealed the
Broadcast Act 1976 which placed restrictions on entry to broadcasting markets.

Among other things, the 1989 Act made it easier for new broadcasters to enter
the industry; reduced or removed ownership restrictions; made it easier for new
technologies to be used and new services provided; and in the interests of
increasing efficiency, separated the Governments commercial and non-commercial
radio interests. Since deregulation in 1989, there has been a rapid and
significant increase in the number of commercial radio stations operating in
New Zealand. The total number of commercial radio stations has increased from
56 in 1989, to over 200 today.

The 1989 Act established the Broadcasting Commission and the Broadcasting
Standards Authority, provided for election broadcasting and restricted the
scope for political intervention in the management or programming of TVNZ and
state-owned radio.

The Act and the Broadcasting Standards Authority require radio broadcasters to
adhere to industry codes, but these are not unduly restrictive. Licences are
issued and technical parameters are controlled by the Ministry of Commerce, but
there are no restrictions as to format, style, or content of a radio broadcast,
provided it meets the Broadcast Standards for good taste and decency and
respects the privacy of the individual. Essentially, as with TV, the radio
industry in New Zealand is unregulated.

There are effectively two major groupings of stations, which account for 90% of
radio revenues for the year ended December 31, 2002, as follows:

Approximaterevenue shareThe Radio Network (TRN)
    
    
    45
    %CanWest NZ Radio
    
    
    45
    %Others
    
    
    10
    %100
    %


Radio Advertising Market

Over the past three years to December 31, 2002, the total radio advertising
market grew at an average of 4.5% per annum. For the twelve months ending
December 31, 2002, radio advertising generated approximately NZ$203 million,
representing approximately 13% of total advertising expenditures.

CanWest NZ Radio

CanWest entered the radio business in 1997 when it acquired nine radio stations
in the metropolitan markets of Auckland, Wellington, Christchurch, Dunedin and
Hamilton reaching approximately 65% of New Zealands population. The success
of these stations resulted from developing top talent in all areas of the
operation backed by extensive audience and radio media research, which
experienced radio executives use to develop strong brand identities.

During May 2000, the Company acquired a 72% share of RadioWorks New Zealand
Limited, a New Zealand stock exchange listed national radio operator. The
remaining 28% was purchased in January 2001. With the purchase of RadioWorks,
CanWests NZ Radio now covers both the urban and rural markets and virtually
the full range of formats. The group has made good progress with the full
integration of all radio properties. This integration process has achieved
synergy benefits, including both revenue gains and cost savings.
Operationally, CanWest NZ Radio has the best operating and profit margins in
the industry in New Zealand.

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CanWest NZ Radio now operates five national network stations and 27 local or
regional stations. The five national networks are Radio Pacific, (AM) (a
talkback format) targeted at the older demographic; Solid Gold (FM) (a classic
hits format also targeted at the older demographic); The Rock (FM) (targeted to
mainly males in the 18-34 age group; The Edge (FM) (a contemporary station
targeting a young audience with current hits); and Channel Z (FM) (slightly
alternative urban rock also targeting the younger audience). The 27 local
stations (including More FM) cover various cities and towns across the country.
They operate under specific location brand names and are mainly adult
contemporary in format, targeting a middle market position. The Company
estimates its signal reaches 99% of the New Zealand population.

Ratings

In the recent October 2003 radio survey of New Zealands largest five markets,
CanWests radio stations achieved the following ranking positions for audience
share (music stations  all listeners aged 10 plus): Auckland  fourth and
fifth; Canterbury  first, second, third, fourth and fifth; Wellington  first,
third and fifth; Waikato  second, third and fifth;
Otago  first, third and
fourth.

Irish Operations

Irish Television Industry

Prior to the launch of TV3 Ireland in September 1998, the Irish television
industry consisted of three national networks, RTE1, Net 2 and TG4 , which are
all available off-air and through cable, satellite and MMDS. In addition to
commercial advertising revenue, these three networks are publicly funded and
operate under the auspices of RTE, the state-owned broadcast organization. TV3
Ireland is the first and only privately owned independent commercial television
channel in the Republic of Ireland. TV3 targets the 15-44 age groups and is a
full service free-to-air television network offering a mix of domestic and
foreign general entertainment programming. TV3 is Irelands second most viewed
channel of all available in the Republic of Ireland, including those channels
that overspill, or transmit from the UK to service Ireland.

In addition to the four Irish channels, the major UK terrestrial channels, each
of which serves Northern Ireland, including BBCI, BBC2, ITV (Channel 3),
Channel 4 and Channel 5 are available to some or all Irish viewers via off-air,
satellite cable or MMDS. In addition, Sky One and other satellite services are
available on cable, MMDS or satellite. In April 2002 the four Irish
terrestrial channels, including TV3, were made available on the family
package offered by Sky Digital Satellite in the Republic. The addition of Sky
satellite distribution added to the 93% terrestrial coverage of TV3, making it
technically available to essentially every Irish home.

TV3 is available to approximately 62% of Northern Irish homes off-air through
transmitters located in the northern part of the Irish Republic.

Overall, approximately 61% of the Irish television households are served by
cable, MMDS or satellite services, reaching up to 88% in the largest urban
market of Dublin. Those homes served by retransmission systems or capable of
receiving terrestrial overspill of the major UK channels now account for 79% of
all homes nationally. In recent years Sky Digital has grown its subscribers to
315,000 Irish homes, which consequently receive, a host of UK based services
not available on the spectrum-limited cable services.

Advertising Market

In 2002, television advertising expenditures in the Republic of Ireland were
expected to have generated approximately 165 million, representing
approximately 24% of total advertising expenditures of 700 million. This is
supplemented by additional expenditures on advertising in the UK on services,
which reach into the Republic of Ireland, which expenditures are targeted at
consumers in the Republic of Ireland. This expenditure is estimated at
approximately 35 million annually.

In calendar 2002, the television advertising market
grew approximately 6%.

In the later part of the fiscal year a number of factors, including a general
slowdown in advertising have negatively influenced the Irish advertising
market. This has impacted both TV3 and its competitors.

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Ratings

TV3s rapid growth to its current status as the second most viewed channel has
demonstrated the need for a third mainstream station. TV3 has filled the gap
between RTEs older audience and Net 2s youthful franchise. With the addition
of TV3 Ireland, there has been repatriation of Irish audiences and growth in
the number of people viewing Irish channels.

After five years on-air, TV3 Ireland has achieved a significant share of the
market, exceeding that of the established and successful British Channels. In
the year just completed, TV3 continued as Irelands second most viewed channel
for its target demographic. In September 2003, TV3 achieved its highest ever
ratings, boding well for the important autumn ratings and fiscal 2004.

Peak Audience ShareNetwork
    
    September 2003TV3
    
    
    15
    %RTE1
    
    
    33
    %Net 2
    
    
    9
    %UTV
    
    
    9
    %


Source: AC Nielsen: All individuals (Monday to Sunday)
September 2003 Republic of Ireland.

Programming

TV3 Ireland offers a wide variety of programming, including news, factual,
comedy, drama, sports and local interest programming. The schedule is a mix of
domestic programming and foreign programming.

TV3 Irelands programming is
targeted to the 15  44 age group, audiences which
are in high demand by Irish advertisers and which had been previously neglected
in the Irish market. TV3 Ireland has quickly established itself with the
viewing audience through the introduction of programs to the Irish market like
Law and Order: Special Victims Unit, South Park, Malcolm in the Middle,and
currently the most popular non-U.K. acquired series, Sex and the City. The
tradition of U.S. movie premieres on a Sunday evening has continued with such
titles as Crouching Tiger, Proof of Lifeand Perfect Storm.

In 2001, as part of the agreement by which Granada acquired an interest in TV3,
two new titles to TV3, Coronation Streetand top-ranked daily peak time soap
Emmerdale, moved to TV3. Audiences for these foundation series have grown
since their transfer to TV3 and have added to TV3s overall success. Other
Granada products, like Heartbeatand Cold Feet,have further improved the
channel. Support for TV3 Irelands coverage of Europes prime club soccer
tournament, the UEFA Champions Leaguehas increased, with record audiences for
the season that began in September 2001. TV3 has entered into a contract to
broadcast another three years of UEFA Champions Leaguecommencing September
2003. TV3 also retains certain exclusive territorial rights for Irish
International Soccer home matches in a multi-year agreement with the Irish
Football Association.

TV3 Ireland recognizes the importance of relevant domestic programming and in
2003 invested almost twice as much in homegrown production than it did in
programming acquired from outside the country. In September 2003 the channel
was required by its license to increase Irish produced programming to 25% of
its output. TV3 had long exceeded this requirement and since its second year
in operation had voluntarily exceeded by 25% its required output of Irish
produced programming. In addition to three daily news bulletins, TV3 Ireland
produces Sports Tonight, Week in Review, periodic News Specials, and Ireland
AM, Irelands first morning breakfast television service, which quickly
established itself as the number one breakfast choice in Ireland. Ireland AM
is a weekday live, magazine and lifestyle program. Building on its success,
the program was expanded to three hours daily in September 2002, including
weekend compilations of the best of the weeks output. The program now has
viewing greater than the accumulated audiences of all its breakfast program
competitors available in the market. Agenda, is a weekly one-hour live program
focusing on politics and money. As part of the strategy to build a strong
inventory

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of Irish dramatic programs, TV3 continues to actively invest in new
Irish film productions. In recent years TV3 has invested in a re-creation of
the events of Bloody Sunday, a pivotal event in modern Irish history, along
with theatrical productions, Map Maker, Watermelonand most recently Halo
Effect. These investments have helped to secure total independent Irish film
investment budgets of over 8 million. These movies are broadcast on TV3 as
theatrical releases permit.

NORTHERN IRELAND  UTV

Headquartered in Belfast, UTV is the ITV television service provider in
Northern Ireland. It first went on the air in 1958, and over the past 45
years, has firmly positioned itself as the number one regional television
network in Northern Ireland. With a strong focus on meeting the distinctive
viewing needs and preferences of its audience, UTV enjoys a viewing share in
excess of 38% in the 6 p.m. to 11 p.m. time period.

Its strong regional identity is reflected not only in the programs being shown,
but also in the tone, style and nature of the presentation of the service,
which is targeted primarily at a younger demographic audience. Regional
programming is the mainstay of UTVs service and over the years has been the
driver of the networks solid ratings figures.

UTV is an internet service provider under the brand UTV Internet and recently
entered the telephone service reselling business. In the past few years, UTV
has also invested in radio stations in Dublin, Limerick and Cork, in the
Republic of Ireland and most recently in Liverpool in the UK. UTV has also
invested in Republic of Ireland based Bocom, an airport and supermarket
advertising company.

The Company has a 29.9% equity interest in UTV, and does not currently have
representation on the UTV board. UTV is a public company listed on the London
Stock Exchange.

Seasonality

The Companys business has experienced and is expected to continue to
experience significant seasonality due to, among other things, seasonal
advertising patterns and seasonal influences on peoples viewing, reading and
listening habits. Typically, the Companys revenue is lowest during the fourth
quarter of the fiscal year, which ends in August, and highest during the first
quarter of the fiscal year.

Regulation

Canadian Television

Canadian television broadcasting, including specialty cable television
broadcasting, is regulated principally by the Broadcasting Act(Canada). The
Canadian Radio-television and Telecommunications Commission, or CRTC, which,
among other things, administers the Broadcasting Act, grants and reviews
broadcasting licences, approves certain changes in corporate ownership and
control, and establishes and oversees compliance with regulations and policies
concerning broadcasting, including various programming requirements, subject to
certain directions from the federal cabinet.

In June 2003, a House of Commons committee, the Standing Committee on Canadian
Heritage, released the findings of its study of the current state and future
direction of Canadas broadcasting system and the efficacy of the Broadcasting
Act in meeting policy objectives, which commenced in May 2001. Included among
the broad ranging issues considered by the Committee were cross-media
ownership, foreign ownership, licence fees, program funding, community, local
and regional broadcasting, the effectiveness of the CRTC, digital transmission,
performance measurement and Canadian content and cultural diversity. The
government has responded to the report and agreed to further study a number of
the recommendations. It is not possible to predict the outcome of future
actions, if any, by government with respect to these matters.

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Ownership and Control

The Canadian government, 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 licence to an applicant that is a
non-Canadian. Canadian, a defined term within the CRTC Direction, means, among
other things, a citizen or a permanent resident of Canada, a qualified
corporation, a Canadian government, a non-share capital corporation the
directors of which are appointed or designated by statute or governmental
authorities, or a mutual insurance company, pension fund society or cooperative
of which 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 other presiding officer and 80% of the directors are Canadian, and
not less than 80% of the issued and outstanding voting shares and not less than
80% of the votes are beneficially owned and controlled, directly or indirectly,
by Canadians. In addition, in order for a subsidiary to be a qualified
corporation, Canadians must beneficially own and control, directly or
indirectly, not less than 66 2/3% of the issued and outstanding voting shares
and not less than 66 2/3% of the votes of the parent company that controls the
subsidiary and neither the parent company nor its directors or similar officers
may exercise control or influence over any programming decisions of the
subsidiary. There are no specific restrictions on the number of non-voting
shares that may be owned by non-Canadians. Finally, an applicant seeking to
acquire, amend or renew a broadcasting licence must not otherwise be controlled
in fact by non-Canadians, a question of fact, which may be determined by the
CRTC in its discretion.

The CRTCs Television Broadcasting Regulations, 1987, and the Specialty
Services Regulations, 1990, 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 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 that has, directly or indirectly,
effective control of a licensee, or (iii) a person or a person and its
associates acquiring 50% or more of the issued common shares of the licensee or
of a person who has direct or indirect effective control of a licensee. In
addition, if a transaction results in a person or a person and its associates
acquiring control of at least 20% but less than 30% of the voting interests of
a licensee, or of a person that has, directly or indirectly, effective control
of the licensee, the CRTC must be given notice of the transaction. If a
transaction increases control to over 40%, the CRTC must be notified.

To enable CanWest to ensure continuing compliance with the CRTC Direction, the
CRTC regulations and the conditions of its Canadian broadcasting licences, the
issue and transfer of CanWest Global Communications Corp.s preference shares,
subordinate voting shares and multiple voting shares and the conversion of
CanWest Global Communications Corp.s non-voting shares, multiple voting shares
or preference shares into subordinate voting shares are constrained by CanWest
Global Communications Corp.s articles.

Canadian Programming Content

CRTC regulations require licensees of television stations to maintain a
specified percentage of Canadian content in their programming. Television
broadcasters are subject to the requirement that, over the broadcast year and
over any six month period specified in the licence, 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.) 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, at least 50% of the
aggregate programming between the hours of 6:00 p.m. and 12:00 midnight over
the broadcast year must be of Canadian origin. Specialty cable television
channels also have to maintain a specified percentage of Canadian content in
their programming, generally set forth in their conditions of licence. Broadcasters are required
to broadcast a minimum of eight hours per week of priority programming during
prime time (7:00 p.m. to 11:00 p.m.). Priority programming includes
Canadian-produced drama, music and dance, and variety and long-form
documentaries, but does not include news and information or sports programming.

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Advertising

The CRTC also regulates the quantity and content of television advertising. A
television licensee may not, during any clock hour, broadcast more than twelve
minutes of advertising, 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.

Licensing

The CRTC has responsibility for the issuance, amendment and renewal of Canadian
broadcasting licences. A television broadcasting licence grants the right to a
broadcaster to transmit a television signal on a defined frequency within a
defined geographic area and at a defined power level. Subject to being
distributed as a distant signal by a distribution service such as cable or
direct-to-home satellite service, it defines the geographic area capable of
being reached by the broadcaster. The CRTC may also grant licences for
rebroadcast transmitters to relay a particular signal to other areas. A
specialty cable television licence grants the right to a broadcaster to
transmit programming to the public through a distribution service such as cable
or direct-to-home satellite service. Broadcasting licences 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 licence 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 licence and may hold public hearings in
other circumstances.

In order to conduct business, CanWest must maintain its licences in good
standing. Failure to meet the terms of such licences may result in their
short-term renewal, suspension, revocation or non-renewal. Conditions may be
imposed by the CRTC on broadcasting licences that may affect the licensees
profitability. Licensees of distribution services must also meet technical
certification requirements under the Radiocommunication Act(Canada).

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All of the Companys licences are in good standing and the Company is confident
of its ability to continue to satisfy the terms of all related undertakings.
Licences and their respective dates of renewal are as follows:

StationGlobal Television Network:Global Vancouver
    
    
    
    CHAN
    
    August 31, 2008Global Halifax
    
    
    
    CIHF
    
    August 31, 2008Global Saint John
    
    
    
    CIHF-2
    
    August 31, 2008Global Quebec
    
    
    
    CKMI
    
    August 31, 2008Global Calgary
    
    
    
    CICT
    
    August 31, 2008Global Edmonton
    
    
    
    CITV
    
    August 31, 2008Global Winnipeg
    
    
    
    CKND
    
    August 31, 2008Global Saskatoon
    
    
    
    CFSK
    
    August 31, 2008Global Regina
    
    
    
    CFRE
    
    August 31, 2008Global Lethbridge
    
    
    
    CISA
    
    August 31, 2008Global Ontario
    
    
    
    CIII
    
    August 31, 2008Independent Stations:CJNT Montreal, Quebec
    
    
    
    CJNT
    
    August 31, 2007CHCH Hamilton, Ontario
    
    
    
    CHCH
    
    August 31, 2008CHEK, Victoria, British Columbia
    
    
    
    CHEK
    
    August 31, 2008CBC Affiliates:CHBC Kelowna, British Columbia
    
    
    
    CHBC
    
    August 31, 2008CKRD Red Deer, Alberta
    
    
    
    CKRD
    
    August 31, 2008Specialty Cable Channels:Analog:Global Prime
    
    Global Prime
    
    
    
    August 31, 2010Digital:mentv (49% interest)
    
    Category 1
    
    
    
    August 31, 2007Mystery (45.05% interest)
    
    Category 1
    
    
    
    August 31, 2007Lonestar
    
    Category 2
    
    
    
    August 31, 2007DejaView
    
    Category 2
    
    
    
    August 31, 2007Fox Sports World Canada
    
    Category 2
    
    
    
    August 31, 2007Xtreme Sports
    
    Category 2
    
    
    
    August 31, 2007


All licences and related CRTC decisions are available for public review.

The Company believes it enjoys good relations with the CRTC and all other
regulatory bodies that govern its operations. All of its licences have been
renewed since the granting of its first licence in 1974. The CRTC considered
the licence renewals of all of the Global Television stations in spring 2001
under new group licensing procedures. These licences were renewed effective
September 2001 for the maximum term, which is seven years.

Cross-Ownership Issues

Although the Broadcasting Act and its regulations and policies do not require
the CRTCs approval of a broadcasters purchase of an unregulated media entity
such as a newspaper, the CRTC may consider the issue of a cross-media ownership
when granting or renewing broadcasting licences. The CRTC has a broad mandate
to regulate and supervise all aspects of the Canadian broadcasting system, to
provide for and encourage the expression of a diversity of voices within the
broadcasting system and to prevent or address the emergence of any undue
competitive advantage on behalf of one licensee. As such, the CRTC may be
concerned about the level of diversity among the media voices available in the
geographic markets where cross-ownership occurs and may choose to accept
safeguards or implement conditions in the Companys licences to ensure a level
of diversity and prevent any undue competitive advantage. Whether the CRTC will
be concerned about the level of diversity will depend upon a number of factors,
including the definition of the relevant geographic market in which diversity
is measured and the number of participants in the market. The CRTC has wide
discretion in determining what constitutes the relevant market. The CRTC
examined cross-ownership issues at the recently completed group licence renewal
hearings.

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At the renewal of the Companys broadcasting licences and in response to
potential concerns about diversity or undue competitive advantage, the CRTC
attached a condition to the Companys group licence which requires a code of
conduct be followed respecting the maintenance of separate management over the
television and print news operations. The CRTC could refuse to renew a licence
or to grant new licences based on the concerns about diversity or undue
competitive advantage.

While there are currently no specific prohibitions on the cross-ownership of
television stations and other media properties in Canada, the House of Commons
committee reviewing Canadas broadcasting system and the Broadcasting Act has
announced that it will study patterns of media ownership, cross-media ownership
and vertical integration as part of its review.

Canadian Publishing

The publication of newspapers in Canada is not directly regulated by federal or
provincial laws. There are, however, indirect restrictions on the foreign
ownership of Canadian newspapers by virtue of certain provisions of the Income
Tax Act(Canada). The Income Tax Act limits the deductibility by Canadian
taxpayers of advertising expenditures that are made in newspapers other than
Canadian issues of Canadian newspapers. 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 the Companys newspapers qualify as Canadian issues of Canadian
newspapers and, as a result, the Companys advertisers generally have the
right to deduct their advertising expenditures for Canadian tax purposes.

Australian Television

The Broadcasting Services Act (Australia), (BSA) regulates the commercial
television industry in Australia. Under the provisions of the BSA, the
Australian Broadcasting Authority, (ABA) has responsibility for planning and
licensing, programming and content standards, ownership and control of
commercial broadcasting services, handling complaints and administering the
allocation of broadcasting frequency spectrum.

Ownership and Control

The BSA prohibits non-Australian persons from being in a position to exercise
control, either alone or together with associates, over commercial television
broadcasting licences. Control is very widely defined and includes the
capacity to veto or exercise restraint over a substantial issue affecting the
management of affairs of a corporation holding a licence.

The BSA limits foreign ownership of commercial television licences by any one
person and its associates to 15% of the shares of any television licensee or of
the voting rights or rights to distributions by way of dividend or a winding up
of the licensee, because the BSA deems any person who has more than 15%
interest of this type to control the television licensee. This limit
increases to 20% for a combined interest holding for two or more persons. An
interest in shares, voting or distribution rights of this nature is referred to
as a company interest. Interests of this kind are also traced on a
proportionate basis through a chain of companies or other entities, so that a
person with a company interest in CanWest would also be considered to have a
company interest in Network TEN. In addition, if foreign persons acquired
company interests directly or indirectly in other shareholders of Network TEN
(including through interests in other companies such as TEN Network Holdings
Limited, a company listed on the Australian Stock Exchange, those interests
would be traced on a proportionate basis through those corporate chains and
aggregated with those persons existing interests for the purposes of
determining compliance with the 15% and 20% thresholds.

The BSA also includes provisions that limit cross-ownership between commercial
television licences, radio licences and newspapers within the same licence
area.

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The audience reach limitations of the BSA prevent a person from being in a
position to exercise control of television licences with a combined audience
reach of more than 75% of the Australian population, although it is possible
for a person to supply programming (through affiliates or otherwise) to achieve
greater audience reach. Furthermore, a person must not be in a position to
control more than one licence in the same licence area.

In March 2002 the Australian Government introduced the Broadcasting Services
Amendment (Media Ownership) Bill 2002, which would remove limitations in the
Broadcasting Services Act (BSA)on foreign ownership and control of the
Australian media, leaving the sector to be regulated under the Foreign
Acquisitions and Takeovers Act 1975and Australias general foreign investment
policy. The Australian Senate, in which the Government does not hold a
majority of Senators, has not supported the Bill proposed by the Government.
The Government has indicated that it will send the Bill to the Senate again to
reconsider. There is no guarantee that the Bill will be passed.

Content and Advertising

The ABA imposes mandatory transmission quotas for Australian content and other
more specific quotas for Australian drama, childrens programming and
documentaries. A minimum of 55% of programming broadcast between 6:00 a.m. and
12:00 midnight must be produced under Australian creative control.

The Australian commercial television industry is also subject to the Commercial
Television Industry Code of Practice, which has been developed by Commercial
Television Australia in conjunction with the ABA. The industrys code pertains
to matters such as the classification of programs and program promotions, the
content of news and current affairs programs and the content, placement and
amount of advertisements, as well as handling of complaints on code matters.

The broadcasting of commercials and program promotions is limited under the
Code of Practice to an average of 13 minutes per hour from 6:00 p.m. to 12:00
midnight and an average of 15 minutes per hour at other times. The exception to
this is certain childrens programming which is regulated by the ABAs
Childrens Television Standards.

Digital Television

The Australian government has passed legislation that required national
television networks to commence broadcasting on new digital channels beginning
on January 1, 2001. Commencing no later than 2005, all over-the-air
broadcasters will be required to simulcast both digital and analog services
until 2008, or such time as determined by further review. Over-the-air
broadcasters are not permitted to provide multiple channels or over-the-air
subscription broadcasting services, conditions that are subject to review by
January 1, 2005. In view of this legislation and the investment and expense
involved for existing broadcasters, the government has determined that no new
commercial television licences will be issued before December 31, 2006.

Network TEN has undertaken a major implementation plan to establish the
infrastructure and operations necessary for digital terrestrial broadcasting
and commenced digital broadcasting on January 1, 2001.

General Regulatory Obligations

In addition to the regulatory framework specific to broadcasting, the
television industry is also governed by general legislation that applies to all
industries. This includes the Trade Practices Act, which primarily deals with
anti-competitive conduct and consumer protection, and the Foreign Acquisitions
and Takeovers Act(Australia), which provides the Federal Treasurer with the
power to prohibit acquisitions by foreign persons of Australian companies and
assets where the acquisition is considered to be contrary to the national
interest.

Licencing

The ABA grants commercial television licences only to companies incorporated in
Australia. Commercial television licences granted by the ABA remain in force
for five years, subject to compliance with the BSA, and are renewed at the
request of the licence holder if the licensee is considered suitable by the ABA
to continue to hold a licence.

40



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The following table sets forth the licences held by Network TEN and their
respective dates of renewal:

Call Sign
    
    Due for RenewalSydney
    
    TEN
    
    
    2007Melbourne
    
    ATV
    
    
    2007Brisbane
    
    TVO
    
    
    2007Perth
    
    NEW
    
    
    2007Adelaide
    
    ADS
    
    
    2004


New Zealand Broadcasting

The New Zealand broadcasting industry was deregulated in 1989. Current
broadcasting laws are primarily concerned with the maintenance of broadcasting
standards in New Zealand and do not contain restrictions on foreign ownership
or cross media ownership. Other general legislation concerning foreign
investment in New Zealand may, however, have some effect on proposals by
non-New Zealand persons to acquire companies in New Zealand.

TV3 operates under a broadcast licence issued in 1995 and TV4 operates under a
broadcast licence issued in 1994. Both licences were granted for a 20-year
period and have similar terms and conditions. CanWest Radio NZ and RadioWorks
each hold broadcasting licences that will expire in 2011.

Under New Zealand law, television and radio broadcasters are required to report
their annual operating revenue to the New Zealand Broadcasting Standards
Authority and, if that operating revenue exceeds NZ$500,000 in any year, they
are required to pay a levy of 0.051% of that revenue, plus applicable taxes.

Under New Zealand law, there are no fixed domestic content quotas for
television or radio broadcasting. However, the Broadcasting Act 1989 requires
the New Zealand Broadcasting Commission to promote local programming and to
have regard to government policy on broadcasting. The New Zealand government
has a policy of promoting programming which represents the uniqueness of New
Zealand, by promoting national culture and identity.

At the invitation of the government, the New Zealand commercial radio industry
has agreed to reach a 20% domestic music quota by 2006.

Republic of Ireland Television

Television broadcasting in the Republic of Ireland is regulated by ComReg and
the Broadcast Commission of Ireland, or the BCI, pursuant to the Broadcast Act,
2001and the Broadcasting Authority Acts, 1960 to 1990.The broadcasting
industry is overseen by the Minister for Communication, Marine and Natural
Resources; the Broadcasting Complaints Commission; the Irish Competition
Authority; and is guided by European Union Directives.

Licencing

ComReg issues television broadcasting licences to the BCI, which then contracts
with television program service providers. Under the Broadcast Act, 2001, TV3
has been awarded broadcast spectrum in the event a national Digital Terrestrial
Television platform is built, which would enable TV3 to supply digital and
other services.

TV3 has entered an agreement with the BCI providing TV3 with the right to
operate its television service and setting forth certain restrictions on the
manner in which TV3 will conduct business. The contract expires in September
2008 and provides for automatic renewal of the contract for an additional ten
years unless TV3 is in breach of the contract or suffers some form of
insolvency event.

41



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Ownership and Control

The BCI has the right to approve any changes to TV3s articles of association,
directors and senior management. The BCI also has the right to approve material
changes in the ownership of TV3 and any related shareholders agreement. The BCI
must approve any transfer of TV3 shares to a person deemed to be a media
operator, non-European Union persons and certain others. A media operator
includes any person who is a television or radio broadcaster, a cable operator,
a program production company, a newspaper, a news magazine, an advertising
agency and certain other persons. There is no express regulatory prohibition on
a non-European Union person controlling TV3.

With effect from January 1, 2002, any change of control of TV3 will also
require the approval of the Irish Competition Authority (which is subject to a
decision by the Minister for Enterprise, Trade and Employment) under Section 23
of the Competition Act,2002 (which deals specifically with mergers or
acquisitions involving media businesses). In certain circumstances, such a
transaction may be subject to the prior approval of the European Commission.

Advertising

The BCI and other regulators regulate the quantity and content of television
advertising. Under the terms of TV3s agreement with the BCI, TV3 may broadcast
commercials for an average of 15% of its broadcast day (or an average of nine
minutes per hour), with a maximum of ten minutes in any single hour.

Programming

In accordance with European Union Directives, a minimum of 50% of TV3s
programming must be of European Union origin. In addition, TV3s agreement with
the BCI requires that in 2002-2003 a minimum of 25% of its content must be of
Irish origin. TV3 has consistently exceeded on its Irish origin programming
commitment.

Northern Ireland Television

Commercial television broadcasting in the United Kingdom (including Northern
Ireland) is regulated by the Office of Communications, or Ofcom,
under the Broadcasting Act 1990,as amended and the 2003 Communications Act.

Licencing

Ofcom issues broadcasting licences under the Broadcasting Act 1990and the 2003
Communications Act.UTV holds a regional licence for Northern Ireland that
expires on December 31, 2009.

Foreign Ownership Restrictions

The 2003 Communications Act removed certain foreign ownership restrictions in
respect of UTV such that the Company, or other foreign parties, may no longer
be prohibited from holding a controlling interest in UTV.

Other Ownership Restrictions

The Broadcasting Act 1990 and the 2003 Communications Actand impose certain
restrictions on holding or controlling broadcast licences. These restrictions
include prohibitions against (i) the ownership of multiple television stations,
(ii) the cross-ownership of television stations and radio stations serving a
particular market, and (iii) the cross-ownership of television stations and
newspapers.

Content Quotas

In accordance with the terms of its licence, in each calendar year, a majority
of UTVs programming must be of European Union origin, a minimum of 25% of
UTVs programming must be independent productions, and a

42



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minimum of 65% of
UTVs programming must be originally commissioned or produced for UTV or
another ITV affiliate.

C. Organizational Structure

The following chart illustrates the relationship of the Company to its parent
and principal subsidiaries and indicates each companys respective jurisdiction
of incorporation and the percentage of voting securities held by each companys
parent company; entities are 100% owned unless otherwise indicated:

(FLOWCHART)



---

|(1) |  | Owned indirectly through CanWest Irish Holdings (Barbados) Inc.                                                                 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | 50% owned indirectly through CanWest International Investments (Luxembourg)
S.A. (International Investments).                 
|   
|(3) |  | The Company owns 14.7% of the voting stock and 100% of the subordinated
debentures indirectly through International Investments.
|   
|(4) |  | Owned indirectly through International Investments.                                                                             

43



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Property, Plant and Equipment

Facilities

The corporate head office is located in leased space located at the TD Centre,
31st Floor, 201 Portage Avenue, Winnipeg, Manitoba, Canada R3B 3L7.

The Company owns the administrative and studio buildings associated with
television broadcasting operations in Vancouver, Victoria, Kelowna, Edmonton,
Calgary, Lethbridge, Red Deer, Regina, Saskatoon, Winnipeg, Toronto and
Hamilton. The Company also leases office and studio premises in Toronto,
Ottawa, Montreal, Quebec City, Dartmouth and Saint John. The Company leases
certain tower and transmitter facilities and a channel on the Anik- E2
satellite which is used to deliver the Companys signal to its transmitters.

All of the newspapers and the National Postare published from premises owned
by the Company, except The Edmonton Journal, which is published from premises
occupied under a lease agreement. In addition, the
Company prints all of its publications using its own presses and related
equipment, except for the National Post, which is printed in part by third
parties at locations throughout Canada. The Company leases additional office
space and warehouse space from time to time as required. The Company owns an
office facility in Toronto which serves as the headquarters for the Canadian
Media Operations. The New Zealand television operations are headquartered in
Auckland, where the Company owns a broadcast and production facility. The
Company also leases premises for its news bureaus in Wellington and
Christchurch. The majority of the transmission facilities are leased under
long-term agreements. CanWest Radio NZ operates its radio stations from leased
premises located in Auckland, Wellington, Christchurch, Dunedin and Hamilton.
RadioWorks leases a corporate office in Auckland and studios throughout the
country.

TV3 is headquartered in Dublin, where it leases office and studio premises.

All of the Companys owned property has been pledged as security under senior
bank debt.

Environmental Protection

Substantially all of the Companys operations are subject to laws and
regulations concerning, among other things, emissions to the air, water and
sewer discharges, handling, storage and disposal of wastes, recycling,
remediation of contaminated sites or otherwise relating to protection of the
environment. The Company believes all of its operations, including its
publishing operations, are in compliance with applicable environmental
protection laws and its own internal environmental compliance standards.
Ensuring environmental compliance has not given and is not expected to give
rise, in the aggregate, to any material adverse financial or operational
effects upon the Companys business.

Nevertheless, more stringent environmental laws as well as more vigorous
enforcement policies or discovery of previously unknown conditions requiring
remediation could result in additional costs that may have such effects.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Certain statements in this annual report may constitute forward-looking
statements. Such forward-looking statements involve risks, uncertainties and
other factors which may cause actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.

TRENDS

The Company has historically derived more than 75% of its revenue from
advertising in Canada. For that reason, the Companys results typically
reflect overall activity in the economy. Advertising markets in North America
and throughout the world recovered in the second half of fiscal 2002 and
continued to improve through fiscal 2003. The

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impact of the war in Iraq, which
overtook normal television schedules for several days during the third quarter
and the effects of the Severe Acute Respiratory Syndrome (SARS) on the travel
and tourism sector, particularly in Toronto, was temporary, and advertising
markets strengthened in the fourth quarter.

Looking forward to fiscal 2004, the positive momentum in advertising markets
for Canadian newspapers experienced in fiscal 2003 is expected to continue. For
Canadian television, after a strong up front market, the television advertising
market in Canada appears to have softened.

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

OUTLOOK

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

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

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

In Canada, management expects to boost long term profitability of its
conventional television operations by continuing to implement a more aggressive
domestic programming strategy. The signing of Kevin Newman to a new multi-year
contract as executive editor and anchor of the nightly national news flagship
has enabled Global Nationalto sustain its strong competitive position in the
Canadian news marketplace and continue to move closer to the traditional
leaders. The recruitment of well-known comedian Mike Bullard to launch a
national late night talk/variety show continues the trend of aggressively
pursuing leading Canadian talent.

For fiscal 2004, Global Television has concentrated on a strategy to refresh
and renew its prime time schedule. In 2003, the Company acquired 10 new
dramas, 6 new sitcoms and 1 new reality series from top U.S. producers. The
acquisitions brought 14 new hours of high quality primetime viewing to
Canadians in the fall and will complement returning drama series such as 24and
Without A Tracethat continue to gain popularity with viewers. In addition,
the final season of Friendsand Frasierhave created must-see programming
events around the series finales that will be the television events
of the 2003 - 2004 program year.

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

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

45



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

The Company continues to pursue additional operational efficiencies and cost
reductions at all of its operating units. The Company announced a major
re-organization of the senior management of its Canadian media operations in
January, 2003. The more integrated management structure has streamlined
decision-making and enhanced the ability of the Companys broadcast, publishing
and interactive assets to work more closely together as complementary and
mutually supportive media businesses. This re-organization was followed by the
launch of the CanWest News Service and the Canadian News Desk, located in
Winnipeg, but with journalist resources in Winnipeg and across Canada. The
Companys consumers saw immediate benefits of increased depth and wider
coverage of Canadian and international news both on television and in the
Companys newspapers.

CRITICAL ACCOUNTING POLICIES

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

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

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

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

46



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Goodwill and intangible assets

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

As at August 31, 2003 the Company had $1,094 million of intangibles and $2,425
million of goodwill on its balance sheet.

In performing the annual impairment testing of goodwill and intangibles, a
number of assumptions and estimates are made in applying a fair value test. The
fair value definition used is the amount at which an asset could be bought or
sold in a current transaction between willing parties. Valuation techniques
used for reporting units include either a market approach or a discounted cash
flow (DCF) approach. The market approach is used where comparable public
market data is available, or the Company has bona fide offers for assets. The
projections used in the DCFs represent managements best estimates of expected
future operating results of the reporting units for the first three years and
an extrapolation based on aggregate economic factors such as gross domestic
product growth rates and inflation, for the final two years of the forecast
period.

Precedent transactions involving comparable companies and market statistics for
comparable companies are used to select appropriate terminal multiples. In
addition, the expected risk-free and other rates of return, general economic
conditions, historical and forecasted operating results, and valuations
prepared by third parties are considered. The discount rates used are based on
the weighted average costs of capital using the capital pricing model and
adjusting for the size of the local reporting unit, local tax rates and risk
profile.

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

Revenue Recognition and Allowance for Doubtful Accounts

Approximately 75% of the Companys revenue is derived from the sale of
advertising. Advertising revenue, net of agency commissions, is recognized at
the time a television or radio commercial is broadcast, or at the time the
publication is delivered.

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

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

Income taxes

Income taxes were $39 million for the year ended August 31, 2003. Future tax
assets were $94 million, while future tax liabilities were $482 million at
August 31, 2003 (see note 12 to the consolidated financial statements).

Management uses judgment and estimates in determining the appropriate rates and
amounts to record future taxes, giving consideration to timing and probability.
Actual income taxes could vary from these estimates as a result of future
events, including changes in income tax law or reviews by tax authorities.

47



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Accounting for Pension and other Benefit Plans

The cost of defined benefit pension and other retirement benefits earned by
employees is calculated based on managements estimates of expected plan
investment performance, salary escalation, retirement ages of employees and
expected healthcare costs. The defined benefit pension and other retirement
benefit expense recorded by the Company for the year ended August 31, 2003 was
$20.7 million. Use of different assumptions would result in different results.

Broadcast rights

At August 31, 2003, the Company had $111 million in broadcast rights. Broadcast
rights represent the right to air various forms of programming. Broadcast
rights and the corresponding liability are recorded when the licence period
begins and the programs are available for air. Foreign programming is primarily
acquired on a pay for play basis, and is immediately aired, while some
foreign and most domestic programming may be carried in inventory and amortized
over a series of plays. Management must use estimates and judgment in
determining the useful lives and carrying values of broadcast rights.
Estimates of useful life relates to the expected number of plays over which the
cost of acquiring the rights are amortized; while estimates of value primarily
relate to the time slots in which the programs will be aired. Inventories are
reviewed regularly to ensure recoverability of the book value of broadcast
rights.

Operating Results

Fiscal 2003 Compared to Fiscal 2002

EBITDA represents net earnings from continuing operations before realized
currency translation adjustments, interest in earnings of Network TEN and other
equity accounted affiliates, minority interests, provision for (recovery of)
income taxes, investment and other income, financing expenses, and
amortization. EBITDA is not a recognized measure of financial performance under
Canadian GAAP. Management utilizes EBITDA as a measure of segment profitability
in making strategic resource allocations. In addition, the Company and its
lenders and investors use EBITDA to measure performance against the Companys
various leverage covenants. Investors are cautioned, however, that EBITDA
should not be construed as an alternative to operating income (earnings before
interest and taxes) or net earnings determined in accordance with GAAP
as an indicator of the Companys performance. The Companys method of
calculating EBITDA may differ from other companies and, accordingly, EBITDA may
not be comparable to measures used by other companies. Earnings before interest,
taxes, depreciation and amortization (EBITDA) is not a recognized measure of
financial performance under Canadian GAAP.

48



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

Segment operatingRevenue
    
    profit (EBITDA)
    
    Amortization
    
    Operating income2003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002$000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000Operating SegmentsTelevisionCanada
    
    
    730,407
    
    
    
    691,888
    
    
    
    216,346
    
    
    
    190,752
    
    
    
    25,363
    
    
    
    25,924
    
    
    
    190,983
    
    
    
    64,828Australia-Network TEN
(1)
    
    
    336,362
    
    
    
    281,427
    
    
    
    106,975
    
    
    
    81,782
    
    
    
    6,573
    
    
    
    5,808
    
    
    
    100,402
    
    
    
    75,974New Zealand
    
    
    95,752
    
    
    
    69,079
    
    
    
    10,095
    
    
    
    (1,938
    )
    
    
    3,408
    
    
    
    2,541
    
    
    
    6,687
    
    
    
    (4,479
    )Ireland
    
    
    32,490
    
    
    
    28,317
    
    
    
    9,729
    
    
    
    7,654
    
    
    
    2,249
    
    
    
    1,869
    
    
    
    7,480
    
    
    
    5,7851,195,011
    
    
    
    1,070,711
    
    
    
    343,145
    
    
    
    278,250
    
    
    
    37,593
    
    
    
    36,142
    
    
    
    305,552
    
    
    
    242,108Publishing
and Online  Canada
    
    
    1,164,012
    
    
    
    1,270,335
    
    
    
    258,496
    
    
    
    285,027
    
    
    
    56,349
    
    
    
    62,488
    
    
    
    202,147
    
    
    
    222,539Radio  New Zealand
    
    
    73,400
    
    
    
    60,724
    
    
    
    20,751
    
    
    
    16,361
    
    
    
    2,336
    
    
    
    2,086
    
    
    
    18,415
    
    
    
    14,275Outdoor-Australia
(1)
    
    
    36,656
    
    
    
    38,074
    
    
    
    2,560
    
    
    
    874
    
    
    
    2,782
    
    
    
    2,891
    
    
    
    (222
    )
    
    
    (2,017
    )2,469,079
    
    
    
    2,439,844
    
    
    
    624,952
    
    
    
    580,512
    
    
    
    99,060
    
    
    
    103,607
    
    
    
    525,892
    
    
    
    476,905Corporate expenses
    
    
    
    
    
    
    
    
    
    
    (23,213
    )
    
    
    (26,807
    )
    
    
    4,982
    
    
    
    2,692
    
    
    
    (28,195
    )
    
    
    (29,499
    )2,469,079
    
    
    
    2,439,844
    
    
    
    601,739
    
    
    
    553,705
    
    
    
    104,042
    
    
    
    106,299
    
    
    
    497,697
    
    
    
    447,406Restructuring and
television program
impairment expense
(2)
    
    
    
    
    
    
    
    
    
    
    (23,305
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,305
    )
    
    
    Total Combined
    
    
    2,469,079
    
    
    
    2,439,844
    
    
    
    578,434
    
    
    
    553,705
    
    
    
    104,042
    
    
    
    106,299
    
    
    
    474,392
    
    
    
    447,406Elimination of equity
accounted affiliates
(1)
    
    
    (373,018
    )
    
    
    (319,500
    )
    
    
    (99,219
    )
    
    
    (82,655
    )
    
    
    (9,355
    )
    
    
    (8,699
    )
    
    
    (89,864
    )
    
    
    (73,956
    )Total Consolidated
    
    
    2,096,061
    
    
    
    2,120,344
    
    
    
    479,215
    
    
    
    471,050
    
    
    
    94,687
    
    
    
    97,600
    
    
    
    384,528
    
    
    
    373,450




---

|(1) |  | Represents the Companys proportionate interest in Network TEN and its
wholly owned subsidiaries.                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes Network TEN television program impairment charges of $10,316 and
Canadian media restructuring charges of $12,989.

49



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

OperatingRevenue
    
    EBITDA
    
    incomeFor the year ended August 31, 2002
    
    $000
    
    $000
    
    $000As reported
    
    
    2,120,344
    
    
    
    471,050
    
    
    
    373,450Newspaper publishing properties
sold
    
    
    (141,807
    )
    
    
    (42,721
    )
    
    
    (39,167
    )Pro forma
    
    
    1,978,537
    
    
    
    428,329
    
    
    
    334,283


The Company reported consolidated revenues of $2,096 million for the year ended
August 31, 2003, a decrease of $24 million from the actual revenues reported
for the previous year and an increase of $118 million from pro forma revenues
of $1,979 million. Revenues for 2003 reflect solid increases in Canadian
television and Publishing revenues, as well as New Zealand broadcasting
operations.

Consolidated operating expenses (including selling, general, and administrative
expenses) before amortization decreased $32 million to $1,617 million. On a pro
forma basis, operating expenses increased $67 million, or 4% from $1,550
million in the previous year, reflecting expense increases in Publishing and
Online operations, as well as restructuring expenses.

Consolidated EBITDA increased by 2% to $479 million from $471 million last
year. Compared to last year on a pro forma basis, EBITDA increased by 12% from
$428 million last year. Substantial increases at broadcast operations in
Canada, New Zealand, and Ireland as well as in publishing and online operations
were partially offset by restructuring expenses.

Revenues from Canadian Television Broadcast operations were up by 6% to $730
million from $692 million recorded in the previous year. Revenues at
conventional television operations and at Global Prime, the Companys top-rated
analog specialty channel, increased by 5% in fiscal 2003 compared to fiscal
2002.

The Companys six digital specialty channels saw revenues double to $9 million
in fiscal 2003, their second full year of operation. The Companys portfolio
of digital channels continue to perform well relative to their peers, steadily
gaining subscribers. Subsequent to year-end the Company launched a seventh
channel, CoolTV.

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

Operating expenses (including selling, general and administrative expenses) at
Canadian Television Broadcast operations increased by 3% to $514 million in
fiscal 2003, compared to $501 million in fiscal 2002. Operating expenses were
well controlled. The increase reflects nominal inflationary increases and
costs related to the start up of Cool FM. Programming expenses were consistent
with the previous year.

As a result of revenue increases and expense control Canadian television
broadcast EBITDA increased 13% to $216 million in fiscal 2003 and operating
income increased 16% to $191 million in fiscal 2003 as compared to fiscal 2002.

50



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

Compared to last year, on a pro forma basis, operating expenses (including
selling, general and administrative expenses) of the Companys publishing and
online operations increased by 2% to $906 million from $886 million on a pro
forma basis. This reflects normal cost escalations, particularly payroll and
moderate increases in the price of newsprint.

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

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

The Companys 45% share of revenues at TV3 in the Republic of Ireland increased
15% to $32 million in fiscal 2003 from $28 million the previous year. The
Companys share of TV3s EBITDA was $10 million, up from $8 million and
operating income increased to $7 million from $6 million the previous year.

Revenues from television broadcast operations for New Zealands 3 and C4
television networks increased by 39% to $96 million for fiscal 2003 from $69
million the previous year. In local currency, revenues increased by 21% to
NZ$121 million in fiscal 2003 from NZ$100 million in fiscal 2002. EBITDA also
improved, from an EBITDA loss of $2 million in fiscal 2002 to $10 million for
fiscal 2003. Operating income increased to $7 million in fiscal 2003 from a
loss of $4 million the previous year. Results from New Zealand have been
translated at an average exchange rate of $0.7957, an increase of 15% over the
prior years rate of exchange. A combination of factors contributed to the
improved results, including higher ratings, improved advertising market
conditions, and higher prices for advertising. A stronger New Zealand dollar
also helped to reduce the cost of imported programming. The C4 Television
Network, previously operated as TV4, is the countrys first music oriented
channel.

CanWest NZ Radio continued its steady performance, increasing revenues, EBITDA
and operating income. Revenue grew by 21% to $73 million in fiscal 2003 from
$61 million the previous year. EBITDA grew by 27% to $21 million in fiscal 2003
from $16 million in the previous year and operating income increased by 29% to
$18 million in fiscal 2003 from $14 million the previous year.

Corporate operating expenses decreased by 13% to $23 million in fiscal 2003
from $27 million in fiscal 2002.

The Company recorded a restructuring charge of $13 million related to employee
severance expenses associated with the restructuring of its Canadian Media
operations in fiscal 2003. The restructuring charge affected the following
operating segments: Canadian Broadcasting  $3 million,
Publishing and Online  $9 million and Corporate and Other  $1 million.

Amortization of intangibles was $18 million in both 2003 and 2002.
Amortization of property and equipment decreased to $70 million in fiscal 2003
from $73 million in the previous year, reflecting the sale of community
newspapers.

Financing costs were $248 million for fiscal 2003, compared to $255 million in
the previous year, reflecting the reduced level of debt as well as lower
interest rates achieved through refinancing of debt.

51



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##### 



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

The provision for income taxes was $39 million in fiscal 2003, compared to $48
million in fiscal 2002.

The Companys interest in earnings of Network TEN was $101 million in fiscal
2003 compared to a loss of $12 million in fiscal 2002. The Companys share of
EBITDA increased to $110 million for fiscal 2003 compared to $83 million in
fiscal 2002. Earnings were affected by a number of one-time charges in both
years. The Companys share of one-time charges in fiscal 2003 included a
charge of $10 million related to program inventory write-down, and a recovery
of future taxes of $39 million as a result of new tax consolidation legislation
in Australia. In fiscal 2002, one-time charges included an investment write
down of $8 million, a charge for Eye Corp. goodwill impairment of $30 million
and a charge related to the resolution of a taxation issue of $17 million.
Results from TEN have been translated at an average rate of $0.8893, up 7% from
the average rate of exchange in 2002. See detailed discussion of Network TEN
herein.

Net earnings for fiscal 2003 were
$188 million, compared to $98 million in fiscal 2002.

Fiscal 2002 Compared to Fiscal 2001

The following is a table of segmented results for the years ended August 31,
2002 and August 31, 2001 including a reconciliation of operating income before
amortization (EBITDA) to operating income:

Segment operatingRevenue
    
    profit (EBITDA)
    
    Amortization
    
    Operating income2002
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001
    
    2002
    
    2001$000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000Operating SegmentsTelevisionCanada
    
    
    691,888
    
    
    
    701,027
    
    
    
    190,752
    
    
    
    229,494
    
    
    
    25,924
    
    
    
    57,840
    
    
    
    164,828
    
    
    
    171,654Australia  Network
TEN(1)
    
    
    281,427
    
    
    
    233,117
    
    
    
    81,782
    
    
    
    69,212
    
    
    
    5,808
    
    
    
    7,785
    
    
    
    75,974
    
    
    
    61,427New Zealand
    
    
    69,079
    
    
    
    58,436
    
    
    
    (1,938
    )
    
    
    (8,939
    )
    
    
    2,541
    
    
    
    4,977
    
    
    
    (4,479
    )
    
    
    (13,916
    )Ireland
    
    
    28,317
    
    
    
    31,056
    
    
    
    7,654
    
    
    
    2,748
    
    
    
    1,869
    
    
    
    3,107
    
    
    
    5,785
    
    
    
    (359
    )1,070,711
    
    
    
    1,023,636
    
    
    
    278,250
    
    
    
    292,515
    
    
    
    36,142
    
    
    
    73,709
    
    
    
    242,108
    
    
    
    218,806Publishing and Online
 Canada
    
    
    1,270,335
    
    
    
    919,923
    
    
    
    285,027
    
    
    
    207,804
    
    
    
    62,488
    
    
    
    83,153
    
    
    
    222,539
    
    
    
    124,651Radio  New Zealand
    
    
    60,724
    
    
    
    56,864
    
    
    
    16,361
    
    
    
    14,301
    
    
    
    2,086
    
    
    
    4,753
    
    
    
    14,275
    
    
    
    9,548Outdoor  Australia
(1)
    
    
    38,074
    
    
    
    22,861
    
    
    
    874
    
    
    
    1,610
    
    
    
    2,891
    
    
    
    3,790
    
    
    
    (2,017
    )
    
    
    (2,180
    )2,439,844
    
    
    
    2,023,284
    
    
    
    580,512
    
    
    
    516,230
    
    
    
    103,607
    
    
    
    165,405
    
    
    
    476,905
    
    
    
    350,825Corporate expenses
    
    
    
    
    
    
    
    
    
    
    (26,807
    )
    
    
    (13,056
    )
    
    
    2,692
    
    
    
    257
    
    
    
    (29,499
    )
    
    
    (13,313
    )Total Combined
    
    
    2,439,844
    
    
    
    
    
    
    
    553,705
    
    
    
    503,174
    
    
    
    106,299
    
    
    
    165,662
    
    
    
    447,406
    
    
    
    337,512Elimination of equity
accounted
affiliates
(1)
    
    
    (319,500
    )
    
    
    2,023,284
    
    
    
    (82,655
    )
    
    
    (69,104
    )
    
    
    (8,699
    )
    
    
    (11,575
    )
    
    
    (73,956
    )
    
    
    (57,529
    )Total Consolidated
    
    
    2,120,344
    
    
    
    1,767,306
    
    
    
    471,050
    
    
    
    434,070
    
    
    
    97,600
    
    
    
    154,087
    
    
    
    373,450
    
    
    
    279,983




---

|(1) |  | Represents the Companys proportionate interest in Network TEN and its
wholly owned subsidiaries.
|--- |  | -------------------------------------------------------------------------------------------------

The Companys results were significantly impacted by acquisitions and
divestitures in fiscal 2002 and fiscal 2001 including the following
transactions:



| |  | the acquisition of publishing and online operations in November 2000;
|- |  | ---------------------------------------------------------------------



| |  | the acquisition of the remaining shares of RadioWorks effective January 2001;
|- |  | -----------------------------------------------------------------------------



| |  | the reorganization of our interest in TV3 Ireland in March 2001;
|- |  | ----------------------------------------------------------------



| |  | the sale of CKVU in October 2001; and
|- |  | -------------------------------------

52



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##### 





| |  | the gain of effective control of the National Post in September,
2001, when we began consolidating its financial results.
|- |  | -------------------------------------------------------------------------------------------------------------------------

The Company reported consolidated revenues of $2,120 million in fiscal 2002, an
increase of $353 million from the actual consolidated revenues reported for the
previous year. The increase in revenue was primarily attributable to the
inclusion of twelve months of Publishing and Online results in fiscal 2002
compared to only nine and a half months in fiscal 2001, offset in part by a
decrease in revenue as a result of the sale of CKVU and the restructuring of
our interest in TV3 Ireland. On a same asset basis revenues decreased by $8
million in fiscal 2002 reflecting increases in Canadian television revenues
offset by decreased revenues in Publishing and Online.

Consolidated operating expenses (including selling, general, and administrative
expenses) before amortization increased $316 million to $1,649 million in
fiscal 2002 as a result of the inclusion of a full year of the Publishing and
Online results.

Operating income increased $93 million to $373 million in fiscal 2002 from $280
million in the previous year. $75 million of this increase resulted from the
accounting policy change that discontinued the amortization of goodwill and
indefinite life intangibles, the remainder is primarily the result of the
inclusion of a full year of Publishing and Online results in 2002 compared to
only nine and a half months in 2001.

Actual revenues from Canadian Television Broadcast operations were down
slightly to $692 million in fiscal 2002 from $701 million recorded in the
previous year. This was due entirely to the sale of CKVU (Vancouver) effective
August 31, 2001. On a same station basis, Canadian Television revenues
increased by 9% compared to $633 million in fiscal 2001. Operating expenses
increased by 5% to $493 million in fiscal 2002, compared to $472 million in
fiscal 2001. On a same station basis, which excluded operating expenses
associated with CKVU in the previous year, operating expenses increased by 16%
in fiscal 2002 compared to fiscal 2001. The year-over-year increase reflected
higher programming costs arising from the affiliation of BCTV in Vancouver with
the Global Television Network, as well as substantial additional investment in
programs designed to enhance future ratings performance.

In addition, as part of the CRTC approval, the Company made substantial
investments in local programming at the CH stations in Victoria and Hamilton,
which included enhanced news programming and daytime programming. Operating
expense increases in fiscal 2002 were offset by the discontinuation of
amortization of indefinite life intangibles resulting in a decrease in
amortization expense of $34 million. Operating income for Canadian Television
Broadcast operations increased to $165 million in fiscal 2002 compared to $172
million in the prior year.

Revenues at Global Prime, the Companys top-rated specialty cable channel,
increased by 27% to $25 million in fiscal 2002, from $19 million in fiscal
2001. The increase was attributable to a 44.9% increase in advertising sales
revenue over the previous year, and an increase in the subscriber base of 6.6%
over the previous year.

The Company launched six specialty digital channels in September 2001. Five of
the new channels ranked in the top ten of the 47 new digital channels that went
on air at that time. At the close of fiscal 2002, the Companys portfolio of
Canadian digital channels had an aggregate of approximately 2,000,000
subscribers. Revenue from the specialty digital channels for the eight months
following the end of the free preview period was $4 million, with expenses of
$8 million, resulting in an operating loss of $4 million.

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

53



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Compared to fiscal 2002, operating expenses (including selling, general and
administrative expenses) of the Companys newspaper operations increased by
$270 million in fiscal 2002 to $982 million as a result of the inclusion of a
full year of operations for the publishing properties and the National Post,
offset by expense reductions of $135 million. The reductions were the result of
restructuring at the National Post and reduced manning at other newspapers, and
an overall drop of 14% in average newsprint costs during the year. Operating
costs include the start-up costs associated with the launch of the Reach Canada
customer contact centre in Winnipeg which receives customer service calls for
all major newspapers in the group. Operating income for the publishing group
increased by $101 million or 81%, to $226 million in fiscal 2002 from $125
million in the prior year. This increase is the result of the inclusion of a
full year of operations of the newspaper group as compared to nine and a half
months the prior year, as well as the discontinuation of amortization of
goodwill and indefinite life intangibles.

In August 2002, the Company sold a number of newspapers and related assets to
GTC for aggregate cash proceeds of $257 million. These newspapers, which
included eleven smaller market daily papers and certain community papers in
Atlantic Canada and Saskatchewan, were not central to the Companys
multi-platform sales, content and promotion strategy. The newspapers and
related assets included in the transaction generated approximately $94 million
in revenue and $27 million in operating income in fiscal 2002.

The Companys 45% share of revenues at TV3 in the Republic of Ireland increased
39% to $28 million in fiscal 2002 from $20 million the previous year. The
Companys share of TV3s operating income was $6 million in fiscal 2002
compared to a small operating loss in the previous year. Ratings were up 13% in
prime time viewing hours, with an 18% growth in all-day ratings at TV3 in
fiscal 2002. Improved ratings for locally produced programming, as well as the
inclusion of top-rated entertainment programming from Granada Media,
contributed substantially to the continued growth at TV3.

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

3 Television Network gained two points in ad market share to 25% in fiscal 2002
compared to a 23% ad market share in the previous fiscal year. In the last
quarter of the year, 3 achieved the highest share in Auckland, New Zealands
largest city, with an audience market share of 32%.

CanWest NZ Radio continued to make steady progress in fiscal 2002, increasing
both its revenues and operating profit. Operating profit grew by 50% to $14
million in fiscal 2002 from $10 million in the previous year on revenues of $61
million. It recorded operating expenses of $44 million in fiscal 2002, a 4%
reduction in costs from the previous year.

Financing costs were $255 million for fiscal 2002, compared to $269 million in
the previous year. The decrease reflects reduced interest rates and debt
repayments in fiscal 2002 partially offset by a full twelve months of financing
costs related to the acquisition of CanWest Publications properties which
occurred late in the first quarter of fiscal 2001, resulting in only nine and
one-half months of the carrying cost associated with the acquisition in fiscal
2001.

Amortization of intangibles and goodwill was reduced to $18 million in fiscal
2002, compared to $89 million in the previous year as a result of the adoption
of the new accounting policy under which goodwill and indefinite life
intangibles are no longer amortized. Amortization of property and equipment
increased to $73 million in fiscal 2002 from $60 million the previous year as a
result of the acquisition of the publishing properties.

In fiscal 2002, the Company had investment gains, net of losses on the write
down of investments, of $34 million. This was comprised of a gain on the sale
of CKVU of $68 million, a gain on the sale of Atlantic Canada and Saskatchewan
community newspapers of $49 million offset by write downs of $86 million as a
result of non-temporary declines in fair value of other investments. In the
previous year, the net investment gain was $29 million.

54



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##### 



The provision for income taxes was $48 million in fiscal 2002, compared to a
tax recovery of $27 million in fiscal 2001. The effective tax rate of 31% in
fiscal 2002 was significantly lower than the Companys statutory rate of 39%,
primarily as a result of the non-taxable portion of gains. The previous years
recovery included a future income tax recovery of $71 million due to reductions
in federal and provincial income tax rates enacted during fiscal 2001.

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

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

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

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

Net earnings for fiscal 2002 were $98 million, compared to $98 million in
fiscal 2001. Adjusted earnings for fiscal 2001, excluding the amortization of
goodwill and indefinite life intangibles, were $167 million.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operating activities for fiscal 2003 was $275 million compared
to $187 million in the previous year. Decreases in cash flow from operations
related to reduced distributions from Network TEN of $33.4 million, down from
$61.0 million in fiscal 2002 was more than offset by the impact of relatively
stable working capital balances. Changes in non-cash operating accounts
contributed cash of $38.7 million in 2003 compared to a use of cash of $73.5
million in fiscal 2002.

In fiscal 2004 the Company expects to receive approximately $99 million in
distributions from Network TEN. In addition working capital balances are
expected to remain relatively constant for fiscal 2004.

Cash was $115 million at August 31, 2003, compared to $50 million as of August
31, 2002. Subsequent to August 31, 2003, $90 million was applied to reduce
outstanding debt.

Capital expenditures were $38 million for fiscal 2003, compared to $52 million
for the previous fiscal year. Capital spending in fiscal 2003 was primarily
related to replacement of capital assets. The Company expects that capital
expenditures for fiscal 2004 will include approximately
$53 million in
replacement of and $19 million in investment in capital assets.

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

Long-term debt, including the current portion, decreased $83 million during
fiscal 2003 to $2,447 million. During fiscal 2003, the Company repaid $378
million of its senior secured debt. The Company issued $295 million in

55



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##### 



senior
unsecured notes, which bear interest at 7 5/8% and mature in May 2013, the
proceeds of which were used to retire a portion of the 12.155% junior
subordinated notes.

The total credit available under the Companys senior secured credit facility
is $1,769 million, of which the Company had drawn approximately $1,417 million
as of August 31, 2003. The facility includes revolving and non-revolving
tranches with terms ranging from three to six and a half years. The senior
secured credit facility is collateralized by substantially all assets of the
Company. Scheduled repayments of the Companys senior secured credit facility
amount to $38 million in fiscal 2004. The provisions of the senior secured
credit facility require that, for fiscal years in which the credit rating for
the Senior Secured Credit facility is below a prescribed level, the Company
make a prepayment of its senior secured credit facility equal to 50% of its
free cash flow, as defined under the facility, for such financial year. The
Company was required to make a prepayment of $41.5 million in January 2004 in
respect of fiscal 2003.

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

The Company has outstanding $709 million in senior subordinated notes,
guaranteed by certain subsidiaries, maturing in 2011 and $295 million in senior
unsecured notes maturing in 2013.

The Company has entered into currency and interest rate swaps with certain
lenders under its indebtedness. The average cost of debt, including its junior
subordinated notes, after taking into account other financial instruments in
place, was 9.5%. As a result of debt repayment, the Companys notional value of
swaps exceeded its debt, resulting in the realization of a loss of $23 million,
equivalent to the fair value of the overhanging swap, in fiscal 2003.
Unrealized losses associated with the Companys interest rate and cross
currency interest rate swaps amounted to $332 million. Unrealized gains related
to foreign exchange on US denominated debt amounted to $194 million as at
August 31, 2003.

Under its senior credit facility the Company is required to maintain a fair
value of its currency and interest rate swaps above a prescribed minimum. In
fiscal 2004 the Company was required to make payments of a net amount of $18
million to recoupon the swaps in order to maintain the fair value of its
interest rate and cross currency swaps within the limits prescribed. Further
strengthening of the Canadian currency and or declining interest rates may
result in further prepayment requirements.

At August 31, 2003 the outstanding principal balance of the junior subordinated
notes payable to the Companys parent was $752 million. These notes bear
interest at 12.155% and mature in 2020.

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

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

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

56



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##### 



fluctuations in foreign currency exchange
rates other than to hedge exposure on its debt issued in U.S. dollars as
discussed above.

In the Companys opinion, working capital is sufficient for the Companys
current requirements. Based on current operations, the Company believes that
cash flow from operations, together with available borrowing capacity under the
senior credit facility, will be adequate to meet its anticipated requirements
for working capital, capital expenditures, interest and principal payments.

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

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The Companys obligations under firm contractual arrangements, including
commitments for future payments under long term debt arrangements, operating
lease arrangements, purchase commitments and other long term liabilities as at
August 31, 2003 are summarized below.

Payments due by periodLess thanTotal
    
    1 year
    
    1 - 3 years
    
    3 - 5 years
    
    Thereafter$000
    
    $000
    
    $000
    
    $000
    
    $000Long term debt
    
    
    2,447,224
    
    
    
    63,078
    
    
    
    104,185
    
    
    
    171,639
    
    
    
    2,108,322Operating leases
    
    
    175,919
    
    
    
    30,045
    
    
    
    53,414
    
    
    
    39,410
    
    
    
    53,050Purchase obligations(1)
    
    
    415,100
    
    
    
    283,100
    
    
    
    57,000
    
    
    
    27,000
    
    
    
    48,000Other long term
liabilities
    
    
    150,190
    
    
    
    
    
    
    
    55,400
    
    
    
    42,000
    
    
    
    52,790Total
    
    
    3,188,433
    
    
    
    370,323
    
    
    
    257,999
    
    
    
    268,049
    
    
    
    2,262,162




---

|(1) |  | Purchase obligations represent an estimate of the Companys
contractual commitments to purchase broadcast rights and to make investments
in television programs as well as its management services agreement with The
Ravelston Corporation Limited.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NETWORK TEN

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

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

Fiscal 2003 Compared to Fiscal 2002

Network TEN television operations in Australia reported a second consecutive
record year in terms of revenues and operating profit after significant ratings
gains for its prime time schedule in its target demographic of 16-39 year olds
and significant ratings gains related to TENs successful acquisition of key
sports properties. Total revenues increased by 13% to A$661 million for the
year ended August 31, 2003, from A$587 million the previous year.

57



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

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

Operating expenses at Eye Corp. decreased by 14% to A$67 million for the year
ended August 31, 2003, from A$78 million the previous year. EBITDA of Eye
Corp. increased to A$5 million for the year ended August 31, 2003 from A$2
million the previous year.

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

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

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

Network TENs earnings, excluding interest in respect of subordinated
debentures, increased to A$212 million for the year ended August 31, 2003, from
a loss of A$23 million in the previous year. Interest in respect of
subordinated debentures was A$88 million in fiscal 2003 compared to A$7 million
in fiscal 2002. Network TENs net earnings in fiscal 2003 were $124 million
compared to a loss of $30 million in 2002.

Fiscal 2002 Compared to Fiscal 2001

In fiscal 2002 Network TEN television operations in Australia reported a record
year in terms of revenues after significant ratings gains for its prime time
schedule in both its target demographic of 16-39 year olds and other audience
categories. Total revenues increased by 16% to A$587 million for the year ended
August 31, 2002, from A$506 million the previous year. This included a record
fourth quarter for the television operations of the Company.

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

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

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

EBITDA of Eye Corp. decreased to A$2 million for fiscal 2002 from A$4 million
the previous year.

Shortly before the end of fiscal 2002, Network TEN acquired the remaining 40%
of Eye Corp. for A$10 million.

In fiscal 2002, Network TEN recorded an investment loss of A$20 million related
to the write down of other investments to fair value. In fiscal 2001, Network
TEN had a net investment income of A$35 million.

58



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##### 



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

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

Network TENs earnings, excluding interest in respect of subordinated
debentures, decreased to a loss of A$23 million for the year ended August 31,
2002, from earnings of A$123 million in the previous year. Interest in respect
of subordinated debentures was A$7 million in fiscal 2002 compared to A$71
million in fiscal 2001. Network TEN recorded a net loss of $30 million in
fiscal 2002 compared to net earnings in fiscal 2001 of $52 million.

Differences Between Canadian GAAP And U.S. GAAP

The preceding discussion and analysis has been based upon financial statements
prepared in accordance with Canadian GAAP, which differs in certain respects
from United States GAAP. The significant differences relevant to the Company
are discussed in detail in note 20 of Notes to the Consolidated Financial
Statements for the years ended August 31, 2003 and August 31, 2002 and note 40
of the Network TEN consolidated financial statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth certain information regarding the Companys
directors and senior management:

Name
    
    Position with the CompanyDavid A. Asper (3)
    
    Executive Vice President, Chairman of
the National Post, and DirectorGail S. Asper
    
    Secretary and DirectorLeonard J. Asper
    
    President, Chief Executive Officer and
DirectorDr. Lloyd I. Barber, C.C., LL.D. (1)(2)(3)
    
    DirectorJalynn H. Bennett, C.M. (1)(2)(3)
    
    DirectorRobert G. Calvert
    
    Senior Vice President, OperationsRichard C. Camilleri
    
    Chief Operating Officer (Operations),
DirectorRonald Daniels (1)
    
    DirectorDavid J. Drybrough, FCA (2)
    
    DirectorPaul V. Godfrey, C.M. (3)
    
    DirectorDoug Hoover
    
    Senior Vice President, Programming and
PromotionsRichard M. Leipsic
    
    Vice-President and General CounselJohn E. Maguire
    
    Chief Financial OfficerThe Hon. Frank J. McKenna, P.C.(1)(2)
    
    Director, Interim Chairman of the BoardThomas C. Strike
    
    Chief Operating Officer (Corporate),
Director




---

|(1) |  | Member of the Executive Compensation Committee of the Companys Board of
Directors.
|--- |  | -----------------------------------------------------------------------------------
|   
|(2) |  | Member of the Audit Committee of the Companys Board of Directors.                 
|   
|(3) |  | Member of the Pensions Committee of the Companys Board of Directors.              

59



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David A. Asperhas been one of CanWest Global Communications Corp.s
Directors since 1997 and one of the Companys Directors since 2000. Since 1998,
he has been President of Daremax Enterprises, a Winnipeg-based private
investment company. He is also Managing Director of Creswin Properties Ltd., a
private property management and development company; Past Chairman of Centre Venture
Development Corp., Winnipegs downtown development authority; and Chairman of
the Winnipeg Blue Bombers Football Club. From 1997 to 1999, Mr. Asper was one
of CanWest Global Communications Corp.s Executive Vice Presidents. Prior to
1997, he was Vice President, Programming of CanWest Global Communications Corp.
Mr. Asper is the brother of Leonard J. Asper, the Companys President and Chief
Executive Officer and Gail S. Asper, the Companys Secretary and Director.

Gail S. Asperhas been CanWest Global Communications Corp.s Secretary and
one of its Directors since 1990, and the Companys Secretary and one of the
Companys Directors since 2000. From 1991 to 1998, she served as CanWest Global
Communications Corp.s General Counsel. Ms. Asper also acts as President of the
CanWest Global Foundation, which leads CanWest Global Communications Corp.s
numerous charitable activities. Ms. Asper is currently a
director of Great-West Lifeco Inc.,
Great-West Life Assurance Company, London Life Insurance Group Inc.,
The Canada Life Assurance Company and Canada Life Financial
Corporation. Ms. Asper is the sister of Leonard J. Asper, the Companys
President and Chief Executive Officer and David A. Asper, the Companys
Executive Vice President, Chairman of the National Post and Director .

Leonard J. Asperhas been CanWest Global Communications Corp.s President
and Chief Executive Officer since September 1999 and the Companys President
and Chief Executive Officer since 2000. Mr. Asper has also been a member of
CanWest Global Communications Corp.s Board of Directors since 1997 and the
Companys Board of Directors since 2000. He joined CanWest Global
Communications Corp. in 1991 as Associate Counsel for the Global Television
Network. He served as CanWest Global Communications Corp.s Executive Vice-
President and Chief Operating Officer from October 1998 to August 1999. Prior
to this, he was Director, Corporate Development. Mr. Asper is the brother of
David A. Asper, the Companys Executive Vice President, Chairman of the
National Post and Director and Gail S. Asper, the Companys Secretary and
Director.

Dr. Lloyd I. Barberhas been one of CanWest Global Communications Corp.s
Directors since 1992 and one of the Companys Directors since 2000. He was
President Emeritus of the University of Regina from 1976 to 1990. Dr. Barber
also serves as a director of Molson Inc. and Teck Cominco Ltd.

Jalynn H. Bennetthas been one of CanWest Global Communications Corp.s
Directors since 1998 and one of the Companys Directors since 2000. She has
been President of Jalynn H. Bennett & Associates Ltd., a
Toronto-based
consulting firm since 1989. Ms. Bennett also serves as a director of several
Canadian companies, including Canadian Imperial Bank of Commerce, Sears Canada
Inc., Bombardier Inc. and Ontario Power Generation Inc.

Robert
G. Calvertbecame Senior Vice President, Operations in January, 2003.
Prior to this appointment he was Executive Vice President for the Companys
publishing properties. Mr. Calvert has over 35 years of experience in the publishing industry,
including eight years with CanWests publishing operations.

Richard
C. Camilleribecame a Director of the Company in January 2004. Mr.
Camilleri was appointed Chief Operating Officer (Operations) of CanWest Global
Communications Corp. and the Company in July 2002. Prior to his appointment to
the Company, Mr. Camilleri was Chairman, President and CEO of Arius3D Inc, and
prior to 2001, was President, Sony Music Entertainment.

Ron Danielsbecame a Director of the Company in January 2004. Mr. Daniels
is the Dean of the Faculty of Law, University of Toronto, since 1995. He is
active in public policy reformation and has contributed to several public task
forces. He was chair of the Ontario Task Force on Securities Regulation and is
a member of Toronto Stock Exchange Commission on Corporate Governance. He also
serves as a director on the board of several public companies, including Moore
Wallace Incorporated, Rockwater Capital Corporation and Great Lakes
Power Inc.

60



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David Drybroughhas been one of the Companys Directors since 2003. Mr.
Drybrough has been Vice President, Finance for Gendis Inc since his retirement
in 1997 from PricewaterhouseCoopers LLP, then known as Coopers &
Lybrand. Mr. Drybrough serves as a director of Fort Chicago
Energy Partners L.P.

Paul Godfreybecame a Director in January 2004. Mr. Godfrey is President
and Chief Executive Officer of the Toronto Blue Jays Baseball Club, a position
he has held since September 1, 2000. From November 1992 until June 2000, Mr.
Godfrey was President and Chief Executive Officer of The Toronto Sun. He
serves as a director of a number of major public Canadian companies including
Astral Media Inc. and Riocan Real Estate Investment Trust and is actively
involved in many charitable organizations. Mr. Godfrey has received many
honours including the City of Torontos highest award, the Civic Award of
Merit, and is a member of the Order of Canada.

Doug Hoover, Senior Vice President, Programming and Promotions has
provided leadership to the Companys Canadian television programming operations
since 1991. Mr. Hoover has over 20 years of experience in the
Companys television operations.

Richard M. Leipsichas been CanWest Global Communications Corp.s Vice
President and General Counsel since he joined CanWest Global Communications
Corp. in 1999. Mr. Leipsic has been the Companys Vice President and General
Counsel since 2000. From 1975 until he joined CanWest Global Communications
Corp., Mr. Leipsic practiced commercial law at Pitblado Buchwald Asper, a
Winnipeg-based law firm, where he was a senior partner. During his time at
Pitblado Buchwald Asper, Mr. Leipsic acted as CanWest Global Communications
Corp.s outside legal counsel.

John E. Maguirehas been CanWest Global Communications Corp.s Chief
Financial Officer since January 1996 and prior to that was Vice President,
Finance since September 1994. Mr. Maguire has been the Companys Chief
Financial Officer since 2000. Mr. Maguire is a Chartered Accountant. Prior to
joining CanWest Global Communications Corp., Mr. Maguire worked with Coopers
& Lybrand from 1980 to 1987.

The Hon. Frank J. McKennahas been one of CanWest Global Communications
Corp.s Directors since 1999 and one of the Companys Directors since 2000. Mr.
McKenna has been a member of the law firm of McInnes Cooper as Counsel since
1998. From 1987 to 1997, he was the Premier of the Province of New Brunswick.
Mr. McKenna also serves as a director of several public companies, including
Bank of Montreal, Noranda Inc., Zenon Environmental Inc., General Motors
Acceptance Corporation of Canada, Limited, Minacs Worldwide Inc., Shoppers Drug Mart Corporation, and Major Drilling Group International Inc.

Thomas C. Strikebecame a Director of the Company in January, 2004. Mr.
Strike was appointed Chief Operating Officer (Corporate) of CanWest Global
Communications Corp. and the Company in July 2002. Prior to his latest
appointment, Mr. Strike was CanWest Global Communications Corp.s Chief
Operating Officer since September 1999 and the Companys Chief Operating
Officer since 2000. Prior to that, Mr. Strike was Executive Vice President, and
prior to January 1996, he was Executive Vice President and Chief Financial
Officer. He is a Chartered Accountant. Prior to joining CanWest Global
Communications Corp.s, Mr. Strike worked with Coopers & Lybrand from 1978 to
1986.

All of the Companys directors and senior management, other than Mr.
Daniels, Mr. Godfrey, Mr. Drybrough and Mr. Camilleri have served in their
respective positions since the Companys incorporation on September 28, 2000.
Mr. Drybrough joined the Companys Board of Directors in
March 2003, Mr. Godfrey
and Mr. Daniels joined the Companys Board of Directors in January 2004, and
Mr. Camilleri was appointed to his executive role in July 2002.

Each Director serves a one-year term and holds office until the next
annual general shareholders 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 his or her death, removal or other cause. The Company has no
arrangements with any of our directors providing for the payment of benefits
upon termination of service as director.

61



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B. Compensation

Compensation of Directors

Directors of the Company who are employees or otherwise retained by the Company
are not entitled to receive any additional remuneration for serving as
directors. All other directors are entitled to receive an annual directors
fee of $25,000 and a maximum of $1,500 for each meeting attended. In January
2004, the Board of Directors increased the annual directors fee to $30,000.
The Chairman of each committee of the Board of Directors is entitled to an
additional $5,000 per annum for acting as such and directors are entitled to
$3,000 per annum for each committee on which they serve. All directors are
reimbursed for travel and other reasonable expenses incurred in attending board
meetings. In fiscal 2003 aggregate directors fees of $365,417 were paid by
the Company. I.H. Asper was Chairman of the Board of Directors effective
February 1, 2003 until his death on October 7, 2003, and received compensation
based upon an annual fee of $200,000.

Until fiscal 2004, the directors were also entitled to participate in the
Executive Stock Option Plan. In each of January 2003 and November 2003, each
non-executive director serving at that time received a grant of options to
purchase 7,500 Subordinate Voting Shares of the Companys parent, CanWest
Global Communications Corp. These options were granted in respect of each of
the 2002 and 2003 fiscal years. These options, which vest immediately on
grant, have a 10-year term and may be exercised at an exercise price of $7.21
per share and $12.90 per share for the January and November grant dates
respectively.

The Board of Directors has determined that directors will not receive grants of
options in the future and have approved a Deferred Share Unit (DSU) Plan. The
purpose of the plan is to promote a greater alignment of interests between the
individual director and the shareholders of the Company. The Board has also
introduced stock ownership guidelines which require non-executive directors to
own stock either directly or in the form of DSUs in the Companys parent,
CanWest Global Communications Corp., equivalent to four times the annual
directors fee. Directors will have a period of 5 years to meet this
guideline. Upon implementation of the DSU Plan, non-executive directors may
elect to receive their remuneration in cash, DSUs or a combination thereof.
Until the stock ownership threshold is reached, directors will be required to
receive 50% of their annual retainer in DSUs.

Executive Compensation

The following table details the annual and long term compensation of
individuals who were, on August 31, 2003 the Companys Chief Executive Officer
and certain other executive officers, which are referred to as named executive
officers, for the 2003 fiscal year:

Annual Compensation
    
    Long Term CompensationSecuritiesName and Principal
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnderlyingPosition with the
    
    
    
    
    
    
    
    
    
    Other Annual
    
    Options
    
    All OtherCompany
    
    Salary
    
    Bonus (4)
    
    Compensation(1)
    
    Granted (2)
    
    CompensationLeonard
J. AsperPresident and Chief
Executive Officer
    
    $
    650,000
    
    
    $
    678,906
    
    
    $
    
    
    
    
    60,000
    
    
    
    Robert
G.
Calvert (3 )Senior Vice President,
Operations
    
    $
    400,000
    
    
    $
    350,000
    
    
    
    
    
    
    
    12,500
    
    
    
    Richard
C.
CamilleriChief Operating
Officer, (Operations)
    
    $
    600,000
    
    
    $
    360,000
    
    
    $
    
    
    
    
    20,000
    
    
    
    Doug
G.
HooverSenior Vice
President,
Programming &
Promotion
    
    $
    411,600
    
    
    $
    311,375
    
    
    $
    3,170
    
    
    
    6,250
    
    
    
    Thomas
C. StrikeChief Operating
Officer (Corporate)
    
    $
    500,000
    
    
    $
    316,500
    
    
    $
    17,714
    
    
    
    40,000
    
    
    
    


62



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##### 





---

|(1) |  | The value of rights and benefits for each named executive officer
is less than the lesser of $50,000 and 10% of the total annual base
compensation and bonuses. Amounts shown reflect imputed interest
benefit on loans pursuant to CanWest Global Communications Corp.s
Management Share Purchase Plan and other indebtedness.                                                                                                                                                           
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Option exercise price per share was market price per share of the
Subordinate Voting Shares as at the date the options were granted.                                                                                                                                                                                                                                                                                                                                                       
|   
|(3) |  | Mr. Calvert was appointed to his position January 27, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(4) |  | These executives are eligible to receive annual bonuses ranging
from 50% to 150% of their base salary. Awards are determined based on
achievement of financial and personal performance objectives. The
performance measures on which awards are determined include: net
earnings, diluted earnings per share, return on average equity and
achievement of personal objectives. In addition, awards for
overachievement of financial objectives of 10% to 15% of base salary
are available.

Option Grants During the Most Recently Completed Financial Year

The Company has adopted an Executive Stock Option Plan as part of its Amended
and Restated Combined Share Compensation Plan under which directors and
eligible executives of the Company are entitled to receive options to acquire
Subordinate Voting Shares or Non-Voting Shares of the Companys parent, CanWest
Global Communications Corp., depending upon each executives citizenship. The
Executive Stock Option Plan is administered by the Board of Directors of the
Company, which establishes the option price per share on the date on which any
options are granted. In all cases, the option price per share has been the
market value of the Subordinate Voting Shares as at the date the option was
granted and in no case has the option term exceeded 10 years. Options granted
up to December 31, 1995 are exercisable in equal annual installments over a
5-year period at any time in each year, unless the Board of Directors
determines otherwise. Options granted from January 1, 1996 to January 1, 2000
vest in equal annual installments over five years in the twelfth month of each
year of the option with the exceptions of options granted to Directors which
vest immediately, and options granted to P.D. Viner in July 1997 and in July
1998 which vested in equal annual amounts over the period to July 2002.
Options granted after January 1, 2000 and before November 2002 are exercisable
over a six year period with one third of the options vesting after every two
years. Options granted subsequent to November 2002 are exercisable over a five
year period with 40% vesting after 2 years and 20% vesting each year
thereafter. The aggregate number of Subordinate Voting Shares and Non-Voting
Shares which have been reserved for issue under this plan, together with any
Subordinate Voting Shares and Non-Voting Shares reserved for issue under any
options for service or other employee stock purchase or option plans
established from time to time may not exceed an aggregate of approximately 13.8
million shares and no individual optionee may hold options to purchase an
aggregate number of Subordinate Voting Shares and Non-Voting Shares in excess
of 5% of the issued and outstanding Subordinate Voting Shares and Non-Voting
Shares at the date of the grant of the option.

Options granted to Executives since November 2002 are granted according to a
formula which is, in part, based upon achievement of specified financial
objectives. Directors of the Company received options in January 2003 in
respect of the fiscal year ended August 31, 2002 and in November 2003 in
respect of the fiscal year ended August 31, 2003. The Board of Directors has
determined that directors will not receive grants of options in the future and
have approved introduction of a Deferred Share Unit Plan (see Compensation of
Directors).

Information as to options granted in respect of fiscal 2003 to named executive
officers of the Company under the Executive Stock Option Plan is shown in the
table below:

63



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##### 



Market Value of% of Total
    
    
    
    
    
    Subordinate VotingSubordinate Voting
    
    Options Granted
    
    
    
    
    
    Shares UnderlyingShares Under
    
    to Employees
    
    Exercise
    
    Options on the DateOption
    
    in respect of
    
    Price
    
    of Grant
    
    ExpirationName
    
    #
    
    fiscal 2003
    
    $/Security
    
    $/Security
    
    DateL.J. Asper
    
    
    30,000
    
    
    
    
    
    
    
    7.21
    
    
    
    7.21
    
    
    January 201330,000
    (1)
    
    
    
    
    
    
    12.90
    
    
    
    12.90
    
    
    November 201360,000
    
    
    
    13.1
    %R.G. Calvert
    
    
    12,500
    
    
    
    2.7
    %
    
    
    7.21
    
    
    
    7.21
    
    
    January 2013R.C. Camilleri
    
    
    20,000
    
    
    
    4.4
    %
    
    
    7.21
    
    
    
    7.21
    
    
    January 2013D.G. Hoover
    
    
    6,250
    
    
    
    1.4
    %
    
    
    7.21
    
    
    
    7.21
    
    
    January 2013T.C. Strike
    
    
    20,000
    
    
    
    
    
    
    
    7.21
    
    
    
    7.21
    
    
    January 201320,000
    (1)
    
    
    
    
    
    
    12.90
    
    
    
    12.90
    
    
    November 201340,000
    
    
    
    8.7
    %




---

|(1) |  | Performance based award in respect of fiscal year ended August 31, 2003.
|--- |  | ------------------------------------------------------------------------

Executive Pension Benefits

Retirement Compensation Arrangement

Certain senior executives of the Company are covered under a Retirement
Compensation Arrangement (RCA). Under the RCA, the benefit accrual is equal to
2.25% of the executives Final Average Earnings multiplied by the number of
years the executive has been continuously employed by the Company. Final
Average Earnings are defined as the average of the executives salary plus
incentive bonus in each of the best 3 consecutive years out of the last 10
years of the executives employment with the Company. Normal retirement is at
age 62 and the pension is payable for only the lifetime of the executive.
Participants can retire as early as age 50 with 5 years service. Pensions
payable on early retirement will be reduced by 0.5% for each month that
retirement occurs prior to age 62. For purposes of the RCA benefits payable to
the named executive officers indicated below, the Final Average Earnings are
capped at $500,000. Benefits accrued under the RCA are not reduced by any
social security or Canada Pension Plan benefits. The Company has
accrued $4.7 million related to this plan (for all participants) as at August 31,

64



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##### 



2003. The table below shows the pension amounts which would be payable at
normal retirement based on various levels of compensation and service.

Years of Credited ServiceFinal AverageEarnings
    
    15
    
    20
    
    25
    
    30
    
    35$125,000
    
    
    42,187.50
    
    
    
    56,250.00
    
    
    
    70,312.50
    
    
    
    84,375.00
    
    
    
    98,437.50150,000
    
    
    50,625.00
    
    
    
    67,500.00
    
    
    
    84,375.00
    
    
    
    101,250.00
    
    
    
    118,125.00175,000
    
    
    59,062.50
    
    
    
    78,750.00
    
    
    
    98,437.50
    
    
    
    118,125.00
    
    
    
    137,812.50200,000
    
    
    67,500.00
    
    
    
    90,000.00
    
    
    
    112,500.00
    
    
    
    135,000.00
    
    
    
    157,500.00225,000
    
    
    75,937.50
    
    
    
    101,250.00
    
    
    
    126,562.50
    
    
    
    151,875.00
    
    
    
    177,187.50250,000
    
    
    84,375.00
    
    
    
    112,500.00
    
    
    
    140,625.00
    
    
    
    168,750.00
    
    
    
    196,875.00300,000
    
    
    101,250.00
    
    
    
    135,000.00
    
    
    
    168,750.00
    
    
    
    202,500.00
    
    
    
    236,250.00400,000
    
    
    135,000.00
    
    
    
    180,000.00
    
    
    
    225,000.00
    
    
    
    270,000.00
    
    
    
    315,000.00500,000
    
    
    168,750.00
    
    
    
    225,000.00
    
    
    
    281,250.00
    
    
    
    337,500.00
    
    
    
    393,750.00


The above table is applicable to L.J. Asper, R. C. Camilleri, D.G. Hoover and
T.C. Strike. Credited service at January 1, 2004 will be as follows:



| | Mr. L.J. Asper, 12.83 years;
Mr. T.C. Strike, 17.42 years
Mr. R.C. Camilleri, 1.50 years; and
Mr. D.G. Hoover, 21.00 years
| | --------------------------------------------------------------------------------------------------------------------------

Supplemental Executive Retirement Arrangement

Certain executives of the Company are covered under a Supplemental Executive
Retirement Arrangement (SERA). Under this arrangement the pension accrual is
equal to 1.25% of the Executives Final Average Earnings up to a prescribed
amount plus 1.75% of the Executives Final Average Earnings in excess of the
prescribed amount multiplied by the Executives Credited Service. Final
Average Earnings are defined as the greatest of (i) the average of the
Executives pensionable earnings during the final 60 months immediately prior
to retirement, termination, or death; (ii) the average of the Executives
highest 5 calendar years of pensionable earnings (excluding overtime) during
the last ten calendar years of employment, plus the annual average of overtime
earnings over the period of employment since 1975. Pensions payable on early
retirement will be reduced by 0.3333% for each month that retirement occurs
prior to age 62 with 10 years service. For purposes of this Plan, the total
pension payable is limited to the Maximum Pension allowable under the Income
Tax Act. For the year 2003, this limit is equal to $1,722.22 x years of
credited service. Benefits under the SERA are integrated with the YMPE under
the Canada Pension Plan, but are not further reduced by the CPP Pension. The
Company has accrued
$5.4 million related to this plan (to cover all
participants). The table below shows the maximum pensions payable at various
service levels.

65



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Years of Credited ServiceFinal AverageRemuneration
    
    15
    
    20
    
    25
    
    30
    
    35$
    125,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278150,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278175,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278200,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278225,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278250,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278300,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278400,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278500,000
    
    
    25,833
    
    
    
    34,444
    
    
    
    43,056
    
    
    
    51,667
    
    
    
    60,278


The above table is applicable to Mr. Calvert. Credited service at January 1,
2004 will be 8 years.

Executive Employment Agreements

Leonard J. Asper

The Company proposes to enter into a management services agreement with CanWest
Direction Ltd. (Direction) with respect to the services of Leonard J. Asper.
In respect of services to be provided by Leonard J. Asper as President and
Chief Executive Officer of the Company, the proposed agreement will provide for
a base annual fee of $650,000 and incentive fees up to 150% of base fee based
upon agreed financial and personal objectives and includes health, life
insurance, pension and similar benefits available to all the Companys
executives. The proposed agreement will require that Mr. Asper not engage or
invest in, own, manage, operate, finance, control or participate in any
business that competes with the Company for a period of 12 months following
expiration of his employment with the Company. Should Direction terminate the
agreement within six months following a change in control of the Company,
Direction is entitled to receive 18 months basic fees and pro-rated incentive
fees for the fiscal year in which the termination occurs.

Robert G. Calvert

The Company has entered into an employment agreement with Robert Calvert, its
Senior Vice President, Operations. The agreement provides for a base annual
salary of $400,000, incentive compensation up to 60% of base salary based upon
agreed financial and personal objectives and includes health, life insurance,
pension and similar benefits available to all the Companys executives.

In the event of Mr. Calverts resignation or termination of employment by the
Company, he is precluded from entering into a consulting arrangement or
employment by companies engaged in television broadcasting or newspaper
operations other than CanWest in any market where the Company has operations
for a period of up to 12 months subsequent to leaving CanWest. Mr. Calvert is
entitled to 24 months salary in the event of termination of employment without
just cause, death or permanent disability, or resignation of employment after
August 31, 2004.

Richard C. Camilleri

The Company has entered into an employment agreement with Richard C. Camilleri,
its Chief Operating Officer (Operations). The agreement provides for a base
annual salary of $600,000, incentive compensation up to 60% of base salary
based upon agreed financial and personal objectives and includes health, life
insurance, pension and similar benefits available to all the Companys
executives. The agreement provides the Company with the right to preclude Mr.
Camilleri from employment by companies other than CanWest in the countries in
which CanWest has operations for a period of up to 18 months subsequent to
leaving CanWest. Under such circumstances, Mr. Camilleri is entitled to
continue to receive salary and health benefits for a period up to 18 months.

66



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C. Board Practices

The Toronto Stock Exchange (the TSX) requires that every listed company
disclose its corporate governance practices annually and relate their corporate
governance practices to each of the TSX Guidelines for Effective Corporate
Governance (the TSX Guidelines). A description of the Companys corporate
governance practices follows, referring to each of the guidelines established
in the TSX Guidelines.

In this Statement, the terms unrelated director and outside director have
the meaning given to those terms in the TSX Guidelines. An unrelated
director is a director who is independent of management and is free from any
interest and any business or other relationship which could, or could
reasonably be perceived to, materially interfere with the directors ability to
act with a view to the best interests of the Company, other than interests and
relationships arising from shareholding. An outside director is a director
who is not a member of management. As well, the term independent director as
used in this statement is used to describe an unrelated director who is free
from any interests in or relationships with either the Company or the
significant shareholder of the Company or any affiliate of the significant
shareholder. In determining the independence of directors, reference was also
made to the Corporate Governance Rules adopted by the New York Stock Exchange
and approved by the Securities and Exchange Commission on November 4, 2003.
For the purposes of this Statement, the Board has determined that directors who
are not independent under the New York Stock Exchange Corporate Listing
Standards are considered to be related.

Mandate of the Board

The mandate of the Board of Directors is to supervise the management of the
business and affairs of the Company and to act with a view to the best
interests of the Company. In fulfilling its mandate, the Board, among other
matters, is responsible for:



| |  |  | reviewing and assessing the operations of the Company with a view
to ensuring the best performance is achieved;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | reviewing and approving major development activities of the Company
including major acquisitions, investments and divestitures outside the
ordinary course of business;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | approving operating and capital budgets;
| | - |  | ----------------------------------------



| |  |  | reviewing and approving the dividend policy and declaration of dividends;
| | - |  | -------------------------------------------------------------------------



| |  |  | appointing the Chief Executive Officer;
| | - |  | ---------------------------------------



| |  |  | reviewing and assessing the performance of the senior management
including the Chief Executive Officer;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | reviewing and approving prospects for additional senior management positions;
| | - |  | -----------------------------------------------------------------------------



| |  |  | reviewing and approving major financing;
| | - |  | ----------------------------------------



| |  |  | reviewing and approving the quarterly and annual financial statements;
| | - |  | ----------------------------------------------------------------------



| |  |  | reviewing and approving compensation of the Chief Executive Officer and other senior executives;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | reviewing the Companys share compensation plan for employees, management and executives;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | reviewing and approving any securities offerings; and
| | - |  | -----------------------------------------------------



| |  |  | reviewing the internal control and management information systems.
| | - |  | ------------------------------------------------------------------

Inherent in the mandate of the Board is the responsibility to review the
Companys strategic planning, risk management, succession planning (including
appointing, training and monitoring senior management), shareholder
communications and the integrity of the Companys internal control and
management information systems. These matters are routinely and expressly
dealt with by the Board throughout the year.

There were nine meetings of the Board of Directors held in fiscal 2003. Seven
meetings of the Board are currently scheduled for fiscal 2004. On a regular
basis, regardless of whether a meeting is scheduled, all directors receive
information including a report from the Chief Executive Officer, a report on
corporate development activities,

67



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operations reports, a financial overview and other pertinent information. All
executives are available for discussions with the directors concerning any
questions or comments which may arise between meetings.

Board Composition

The Companys Board currently consists of eleven directors. The relatively
small size of the Board has enabled it to be extremely flexible with regard to
scheduling meetings, including unplanned meetings which are called in order to
review new opportunities. The Board is thus able to act quickly and remain
well informed at all times.

Nominees for election to the Board are selected having due regard for
geographic diversity, considering the primary markets in which the Company
operates and the appropriate expertise and background to contribute and support
the Companys strategy and operations.

The Board consists of six unrelated directors and five related directors. The
six unrelated directors are: Dr. Lloyd I. Barber, C.C., S.O.M., LL.D; Ms.
Jalynn H. Bennett, C.M.; Mr. Ron Daniels; Mr. David J. Drybrough, FCA; Mr. Paul
V. Godfrey, C.M. and The Honourable Frank J. McKenna, P.C. The remaining five
directors are related. Accordingly, the Board will be constituted with a
majority of individuals who qualify as unrelated directors.

In determining whether the directors were unrelated, the Board examined the
factual circumstances of each director and considered them in the context of
many factors and concluded that all the individuals in question were
independent from management and were free from any interest and any business or
other relationship which would or could reasonably be perceived to, materially
interfere with their ability to act in the best interests of the Company.

Independence from Management

In order to ensure that the Board of Directors can function independently from
management, the Company has separated the roles of Chairman and Chief Executive
Officer through the appointment of the Hon. Frank J. McKenna, P.C. as Interim
Chairman of the Board of Directors and Mr. Leonard J. Asper as President and
Chief Executive Officer. Further, independent directors chair each of the
Board of Directors, Audit Committee, Compensation Committee and Pensions
Committee. Each Committee as well as the Board as a whole meet in-camera
without management present. Individual directors may, with the consent of the
Chairman of the Governance and Nominating Committee of the Board, engage
outside advisors at the expense of the Company.

Board Committees

In fiscal 2003, the Board of Directors had 4 committees: the Audit Committee,
the Compensation Committee, the Executive Committee and the Pensions Committee.
The Chair of the Board of Directors is an ex-officio member of all committees
of the Board, subject to the limitations set out in the by-laws of the Company.
For fiscal 2004, the Board has disbanded the Executive Committee and
established a Governance and Nominating Committee which consists of the Board
as a whole.

i) Audit Committee

The Audit Committee is composed entirely of independent directors in compliance
with the Guidelines established in the TSX Guidelines. Under the terms of the
Audit Committee Charter, the Committee is responsible for, among other things,
reviewing the Companys financial reporting procedures, internal controls,
recommending the appointment of the external auditors as well as reviewing the
performance of the Companys external auditors. The Committee also establishes
the external auditors compensation. Since fiscal 2002, the Audit Committee
has had in place a policy limiting the scope of the external auditors services
to audit and audit related activities, including tax services. Prior approval
of any audit related expenses in excess of $50,000 is required. The Audit
Committee has direct communication channels with the internal and external
auditors to discuss and review specific issues as appropriate. The Committee
is also responsible for reviewing the quarterly and the annual financial
statements and related news releases as well as Managements Discussion and
Analysis of Financial Results prior to their approval by the Board of
Directors. The Committee also receives and reviews quarterly, managements
report on compliance with the Companys policy on full and non-selective
disclosure of material information.

68



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The Audit Committee met seven times in fiscal 2003, during which time its
members were Dr. Lloyd I. Barber, C.C., S.O.M., LL.D., Ms. Jalynn H. Bennett,
C.M., Mr. David J. Drybrough, FCA and The Honourable Frank McKenna, P.C. Ms.
Jalynn H. Bennett, C.M. is Chair of the Audit Committee. All of the members of
the Audit Committee are financially literate and the Committee has determined
that Dr. Barber, Ms. Bennett and Mr. Drybrough qualify as financial experts.

ii) Compensation Committee

The Compensation Committee is composed entirely of unrelated directors and
makes recommendations to the Board on, among other things, executive
compensation, including the compensation of the Chief Executive Officer, and
reviews other aspects of executive compensation, such as the Companys share
compensation plans. The Committee also ensures that the Company complies with
corporate and securities legislation with respect to executive compensation
disclosure in the annual information circular. The Committee held four
meetings in fiscal 2003 during which time its members were the Honourable Frank
J. McKenna, P.C., Mr. I.H. Asper, O.C., O.M., Q.C., LL.D., Dr. Lloyd I. Barber,
C.C., S.O.M., LL.D. and Jalynn H. Bennett, C.M. The Honorable Frank J.
McKenna, P.C. is Chair of the Compensation Committee.

iii) Pensions Committee

The Pensions Committee is composed of three directors. The Committee is
responsible for overseeing matters relating to the investment policies and
performance of the Companys pension funds. The Committee held one meeting in
fiscal 2003 during which time its members were Dr. Lloyd I. Barber, C.C.,
S.O.M., LL.D., Mr. David A. Asper and Ms. Jalynn H. Bennett, C.M. Dr. Lloyd I.
Barber, C.C., S.O.M., LL.D. is Chair of the Pensions Committee.

Corporate Governance

As a result of the TSXs corporate governance rules, the Board of Directors
passed a resolution authorizing the Board to expressly assume responsibility
for developing and monitoring the Companys approach to corporate governance
issues. The Corporate Secretary who is also a director has been appointed as
the person responsible for ensuring all corporate governance matters are
reviewed by the Board and that procedures recommended in the guidelines
established in the TSX Guidelines are followed, where appropriate.

Decisions Requiring Board Approval

In addition to those matters which must by law be approved by the Board, the
Board reviews and approves dispositions, acquisitions or investments which are
outside the ordinary course of business of the Company. The Board also reviews
and approves operating and capital budgets. The Board also reviews the
recommendations of the Compensation Committee as to the adequacy and form of
compensation of the directors to ensure that compensation realistically
reflects the responsibilities and risks involved in being an effective
director. The Board also approves changes in senior management. The directors
have access to management and the Companys advisors in order to assist in
their understanding of proposed Board actions and the implications of voting
for or against such actions. In addition, Committees of the Board are
authorized by the Board from time to and as appropriate to retain outside
advisors at the Companys expense.

69



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Because the Company focuses on new development opportunities, at any given time
a significant number of investment opportunities may be under investigation by
management. The Board receives monthly reports on these activities and Board
meetings are held to review and approve the corporate development transactions.
As a result of its relatively small size, the Board is very flexible and
management has been able to consult regularly with the Board to seek approval
for any activities outside the normal course of business.

With respect to establishing specific corporate objectives for the Company and
the Chief Executive Officer, the Board is satisfied that such objectives (both
long and short term) are set and regularly discussed at Board meetings.

Board Performance

It is the responsibility of the Chairman of the Board to ensure the effective
operation of the Board and to ensure the Board discharges its responsibilities.
Because of the relative youth of the Company and the small Board of Directors,
it has not been necessary to create formal committees or to convene specific
meetings to assess the effectiveness of the Board as a whole, the committees of
the Board or the contribution of individual directors and the quality of
information provided to the Board. The Board has established an orientation
and education program for new director recruits. To date, issues regarding
quality of information, suggestions regarding the appointment of new directors
and issues regarding Board performance have been raised and have been regularly
explored at meetings of the Board of Directors. The Board is developing a
Charter of Expectations as part of a formal process for evaluating the
effectiveness of the Board and its Committees.

Shareholder Feedback

The Company has a Director of Communications who, working with the Secretary
and other senior executives of the Company, responds promptly to all
shareholder inquiries. To date, the Company believes that all shareholder
inquiries have been dealt with in a manner satisfactory to the particular
shareholder.

Expectations of Management

The Board of Directors expects management, among other things, to work
diligently towards enhancing the Corporations performance by ensuring that
existing operations are managed prudently and that new profit centres are
sought. It is expected that management will provide the Board with all
pertinent information regarding the operations and corporate development
activities of the Company so that the Board can properly assess whether these
goals are being met. The Company believes that the Board of Directors has been
kept fully informed of the Companys activities. Management is expected and
strives to provide as much information as is required or requested to ensure
that the Board can participate actively in important discussions on the
Companys future, discussions regarding strategic planning and discussions
regarding the assessment of performance. The Board of Directors expects
management to be completely forthcoming with respect to its assessment of
opportunities and performance so that the Board can make reasoned decisions
regarding the same.

The Board will continue to monitor the nature of the information requested by
and provided to the Board so that it is able to determine if the Board can be
more effective in identifying issues and opportunities for the Company.

D. Employees

The Companys Canadian television operations employ approximately 2000 people
on a full-time and full-time equivalent basis. Approximately 55% of the
Companys Canadian broadcasting employees are employed under a total of 15
collective agreements, 12 of which are with the Communications, Energy and
Paperworkers Union of Canada. Three of these agreements are in renegotiation
or conciliation, an additional three agreements will expire in 2004 and a
further three will expire in 2005.

CanWest Publications has approximately 5,300 full-time and full-time equivalent
employees. Approximately 53% of these employees are employed under a total of
49 collective agreements. Six of these collective agreements are in
negotiation, an additional one will expire in 2004 and a further 25 will expire
in 2005. In general, the Companys collective agreements cover operations at
particular publications or business locations, rather than multiple locations.

70



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Canadian newspaper operations experienced one work stoppage in the year.
Collective bargaining in Victoria at the Times-Colonist commenced in April 2002
to renew agreements expiring December 31, 2001. Four unions representing 300
employees went on strike from September 2, 2002 to November 4, 2002. The term
of the new collective agreement runs to December 31, 2004. Operations have
returned to normal with no further disruption expected. Collective bargaining
in Vancouver between the Pacific Newspaper Group and the CEP, Local 2000,
representing 1,050 employees commenced during the month of October 2001 for the
renewal of the 1998-2001 collective agreement. After continuous bargaining,
the CEP, Local 2000 engaged in strike activity on July 1, 2002 affecting the
publication of The Vancouver Sun and the Province newspapers. The parties
reached a settlement on July 18, 2002 and both newspapers resumed publication
for the July 22, 2002 editions. The term of the new collective agreement runs
to November 30, 2004. Operations at the Pacific Newspaper Group have since
been without disruption and no significant labour issues have developed as a
result of the dispute.

In Australia, Network TEN and Eye Corp. employ a total of approximately 1,280
full-time employees and management estimates 30% are represented by labor
unions.

In New Zealand, TV3 and TV4 have 309 employees, and CanWest NZ Radio has 580
employees. In the Republic of Ireland, TV3 has 140 employees. None of the
Companys employees in New Zealand or the Republic of Ireland are represented
by trade unions.

CanWest employs approximately 53 people at its corporate and international
offices. The Companys Business Services Centre, including finance and
information technology services, employs 181 people, and Reach Canada employs
209 people.

Collective bargaining agreements to which the Company is subject vary as to the
number of employees covered and content. The Company believes it has
satisfactory relationships with unionized and non-unionized employees.

E. Share Ownership

The Company is an indirect wholly-owned subsidiary of CanWest Global
Communications Corp, the voting power of which is controlled by trusts for the
benefit of members of the family of the late Israel Asper, including David A.
Asper, Gail S. Asper, and Leonard J. Asper, who are senior officers and
directors of the Company and Mrs. Ruth M. Asper.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

See Item 6.E. Share Ownership.

B. Related Party Transactions

The Company has entered into various transactions with management and other
related parties including the following, which it believes are on substantially
comparable terms as those which it could have obtained with unrelated parties
on an arms length basis:



| |  | For the year ended August 31, 2003, the Company paid $1.8 million in
aircraft lease payments to CanWest Global Communications Corp. and
expects to make similar payments in the future.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | For the year ended August 31, 2003 the Company paid $0.2 million in
operating lease payments to a company which is 50% owned by a company
affiliated with CanWest Communications Corporation, the parent company
of CanWest Global Communications Corp.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As of August 31, 2003, the Company has outstanding advances due from
CanWest Global Communications Corp. of $82.1 million. In the future,
similar advances must be made in accordance with the terms of the
indenture governing the notes.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

71



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##### 





| |  | The Company has had a non-interest bearing loan outstanding during the
previous year in the principal amount of $60.5 million to CanWest
Entertainment Inc., the proceeds of which were used to acquire
Fireworks Entertainment Inc.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As of August 31, 2003, the Company has loans
outstanding to Fireworks Entertainment Inc. in the principal
amount of $372.4 million. The proceeds of such loans were used
for production of content and related operating expenses, as well
as a $110.0 million loan used to acquire a film and program
library. The loan to Fireworks bears interest at the Canadian
prime rate. The loans due from Fireworks Entertainment Inc. are
subject to measurement uncertainty. The estimated recoverable
amounts of these loans depend on estimates of the profitability
of Fireworks, which, in turn, depends upon assumptions regarding
future conditions in the film and entertainment industry and the
exploitation of the films included in Fireworks library. These
assumptions are limited by the availability of reliable industry
comparative data and the uncertainty of prediction concerning
future events. Accordingly, by their nature, estimates of
recoverable amounts are subjective.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | For the year ended August 31, 2003 the Company acquired broadcast
rights for various television programs from Fireworks in the amount of
$6.6 million.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | As at August 31, 2003 the Company had senior subordinated notes held
by CanWest Communications Corporation, the parent company of CanWest
Global Communications Corp. totaling $58.1 million (US$41.9 million).
This debt, issued in May 2001, matures May 15, 2011 and bears interest
at 10.625%. Interest expense related to this debt totaled $6.4
million in fiscal 2003 (2002-$6.0 million). During fiscal 2003,
CanWest Communications Corporation exchanged these Canadian dollar
denominated notes for United States dollar denominated notes. The
exchange was completed pursuant to the provisions of the original note
indenture.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, CanWest Global Communications Corp. has approved stock based
compensation programs, the purpose of which are to provide the Companys
employees and certain of the Companys directors and the directors of the
Companys subsidiaries with the opportunity to participate in the growth and
development of CanWest Global Communications Corp. through the granting of
options on CanWest Global Communications Corp. shares and share purchase loans.

On November 16, 2000, CanWest Global Communications Corp. acquired
substantially all of Hollingers Canadian newspapers and Internet assets,
including a 50% interest in the National Postthrough its wholly-owned
subsidiary, 3815668 Canada Inc., the Companys immediate parent, which then
transferred those assets to the Company. The purchase price for CanWest
Publications was approximately $3.1 billion, based upon an agreed value for
CanWest Global Communications Corp.s equity, subject to adjustment for future
operating results and working capital.

The consideration for the acquisition of CanWest Publications consisted of:



| |  |  | $1,985.5 million in cash;
| | - |  | -------------------------



| |  |  | approximately $766.8 million of holding company notes issued by the
Companys immediate parent to Hollinger; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | 24.3 million non-voting shares and 2.7 million series 1 preference
shares issued by CanWest Global Communications Corp. to Hollinger,
which were accepted in payment of $617.6 million of the purchase price.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The value ascribed to the non-voting shares and series 1 preference shares was
approximately $375.5 million under Canadian GAAP. The Companys immediate
parent issued shares to CanWest Global Communications Corp. for the
consideration paid in shares by CanWest Global Communications Corp. The Company
acquired CanWest Publications from its immediate parent in return for cash,
share consideration and notes payable to its immediate parent. The notes
payable to the Companys immediate parent and their related service costs are
payable, at the

72



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##### 



Companys option, in cash or shares. In connection with the acquisition of
CanWest Publications, CanWest Global Communications Corp. entered into a
management services agreement with Ravelston and The National Post Company.
Ravelston provides advisory, consultative, procurement and administrative
services to the Companys Canadian publishing operations and to The National
Post Company for an annual fee of $6.0 million.

Subsequently, the Company acquired the 50% of the National Postit did not
already own.The purchase price for such acquisition consisted of nominal cash
consideration and other consideration in the form of agreements and
undertakings exchanged by the parties, including the elimination of certain of
the purchase price adjustments. In addition, on September 30, 2001, Hollinger
was required to make payment to The National Post Company in respect of a pre-payment of future losses or cash requirements of The National Post Company.

In September 2001, the Company assumed the day-to-day management of the
National Post. In addition, in September 2001, the executives holding the
positions of chairman, chief executive officer, publisher and assistant
publisher of the National Postresigned and the Company filled the resulting
vacancies.

Indebtedness of Directors and Senior Officers Under Securities Purchase
Programs

All of the Companys employees and non-executive directors are eligible to
participate in the CanWest Global Communications Corp. Employee Share Purchase
Plan and certain of the Companys management employees are eligible to
participate in the CanWest Global Communications Corp. Management Share
Purchase Plan, each of which are part of CanWest Global Communication Corp.s
Amended and Restated Combined Share Compensation Plan. Participants may
acquire, annually, subordinate voting shares or non-voting shares of CanWest
Global Communications Corp., depending upon the participants citizenship, with
a purchase price equal to the market price per share of the relevant shares up
to a maximum of the amount of their annual directors fees in the case of
directors; 5% of their annual base compensation in the case of other
participants in the CanWest Employee Share Purchase Plan; and 10% of their
annual base compensation in the case of participants in the CanWest Management
Share Purchase Plan. All participants are eligible to receive interest-free
share purchase loans from CanWest Global Communications Corp. Such loans are
repayable in full by December 31 of the year in which the loans were made.

The aggregate amount outstanding to CanWest Global Communications Corp. and its
subsidiaries for indebtedness of present and former directors, officers and
employees, in connection with the purchase of CanWest Global Communication
Corp.s securities, excluding routine indebtedness, as of February 13, 2004 was
approximately $446,871.

Other Indebtedness to CanWest Global Communications Corp.

The aggregate amount outstanding to CanWest Global Communications Corp. and its
subsidiaries for indebtedness of present and former directors, officers and
employees, borrowed not in connection with the purchase of securities of the
Company as of February 13, 2004, was approximately $592,158. This amount
includes loans to Mr. Strike, Mr. Leipsic and Mr. Hoover in connection with the
purchase of their residences with principal amounts outstanding of $384,765,
$99,393, and $60,000, respectively. The highest principal amount outstanding
under these loans since September 1, 2001 was $418,514, $118,750, and $100,000,
respectively. These loans are interest-free and secured by mortgages on the
respective residences of the individuals concerned. Repayments of amounts
outstanding under each of these loans are required in annual amounts equal to
50% of the individuals net bonus after taxes in the case of Mr. Strike and Mr.
Leipsic.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See the Consolidated Financial Statements for CanWest Media Inc. and The Ten
Group Pty. Limited set forth in Part III, Item 17 hereof and filed as part of
this annual report.

73



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##### 



The CanWest Media Inc. Consolidated Financial Statements for the three months
ended November 30, 2003 and 2002 (unaudited) filed by the Company on February
13, 2004, on its Report of Foreign Private Issuer on Form 6-K, is incorporated
by reference herein.

Legal Proceedings

On March 5, 2001, certain plaintiffs who owned a 29.3% interest in CanWest
Broadcasting Limited filed a statement of claim against CanWest Global
Communications Corp., the Company, certain subsidiaries, and Israel Asper. The
plaintiffs claim, among other things, that the defendants have acted in a
manner that is oppressive and unfairly prejudicial to the plaintiffs; have
improperly favored the interests of the defendants over the interests of CBL
and the plaintiffs (including the diversion of corporate opportunities); owe
fiduciary duties to the plaintiffs; and have wrongly terminated certain
contracts with the plaintiffs and replaced them with non-arms length
contracts. They are seeking, among other things, damages of $345.0 million
(including aggravated and punitive damages).

While the results of litigation are inherently uncertain, the Company believes
the allegations are substantially without merit and intends to vigorously
defend it.

At the time of the commencement of the action, the Company owned 70.67% of CBL
and the plaintiffs owned the minority interest. CBL owned Global Television
Network stations in British Columbia (CKVU), Manitoba (CKND) and Saskatchewan
(CFRE and CFSK). On May 1, 2001, CBL amalgamated with one of the Companys
indirect wholly-owned subsidiaries. Under the terms of the amalgamation
agreement, the Company received all of the shares of the amalgamated
corporation and the minority shareholders of CBL received series 2 preference
shares of CanWest Global Communications Corp. CanWest Global Communications
Corp. redeemed the series 2 preference shares for cash of $57.7 million on
December 18, 2002.

B. Significant Changes

Except as otherwise disclosed in this annual report, no significant changes
have occurred since the date of the Companys Financial Statements.

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Not applicable.

B. Markets

The Company is an indirect, wholly-owned subsidiary of CanWest Global
Communications Corp. CanWest Global Communications Corp. is a public company
whose shares are listed on The Toronto Stock Exchange and The New York Stock
Exchange.

ITEM 10. ADDITIONAL INFORMATION

A. Memorandum and Articles of Association

Set forth below is a summary of certain provisions of the Companys Articles of
Incorporation and By-Laws. This summary does not purport to be complete and is
qualified in its entirety by reference to the Articles of Incorporation and
By-Laws.

The Companys board of directors shall consist of a majority of resident
Canadians. (Section 4.2 of the By-laws) If a director is materially interested
in a contract or proposed contract with the Company, or is a director or
officer of or has a material interest in any person who is a party to a
contract or proposed contract with the Company, such

74



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##### 



director must disclose in writing to the Company the nature and extent of such
directors interest and refrain from voting with respect thereto. (Section 4.19
of the By-laws) Directors need not hold shares of the Company in order to
qualify as directors on the Board of Directors. (Section 4.2 of the By-laws)

Holders of the Companys common shares are entitled to receive notice of and
attend all meetings of the shareholders of the Company and to vote thereat,
except meetings at which only holders of a specified class or series of shares
are entitled to vote. Each holder of common shares is entitled to one vote for
each share held. (Common Shares  Section 1 of Schedule I to the Articles of
Incorporation). Holders of common shares are entitled to receive any dividend
declared by the Company, subject to the rights, privileges, restrictions and
conditions attaching to any other class of shares of the Company. (Common
Shares  Section 2 of Schedule I to the Articles of Incorporation).

Holders of the Companys Preference shares shall, with respect to the payment
of dividends and any distribution or assets or return of capital, rank on a
parity with the preference shares of every other series and be entitled to
preference over the common shares and any other shares ranking junior to the
preference shares. (Preference Shares  Section 3 of Schedule I to the Articles
of Incorporation).

Annual meetings of shareholders are to be held on such day as determined by the
board, or the chairman of the board or president and approved by the board.
(Section 8.1 of the By-laws.) The Board may call a special meeting at any time.
(Section 8.2 of the By-laws.) Shareholders shall receive notice of any meeting
not less than 21 days nor more than 50 days before the meeting. (Section 8.5 of
the By-laws.) Shareholders of record as of the record date, if set, or as of
one day prior to the day notice of the meeting is given, shall be entitled to
attend and vote at a shareholders meeting. (Section 8.9 of the By-laws.)

The Articles of Incorporation prohibit any offering of the Companys shares to
the public. (Schedule II to the Articles of Incorporation). The shares of the
Company may not be transferred without the approval of the board of directors.
(Section 5 of the Articles of Incorporation).

B. Material Contracts

Except as otherwise disclosed in this annual report and the Companys financial
statements and notes included elsewhere in this annual report, the Company has
no other material contracts.

C. Exchange Controls

Canada has no system of exchange controls. There are no Canadian restrictions
on the repatriation of capital or earnings of a Canadian company to
non-resident investors.

D. Taxation

Not applicable.

E. Documents on Display

The Company has filed a registration statement on Form F-4 with the SEC with
respect to the exchange of all of its US$425.0 million in outstanding 10 5/8%
series A senior subordinated notes due 2011 on September 4, 2001. The Company
has filed a registration statement on Form F-4 with the SEC with respect to the
exchange of all of its US$200.0 million in outstanding 7 5/8% series A senior
unsecured notes due 2013. The Company has also filed annual reports on Form
20-F for the years ended August 31, 2001 and 2002. Filed as exhibits to the
registration statements, as exhibits to the annual reports and as exhibits to
this annual report, or incorporated therein by reference are complete copies of
the material contracts described herein. The registration statements and
exhibits thereto, the 2002 and 2001 annual reports and exhibits thereto, and
this annual report and exhibits thereto may be inspected without charge at the
public reference facilities maintained by the SEC in Room 1024, 450 Fifth
Street, N.W. Washington, D.C. 20549, and the SECs regional offices located in
New York, New York and Chicago, Illinois. Copies of all or any part of the
registration statement may also be obtained from the Companys offices after
payment of fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms.

75



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##### 



F. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The Company has fully hedged the currency exposure on its U.S. dollar
denominated debt with the exception of notes in the amount of US$42 million,
and has fixed the interest rate of 100% of its floating rate debt by entering
into a combination of cross currency swaps and interest rate swaps.

As of August 31, 2003, the Company has entered into interest rate swap
contracts to pay fixed rates of interest (at an average rate of 8.54%) and
receive floating rates of interest (at an average rate of 5.12%) on a notional
amount of $589 million. The Company has entered into pay fixed receive floating
cross currency swap contracts at an average rate of 9.46% on a notional amount
of $1,073 million and receive floating rates of 3.9% on a notional amount of
US$693 million. The Company has also entered into pay floating receive fixed
cross currency swap contracts at an average floating rate of 7.45% on a
notional amount of $954 million and an average fixed rate of 9.7% on a notional
amount of US$625 million.

Based on the current swap contracts outstanding and the current level of
variable rate debt, the Company estimates that a 1% increase in floating
interest rates will increase annual interest expense by $9.5 million. This
estimate is based on the assumption of a constant variable rate debt and swap
level and an immediate rate increase with no subsequent rate changes in the
remaining term to maturity.

The fair value of the swap contracts represents an estimate of the amount that
the Company would receive or pay if the contracts were closed out at a market
price on the balance sheet date. As of August 31, 2003, the fair value of the
outstanding swap contracts was $357 million.

As of August 31, 2002, assuming all other variables are held constant, a 10
basis point parallel upward shift in the Canadian and U.S. fixed yield would
result in a $2.1 million deterioration in the mark to market value of all
swaps. A 10 basis point change in the value of the Canadian dollar against the
U.S. dollar, assuming all other variables are held constant, would result in a
$1.6 million change in the mark to market value of the cross currency swaps.

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

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

76



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##### 



PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

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

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

Within 90 days prior to the filing date of this Annual Report on Form 20-F, the
Company carried out an evaluation, under the supervision and with the
participation of the Companys management, including the Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the Companys
disclosure controls and procedures as defined in Exchange Act Rule 13a-14.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that the Companys current disclosure controls and
procedures are effective. There have been no significant changes in the
Companys internal controls or in other factors that could significantly affect
internal controls subsequent to the date of the evaluation by the Chief
Executive Officer and Chief Financial Officer. The design of any system of
controls and procedures is based in part upon certain assumptions about the
likelihood of future events. There can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions,
regardless of how remote.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

All of the members of the Audit Committee are financially literate and the
Board has determined that Dr. Barber, Ms. Bennett and Mr. Drybrough qualify as
financial experts.

ITEM 16B. CODE OF ETHICS

The Company has developed a Code of Ethics which applies to its Chief Executive
Officer and senior financial officers. The code of ethics is posted on the
Companys website at www.canwestglobal.com. If the Company makes
substantive amendments to the Code of Ethics or grants any waiver, it
will disclose the nature of such amendment or waiver on the
Companys website within five days of such amendment or waiver.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee establishes the external auditors compensation. Since
fiscal 2002, the Audit Committee has had in place a policy limiting the scope
of the external auditors services to audit and audit related activities,
including tax services. Prior approval of any audit related expenses in excess
of $50,000 is required. In addition, the Audit Committee pre-approves the
provision of non-audit services performed by the Companys audit firm in excess
of $50,000 which include business advisory services and taxation services. For
the years ended August 31, 2003 and 2002, the Audit Committee has approved fees
to PricewaterhouseCoopers LLP and its affiliates as follows:

2003
    
    2002$
    000s
    
    
    $
    000sAudit fees
    
    
    1,950
    
    
    
    1,827Audit-related
fees(1)
    
    
    936
    
    
    
    1,408Tax
fees
    
    
    251
    
    
    
    2913,137
    
    
    
    3,525


|    |  |                                                                                                                                                                                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Audit related fees include fees for employee
benefit plan audits, special audits in connection with the sale of
certain operations, and consultations concerning financial accounting
and reporting standards.

77



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##### 



PART III


ITEM 17. FINANCIAL STATEMENTS



---



##### 



CANWEST MEDIA INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2003 AND 2002

(expressed in Canadian dollars)

1



---



##### 



|                                       |  |                              
|-------------------------------------- |  | -----------------------------
|                                       |  | PricewaterhouseCoopers LLP   
|                                       |  | Chartered Accountants        
|October 31, 2003                       |  | One Lombard Place, Suite 2300
|                                       |  | Winnipeg, Manitoba           
|Auditors Report                       |  | Canada R3B 0X6               
|                                       |  | Telephone +1 (204) 926 2400  
|To the Directors of CanWest Media Inc. |  | Facsimile +1 (204) 944 1020  

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

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

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

( -s- PRICEWATERHOUSECOOPERS LLP)Chartered Accountants
Winnipeg, Canada

October 31, 2003

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

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when there are
changes in accounting principles that have a material effect on the
comparability of the Companys financial statements, such as the changes
described in note 1 to the consolidated financial statements. Our report to
the directors dated October 31, 2003 is expressed in accordance with Canadian
reporting standards which do not require a reference to such changes in
accounting principles in the auditors report when the changes are properly
accounted for and adequately disclosed in the financial statements.

( -s- PRICEWATERHOUSECOOPERS LLP)Chartered Accountants
Winnipeg, Canada

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

2



---



##### 



CANWEST MEDIA INC.
CONSOLIDATED BALANCE SHEETS
AS AT AUGUST 31

|                                                              |  |      |           |      |  |  |           |  
|------------------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | -
|                                                              |  | 2003 |           | 2002
|                                                              |  | $000 |           | $000
|ASSETS                                                        |  |      |           |      |  |  |           |  
|Current assets                                                |  |      |           |      |  |  |           |  
|Cash                                                          |  |      | 115,450   |      |  |  | 49,778    |  
|Accounts receivable                                           |  |      | 370,132   |      |  |  | 382,337   |  
|Distributions receivable from Network TEN                     |  |      | 20,909    |      |  |  |          |  
|Income taxes recoverable                                      |  |      |          |      |  |  | 34,623    |  
|Inventory                                                     |  |      | 14,509    |      |  |  | 19,836    |  
|Broadcast rights                                              |  |      | 82,912    |      |  |  | 98,096    |  
|Future income taxes (note 12)                                 |  |      | 20,223    |      |  |  | 30,013    |  
|Other                                                         |  |      | 10,483    |      |  |  | 13,231    |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 634,618   |      |  |  | 627,914   |  
|Investment in Network TEN (note 3)                            |  |      | 55,546    |      |  |  | 4,494     |  
|Other investments (note 4)                                    |  |      | 109,280   |      |  |  | 159,181   |  
|Broadcast rights                                              |  |      | 27,661    |      |  |  | 23,172    |  
|Due from parent and affiliated companies (note 15)            |  |      | 515,025   |      |  |  | 466,457   |  
|Property, plant and equipment (note 5)                        |  |      | 624,820   |      |  |  | 660,700   |  
|Other assets                                                  |  |      | 126,726   |      |  |  | 95,294    |  
|Intangible assets (note 7)                                    |  |      | 1,093,818 |      |  |  | 1,096,458 |  
|Goodwill (note 6)                                             |  |      | 2,424,763 |      |  |  | 2,579,196 |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 5,612,257 |      |  |  | 5,712,866 |  
|                                                              |  |      |           |      |  |  |           |  
|LIABILITIES                                                   |  |      |           |      |  |  |           |  
|Current liabilities                                           |  |      |           |      |  |  |           |  
|Accounts payable                                              |  |      | 107,503   |      |  |  | 158,252   |  
|Accrued liabilities (note 9)                                  |  |      | 194,845   |      |  |  | 213,070   |  
|Income tax payable                                            |  |      | 16,968    |      |  |  |          |  
|Broadcast rights accounts payable                             |  |      | 30,507    |      |  |  | 35,294    |  
|Deferred revenue                                              |  |      | 30,067    |      |  |  | 30,522    |  
|Future income taxes (note 12)                                 |  |      | 6,072     |      |  |  | 6,072     |  
|Current portion of long term debt                             |  |      | 63,078    |      |  |  | 150,865   |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 449,040   |      |  |  | 594,075   |  
|Long term debt (note 8)                                       |  |      | 2,384,146 |      |  |  | 2,379,459 |  
|Other accrued liabilities                                     |  |      | 150,190   |      |  |  | 65,169    |  
|Future income taxes (note 12)                                 |  |      | 401,327   |      |  |  | 414,933   |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 3,384,703 |      |  |  | 3,453,636 |  
|                                                              |  |      |           |      |  |  |           |  
|Commitments, contingencies and guarantees (note 18)           |  |      |           |      |  |  |           |  
|SHAREHOLDERS EQUITY                                          |  |      |           |      |  |  |           |  
|Equity instruments (note 10)                                  |  |      | 1,191,004 |      |  |  | 1,371,442 |  
|Contributed surplus                                           |  |      | 132,953   |      |  |  | 132,953   |  
|Retained earnings                                             |  |      | 931,090   |      |  |  | 803,493   |  
|Cumulative foreign currency translation
adjustments (note 11) |  |      | (27,493   | )    |  |  | (48,658   | )
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 2,227,554 |      |  |  | 2,259,230 |  
|                                                              |  |      |           |      |  |  |           |  
|                                                              |  |      | 5,612,257 |      |  |  | 5,712,866 |  
|                                                              |  |      |           |      |  |  |           |  

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

Signed on behalf of the Board

|                      |  |                     
|--------------------- |  | --------------------
|/s/ JALYNN H. BENNETT |  | /s/ FRANK J. MCKENNA
|Director              |  | Director            

3



---



##### 



CANWEST MEDIA INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED AUGUST 31

|                                                      |  |      |           |      |  |  |           |   |  |  |           |  
|----------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | - |  |  | --------- | -
|                                                      |  | 2003 |           | 2002 |  |  | 2001      |  
|                                                      |  | $000 |           | $000 |  |  | $000      |  
|Revenue                                               |  |      | 2,096,061 |      |  |  | 2,120,344 |   |  |  | 1,767,306 |  
|Operating expenses                                    |  |      | 1,072,378 |      |  |  | 1,108,942 |   |  |  | 965,515   |  
|Selling, general and administrative expenses          |  |      | 531,479   |      |  |  | 540,352   |   |  |  | 367,721   |  
|Restructuring expenses                                |  |      | 12,989    |      |  |  |          |   |  |  |          |  
|                                                      |  |      |           |      |  |  |           |   |  |  |           |  
|                                                      |  |      | 479,215   |      |  |  | 471,050   |   |  |  | 434,070   |  
|Amortization of intangibles                           |  |      | 17,500    |      |  |  | 17,500    |   |  |  | 89,319    |  
|Amortization of property, plant and equipment         |  |      | 70,100    |      |  |  | 73,430    |   |  |  | 59,528    |  
|Other amortization                                    |  |      | 7,087     |      |  |  | 6,670     |   |  |  | 5,240     |  
|                                                      |  |      |           |      |  |  |           |   |  |  |           |  
|Operating income                                      |  |      | 384,528   |      |  |  | 373,450   |   |  |  | 279,983   |  
|Financing expenses                                    |  |      | (248,478  | )    |  |  | (255,006  | ) |  |  | (268,843  | )
|Dividend income                                       |  |      | 3,532     |      |  |  | 3,241     |   |  |  | 2,952     |  
|                                                      |  |      |           |      |  |  |           |   |  |  |           |  
|                                                      |  |      | 139,582   |      |  |  | 121,685   |   |  |  | 14,092    |  
|Investment gains, losses and write-downs              |  |      | 9,240     |      |  |  | 33,843    |   |  |  | 28,630    |  
|Interest rate swap loss (note 8)                      |  |      | (23,015   | )    |  |  |          |   |  |  |          |  
|                                                      |  |      |           |      |  |  |           |   |  |  |           |  
|                                                      |  |      | 125,807   |      |  |  | 155,528   |   |  |  | 42,722    |  
|Provision
for (recovery of) income taxes (note 12)    |  |      | 39,130    |      |  |  | 47,610    |   |  |  | (27,280   | )
|                                                      |  |      |           |      |  |  |           |   |  |  |           |  
|Earnings before the following                         |  |      | 86,677    |      |  |  | 107,918   |   |  |  | 70,002    |  
|Minority interests                                    |  |      |          |      |  |  | 4,330     |   |  |  | (3,196    | )
|Interest in earnings (loss) of Network TEN            |  |      | 101,339   |      |  |  | (11,815   | ) |  |  | 52,567    |  
|Interest in loss of other equity accounted affiliates |  |      | (1,332    | )    |  |  | (1,523    | ) |  |  | (14,491   | )
|Realized currency translation adjustments             |  |      | 922       |      |  |  | (1,000    | ) |  |  | (7,200    | )
|                                                      |  |      |           |      |  |  |           |   |  |  |           |  
|Net earnings for the year                             |  |      | 187,606   |      |  |  | 97,910    |   |  |  | 97,682    |  
|                                                      |  |      |           |      |  |  |           |   |  |  |           |  

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

4



---



##### 



CANWEST MEDIA INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED AUGUST 31

|                                                                                                  |  |      |         |      |  |      |         |   |  |  |         |  
|------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                                                  |  | 2003 |         | 2002 |  | 2001
|                                                                                                  |  | $000 |         | $000 |  | $000
|Retained
earnings  beginning of year                                                             |  |      | 803,493 |      |  |      | 808,000 |   |  |  | 755,549 |  
|Adjustment for adoption of new
accounting pronouncements                                          |  |      |        |      |  |      | (45,269 | ) |  |  | (329    | )
|                                                                                                  |  |      |         |      |  |      |         |   |  |  |         |  
|Retained earnings - beginning of year,
as adjusted                                                |  |      | 803,493 |      |  |      | 762,731 |   |  |  | 755,220 |  
|Net earnings for the year                                                                         |  |      | 187,606 |      |  |      | 97,910  |   |  |  | 97,682  |  
|Interest on junior subordinated
debentures net of tax of $31,622
(2002 - $36,538, 2001 - $28,900) |  |      | (60,009 | )    |  |      | (57,148 | ) |  |  | (44,902 | )
|                                                                                                  |  |      |         |      |  |      |         |   |  |  |         |  
|Retained earnings  end of year                                                                   |  |      | 931,090 |      |  |      | 803,493 |   |  |  | 808,000 |  
|                                                                                                  |  |      |         |      |  |      |         |   |  |  |         |  

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

5



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##### 



CANWEST MEDIA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31

|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |         |  
|------------------------------------------------ | ----------------------------------------------- |  | -------- | -------- | ---- |  | -------- | ------- | - |  | ---------- | ------- | -
|                                                 |                                                 |  | 2003     |          | 2002 |  | 2001    
|                                                 |                                                 |  | $000     |          | $000 |  | $000    
|CASH GENERATED (UTILIZED) BY:                    |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Operating activities                             |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Net earnings for the year                        |                                                 |  | 187,606  |          |      |  | 97,910   |         |   |  | 97,682     |        
|Items not affecting cash                         |                                                 |  |          |          |      |  |          |         |   |  |            |        
|                                                 | Amortization                                    |  |          | 104,133  |      |  |          | 107,542 |   |  |            | 165,128 |  
|                                                 | Future income taxes                             |  |          | (9,190   | )    |  |          | 11,210  |   |  |            | (97,006 | )
|                                                 | Interest in loss (earnings) of Network TEN      |  |          | (101,339 | )    |  |          | 11,815  |   |  |            | (52,567 | )
|                                                 | Interest in loss of equity accounted affiliates |  |          | 1,332    |      |  |          | 1,523   |   |  |            | 14,491  |  
|                                                 | Minority interests                              |  |          |         |      |  |          | (4,330  | ) |  |            | 3,196   |  
|                                                 | Interest rate swap loss                         |  |          | 23,015   |      |  |          |        |   |  |            |        |  
|                                                 | Realized currency translation adjustments       |  |          | (922     | )    |  |          | 1,000   |   |  |            | 7,200   |  
|                                                 | Write-off of deferred financing fees            |  |          |         |      |  |          |        |   |  |            | 17,900  |  
|                                                 | Investment gains, losses and write-downs        |  |          | (9,240   | )    |  |          | (33,843 | ) |  |            | (28,630 | )
|                                                 | Pension expense                                 |  |          | 7,609    |      |  |          | 6,445   |   |  |            | 2,909   |  
|Distributions from Network TEN                   |                                                 |  | 33,378   |          |      |  | 60,984   |         |   |  | 71,096     |        
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|                                                 |                                                 |  | 236,382  |          |      |  | 260,256  |         |   |  | 201,399    |        
|Changes in non-cash operating accounts (note 13) |                                                 |  | 38,701   |          |      |  | (73,533  | )       |   |  | (10,656    | )      
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Cash flows from operating activities             |                                                 |  | 275,083  |          |      |  | 186,723  |         |   |  | 190,743    |        
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Investing activities                             |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Acquisitions                                     |                                                 |  |         |          |      |  |         |         |   |  | (2,007,291 | )      
|Other investments                                |                                                 |  | (4,311   | )        |      |  | (5,187   | )       |   |  | (1,733     | )      
|Investment in broadcast licences                 |                                                 |  | (2,325   | )        |      |  |         |         |   |  |           |        
|Proceeds from sale of investments                |                                                 |  | 45,605   |          |      |  | 87,000   |         |   |  | 64,045     |        
|Proceeds from divestitures                       |                                                 |  | 193,500  |          |      |  | 390,059  |         |   |  | 32,454     |        
|Purchase of property, plant and equipment        |                                                 |  | (38,140  | )        |      |  | (52,272  | )       |   |  | (41,736    | )      
|Advances to parent and affiliated companies      |                                                 |  | (48,568  | )        |      |  | (45,275  | )       |   |  | (150,064   | )      
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|                                                 |                                                 |  | 145,761  |          |      |  | 374,325  |         |   |  | (2,104,325 | )      
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Financing activities                             |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Issuance of long term debt                       |                                                 |  | 294,700  |          |      |  |         |         |   |  | 3,862,600  |        
|Repayment of long term debt                      |                                                 |  | (651,603 | )        |      |  | (493,703 | )       |   |  | (2,030,988 | )      
|Issuance of share capital                        |                                                 |  | 1,731    |          |      |  |         |         |   |  |           |        
|Net change in bank loans and advances            |                                                 |  |         |          |      |  | (28,999  | )       |   |  | 23,739     |        
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|                                                 |                                                 |  | (355,172 | )        |      |  | (522,702 | )       |   |  | 1,855,351  |        
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Net change in cash                               |                                                 |  | 65,672   |          |      |  | 38,346   |         |   |  | (58,231    | )      
|Cash  beginning of year                         |                                                 |  | 49,778   |          |      |  | 11,432   |         |   |  | 69,663     |        
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        
|Cash  end of year                               |                                                 |  | 115,450  |          |      |  | 49,778   |         |   |  | 11,432     |        
|                                                 |                                                 |  |          |          |      |  |          |         |   |  |            |        

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

6



---



##### 



CANWEST MEDIA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2003 AND 2002

(expressed in Canadian dollars)



| |  | 1. SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On September 28, 2000, CanWest Media Inc. (the Company) was created as a
wholly-owned subsidiary of CanWest Global Communications Corp. (CanWest)
solely to acquire 100% of the common shares of Global Television Network
Inc. (GTNI), a wholly-owned subsidiary of CanWest. This transaction has
been accounted for on a continuity of interests basis. The results of
operations for periods prior to creation of the Company are presented as
those of the Company in a manner similar to a pooling of interests.
Accordingly, these consolidated financial statements present the
operations of the Company on a continuity of interests basis which is
identical to the financial position and results of operations of GTNI for
those periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | The Company is an international media company with interests in broadcast
television, publishing, radio, specialty cable channels, out-of-home
advertising, and internet websites in Canada, Australia, New Zealand,
Ireland and Northern Ireland. The Companys operating segments include
television and radio broadcasting, publishing and online operations and
outdoor advertising. In Canada, the Television Broadcast segment includes
the operation of the Global Television Network, Global Prime, various
other conventional and specialty channels and the Cool FM radio station.
The Australian Television segment includes the Companys 57.1% economic
interest (57.5% to February 27, 2003) in the TEN Group Pty Limited which
owns and operates Australias TEN Television Network (Network TEN). The
Canadian Publishing and Online segment includes the publication of a
number of newspapers, including metropolitan daily newspapers, and the
National Post as well as operation of the canada.com web portal and other
web based operations. The New Zealand Television Broadcasting segment
includes the operations of the 3 and C4 Television Networks. The New
Zealand Radio Broadcasting segment includes five nationally networked
radio brands and 27 local radio stations including More FM stations. The
Irish Television Broadcasting segment includes the Companys 45% interest
in the Republic of Irelands TV3 Television Network. The Australian
Outdoor advertising segment includes the Companys economic interest in
EyeCorp, an out-of-home advertising operation which is wholly owned by the
TEN Group Pty Limited. The Corporate and Other segment includes various
investments in media operations including a 29.9% interest in Northern
Irelands Ulster Television plc (UTV).
|
| |  | The Companys broadcast customer base is comprised primarily of large
advertising agencies which place advertisements with the Company on behalf
of their customers. Publishing revenues include advertising, circulation
and subscriptions which are derived from a variety of sources. The
Companys advertising revenues are seasonal. Revenues and accounts
receivable are highest in the first and third quarters, while expenses are
relatively constant throughout the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | A summary of significant accounting policies followed in the preparation
of these consolidated financial statements is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Basis of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada. All amounts are
expressed in Canadian dollars unless otherwise noted. A reconciliation to
accounting principles generally accepted in the United States is provided
in note 20.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

7



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##### 





| |  | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The consolidated financial statements include the accounts of the Company
and its subsidiaries, and the Companys pro rata 45% share of the assets,
liabilities, and results of operations of TV3 Ireland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | The Company accounts for its investment in Network TEN, CF Television Inc.
(to the date of its sale on September 12, 2001), mentv and Mystery using
the equity method. Other investments are recorded at the lower of cost
and net realizable value. A provision for loss in value of other
investments is made when a decline in current market value is considered
other than temporary.                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Broadcast rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The Company has entered into various agreements for the rights to
broadcast certain feature films and television programs. The Company
records a liability for broadcast rights and the corresponding asset when
the programs are available for telecast. Broadcast rights are charged to
operations as programs are telecast over the anticipated period of use.
An impairment loss is recognized when the carrying amount is not
recoverable and exceeds fair value.                                                                                                                                                                                                                                                                                                                      
|
| |  | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | The Companys operations in Australia, New Zealand and Ireland represent
self-sustaining foreign operations, and the respective accounts have been
translated into Canadian dollars in accordance with the current rate
method. Assets and liabilities are translated at the exchange rates
prevailing at the balance sheet dates, and revenue and expenses are
translated on the basis of average exchange rates during the periods. Any
gains or losses arising from the translation of these accounts are
deferred and included as a component of shareholders equity as cumulative
foreign currency translation adjustments. An applicable portion of these
deferred gains and losses is included in the determination of net earnings
when there is a reduction of the net investment.
|
| |  | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Property, plant and equipment are recorded at cost. Amortization is
provided over the assets estimated useful lives on a straight-line basis
at the following annual rates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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



| |  | Impairment of long lived assets                                                                                                                                                                                                                                                                                         
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Impairment of long lived assets is recognized when an event or change in
circumstances causes the assets carrying value to exceed the total
undiscounted cash flows expected from its use and eventual disposition.
The impairment loss is calculated by deducting the fair value of the asset
from its carrying value.
|
| |  | Deferred Charges                                                                                                                                                                                                                                                                                                        
|
| |  | Certain pre-operating costs incurred in new business undertakings are
deferred prior to the commencement of commercial operations, which is
generally the time at which subscriber revenues                                                                                                                             

8



---



##### 





| |  | commence. Pre-operating costs are amortized over a period of five years.
Costs related to debt financing are deferred and amortized over the term
of the debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Capitalization of interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Interest is capitalized as part of the cost of certain assets while they
are being prepared for use or sale. Interest in the amount of $3.7 million
was capitalized in 2003 (2002 - $3.4 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Broadcast licences, newspaper mastheads, circulation and other intangible
assets are recorded at their cost which, for business acquisitions,
represents the fair market value at the date of the acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Circulation and other finite life intangibles are amortized over periods
from 5 to 40 years. Intangibles with indefinite lives are not subject to
amortization and are tested for impairment annually. Impairment of an
intangible asset is recognized in an amount equal to the difference
between the carrying value and the fair value of the related intangible
asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Goodwill represents the cost of acquired businesses in excess of the fair
value of net identifiable assets acquired. Goodwill is tested for
impairment annually by comparing the fair value of a particular reporting
unit to its carrying value. When the carrying value exceeds its fair
value, the fair value of the reporting units goodwill is compared with
its carrying value to measure any impairment loss.                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Revenue derived from broadcasting activities consists primarily of the
sale of airtime which is recognized at the time commercials are broadcast.
Circulation and advertising revenue from publishing activities is

recognized when the newspaper is delivered. Subscription revenue is
recognized on a straight-line basis over the term of the subscription.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Amounts received that do not meet all of the above criteria are recorded
as deferred revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | The asset and liability method is used to account for income taxes. Under
this method, future income tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between
the financial statement carrying amounts and the tax bases of assets and
liabilities including equity accounted investments. Future income tax
assets and liabilities are measured using substantively enacted tax rates
in effect for the year in which those temporary differences are expected
to be recovered or settled. The effect on future income tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. Future income tax assets are recognized
to the extent that realization is considered more likely than not.
|
| |  | Income taxes on undistributed earnings of Network TEN are provided at
rates applicable to distributions. Income taxes on undistributed earnings
of foreign operations other than Network TEN are not provided as such
earnings are expected to be indefinitely reinvested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

9



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##### 





| |  | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Inventory, consisting primarily of printing materials, is valued at the
lower of cost and net realizable values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Pension plans and post retirement benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The Company maintains a number of defined benefit and defined contribution
pension and other post retirement benefit plans. For the defined benefit
plans, the cost of pension and other retirement benefits earned by
employees is determined using the projected benefit method pro rated on
service and managements estimate of expected plan investment performance,
salary escalation, retirement ages of employees and expected health care
costs. For the purpose of calculating the expected return on plan assets,
those assets are valued at fair value. Past service costs from plan
amendments are amortized on a straight line basis over the average
remaining service period of employees active at the date of the amendment.
The excess of the net actuarial gain or loss over 10% of the greater of
the accrued benefit obligation and the fair value of plan assets is
amortized over the average remaining service period of active employees.
The average remaining service period of employees covered by the pension
plans is 15 years. The average remaining service period of the employees
covered by the other retirement benefit plans is 15 years. For the
defined contribution plans, the pension expense is the Companys
contribution to the plan. The Company also maintains post retirement
benefit plans for certain of its employees, the cost of which is expensed
as benefits are earned by the employees.
|
| |  | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | For the purpose of the statements of cash flows, cash includes cash and
short-term investments with maturities at the date of purchase of up to
three months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Share-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | The Company has share based compensation plans under which options of its
parent company, CanWest, are issued to certain employees. These options
are granted by CanWest with exercise prices equal to the market value of
the underlying stock on the date of grant. No compensation expense is
recognized from stock options granted by CanWest to the employees of the
Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Derivative financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Derivative financial instruments are used to reduce foreign currency and
interest rate risk on the Companys debt. The Company does not enter into
financial instruments for trading or speculative purposes. The Companys
policy is to designate each derivative financial instrument as a hedge of
a specifically identified debt instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Interest rate swap agreements are used as part of the Companys program to
manage the fixed and floating interest rate mix of the Companys total
debt portfolio and related overall cost of borrowing. The interest
differential to be paid or received under interest rate swap agreements is
recognized as an adjustment to interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Foreign currency interest rate swap agreements are used to manage exchange
and interest rate exposures related to debt instruments denominated in
foreign currencies. Translation gains and losses on the principal swapped
are offset by corresponding translation losses and gains on the related
debt in earnings. The Company translates its foreign currency denominated
debt that is hedged by foreign currency interest rate swaps at the rate
implicit in the swap agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

10



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##### 





| |  | Gains and losses on terminations of interest rate and foreign currency
interest rate swap agreements are deferred and amortized as an adjustment
to interest expense related to the underlying debt over the remaining term
of the original contract life of the terminated swap agreement. In the
event of early extinguishment of the debt obligation, any realized or
unrealized gain or loss from the swap is recognized in earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The preparation of financial statements in accordance with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect reported amounts of assets, liabilities, revenue
and expenses, and disclosure of contingencies. Future events could alter
such estimates in the near term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The Company operates in highly competitive markets. The Company has
estimated the useful lives of intangible assets and the value of goodwill,
based on historical customer patterns, industry trends and existing
competitive factors. Significant long-term changes in these factors could
result in a material impairment of the value and life of intangible assets
and goodwill.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Expenses, assets and liabilities related to defined benefit pension and
other post retirement benefit plans are determined actuarially based on
estimates including discount rates for obligations, expected long term
rates of return on pension assets and the rate of compensation increase.
Actual results may differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Changes in Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Goodwill and other intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | On September 1, 2001, the Company adopted Section 3062, Goodwill and Other
Intangibles. As a result of adopting the new standard, goodwill and
certain intangibles with indefinite lives, including newspaper mastheads
and broadcast licences, are no longer amortized. Circulation and other
intangibles are amortized over periods from 5 to 40 years. As a result of
applying the new standards, no initial impairment in intangibles with
indefinite lives or goodwill were identified at the Company or any of its
subsidiaries. However, an initial goodwill impairment was identified by
Network TEN in its reporting unit, Eye Corp, resulting in a charge to the
Companys retained earnings of $45.3 million (net of income tax recoveries
of $2.5 million). In addition, as a result of events occurring after the
beginning of 2001, a goodwill impairment of $30.2 million (net of income
tax recoveries of $2.0 million) was reflected in the Companys interest in
loss of Network TEN in the Companys statement of earnings for the period
ended August 31, 2002 (note 3).
|
| |  | This change in accounting policy has been applied prospectively commencing
September 1, 2001. The table below provides a reconciliation of
previously reported 2001 earnings to net earnings adjusted to exclude
amortization of goodwill and intangible assets with indefinite lives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                                                                                                |  |      |         | 
|--------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | 
|                                                                                                                |  | 2001
|                                                                                                                |  | $000
|Reported net earnings                                                                                           |  |      | 97,682  | 
|Amortization of goodwill and indefinite life
intangibles, net of tax $11,975
for the year ended August 31, 2001 |  |      | 62,868  | 
|Amortization of goodwill and indefinite
life intangibles in equity accounted
affiliates, net of tax of nil      |  |      | 6,211   | 
|                                                                                                                |  |      |         | 
|Net earnings adjusted to exclude amortization expense
recognized in 2001                                        |  |      | 166,761 | 
|                                                                                                                |  |      |         | 

11



---



##### 





| |  | Proposed accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (a)     Hedging relationships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | The CICA has issued Accounting Guideline 13, Hedging Relationships, (AcG
13) which will be effective for fiscal years beginning on or after July 1,
2003. AcG 13 addresses the identification, designation, documentation,
and effectiveness of hedging transactions for the purposes of applying
hedge accounting. It also establishes conditions for applying or
discontinuing hedge accounting. Under the new guideline, the Company will
be required to document its hedging transactions and explicitly
demonstrate that the hedges are sufficiently effective in order to
continue accrual accounting for positions hedged with derivatives. As at
August 31, 2003, the only derivatives utilized by the Company are interest
rate swaps and foreign currency interest rate swaps as described in notes
8 and 16. The Company has determined that the adoption of AcG 13 will not
have a material effect on the balance sheet or the statement of earnings.
|
| |  | (b)     Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | The Accounting Standards Board will be issuing amendments to Section 3860,
Financial Instruments - Disclosure and Presentation, in January 2004,
requiring that an entity account for certain financial instruments that
may be settled in cash or by an issuers own equity instruments, at the
issuers discretion as liabilities. The amended section will be effective
for fiscal years beginning on or after November 1, 2004. The application
of this standard by the Company effective September 1, 2005 may result in
the reclassification of the Companys junior subordinated notes as
liabilities.                                                                                                                                                                                                                                                                                                                                                      



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



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

|                                  |  |       |         | 
|--------------------------------- |  | ----- | ------- | 
|                                  |  | $ 000
|Current assets                    |  |       | 50,257  | 
|Property, plant and equipment     |  |       | 12,436  | 
|Circulation and other intangibles |  |       | 10,700  | 
|Newspaper masthead                |  |       | 35,000  | 
|Goodwill                          |  |       | 62,987  | 
|                                  |  |       |         | 
|Total Assets                      |  |       | 171,380 | 
|                                  |  |       |         | 

12



---



##### 



|                    |  |       |         |  
|------------------- |  | ----- | ------- | -
|                    |  | $ 000
|Current liabilities |  |       | (50,665 | )
|Future income taxes |  |       | (14,600 | )
|Minority interests  |  |       | (22,500 | )
|                    |  |       |         |  
|Total liabilities   |  |       | (87,765 | )
|                    |  |       |         |  
|                    |  |       | 83,615  |  
|                    |  |       |         |  



| |  | b) On November 16, 2000, the Company acquired substantially all of the
Canadian newspaper and other Canadian media assets including a 50%
interest in the National Post (CanWest Publications) of Hollinger
International Inc. and certain of its affiliates (Hollinger) for
consideration of approximately $3.1 billion, including certain costs
related to the acquisition.                                                                                     
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In 2003 the Company retroactively adjusted the allocation of the purchase
price based on the final determination of the balance of pension assets
acquired. The impact was to reduce goodwill by $21.0 million and reduce
the pension liability by $21.0 million.                                                                                                                                                                                                     
|
| |  | The purchase price is subject to adjustment based on the working capital
of CanWest Publications at August 31, 2000 and the results of its
operations from September 1, 2000 to November 16, 2000. The amount of
such adjustment is subject to negotiation between the parties and has not
been finally determined. When finalized, the working capital adjustment
payable or refundable will increase or decrease the amount of goodwill
recorded on the acquisition.
|
| |  | In June 2003, the Company filed a claim with Hollinger in respect of
several items including the working capital and other closing adjustments
and totaling $54.1 million. Certain amounts are currently in dispute and
are to be resolved with Hollinger. Inability to resolve disagreements of
amounts owing may result in matters being referred to arbitration or
formal court adjudication.                                                                      
|
| |  | Divestitures                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | c) In February 2003 the Company sold its interest in community newspapers
and related assets in Southern Ontario for cash proceeds of $193.5
million. The accounting gain on this sale was $21.3 million; assets and
liabilities disposed of amounted to $179.6 million and $7.4 million,
respectively.                                                                                                                                                               
|
| |  | d) In August 2002, the Company sold its interest in community newspapers
and related assets in Atlantic Canada and Saskatchewan for cash proceeds
of $257.0 million. The accounting gain on this sale was $48.2 million;
assets and liabilities disposed of amounted to $228.7 million and $19.9
million, respectively.                                                                                                                                               
|
| |  | e) In October 2001, the Company completed the sale of CKVU Sub Inc., and
received cash proceeds of $133.0 million. The accounting gain on the sale
was $67.7 million; assets and liabilities disposed of amounted to $84.1
million and $18.8 million, respectively.                                                                                                                                                                                                   
|
| |  | f) In September 2001, the Company completed the sale of CF Television
Inc., and received cash proceeds of $87.0 million. No gain or loss arose
from this transaction; assets and liabilities disposed of amounted to
$87.0 million and nil, respectively.                                                                                                                                                                                                             



|3. |  | INVESTMENT IN NETWORK TEN
|-- |  | -------------------------



| |  | The Company owns approximately 14.8% (15% to February 27, 2003) of the
issued ordinary shares and all of the convertible debentures and
subordinated debentures of Network TEN, an Australian television broadcast
network. The subordinated debentures have an aggregate principal amount of
A$45.5 million and pay interest based on distributions to holders of
ordinary shares. The convertible debentures have an aggregate principal
amount of A$45,500 and pay a market linked rate of interest.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13



---



##### 





| |  | The combination of ordinary shares and subordinated debentures yield
distributions equivalent to approximately 57.1% (57.5% to February 27,
2003) of all distributions paid by Network TEN. The convertible debentures
are convertible, upon payment of an aggregate of A$45.5 million, into a
number of ordinary shares which would represent 49.7% (50% to February 27,
2003) of the issued and outstanding shares of Network TEN at the time of
conversion.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | As a result of its contractual right to representation on Network TENs
board of directors and other factors, the Company accounts for its
interest in Network TEN on the equity basis. The Company has appointed
three of the thirteen members of the board of directors of Network TEN.                                                                                                                                                                     
|
| |  | During the year ended August 31, 2003 Network TEN issued 7.1 million
shares for proceeds of $14.4 million as a result of the exercise of
management stock options. This effectively diluted the Companys economic
interest in Network TEN to 57.1% from 57.5% and resulted in an investment
gain of $1.9 million.                                                                                                                                            
|
| |  | The following selected consolidated financial information of Network TEN
has been prepared in accordance with accounting principles generally
accepted in Canada. The accounts have been translated to Canadian dollars
using the current rate method.                                                                                                                                                                                                        

14



---



##### 





| |  | Summary Consolidated Balance Sheets
| |  | -----------------------------------

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



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

|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|-------------------------------------------------------------------------------------- |  | ---- | -------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                                       |  | 2003 |          | 2002 |  | 2001
|                                                                                       |  | $000 |          | $000 |  | $000
|Revenue                                                                                |  |      | 650,952  |      |  |      | 555,653 |   |  |  | 445,179 |  
|Operating expenses                                                                     |  |      | 459,842  |      |  |      | 411,904 |   |  |  | 324,999 |  
|Write down of program inventory                                                        |  |      | 18,082   |      |  |      |        |   |  |  |        |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|Operating profit before amortization                                                   |  |      | 173,028  |      |  |      | 143,749 |   |  |  | 120,180 |  
|Amortization of intangibles and goodwill                                               |  |      |         |      |  |      |        |   |  |  | 10,802  |  
|Amortization of property, plant, equipment
and other                                   |  |      | 16,329   |      |  |      | 15,130  |   |  |  | 9,329   |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|                                                                                       |  |      | 156,699  |      |  |      | 128,619 |   |  |  | 100,049 |  
|Investment income and gains net of losses
on write down of investments                 |  |      |         |      |  |      | (17,221 | ) |  |  | 26,427  |  
|Financing expenses                                                                     |  |      | (102,124 | )    |  |      | (28,270 | ) |  |  | (71,343 | )
|Goodwill impairment loss (1)                                                           |  |      |         |      |  |      | (56,114 | ) |  |  |        |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|                                                                                       |  |      | 54,575   |      |  |      | 27,014  |   |  |  | 55,133  |  
|Provision for (recovery of) income taxes (2)                                           |  |      | (55,969  | )    |  |      | 59,511  |   |  |  | 19,328  |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|Earnings (loss) before the following                                                   |  |      | 110,544  |      |  |      | (32,497 | ) |  |  | 35,805  |  
|Minority interests                                                                     |  |      | 48       |      |  |      | 4,737   |   |  |  | 4,354   |  
|Interest in earnings of equity accounted
afilliates                                    |  |      |         |      |  |      |        |   |  |  | 940     |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|Net earnings (loss) for the year                                                       |  |      | 110,592  |      |  |      | (27,760 | ) |  |  | 41,099  |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|Net earnings (loss) for the year                                                       |  |      | 110,592  |      |  |      | (27,760 | ) |  |  | 41,099  |  
|Interest in respect of subordinated
debentures held by the Company                     |  |      | 78,056   |      |  |      | 5,370   |   |  |  | 56,697  |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  
|Earnings (loss) for the year before
interest in respect of subordinated
debentures (3) |  |      | 188,648  |      |  |      | (22,390 | ) |  |  | 97,796  |  
|                                                                                       |  |      |          |      |  |      |         |   |  |  |         |  

15



---



##### 



Summary Statements of Undistributed Earnings

|                                                                                   |  |      |          |      |  |      |          |   |  |  |          |  
|---------------------------------------------------------------------------------- |  | ---- | -------- | ---- |  | ---- | -------- | - |  |  | -------- | -
|                                                                                   |  | 2003 |          | 2002 |  | 2001
|                                                                                   |  | $000 |          | $000 |  | $000
|Undistributed earnings (deficit)  beginning of
year as previously reported        |  |      | (52,232  | )    |  |      | 177,251  |   |  |  | 220,853  |  
|Adjustment for adoption of new
accounting pronouncements (1)                       |  |      |         |      |  |      | (83,109  | ) |  |  |         |  
|                                                                                   |  |      |          |      |  |      |          |   |  |  |          |  
|Undistributed earnings (deficit)  beginning of
year as adjusted                   |  |      | (52,232  | )    |  |      | 94,142   |   |  |  | 220,853  |  
|Earnings (loss) for the year before interest in respect of
subordinated debentures |  |      | 188,648  |      |  |      | (22,390  | ) |  |  | 97,796   |  
|Distributions paid and payable                                                     |  |      | (100,780 | )    |  |      | (123,984 | ) |  |  | (141,398 | )
|                                                                                   |  |      |          |      |  |      |          |   |  |  |          |  
|Undistributed earnings (deficit)  end of year                                     |  |      | 35,636   |      |  |      | (52,232  | ) |  |  | 177,251  |  
|                                                                                   |  |      |          |      |  |      |          |   |  |  |          |  



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

16



---



##### 





| |  | (August 31, 2002 - NIL). The Company estimates that the market value of
the Companys investment in Network TEN, based on quoted market rates for
Ten Network Holdings Limited at August 31, 2003, was approximately $1,091
million (2002 - $901 million).
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

|                                                    |                           |  |         |        |          |  |         |         |          |  |         |        |        |  |         |         | 
|--------------------------------------------------- | ------------------------- |  | ------- | ------ | -------- |  | ------- | ------- | -------- |  | ------- | ------ | ------ |  | ------- | ------- | 
|                                                    |                           |  | 2003    |        | 2002    
|                                                    |                           |  |         |        |         
|                                                    |                           |  |         |        |          |  | Market  |         |          |  |         |        | Market
|                                                    |                           |  | Cost    |        | Value(2) |  | Cost    |         | Value(2)
|                                                    |                           |  | $000    |        | $000     |  | $000    |         | $000    
|Investments in publicly traded
securities  at cost |                           |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|                                                    | Ulster Television plc (1) |  |         | 92,006 |          |  |         | 108,841 |          |  |         | 92,006 |        |  |         | 148,340 | 
|                                                    | Other                     |  |         | 2,379  |          |  |         | 2,379   |          |  |         | 55,980 |        |  |         | 49,175  | 
|                                                    |                           |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|                                                    |                           |  | 94,385  |        |          |  | 111,220 |         |          |  | 147,986 |        |        |  | 197,515 |        
|                                                    |                           |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|Investments in private companies
 at cost          |                           |  | 8,602   |        |          |  |         |         |          |  | 8,602   |        |        |  |         |        
|Investments  on an equity basis                    |                           |  | 6,293   |        |          |  |         |         |          |  | 2,593   |        |        |  |         |        
|                                                    |                           |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        
|                                                    |                           |  | 109,280 |        |          |  |         |         |          |  | 159,181 |        |        |  |         |        
|                                                    |                           |  |         |        |          |  |         |         |          |  |         |        |        |  |         |        



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



|5. |  | PROPERTY, PLANT AND EQUIPMENT
|-- |  | -----------------------------

|                                |  |      |         |              |  |             |         |  |  |  |         | 
|------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------- |  |  |  | ------- | 
|                                |  | 2003
|                                |  |     
|                                |  |      |         |              |  | Accumulated |         |  |  | 
|                                |  | Cost |         | Amortization |  | Net        
|                                |  | $000 |         | $000         |  | $000       
|Land                            |  |      | 58,703  |              |  |             |        |  |  |  | 58,703  | 
|Buildings                       |  |      | 172,355 |              |  |             | 29,633  |  |  |  | 142,722 | 
|Machinery and equipment         |  |      | 662,448 |              |  |             | 255,619 |  |  |  | 406,829 | 
|Leasehold and land improvements |  |      | 29,707  |              |  |             | 13,141  |  |  |  | 16,566  | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 
|                                |  |      | 923,213 |              |  |             | 298,393 |  |  |  | 624,820 | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 

|                                |  |      |         |              |  |             |         |  |  |  |         | 
|------------------------------- |  | ---- | ------- | ------------ |  | ----------- | ------- |  |  |  | ------- | 
|                                |  | 2002
|                                |  |     
|                                |  |      |         |              |  | Accumulated |         |  |  | 
|                                |  | Cost |         | amortization |  | Net        
|                                |  | $000 |         | $000         |  | $000       
|Land                            |  |      | 60,002  |              |  |             |        |  |  |  | 60,002  | 
|Buildings                       |  |      | 170,302 |              |  |             | 36,630  |  |  |  | 133,672 | 
|Machinery and equipment         |  |      | 648,706 |              |  |             | 197,498 |  |  |  | 451,208 | 
|Leasehold and land improvements |  |      | 26,785  |              |  |             | 10,967  |  |  |  | 15,818  | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 
|                                |  |      | 905,795 |              |  |             | 245,095 |  |  |  | 660,700 | 
|                                |  |      |         |              |  |             |         |  |  |  |         | 

17



---



##### 





|   |  | Property, plant and equipment located in Canada was $587.5 million (2002 -
$625.8 million) and in foreign jurisdictions was $37.3 million (2002 -
$34.9 million).
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|6. |  | GOODWILL                                                                                                                                                         

2002
    
    Additions
    
    Divestitures
    
    Other
    
    2003Operating segment
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000Television  Canada
    
    
    604,437
    
    
    
    
    
    
    
    
    
    
    
    (4,025
    )(1)
    
    
    600,412Television  New Zealand
    
    
    19,613
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,613Television  Ireland
    
    
    1,223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,223Radio  New Zealand
    
    
    55,239
    
    
    
    
    
    
    
    
    
    
    
    1,775
    (2)
    
    
    57,014Publishing and Online  Canada
    
    
    1,898,684
    
    
    
    
    
    
    
    (151,376
    )
    
    
    (807
    )(1)
    
    
    1,746,501Total
    
    
    2,579,196
    
    
    
    
    
    
    
    (151,376
    )
    
    
    (3,057
    )
    
    
    2,424,7632001
    
    Additions
    
    Divestitures
    
    Other
    
    2002Operating segment
    
    $000
    
    $000
    
    $000
    
    $000
    
    $000Television  Canada
    
    
    662,637
    
    
    
    
    
    
    
    (44,800
    )
    
    
    (13,400
    )(1)
    
    
    604,437Television  New Zealand
    
    
    19,613
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,613Television  Ireland
    
    
    1,223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,223Radio  New Zealand
    
    
    53,039
    
    
    
    
    
    
    
    
    
    
    
    2,200
    (2)
    
    
    55,239Publishing and Online  Canada
    
    
    2,039,607
    
    
    
    47,000
    
    
    
    (187,923
    )
    
    
    
    
    
    
    1,898,684Total
    
    
    2,776,119
    
    
    
    47,000
    
    
    
    (232,723
    )
    
    
    (11,200
    )
    
    
    2,579,196




|(1) Decrease in goodwill was related to the adjustment of WIC and CanWest
Publications purchase equations including the reversal of restructuring
provisions (note 9).
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                      
|(2) Increase in goodwill was related to increase in currency translation
rates.                                                                                       



|7. |  | INTANGIBLE ASSETS
|-- |  | -----------------

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

18



---



##### 



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



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



|8. |  | LONG TERM DEBT
|-- |  | --------------

|                                                  |  |          |     |      |  |          |           |      |  |  |     |   |  |  |           |  
|------------------------------------------------- |  | -------- | --- | ---- |  | -------- | --------- | ---- |  |  | --- | - |  |  | --------- | -
|                                                  |  | Interest |     | 2003 |  | Interest |           | 2002
|                                                  |  | Rate
(1) |     | $000 |  | Rate (1) |           | $000
|Term bank loans (2)                               |  |          | 9.7 | %    |  |          | 1,417,148 |      |  |  | 9.7 | % |  |  | 1,791,938 |  
|Senior subordinated notes (3)                     |  |          | 8.2 | %    |  |          | 709,399   |      |  |  | 7.8 | % |  |  | 705,700   |  
|Senior unsecured notes (4)                        |  |          | 7.2 | %    |  |          | 294,500   |      |  |  |     |   |  |  |          |  
|Term and demand loan 17,201
(2002 - 21,375)
(5) |  |          | 2.7 | %    |  |          | 26,177    |      |  |  | 5.8 | % |  |  | 32,686    |  
|                                                  |  |          |     |      |  |          |           |      |  |  |     |   |  |  |           |  
|Long term debt                                    |  |          |     |      |  |          | 2,447,224 |      |  |  |     |   |  |  | 2,530,324 |  
|Less portion due within one year                  |  |          |     |      |  |          | (63,078   | )    |  |  |     |   |  |  | (150,865  | )
|                                                  |  |          |     |      |  |          |           |      |  |  |     |   |  |  |           |  
|Long term portion                                 |  |          |     |      |  |          | 2,384,146 |      |  |  |     |   |  |  | 2,379,459 |  
|                                                  |  |          |     |      |  |          |           |      |  |  |     |   |  |  |           |  



| |  | (1) The weighted average interest rate gives effect to interest rate
swaps.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (2) Credit facilities provide for revolving and term loans in the maximum
amounts of $600 million and $1,768.5 million, respectively, and are
secured by substantially all of the assets of the Company. At August 31,
2003 the Company had drawn on availabilities under all of its term
facilities, including U.S. dollar loans of US$648.8 million and had $250
million drawn under revolving facilities. The revolving credit facility
matures in November 2006. The amount of credit available under the
$1,768.5 million term facilities decreases periodically until maturity
between November 2006 and May 2009. The Canadian dollar debt bears
interest at CDOR plus a margin and the US dollar debt bears interest at
LIBOR plus a margin. During 2003 the Company refinanced all of its US
dollar debt and $30.2 million of its Canadian dollar debt resulting in the
extension of maturity dates and reduction of interest rates.
|
| |  | Up to $30.0 million of the revolving credit facility is available on an
operating basis, of which no amount was utilized at August 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | (3) The senior subordinated notes include loans of US$425.0 million and
loans held by the majority shareholder of CanWest in the amount of US$41.9
million (2002 - $56.1 million) which mature on May                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

19



---



##### 





| |  | 15, 2011 and bear interest at 10.625%. The notes rank junior to the
Companys senior credit facility and are guaranteed by certain
subsidiaries of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (4) The US$200.0 million senior unsecured notes mature on April 3, 2013
and bear interest at 7.625%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | (5) These credit facilities provide for demand bank loans at August 31,
2003 in the maximum amount of
 40.7 million (2002 - 47.5 million). The
debt bears interest at floating rates and is secured by a letter of credit
provided by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | The Company has entered into various cross-currency interest rate and
interest rate swaps which have resulted in fixed interest costs on its
senior indebtedness. The total notional value of such instruments was
$1,661.3 million at August 31, 2003 (2002 - $1,796.5 million) at rates
ranging from 6.25% to 6.59% plus a margin (2002  5.7% to 6.63% plus a
margin). As a result of debt repayment during 2003 the notional value of
the swaps exceeded the principal outstanding on the debt, resulting in a
swap loss of $23.0 million being recorded in earnings. The Company has
also entered into a cross currency interest rate swap resulting in
floating interest rates on the US$425.0 million, senior subordinated notes
and the US$200.0 million, senior unsecured notes at rates based on CDOR
plus a margin.
|
| |  | The Company is subject to covenants under certain of the credit facilities
referred to above, including thresholds for leverage and interest
coverage, and is also subject to certain restrictions under negative
covenants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Principal payments of long term debt, based on terms existing at August
31, 2003 over the next five years, are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|                       |  |  |      |  |  |      |         | 
|---------------------- |  |  | ---- |  |  | ---- | ------- | 
|                       |  |  |      |  |  | $000
|Year ending August 31, |  |  | 2004 |  |  |      | 63,078  | 
|                       |  |  | 2005 |  |  |      | 47,484  | 
|                       |  |  | 2006 |  |  |      | 56,701  | 
|                       |  |  | 2007 |  |  |      | 33,657  | 
|                       |  |  | 2008 |  |  |      | 137,982 | 



|9. |  | RESTRUCTURING ACCRUALS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In 2000, the Company established restructuring accruals of $37.8 million
related to the acquisition and integration of WIC Western International
Communications Ltd. (WIC). This balance was made up of approximately
$12.5 million in severance costs, $9.7 million related to integration and
rebranding of WIC and $15.7 million in other restructuring costs.                                                                                                                                                                                                    
|  
|   |  | In 2001, the Company recorded restructuring accruals of $43.0 million
related to the acquisition and restructuring of its publishing operations.
Restructuring activities included the centralization of certain call
centres, integration of the Companys interactive and news and editorial
operations, and centralization of business, finance and information
technology functions. This balance was made up of $24.5 million in
involuntary severance costs, $3.6 million in lease and contract
termination costs and $14.9 million in other restructuring costs.
|  
|   |  | In 2002, the Company established a restructuring accrual of $7.0 million
related to its acquisition and restructuring of the National Post. This
balance is primarily related to involuntary severance costs and contract
cancellation costs.                                                                                                                                                                                                                                                                                                                          

20



---



##### 





| |  | In 2003, the Company undertook restructuring activities in its Canadian
Media operations. The $13.0 million cost of this restructuring was related
to employee severance. The restructuring expense related to the following
operating segments: Canadian Broadcasting - $3.2 million, Canadian
Publishing and Online - $8.8 million and Corporate and Other - $1.1
million.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For the year ended August 31 2003, expenditures charged to the
restructuring accruals were $36.1 million (August 31, 2002- $43.9
million). The balance of the restructuring accruals are expected to be
completed by August 31, 2004.                                                                                                                                       
|
| |  | In 2003, the Company reversed certain unutilized restructuring accruals in
the amount of $8.1 million as a result of changes in estimates. The
reversal was recorded as a reduction of goodwill.                                                                                                                                                                            

|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|--------------------------------- |  | --------- | ------- | ----------- |  | ----------- | ------ | ----- |  | ----- | ------ | - |  |  | ------- | - |  |  | ------- | -
|                                  |  |           |         |             |  | Lease/      |        |       |  |       |        |   |  |  |         |   |  | 
|                                  |  |           |         |             |  | contract    |        |       |  |       |        |   |  |  |         |   |  | 
|                                  |  | Severance |         | termination |  | Integration |        | Other |  | Total
|                                  |  | $000      |         | $000        |  | $000        |        | $000  |  | $000 
|WIC integration accrual           |  |           | 12,450  |             |  |             |       |       |  |       | 9,670  |   |  |  | 15,680  |   |  |  | 37,800  |  
|CanWest Publications accrual      |  |           | 24,556  |             |  |             | 3,588  |       |  |       | 250    |   |  |  | 14,606  |   |  |  | 43,000  |  
|Expenditures - 2001               |  |           | (3,851  | )           |  |             |       |       |  |       | (8,232 | ) |  |  | (2,259  | ) |  |  | (14,342 | )
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|Balance August 31, 2001           |  |           | 33,155  |             |  |             | 3,588  |       |  |       | 1,688  |   |  |  | 28,027  |   |  |  | 66,458  |  
|National Post accrual             |  |           | 4,539   |             |  |             | 2,461  |       |  |       |       |   |  |  |        |   |  |  | 7,000   |  
|Expenditures - 2002               |  |           | (14,728 | )           |  |             | (3,328 | )     |  |       | (1,438 | ) |  |  | (7,452  | ) |  |  | (26,946 | )
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|Balance August 31, 2002           |  |           | 22,966  |             |  |             | 2,721  |       |  |       | 250    |   |  |  | 20,575  |   |  |  | 46,512  |  
|Canadian Media operations
accrual |  |           | 12,989  |             |  |             |       |       |  |       |       |   |  |  |        |   |  |  | 12,989  |  
|Expenditures  2003               |  |           | (21,512 | )           |  |             | (239   | )     |  |       |       |   |  |  | (14,301 | ) |  |  | (36,052 | )
|Reversals - 2003                  |  |           | (4,117  | )           |  |             |       |       |  |       |       |   |  |  | (3,934  | ) |  |  | (8,051  | )
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  
|Balance August 31, 2003           |  |           | 10,326  |             |  |             | 2,482  |       |  |       | 250    |   |  |  | 2,340   |   |  |  | 15,398  |  
|                                  |  |           |         |             |  |             |        |       |  |       |        |   |  |  |         |   |  |  |         |  



|10. |  | EQUITY INSTRUMENTS                                                   
|--- |  | ---------------------------------------------------------------------
|   
|    |  | The authorized and issued capital stock of the Company is as follows:
|   
|    |  | Authorized                                                           
|   
|    |  | An unlimited number of common shares.                                
|   
|    |  | An unlimited number of preference shares.                            
|   
|    |  | Issued                                                               

|                                                 |  |      |           |      |  |  |           | 
|------------------------------------------------ |  | ---- | --------- | ---- |  |  | --------- | 
|                                                 |  | 2003 |           | 2002
|                                                 |  | $000 |           | $000
|22,786 common shares (2002  22,785)             |  |      | 438,838   |      |  |  | 437,107   | 
|Junior subordinated notes, due November 15, 2020 |  |      | 752,166   |      |  |  | 934,335   | 
|                                                 |  |      |           |      |  |  |           | 
|                                                 |  |      | 1,191,004 |      |  |  | 1,371,442 | 
|                                                 |  |      |           |      |  |  |           | 



| |  | During the year ended August 31, 2003 the Company issued one common share
to its parent for $1.7 million representing the carrying value of certain property and equipment
transferred to the Company.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21



---



##### 





|    |  | The junior subordinated notes were issued to the Companys parent on
November 16, 2000 for $766.8 million in connection with the financing of
the acquisition of CanWest Publications. These junior subordinated notes
bear interest at 12.155%, which under certain conditions could vary
subject to a maximum limit of 13.03%. Additional junior subordinated notes
were issued in satisfaction of interest. The Company has the option of
settling all principal and interest obligations under the junior
subordinated notes with shares, and therefore the debentures and
associated interest have been classified as equity instruments. In May
2003, the Company repaid $274.0 million in junior subordinated notes.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|11. |  | CUMULATIVE TRANSLATION ADJUSTMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | The cumulative foreign currency translation adjustments account reflects
the net changes in the respective book values of the Companys investments
in self-sustaining foreign operations due to exchange rate fluctuations
since the respective dates of their acquisition or start-up.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | The changes in this account arise from changes in the Australian, New
Zealand, and Euro currencies relative to the Canadian currency, and
changes in the Companys net investment in the book values of
international operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Changes in this account were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                                                             |  |      |         |      |  |      |         |   |  |  |        |  
| | ----------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------ | -
| |                                                             |  | 2003 |         | 2002 |  | 2001
| |                                                             |  | $000 |         | $000 |  | $000
| | Deferred loss, beginning of year                            |  |      | 48,658  |      |  |      | 74,294  |   |  |  | 87,553 |  
| | Deferred foreign currency gain during the year              |  |      | (22,087 | )    |  |      | (24,636 | ) |  |  | (6,059 | )
| | Realization of translation gain (loss) due to distributions |  |      | 922     |      |  |      | (1,000  | ) |  |  | (7,200 | )
| |                                                             |  |      |         |      |  |      |         |   |  |  |       
| | Deferred loss, end of year                                  |  |      | 27,493  |      |  |      | 48,658  |   |  |  | 74,294 |  
| |                                                             |  |      |         |      |  |      |         |   |  |  |       



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

|                           |  |      |        |      |  |      |        |  |  |  |        |  
|-------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | -
|                           |  | 2003 |        | 2002 |  | 2001
|                           |  | $000 |        | $000 |  | $000
|Australian dollar          |  |      | 5,705  |      |  |      | 8,120  |  |  |  | 19,759 |  
|New Zealand dollar         |  |      | 21,506 |      |  |      | 40,266 |  |  |  | 55,467 |  
|Irish punt                 |  |      |       |      |  |      |       |  |  |  | (932   | )
|Euro                       |  |      | 282    |      |  |      | 272    |  |  |  |       |  
|                           |  |      |        |      |  |      |        |  |  |  |        |  
|Deferred loss, end of year |  |      | 27,493 |      |  |      | 48,658 |  |  |  | 74,294 |  
|                           |  |      |        |      |  |      |        |  |  |  |        |  

22



---



##### 





|12. |  | INCOME TAXES                                                                                                                                      
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Companys provision for income taxes reflects an effective income tax
rate which differs from the combined Canadian statutory rate as follows:

|                                                                                                                       |  |      |         |      |  |      |         |   |  |  |         |  
|---------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                                                                       |  | 2003 |         | 2002 |  | 2001
|                                                                                                                       |  | $000 |         | $000 |  | $000
|Income taxes at combined Canadian statutory rate
of 36.6% (2002  38.7%)                                               |  |      | 46,045  |      |  |      | 60,127  |   |  |  | 17,644  |  
|Non-taxable portion of capital gains                                                                                   |  |      | (3,705  | )    |  |      | (17,044 | ) |  |  | (11,716 | )
|Effect of valuation allowance on future tax assets                                                                     |  |      | (10,594 | )    |  |      | (3,552  | ) |  |  |        |  
|Non-deductible amortization expense                                                                                    |  |      |        |      |  |      | 6,766   |   |  |  | 30,980  |  
|Effect of foreign income tax rates differing from
Canadian income tax rates                                            |  |      | (1,477  | )    |  |      | (1,924  | ) |  |  | (995    | )
|Large corporations tax                                                                                                 |  |      | 3,853   |      |  |      | 3,250   |   |  |  | 1,788   |  
|Effect of the expected future tax rates
applicable to temporary differences differing
from the current income tax rate |  |      | 2,458   |      |  |      |        |   |  |  | (70,573 | )
|Non-deductible expenses                                                                                                |  |      | 1,261   |      |  |      |        |   |  |  |        |  
|Other                                                                                                                  |  |      | 1,289   |      |  |      | (13     | ) |  |  | 5,592   |  
|                                                                                                                       |  |      |         |      |  |      |         |   |  |  |         |  
|Provision for (recovery of) income taxes                                                                               |  |      | 39,130  |      |  |      | 47,610  |   |  |  | (27,280 | )
|                                                                                                                       |  |      |         |      |  |      |         |   |  |  |         |  



| |  | An analysis of earnings before tax by jurisdiction follows:
| |  | -----------------------------------------------------------

|                    |  |      |         |      |  |      |         |  |  |  |        | 
|------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------ | 
|                    |  | 2003 |         | 2002 |  | 2001
|                    |  | $000 |         | $000 |  | $000
|Canada              |  |      | 101,551 |      |  |      | 137,566 |  |  |  | 10,907 | 
|Foreign             |  |      | 24,256  |      |  |      | 17,962  |  |  |  | 31,815 | 
|                    |  |      |         |      |  |      |         |  |  |  |        | 
|Earnings before tax |  |      | 125,807 |      |  |      | 155,528 |  |  |  | 42,722 | 
|                    |  |      |         |      |  |      |         |  |  |  |        | 



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

|                           |         |  |        |        |   |  |        |        |  |  |         |         |  
|-------------------------- | ------- |  | ------ | ------ | - |  | ------ | ------ |  |  | ------- | ------- | -
|                           |         |  |        | 2003   |   |  |        | 2002   |  |  |         | 2001    |  
|                           |         |  |        | $000   |   |  |        | $000   |  |  |         | $000    |  
|Current income taxes       |         |  |        |        |   |  |        |        |  |  |         |        
|                           | Canada  |  |        | 47,949 |   |  |        | 36,098 |  |  |         | 69,523  |  
|                           | Foreign |  |        | 371    |   |  |        | 302    |  |  |         | 203     |  
|                           |         |  |        |        |   |  |        |        |  |  |         |        
|                           |         |  | 48,320 |        |   |  | 36,400 |        |  |  | 69,726  |        
|                           |         |  |        |        |   |  |        |        |  |  |         |        
|Future income taxes        |         |  |        |        |   |  |        |        |  |  |         |        
|                           | Canada  |  |        | (9,452 | ) |  |        | 11,060 |  |  |         | (94,544 | )
|                           | Foreign |  |        | 262    |   |  |        | 150    |  |  |         | (2,462  | )
|                           |         |  |        |        |   |  |        |        |  |  |         |        
|                           |         |  | (9,190 | )      |   |  | 11,210 |        |  |  | (97,006 | )      
|                           |         |  |        |        |   |  |        |        |  |  |         |        
|Provision for income taxes |         |  | 39,130 |        |   |  | 47,610 |        |  |  | (27,280 | )      
|                           |         |  |        |        |   |  |        |        |  |  |         |        

23



---



##### 





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

|                                   |                                                        |  |         |         |      |  |         |         |  
|---------------------------------- | ------------------------------------------------------ |  | ------- | ------- | ---- |  | ------- | ------- | -
|                                   |                                                        |  | 2003    |         | 2002
|                                   |                                                        |  | $000    |         | $000
|Future tax assets                  |                                                        |  |         |         |      |  |         |        
|                                   | Non-capital loss carry forwards                        |  |         | 57,550  |      |  |         | 61,399  |  
|                                   | Accounts payable and other accruals                    |  |         | 29,756  |      |  |         | 45,417  |  
|                                   | Pension and post retirement benefits                   |  |         | 7,139   |      |  |         |        |  
|                                   | Less: Valuation allowance                              |  |         |        |      |  |         | (20,717 | )
|                                   |                                                        |  |         |         |      |  |         |        
|                                   | Total future tax assets                                |  |         | 94,445  |      |  |         | 86,099  |  
|                                   |                                                        |  |         |         |      |  |         |        
|Future tax liabilities             |                                                        |  |         |         |      |  |         |        
|                                   | Capital cost allowances in excess of book
depreciation |  |         | 72,867  |      |  |         | 52,845  |  
|                                   | Pension obligations                                    |  |         | 2,404   |      |  |         | 14,823  |  
|                                   | Intangible assets                                      |  |         | 386,614 |      |  |         | 398,157 |  
|                                   | Other assets                                           |  |         | 19,736  |      |  |         | 11,266  |  
|                                   |                                                        |  |         |         |      |  |         |        
|                                   | Total future tax liabilities                           |  |         | 481,621 |      |  |         | 477,091 |  
|                                   |                                                        |  |         |         |      |  |         |        
|Net future tax liability           |                                                        |  | 387,176 |         |      |  | 390,992 |        
|Current future tax asset           |                                                        |  | 20,223  |         |      |  | 30,013  |        
|Current future tax liability       |                                                        |  | (6,072  | )       |      |  | (6,072  | )      
|                                   |                                                        |  |         |         |      |  |         |        
|Net long term future tax liability |                                                        |  | 401,327 |         |      |  | 414,933 |        
|                                   |                                                        |  |         |         |      |  |         |        



|    |  | As at August 31, 2003, the Company had non capital loss carry forwards for
income tax purposes of $201.0 million, that expire as follows: 2006  $1.8
million, 2007  $8.5 million, 2008  $32.5 million, 2009  $35.0 million,
2010 and thereafter  $123.2 million.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|13. |  | STATEMENTS OF CASH FLOWS                                                                                                                                                                                                                                             
|   
|    |  | The following amounts comprise the net change in non-cash operating accounts included in the statements of cash
flows:                                                                                                                                               

|                                         |  |      |         |      |  |      |         |   |  |  |         |  
|---------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                         |  | 2003 |         | 2002 |  | 2001
|                                         |  | $000 |         | $000 |  | $000
|CASH GENERATED (UTILIZED) BY:            |  |      |         |      |  |      |         |   |  |  |         |  
|Accounts receivable                      |  |      | 5,211   |      |  |      | (36,426 | ) |  |  | 93,424  |  
|Broadcast rights                         |  |      | 4,359   |      |  |      | (16,548 | ) |  |  | (55,674 | )
|Inventory                                |  |      | 4,681   |      |  |      | 12,342  |   |  |  | (7,342  | )
|Other current assets                     |  |      | 2,673   |      |  |      | 977     |   |  |  | (8,788  | )
|Other assets                             |  |      | (7,759  | )    |  |      | (1,195  | ) |  |  | 24,878  |  
|Accounts payable and accrued liabilities |  |      | (61,564 | )    |  |      | (74,392 | ) |  |  | (38,678 | )
|Income taxes payable                     |  |      | 84,293  |      |  |      | 33,904  |   |  |  | (14,154 | )
|Deferred revenue                         |  |      | 1,360   |      |  |      | (4,120  | ) |  |  | 1,494   |  
|Broadcast rights accounts payable        |  |      | 5,447   |      |  |      | 11,925  |   |  |  | (5,816  | )
|                                         |  |      |         |      |  |      |         |   |  |  |         |  
|                                         |  |      | 38,701  |      |  |      | (73,533 | ) |  |  | (10,656 | )
|                                         |  |      |         |      |  |      |         |   |  |  |         |  



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

|             |  |      |         |      |  |      |         |  |  |  |         | 
|------------ |  | ---- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|             |  | 2003 |         | 2002 |  | 2001
|             |  | $000 |         | $000 |  | $000
|             |  |      |         |      |  |     
|Interest     |  |      | 259,712 |      |  |      | 258,719 |  |  |  | 237,264 | 
|Income taxes |  |      | 9,052   |      |  |      | 23,005  |  |  |  | 72,923  | 

24



---



##### 





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

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



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

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



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

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



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

|                                                       |  |                  |         |                          |  |      |         |      |  |      |         |      |  |  |       |  |  |  |       |  |  |  |       | 
|------------------------------------------------------ |  | ---------------- | ------- | ------------------------ |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                       |  | Pension benefits |         | Post retirement benefits
|                                                       |  |                  |         |                         
|                                                       |  | 2003             |         | 2002                     |  | 2001 |         | 2003 |  | 2002 |         | 2001
|                                                       |  | $000             |         | $000                     |  | $000 |         | $000 |  | $000 |         | $000
|Current service cost                                   |  |                  | 17,055  |                          |  |      | 15,174  |      |  |      | 10,586  |      |  |  | 1,235 |  |  |  | 1,198 |  |  |  | 419   | 
|Employee contributions                                 |  |                  | (6,322  | )                        |  |      | (5,800  | )    |  |      | (4,475  | )    |  |  |      |  |  |  |      |  |  |  |      | 
|Accrued interest on benefits                           |  |                  | 20,622  |                          |  |      | 18,252  |      |  |      | 13,814  |      |  |  | 2,868 |  |  |  | 2,503 |  |  |  | 1,959 | 
|Expected return on plan assets                         |  |                  | (18,060 | )                        |  |      | (19,174 | )    |  |      | (16,451 | )    |  |  |      |  |  |  |      |  |  |  |      | 
|Amortization of transitional (asset) obligation        |  |                  | 610     |                          |  |      | (358    | )    |  |      | (358    | )    |  |  | 439   |  |  |  | 439   |  |  |  | 439   | 
|Amortization of past service costs                     |  |                  | 808     |                          |  |      | 527     |      |  |      |        |      |  |  |      |  |  |  |      |  |  |  |      | 
|Amortization of net actuarial loss                     |  |                  | 1,516   |                          |  |      | 57      |      |  |      |        |      |  |  | 92    |  |  |  |      |  |  |  |      | 
|Changes in valuation allowance                         |  |                  | (146    | )                        |  |      | (86     | )    |  |      | (61     | )    |  |  |      |  |  |  |      |  |  |  |      | 
|                                                       |  |                  |         |                          |  |      |         |      |  |      |         |      |  |  |       |  |  |  |       |  |  |  |       | 
|Benefit expense                                        |  |                  | 16,083  |                          |  |      | 8,592   |      |  |      | 3,055   |      |  |  | 4,634 |  |  |  | 4,140 |  |  |  | 2,817 | 
|Employer contribution to the defined
contribution plan |  |                  | 2,299   |                          |  |      | 1,552   |      |  |      | 463     |      |  |  |      |  |  |  |      |  |  |  |      | 
|                                                       |  |                  |         |                          |  |      |         |      |  |      |         |      |  |  |       |  |  |  |       |  |  |  |       | 
|Total pension and post retirement benefit
expense      |  |                  | 18,382  |                          |  |      | 10,144  |      |  |      | 3,518   |      |  |  | 4,634 |  |  |  | 4,140 |  |  |  | 2,817 | 
|                                                       |  |                  |         |                          |  |      |         |      |  |      |         |      |  |  |       |  |  |  |       |  |  |  |       | 

25



---



##### 





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

|                                                         |  |                  |           |                          |  |      |           |      |  |  |           |   |  |  |      |  
|-------------------------------------------------------- |  | ---------------- | --------- | ------------------------ |  | ---- | --------- | ---- |  |  | --------- | - |  |  | ---- | -
|                                                         |  | Pension benefits |           | Post retirement benefits
|                                                         |  |                  |           |                         
|                                                         |  | 2003             |           | 2002                     |  | 2003 |           | 2002
|Discount rate                                            |  |                  | 6.50-6.75 | %                        |  |      | 6.75-7.25 | %    |  |  | 6.50-6.75 | % |  |  | 7.25 | %
|Expected long-term rate of return on pension
plan assets |  |                  | 6.75-7.25 | %                        |  |      | 7.00-7.25 | %    |  |  | 7.25      | % |  |  | 7.00 | %
|Rate of compensation increase                            |  |                  | 3.50-4.50 | %                        |  |      | 3.50-4.00 | %    |  |  | 3.50-5.00 | % |  |  | 4.00 | %



|15. |  | RELATED PARTY BALANCES AND TRANSACTIONS                           
|--- |  | ------------------------------------------------------------------
|   
|    |  | Due from parent and affiliated companies consist of the
following:

|                                                                                          |  |  |         |  |      |  |         |  | 
|----------------------------------------------------------------------------------------- |  |  | ------- |  | ---- |  | ------- |  | 
|                                                                                          |  |  | 2003    |  | 2002
|                                                                                          |  |  | $000    |  | $000
|Due from parent,
CanWest  non-interest bearing                                           |  |  | 82,115  |  |      |  | 25,651  | 
|Due from various
affiliated companies  CanWest Entertainment Inc.
 non-interest
bearing |  |  | 60,502  |  |      |  | 59,516  | 
|Fireworks
Entertainment Inc.  bearing interest at
prime                                  |  |  | 372,408 |  |      |  | 381,290 | 
|                                                                                          |  |  |         |  |      |  |         | 
|Due from parent
and affiliated companies                                                  |  |  | 515,025 |  |      |  | 466,457 | 
|                                                                                          |  |  |         |  |      |  |         | 



| |  | These advances have no fixed repayment terms.                                                                                                        
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company has entered into the following transactions with
related
parties. The related parties are the parent of the Company and other
affiliates:

|                                                                                    |  |      |       |      |  |      |       |  |  |  |       | 
|----------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                                                                    |  | 2003 |       | 2002 |  | 2001
|                                                                                    |  | $000 |       | $000 |  | $000
|Operating expenses 
acquisition of broadcast rights
 Fireworks Entertainment Inc. |  |      | 6,550 |      |  |      | 4,475 |  |  |  | 4,516 | 
|Interest expense 
CanWest                                                          |  |      |      |      |  |      |      |  |  |  | 2,613 | 
|Management fee expense
 CanWest                                                    |  |      |      |      |  |      |      |  |  |  | 7,600 | 
|Operating lease expense
 CanWest                                                   |  |      | 2,020 |      |  |      | 2,020 |  |  |  | 420   | 



| |  | All transactions occur at the exchange amount agreed to by the
parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Senior subordinated notes held by CanWest Communications
Corporation, the
parent company of CanWest totaled $58.1 million (US$41.9 million) at
August 31, 2003 (2002 - $56.1 million). This debt, issued in May 2001,
matures May 15, 2011 and bears interest at 10.625%. Interest expense
related to this debt totaled $6.4 million in fiscal 2003 (2002 - $6.0
million). During 2003, CanWest Communications Corporation exchanged
these Canadian dollar denominated notes for United States dollar
denominated notes. The exchange was completed pursuant to the provisions
of the original note indenture. In September 2003, the necessary filings
were made with the Securities Exchange Commission to register the notes
for trading.
|
| |  | In June 2003, a company in which an affiliate of CanWest
Communications
Corporation holds a 50% interest, acquired the TD Centre in Winnipeg,
Manitoba, a building in which the Company is a tenant. Rent paid to this
company in fiscal 2003 amounted to $195,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

26



---



##### 





|16. |  | FINANCIAL INSTRUMENTS                          
|--- |  | -----------------------------------------------
|   
|    |  | Financial instruments consist of the following:

|                                                  |  |          |           |       |  |          |           |       |  |  |           |  |  |  |           | 
|------------------------------------------------- |  | -------- | --------- | ----- |  | -------- | --------- | ----- |  |  | --------- |  |  |  | --------- | 
|                                                  |  | 2003     |           | 2002 
|                                                  |  |          |           |      
|                                                  |  | Carrying |           | Fair  |  | Carrying |           | Fair 
|                                                  |  | value    |           | value |  | value    |           | value
|                                                  |  | $000     |           | $000  |  | $000     |           | $000 
|Short term
assets                                 |  |          | 516,974   |       |  |          | 516,974   |       |  |  | 479,969   |  |  |  | 479,969   | 
|Other
investments                                 |  |          | 109,280   |       |  |          | 119,822   |       |  |  | 159,181   |  |  |  | 206,117   | 
|Short term
liabilities                            |  |          | 349,823   |       |  |          | 349,823   |       |  |  | 406,616   |  |  |  | 406,616   | 
|Long term
debt                                    |  |          | 2,447,224 |       |  |          | 2,331,005 |       |  |  | 2,530,324 |  |  |  | 2,474,324 | 
|Other long term
liabilities                       |  |          | 150,190   |       |  |          | 150,190   |       |  |  | 65,169    |  |  |  | 65,169    | 
|Interest rate and cross-currency swap liabilities |  |          | 23,015    |       |  |          | 356,956   |       |  |  |          |  |  |  | 56,000    | 



| |  | The fair value of short-term assets and liabilities, which
include cash
and short term investments, accounts receivable, distributions from
Network TEN, income taxes recoverable, and other assets, bank loans and
advances, accounts payable and accrued liabilities and broadcast rights
accounts payable approximate their fair value due to the short term
nature of these financial instruments.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The fair value of other investments is primarily based on quoted
market
prices for publicly traded securities, and the most recent purchase
transactions and agreements for non-listed securities.                                                                                                                                                                                                    
|
| |  | The fair value of advances to parent and affiliated companies are
not
readily determinable.                                                                                                                                                                                                                                                                                                           
|
| |  | The fair value of long term debt subject to floating interest
rates
approximates the carrying value. The fair value of long term debt,
subject to fixed interest rates, is estimated by discounting future cash
flows, including interest payments, using rates currently available for
debt of similar terms and maturity.                                                                           
|
| |  | The fair values of other long term liabilities, including
broadcast
rights accounts payable, approximates their carrying values.                                                                                                                                                                                                                                                                      
|
| |  | The fair values of unrealized net gains and losses on interest
rate and
cross-currency interest rate swaps are based on the amounts at which they
could be settled based on estimates of market rates.                                                                                                                                                                                                
|
| |  | Credit risk                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The Company is exposed to credit risk, primarily in relation to
accounts
receivable. Exposure to credit risk varies due to the concentration of
individual balances with large advertising agencies. The Company
performs regular credit assessments of its customers and provides
allowances for potentially uncollectable accounts receivable.                                                      
|
| |  | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                    
| |  | The Company manages its exposure to fluctuations in interest
rates
through the use of interest rate and cross currency interest rate swap
agreements, more fully described in note 8.                                                                                                                                                                                                                 

27



---



##### 





|17. |  | JOINTLY CONTROLLED ENTERPRISE                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The following amounts included in the consolidated financial
statements
represent the Companys proportionate interest in TV3 Ireland.

|                              |                                 |  |        |        |      |  |        |        |  
|----------------------------- | ------------------------------- |  | ------ | ------ | ---- |  | ------ | ------ | -
|                              |                                 |  | 2003   |        | 2002
|                              |                                 |  | $000   |        | $000
|Balance
sheets                |                                 |  |        |        |      |  |        |       
|Assets                        |                                 |  |        |        |      |  |        |       
|                              | Current
assets                  |  |        | 10,182 |      |  |        | 9,329  |  
|                              | Long term
assets                |  |        | 9,823  |      |  |        | 12,732 |  
|                              |                                 |  |        |        |      |  |        |       
|                              |                                 |  | 20,005 |        |      |  | 22,061 |       
|                              |                                 |  |        |        |      |  |        |       
|Liabilities                   |                                 |  |        |        |      |  |        |       
|                              | Current
liabilities             |  |        | 33,692 |      |  |        | 32,906 |  
|                              | Long term
liabilities           |  |        |       |      |  |        | 4,643  |  
|                              |                                 |  |        |        |      |  |        |       
|                              |                                 |  | 33,692 |        |      |  | 37,549 |       
|                              |                                 |  |        |        |      |  |        |       
|Statements of
earnings        |                                 |  |        |        |      |  |        |       
|Revenue                       |                                 |  | 29,461 |        |      |  | 25,643 |       
|Expenses                      |                                 |  | 27,674 |        |      |  | 24,630 |       
|                              |                                 |  |        |        |      |  |        |       
|Net
earnings                  |                                 |  | 1,787  |        |      |  | 1,013  |       
|                              |                                 |  |        |        |      |  |        |       
|Statements of
cash flows      |                                 |  |        |        |      |  |        |       
|Cash generated
(utilized) by: |                                 |  |        |        |      |  |        |       
|                              | Operating
activities            |  |        | 6,833  |      |  |        | (1,936 | )
|                              | Investing
activities            |  |        | (70    | )    |  |        | (130   | )
|                              | Financing
activities            |  |        | (6,602 | )    |  |        | 2,903  |  
|                              |                                 |  |        |        |      |  |        |       
|                              | Net increase
(decrease) in cash |  |        | 161    |      |  |        | 857    |  
|                              |                                 |  |        |        |      |  |        |       



|18. |  | COMMITMENTS, CONTINGENCIES and GUARANTEES
|--- |  | -----------------------------------------
|    |  |                                          
|    |  | Commitments                              



| | a) |  | The Company has entered into various agreements for the right
to broadcast certain feature films and syndicated television
programs in the future. These agreements, which range in term from
one to five years, generally commit the Company to acquire specific
programs or films or certain levels of future productions. The
acquisition of these additional broadcast rights is contingent on
the actual production and/or the airing of the programs or films.
Management estimates that at August 31, 2003 these agreements will
result in future annual program and film expenditures of $250
million to $277 million.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | In addition, at August 31, 2003 the company has entered into
agreements to acquire investments in film and television programs
amounting to $27.3 million (US$ 19.0 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                 

28



---



##### 





| | b) |  | The Companys future minimum payments under the terms of its
operating lease commitments for the next five years are as follows:
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------

|           |  |      |       
|---------- |  | ---- | ------
|           |  | $000
|2004       |  |      | 30,045
|2005       |  |      | 28,469
|2006       |  |      | 24,945
|2007       |  |      | 19,918
|2008       |  |      | 19,492
|thereafter |  |      | 53,050



| | Contingencies
| | -------------
| |              
| | a)           
|
| | (b)          
|
| | (c)          
|
| | (d)          



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

29



---



##### 





|    |  | The Company has agreed to indemnify its current and former
directors and
officers to the extent permitted by law, against any and all charges,
costs, expenses, amounts paid in settlement and damages incurred by the
directors and officers as a result of any lawsuit or any other judicial,
administrative or investigative proceeding in which the directors and
officers are sued as result of their service. These indemnification
claims will be subject to any statutory or other legal limitation period.
The nature of such indemnification prevents the Company from making a
reasonable estimate of the maximum potential amount if it could be
required to pay to counter parties. The Company has $30 million in
directors and officers liability insurance coverage.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|19. |  | SEGMENTED INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | The Company operates primarily within the publishing, online,
broadcasting, and outdoor advertising industries in Canada, New
Zealand, Ireland and Australia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | Each segment below operates as a strategic business unit with
separate
management. Segment performance is measured primarily on the basis of
operating profit. Management includes its proportionate interest in
the results of its equity accounted Australian television and outdoor
operations in strategic decision making, therefore, these
proportionate results are included in the following segmented
disclosure. Segmented information in Canadian dollars is as
follows:                                                                                                                                                                                                                                                                                                   



|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|-------------------------------------------------------- |  | ------- | --------- | ---------------- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | -
|                                                         |  | Revenue |           | Operating profit
|                                                         |  |         |           |                 
|Operating Segments                                       |  | 2003    |           | 2002             |  | 2001 |           | 2003 |  | 2002 |           | 2001
|                                                         |  | $000    |           | $000             |  | $000 |           | $000 |  | $000 |           | $000
|Television                                               |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|Canada                                                   |  |         | 730,407   |                  |  |      | 691,888   |      |  |      | 701,027   |      |  |  | 216,346 |   |  |  | 190,752 |   |  |  | 229,494 |  
|Australia - Network
TEN                                  |  |         | 336,362   |                  |  |      | 281,427   |      |  |      | 233,117   |      |  |  | 106,975 |   |  |  | 81,782  |   |  |  | 69,212  |  
|New
Zealand                                              |  |         | 95,752    |                  |  |      | 69,079    |      |  |      | 58,436    |      |  |  | 10,095  |   |  |  | (1,938  | ) |  |  | (8,939  | )
|Ireland                                                  |  |         | 32,490    |                  |  |      | 28,317    |      |  |      | 31,056    |      |  |  | 9,729   |   |  |  | 7,654   |   |  |  | 2,748   |  
|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|                                                         |  |         | 1,195,011 |                  |  |      | 1,070,711 |      |  |      | 1,023,636 |      |  |  | 343,145 |   |  |  | 278,250 |   |  |  | 292,515 |  
|Radio - New
Zealand                                      |  |         | 73,400    |                  |  |      | 60,724    |      |  |      | 56,864    |      |  |  | 20,751  |   |  |  | 16,361  |   |  |  | 14,301  |  
|Publishing and Online -
Canada                           |  |         | 1,164,012 |                  |  |      | 1,270,335 |      |  |      | 919,923   |      |  |  | 258,496 |   |  |  | 285,027 |   |  |  | 207,804 |  
|Outdoor -
Australia                                      |  |         | 36,656    |                  |  |      | 38,074    |      |  |      | 22,861    |      |  |  | 2,560   |   |  |  | 874     |   |  |  | 1,610   |  
|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|                                                         |  |         | 2,469,079 |                  |  |      | 2,439,844 |      |  |      | 2,023,284 |      |  |  | 624,952 |   |  |  | 580,512 |   |  |  | 516,230 |  
|Corporate and
other                                      |  |         |          |                  |  |      |          |      |  |      |          |      |  |  | (23,213 | ) |  |  | (26,807 | ) |  |  | (13,057 | )
|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|                                                         |  |         | 2,469,079 |                  |  |      | 2,439,844 |      |  |      | 2,023,284 |      |  |  | 601,739 |   |  |  | 553,705 |   |  |  | 503,173 |  
|Restructuring and television
program impairment expenses |  |         |          |                  |  |      |          |      |  |      |          |      |  |  | (23,305 | ) |  |  |        |   |  |  |        |  
|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|Total
Combined                                           |  |         | 2,469,079 |                  |  |      | 2,439,844 |      |  |      | 2,023,284 |      |  |  | 578,434 |   |  |  | 553,705 |   |  |  | 503,173 |  
|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|Elimination of equity
accounted affiliates(1)            |  |         | (373,018  | )                |  |      | (319,500  | )    |  |      | (255,978  | )    |  |  | (99,219 | ) |  |  | (82,655 | ) |  |  | (69,103 | )
|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  
|Total
Consolidated                                       |  |         | 2,096,061 |                  |  |      | 2,120,344 |      |  |      | 1,767,306 |      |  |  | 479,215 |   |  |  | 471,050 |   |  |  | 434,070 |  
|                                                         |  |         |           |                  |  |      |           |      |  |      |           |      |  |  |         |   |  |  |         |   |  |  |         |  

30



---



##### 



|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|-------------------------------------------------------- |  | ------------ | --------- | -------------------- |  | ---- | --------- | ---- |  | ---- | ------- | - |  |  | ------- | - |  |  | ------- | -
|                                                         |  | Total assets |           | Capital expenditures
|                                                         |  |              |           |                     
|Operating Segments                                       |  | 2003         |           | 2002                 |  | 2003 |           | 2002 |  | 2001
|                                                         |  | $000         |           | $000                 |  | $000 |           | $000 |  | $000
|Television                                               |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|Canada                                                   |  |              | 1,485,263 |                      |  |      | 1,362,562 |      |  |      | 9,364   |   |  |  | 14,392  |   |  |  | 16,465  |  
|Australia - Network
TEN                                  |  |              | 372,039   |                      |  |      | 345,051   |      |  |      | 11,097  |   |  |  | 12,388  |   |  |  | 8,670   |  
|New
Zealand                                              |  |              | 156,662   |                      |  |      | 141,677   |      |  |      | 3,056   |   |  |  | 1,518   |   |  |  | 2,163   |  
|Ireland                                                  |  |              | 19,923    |                      |  |      | 21,530    |      |  |      | 117     |   |  |  | 479     |   |  |  | 86      |  
|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|                                                         |  |              | 2,033,887 |                      |  |      | 1,870,820 |      |  |      | 23,634  |   |  |  | 28,777  |   |  |  | 27,384  |  
|Radio - New
Zealand                                      |  |              | 163,118   |                      |  |      | 150,176   |      |  |      | 2,666   |   |  |  | 1,207   |   |  |  | 1,090   |  
|Publishing and Online -
Canada                           |  |              | 2,836,809 |                      |  |      | 3,236,317 |      |  |      | 9,348   |   |  |  | 17,063  |   |  |  | 21,932  |  
|Outdoor -
Australia                                      |  |              | 23,789    |                      |  |      | 27,867    |      |  |      | 693     |   |  |  | 2,379   |   |  |  | 2,000   |  
|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|                                                         |  |              | 5,057,603 |                      |  |      | 5,285,180 |      |  |      | 36,341  |   |  |  | 49,426  |   |  |  | 52,406  |  
|Corporate and
other                                      |  |              | 874,027   |                      |  |      | 796,110   |      |  |      | 13,589  |   |  |  | 17,613  |   |  |  |        |  
|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|                                                         |  |              | 5,931,630 |                      |  |      | 6,081,290 |      |  |      | 49,930  |   |  |  | 67,039  |   |  |  | 52,406  |  
|Restructuring and television
program impairment expenses |  |              |          |                      |  |      |          |      |  |      |        |   |  |  |        |   |  |  |        |  
|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|Total
Combined                                           |  |              | 5,931,630 |                      |  |      | 6,081,290 |      |  |      | 49,930  |   |  |  | 67,039  |   |  |  | 52,406  |  
|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|Elimination of equity
accounted affiliates(1)            |  |              | (319,373  | )                    |  |      | (368,424  | )    |  |      | (11,790 | ) |  |  | (14,767 | ) |  |  | (10,670 | )
|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  
|Total
Consolidated                                       |  |              | 5,612,257 |                      |  |      | 5,712,866 |      |  |      | 38,140  |   |  |  | 52,272  |   |  |  | 41,736  |  
|                                                         |  |              |           |                      |  |      |           |      |  |      |         |   |  |  |         |   |  |  |         |  



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



---



##### 





|20. |  | UNITED STATES ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | These consolidated financial statements have been prepared in
accordance
with Canadian GAAP. In certain aspects GAAP as applied in the United
States (U.S.) differs from Canadian GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Principal differences affecting the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Comprehensive income, defined as all changes in equity other than
those
resulting from investments by owners and distributions to owners, must be
reported under U.S. GAAP. There is no similar requirement under Canadian
GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Pre-operating costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | In the U.S., pre-operating costs are expensed in the period
incurred. In
accordance with Canadian GAAP, the Company defers pre-operating costs
until commencement of commercial operations and amortizes the deferred
costs over a period of five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | In the U.S., distributions from self-sustaining foreign
operations do not
result in a realization of the cumulative translation adjustments
account. Realization of such foreign currency translation adjustments
occur only upon the sale of all or a part of the investment giving rise
to the translation adjustments. In accordance with Canadian GAAP,
reductions in the net investment in self-sustaining foreign operations
result in a proportionate reduction in the cumulative foreign currency
translation adjustment accounts.                                                                                                                                                              
|   
|    |  | Programming commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | Under Canadian GAAP, certain programming commitments related to
an
acquisition imposed by regulatory requirements were accrued in the
purchase equation. Under U.S. GAAP, these costs are expensed as
incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | Equity accounted affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Under U.S. GAAP, investments placed in trust due to regulatory
requirements must be accounted for at cost. Under Canadian GAAP, these
investments are accounted as cost, equity or consolidated investments
based on the level of influence that the investor has over the
investment.                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Investment in WIC on an equity basis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Under Canadian GAAP, the investment in WIC was accounted for
using the
equity method during the period that this investment was held in trust
pending completion of the regulatory approval process. Under US GAAP,
the investment was accounted for on a cost basis then, as a result of
receiving approval to complete the purchase of WIC, the Company changed
its method of accounting for WIC to the equity method. The change in
accounting policy was retroactively
applied as required under APB Opinion No. 18, The Equity Method of
Accounting for Investments in Common Stock. Effective July 6, 2000, the
Company consolidated its investment in WIC for both Canadian and US GAAP
purposes.

31



---



##### 





| |  | Intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Under Canadian GAAP, certain costs related to the acquisition of
broadcast licences other than through a business combination were
recorded as intangible assets. Under US GAAP such costs are expensed as
incurred.                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Investment in marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | In the U.S., investment assets classified as available for
sale are
carried at market, and unrealized temporary gains and losses are
included, net of tax, in accumulated comprehensive income. In accordance
with Canadian GAAP, the Company carries its investment in marketable
securities at lower of cost and net realizable value.                                                                                                                                                                                                                                                                                      
|
| |  | Effect of tax rate changes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Under U.S. GAAP, changes in tax rates are applied to reduce or
increase
future income tax assets or liabilities when the proposed tax rate change
has received legislative approval. Under Canadian GAAP, tax rate changes
are applied when the change in tax rate is considered substantively
enacted.                                                                                                                                                                                                                                                                                                                         
|
| |  | Pension Valuation Allowances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Under Canadian GAAP, a valuation allowance is used to reduce the
carrying
value of pension assets to the future benefit expected to be realized.
Changes in the valuation allowance are recorded as adjustments to pension
expense. Under US GAAP, valuation allowances are not recorded.                                                                                                                                                                                                                                                                                                                                       
|
| |  | Cash flow statement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | The Canadian accounting standard for the preparation of cash flow
statements is consistent with the guidance provided under IAS 7, and
accordingly, the cash flow statements presented herein have not been
reconciled to U.S. GAAP under the accommodation provided by the
Securities and Exchange Commission of the United States (SEC).                                                                                                                                                                                                                                                                                    
|
| |  | Proportionate consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Canadian GAAP requires the accounts of jointly controlled
enterprises to
be proportionately consolidated. In the U.S., investments in jointly
controlled entities are accounted as equity investments. This accounting
difference applies to the Companys investment in TV3 Ireland. The
proportionate interest is disclosed in note 17. Accordingly, under
accommodation provided by the SEC this difference is not included in the
following reconciliation.                                                                                                                                                                 
|
| |  | Accounting for derivative instruments and hedging
activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Under U.S. GAAP, entities are required to recognize all
derivative
instruments as either assets or liabilities in the balance sheet, and
measure those instruments at fair value. The changes in fair value of
the derivative are included in the statement of earnings. In addition,
under U.S. GAAP foreign denominated debt is adjusted through earnings to
reflect currency translation rates at each balance sheet date. Under
Canadian GAAP hedging derivatives are eligible for hedge accounting if
certain criteria are met. Non-hedging derivatives are recognized at
their fair value as either assets or liabilities.
|
| |  | U.S. GAAP for Equity accounted affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | For Canadian GAAP the Company accounts for Network TENs
derivative
instruments using hedge                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

32



---



##### 





| |  | accounting. Under U.S. GAAP the change in fair
value of the instruments would be reflected in earnings as described
above.                                                                                                                                                                                                                                                                                                                                                              
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Cumulative effect of the prospective adoption of new
accounting
pronouncements                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Under U.S. GAAP, the transitional impairment of goodwill related
to
Network TEN is recorded as a charge to net earnings in accordance with
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangibles, where as under Canadian GAAP it was recorded as a charge to
opening retained earnings. The principles and methods for computing
impairment in accordance with FAS 142 are similar to those prescribed
under Canadian GAAP, as described in notes 1 and 3.
|
| |  | Integration costs related to CanWest
Publications                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Under Canadian GAAP certain integration costs related to the
CanWest
Publications acquisition were accrued in the purchase equation. Under US
GAAP, these costs are expensed as incurred.                                                                                                                                                                                                                                                                                               
|
| |  | Reconciliation of financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Consolidated statements of earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | The following is a reconciliation of net earnings reflecting the
differences between Canadian and U.S. GAAP:                                                                                                                                                                                                                                                                                                                                                                            

|                                                                                                                                                                   |  |      |         |      |  |      |         |   |  |  |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                                                                                                                                                   |  | 2003 |         | 2002 |  | 2001
|                                                                                                                                                                   |  | $000 |         | $000 |  | $000
|Net earnings in accordance
with Canadian GAAP                                                                                                                      |  |      | 187,606 |      |  |      | 97,910  |   |  |  | 97,682  |  
|Pre-operating costs net of
tax of ($939) (2002  $1,331,
2001 - $1,175)                                                                                            |  |      | 2,921   |      |  |      | (100    | ) |  |  | 3,337   |  
|Realization of cumulative
translation adjustments net
of tax of nil                                                                                                |  |      | (922    | )    |  |      | 1,000   |   |  |  | 7,200   |  
|Reversal of amortization of
goodwill related to future
programming costs imposed by regulatory requirement
on business combination, net of tax of nil              |  |      |        |      |  |      |        |   |  |  | 938     |  
|Programming costs imposed by
regulatory requirement
net of tax of $2,567 (2002  $2,438, 2001 - $774)                                                              |  |      | (3,403  | )    |  |      | (3,232  | ) |  |  | (1,026  | )
|Integration costs related to
CanWest Publications
net of tax of $109 (2002 - $827)                                                                                 |  |      | (193    | )    |  |      | (1,470  | ) |  |  |        |  
|Intangible assets net of tax
of $860                                                                                                                               |  |      | (1,465  | )    |  |      |        |   |  |  |        |  
|Pension valuation allowances
net of tax of $54 (2002 - $32,
2001 - $23)                                                                                            |  |      | (92     | )    |  |      | (54     | ) |  |  | (38     | )
|Equity accounted affiliates
in trust net of tax of nil                                                                                                             |  |      |        |      |  |      | 3,375   |   |  |  | (3,375  | )
|Reclassification of interest
on junior subordinated notes
from equity net of tax of $31,622 (2002  $36,538,
2001  28,900)                                        |  |      | (60,009 | )    |  |      | (57,148 | ) |  |  | (44,902 | )
|Timing of tax rate
enactment                                                                                                                                       |  |      |        |      |  |      |        |   |  |  | 14,832  |  
|US GAAP adjustments in
equity accounted affiliates
net of tax of ($1,955)                                                                                          |  |      | (3,476  | )    |  |      |        |   |  |  |        |  
|Amortization of WIC goodwill
adjustment resulting from
retroactive equity accounting of WIC upon regulatory
approval net of tax of nil                             |  |      |        |      |  |      |        |   |  |  | (1,576  | )
|Unrealized gain
(loss) on interest rate and cross-currency swaps and translation of foreign denominated
debt net of tax of $30,272 (2002 - $1,199,
2001  $37,016) |  |      | (40,605 | )    |  |      | 27,535  |   |  |  | (55,618 | )
|                                                                                                                                                                   |  |      |         |      |  |      |         |   |  |  |         |  

33



---



##### 



|                                                                                                          |  |      |        |      |  |      |         |   |  |  |        | 
|--------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------- | - |  |  | ------ | 
|                                                                                                          |  | 2003 |        | 2002 |  | 2001
|                                                                                                          |  | $000 |        | $000 |  | $000
|Net earnings in accordance
with U.S. GAAP before
cumulative effect of adoption of new accounting policies |  |      | 80,362 |      |  |      | 67,816  |   |  |  | 17,454 | 
|Cumulative effect of
adoption of new accounting
policies net of tax of nil (2002 - $2,500)                |  |      |       |      |  |      | (45,269 | ) |  |  |       | 
|                                                                                                          |  |      |        |      |  |      |         |   |  |  |        | 
|Net earnings in accordance
with U.S. GAAP                                                                 |  |      | 80,362 |      |  |      | 22,547  |   |  |  | 17,454 | 
|Amortization of goodwill and
indefinite life intangibles
Net of tax of $11,975                            |  |      |       |      |  |      |        |   |  |  | 63,506 | 
|Amortization of goodwill and
indefinite life intangibles
In equity accounted affiliates net of tax of nil |  |      |       |      |  |      |        |   |  |  | 6,211  | 
|                                                                                                          |  |      |        |      |  |      |         |   |  |  |        | 
|Net earnings in accordance
with U.S. GAAP adjusted
to exclude amortization expense recognized in 2001     |  |      | 80,362 |      |  |      | 22,547  |   |  |  | 87,171 | 
|                                                                                                          |  |      |        |      |  |      |         |   |  |  |        | 

34



---



##### 





| |  | Statements of Comprehensive Income            
| |  | ----------------------------------------------
|
| |  | Comprehensive income (loss)  current
periods:

|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- |  | ------- | ------ | ---- |  | ------- | ------ |  |  | ------- | ----- | 
|                                                                                                                                               |                                   |  | 2003    |        | 2002 |  | 2001   
|                                                                                                                                               |                                   |  | $000    |        | $000 |  | $000   
|Net earnings in
accordance with U.S. GAAP                                                                                                      |                                   |  | 80,362  |        |      |  | 22,547  |        |  |  | 17,454  |      
|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |      
|Other
comprehensive income, net of tax:                                                                                                        |                                   |  |         |        |      |  |         |        |  |  |         |      
|                                                                                                                                               | Foreign currency translation
gain |  |         | 22,087 |      |  |         | 24,636 |  |  |         | 6,059 | 
|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |      
|Unrealized gains
(losses) on securities available
for sale, net of tax of nil (2002  nil, 2001 - nil)                                         |                                   |  | (43,647 | )      |      |  | 31,387  |        |  |  | (73,178 | )    
|Realization of
prior years unrealized losses
on sale / write-down of securities available
for sale, net of tax of nil (2002  nil, 2001 - nil) |                                   |  | 10,952  |        |      |  | 60,000  |        |  |  | (987    | )    
|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |      
|                                                                                                                                               |                                   |  | (32,695 | )      |      |  | 91,387  |        |  |  | (74,165 | )    
|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |      
|Reclassification
of transition adjustment related to
interest rate swaps net of tax of $68 (2002 - $69,
2001 - $70)                            |                                   |  | 118     |        |      |  | 115     |        |  |  | 114     |      
|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |      
|                                                                                                                                               |                                   |  | (10,490 | )      |      |  | 116,138 |        |  |  | 67,992  |      
|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |      
|Comprehensive
income (loss)                                                                                                                    |                                   |  | 69,872  |        |      |  | 138,685 |        |  |  | 50,538  |      
|                                                                                                                                               |                                   |  |         |        |      |  |         |        |  |  |         |      



| |  | Other comprehensive income (loss)  accumulated
balances:
| |  | ---------------------------------------------------------

|                               |  |             |         |                |  |            |         |       |  |  |        |   |  |  |          |  
|------------------------------ |  | ----------- | ------- | -------------- |  | ---------- | ------- | ----- |  |  | ------ | - |  |  | -------- | -
|                               |  | Foreign     |         | Unrealized     |  | Transition |         |       |  | 
|                               |  | currency    |         | gains (losses) |  | adjustment |         |       |  | 
|                               |  | translation |         | on securities  |  | on swaps   |         | Total
|Balance, August 31,
2000       |  |             | (85,783 | )              |  |            | 32,307  |       |  |  |       |   |  |  | (53,476  | )
|Transition adjustment on
swaps |  |             |        |                |  |            |        |       |  |  | (2,577 | ) |  |  | (2,577   | )
|Change during
2001             |  |             | 6,059   |                |  |            | (74,165 | )     |  |  | 114    |   |  |  | (67,992  | )
|                               |  |             |         |                |  |            |         |       |  |  |        |   |  |  |          |  
|Balance, August 31,
2001       |  |             | (79,724 | )              |  |            | (41,858 | )     |  |  | (2,463 | ) |  |  | (124,045 | )
|Change during
2002             |  |             | 24,636  |                |  |            | 91,387  |       |  |  | 115    |   |  |  | 116,138  |  
|                               |  |             |         |                |  |            |         |       |  |  |        |   |  |  |          |  
|Balance, August 31,
2002       |  |             | (55,088 | )              |  |            | 49,529  |       |  |  | (2,348 | ) |  |  | (7,907   | )
|Change during
2003             |  |             | 22,087  |                |  |            | (32,695 | )     |  |  | 118    |   |  |  | (10,490  | )
|                               |  |             |         |                |  |            |         |       |  |  |        |   |  |  |          |  
|Balance, August 31,
2003       |  |             | (33,001 | )              |  |            | 16,834  |       |  |  | (2,230 | ) |  |  | (18,397  | )
|                               |  |             |         |                |  |            |         |       |  |  |        |   |  |  |          |  

35



---



##### 





| |  | Consolidated Balance Sheets                                                    
| |  | -------------------------------------------------------------------------------
|
| |  | Balance sheet captions restated to reflect the above items are
presented below:

|                     |                                               |  |      |           |      |  |  |           |  
|-------------------- | --------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | -
|                     |                                               |  | 2003 |           | 2002
|                     |                                               |  | $000 |           | $000
|ASSETS               |                                               |  |      |           |      |  |  |          
|                     | Current
assets                                |  |      | 634,618   |      |  |  | 628,523   |  
|                     | Investment in Network
TEN                     |  |      | 52,070    |      |  |  | 4,494     |  
|                     | Property, plant and
equipment                 |  |      | 624,820   |      |  |  | 660,700   |  
|                     | Intangibles and
goodwill                      |  |      | 3,536,645 |      |  |  | 3,714,768 |  
|                     | Due from parent and
affiliated companies      |  |      | 515,025   |      |  |  | 466,457   |  
|                     | Other
investments                             |  |      | 126,115   |      |  |  | 208,710   |  
|                     | Other
assets                                  |  |      | 145,841   |      |  |  | 186,394   |  
|                     |                                               |  |      |           |      |  |  |           |  
|                     |                                               |  |      | 5,635,134 |      |  |  | 5,870,046 |  
|                     |                                               |  |      |           |      |  |  |           |  
|LIABILITIES          |                                               |  |      |           |      |  |  |          
|                     | Current
liabilities                           |  |      | 446,377   |      |  |  | 586,670   |  
|                     | Long term
debt                                |  |      | 2,942,327 |      |  |  | 3,320,781 |  
|                     | Other
liabilities                             |  |      | 460,646   |      |  |  | 196,835   |  
|                     | Future income
taxes                           |  |      | 342,371   |      |  |  | 393,950   |  
|                     |                                               |  |      |           |      |  |  |           |  
|                     |                                               |  |      | 4,191,721 |      |  |  | 4,498,236 |  
|                     |                                               |  |      |           |      |  |  |           |  
|SHAREHOLDERS
EQUITY |                                               |  |      |           |      |  |  |          
|                     | Capital
stock                                 |  |      | 438,838   |      |  |  | 437,107   |  
|                     | Contributed
surplus                           |  |      | 132,953   |      |  |  | 132,953   |  
|                     | Retained
earnings                             |  |      | 890,019   |      |  |  | 809,657   |  
|                     | Accumulated other
comprehensive income (loss) |  |      | (18,397   | )    |  |  | (7,907    | )
|                     |                                               |  |      |           |      |  |  |           |  
|                     |                                               |  |      | 1,443,413 |      |  |  | 1,371,810 |  
|                     |                                               |  |      |           |      |  |  |           |  
|                     |                                               |  |      | 5,635,134 |      |  |  | 5,870,046 |  
|                     |                                               |  |      |           |      |  |  |           |  

36



---



##### 





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

|                                                                                                                                                     |  |      |           |      |  |  |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- |  |  | --------- | -
|                                                                                                                                                     |  | 2003 |           | 2002
|                                                                                                                                                     |  | $000 |           | $000
|Shareholders equity in
accordance with
Canadian GAAP                                                                                                |  |      | 2,227,554 |      |  |  | 2,259,230 |  
|Adjustments relating to
pre-operating costs,
net of tax of $2,669 (2002 - $3,608)                                                                    |  |      | (3,552    | )    |  |  | (6,473    | )
|Adjustment to goodwill
resulting from retroactive
equity accounting of WIC upon regulatory
approval net of tax of nil                                |  |      | 38,503    |      |  |  | 38,503    |  
|Programming costs imposed by
regulatory requirement
On business combination net of tax of $5,779
(2002  $3,212)                                     |  |      | (7,661    | )    |  |  | (4,258    | )
|Integration costs related to
CanWest Publications
net of tax of $936 (2002 - $827)                                                                   |  |      | (1,663    | )    |  |  | (1,470    | )
|Reversal of amortization of
goodwill related to
future programming costs imposed by regulatory
requirement on business combination net of tax of nil |  |      | 938       |      |  |  | 938       |  
|Adjustment from expensing
intangible assets net of
tax of $860                                                                                       |  |      | (1,465    | )    |  |  |          |  
|Pension valuation allowance
net of tax of $285
(2002 - $339)                                                                                         |  |      | 485       |      |  |  | 577       |  
|Adjustments to equity
accounted affiliates
net of tax of $1,955                                                                                      |  |      | (3,476    | )    |  |  |          |  
|Adjustment to reflect losses
on interest
rate and cross currency swaps net of tax of
$65,951 (2002  $35,679)                                        |  |      | (68,688   | )    |  |  | (28,083   | )
|Transition adjustment on
interest rate swaps, net of
tax of $1,451 (2002 - $1,383)                                                                   |  |      | (2,230    | )    |  |  | (2,348    | )
|Reclassification of junior
subordinated notes to debt                                                                                                |  |      | (752,166  | )    |  |  | (934,335  | )
|Unrealized gain
(loss) on other investments net
of tax of nil (2002  nil)                                                                           |  |      | 16,834    |      |  |  | 49,529    |  
|                                                                                                                                                     |  |      |           |      |  |  |           |  
|Shareholders equity in
accordance with U.S. GAAP                                                                                                    |  |      | 1,443,413 |      |  |  | 1,371,810 |  
|                                                                                                                                                     |  |      |           |      |  |  |           |  



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

|                                |  |      |        |      |  |  |        | 
|------------------------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                                |  | 2003 |        | 2002
|                                |  | $000 |        | $000
|Allowance for doubtful
accounts |  |      | 14,600 |      |  |  | 13,700 | 

37



---



##### 





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

|                 |  |      |        |      |  |  |        | 
|---------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                 |  | 2003 |        | 2002
|                 |  | $000 |        | $000
|Bad debt
expense |  |      | 5,800  |      |  |  | 5,700  | 
|Rent
expense     |  |      | 20,600 |      |  |  | 17,300 | 



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

|                 |  |      |        |      |  |  |        | 
|---------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                 |  | 2003 |        | 2002
|                 |  | $000 |        | $000
|Accrued
salaries |  |      | 75,800 |      |  |  | 62,200 | 



|    |  | Amortization expense related to existing finite life intangibles
will be
$17.5 million per year to 2005, $8.8 million in 2006, and $1.5 million in
2007 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|21. |  | CONSOLIDATING FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | The Company has entered into financing arrangements which are
guaranteed
by the Company and certain of its wholly-owned subsidiaries (the
Guarantor Subsidiaries). Such guarantees are full, unconditional and
joint and several.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | The following supplemental financial information sets forth, on
an
unconsolidated basis, balance sheets, statements of operations and cash
flow information for the Company, Guarantor Subsidiaries and the
Companys other subsidiaries (the Non-Guarantor Subsidiaries). The
supplemental financial information reflects the investments of the
Company in the Guarantor and Non-Guarantor subsidiaries using the equity
method of accounting. As indicated in note 1 for the years ended August
31, 1999 and 2000 the results of the Company reflect results identical to
those of GTNI on a continuity of interests basis. As of September 28,
2000 when the Company was created results reflect the actual results of
the Company.

38



---



##### 



CanWest Media Inc.

Supplemental Consolidating Balance Sheet
August 31, 2003

|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ------------ |  | ------------- | ---------- | ----------- |  | ------------ | ------- | - |  |  | ---------- | - |  |  | --------- | -
|                                                                                                                        |  | CanWest Media Inc. |           | Consolidated |  | Non-guarantor |            | Elimination |  |              |         |  
|                                                                                                                        |  | parent company     |           | guarantors   |  | subsidiaries  |            | entries     |  | Consolidated
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |             
|                                                                                                                        |  | $000               |           | $000         |  | $000          |            | $000        |  | $000        
|Assets                                                                                                                  |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Current
Assets                                                                                                          |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Cash                                                                                                                    |  |                    | 27,922    |              |  |               | 85,014     |             |  |              | 2,514   |   |  |  |           |   |  |  | 115,450   |  
|Accounts
receivable                                                                                                     |  |                    | 1,191     |              |  |               | 361,215    |             |  |              | 7,726   |   |  |  |           |   |  |  | 370,132   |  
|Due from Network
TEN                                                                                                    |  |                    |          |              |  |               | 20,909     |             |  |              |        |   |  |  |           |   |  |  | 20,909    |  
|Inventory                                                                                                               |  |                    |          |              |  |               | 14,509     |             |  |              |        |   |  |  |           |   |  |  | 14,509    |  
|Broadcast
rights                                                                                                        |  |                    |          |              |  |               | 75,007     |             |  |              | 7,905   |   |  |  |           |   |  |  | 82,912    |  
|Future income
taxes                                                                                                     |  |                    |          |              |  |               | 20,223     |             |  |              |        |   |  |  |           |   |  |  | 20,223    |  
|Other                                                                                                                   |  |                    | 2,985     |              |  |               | 7,203      |             |  |              | 295     |   |  |  |           |   |  |  | 10,483    |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                        |  |                    | 32,098    |              |  |               | 584,080    |             |  |              | 18,440  |   |  |  |           |   |  |  | 634,618   |  
|Investment in Network
TEN                                                                                               |  |                    |          |              |  |               | 55,546     |             |  |              |        |   |  |  |           |   |  |  | 55,546    |  
|Investment in equity
accounted subsidiaries                                                                             |  |                    | 1,424,215 |              |  |               |           |             |  |              |        |   |  |  | (1,424,215 | ) |  |  |          |  
|Other
investments                                                                                                       |  |                    | 7         |              |  |               | 109,110    |             |  |              | 163     |   |  |  |           |   |  |  | 109,280   |  
|Broadcast
rights                                                                                                        |  |                    |          |              |  |               | 24,614     |             |  |              | 3,047   |   |  |  |           |   |  |  | 27,661    |  
|Due from parent and
affiliated companies                                                                                |  |                    | 3,138,732 |              |  |               | (2,621,982 | )           |  |              | (1,725  | ) |  |  |           |   |  |  | 515,025   |  
|Property, plant and
equipment                                                                                           |  |                    | 26,936    |              |  |               | 593,770    |             |  |              | 4,114   |   |  |  |           |   |  |  | 624,820   |  
|Other
assets                                                                                                            |  |                    | 58,927    |              |  |               | 67,345     |             |  |              | 454     |   |  |  |           |   |  |  | 126,726   |  
|Intangibles                                                                                                             |  |                    |          |              |  |               | 1,091,554  |             |  |              | 2,264   |   |  |  |           |   |  |  | 1,093,818 |  
|Goodwill                                                                                                                |  |                    |          |              |  |               | 2,423,540  |             |  |              | 1,223   |   |  |  |           |   |  |  | 2,424,763 |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                        |  |                    | 4,680,915 |              |  |               | 2,327,577  |             |  |              | 27,980  |   |  |  | (1,424,215 | ) |  |  | 5,612,257 |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Liabilities                                                                                                             |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Current
liabilities                                                                                                     |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Accounts
payable                                                                                                        |  |                    | 5,684     |              |  |               | 90,753     |             |  |              | 11,066  |   |  |  |           |   |  |  | 107,503   |  
|Accrued
liabilities                                                                                                     |  |                    | 35,162    |              |  |               | 156,189    |             |  |              | 3,494   |   |  |  |           |   |  |  | 194,845   |  
|Income taxes
payable                                                                                                    |  |                    | 1,755     |              |  |               | 14,919     |             |  |              | 294     |   |  |  |           |   |  |  | 16,968    |  
|Broadcast rights accounts
payable                                                                                       |  |                    |          |              |  |               | 28,429     |             |  |              | 2,078   |   |  |  |           |   |  |  | 30,507    |  
|Deferred
revenue                                                                                                        |  |                    | 64        |              |  |               | 29,991     |             |  |              | 12      |   |  |  |           |   |  |  | 30,067    |  
|Future income
taxes                                                                                                     |  |                    |          |              |  |               | 6,072      |             |  |              |        |   |  |  |           |   |  |  | 6,072     |  
|Current portion of long term
debt                                                                                       |  |                    | 36,901    |              |  |               |           |             |  |              | 26,177  |   |  |  |           |   |  |  | 63,078    |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                        |  |                    | 79,566    |              |  |               | 326,353    |             |  |              | 43,121  |   |  |  |           |   |  |  | 449,040   |  
|Long term
debt                                                                                                          |  |                    | 2,384,146 |              |  |               |           |             |  |              |        |   |  |  |           |   |  |  | 2,384,146 |  
|Other accrued
liabilities                                                                                               |  |                    |          |              |  |               | 149,924    |             |  |              | 266     |   |  |  |           |   |  |  | 150,190   |  
|Future income
taxes                                                                                                     |  |                    | (10,351   | )            |  |               | 407,796    |             |  |              | 3,882   |   |  |  |           |   |  |  | 401,327   |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                        |  |                    | 2,453,361 |              |  |               | 884,073    |             |  |              | 47,269  |   |  |  |           |   |  |  | 3,384,703 |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Shareholders
Equity                                                                                                    |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Equity
instruments                                                                                                      |  |                    | 1,191,004 |              |  |               | 438,841    |             |  |              | 846     |   |  |  | (439,687   | ) |  |  | 1,191,004 |  
|Contributed
surplus                                                                                                     |  |                    | 132,953   |              |  |               | 132,953    |             |  |              | 2,654   |   |  |  | (135,607   | ) |  |  | 132,953   |  
|Retained
earnings                                                                                                       |  |                    | 931,090   |              |  |               | 898,921    |             |  |              | (22,507 | ) |  |  | (876,414   | ) |  |  | 931,090   |  
|Cumulative foreign currency
translation
Adjustments                                                                     |  |                    | (27,493   | )            |  |               | (27,211    | )           |  |              | (282    | ) |  |  | 27,493     |   |  |  | (27,493   | )
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                        |  |                    | 2,227,554 |              |  |               | 1,443,504  |             |  |              | (19,289 | ) |  |  | (1,424,215 | ) |  |  | 2,227,554 |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                        |  |                    | 4,680,915 |              |  |               | 2,327,577  |             |  |              | 27,980  |   |  |  | (1,424,215 | ) |  |  | 5,612,257 |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Shareholders Equity in
accordance with
Canadian GAAP                                                                   |  |                    | 2,227,554 |              |  |               | 1,443,504  |             |  |              | (19,289 | ) |  |  | (1,424,215 | ) |  |  | 2,227,554 |  
|Adjustments relating to
pre-operating costs
 net of tax of $2,669                                                      |  |                    |          |              |  |               | (3,636     | )           |  |              | 84      |   |  |  |           |   |  |  | (3,552    | )
|Programming costs imposed by
regulatory
requirement on business combination net of
tax of $5,779                        |  |                    |          |              |  |               | (7,661     | )           |  |              |        |   |  |  |           |   |  |  | (7,661    | )
|Adjustment to goodwill
resulting from
retroactive equity accounting of WIC upon
regulatory approval - net of tax of nil |  |                    |          |              |  |               | 38,503     |             |  |              |        |   |  |  |           |   |  |  | 38,503    |  
|Reversal of amortization of
goodwill related
to future programming expenses, net of tax of
nil                          |  |                    |          |              |  |               | 938        |             |  |              |        |   |  |  |           |   |  |  | 938       |  
|Integration costs related to
CanWest
Publications net of tax of $936                                                    |  |                    |          |              |  |               | (1,663     | )           |  |              |        |   |  |  |           |   |  |  | (1,663    | )
|Adjustment to reflect losses
on interest rate
and cross currency swaps net of tax of
$65,951                            |  |                    | (68,688   | )            |  |               |           |             |  |              |        |   |  |  |           |   |  |  | (68,688   | )
|Adjustment from expensing
intangible assets
net of tax of $860                                                          |  |                    |          |              |  |               | (1,465     | )           |  |              |        |   |  |  |           |   |  |  | (1,465    | )
|Pension valuation allowance
net of tax of $285                                                                          |  |                    |          |              |  |               | 485        |             |  |              |        |   |  |  |           |   |  |  | 485       |  
|Adjustments to equity
accounted affiliates
net of tax of $1,955                                                         |  |                    |          |              |  |               | (3,476     | )           |  |              |        |   |  |  |           |   |  |  | (3,476    | )
|Transition adjustment on
interest rate swaps,
net of tax of $1,451                                                      |  |                    | (2,230    | )            |  |               |           |             |  |              |        |   |  |  |           |   |  |  | (2,230    | )
|Reclassification of junior
subordinated notes
to debt                                                                   |  |                    | (752,166  | )            |  |               |           |             |  |              |        |   |  |  |           |   |  |  | (752,166  | )
|Unrealized gain on other
investments net of tax
of nil                                                                  |  |                    |          |              |  |               | 16,834     |             |  |              |        |   |  |  |           |   |  |  | 16,834    |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Shareholders equity in
accordance with U.S
GAAP                                                                        |  |                    | 1,404,470 |              |  |               | 1,482,363  |             |  |              | (19,205 | ) |  |  | (1,424,215 | ) |  |  | 1,443,413 |  
|                                                                                                                        |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  

39



---



##### 



CanWest Media Inc.

Supplemental Consolidating Statement of Operations
For the Year Ended August 31, 2003

|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ------------ |  | ------------- | --------- | ----------- |  | ------------ | ------- | - |  |  | -------- | - |  |  | --------- | -
|                                                                                                                                   |  | CanWest Media Inc. |         | Consolidated |  | Non-guarantor |           | Elimination |  |              |         |  
|                                                                                                                                   |  | parent company     |         | guarantors   |  | subsidiaries  |           | entries     |  | Consolidated
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |             
|                                                                                                                                   |  | $000               |         | $000         |  | $000          |           | $000        |  | $000        
|Revenue                                                                                                                            |  |                    |        |              |  |               | 2,037,501 |             |  |              | 58,560  |   |  |  |         |   |  |  | 2,096,061 |  
|Operating
expenses                                                                                                                 |  |                    |        |              |  |               | 1,042,338 |             |  |              | 30,040  |   |  |  |         |   |  |  | 1,072,378 |  
|Selling, general and
administrative
expenses                                                                                       |  |                    | 15,440  |              |  |               | 508,441   |             |  |              | 7,598   |   |  |  |         |   |  |  | 531,479   |  
|Restructuring and film and
television program impairment
expenses                                                                  |  |                    |        |              |  |               | 12,989    |             |  |              |        |   |  |  |         |   |  |  | 12,989    |  
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                                                   |  |                    | (15,440 | )            |  |               | 473,733   |             |  |              | 20,922  |   |  |  |         |   |  |  | 479,215   |  
|Amortization of broadcast
licenses,
goodwill and circulation                                                                       |  |                    |        |              |  |               | 17,500    |             |  |              |        |   |  |  |         |   |  |  | 17,500    |  
|Amortization of property,
plant and
equipment                                                                                      |  |                    | 4,668   |              |  |               | 62,665    |             |  |              | 2,767   |   |  |  |         |   |  |  | 70,100    |  
|Other
amortization                                                                                                                 |  |                    |        |              |  |               | 5,819     |             |  |              | 1,268   |   |  |  |         |   |  |  | 7,087     |  
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                                                   |  |                    | (20,108 | )            |  |               | 387,749   |             |  |              | 16,887  |   |  |  |         |   |  |  | 384,528   |  
|Financing
(expenses) income                                                                                                        |  |                    | 119,489 |              |  |               | (359,666  | )           |  |              | (8,301  | ) |  |  |         |   |  |  | (248,478  | )
|Dividend
income                                                                                                                    |  |                    |        |              |  |               | 3,532     |             |  |              |        |   |  |  |         |   |  |  | 3,532     |  
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                                                   |  |                    | 99,381  |              |  |               | 31,615    |             |  |              | 8,586   |   |  |  |         |   |  |  | 139,582   |  
|Investment gains net of
write-down
of investments                                                                                  |  |                    | (10,386 | )            |  |               | 19,626    |             |  |              |        |   |  |  |         |   |  |  | 9,240     |  
|Interest rate swap
loss                                                                                                            |  |                    | (23,015 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (23,015   | )
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                                                   |  |                    | 65,980  |              |  |               | 51,241    |             |  |              | 8,586   |   |  |  |         |   |  |  | 125,807   |  
|Provision for (recovery of)
income
taxes                                                                                           |  |                    | 26,301  |              |  |               | 9,737     |             |  |              | 3,092   |   |  |  |         |   |  |  | 39,130    |  
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Earnings before the
following                                                                                                      |  |                    | 39,679  |              |  |               | 41,504    |             |  |              | 5,494   |   |  |  |         |   |  |  | 86,677    |  
|Interest in earnings of
Network TEN                                                                                                |  |                    |        |              |  |               | 101,339   |             |  |              |        |   |  |  |         |   |  |  | 101,339   |  
|Interest in earnings
(loss) of other
equity accounted affiliates                                                                   |  |                    | 147,927 |              |  |               | (1,332    | )           |  |              |        |   |  |  | (147,927 | ) |  |  | (1,332    | )
|Realized currency
translation
adjustments                                                                                          |  |                    |        |              |  |               | 922       |             |  |              |        |   |  |  |         |   |  |  | 922       |  
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings for the
year                                                                                                          |  |                    | 187,606 |              |  |               | 142,433   |             |  |              | 5,494   |   |  |  | (147,927 | ) |  |  | 187,606   |  
|Retained earnings 
beginning of year                                                                                              |  |                    | 803,493 |              |  |               | 747,297   |             |  |              | (18,810 | ) |  |  | (728,487 | ) |  |  | 803,493   |  
|Dividends                                                                                                                          |  |                    |        |              |  |               | 9,191     |             |  |              | (9,191  | ) |  |  |         |   |  |  |          |  
|Interest on junior
subordinated
debentures  net of tax of $31,622                                                                 |  |                    | (60,009 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (60,009   | )
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Retained earnings  end
of year                                                                                                    |  |                    | 931,090 |              |  |               | 898,921   |             |  |              | (22,507 | ) |  |  | (876,414 | ) |  |  | 931,090   |  
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings in accordance
with
Canadian GAAP                                                                                      |  |                    | 187,606 |              |  |               | 142,433   |             |  |              | 5,494   |   |  |  | (147,927 | ) |  |  | 187,606   |  
|Pre-operating costs net of
tax of
($939)                                                                                           |  |                    |        |              |  |               | 20        |             |  |              | 2,901   |   |  |  |         |   |  |  | 2,921     |  
|Realization of currency
translation
adjustments net of tax of nil                                                                  |  |                    |        |              |  |               | (922      | )           |  |              |        |   |  |  |         |   |  |  | (922      | )
|Integration costs related to
CanWest
Publications net of tax of $109                                                               |  |                    |        |              |  |               | (193      | )           |  |              |        |   |  |  |         |   |  |  | (193      | )
|Programming costs imposed by
regulatory requirement, net of tax
of $2,567                                                          |  |                    |        |              |  |               | (3,403    | )           |  |              |        |   |  |  |         |   |  |  | (3,403    | )
|Reclassification of interest
on
junior subordinated debentures from
equity net of tax of $31,622                                   |  |                    | (60,009 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (60,009   | )
|Intangible assets net of tax
of $860                                                                                               |  |                    |        |              |  |               | (1,465    | )           |  |              |        |   |  |  |         |   |  |  | (1,465    | )
|Pension valuation allowances
net of
tax of $54                                                                                     |  |                    |        |              |  |               | (92       | )           |  |              |        |   |  |  |         |   |  |  | (92       | )
|US GAAP adjustments in
equity
accounted affiliates net of tax of
($1,955)                                                          |  |                    |        |              |  |               | (3,476    | )           |  |              |        |   |  |  |         |   |  |  | (3,476    | )
|Unrealized gain
(loss) on interest
rate and cross currency swaps and
translation of foreign denominated
debt bet of tax of $30,272 |  |                    | (40,605 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (40,605   | )
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings (loss) in
accordance
with U.S. GAAP                                                                                   |  |                    | 86,992  |              |  |               | 132,902   |             |  |              | 8,395   |   |  |  | (147,927 | ) |  |  | 80,362    |  
|                                                                                                                                   |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  

41



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##### 



CanWest Media Inc.

Supplemental Consolidating Statement of Cash Flows
For the Year Ended August 31, 2003

|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |          |  
|------------------------------------------- | ---------------------------------------------------------- |  | ------------------ | -------- | ------------ |  | ------------- | -------- | ----------- |  | ------------ | ----- |  |  | -------- | ------- |  |  | -------- | -------- | -
|                                            |                                                            |  | CanWest Media Inc. |          | Consolidated |  | Non-guarantor |          | Elimination |  |              |       | 
|                                            |                                                            |  | parent company     |          | guarantors   |  | subsidiaries  |          | entries     |  | Consolidated
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |             
|                                            |                                                            |  | $000               |          | $000         |  | $000          |          | $000        |  | $000        
|CASH
GENERATED (UTILIZED) BY:               |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Operating
activities                        |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Net earnings for
the year                   |                                                            |  | 187,606            |          |              |  | 142,433       |          |             |  | 5,494        |       |  |  | (147,927 | )       |  |  | 187,606  |         
|Items not
affecting cash                    |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|                                            | Amortization                                               |  |                    | 14,114   |              |  |               | 85,984   |             |  |              | 4,035 |  |  |          |        |  |  |          | 104,133  |  
|                                            | Future income
taxes                                        |  |                    | (5,899   | )            |  |               | (5,957   | )           |  |              | 2,666 |  |  |          |        |  |  |          | (9,190   | )
|                                            | Interest in loss of Network
TEN                            |  |                    |         |              |  |               | (101,339 | )           |  |              |      |  |  |          |        |  |  |          | (101,339 | )
|                                            | Interest in loss
(earnings) of equity
accounted affiliates |  |                    | (147,927 | )            |  |               | 1,332    |             |  |              |      |  |  |          | 147,927 |  |  |          | 1,332    |  
|                                            | Interest rate swap
loss                                    |  |                    | 23,015   |              |  |               |         |             |  |              |      |  |  |          |        |  |  |          | 23,015   |  
|                                            | Realized translation
adjustments                           |  |                    |         |              |  |               | (922     | )           |  |              |      |  |  |          |        |  |  |          | (922     | )
|                                            | Investment gains net of
write-down of
investments          |  |                    |         |              |  |               | (9,240   | )           |  |              |      |  |  |          |        |  |  |          | (9,240   | )
|                                            | Pension
expense                                            |  |                    |         |              |  |               | 7,609    |             |  |              |      |  |  |          |        |  |  |          | 7,609    |  
|Distributions
from Network TEN              |                                                            |  |                   |          |              |  | 33,378        |          |             |  |             |       |  |  |         |         |  |  | 33,378   |         
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|                                            |                                                            |  | 70,909             |          |              |  | 153,278       |          |             |  | 12,195       |       |  |  |         |         |  |  | 236,382  |         
|Changes in
non-cash operating accounts      |                                                            |  | 33,644             |          |              |  | (57,258       | )        |             |  | 62,315       |       |  |  |         |         |  |  | 38,701   |         
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|                                            |                                                            |  | 104,553            |          |              |  | 96,020        |          |             |  | 74,510       |       |  |  |         |         |  |  | 275,083  |         
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Investing
Activities                        |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Other
investments                           |                                                            |  |                   |          |              |  | (4,311        | )        |             |  |             |       |  |  |         |         |  |  | (4,311   | )       
|Investment in
broadcast licences            |                                                            |  |                   |          |              |  | (2,260        | )        |             |  | (65          | )     |  |  |         |         |  |  | (2,325   | )       
|Proceeds from
sale of investments           |                                                            |  |                   |          |              |  | 45,605        |          |             |  |             |       |  |  |         |         |  |  | 45,605   |         
|Proceeds from
divestitures                  |                                                            |  |                   |          |              |  | 193,500       |          |             |  |             |       |  |  |         |         |  |  | 193,500  |         
|Purchase of
property, plant and equipment   |                                                            |  | (13,588            | )        |              |  | (24,435       | )        |             |  | (117         | )     |  |  |         |         |  |  | (38,140  | )       
|Advances to
parent and affiliated companies |                                                            |  | 292,760            |          |              |  | (291,058      | )        |             |  | (50,270      | )     |  |  |         |         |  |  | (48,568  | )       
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|                                            |                                                            |  | 279,172            |          |              |  | (82,959       | )        |             |  | (50,452      | )     |  |  |         |         |  |  | 145,761  |         
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Financing
Activities                        |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Dividends
paid                              |                                                            |  |                   |          |              |  | 9,191         |          |             |  | (9,191       | )     |  |  |         |         |  |  |         |         
|Issuance of long
term debt                  |                                                            |  | 294,700            |          |              |  |              |          |             |  |             |       |  |  |         |         |  |  | 294,700  |         
|Repayment of
long term debt                 |                                                            |  | (636,931           | )        |              |  |              |          |             |  | (14,672      | )     |  |  |         |         |  |  | (651,603 | )       
|Issuance of
share capital                   |                                                            |  | 1,731              |          |              |  |              |          |             |  |             |       |  |  |         |         |  |  | 1,731    |         
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|                                            |                                                            |  | (340,500           | )        |              |  | 9,191         |          |             |  | (23,863      | )     |  |  |         |         |  |  | (355,172 | )       
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Net change in
cash                          |                                                            |  | 43,225             |          |              |  | 22,252        |          |             |  | 195          |       |  |  |         |         |  |  | 65,672   |         
|Cash 
beginning of year                    |                                                            |  | (15,303            | )        |              |  | 62,762        |          |             |  | 2,319        |       |  |  |         |         |  |  | 49,778   |         
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         
|Cash 
end of year                          |                                                            |  | 27,922             |          |              |  | 85,014        |          |             |  | 2,514        |       |  |  |         |         |  |  | 115,450  |         
|                                            |                                                            |  |                    |          |              |  |               |          |             |  |              |       |  |  |          |         |  |  |          |         

42



---



##### 



CanWest Media Inc.

Supplemental Consolidating Balance Sheet
August 31, 2002

|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | --------- | ------------ |  | ------------- | ---------- | ----------- |  | ------------ | ------- | - |  |  | ---------- | - |  |  | --------- | -
|                                                                                                                         |  | CanWest Media Inc. |           | Consolidated |  | Non-guarantor |            | Elimination |  |              |         |  
|                                                                                                                         |  | parent company     |           | guarantors   |  | subsidiaries  |            | entries     |  | Consolidated
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |             
|                                                                                                                         |  | $000               |           | $000         |  | $000          |            | $000        |  | $000        
|Assets                                                                                                                   |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Current
Assets                                                                                                           |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Cash                                                                                                                     |  |                    | (15,303   | )            |  |               | 62,762     |             |  |              | 2,319   |   |  |  |           |   |  |  | 49,778    |  
|Accounts
receivable                                                                                                      |  |                    | 803       |              |  |               | 368,630    |             |  |              | 12,904  |   |  |  |           |   |  |  | 382,337   |  
|Income taxes
recoverable                                                                                                 |  |                    | 2,842     |              |  |               | 32,288     |             |  |              | (507    | ) |  |  |            |   |  |  | 34,623    |  
|Inventory                                                                                                                |  |                    |          |              |  |               | 19,836     |             |  |              |        |   |  |  |           |   |  |  | 19,836    |  
|Broadcast
rights                                                                                                         |  |                    |          |              |  |               | 90,193     |             |  |              | 7,903   |   |  |  |           |   |  |  | 98,096    |  
|Future income
taxes                                                                                                      |  |                    |          |              |  |               | 30,013     |             |  |              |        |   |  |  |           |   |  |  | 30,013    |  
|Other                                                                                                                    |  |                    | 1,218     |              |  |               | 11,559     |             |  |              | 454     |   |  |  |           |   |  |  | 13,231    |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                         |  |                    | (10,440   | )            |  |               | 615,281    |             |  |              | 23,073  |   |  |  |           |   |  |  | 627,914   |  
|Investment in Network
TEN                                                                                                |  |                    |          |              |  |               | 4,494      |             |  |              |        |   |  |  |           |   |  |  | 4,494     |  
|Investment in equity
accounted subsidiaries                                                                              |  |                    | 1,253,792 |              |  |               |           |             |  |              |        |   |  |  | (1,253,792 | ) |  |  |          |  
|Other
investments                                                                                                        |  |                    | 7         |              |  |               | 159,173    |             |  |              | 1       |   |  |  |           |   |  |  | 159,181   |  
|Broadcast
rights                                                                                                         |  |                    |          |              |  |               | 19,359     |             |  |              | 3,813   |   |  |  |           |   |  |  | 23,172    |  
|Due from parent and
affiliated companies                                                                                 |  |                    | 3,431,492 |              |  |               | (2,913,040 | )           |  |              | (51,995 | ) |  |  |           |   |  |  | 466,457   |  
|Property, plant and
equipment                                                                                            |  |                    | 16,555    |              |  |               | 634,478    |             |  |              | 9,667   |   |  |  |           |   |  |  | 660,700   |  
|Other
assets                                                                                                             |  |                    | 67,796    |              |  |               | 24,479     |             |  |              | 3,019   |   |  |  |           |   |  |  | 95,294    |  
|Intangibles                                                                                                              |  |                    |          |              |  |               | 1,093,274  |             |  |              | 3,184   |   |  |  |           |   |  |  | 1,096,458 |  
|Goodwill                                                                                                                 |  |                    |          |              |  |               | 2,577,973  |             |  |              | 1,223   |   |  |  |           |   |  |  | 2,579,196 |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                         |  |                    | 4,759,202 |              |  |               | 2,215,471  |             |  |              | (8,015  | ) |  |  | (1,253,792 | ) |  |  | 5,712,866 |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Liabilities                                                                                                              |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Current
liabilities                                                                                                      |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Accounts
payable                                                                                                         |  |                    |          |              |  |               | 154,609    |             |  |              | 3,643   |   |  |  |           |   |  |  | 158,252   |  
|Accrued
liabilities                                                                                                      |  |                    | 2,334     |              |  |               | 201,014    |             |  |              | 9,722   |   |  |  |           |   |  |  | 213,070   |  
|Broadcast rights accounts
payable                                                                                        |  |                    |          |              |  |               | 34,511     |             |  |              | 783     |   |  |  |           |   |  |  | 35,294    |  
|Deferred
revenue                                                                                                         |  |                    |          |              |  |               | 30,522     |             |  |              |        |   |  |  |           |   |  |  | 30,522    |  
|Future
income taxes                                                                                                      |  |                    |          |              |  |               | 6,072      |             |  |              |        |   |  |  |           |   |  |  | 6,072     |  
|Current portion of long term
debt                                                                                        |  |                    | 122,822   |              |  |               |           |             |  |              | 28,043  |   |  |  |           |   |  |  | 150,865   |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                         |  |                    | 125,156   |              |  |               | 426,728    |             |  |              | 42,191  |   |  |  |           |   |  |  | 594,075   |  
|Long term
debt                                                                                                           |  |                    | 2,374,816 |              |  |               |           |             |  |              | 4,643   |   |  |  |           |   |  |  | 2,379,459 |  
|Other accrued
liabilities                                                                                                |  |                    |          |              |  |               | 64,903     |             |  |              | 266     |   |  |  |           |   |  |  | 65,169    |  
|Future income
taxes                                                                                                      |  |                    |          |              |  |               | 416,969    |             |  |              | (2,036  | ) |  |  |           |   |  |  | 414,933   |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                         |  |                    | 2,499,972 |              |  |               | 908,600    |             |  |              | 45,064  |   |  |  |           |   |  |  | 3,453,636 |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Shareholders
Equity                                                                                                     |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Equity
instruments                                                                                                       |  |                    | 1,371,442 |              |  |               | 437,110    |             |  |              | 1,246   |   |  |  | (438,356   | ) |  |  | 1,371,442 |  
|Contributed
surplus                                                                                                      |  |                    | 132,953   |              |  |               | 132,953    |             |  |              | 2,654   |   |  |  | (135,607   | ) |  |  | 132,953   |  
|Retained
earnings                                                                                                        |  |                    | 803,493   |              |  |               | 785,195    |             |  |              | (56,708 | ) |  |  | (728,487   | ) |  |  | 803,493   |  
|Cumulative foreign currency
translation
Adjustments                                                                      |  |                    | (48,658   | )            |  |               | (48,387    | )           |  |              | (271    | ) |  |  | 48,658     |   |  |  | (48,658   | )
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                         |  |                    | 2,259,230 |              |  |               | 1,306,871  |             |  |              | (53,079 | ) |  |  | (1,253,792 | ) |  |  | 2,259,230 |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|                                                                                                                         |  |                    | 4,759,202 |              |  |               | 2,215,471  |             |  |              | (8,015  | ) |  |  | (1,253,792 | ) |  |  | 5,712,866 |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Shareholders Equity in
accordance with
Canadian GAAP                                                                    |  |                    | 2,259,230 |              |  |               | 1,306,871  |             |  |              | (53,079 | ) |  |  | (1,253,792 | ) |  |  | 2,259,230 |  
|Adjustments relating to
pre-operating costs
 net of tax of $3,608                                                       |  |                    |          |              |  |               | (3,656     | )           |  |              | (2,817  | ) |  |  |           |   |  |  | (6,473    | )
|Programming costs imposed by
regulatory
requirement on business combination net of
tax of $3,212                         |  |                    |          |              |  |               | (4,258     | )           |  |              |        |   |  |  |           |   |  |  | (4,258    | )
|Adjustment to goodwill
resulting from
retroactive equity accounting of WIC upon
regulatory approval -  net of tax of nil |  |                    |          |              |  |               | 38,503     |             |  |              |        |   |  |  |           |   |  |  | 38,503    |  
|Reversal of amortization of
goodwill related
to future programming expenses, net of tax of
nil                           |  |                    |          |              |  |               | 938        |             |  |              |        |   |  |  |           |   |  |  | 938       |  
|Integration costs related to
CanWest
Publications net of tax of $827                                                     |  |                    |          |              |  |               | (1,470     | )           |  |              |        |   |  |  |           |   |  |  | (1,470    | )
|Pension valuation allowance
net of tax of $339                                                                           |  |                    |          |              |  |               | 577        |             |  |              |        |   |  |  |           |   |  |  | 577       |  
|Adjustment to reflect losses
on interest rate
and cross currency swaps net of tax of
$35,748                             |  |                    | (28,083   | )            |  |               |           |             |  |              |        |   |  |  |           |   |  |  | (28,083   | )
|Transition adjustment on
interest rate swaps
net of tax of $1,383                                                        |  |                    | (2,348    | )            |  |               |           |             |  |              |        |   |  |  |           |   |  |  | (2,348    | )
|Reclassification of junior
subordinated notes
to debt                                                                    |  |                    | (934,335  | )            |  |               |           |             |  |              |        |   |  |  |           |   |  |  | (934,335  | )
|Adjustment to reflect
unrealized gain on
other investments net of tax of nil                                             |  |                    |          |              |  |               | 49,529     |             |  |              |        |   |  |  |           |   |  |  | 49,529    |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  
|Shareholders equity in
accordance with U.S
GAAP                                                                         |  |                    | 1,294,464 |              |  |               | 1,387,034  |             |  |              | (55,896 | ) |  |  | (1,253,792 | ) |  |  | 1,371,810 |  
|                                                                                                                         |  |                    |           |              |  |               |            |             |  |              |         |   |  |  |            |   |  |  |           |  

43



---



##### 



CanWest Media Inc.

Supplemental Consolidating Statement of Operations
For the Year Ended August 31, 2002

|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ------------ |  | ------------- | --------- | ----------- |  | ------------ | ------- | - |  |  | -------- | - |  |  | --------- | -
|                                                                                                               |  | CanWest Media Inc. |         | Consolidated |  | Non-guarantor |           | Elimination |  |              |         |  
|                                                                                                               |  | parent company     |         | guarantors   |  | subsidiaries  |           | entries     |  | Consolidated
|                                                                                                               |  |                    |         |              |  |               |           |             |  |             
|                                                                                                               |  | $000               |         | $000         |  | $000          |           | $000        |  | $000        
|Revenue                                                                                                        |  |                    |        |              |  |               | 2,046,669 |             |  |              | 73,675  |   |  |  |         |   |  |  | 2,120,344 |  
|Operating
expenses                                                                                             |  |                    |        |              |  |               | 1,066,135 |             |  |              | 42,807  |   |  |  |         |   |  |  | 1,108,942 |  
|Selling, general and
administrative
expenses                                                                   |  |                    | 9,628   |              |  |               | 515,390   |             |  |              | 15,334  |   |  |  |         |   |  |  | 540,352   |  
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                               |  |                    | (9,628  | )            |  |               | 465,144   |             |  |              | 15,534  |   |  |  |         |   |  |  | 471,050   |  
|Amortization of broadcast
licenses,
goodwill and circulation                                                   |  |                    |        |              |  |               | 17,500    |             |  |              |        |   |  |  |         |   |  |  | 17,500    |  
|Amortization of property,
plant and
equipment                                                                  |  |                    | 2,356   |              |  |               | 68,033    |             |  |              | 3,041   |   |  |  |         |   |  |  | 73,430    |  
|Other
amortization                                                                                             |  |                    |        |              |  |               | 2,994     |             |  |              | 3,676   |   |  |  |         |   |  |  | 6,670     |  
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                               |  |                    | (11,984 | )            |  |               | 376,617   |             |  |              | 8,817   |   |  |  |         |   |  |  | 373,450   |  
|Financing
(expenses) income                                                                                    |  |                    | 129,153 |              |  |               | (373,371  | )           |  |              | (10,788 | ) |  |  |         |   |  |  | (255,006  | )
|Investment gains net of
write-down
of investments                                                              |  |                    |        |              |  |               | 33,843    |             |  |              |        |   |  |  |         |   |  |  | 33,843    |  
|Dividend
income                                                                                                |  |                    |        |              |  |               | 3,241     |             |  |              |        |   |  |  |         |   |  |  | 3,241     |  
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                               |  |                    | 117,169 |              |  |               | 40,330    |             |  |              | (1,971  | ) |  |  |         |   |  |  | 155,528   |  
|Provision for (recovery of)
income
taxes                                                                       |  |                    | 33,338  |              |  |               | 16,281    |             |  |              | (2,009  | ) |  |  |         |   |  |  | 47,610    |  
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Earnings before the
following                                                                                  |  |                    | 83,831  |              |  |               | 24,049    |             |  |              | 38      |   |  |  |         |   |  |  | 107,918   |  
|Minority
interest                                                                                              |  |                    |        |              |  |               | 4,330     |             |  |              |        |   |  |  |         |   |  |  | 4,330     |  
|Interest in loss of Network
TEN                                                                                |  |                    |        |              |  |               | (11,815   | )           |  |              |        |   |  |  |         |   |  |  | (11,815   | )
|Interest in earnings of
equity
accounted affiliates                                                            |  |                    | 14,079  |              |  |               | (1,523    | )           |  |              |        |   |  |  | (14,079  | ) |  |  | (1,523    | )
|Realized currency
translation
adjustments                                                                      |  |                    |        |              |  |               | (1,000    | )           |  |              |        |   |  |  |         |   |  |  | (1,000    | )
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings for the
year                                                                                      |  |                    | 97,910  |              |  |               | 14,041    |             |  |              | 38      |   |  |  | (14,079  | ) |  |  | 97,910    |  
|Retained earnings 
beginning of year                                                                          |  |                    | 808,000 |              |  |               | 876,133   |             |  |              | (54,456 | ) |  |  | (821,677 | ) |  |  | 808,000   |  
|Adjustment for the adoption
of new
accounting pronouncement                                                    |  |                    | (45,269 | )            |  |               | (45,269   | )           |  |              |        |   |  |  | 45,269   |   |  |  | (45,269   | )
|Dividends                                                                                                      |  |                    |        |              |  |               | (59,710   | )           |  |              | (2,290  | ) |  |  | 62,000   |   |  |  |          |  
|Interest on junior
subordinated
debentures  net of tax of $36,538                                             |  |                    | (57,148 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (57,148   | )
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Retained earnings  end
of year                                                                                |  |                    | 803,493 |              |  |               | 785,195   |             |  |              | (56,708 | ) |  |  | (728,487 | ) |  |  | 803,493   |  
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings in accordance
with
Canadian GAAP                                                                  |  |                    | 97,910  |              |  |               | 14,041    |             |  |              | 38      |   |  |  | (14,079  | ) |  |  | 97,910    |  
|Pre-operating costs net of
tax of
$1,331                                                                       |  |                    |        |              |  |               | (3,656    | )           |  |              | 3,556   |   |  |  |         |   |  |  | (100      | )
|Realization of currency
translation
adjustments net of tax of nil                                              |  |                    |        |              |  |               | 1,000     |             |  |              |        |   |  |  |         |   |  |  | 1,000     |  
|Integration costs related to
CanWest
Publications net of tax of $827                                           |  |                    |        |              |  |               | (1,470    | )           |  |              |        |   |  |  |         |   |  |  | (1,470    | )
|Pension valuation allowances
net of
tax of $32                                                                 |  |                    |        |              |  |               | (54       | )           |  |              |        |   |  |  |         |   |  |  | (54       | )
|Programming costs imposed by
regulatory requirement, net of tax
of $2,438                                      |  |                    |        |              |  |               | (3,232    | )           |  |              |        |   |  |  |         |   |  |  | (3,232    | )
|Equity accounted affiliates
in
trust, net of tax of $nil                                                       |  |                    |        |              |  |               | 3,375     |             |  |              |        |   |  |  |         |   |  |  | 3,375     |  
|Reclassification of interest
on
junior subordinated debentures from equity net of tax of
$36,538               |  |                    | (57,148 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (57,148   | )
|Unrealized gain
(loss) on interest
rate and cross currency interest
rate swaps net of tax of $1,199            |  |                    | 27,535  |              |  |               |          |             |  |              |        |   |  |  |         |   |  |  | 27,535    |  
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings (loss) in
accordance
with U.S. GAAP before cumulative
effect of adoption of new accounting
policy |  |                    | 68,297  |              |  |               | 10,004    |             |  |              | 3,594   |   |  |  | (14,079  | ) |  |  | 67,816    |  
|Cumulative effect of
adoption of new
goodwill and intangibles accounting
policy net of tax of $2,500           |  |                    |        |              |  |               | (45,269   | )           |  |              |        |   |  |  |         |   |  |  | (45,269   | )
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings (loss) in
accordance
with U.S. GAAP                                                               |  |                    | 68,297  |              |  |               | (35,265   | )           |  |              | 3,594   |   |  |  | (14,079  | ) |  |  | 22,547    |  
|                                                                                                               |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  

44



---



##### 



CanWest Media Inc.

Supplemental Consolidating Statement of Cash Flows
For the Year Ended August 31, 2002

|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |         |  
|------------------------------------------- | ---------------------------------------------------------- |  | ------------------ | ------- | ------------ |  | ------------- | ------- | ----------- |  | ------------ | ----- |  |  | ------- | ------ |  |  | -------- | ------- | -
|                                            |                                                            |  | CanWest Media Inc. |         | Consolidated |  | Non-guarantor |         | Elimination |  |              |       | 
|                                            |                                                            |  | parent company     |         | guarantors   |  | subsidiaries  |         | Entries     |  | Consolidated
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |             
|                                            |                                                            |  | $000               |         | $000         |  | $000          |         | $000        |  | $000        
|CASH
GENERATED (UTILIZED) BY:               |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Operating
activities                        |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Net earnings for
the year                   |                                                            |  | 97,910             |         |              |  | 14,041        |         |             |  | 38           |       |  |  | (14,079 | )      |  |  | 97,910   |        
|Items not
affecting cash                    |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|                                            | Amortization                                               |  |                    | 12,298  |              |  |               | 88,527  |             |  |              | 6,717 |  |  |         |       |  |  |          | 107,542 |  
|                                            | Future income
taxes                                        |  |                    |        |              |  |               | 11,060  |             |  |              | 150   |  |  |         |       |  |  |          | 11,210  |  
|                                            | Interest in loss of Network
TEN                            |  |                    |        |              |  |               | 11,815  |             |  |              |      |  |  |         |       |  |  |          | 11,815  |  
|                                            | Interest in loss
(earnings) of equity
accounted affiliates |  |                    | (14,079 | )            |  |               | 1,523   |             |  |              |      |  |  |         | 14,079 |  |  |          | 1,523   |  
|                                            | Minority
interests                                         |  |                    |        |              |  |               | (4,330  | )           |  |              |      |  |  |         |       |  |  |          | (4,330  | )
|                                            | Realized translation
adjustments                           |  |                    |        |              |  |               | 1,000   |             |  |              |      |  |  |         |       |  |  |          | 1,000   |  
|                                            | Investment gains net of
write-down of
investments          |  |                    |        |              |  |               | (33,843 | )           |  |              |      |  |  |         |       |  |  |          | (33,843 | )
|                                            | Pension
expense                                            |  |                    |        |              |  |               | 6,445   |             |  |              |      |  |  |         |       |  |  |          | 6,445   |  
|Distributions
from Network TEN              |                                                            |  |                   |         |              |  | 60,984        |         |             |  |             |       |  |  |        |        |  |  | 60,984   |        
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|                                            |                                                            |  | 96,129             |         |              |  | 157,222       |         |             |  | 6,905        |       |  |  |        |        |  |  | 260,256  |        
|Changes in
non-cash operating accounts      |                                                            |  | 4,061              |         |              |  | (80,235       | )       |             |  | 2,641        |       |  |  |        |        |  |  | (73,533  | )      
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|                                            |                                                            |  | 100,190            |         |              |  | 76,987        |         |             |  | 9,546        |       |  |  |        |        |  |  | 186,723  |        
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Investing
Activities                        |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Other
investments                           |                                                            |  |                   |         |              |  | (4,400        | )       |             |  | (787         | )     |  |  |        |        |  |  | (5,187   | )      
|Proceeds from
sale of investments           |                                                            |  |                   |         |              |  | 87,000        |         |             |  |             |       |  |  |        |        |  |  | 87,000   |        
|Proceeds from
divestitures                  |                                                            |  |                   |         |              |  | 390,059       |         |             |  |             |       |  |  |        |        |  |  | 390,059  |        
|Purchase of
property, plant and equipment   |                                                            |  | (18,735            | )       |              |  | (33,058       | )       |             |  | (479         | )     |  |  |        |        |  |  | (52,272  | )      
|Advances to
parent and affiliated companies |                                                            |  | 329,650            |         |              |  | (374,925      | )       |             |  |             |       |  |  |        |        |  |  | (45,275  | )      
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|                                            |                                                            |  | 310,915            |         |              |  | 64,676        |         |             |  | (1,266       | )     |  |  |        |        |  |  | 374,325  |        
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Financing
Activities                        |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Dividends
paid                              |                                                            |  | 62,000             |         |              |  | (59,710       | )       |             |  | (2,290       | )     |  |  |        |        |  |  |         |        
|Repayment of
long term debt                 |                                                            |  | (488,408           | )       |              |  |              |         |             |  | (5,295       | )     |  |  |        |        |  |  | (493,703 | )      
|Net change in
bank loans and advances       |                                                            |  |                   |         |              |  | (28,999       | )       |             |  |             |       |  |  |        |        |  |  | (28,999  | )      
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|                                            |                                                            |  | (426,408           | )       |              |  | (88,709       | )       |             |  | (7,585       | )     |  |  |        |        |  |  | (522,702 | )      
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Net change in
cash                          |                                                            |  | (15,303            | )       |              |  | 52,954        |         |             |  | 695          |       |  |  |        |        |  |  | 38,346   |        
|Cash 
beginning of year                    |                                                            |  |                   |         |              |  | 9,808         |         |             |  | 1,624        |       |  |  |        |        |  |  | 11,432   |        
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        
|Cash 
end of year                          |                                                            |  | (15,303            | )       |              |  | 62,762        |         |             |  | 2,319        |       |  |  |        |        |  |  | 49,778   |        
|                                            |                                                            |  |                    |         |              |  |               |         |             |  |              |       |  |  |         |        |  |  |          |        

45



---



##### 



CanWest Media Inc.

Supplemental Consolidating Statement of Operations
For the Year Ended August 31, 2001

|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ------------ |  | ------------- | --------- | ----------- |  | ------------ | ------- | - |  |  | -------- | - |  |  | --------- | -
|                                                                                                                                                         |  | CanWest Media Inc. |         | Consolidated |  | Non-guarantor |           | Elimination |  |              |         |  
|                                                                                                                                                         |  | parent company     |         | guarantors   |  | subsidiaries  |           | entries     |  | Consolidated
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |             
|                                                                                                                                                         |  | $000               |         | $000         |  | $000          |           | $000        |  | $000        
|Revenue                                                                                                                                                  |  |                    |        |              |  |               | 1,594,387 |             |  |              | 172,919 |   |  |  |         |   |  |  | 1,767,306 |  
|Operating
expenses                                                                                                                                       |  |                    |        |              |  |               | 828,224   |             |  |              | 137,291 |   |  |  |         |   |  |  | 965,515   |  
|Selling, general and
administrative expenses                                                                                                             |  |                    | (913    | )            |  |               | 359,483   |             |  |              | 9,151   |   |  |  |         |   |  |  | 367,721   |  
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                                                                         |  |                    | 913     |              |  |               | 406,680   |             |  |              | 26,477  |   |  |  |         |   |  |  | 434,070   |  
|Amortization of intangibles
and goodwill                                                                                                                 |  |                    |        |              |  |               | 87,404    |             |  |              | 1,915   |   |  |  |         |   |  |  | 89,319    |  
|Amortization of property,
plant and
equipment                                                                                                            |  |                    |        |              |  |               | 54,060    |             |  |              | 5,468   |   |  |  |         |   |  |  | 59,528    |  
|Other
amortization                                                                                                                                       |  |                    |        |              |  |               | 2,172     |             |  |              | 3,068   |   |  |  |         |   |  |  | 5,240     |  
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                                                                         |  |                    | 913     |              |  |               | 263,044   |             |  |              | 16,026  |   |  |  |         |   |  |  | 279,983   |  
|Financing
(expenses) income                                                                                                                              |  |                    | 69,974  |              |  |               | (331,986  | )           |  |              | (6,831  | ) |  |  |         |   |  |  | (268,843  | )
|Investment income and
gains                                                                                                                              |  |                    |        |              |  |               | 28,630    |             |  |              |        |   |  |  |         |   |  |  | 28,630    |  
|Dividend
income                                                                                                                                          |  |                    |        |              |  |               | 2,952     |             |  |              |        |   |  |  |         |   |  |  | 2,952     |  
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|                                                                                                                                                         |  |                    | 70,887  |              |  |               | (37,360   | )           |  |              | 9,195   |   |  |  |         |   |  |  | 42,722    |  
|Provision for (recovery of)
income taxes                                                                                                                 |  |                    | 29,630  |              |  |               | (62,456   | )           |  |              | 5,546   |   |  |  |         |   |  |  | (27,280   | )
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Earnings before the
following                                                                                                                            |  |                    | 41,257  |              |  |               | 25,096    |             |  |              | 3,649   |   |  |  |         |   |  |  | 70,002    |  
|Minority
interest                                                                                                                                        |  |                    |        |              |  |               | (3,196    | )           |  |              |        |   |  |  |         |   |  |  | (3,196    | )
|Interest in earnings of
Network TEN                                                                                                                      |  |                    |        |              |  |               | 52,567    |             |  |              |        |   |  |  |         |   |  |  | 52,567    |  
|Interest in earnings of
equity accounted
affiliates                                                                                                      |  |                    | 56,425  |              |  |               | (14,491   | )           |  |              |        |   |  |  | (56,425  | ) |  |  | (14,491   | )
|Realized currency
translation adjustments                                                                                                                |  |                    |        |              |  |               | (7,200    | )           |  |              |        |   |  |  |         |   |  |  | (7,200    | )
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings for the
year                                                                                                                                |  |                    | 97,682  |              |  |               | 52,776    |             |  |              | 3,649   |   |  |  | (56,425  | ) |  |  | 97,682    |  
|Retained earnings 
beginning of year                                                                                                                    |  |                    | 755,549 |              |  |               | 753,870   |             |  |              | 5,257   |   |  |  | (759,127 | ) |  |  | 755,549   |  
|Adjustment for the adoption
of new
accounting pronouncement                                                                                              |  |                    | (329    | )            |  |               | (3,910    | )           |  |              |        |   |  |  | 3,910    |   |  |  | (329      | )
|Dividends                                                                                                                                                |  |                    |        |              |  |               | 48,095    |             |  |              | (48,095 | ) |  |  |         |   |  |  |          |  
|Interest on junior
subordinated debentures
 net of tax of $28,900                                                                                       |  |                    | (44,902 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (44,902   | )
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Retained earnings  end
of year                                                                                                                          |  |                    | 808,000 |              |  |               | 850,831   |             |  |              | (39,189 | ) |  |  | (811,642 | ) |  |  | 808,000   |  
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings in accordance
with Canadian
GAAP                                                                                                            |  |                    | 97,682  |              |  |               | 52,776    |             |  |              | 3,649   |   |  |  | (56,425  | ) |  |  | 97,682    |  
|Pre-operating costs net of
tax of $1,175                                                                                                                 |  |                    |        |              |  |               |          |             |  |              | 3,337   |   |  |  |         |   |  |  | 3,337     |  
|Realization of currency
translation
adjustments net of tax of nil                                                                                        |  |                    |        |              |  |               | 7,200     |             |  |              |        |   |  |  |         |   |  |  | 7,200     |  
|Pension valuation allowances
net of tax of
$23                                                                                                           |  |                    |         |              |  |               | (38       | )           |  |              |         |   |  |  |          |   |  |  | (38       | )
|Reversal of amortization of
goodwill
related to future programming expenses
imposed by regulatory requirement on
business combination, net of tax of nil |  |                    |        |              |  |               | 938       |             |  |              |        |   |  |  |         |   |  |  | 938       |  
|Programming costs imposed by
regulatory
requirement, net of tax of $774                                                                                  |  |                    |        |              |  |               | (1,026    | )           |  |              |        |   |  |  |         |   |  |  | (1,026    | )
|Equity accounted affiliates
in trust, net
of tax of nil                                                                                                  |  |                    |        |              |  |               | (3,375    | )           |  |              |        |   |  |  |         |   |  |  | (3,375    | )
|Reclassification of interest
on junior
subordinated notes from equity net of tax
of $28,900                                                              |  |                    | (44,902 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (44,902   | )
|Timing of tax rate
enactment                                                                                                                             |  |                    |        |              |  |               | 14,832    |             |  |              |        |   |  |  |         |   |  |  | 14,832    |  
|Amortization of WIC goodwill
adjustment
resulting from retroactive equity
accounting of WIC upon regulatory approval
net of tax of nil                   |  |                    |        |              |  |               | (1,576    | )           |  |              |        |   |  |  |         |   |  |  | (1,576    | )
|Unrealized gain
(loss) on interest rate and
cross currency interest rate swaps, net of
tax of $37,016                                                    |  |                    | (55,618 | )            |  |               |          |             |  |              |        |   |  |  |         |   |  |  | (55,618   | )
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  
|Net earnings in accordance
with U.S. GAAP                                                                                                                |  |                    | (2,838  | )            |  |               | 69,731    |             |  |              | 6,986   |   |  |  | (56,425  | ) |  |  | 17,454    |  
|Amortization of goodwill and
indefinite
life intangibles net of tax of $11,975                                                                           |  |                    |        |              |  |               | 61,591    |             |  |              | 1,915   |   |  |  |         |   |  |  | 63,506    |  
|Amortization of goodwill and
indefinite
life intangibles in equity accounted
affiliates net of tax of nil                                                |  |                    |        |              |  |               | 6,211     |             |  |              |        |   |  |  |         |   |  |  | 6,211     |  
|                                                                                                                                                         |  |                    |         |              |  |               |           |             |  |              |         |   |  |  |          |   |  |  |           |  

46



---



##### 



|                                                                                                      |  |                    |        |              |  |               |         |             |  |              |       |  |  |  |         |   |  |  |        | 
|----------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ------------ |  | ------------- | ------- | ----------- |  | ------------ | ----- |  |  |  | ------- | - |  |  | ------ | 
|                                                                                                      |  | CanWest Media Inc. |        | Consolidated |  | Non-guarantor |         | Elimination |  |              |       | 
|                                                                                                      |  | parent company     |        | guarantors   |  | subsidiaries  |         | entries     |  | Consolidated
|                                                                                                      |  |                    |        |              |  |               |         |             |  |             
|                                                                                                      |  | $000               |        | $000         |  | $000          |         | $000        |  | $000        
|Net earnings in accordance
with U.S. GAAP
adjusted to exclude amortization
expense recognized in 2001 |  |                    | (2,838 | )            |  |               | 137,533 |             |  |              | 8,901 |  |  |  | (56,425 | ) |  |  | 87,171 | 
|                                                                                                      |  |                    |        |              |  |               |         |             |  |              |       |  |  |  |         |   |  |  |        | 

47



---



##### 



CanWest Media Inc.

Supplemental Consolidating Statement of Cash Flows
For the Year Ended August 31, 2001

|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |         |  
|--------------------------------------------- | ---------------------------------------------------------- |  | ------------------ | ------- | ------------ |  | ------------- | ------- | ----------- |  | ------------ | ------ | - |  | ------- | ------ |  |  | ---------- | ------- | -
|                                              |                                                            |  | CanWest Media Inc. |         | Consolidated |  | Non-guarantor |         | Elimination |  |              |        |  
|                                              |                                                            |  | parent company     |         | guarantors   |  | subsidiaries  |         | entries     |  | Consolidated
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |             
|                                              |                                                            |  | $000               |         | $000         |  | $000          |         | $000        |  | $000        
|CASH
GENERATED (UTILIZED) BY:                 |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Operating
activities                          |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Net earnings for
the year                     |                                                            |  | 97,682             |         |              |  | 52,776        |         |             |  | 3,649        |        |   |  | (56,425 | )      |  |  | 97,682     |        
|Items not
affecting cash                      |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|                                              | Amortization                                               |  |                    | 6,583   |              |  |               | 149,945 |             |  |              | 8,600  |   |  |         |       |  |  |            | 165,128 |  
|                                              | Future income
taxes                                        |  |                    |        |              |  |               | (89,476 | )           |  |              | (7,530 | ) |  |         |       |  |  |            | (97,006 | )
|                                              | Interest in earnings of
Network TEN                        |  |                    |        |              |  |               | (52,567 | )           |  |              |       |   |  |         |       |  |  |            | (52,567 | )
|                                              | Interest in loss
(earnings) of equity
accounted affiliates |  |                    | (56,425 | )            |  |               | 14,491  |             |  |              |       |   |  |         | 56,425 |  |  |            | 14,491  |  
|                                              | Minority
interests                                         |  |                    |        |              |  |               | 3,196   |             |  |              |       |   |  |         |       |  |  |            | 3,196   |  
|                                              | Realized translation
adjustments                           |  |                    |        |              |  |               | 7,200   |             |  |              |       |   |  |         |       |  |  |            | 7,200   |  
|                                              | Write-off of deferred
financing fees                       |  |                    | 17,900  |              |  |               |        |             |  |              |       |   |  |         |       |  |  |            | 17,900  |  
|                                              | Investment income and
gains                                |  |                    |        |              |  |               | (28,630 | )           |  |              |       |   |  |         |       |  |  |            | (28,630 | )
|                                              | Pension
expense                                            |  |                    |        |              |  |               | 2,909   |             |  |              |       |   |  |         |       |  |  |            | 2,909   |  
|Distributions
from Network TEN                |                                                            |  |                   |         |              |  | 71,096        |         |             |  |             |        |   |  |        |        |  |  | 71,096     |        
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|                                              |                                                            |  | 65,740             |         |              |  | 130,940       |         |             |  | 4,719        |        |   |  |        |        |  |  | 201,399    |        
|Changes in
non-cash operating accounts        |                                                            |  | (12,481            | )       |              |  | (19,836       | )       |             |  | 21,661       |        |   |  |        |        |  |  | (10,656    | )      
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|                                              |                                                            |  | 53,259             |         |              |  | 111,104       |         |             |  | 26,380       |        |   |  |        |        |  |  | 190,743    |        
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Investing
Activities                          |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Acquisitions                                  |                                                            |  |                   |         |              |  | (2,007,291    | )       |             |  |             |        |   |  |        |        |  |  | (2,007,291 | )      
|Other
investments                             |                                                            |  |                   |         |              |  | 52,090        |         |             |  | (52,090      | )      |   |  |        |        |  |  |           |        
|Proceeds from
sale of investments             |                                                            |  |                   |         |              |  | 64,045        |         |             |  |             |        |   |  |        |        |  |  | 64,045     |        
|Proceeds from
divestitures                    |                                                            |  |                   |         |              |  | 32,454        |         |             |  |             |        |   |  |        |        |  |  | 32,454     |        
|Purchase of
broadcast facilities and licenses |                                                            |  |                   |         |              |  | (1,106        | )       |             |  | (627         | )      |   |  |        |        |  |  | (1,733     | )      
|Purchase of
property, plant and equipment     |                                                            |  |                   |         |              |  | (41,118       | )       |             |  | (618         | )      |   |  |        |        |  |  | (41,736    | )      
|Advances to
parent and affiliated companies   |                                                            |  | (3,062,322         | )       |              |  | 2,851,733     |         |             |  | 60,525       |        |   |  |        |        |  |  | (150,064   | )      
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|                                              |                                                            |  | (3,062,322         | )       |              |  | 950,807       |         |             |  | 7,190        |        |   |  |        |        |  |  | (2,104,325 | )      
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Financing
Activities                          |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Dividends
paid                                |                                                            |  |                   |         |              |  | 48,095        |         |             |  | (48,095      | )      |   |  |        |        |  |  |           |        
|Issuance
(repayment) of long-term debt        |                                                            |  | 3,009,063          |         |              |  | (1,166,721    | )       |             |  | (10,730      | )      |   |  |        |        |  |  | 1,831,612  |        
|Net change in
bank loans and advances         |                                                            |  |                   |         |              |  | 24,682        |         |             |  | (943         | )      |   |  |        |        |  |  | 23,739     |        
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|                                              |                                                            |  | 3,009,063          |         |              |  | (1,093,944    | )       |             |  | (59,768      | )      |   |  |        |        |  |  | 1,855,351  |        
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Net change in
cash                            |                                                            |  |                   |         |              |  | (32,033       | )       |             |  | (26,198      | )      |   |  |        |        |  |  | (58,231    | )      
|Cash 
beginning of year                      |                                                            |  |                   |         |              |  | 35,513        |         |             |  | 34,150       |        |   |  |        |        |  |  | 69,663     |        
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        
|Cash 
end of year                            |                                                            |  |                   |         |              |  | 3,480         |         |             |  | 7,952        |        |   |  |        |        |  |  | 11,432     |        
|                                              |                                                            |  |                    |         |              |  |               |         |             |  |              |        |   |  |         |        |  |  |            |        

48



---



##### 



THE TEN GROUP PTY LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2003
(expressed in Australian dollars)



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 AUGUST 2003

|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  
|------------------------------------------------------------------------------------------------------ |  | ---- | -- | ----- |  | ----- | -------- | ----- |  | ---- | -------- | - |  |  | -------- | -
|                                                                                                       |  |      |    |       |  | 2003  |          | 2002  |  | 2001
|                                                                                                       |  | Note |    | $000 |  | $000 |          | $000
|Revenue from ordinary activities                                                                       |  |      | 2  |       |  |       | 732,995  |       |  |      | 667,012  |   |  |  | 664,157  |  
|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  
|Television costs                                                                                       |  |      |    |       |  |       | (483,376 | )     |  |      | (446,110 | ) |  |  | (401,061 | )
|Out of Home costs                                                                                      |  |      |    |       |  |       | (75,107  | )     |  |      | (272,214 | ) |  |  | (65,683  | )
|Ventures costs                                                                                         |  |      |    |       |  |       |         |       |  |      |         |   |  |  | (31,099  | )
|Borrowing costs                                                                                        |  |      | 3  | (b)   |  |       | (117,333 | )     |  |      | (37,355  | ) |  |  | (93,263  | )
|Share of net profit of associates and joint
ventures accounted for using the equity method             |  |      | 26 |       |  |       | 2,430    |       |  |      | 916      |   |  |  | 588      |  
|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  
|Profit/(Loss) from ordinary activities before
income tax                                               |  |      |    |       |  |       | 59,609   |       |  |      | (87,751  | ) |  |  | 73,639   |  
|Income tax revenue/(expense)                                                                           |  |      | 4  | (a)   |  |       | 27,223   |       |  |      | (70,530  | ) |  |  | (23,822  | )
|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  
|Net profit/(loss) from ordinary activities after
income tax                                            |  |      |    |       |  |       | 86,832   |       |  |      | (158,281 | ) |  |  | 49,817   |  
|Net loss attributable to outside equity interests                                                      |  |      |    |       |  |       | 54       |       |  |      | 29,790   |   |  |  | 5,451    |  
|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  
|Net profit/(loss) attributable to members of the
Company                                               |  |      | 24 |       |  |       | 86,886   |       |  |      | (128,491 | ) |  |  | 55,268   |  
|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  
|(Decrease)/Increase in asset revaluation reserve                                                       |  |      | 23 |       |  |       | (208,098 | )     |  |      | 751,400  |   |  |  |         |  
|Net exchange difference on translation of
financial report of foreign controlled entities              |  |      | 23 |       |  |       | (431     | )     |  |      | (81      | ) |  |  | 18       |  
|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  
|Total changes in equity from non-owner related
transactions attributable to the members of the
Company |  |      |    |       |  |       | (121,643 | )     |  |      | 622,828  |   |  |  | 55,286   |  
|                                                                                                       |  |      |    |       |  |       |          |       |  |      |          |   |  |  |          |  

The above statements of financial performance should be read in
conjunction with the accompanying notes.

Page 2



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL POSITION
AS AT 31 AUGUST 2003

|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |           |         |  
|----------------------------------------------- | ------------------------------------------------- | ------------------ | -- | ---- | --- | ----- | --------- | --------- | ------- | ---- | --------- | --------- | ------- | -
|                                                |                                                   |                    |    |      |     |       |           | 2003      |         | 2002
|                                                |                                                   |                    |    | Note |     | $000 |           | $000    
|Current
Assets                                  |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|                                                | Cash                                              |                    |    | 5    |     |       |           | 20,982    |         |      |           | 11,799    |        
|                                                | Receivables                                       |                    |    | 6    |     |       |           | 127,808   |         |      |           | 116,124   |        
|                                                | Inventories                                       |                    |    | 7    |     |       |           | 123,417   |         |      |           | 127,638   |        
|                                                | Current tax
receivables                           |                    |    | 4    | (d) |       |           |          |         |      |           | 63,716    |        
|                                                | Other                                             |                    |    | 8    |     |       |           | 4,022     |         |      |           | 12,029    |        
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total Current
Assets                            |                                                   |                    |    |      |     |       | 276,229   |           |         |      | 331,306   |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Non-Current
Assets                              |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|                                                | Receivables                                       |                    |    | 9    |     |       |           | 2,532     |         |      |           | 2,116     |        
|                                                | Inventories                                       |                    |    | 12   |     |       |           | 3,005     |         |      |           | 1,565     |        
|                                                | Investments
accounted for using the equity
method |                    |    | 10   |     |       |           | 10,162    |         |      |           | 2,888     |        
|                                                | Other financial
assets                            |                    |    | 11   |     |       |           | 2,553     |         |      |           | 2,553     |        
|                                                | Property, plant
and equipment                     |                    |    | 13   |     |       |           | 89,202    |         |      |           | 84,779    |        
|                                                | Intangibles                                       |                    |    | 14   |     |       |           | 1,156,190 |         |      |           | 1,159,707 |        
|                                                | Deferred tax
assets                               |                    |    | 4    | (e) |       |           | 108       |         |      |           | 8,270     |        
|                                                | Other                                             |                    |    | 15   |     |       |           | 1,397     |         |      |           | 626       |        
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total
Non-Current Assets                        |                                                   |                    |    |      |     |       | 1,265,149 |           |         |      | 1,262,504 |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total
Assets                                    |                                                   |                    |    |      |     |       | 1,541,378 |           |         |      | 1,593,810 |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Current
Liabilities                             |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|                                                | Payables                                          |                    |    | 16   |     |       |           | 215,875   |         |      |           | 159,958   |        
|                                                | Interest-bearing
liabilities                      |                    |    | 17   |     |       |           | 945       |         |      |           | 29,247    |        
|                                                | Current tax
liabilities                           |                    |    | 4    | (d) |       |           | 16,110    |         |      |           |          |        
|                                                | Provisions                                        |                    |    | 18   |     |       |           | 23,789    |         |      |           | 40,737    |        
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total Current
Liabilities                       |                                                   |                    |    |      |     |       | 256,719   |           |         |      | 229,942   |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Non-Current
Liabilities                         |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|                                                | Payables                                          |                    |    | 19   |     |       |           | 36,377    |         |      |           | 26,521    |        
|                                                | Interest-bearing
liabilities                      |                    |    | 20   |     |       |           | 434,457   |         |      |           | 510,111   |        
|                                                | Deferred tax
liabilities                          |                    |    | 4    | (f) |       |           | 224,286   |         |      |           | 32,042    |        
|                                                | Provisions                                        |                    |    | 21   |     |       |           | 1,796     |         |      |           | 1,971     |        
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total
Non-Current Liabilities                   |                                                   |                    |    |      |     |       | 696,916   |           |         |      | 570,645   |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total
Liabilities                               |                                                   |                    |    |      |     |       | 953,635   |           |         |      | 800,587   |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Net
Assets                                      |                                                   |                    |    |      |     |       | 587,743   |           |         |      | 793,223   |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Equity                                          |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|                                                |                                                   | Contributed
equity |    |      | 22  |       |           |           | 59,934  |      |           |           | 45,500  |  
|                                                |                                                   | Reserves           |    |      | 23  |       |           |           | 543,737 |      |           |           | 752,266 |  
|                                                |                                                   | Retained
earnings  |    |      | 24  |       |           |           | (15,947 | )    |           |           | (4,468  | )
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total parent
entity interest                    |                                                   |                    |    |      |     |       | 587,724   |           |         |      | 793,298   |          
|Outside equity
interests in controlled entities |                                                   |                    | 30 |      |     |       | 19        |           |         |      | (75       | )        
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          
|Total
Equity                                    |                                                   |                    |    |      |     |       | 587,743   |           |         |      | 793,223   |          
|                                                |                                                   |                    |    |      |     |       |           |           |         |      |           |          

The above statements of financial performance should be read in
conjunction with the accompanying notes.

Page 3



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2003

|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |          |         |  
|---------------------------------------- | --------------------------------------------------------- | --------------------------------------- | -- | ---- | --- | ----- | -------- | -------- | ------- | ----- | ------- | -------- | ------- | - | -------- | -------- | ------- | -
|                                         |                                                           |                                         |    |      |     |       |          | 2003     |         | 2002  |         | 2001    
|                                         |                                                           |                                         |    | Note |     | $000 |          | $000    |         | $000
|Cash and its
equivalents                 |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|                                         | Cash on
hand                                              |                                         |    | 5    |     |       |          | 80       |         |       |         | 65       |         |   |          | 69       |        
|                                         | Cash at
bank                                              |                                         |    | 5    |     |       |          | 20,902   |         |       |         | 11,734   |         |   |          | 21,700   |        
|                                         | Bank
overdraft                                            |                                         |    | 17   |     |       |          |         |         |       |         | (1,791   | )       |   |          | (1,084   | )      
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|At end of
year                           |                                                           |                                         |    |      |     |       | 20,982   |          |         |       | 10,008  |          |         |   | 20,685   |         
|At beginning of
year                     |                                                           |                                         |    |      |     |       | 10,008   |          |         |       | 20,685  |          |         |   | 38,309   |         
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Net cash
inflow/(outflow) for the year   |                                                           |                                         |    |      |     |       | 10,974   |          |         |       | (10,677 | )        |         |   | (17,624  | )       
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Represented
by:                          |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Cash Flows
from operating activities     |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|                                         | Receipts from
customers                                   |                                         |    |      |     |       |          | 786,459  |         |       |         | 745,199  |         |   |          | 610,972  |        
|                                         | Payments to
suppliers and employees                       |                                         |    |      |     |       |          | (603,836 | )       |       |         | (609,867 | )       |   |          | (521,070 | )      
|                                         | Dividends
received                                        |                                         |    |      |     |       |          | 1,915    |         |       |         | 346      |         |   |          | 1,959    |        
|                                         | Interest
received                                         |                                         |    |      |     |       |          | 2,416    |         |       |         | 933      |         |   |          | 1,424    |        
|                                         | Bank interest
paid                                        |                                         |    |      |     |       |          | (26,501  | )       |       |         | (25,503  | )       |   |          | (18,897  | )      
|                                         | Income tax
received/(paid)                                |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |          |        
|                                         |                                                           | Prior year refunds received             |    |      |     |       |          |          | 71,188  |       |         |          | 4,447   |   |          |          |        |  
|                                         |                                                           | Current year
payments                   |    |      |     |       |          |          | (33,706 | )     |         |          | (56,305 | ) |          |          | (55,043 | )
|                                         |                                                           | Tax
settlement                          |    |      |     |       |          |          |        |       |         |          | (36,158 | ) |          |          |        |  
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Net cash flow
from operating activities  |                                                           |                                         | 36 |      |     |       | 197,935  |          |         |       | 23,092  |          |         |   | 19,345   |         
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Cash Flows
from investment activities    |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|                                         | Acquisition of
property, plant and equipment              |                                         |    |      |     |       |          | (23,909  | )       |       |         | (25,490  | )       |   |          | (23,120  | )      
|                                         | Proceeds on
disposal of property, plant and
equipment     |                                         |    |      |     |       |          | 591      |         |       |         | 326      |         |   |          | 13,282   |        
|                                         | Sale of equity
investments                                |                                         |    |      |     |       |          |         |         |       |         | 142      |         |   |          | 91,682   |        
|                                         | Payment for
investments                                   |                                         |    |      |     |       |          | (5,567   | )       |       |         |         |         |   |          |         |        
|                                         | Purchase of
controlled entities (net of
cash acquired)    |                                         |    | 25   | (b) |       |          |         |         |       |         | (10,000  | )       |   |          | (184,711 | )      
|                                         | Payment for
intangible licence rights                     |                                         |    |      |     |       |          |         |         |       |         |         |         |   |          | (1,000   | )      
|                                         | Payment for
Out-of-home investments and
site acquisitions |                                         |    |      |     |       |          |         |         |       |         | (6,361   | )       |   |          |         |        
|                                         | Advances/(repayments) from/(to):                          |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |          |        
|                                         |                                                           | Controlled
entities                     |    |      |     |       |          |          |        |       |         |          |        |   |          |          |        |  
|                                         |                                                           | Associated companies and
joint ventures |    |      |     |       |          |          | 122     |       |         |          | 11      |   |          |          | (12,173 | )
|                                         |                                                           | Directors of controlled
entities        |    |      |     |       |          |          | 350     |       |         |          | (1,017  | ) |          |          | 1,017   |  
|                                         |                                                           | Other related
parties                   |    |      |     |       |          |          |        |       |         |          | (1,138  | ) |          |          | (7,766  | )
|                                         |                                                           | Other                                   |    |      |     |       |          |          | (169    | )     |         |          | 153     |   |          |          | (2,837  | )
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Net cash flow
from investment activities |                                                           |                                         |    |      |     |       | (28,582  | )        |         |       | (43,374 | )        |         |   | (125,626 | )       
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Cash Flows
from financing activities     |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|                                         | Dividends
paid                                            |                                         |    |      |     |       |          | (53,602  | )       |       |         | (66,221  | )       |   |          | (73,797  | )      
|                                         | Debenture
interest paid                                   |                                         |    |      |     |       |          | (30,018  | )       |       |         | (66,221  | )       |   |          | (73,797  | )      
|                                         | Debenture
interest  withholding tax                      |                                         |    |      |     |       |          | (3,002   | )       |       |         | (6,622   | )       |   |          | (7,380   | )      
|                                         | Amounts
received/(paid) re: Tax Dispute                   |                                         |    |      |     |       |          | 16,972   |         |       |         | (16,972  | )       |   |          |         |        
|                                         | Financing
establishment costs paid                        |                                         |    |      |     |       |          | (1,467   | )       |       |         |         |         |   |          |         |        
|                                         | Proceeds from
exercise of options                         |                                         |    |      |     |       |          | 14,434   |         |       |         |         |         |   |          |         |        
|                                         | Proceeds from
borrowings                                  |                                         |    |      |     |       |          | 380,084  |         |       |         | 538,000  |         |   |          | 526,435  |        
|                                         | Repayment of
borrowings                                   |                                         |    |      |     |       |          | (481,780 | )       |       |         | (372,359 | )       |   |          | (282,804 | )      
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Net cash flow
from financing activities  |                                                           |                                         |    |      |     |       | (158,379 | )        |         |       | 9,605   |          |         |   | 88,657   |         
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         
|Net cash
inflow/(outflow) for the year   |                                                           |                                         |    |      |     |       | 10,974   |          |         |       | (10,677 | )        |         |   | (17,624  | )       
|                                         |                                                           |                                         |    |      |     |       |          |          |         |       |         |          |         |   |          |         

Page 4



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003

The above statements of cash flows should be read in conjunction with the accompanying notes.



|1 |  | STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
|- |  | --------------------------------------------

This general purpose financial report has been prepared in accordance with
Accounting Standards, other authoritative pronouncements of the Australian
Accounting Standards Board, Urgent Issues Group Consensus Views and the
Corporations Act 2001.

It is prepared in accordance with the historical cost convention except for
certain assets which are at valuation. The accounting policies adopted are
consistent with those of the previous year, except for the change in Income
Taxes as detailed at point (b) below. Comparative information has been
reclassified where appropriate to enhance comparability.



|(a) |  | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The consolidated financial statements incorporate the assets, liabilities
and results of all entities controlled by the Ten Group Pty Limited (the
Company) as detailed in Note 25 to the financial statements. The Ten
Group Pty Limited and its controlled entities together are referred to in
this financial report as the consolidated entity. The financial
statements of controlled entities are included from the date control
commences until the date control ceases.                                                                               
|   
|    |  | All intercompany transactions are eliminated in full. Outside equity
interests in the equity and results of the entities that are controlled
by the Company are shown as a separate item in the consolidated financial
statements.                                                                                                                                                                                                                                                                                                                              
|   
|(b) |  | Income Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | The income tax expense or revenue for the year is the tax payable on the
current years taxable income based on the national income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax bases
of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.                                                                                                                                                           
|   
|    |  | Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are
enacted or substantially enacted for each jurisdiction. The relevant tax
rates are applied to the cumulative amounts of deductible and assessable
temporary differences to measure the deferred tax asset or liability.                                                                                                                            
|   
|    |  | Deferred tax assets are recognised for deductible temporary differences
and unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Deferred tax liabilities are not recognised for temporary differences
between the carrying amount and tax bases of investments in controlled
entities where the parent entity is able to control the timing of
distributions from controlled entities and it is probable that the
temporary difference will not reverse in the foreseeable future.                                                                                                                                                                                                              
|   
|    |  | Current and deferred tax balances attributable to amounts recognised
directly in equity are also recognised directly in equity.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | Change in Accounting Policy for Income Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | The above policy was adopted with effect from 1 September 2002 to comply
with AASB 1020 Income Taxes released in December 1999 and applied to the
year ended 31 August 2003 in accordance with a written election by the
directors under subsection 334(5) of the Corporations Act 2001. In
previous years, income tax expense in the statement of financial
performance was calculated by reference to the accounting profit after
allowing for permanent differences and deferred tax was not recognised in
relation to amounts recognised directly in equity.

Page 5



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|1   |  | STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Income Tax (continued)                                                                                                                                                                                                                                  
|   
|    |  | The change in accounting policy has resulted in the recognition of
deferred tax liabilities on the difference between accounting and
taxation values of television licences and capitalised licences at 31
August 2002. The adjustments were as follows:



| |  |  | Increase in consolidated deferred tax liabilities of $270,192,000    
| | - |  | ---------------------------------------------------------------------
|
| |  |  | A reduction in consolidated asset revaluation reserve of $225,413,000
|
| |  |  | A reduction in consolidated retained earnings of $44,779,000.        



| |  | These adjustments resulted in a net reduction in consolidated net assets
and consolidated total equity of $270,192,000 as at 31 August 2002. It is
not practical to restate the prior financial year results as if the new
accounting policy had always applied.                                                                                                                                                                                                                                                                       
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Tax Consolidation Legislation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | The Ten Group Pty Limited and its wholly-owned Australian controlled
entities implemented the tax consolidation legislation as of 1 July 2003.
The Australian Taxation Office has not yet been notified of this
decision.                                                                                                                                                                                                                                                                                                              
|
| |  | The deferred tax balances recognised by the parent entity and the
consolidated entity in relation to wholly-owned entities joining the tax
consolidated group are initially measured and remeasured based on the
carrying amounts of the assets and liabilities of those entities at the
level of the tax consolidation group and their tax values, as applicable
under tax consolidation. The resetting of tax values of the assets on
entering the tax consolidation regime on 1 July 2003 has resulted in the
following adjustments:



| |  |  | Decrease in consolidated deferred tax liabilities of $62,041,000    
| | - |  | --------------------------------------------------------------------
|
| |  |  | An increase in consolidated asset revaluation reserve of $17,315,000
|
| |  |  | A decrease in current year income tax expense of $44,726,000.       



|    |  | These adjustments resulted in a net increase in consolidated net assets
and consolidated total equity of $62,041,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Ten Group Pty Limited, as the head entity in the tax consolidation
group, recognises current and deferred tax amounts relating to
transactions, events and balances of the controlled entities in this
group as if those transactions, events and balances were its own, in
addition to the current and deferred tax amounts arising in relation to
its own transactions, events and balances. Amounts receivable or payable
under a tax sharing agreement with the tax consolidated entities are
recognised separately as tax-related amounts receivable or payable.
Expenses and revenues arising under the tax sharing agreement are
recognised as a component of income tax expense/(revenue).
|   
|(c) |  | Receivables and Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | Revenue is recognised at fair value of the consideration received net of
the amount of goods and services tax (GST). Revenue from core operating
activities consists of advertising and media revenues and is recognised
when the advertisement has been broadcast/displayed or the media service
performed.                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Advertising and media revenues are disclosed after making allowance for
commissions paid to advertising agencies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Collectability of trade debtors is reviewed on an ongoing basis. Debts
which are known to be uncollectable are written off.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | The gross proceeds of non-current asset sales are included as revenue at
the date control of the asset passes to the buyer, usually when an
unconditional contract of sale is signed.
The gain or loss on disposal is calculated as the difference between the
carrying amount of the asset at the time of disposal and the net proceeds
on disposal.                                                                                                                                                                                                                                                                                                                                                 

Page 6



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|1   |  | STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(d) |  | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Television Program Rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | Television programs which are available for broadcast are recognised as
an asset and stated at cost. Series programs are written off in full
upon initial airing. Features are amortised over their estimated useful
lives. The carrying values of television program rights are reviewed on
a periodic basis and, where required, written down to their recoverable
amount.                                                                                                                                   
|   
|    |  | Television programs at balance date for which the telecast licence period
has commenced or will commence in the succeeding year have been
classified as a current asset.                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | Other Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | All other inventories are carried at the lower of cost and net realisable
value.                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(e) |  | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Depreciation or amortisation is provided on fixed assets other than
freehold land so as to write off the cost of the assets progressively
over their estimated remaining useful lives. The straight line method of
calculating depreciation is applied. The cost of the freehold land and
buildings is supported by independent valuations conducted at least once
every three years. Estimates of remaining useful lives are made on a
regular basis for all assets. The expected useful lives are as follows:

|                    |  |               |  |               |  |  |  | 
|------------------- |  | ------------- |  | ------------- |  |  |  | 
|                    |  | 2003          |  | 2002         
|Buildings           |  | 40 years      |  | 40 years     
|Plant and Equipment |  | 3 to 10 years |  | 3 to 10 years



|    |  | The cost of leasehold improvements is amortised over the unexpired period
of the lease or the estimated useful life of the improvement, whichever
is the shorter.                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(f) |  | Intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Television Licences                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Television licences are measured at fair value based on a Directors
valuation and are supported by an independent valuation received from
Grant Samuel & Associates Pty Limited in October 2002. Revaluations are
made with sufficient regularity to ensure that the carrying amount of
television licences does not differ materially from fair value at the
reporting date. Annual assessments are made by the Directors,
supplemented by independent assessments at least every three years. The
revaluation increments are credited directly to the asset revaluation
reserve.
|   
|    |  | The television licences continue to be subject to Government legislation
and regulation by the Australian Broadcasting Authority (ABA). The
Directors have no reason to believe that the licences will not be renewed
in due course.                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | No amortisation is provided against these assets as the Directors believe
that the television licences do not have a limited useful life.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Other Licences                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Other licences represent capitalised outdoor site leases. These licences
are being amortised on a straight line basis over the term of the site
leases (approximately 20 to 40 years).                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Goodwill represents the excess of the purchase consideration plus
incidental costs over the fair value of the identifiable net assets
acquired. Goodwill is being amortised on a straight line basis over 20
years.                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Directors review goodwill at each reporting date and recognise it as an
expense to the extent that future benefits are no longer probable.                                                                                                                                                                                                                                                                                                                                                                                                                                         

Page 7



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|1   |  | STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(g) |  | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Controlled entities                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | Investments in controlled entities are carried in the Companys financial
statements at the lower of cost and recoverable amount.                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Associates and Joint Ventures                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Investments in associates and joint ventures are carried in the Companys
financial statements at the lower of cost and recoverable amount.                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Investments in associates and joint ventures are detailed in Note 26 and
comprise those investments where the consolidated entity exercises
significant influence but not control.                                                                                                                                                                                                                                                                                                   
|   
|    |  | Information determined in accordance with the equity method of accounting
is detailed in Note 26 to the financial statements in respect of material
investments in associated and joint venture companies. The consolidated
entitys equity accounted share of the associates and joint ventures
net profit or loss is recognised in the consolidated statement of
financial performance from the date significant influence commences until
the date significant influence ceases.
|   
|    |  | In the prior year, joint ventures were accounted for using the
proportional consolidation method, rather than the equity method, the
effects of which are not material.                                                                                                                                                                                                                                                                                                              
|   
|(h) |  | Leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Operating leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Operating leases are those leases under which the lessor effectively
retains substantially all the risks and benefits incident to ownership of
leased non-current assets.                                                                                                                                                                                                                                                                                                            
|   
|    |  | The present value of future payments for surplus leased space under
non-cancellable operating leases is recognised as a liability, net of
sub-leasing revenue, in the period in which it is determined that the
leased space will be of no future benefit to the company. Each lease
payment is allocated between the liability and finance charge.                                                                                                                                  
|   
|    |  | Finance leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | Finance leases are capitalised. A lease asset and a lease liability
equal to the present value of the minimum lease payments are recorded at
the inception of the lease.                                                                                                                                                                                                                                                                                                             
|   
|    |  | Lease liabilities are reduced by repayments of principal. The interest
components of the lease payments are expensed. Contingent rentals are
expensed as incurred.                                                                                                                                                                                                                                                                                                                   
|   
|(i) |  | Recoverable Amount of Non-Current Assets Measured on the Cost Basis                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | The recoverable amount of an asset is the net amount expected to be
recovered through the net cash inflows arising from its continued use and
subsequent disposal.                                                                                                                                                                                                                                                                                                                   
|   
|    |  | Where the carrying amount of a non-current asset is greater than its
recoverable amount the asset is written down to its recoverable amount.
The write down is recognised as an expense in the reporting period in
which it occurs. Where the net cash inflows are derived from a group of
assets working together, recoverable amount is determined on the basis of
the relevant group of assets.                                                                                   
|   
|    |  | The expected net cash flows included in determining recoverable amounts
of non-current assets are discounted to their present values using a
market-determined, risk-adjusted discount rate. The discount rates used
ranged from 10%-12% (2002: 12%-14%) depending on the nature of the
assets.                                                                                                                                                                                      

Page 8



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|1   |  | STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(j) |  | Payables                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | These amounts represent liabilities for goods and services provided to
the consolidated entity prior to the end of the financial period and
which are unpaid. The amounts are unsecured and are usually paid within
30 days of recognition.                                                                                                                                                                                                                               
|   
|(k) |  | Employee Entitlements                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Liabilities for wages and salaries, annual leave and long service leave
expected to be settled within 12 months of the reporting date are
recognised, and are measured at the amounts expected to be paid when the
liabilities are settled.                                                                                                                                                                                                                               
|   
|    |  | The liability for long service leave expected to be settled more than 12
months from reporting date and Indonesian statutory severance
entitlements are recognised, and measured as the present value of
expected future payments to be made in respect of services provided by
employees up to the reporting date. Consideration is given to expected
future wage and salary levels including related on-costs, experience of
employee departures and periods of service.
|   
|(l) |  | Intercompany Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Loans between members of the consolidated entity have no specified terms
of repayment but where it is unlikely that such amounts will be repayable
within 12 months the advances have been included, as appropriate, in
non-current assets or liabilities.                                                                                                                                                                                                                
|   
|(m) |  | Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | For purposes of the Statement of Cash Flows, cash includes cash
management deposits at call net of outstanding overdrafts.                                                                                                                                                                                                                                                                                                                                                
|   
|(n) |  | Interest Bearing Securities                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Interest bearing deposits and borrowings are stated at cost with interest
income or expense brought to account in the periods to which they relate.
Interest expense is accrued at the contracted rate and included in
Payables.                                                                                                                                                                                                                                        
|   
|(o) |  | Borrowing Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | Borrowing costs are recognised as expenses in the period in which they
are incurred. Borrowing costs include interest on bank overdrafts,
finance lease charges, short-term and long-term borrowings. Ancillary
costs incurred in connection with arrangement of borrowings are
capitalised and amortised over the period of the loan.                                                                                                                                    
|   
|    |  | So as to hedge some or all of the financial exposure of the long-term
borrowings at variable market determined interest rates, the consolidated
entity enters into interest swap contracts. The costs of such contracts
are brought to account in the periods to which they relate and are
included in interest expense.                                                                                                                                                  
|   
|(p) |  | Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | Provision is made for the amount of any dividend declared, determined or
publicly recommended by the Directors on or before the end of the
financial year but not distributed at balance date.                                                                                                                                                                                                                                                                            
|   
|(q) |  | Program Development                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | The consolidated entitys long term commitment to program planning and
development requires significant expenditure on an infrequent basis.
Accordingly, where appropriate, amounts are set aside as a charge against
revenue to reflect more properly the ongoing nature of these expenses in
the periods in which they accrue.                                                                                                                                          

Page 9



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|1   |  | STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                           
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(r) |  | Acquisition of Assets                                                                                                                                                                                                                                                                              
|   
|    |  | The cost method of accounting is used for all acquisitions of assets,
regardless of whether shares or other assets are acquired. Cost is
determined as the fair value of the assets given up at the date of
acquisition plus costs incidental to the acquisition.                                  
|   
|    |  | Where settlement of any part of cash consideration is deferred, the
amounts payable in the future are discounted to their present value as at
the date of the acquisition. The discount rate used is the rate at which
a similar borrowing could be obtained under comparable terms and
conditions.
|   
|    |  | A liability for restructuring costs is recognised as at the date of
acquisition of an entity or part thereof when there is a demonstrable
commitment to a restructuring of the acquired entity and a reliable
estimate of the amount of the liability can be made.                                 
|   
|(s) |  | Foreign Currency Translation                                                                                                                                                                                                                                                                       



| | (i)  |  | Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |      |  | Foreign currency transactions are translated at the rate applicable at
the date of the transaction. At balance date amounts payable and
receivable are translated at rates of exchange current at that date.
All realised and unrealised currency translation gains and losses are
brought to account in the statement of financial performance.                                                                                                
|
| | (ii) |  | Translation of Controlled Foreign Entities                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |      |  | The assets and liabilities of foreign operations, including associates
and joint ventures, that are self-sustaining are translated at the
rates of exchange ruling at balance date. Equity items are translated
at historical rates. The statements of financial performance are
translated at a weighted average rate for the year. Exchange
differences arising on translation are taken directly to the foreign
currency translation reserve.

Page 10



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|2 |  | REVENUE FROM ORDINARY ACTIVITIES
|- |  | --------------------------------

|                                                        |       |  |      |  |       |  |         |       |       |  |         |     |  |  |         |       | 
|------------------------------------------------------- | ----- |  | ---- |  | ----- |  | ------- | ----- | ----- |  | ------- | --- |  |  | ------- | ----- | 
|                                                        |       |  |      |  |       |  | 2003    |       | 2002  |  | 2001   
|                                                        |       |  | Note |  | $000 |  | $000   |       | $000
|Revenue from Operating Activities                       |       |  |      |  |       |  |         |       |       |  |         |     |  |  |         |      
|Sales revenue                                           |       |  |      |  |       |  | 729,865 |       |       |  | 665,555 |     |  |  | 551,174 |      
|Revenue from Outside the Operating Activities           |       |  |      |  |       |  |         |       |       |  |         |     |  |  |         |      
|Dividends - Other                                       |       |  |      |  |       |  |        |       |       |  | 66      |     |  |  | 5,702   |      
|Interest                                                |       |  |      |  |       |  |         |       |       |  |         |     |  |  |         |      
|                                                        | Other |  |      |  |       |  |         | 2,539 |       |  |         | 923 |  |  |         | 1,354 | 
|Gross proceeds on sale of listed investments            |       |  |      |  |       |  |        |       |       |  | 142     |     |  |  | 92,645  |      
|Gross proceeds on sale of property, plant
and equipment |       |  |      |  |       |  | 591     |       |       |  | 326     |     |  |  | 13,282  |      
|                                                        |       |  |      |  |       |  |         |       |       |  |         |     |  |  |         |      
|Total Revenue from Ordinary Activities                  |       |  |      |  |       |  | 732,995 |       |       |  | 667,012 |     |  |  | 664,157 |      
|                                                        |       |  |      |  |       |  |         |       |       |  |         |     |  |  |         |      



|3 |  | PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX
|- |  | --------------------------------------------------------

|                                                                                                                                 |                                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |         |        | 
|-------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------- |  | ---- | -- | ----- | ------- | ------- | ------ | ----- | -------- | -------- | ------ |  | ------ | ------- | ------ | 
|                                                                                                                                 |                                                                                 |                           |  |      |    |       |         | 2003    |        | 2002  |          | 2001    
|                                                                                                                                 |                                                                                 |                           |  | Note |    | $000 |         | $000   |        | $000
|(a) Individually significant items included
in profit from ordinary activities before
related income tax expense                 |                                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |        
|                                                                                                                                 | Write down of goodwill and other charges                                        |                           |  |      |    |       |         | (20,000 | )      |       |          | (178,421 | )      |  |        | (3,711  | )     
|                                                                                                                                 | Net profit on sale of listed investments                                        |                           |  |      |    |       |         |        |        |       |          |         |        |  |        | 58,626  |       
|                                                                                                                                 | Net profit on sale of land and buildings                                        |                           |  |      |    |       |         |        |        |       |          |         |        |  |        | 6,989   |       
|                                                                                                                                 | Write off of capitalised costs                                                  |                           |  |      |    |       |         |        |        |       |          | (3,493   | )      |  |        |        |       
|                                                                                                                                 | Write down of unlisted online investments                                       |                           |  |      |    |       |         |        |        |       |          |         |        |  |        | (26,877 | )     
|                                                                                                                                 | Write down of listed investments                                                |                           |  |      |    |       |         |        |        |       |          | (16,522  | )      |  |        | (2,366  | )     
|                                                                                                                                 | Restucture and relocation costs                                                 |                           |  |      |    |       |         |        |        |       |          |         |        |  |        | (2,779  | )     
|                                                                                                                                 |                                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |        
|                                                                                                                                 |                                                                                 |                           |  |      |    |       | (20,000 | )       |        |       | (198,436 | )        |        |  | 29,882 |        
|                                                                                                                                 |                                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |        
|(b) Profit/(Loss) from ordinary activities
before income
tax has been arrived at after
charging/(crediting) the following items: |                                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |        
|                                                                                                                                 | Loss/(Profit) on sale of property, plant
and equipment                          |                           |  |      |    |       |         | 73      |        |       |          | (317     | )      |  |        | (17     | )     
|                                                                                                                                 | Profit on sale of investments                                                   |                           |  |      |    |       |         |        |        |       |          | (142     | )      |  |        |        |       
|                                                                                                                                 | Net foreign currency losses  realised                                          |                           |  |      |    |       |         | 53      |        |       |          | 27       |        |  |        |        |       
|                                                                                                                                 | Net bad and doubtful debts, including
movements in
provision for doubtful debts |                           |  |      |    |       |         | 441     |        |       |          | 794      |        |  |        | (14     | )     
|                                                                                                                                 | Operating lease rentals                                                         |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |         |       
|                                                                                                                                 |                                                                                 | Minimum lease payments    |  |      |    |       |         |         | 42,348 |       |          |          | 49,134 |  |        |         | 39,548 | 
|                                                                                                                                 |                                                                                 | Contingent rental expense |  |      |    |       |         |         | 9,589  |       |          |          | 6,112  |  |        |         | 6,185  | 
|                                                                                                                                 | Borrowing costs                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |         |       
|                                                                                                                                 |                                                                                 | Subordinated debentures   |  |      | 33 |       |         |         | 87,791 |       |          |          | 6,825  |  |        |         | 71,271 | 
|                                                                                                                                 |                                                                                 | Other                     |  |      |    |       |         |         | 29,542 |       |          |          | 30,530 |  |        |         | 21,992 | 
|                                                                                                                                 |                                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |        
|                                                                                                                                 |                                                                                 |                           |  |      |    |       | 117,333 |         |        |       | 37,355   |          |        |  | 93,263 |        
|                                                                                                                                 |                                                                                 |                           |  |      |    |       |         |         |        |       |          |          |        |  |        |        

Page 11



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|3 |  | PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX (continued)
|- |  | --------------------------------------------------------------------

|                                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |   |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | -------------------------- | ------- | ----- | ------ | ----- | ------ | ----- | ------ |  | ------ | - | ----- | 
|                                                                                                                                                                             |                                                              |                            |         | 2003  |        | 2002  |        | 2001 
|                                                                                                                                                                             |                                                              |                            |         | $000 |        | $000 |        | $000
|(b) Profit/(Loss) from ordinary activities before income tax
has been arrived at after charging/(crediting)
the following items (continued):                                 |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|                                                                                                                                                                             | Depreciation and amortisation of property, plant & equipment |                            |         |       |        |       |        |       |        |  |        |   |      
|                                                                                                                                                                             |                                                              | Plant and equipment        |         |       | 16,204 |       |        |       | 15,722 |  |        |   | 9,359 | 
|                                                                                                                                                                             |                                                              | Leasehold improvements     |         |       | 212    |       |        |       | 161    |  |        |   | 75    | 
|                                                                                                                                                                             |                                                              | Buildings                  |         |       | 253    |       |        |       | 253    |  |        |   | 252   | 
|                                                                                                                                                                             |                                                              | Leased plant and equipment |         |       | 957    |       |        |       | 117    |  |        |   | 995   | 
|                                                                                                                                                                             | Amortisation                                                 |                            |         |       |        |       |        |       |        |  |        |   |      
|                                                                                                                                                                             |                                                              | Goodwill                   |         |       | 2,805  |       |        |       | 10,043 |  |        |   | 9,342 | 
|                                                                                                                                                                             |                                                              | Other intangibles          |         |       | 712    |       |        |       | 711    |  |        |   | 501   | 
|                                                                                                                                                                             |                                                              | Capitalised digital costs  |         |       |       |       |        |       | 1,543  |  |        |   | 1,019 | 
|                                                                                                                                                                            
|4                                                                                                                                                                            |                                                              | INCOME TAX                 |         |       |        |       |        |       |        |  |        |   |       | 
|                                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|(a) Income tax (revenue)/expense                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|Current income tax expense                                                                                                                                                   |                                                              |                            | 42,563  |       |        |       | 52,506 |       |        |  | (1,113 | )
|Deferred income tax (revenue)/expense (2003
consolidated includes $44,726,000 deferred tax
revenue arising as a result of the tax
consolidation legislation  see notes (b)) |                                                              |                            | (69,786 | )     |        |       | 18,024 |       |        |  | 24,935 |  
|                                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |   |       | 
|                                                                                                                                                                             |                                                              |                            | (27,223 | )     |        |       | 70,530 |       |        |  | 23,822 |  
|                                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|Attributable to:                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|Profit from ordinary activities                                                                                                                                              |                                                              |                            | (27,223 | )     |        |       | 70,530 |       |        |  | 23,822 |  
|                                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|Deferred income tax (revenue)/expense included
in income tax expense comprises:                                                                                              |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|Decrease/(increase) in deferred tax assets                                                                                                                                   |                                                              |                            | 8,162   |       |        |       | (5,562 | )     |        |  | 16,479 |  
|(Decrease)/increase in deferred tax liabilities                                                                                                                              |                                                              |                            | (77,948 | )     |        |       | 23,586 |       |        |  | 8,456  |  
|                                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |  
|                                                                                                                                                                             |                                                              |                            | (69,786 | )     |        |       | 18,024 |       |        |  | 24,935 |  
|                                                                                                                                                                             |                                                              |                            |         |       |        |       |        |       |        |  |        |  

Page 12



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|4 |  | INCOME TAX (continued)
|- |  | ----------------------

|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |        |       | 
|------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------- | ------- | ----- | ----- | ------- | ------ | ------ |  | ------ | ------ | ----- | 
|                                                                                                                                                       |                                                                                                                                                           |                                 |         | 2003    |       | 2002  |         | 2001  
|                                                                                                                                                       |                                                                                                                                                           |                                 |         | $000   |       | $000 |         | $000 
|(b) Numerical reconciliation of income tax (revenue)/
expense to prima facie tax payable                                                               |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|Pre-tax profit/(loss)                                                                                                                                  |                                                                                                                                                           |                                 | 59,609  |         |       |       | (87,751 | )      |        |  | 73,639 |       
|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|Tax at the Australian tax rate 30%                                                                                                                     |                                                                                                                                                           |                                 | 17,883  |         |       |       | (26,326 | )      |        |  | 24,298 |       
|Increase in income tax expense is due to:                                                                                                              |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|                                                                                                                                                       | Non-recurring tax settlement expenses                                                                                                                     |                                 |         |        |       |       |         | 36,158 |        |  |        |       |      
|                                                                                                                                                       | Non deductible expenditure                                                                                                                                |                                 |         |         |       |       |         |        |        |  |        |        |      
|                                                                                                                                                       |                                                                                                                                                           | Amortisation                    |         |         | 1,055 |       |         |        | 3,226  |  |        |        | 3,248 | 
|                                                                                                                                                       |                                                                                                                                                           | Writedown of goodwill           |         |         |      |       |         |        | 51,735 |  |        |        |      | 
|                                                                                                                                                       |                                                                                                                                                           | Writedown of listed investments |         |         |      |       |         |        | 4,957  |  |        |        | 710   | 
|                                                                                                                                                       |                                                                                                                                                           | Other                           |         |         | 2,193 |       |         |        | 1,356  |  |        |        | 875   | 
|Decrease in income tax expense is due to:                                                                                                              |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|                                                                                                                                                       | Non-assessable profits on sale of listed investments                                                                                                      |                                 |         |        |       |       |         |       |        |  |        |       |      
|                                                                                                                                                       | Prior year adjustments                                                                                                                                    |                                 |         | (51     | )     |       |         | (576   | )      |  |        | 553    |      
|                                                                                                                                                       | Tax settlement                                                                                                                                            |                                 |         | (3,196  | )     |       |         |       |        |  |        |       |      
|                                                                                                                                                       | Other                                                                                                                                                     |                                 |         | (381    | )     |       |         |       |        |  |        |       |      
|                                                                                                                                                       | Dividend rebate                                                                                                                                           |                                 |         |        |       |       |         |       |        |  |        | (1,478 | )    
|                                                                                                                                                       | Benefit of tax losses of prior years recouped                                                                                                             |                                 |         |        |       |       |         |       |        |  |        | (1,421 | )    
|                                                                                                                                                       | Tax rate change                                                                                                                                           |                                 |         |        |       |       |         |       |        |  |        | (2,963 | )    
|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|                                                                                                                                                       |                                                                                                                                                           |                                 | 17,503  |         |       |       | 70,530  |        |        |  | 23,822 |       
|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|                                                                                                                                                       | Deferred tax (revenue) arising from the resetting
of the tax values of assets as a result of the tax
consolidation legislation implemented on 1 July
2003 |                                 |         | (44,726 | )     |       |         |       |        |  |        |       |      
|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|Income tax expense                                                                                                                                     |                                                                                                                                                           |                                 | (27,223 | )       |       |       | 70,530  |        |        |  | 23,822 |       
|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|(c) Amounts recognised directly in equity                                                                                                              |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|Aggregate current and deferred tax arising in the
reporting period and not recognised in net profit or
loss but directly debited or credited to equity |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|                                                                                                                                                       | Deferred tax- debited directly to equity                                                                                                                  |                                 |         | 270,192 |       |       |         |       |        |  |        |       |      
|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       
|                                                                                                                                                       |                                                                                                                                                           |                                 | 270,192 |         |       |       |        |        |        |  |       |       
|                                                                                                                                                       |                                                                                                                                                           |                                 |         |         |       |       |         |        |        |  |        |       

Page 13



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|4 |  | INCOME TAX (continued)
|- |  | ----------------------

|                                          |  |      |  |       |  |       |         |      |  |  |         |  
|----------------------------------------- |  | ---- |  | ----- |  | ----- | ------- | ---- |  |  | ------- | -
|                                          |  |      |  |       |  | 2003  |         | 2002
|                                          |  | Note |  | $000 |  | $000
|(d) Current tax liabilities/(receivables) |  |      |  |       |  |       |         |      |  |  |         |  
|Provision for income tax                  |  |      |  |       |  |       | 16,110  |      |  |  | (63,716 | )
|                                          |  |      |  |       |  |       |         |      |  |  |         |  
|(e) Deferred tax assets                   |  |      |  |       |  |       |         |      |  |  |         |  
|Future income tax benefit                 |  |      |  |       |  |       | 108     |      |  |  | 8,270   |  
|                                          |  |      |  |       |  |       |         |      |  |  |         |  
|(f) Deferred tax liabilities              |  |      |  |       |  |       |         |      |  |  |         |  
|Provision for deferred income tax         |  |      |  |       |  |       | 224,286 |      |  |  | 32,042  |  
|                                          |  |      |  |       |  |       |         |      |  |  |         |  

Deferred tax balances include $5.2m attributable to tax losses.

|                                                                                          |  |       |     |       |  |       |       |  |  |  |     |  | 
|----------------------------------------------------------------------------------------- |  | ----- | --- | ----- |  | ----- | ----- |  |  |  | --- |  | 
|                                                                                          |  | 2003  |     | 2002  |  | 2001  |      
|                                                                                          |  | $000 |     | $000 |  | $000 |      
|The potential future income tax benefit relating to tax
losses not brought to account is: |  |       | 521 |       |  |       | 1,071 |  |  |  | 429 |  | 
|                                                                                          |  |       |     |       |  |       |       |  |  |  |     |  | 

The benefit for tax losses will only be obtained if:



|(i)   |  | The consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised;
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and                                                        
|     
|(iii) |  | no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the
losses.                                      

Tax consolidation legislation

The Ten Group Pty Limited and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as of 1
July 2003. The Australian Taxation Office has not yet been notified of this decision.

The deferred tax balances recognised by the parent entity and the consolidated entity in relation to wholly-owned entities joining the
tax consolidated group are initially measured and remeasured based on the carrying amounts of the assets and liabilities of those
entities at the level of the tax consolidation group and their tax values, as applicable under tax consolidations. The resetting of
tax values of the assets on entering the tax consolidation regime on 1 July 2003 has resulted in the following adjustments:



| |  | A decrease in consolidated deferred tax liabilities of $62,041,000  
|- |  | --------------------------------------------------------------------
| 
| |  | An increase in consolidated asset revaluation reserve of $17,315,000
| 
| |  | A decrease in current income tax expense of $44,726,000             

These adjustments resulted in a net increase in consolidated net assets and consolidated total equity of $62,041,000.

The Ten Group Pty Limited, as the head entity in the tax consolidation group, recognises current and deferred tax amounts relating to
transactions, events and balances of the controlled entities in this group as if those transactions, events and balances were its own,
in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Amounts
receivable or payable under a tax sharing agreement with the tax consolidated entities are recognised separately as tax-related
amounts receivable or payable. Expenses and revenues arising under the tax sharing agreement are recognised as a component of income
tax expense/(revenue).

Page 14



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|5 |  | CASH
|- |  | ----

|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |     | 
|----------------------------------------------------- | -------------------------------- |  | ---- | -- | ----- |  | ------- | ----- | ---- |  | ------- | --- | 
|                                                      |                                  |  |      |    |       |  | 2003    |       | 2002
|                                                      |                                  |  | Note |    | $000 |  | $000  
|Cash on hand                                          |                                  |  |      |    |       |  | 80      |       |      |  | 65      |    
|Cash at bank                                          |                                  |  |      |    |       |  | 20,902  |       |      |  | 11,734  |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      |                                  |  | 31   |    |       |  | 20,982  |       |      |  | 11,799  |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                     
|6                                                     | RECEIVABLES (CURRENT)            |  |      |    |       |  |         |       |      |  |         |     | 
|                                                     
|Trade debtors                                         |                                  |  |      |    |       |  | 136,476 |       |      |  | 127,426 |    
|Provisions for doubtful debts and advertising credits |                                  |  |      |    |       |  | (8,827  | )     |      |  | (11,677 | )  
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      |                                  |  |      |    |       |  | 127,649 |       |      |  | 115,749 |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|Loans and advances                                    |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      | Controlled entities              |  |      | 33 |       |  |         |      |      |  |         |    | 
|                                                      | Associated companies             |  |      | 33 |       |  |         | 2     |      |  |         | 2   | 
|                                                      | Other                            |  |      |    |       |  |         | 157   |      |  |         | 373 | 
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      |                                  |  |      |    |       |  | 159     |       |      |  | 375     |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      |                                  |  | 31   |    |       |  | 127,808 |       |      |  | 116,124 |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                     
|7                                                     | INVENTORIES (CURRENT)            |  |      |    |       |  |         |       |      |  |         |     | 
|                                                     
|Program rights                                        |                                  |  |      |    |       |  | 122,411 |       |      |  | 126,503 |    
|Other inventories                                     |                                  |  |      |    |       |  | 1,006   |       |      |  | 1,135   |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      |                                  |  |      |    |       |  | 123,417 |       |      |  | 127,638 |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                     
|8                                                     | OTHER ASSETS (CURRENT)           |  |      |    |       |  |         |       |      |  |         |     | 
|                                                     
|Prepayments and sundry debtors                        |                                  |  |      |    |       |  | 3,873   |       |      |  | 12,029  |    
|Capitalised borrowing costs                           |                                  |  |      |    |       |  | 149     |       |      |  |        |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      |                                  |  |      |    |       |  | 4,022   |       |      |  | 12,029  |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                     
|9                                                     | RECEIVABLES (NON-CURRENT)        |  |      |    |       |  |         |       |      |  |         |     | 
|                                                     
|Loans and advances                                    |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      | Associated companies             |  |      | 33 |       |  |         | 686   |      |  |         | 791 | 
|                                                      | Joint venture entities           |  |      |    |       |  |         |      |      |  |         |    | 
|                                                      | Related entities                 |  |      |    |       |  |         |      |      |  |         |    | 
|                                                      | Directors of controlled entities |  |      | 33 |       |  |         |      |      |  |         | 350 | 
|                                                      | Other                            |  |      |    |       |  |         | 1,846 |      |  |         | 975 | 
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    
|                                                      |                                  |  | 31   |    |       |  | 2,532   |       |      |  | 2,116   |    
|                                                      |                                  |  |      |    |       |  |         |       |      |  |         |    

Page 15



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|10 |  | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
|-- |  | -------------------------------------------------

|                                   |                           |  |          |    |  |  |        |       |  |  |       |         |  
|---------------------------------- | ------------------------- |  | -------- | -- |  |  | ------ | ----- |  |  | ----- | ------- | -
|Associates                         |                           |  | 26(a),33 |    |  |  | 8,635  |       |  |  | 2,888 |        
|Joint ventures                     |                           |  | 26(b),33 |    |  |  | 1,527  |       |  |  |      |        
|                                   |                           |  |          |    |  |  |        |       |  |  |       |        
|                                   |                           |  |          |    |  |  | 10,162 |       |  |  | 2,888 |        
|                                   |                           |  |          |    |  |  |        |       |  |  |       |        
|                                  
|11                                 | OTHER FINANCIAL ASSETS    |  |          |    |  |  |        |       |  |  |       |         |  
|                                  
|Investments in listed securities   |                           |  |          |    |  |  |        |       |  |  |       |        
|                                   | Cost                      |  |          |    |  |  |        |      |  |  |       | 16,522  |  
|                                   | Provision for diminution  |  |          |    |  |  |        |      |  |  |       | (16,522 | )
|                                   |                           |  |          |    |  |  |        |       |  |  |       |        
|                                   |                           |  |          |    |  |  |       |       |  |  |      |        
|                                   |                           |  |          |    |  |  |        |       |  |  |       |        
|Investments in unlisted securities |                           |  |          |    |  |  |        |       |  |  |       |        
|                                   | Associated companies      |  |          | 33 |  |  |        | 2,119 |  |  |       | 2,119   |  
|                                   | Other                     |  |          | 31 |  |  |        | 434   |  |  |       | 434     |  
|                                   |                           |  |          |    |  |  |        |       |  |  |       |        
|                                   |                           |  |          |    |  |  | 2,553  |       |  |  | 2,553 |        
|                                   |                           |  |          |    |  |  |        |       |  |  |       |        
|                                  
|12                                 | INVENTORIES (NON-CURRENT) |  |          |    |  |  |        |       |  |  |       |         |  
|                                  
|Program rights                     |                           |  |          |    |  |  | 3,005  |       |  |  | 1,565 |        
|                                   |                           |  |          |    |  |  |        |       |  |  |       |        

Page 16



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|13 |  | PROPERTY, PLANT AND EQUIPMENT
|-- |  | -----------------------------

|                                    |                          |  |      |  |       |  |        |          |      |  |        |         |  
|----------------------------------- | ------------------------ |  | ---- |  | ----- |  | ------ | -------- | ---- |  | ------ | ------- | -
|                                    |                          |  |      |  |       |  | 2003   |          | 2002
|                                    |                          |  | Note |  | $000 |  | $000 
|Freehold land                       |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    | At cost                  |  |      |  |       |  |        | 5,188    |      |  |        | 5,188   |  
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|Freehold buildings                  |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    | At cost                  |  |      |  |       |  |        | 9,724    |      |  |        | 9,461   |  
|                                    | Accumulated depreciation |  |      |  |       |  |        | (2,001   | )    |  |        | (1,748  | )
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    |                          |  |      |  |       |  | 7,723  |          |      |  | 7,713  |        
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|Leasehold improvements              |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    | At cost                  |  |      |  |       |  |        | 4,488    |      |  |        | 3,414   |  
|                                    | Accumulated depreciation |  |      |  |       |  |        | (761     | )    |  |        | (549    | )
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    |                          |  |      |  |       |  | 3,727  |          |      |  | 2,865  |        
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|Plant and equipment                 |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    | At cost                  |  |      |  |       |  |        | 176,900  |      |  |        | 157,955 |  
|                                    | Accumulated depreciation |  |      |  |       |  |        | (106,923 | )    |  |        | (92,490 | )
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    |                          |  |      |  |       |  | 69,977 |          |      |  | 65,465 |        
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|Leased Plant and Equipment          |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    | At cost                  |  |      |  |       |  |        | 6,799    |      |  |        | 6,835   |  
|                                    | Accumulated depreciation |  |      |  |       |  |        | (4,212   | )    |  |        | (3,287  | )
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    |                          |  |      |  |       |  | 2,587  |          |      |  | 3,548  |        
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        
|Total property, plant and equipment |                          |  |      |  |       |  |        |          |      |  |        |        
|                                    | Net book value           |  |      |  |       |  |        | 89,202   |      |  |        | 84,779  |  
|                                    |                          |  |      |  |       |  |        |          |      |  |        |        

|                                                                                                           |                                       |  |       |         |  
|---------------------------------------------------------------------------------------------------------- | ------------------------------------- |  | ----- | ------- | -
|                                                                                                           |                                       |  | 2003 
|                                                                                                           |                                       |  | $000
|Reconciliations                                                                                            |                                       |  |       |        
|Reconciliations of the carrying amounts for each class of
property, plant and equipment are set out below: |                                       |  |       |        
|Freehold buildings                                                                                         |                                       |  |       |        
|                                                                                                           | Balance at beginning of year          |  |       | 7,713   |  
|                                                                                                           | Additions                             |  |       | 263     |  
|                                                                                                           | Depreciation                          |  |       | (253    | )
|                                                                                                           |                                       |  |       |         |  
|                                                                                                           | Balance at end of year                |  |       | 7,723   |  
|                                                                                                           |                                       |  |       |        
|Leasehold improvements                                                                                     |                                       |  |       |        
|                                                                                                           | Balance at beginning of year          |  |       | 2,865   |  
|                                                                                                           | Additions                             |  |       | 1,077   |  
|                                                                                                           | Disposals                             |  |       | (2      | )
|                                                                                                           | Foreign currency exchange differences |  |       | (1      | )
|                                                                                                           | Depreciation                          |  |       | (212    | )
|                                                                                                           |                                       |  |       |         |  
|                                                                                                           | Balance at end of year                |  |       | 3,727   |  
|                                                                                                           |                                       |  |       |        
|Plant and equipment                                                                                        |                                       |  |       |        
|                                                                                                           | Balance at beginning of year          |  |       | 65,465  |  
|                                                                                                           | Additions                             |  |       | 22,552  |  
|                                                                                                           | Disposals                             |  |       | (1,646  | )
|                                                                                                           | Foreign currency exchange differences |  |       | (279    | )
|                                                                                                           | Depreciation                          |  |       | (16,115 | )
|                                                                                                           |                                       |  |       |         |  
|                                                                                                           | Balance at end of year                |  |       | 69,977  |  
|                                                                                                           |                                       |  |       |        

Page 17



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|13 |  | PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
|-- |  | -----------------------------------------

|                           |                                       |  |       |       |  
|-------------------------- | ------------------------------------- |  | ----- | ----- | -
|                           |                                       |  | 2003 
|                           |                                       |  | $000
|Leased plant and equipment |                                       |  |       |      
|                           | Balance at beginning of year          |  |       | 3,548 |  
|                           | Additions                             |  |       | 14    |  
|                           | Disposals                             |  |       | (8    | )
|                           | Foreign currency exchange differences |  |       | (10   | )
|                           | Depreciation                          |  |       | (957  | )
|                           |                                       |  |       |      
|                           | Balance at end of year                |  |       | 2,587 |  
|                           |                                       |  |       |      



|14 |  | INTANGIBLES
|-- |  | -----------

|                            |                                        |  |       |    |       |  |           |        |      |  |           |       | 
|--------------------------- | -------------------------------------- |  | ----- | -- | ----- |  | --------- | ------ | ---- |  | --------- | ----- | 
|                            |                                        |  |       |    |       |  | 2003      |        | 2002
|                            |                                        |  | Note  |    | $000 |  | $000    
|Television licences         |                                        |  |       |    |       |  | 1,077,822 |        |      |  | 1,077,822 |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|Other licences  cost       |                                        |  |       |    |       |  | 29,500    |        |      |  | 29,500    |      
|Accumulated amortisation    |                                        |  |       |    |       |  | (1,912    | )      |      |  | (1,200    | )    
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            |                                        |  |       |    |       |  | 27,588    |        |      |  | 28,300    |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|Goodwill  cost             |                                        |  |       |    |       |  | 245,421   |        |      |  | 245,421   |      
|Writedown of goodwill       |                                        |  |       |    |       |  | (172,451  | )      |      |  | (172,451  | )    
|Accumulated amortisation    |                                        |  |       |    |       |  | (22,190   | )      |      |  | (19,385   | )    
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            |                                        |  |       |    |       |  | 50,780    |        |      |  | 53,585    |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            |                                        |  |       |    |       |  | 1,156,190 |        |      |  | 1,159,707 |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                           
|15                          | OTHER ASSETS (NON-CURRENT)             |  |       |    |       |  |           |        |      |  |           |       | 
|                           
|Capitalised borrowing costs |                                        |  |       |    |       |  | 1,268     |        |      |  |          |      
|Other                       |                                        |  |       |    |       |  | 129       |        |      |  | 626       |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            |                                        |  |       |    |       |  | 1,397     |        |      |  | 626       |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                           
|16                          | PAYABLES (CURRENT)                     |  |       |    |       |  |           |        |      |  |           |       | 
|                           
|Trade creditors             |                                        |  |       |    |       |  | 147,545   |        |      |  | 145,430   |      
|Unearned income             |                                        |  |       |    |       |  | 2,568     |        |      |  | 4,135     |      
|Accrued interest            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            | Related entity                         |  |       | 33 |       |  |           | 61,803 |      |  |           | 6,825 | 
|                            | Other                                  |  |       |    |       |  |           | 3,959  |      |  |           | 3,568 | 
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            |                                        |  | 31    |    |       |  | 215,875   |        |      |  | 159,958   |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                           
|17                          | INTEREST-BEARING LIABILITIES (CURRENT) |  |       |    |       |  |           |        |      |  |           |       | 
|                           
|Bank loans                  |                                        |  | 31    |    |       |  |          |        |      |  | 23,000    |      
|Bank overdraft              |                                        |  | 31    |    |       |  |          |        |      |  | 1,791     |      
|Commercial bills            |                                        |  | 31    |    |       |  |          |        |      |  | 3,000     |      
|Lease liabilities           |                                        |  | 29,31 |    |       |  | 945       |        |      |  | 987       |      
|Other loans                 |                                        |  |       |    |       |  |          |        |      |  | 469       |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      
|                            |                                        |  |       |    |       |  | 945       |        |      |  | 29,247    |      
|                            |                                        |  |       |    |       |  |           |        |      |  |           |      

Page 18



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|18 |  | PROVISIONS (CURRENT)
|-- |  | --------------------

|                      |  |      |  |       |  |       |        |      |  |  |        | 
|--------------------- |  | ---- |  | ----- |  | ----- | ------ | ---- |  |  | ------ | 
|                      |  |      |  |       |  | 2003  |        | 2002
|                      |  | Note |  | $000 |  | $000
|Employee entitlements |  |      |  |       |  |       | 12,940 |      |  |  | 13,234 | 
|Surplus lease space   |  |      |  |       |  |       | 345    |      |  |  | 441    | 
|Deferred settlement   |  |      |  |       |  |       | 3,000  |      |  |  | 3,000  | 
|Other                 |  |      |  |       |  |       | 7,504  |      |  |  | 24,062 | 
|                      |  |      |  |       |  |       |        |      |  |  |        | 
|                      |  |      |  |       |  |       | 23,789 |      |  |  | 40,737 | 
|                      |  |      |  |       |  |       |        |      |  |  |        | 



|Movements in provisions                                                                                            
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   
|Movements in each class of provision during the financial year, other than
employee entitlements are set out
below:

|                                     |  |             |     |            |  |       |       |       |  |  |         |   |  |  |         |  
|------------------------------------ |  | ----------- | --- | ---------- |  | ----- | ----- | ----- |  |  | ------- | - |  |  | ------- | -
|                                     |  | Surplus     |     | Deferred   |  |       |       |       |  |  |         |  
|                                     |  | lease space |     | settlement |  | Other |       | Total
|                                     |  | $000       |     | $000      |  | $000 |       | $000
|Current                              |  |             |     |            |  |       |       |       |  |  |         |   |  |  |         |  
|Carrying amount at beginning of year |  |             | 441 |            |  |       | 3,000 |       |  |  | 24,062  |   |  |  | 27,503  |  
|Additional provisions recognised     |  |             |    |            |  |       |      |       |  |  | 518     |   |  |  | 518     |  
|Payments                             |  |             |    |            |  |       |      |       |  |  | (5,652  | ) |  |  | (5,652  | )
|Reductions from remeasurement        |  |             | (96 | )          |  |       |      |       |  |  | (11,424 | ) |  |  | (11,520 | )
|                                     |  |             |     |            |  |       |       |       |  |  |         |   |  |  |         |  
|Carrying amount at end of year       |  |             | 345 |            |  |       | 3,000 |       |  |  | 7,504   |   |  |  | 10,849  |  
|                                     |  |             |     |            |  |       |       |       |  |  |         |   |  |  |         |  



|19 |  | PAYABLES (NON-CURRENT)
|-- |  | ----------------------

|                           |                                            |                  |       |       |  |       |         |        |     |      |         |        |     | 
|-------------------------- | ------------------------------------------ | ---------------- | ----- | ----- |  | ----- | ------- | ------ | --- | ---- | ------- | ------ | --- | 
|                           |                                            |                  |       |       |  |       |         | 2003   |     | 2002
|                           |                                            |                  |       | Note  |  | $000 |         | $000 
|Trade creditors            |                                            |                  |       |       |  |       | 36,073  |        |     |      | 26,256  |       
|Loans                      |                                            |                  |       |       |  |       |         |        |     |      |         |       
|                           |                                            | Related entities |       |       |  |       |         |        | 304 |      |         |        | 265 | 
|                           |                                            |                  |       |       |  |       |         |        |     |      |         |       
|                           |                                            |                  | 31    |       |  |       | 36,377  |        |     |      | 26,521  |       
|                           |                                            |                  |       |       |  |       |         |        |     |      |         |       
|                          
|20                         | INTEREST-BEARING LIABILITIES (NON-CURRENT) |                  |       |       |  |       |         |        |     |      |         |        |    
|                          
|Bank loan                  |                                            |                  | 31    |       |  |       | 175,000 |        |     |      | 460,000 |       
|USD senior unsecured notes |                                            |                  | 31    |       |  |       | 210,084 |        |     |      |        |       
|Debentures                 |                                            |                  |       |       |  |       |         |        |     |      |         |       
|                           | Subordinated                               |                  |       | 31,33 |  |       |         | 45,500 |     |      |         | 45,500 |    
|                           | Convertible                                |                  |       | 31,33 |  |       |         | 45     |     |      |         | 45     |    
|Lease liabilities          |                                            |                  | 29,31 |       |  |       | 3,828   |        |     |      | 4,566   |       
|                           |                                            |                  |       |       |  |       |         |        |     |      |         |       
|                           |                                            |                  |       |       |  |       | 434,457 |        |     |      | 510,111 |       
|                           |                                            |                  |       |       |  |       |         |        |     |      |         |       
|                          
|21                         | PROVISIONS (NON-CURRENT)                   |                  |       |       |  |       |         |        |     |      |         |        |    
|                          
|Employee entitlements      |                                            |                  |       |       |  |       | 1,796   |        |     |      | 1,971   |       
|                           |                                            |                  |       |       |  |       |         |        |     |      |         |       

Page 19



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|22 |  | CONTRIBUTED EQUITY
|-- |  | ------------------

|                                              |  |      |  |       |  |       |        |      |  |  |        | 
|--------------------------------------------- |  | ---- |  | ----- |  | ----- | ------ | ---- |  |  | ------ | 
|                                              |  |      |  |       |  | 2003  |        | 2002
|                                              |  | Note |  | $000 |  | $000
|Paid up capital                               |  |      |  |       |  |       |        |      |  |  |        | 
|462,125,000 ordinary shares fully paid (2002: |  |      |  |       |  |       |        |      |  |  |        | 
|455,000,000)                                  |  |      |  |       |  |       | 59,934 |      |  |  | 45,500 | 
|                                              |  |      |  |       |  |       |        |      |  |  |        | 

Holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at shareholders meetings.

In the event of winding up of the Company ordinary shareholders rank after all
creditors and are fully entitled to any proceeds of liquidation.



|23 |  | RESERVES
|-- |  | --------

|                             |                                                             |  |      |  |       |  |         |          |      |  |         |         |  
|---------------------------- | ----------------------------------------------------------- |  | ---- |  | ----- |  | ------- | -------- | ---- |  | ------- | ------- | -
|                             |                                                             |  |      |  |       |  | 2003    |          | 2002
|                             |                                                             |  | Note |  | $000 |  | $000  
|Asset revaluation            |                                                             |  |      |  |       |  | 544,231 |          |      |  | 752,329 |        
|Foreign currency translation |                                                             |  |      |  |       |  | (494    | )        |      |  | (63     | )      
|                             |                                                             |  |      |  |       |  |         |          |      |  |         |        
|                             |                                                             |  |      |  |       |  | 543,737 |          |      |  | 752,266 |        
|                             |                                                             |  |      |  |       |  |         |          |      |  |         |        
|Movements during the year    |                                                             |  |      |  |       |  |         |          |      |  |         |        
|Asset revaluation            |                                                             |  |      |  |       |  |         |          |      |  |         |        
|                             | Balance at beginning of year                                |  |      |  |       |  |         | 752,329  |      |  |         | 929     |  
|                             | (Decrement)/Increment on revaluation of television
licences |  |      |  |       |  |         | (208,098 | )    |  |         | 751,400 |  
|                             |                                                             |  |      |  |       |  |         |          |      |  |         |        
|                             | Balance at end of year                                      |  |      |  |       |  |         | 544,231  |      |  |         | 752,329 |  
|                             |                                                             |  |      |  |       |  |         |          |      |  |         |        
|Foreign currency translation |                                                             |  |      |  |       |  |         |          |      |  |         |        
|                             | Balance at beginning of year                                |  |      |  |       |  |         | (63      | )    |  |         | 18      |  
|                             | Net translation adjustment                                  |  |      |  |       |  |         | (431     | )    |  |         | (81     | )
|                             |                                                             |  |      |  |       |  |         |          |      |  |         |        
|                             | Balance at end of year                                      |  |      |  |       |  |         | (494     | )    |  |         | (63     | )
|                             |                                                             |  |      |  |       |  |         |          |      |  |         |        

Nature and purpose of reserves

Asset Revaluation

The asset revaluation reserve includes the net revaluation increments and
decrements arising from the revaluation to independent valuations in 1995 of
land and buildings and a Directors valuation of television licences in 2002.

Foreign currency translation

The foreign currency translation reserve records the foreign currency
differences arising from the translation of self-sustaining foreign
operations, as disclosed in accounting policy note 1(s).



|24 |  | RETAINED EARNINGS
|-- |  | -----------------

|                                                                  |  |  |  |  |  |  |         |   |  |  |          |  
|----------------------------------------------------------------- |  |  |  |  |  |  | ------- | - |  |  | -------- | -
|Retained earnings at beginning of year                            |  |  |  |  |  |  | (4,468  | ) |  |  | 124,023  |  
|Adjustments to opening retained earnings                          |  |  |  |  |  |  |         |   |  |  |          |  
|Adoption of AASB 1020                                             |  |  |  |  |  |  | (44,763 | ) |  |  |         |  
|                                                                  |  |  |  |  |  |  |         |   |  |  |          |  
|Adjusted retained earnings at the beginning of the
financial year |  |  |  |  |  |  | (49,231 | ) |  |  | 124,023  |  
|Net profit/(loss) attributable to members of the Company          |  |  |  |  |  |  | 86,886  |   |  |  | (128,491 | )
|Dividends paid                                                    |  |  |  |  |  |  | (53,602 | ) |  |  |         |  
|                                                                  |  |  |  |  |  |  |         |   |  |  |          |  
|Retained earnings at end of year                                  |  |  |  |  |  |  | (15,947 | ) |  |  | (4,468   | )
|                                                                  |  |  |  |  |  |  |         |   |  |  |          |  

Page 20



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|25 |  | CONTROLLED ENTITIES
|-- |  | -------------------

|                                                   |                             |                                                       |                                                 |                                               |     |                              |     |      |     |     |     | 
|-------------------------------------------------- | --------------------------- | ----------------------------------------------------- | ----------------------------------------------- | --------------------------------------------- | --- | ---------------------------- | --- | ---- | --- | --- | --- | 
|                                                   |                             |                                                       |                                                 |                                               |     | Ordinary Share              
|                                                   |                             |                                                       |                                                 |                                               |     | Consolidated Entity Interest
|                                                   |                             |                                                       |                                                 |                                               |     | 2003                         |     | 2002
|                                                   |                             |                                                       |                                                 |                                               |     | %                            |     | %   
|(a) Particulars in relation to controlled entities |                             |                                                       |                                                 |                                               |     |                              |     |     
|Parent entity                                      |                             |                                                       |                                                 |                                               |     |                              |     |     
|The Ten Group Pty Limited                          |                             |                                                       |                                                 |                                               |     |                              |     |     
|Controlled entities                                |                             |                                                       |                                                 |                                               |     |                              |     |     
|                                                   | Ten Pay TV Pty Limited (i)  |                                                       |                                                 | 100                                           |     |                              |     | 100  |    
|                                                   | Network Ten Pty Limited (i) |                                                       |                                                 | 100                                           |     |                              |     | 100  |    
|                                                   |                             | Network Ten (Sydney) Pty Limited (i)                  |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             | Network Ten (Melbourne) Pty Limited (i)               |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             | Network Ten (Brisbane) Pty Limited (i)                |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             | Television & Telecasters (Properties) Pty Limited (i) |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             | Network Ten Nominees Pty Limited                      |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             | Caprice Pty Limited (i)                               |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             |                                                       | Network Ten (Adelaide) Pty Limited (i)          |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             | Chartreuse Pty Limited (i)                            |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             |                                                       | Network Ten (Perth) Pty Limited (i)             |                                               |     | 100                          |     |      |     | 100 |    
|                                                   | Ten Ventures Pty Limited    |                                                       |                                                 | 100                                           |     |                              |     | 100  |    
|                                                   |                             | Ten Online Pty Limited                                |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   | Eye Corp Pty Limited        |                                                       |                                                 | 100                                           |     |                              |     | 100  |    
|                                                   |                             | Eye Corp Australia Pty Limited (ii)                   |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             |                                                       | Eye Fly (Sydney) Pty Limited (ii)               |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             |                                                       |                                                 | Eye Drive Sydney No. 2 Pty Limited (ii)*      |     |                              | 100 |      |     |     | 100 | 
|                                                   |                             |                                                       |                                                 | Pimington Pty Limited (ii)*                   |     |                              | 100 |      |     |     | 100 | 
|                                                   |                             |                                                       |                                                 | Olympic Murals 2000 Pty Limited (ii)*         |     |                              | 100 |      |     |     | 100 | 
|                                                   |                             |                                                       |                                                 | Boyd Outdoor Advertising Pty
Limited (ii)*    |     |                              | 100 |      |     |     | 100 | 
|                                                   |                             |                                                       | Eye Digital Pty Limited (ii)                    |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             |                                                       | NLD Pty Limited (ii)                            |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             |                                                       | Australian Airport Advertising Pty Limited (ii) |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             |                                                       |                                                 | Eye Corp Airport Advertising Pty Limited (ii) |     |                              | 100 |      |     |     | 100 | 
|                                                   |                             |                                                       | Eye Drive Sydney Pty Limited (ii)               |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             |                                                       | Eye Mall Media Pty Limited (ii)                 |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             | Eye Corp Asia Limited                                 |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             |                                                       | Eyecorp Limited                                 |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             |                                                       | PT Netra Estha Muda                             |                                               |     | 95                           |     |      |     | 95  |    
|                                                   |                             |                                                       |                                                 | PT Agung Bali                                 |     |                              | 67  |      |     |     | 67  | 
|                                                   |                             |                                                       | PT Eye Corp (iii)                               |                                               |     |                             |     |      |     |    |    
|                                                   |                             | Eye Corp Media Pty Limited                            |                                                 |                                               | 100 |                              |     |      | 100 |    
|                                                   |                             |                                                       | Adval Holdings Pty Limited                      |                                               |     | 100                          |     |      |     | 100 |    
|                                                   |                             |                                                       | Adval Australia Pty Limited                     |                                               |     | 100                          |     |      |     | 100 |    

All the above controlled entities are incorporated in Australia, except for the following:



|- |  | Eye Corp Asia Limited (incorporated in Mauritius);                             
|- |  | -------------------------------------------------------------------------------
| 
|- |  | Eyecorp Limited (incorporated in Myanmar); and                                 
| 
|- |  | PT Netra Estha Muda, PT Agung Bali and PT Eye Corp (incorporated in Indonesia).



|(i)  |  | Refer to Note 37 for details of The Ten Group Pty Limited Deed of Cross Guarantee.
|---- |  | ----------------------------------------------------------------------------------
|    
|(ii) |  | Refer to Note 37 for details of the Eye Corp Pty Limited Deed of Cross Guarantee. 

Page 21



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|(iii)    Eye Corp Asia Limited has a 100% beneficial ownership interest in PT Eye Corp and PT Netra Estha Muda and a 70% beneficial
ownership interest in PT Agung Bali.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                        
|*: In liquidation                                                                                                                                                       

Page 22



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|25 |  | CONTROLLED ENTITIES (continued)
|-- |  | -------------------------------

(b)  Acquisition of controlled entities

During the previous financial year The Ten Group Pty Limited acquired the remaining 40% of the
voting shares of Eye Corp Pty Limited and its controlled entities. Details of the acquisition
are as follows:

|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |         |  
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- |  | ---- | -- | ----- |  | ----- | ----- | ----- |  | ------ | ------- | -
|                                                                                                              |                                                   |  |      |    |       |  | 2003  |       | 2002 
|                                                                                                              |                                                   |  |      |    |       |  | $000 |       | $000
|Fair value of net assets of entity acquired:                                                                  |                                                   |  |      |    |       |  |       |       |       |  |        |        
|                                                                                                              | Property, plant and equipment                     |  |      |    |       |  |       |      |       |  |        | 8,990   |  
|                                                                                                              | Future income tax benefit                         |  |      |    |       |  |       |      |       |  |        | 2,752   |  
|                                                                                                              | Inventories                                       |  |      |    |       |  |       |      |       |  |        | 480     |  
|                                                                                                              | Trade debtors                                     |  |      |    |       |  |       |      |       |  |        | 5,622   |  
|                                                                                                              | Investments                                       |  |      |    |       |  |       |      |       |  |        | 1,167   |  
|                                                                                                              | Intangibles                                       |  |      |    |       |  |       |      |       |  |        | 29,874  |  
|                                                                                                              | Other assets                                      |  |      |    |       |  |       |      |       |  |        | 3,677   |  
|                                                                                                              | Bank overdraft                                    |  |      |    |       |  |       |      |       |  |        | (215    | )
|                                                                                                              | Bank loans - secured                              |  |      |    |       |  |       |      |       |  |        | (9,200  | )
|                                                                                                              | Trade creditors                                   |  |      |    |       |  |       |      |       |  |        | (7,955  | )
|                                                                                                              | Net loans payable                                 |  |      |    |       |  |       |      |       |  |        | (20,194 | )
|                                                                                                              | Other provisions                                  |  |      |    |       |  |       |      |       |  |        | (4,998  | )
|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |        
|                                                                                                              |                                                   |  |      |    |       |  |      |       |       |  | 10,000 |        
|Goodwill on acquisition                                                                                       |                                                   |  |      |    |       |  |      |       |       |  |       |        
|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |        
|Consideration (cash)                                                                                          |                                                   |  |      |    |       |  |      |       |       |  | 10,000 |        
|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |        
|                                                                                                             
|                                                                                                              |                                                   |  |      |    | 2003  |  | 2002 
|                                                                                                              |                                                   |  |      |    | $000 |  | $000
|Consideration                                                                                                 |                                                   |  |      |    |       |  |      |       |       |  | 10,000 |        
|Cash acquired                                                                                                 |                                                   |  |      |    |       |  |      |       |       |  |       |        
|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |         |  
|Outflow of cash                                                                                               |                                                   |  |      |    |       |  |      |       |       |  | 10,000 |        
|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |         |  
|                                                                                                             
|26                                                                                                            | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
|                                                                                                             
|                                                                                                              |                                                   |  |      |    | 2003  |  | 2002 
|                                                                                                              |                                                   |  | Note |    | $000 |  | $000
|Share of net profits accounted for using the
equity method included in the statement of
financial performance |                                                   |  |      |    |       |  |       |       |       |  |        |        
|                                                                                                              | Associates                                        |  |      | 26 | (a)   |  |       | 1,038 |       |  |        | 916     |  
|                                                                                                              | Joint ventures                                    |  |      | 26 | (b)   |  |       | 1,392 |       |  |        |        |  
|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |        
|                                                                                                              |                                                   |  |      |    |       |  | 2,430 |       |       |  | 916    |        
|                                                                                                              |                                                   |  |      |    |       |  |       |       |       |  |        |        

Page 23



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|26 |  | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
|-- |  | -------------------------------------------------------------

(a) Investments in equity accounted associates

|                                  |                  |                                 |  |           |   |         |        |      |      |                    |  |                      |     |      |  |  |       |       |       |  |   |       |       |  |  | 
|--------------------------------- | ---------------- | ------------------------------- |  | --------- | - | ------- | ------ | ---- | ---- | ------------------ |  | -------------------- | --- | ---- |  |  | ----- | ----- | ----- |  | - | ----- | ----- |  |  | 
|                                  |                  |                                 |  | Principal |   |         |        |      |      | Ownership interest |  | Amount of investment
|                                  |                  |                                 |  | Activity/ |   | Balance |        | 2003 |      | 2002               |  | 2003                 |     | 2002
|Name                              |                  | Note                            |  | Date      |   | %       |        | %    |      | $000              |  | $000               
|                                  |                  |                                 |  |           |   |         |        |      |      |                    |  |                     
|Held by Eye Corp Pty Limited      |                  |                                 |  |           |   |         |        |      |      |                    |  |                      |     |      |  |  |       |       |       |  |   |       |       | 
|                                  | Big Tree Sdn Bhd |                                 |  | (i        | ) |         | 31 Dec |      |      | 30.0               |  |                      |     | 30.0 |  |  |       | 2,792 |       |  |   | 2,888 |      
|Held by The Ten Group Pty Limited |                  |                                 |  |           |   |         |        |      |      |                    |  |                      |     |      |  |  |       |       |       |  |   |       |       | 
|                                  |                  | Television & Media Services Ltd |  | (ii)      |   | 30 Jun  |        |      | 24.3 |                    |  |                      | 9.8 |      |  |  | 5,843 |       |       |  |  |      
|                                  |                  |                                 |  |           |   |         |        |      |      |                    |  |                      |     |      |  |  |       |       |       |  |   |       |       | 
|                                  |                  |                                 |  |           |   |         |        |      |      |                    |  |                      |     |      |  |  |       |       | 8,635 |  |   |       | 2,888 | 
|                                  |                  |                                 |  |           |   |         |        |      |      |                    |  |                      |     |      |  |  |       |       |       |  |   |       |       | 

The principal activities of the associated companies are:



|(i)  |  | Outdoor advertising                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------
|    
|(ii) |  | Television and studio production services, field production services, and cinema screen advertising to December 2002.

|                                                                                   |  |       |       |       |  |  |       |  
|---------------------------------------------------------------------------------- |  | ----- | ----- | ----- |  |  | ----- | -
|                                                                                   |  | 2003  |       | 2002 
|                                                                                   |  | $000 |       | $000
|Results attributable to associates                                                 |  |       |       |       |  |  |       |  
|Profits from ordinary activities before income tax                                 |  |       | 1,480 |       |  |  | 1,390 |  
|Income tax expense                                                                 |  |       | (387  | )     |  |  | (474  | )
|                                                                                   |  |       |       |       |  |  |       |  
|Profits from ordinary activities after income tax                                  |  |       | 1,093 |       |  |  | 916   |  
|Goodwill amortisation                                                              |  |       | (55   | )     |  |  |      |  
|                                                                                   |  |       |       |       |  |  |       |  
|                                                                                   |  |       | 1,038 |       |  |  | 916   |  
|Retained profits attributable to associates at the beginning of the financial year |  |       | 1,504 |       |  |  | 588   |  
|                                                                                   |  |       |       |       |  |  |       |  
|Retained profits attributable to associates at the end of the financial year       |  |       | 2,542 |       |  |  | 1,504 |  
|                                                                                   |  |       |       |       |  |  |       |  
|Reserves attributable to associates                                                |  |       |       |       |  |  |       |  
|Foreign Currency Translation Reserve                                               |  |       |       |       |  |  |       |  
|Share of associates reserve at beginning of year                                  |  |       | (107  | )     |  |  | 21    |  
|Share of decrement in associates reserve                                          |  |       | (449  | )     |  |  | (128  | )
|                                                                                   |  |       |       |       |  |  |       |  
|Share of associates reserve at end of year                                        |  |       | (556  | )     |  |  | (107  | )
|                                                                                   |  |       |       |       |  |  |       |  
|Movements in carrying amount of investments                                        |  |       |       |       |  |  |       |  
|Carrying amount at the beginning of the financial year                             |  |       | 2,888 |       |  |  | 2,384 |  
|Investments in associates acquired during the year                                 |  |       | 5,567 |       |  |  |      |  
|Share of profits from ordinary activities after income tax                         |  |       | 1,093 |       |  |  | 916   |  
|Goodwill amortisation                                                              |  |       | (55   | )     |  |  |      |  
|Dividends received/receivable                                                      |  |       | (409  | )     |  |  | (284  | )
|Share of decrement in associates reserve                                          |  |       | (449  | )     |  |  | (128  | )
|                                                                                   |  |       |       |       |  |  |       |  
|Carrying amount at the end of the financial year                                   |  |       | 8,635 |       |  |  | 2,888 |  
|                                                                                   |  |       |       |       |  |  |       |  

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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|26 |  | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
|-- |  | -------------------------------------------------------------

(a)  Investments in equity accounted associates (continued)

|                                                                                                 |  |       |         |       |  |  |        |  
|------------------------------------------------------------------------------------------------ |  | ----- | ------- | ----- |  |  | ------ | -
|                                                                                                 |  | 2003  |         | 2002 
|                                                                                                 |  | $000 |         | $000
|Financial position of associates                                                                 |  |       |         |       |  |  |        |  
|The consolidated entitys share of aggregate assets and
liabilities of associates is as follows: |  |       |         |       |  |  |        |  
|Current assets                                                                                   |  |       | 3,903   |       |  |  | 1,459  |  
|Non-current assets                                                                               |  |       | 14,898  |       |  |  | 3,645  |  
|                                                                                                 |  |       |         |       |  |  |        |  
|Total assets                                                                                     |  |       | 18,801  |       |  |  | 5,104  |  
|                                                                                                 |  |       |         |       |  |  |        |  
|Current liabilities                                                                              |  |       | (3,456  | )     |  |  | (2,216 | )
|Non-current liabilities                                                                          |  |       | (9,857  | )     |  |  |       |  
|                                                                                                 |  |       |         |       |  |  |        |  
|Total liabilities                                                                                |  |       | (13,313 | )     |  |  | (2,216 | )
|                                                                                                 |  |       |         |       |  |  |        |  
|Net assets                                                                                       |  |       | 5,488   |       |  |  | 2,888  |  
|                                                                                                 |  |       |         |       |  |  |        |  
|Share of associates expenditure commitments as at 30 June                                       |  |       |         |       |  |  |        |  
|Capital commitments                                                                              |  |       | 1       |       |  |  |       |  
|Lease commitments                                                                                |  |       | 8,674   |       |  |  |       |  
|                                                                                                 |  |       |         |       |  |  |        |  
|                                                                                                 |  |       | 8,675   |       |  |  |       |  
|                                                                                                 |  |       |         |       |  |  |        |  

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THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|26 |  | INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)
|-- |  | -------------------------------------------------------------

(b)  Investments in joint venture companies

|                             |                         |      |           |      |         |   |        |   |                    |       |                      |       |      |      |  |  |  |       |  |  |  |   |  |  | 
|---------------------------- | ----------------------- | ---- | --------- | ---- | ------- | - | ------ | - | ------------------ | ----- | -------------------- | ----- | ---- | ---- |  |  |  | ----- |  |  |  | - |  |  | 
|                             |                         |      | Principal |      |         |   |        |   | Ownership interest |       | Amount of investment
|                             |                         |      | Activity/ |      | Balance |   | 2003   |   | 2002               |       | 2003                 |       | 2002
|Name                         |                         | Note |           | Date |         | % |        | % |                    | $000 |                      | $000
|                             |                         |      |           |      |         |   |        |   |                    |       |                      |      
|Held by Eye Corp Pty Limited |                         |      |           |      |         |   |        |   |                    |       |                      |       |      |      |  |  |  |       |  |  |  |   |  | 
|                             | Eye Village Pty Limited |      |           | (i   | )       |   | 30 Jun |   |                    | 50.0  |                      |       |      | 50.0 |  |  |  | 1,527 |  |  |  |  | 
|                             |                         |      |           |      |         |   |        |   |                    |       |                      |       |      |      |  |  |  |       |  |  |  |   |  | 

The principal activities of the joint venture companies are:



|(i) |  | Internal advertising in shopping centres.
|--- |  | -----------------------------------------

|                                                                                                     |  |              |        |       |  |  |   | 
|---------------------------------------------------------------------------------------------------- |  | ------------ | ------ | ----- |  |  | - | 
|                                                                                                     |  | Consolidated
|                                                                                                     |  | 2003         |        | 2002 
|                                                                                                     |  | $000        |        | $000
|Results attributable to joint ventures                                                               |  |              |        |       |  |  |   | 
|Profits from ordinary activities before income tax                                                   |  |              | 1,392  |       |  |  |  | 
|Income tax expense                                                                                   |  |              |       |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Profits from ordinary activities after income tax                                                    |  |              | 1,392  |       |  |  |  | 
|Retained profits attributable to joint ventures equity accounted for the first time                  |  |              | (1,124 | )     |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Retained profits attributable to joint ventures at the end of the financial year                     |  |              | 268    |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Reserves attributable to joint ventures                                                              |  |              |        |       |  |  |   | 
|Foreign Currency Translation Reserve                                                                 |  |              |        |       |  |  |   | 
|Share of joint ventures reserve at beginning of year                                                |  |              |       |       |  |  |  | 
|Share of increment in joint ventures reserve                                                        |  |              | 14     |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Share of joint ventures reserve at end of year                                                      |  |              | 14     |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Movements in carrying amount of investments                                                          |  |              |        |       |  |  |   | 
|Carrying amount at the beginning of the financial year                                               |  |              |       |       |  |  |  | 
|Carrying amount of joint ventures equity accounted for the first time                                |  |              | 1,221  |       |  |  |  | 
|Investments in joint ventures acquired during the year                                               |  |              | 400    |       |  |  |  | 
|Share of profits from ordinary activities after income tax                                           |  |              | 1,392  |       |  |  |  | 
|Dividends received/receivable                                                                        |  |              | (1,500 | )     |  |  |  | 
|Share of increment in joint ventures reserve                                                        |  |              | 14     |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Carrying amount at the end of the financial year                                                     |  |              | 1,527  |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Financial position of joint ventures                                                                 |  |              |        |       |  |  |   | 
|The consolidated entitys share of aggregate assets and liabilities of joint ventures is as follows: |  |              |        |       |  |  |   | 
|Current assets                                                                                       |  |              | 1,593  |       |  |  |  | 
|Non-current assets                                                                                   |  |              | 383    |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Total assets                                                                                         |  |              | 1,976  |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Current liabilities                                                                                  |  |              | (449   | )     |  |  |  | 
|Non-current liabilities                                                                              |  |              |       |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Total liabilities                                                                                    |  |              | (449   | )     |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 
|Net assets                                                                                           |  |              | 1,527  |       |  |  |  | 
|                                                                                                     |  |              |        |       |  |  |   | 

Page 26



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|27 |  | DIRECTORS REMUNERATION
|-- |  | -----------------------

|                                                                                                                                                                                                                                                           |  |       |       |       |  |       |       |  |  |  |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- | ----- | ----- |  | ----- | ----- |  |  |  | ----- | 
|                                                                                                                                                                                                                                                           |  | 2003  |       | 2002  |  | 2001 
|                                                                                                                                                                                                                                                           |  | $000 |       | $000 |  | $000
|Income paid or payable, or otherwise made
available, to Directors of the Company and
controlled entities by entities in the
consolidated entity and related parties in
connection with the management of affairs of
the Company or its controlled entities |  |       | 4,365 |       |  |       | 4,835 |  |  |  | 2,453 | 
|                                                                                                                                                                                                                                                           |  |       |       |       |  |       |       |  |  |  |       | 

The number of Directors of the Company whose
income from the Company or any related party
falls within the following bands:

|      |  |  |      |  |      |  |       |  |  |  |   |  |  |  |   |  |  |  |   | 
|----- |  |  | ---- |  | ---- |  | ----- |  |  |  | - |  |  |  | - |  |  |  | - | 
|      |  |  |      |  |      |  |       |  |  |  |   |  |  | 
|$000 |  |  | 2003 |  | 2002 |  | 2001 
|0     |  |  |     |  |      |  | 10    |  |  |  | 3 |  |  |  | 2 |  |  |  | 6 | 
|10    |  |  |     |  |      |  | 20    |  |  |  | 8 |  |  |  | 7 |  |  |  | 8 | 
|20    |  |  |     |  |      |  | 30    |  |  |  | 3 |  |  |  | 2 |  |  |  |  | 
|30    |  |  |     |  |      |  | 40    |  |  |  |  |  |  |  | 1 |  |  |  |  | 
|50    |  |  |     |  |      |  | 60    |  |  |  |  |  |  |  | 1 |  |  |  |  | 
|190   |  |  |     |  |      |  | 200   |  |  |  |  |  |  |  |  |  |  |  | 1 | 
|590   |  |  |     |  |      |  | 600   |  |  |  |  |  |  |  | 1 |  |  |  |  | 
|1,160 |  |  |     |  |      |  | 1,170 |  |  |  |  |  |  |  |  |  |  |  | 1 | 
|1,180 |  |  |     |  |      |  | 1,190 |  |  |  |  |  |  |  | 1 |  |  |  |  | 
|1,320 |  |  |     |  |      |  | 1,330 |  |  |  |  |  |  |  | 1 |  |  |  |  | 
|1,350 |  |  |     |  |      |  | 1,360 |  |  |  | 1 |  |  |  |  |  |  |  |  | 
|2,250 |  |  |     |  |      |  | 2,260 |  |  |  | 1 |  |  |  |  |  |  |  |  | 

Page 27



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|28 |  | AUDITORS REMUNERATION
|-- |  | ----------------------

|                                    |                               |                                      |       |       |     |       |       |       |     |  |       |  |     | 
|----------------------------------- | ----------------------------- | ------------------------------------ | ----- | ----- | --- | ----- | ----- | ----- | --- |  | ----- |  | --- | 
|                                    |                               |                                      |       | 2003  |     | 2002  |       | 2001 
|                                    |                               |                                      |       | $000 |     | $000 |       | $000
|Audit and other assurance services: |                               |                                      |       |       |     |       |       |       |     |  |       | 
|                                    | Auditors of the Company  PwC |                                      |       |       |     |       |       |       |     |  |       |  |    
|                                    |                               | Audit or review of financial reports |       |       | 458 |       |       |       | 434 |  |       |  | 266 | 
|                                    |                               | Other audit related work             |       |       | 10  |       |       |       | 98  |  |       |  | 40  | 
|                                    |                               | Other assurance services             |       |       | 267 |       |       |       | 292 |  |       |  | 576 | 
|                                    |                               |                                      |       |       |     |       |       |       |     |  |       | 
|                                    |                               |                                      | 735   |       |     |       | 824   |       |     |  | 882   | 
|                                    |                               |                                      |       |       |     |       |       |       |     |  |       | 
|Other services:                     |                               |                                      |       |       |     |       |       |       |     |  |       | 
|                                    | Auditors of the Company  PwC |                                      |       |       |     |       |       |       |     |  |       |  |    
|                                    |                               | Advisory services                    |       |       | 50  |       |       |       | 23  |  |       |  | 80  | 
|                                    |                               | Taxation                             |       |       | 625 |       |       |       | 745 |  |       |  | 508 | 
|                                    |                               |                                      |       |       |     |       |       |       |     |  |       | 
|                                    |                               |                                      | 675   |       |     |       | 768   |       |     |  | 588   | 
|                                    |                               |                                      |       |       |     |       |       |       |     |  |       | 
|                                    |                               |                                      | 1,410 |       |     |       | 1,592 |       |     |  | 1,470 | 
|                                    |                               |                                      |       |       |     |       |       |       |     |  |       | 

The auditors remuneration attributable to the Company is borne by a
controlled entity.



|29 |  | COMMITMENTS
|-- |  | -----------

| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         |  |  |        | 
| | -- | - |  | ------------------------------------------------------- |  |  | -------------------------------------------------------- |  |  |  | ------- |  | ----- | ------ | ------- |  |  | ------ | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 2003    |  | 2002 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | $000   |  | $000
| | (a | ) |  | Capital expenditure commitments                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  | Amounts contracted but not provided for:                |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  | No later than one year                                   |  |  |  |         |  |       | 3,535  |         |  |  | 4,166  | 
| |    |   |  |                                                         |  |  | Later than one year and not later than five years        |  |  |  |         |  |       | 636    |         |  |  |       | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 4,171   |  |       |        | 4,166   | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| | (b | ) |  | Program expenditure commitments                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  | Amounts contracted but not provided for:                |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  | No later than one year                                   |  |  |  |         |  |       | 44,732 |         |  |  | 77,767 | 
| |    |   |  |                                                         |  |  | Later than one year and not later than five years        |  |  |  |         |  |       | 70,110 |         |  |  | 13,721 | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 114,842 |  |       |        | 91,488  | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| | (c | ) |  | Non-cancellable operating lease commitments             |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  | Minimum lease payments contracted but not provided for: |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  | No later than one year                                   |  |  |  |         |  |       | 38,074 |         |  |  | 39,643 | 
| |    |   |  |                                                         |  |  | Later than one year and not later than five years        |  |  |  |         |  |       | 89,814 |         |  |  | 91,274 | 
| |    |   |  |                                                         |  |  | Later than five years                                    |  |  |  |         |  |       | 29,259 |         |  |  | 34,246 | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 157,147 |  |       |        | 165,163 | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  | Less: Total future minimum sub lease payments
receivable |  |  |  |         |  |       | 7      |         |  |  |       | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 157,140 |  |       |        | 165,163 | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| | (d | ) |  | Finance lease commitments                               |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  | Finance lease commitments are payable:                  |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  | No later than one year                                   |  |  |  |         |  |       | 1,677  |         |  |  | 1,370  | 
| |    |   |  |                                                         |  |  | Later than one year and not later than five years        |  |  |  |         |  |       | 3,446  |         |  |  | 4,579  | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 5,123   |  |       |        | 5,949   | 
| |    |   |  | Less: Total future finance charges                      |  |  |                                                          |  |  |  | 350     |  |       |        | 396     | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 4,773   |  |       |        | 5,553   | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  | Represented by:                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  | Current                                                 |  |  | 17                                                       |  |  |  | 945     |  |       |        | 987     | 
| |    |   |  | Non-current                                             |  |  | 20                                                       |  |  |  | 3,828   |  |       |        | 4,566   | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  | 4,773   |  |       |        | 5,553   | 
| |    |   |  |                                                         |  |  |                                                          |  |  |  |         |  |       |        |         | 

Page 28



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|29 |  | COMMITMENTS (continued)
|-- |  | -----------------------

(e)  Superannuation



| |  |  | The consolidated entity contributes superannuation benefits to numerous,
but solely accumulation-type superannuation funds
including personal, award based and the company administered fund at
various percentages of salary pursuant to employee contracts and
statutory obligations.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The assets of the company administered fund are at all times sufficient
to satisfy all benefits that would have been payable in the event of the
termination of the fund, and voluntary or compulsory termination of
employment by each employee.                                      



|30 |  | OUTSIDE EQUITY INTERESTS
|-- |  | ------------------------

|                                                               |  |      |     |       |  |  |      |  
|-------------------------------------------------------------- |  | ---- | --- | ----- |  |  | ---- | -
|                                                               |  | 2003 |     | 2002 
|                                                               |  | $000 |     | $ 000
|Outside equity interests in controlled entities comprise:      |  |      |     |       |  |  |      |  
|Interest in share capital                                      |  |      |    |       |  |  | 104  |  
|Interest in reserves                                           |  |      | 40  |       |  |  | (3   | )
|Interest in retained earnings at the end of the financial year |  |      | (21 | )     |  |  | (176 | )
|                                                               |  |      |     |       |  |  |      |  
|Total outside equity interests                                 |  |      | 19  |       |  |  | (75  | )
|                                                               |  |      |     |       |  |  |      |  

Page 29



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|31 |  | FINANCIAL INSTRUMENTS
|-- |  | ---------------------

|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|---------------------------------- |  | --------------------------- | ----- | ----- |  | ------------- | -------- | --------- |  | ------------ | ------ | ------- |  | ------- | ------- | --------- |  | -------- | ------ |  |  | ---- | -------- | - |  |  | -------- | -
|                                   |  | Fixed interest maturing in:
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  | Non- |          |   |  | 
|                                   |  |                             |       |       |  | Floating      |          |           |  |              |        |         |  |         |         | More than |  | interest |        |  |  |     
|                                   |  |                             |       |       |  | interest rate |          | 1 year or |  | 1 to 5 years |        | 5 years |  | bearing |         | Total    
|                                   |  | Note                        |       | $000 |  | less $000    |          | $000     |  | $000        |        | $000   |  | $000  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |        
|2003                               |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Financial assets                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Cash                               |  |                             | 5     |       |  |               | 20,902   |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 80       |   |  |  | 20,982   |  
|Receivables                        |  |                             | 6,9   |       |  |               |         |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 130,340  |   |  |  | 130,340  |  
|Investments                        |  |                             | 11    |       |  |               |         |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 434      |   |  |  | 434      |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|                                   |  |                             |       |       |  |               | 20,902   |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 130,854  |   |  |  | 151,756  |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Financial liabilities              |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Payables                           |  |                             | 16,19 |       |  |               |         |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 252,251  |   |  |  | 252,251  |  
|Bank overdrafts and loans          |  |                             | 17,20 |       |  |               | 175,000  |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 175,000  |  
|USD senior unsecured notes         |  |                             | 20    |       |  |               | 210,084  |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 210,084  |  
|Subordinated debentures            |  |                             | 20    |       |  |               | 45,500   |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 45,500   |  
|Convertible debentures             |  |                             | 20    |       |  |               | 45       |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 45       |  
|Lease liabilities                  |  |                             | 17,20 |       |  |               |         |           |  |              | 945    |         |  |         | 3,828   |           |  |          |       |  |  |      |         |   |  |  | 4,773    |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|                                   |  |                             |       |       |  |               | 430,629  |           |  |              | 945    |         |  |         | 3,828   |           |  |          |       |  |  |      | 252,251  |   |  |  | 687,653  |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Net financial assets (liabilities) |  |                             |       |       |  |               | (409,727 | )         |  |              | (945   | )       |  |         | (3,828  | )         |  |          |       |  |  |      | (121,397 | ) |  |  | (535,897 | )
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Interest rate swaps *              |  |                             |       |       |  |               |         |           |  |              | 50,000 |         |  |         | 135,000 |           |  |          | 50,000 |  |  |      |         |   |  |  | 235,000  |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Weighted average interest rate     |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  | 5.95     | %
|2002                               |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Financial assets                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Cash                               |  |                             | 5     |       |  |               | 11,734   |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 65       |   |  |  | 11,799   |  
|Receivables                        |  |                             | 6,9   |       |  |               |         |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 118,240  |   |  |  | 118,240  |  
|Investments                        |  |                             | 11    |       |  |               |         |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 434      |   |  |  | 434      |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|                                   |  |                             |       |       |  |               | 11,734   |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 118,739  |   |  |  | 130,473  |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Financial liabilities              |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Payables                           |  |                             | 16,19 |       |  |               |         |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      | 186,479  |   |  |  | 186,479  |  
|Bank overdrafts and loans          |  |                             | 17,20 |       |  |               | 484,791  |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 484,791  |  
|Commercial bills                   |  |                             | 17    |       |  |               | 3,000    |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 3,000    |  
|Subordinated debentures            |  |                             | 20    |       |  |               | 45,500   |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 45,500   |  
|Convertible debentures             |  |                             | 20    |       |  |               | 45       |           |  |              |       |         |  |         |        |           |  |          |       |  |  |      |         |   |  |  | 45       |  
|Lease liabilities                  |  |                             | 17,20 |       |  |               |         |           |  |              | 987    |         |  |         | 4,566   |           |  |          |       |  |  |      |         |   |  |  | 5,553    |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|                                   |  |                             |       |       |  |               | 533,336  |           |  |              | 987    |         |  |         | 4,566   |           |  |          |       |  |  |      | 186,479  |   |  |  | 725,368  |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Net financial assets (liabilities) |  |                             |       |       |  |               | (521,602 | )         |  |              | (987   | )       |  |         | (4,566  | )         |  |          |       |  |  |      | (67,740  | ) |  |  | (594,895 | )
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Interest rate swaps *              |  |                             |       |       |  |               |         |           |  |              | 50,000 |         |  |         | 165,000 |           |  |          | 50,000 |  |  |      |         |   |  |  | 265,000  |  
|                                   |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  |          |  
|Weighted average interest rate     |  |                             |       |       |  |               |          |           |  |              |        |         |  |         |         |           |  |          |        |  |  |      |          |   |  |  | 5.8      | %

*     Notional principal amounts

Page 30



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|31 |  | FINANCIAL INSTRUMENTS (continued)
|-- |  | ---------------------------------

The terms and conditions of financial instruments at balance date are:

|                             |  |           |  |          |         |                    |  |                      
|---------------------------- |  | --------- |  | -------- | ------- | ------------------ |  | ---------------------
|                             |  |           |  | Facility |         |                   
|                             |  | Security  |  | $000    |         | Period to Maturity
|Bank loan                    |  | Unsecured |  |          | 700,000 |                    |  | 2years               
|US senior unsecured notes    |  | Unsecured |  |          | 210,084 |                    |  | 10 years(i)          
|Bank overdraft               |  | Secured   |  |          | 3,000   |                    |  | On demand  Note (iv)
|Subordinated debentures      |  | Unsecured |  |          | 45,500  |                    |  | 40 years  Note (ii) 
|Convertible debentures       |  | Unsecured |  |          | 45      |                    |  | 35 years  Note (iii)
|Interest rate swap contracts |  | Unsecured |  |          | 235,000 |                    |  | Up to 8 years        

Notes:



|(i)  |  | During the year, The Ten Group Pty Limited raised funds through USD $125m Senior Unsecured Notes (due March 2013) in the
US Private Placement market. The notes have been fully swapped by the use of foreign currency and interest rate swaps into an
AUD floating exposure of $210.084m. This amount will be required to be repaid to noteholders upon maturity in March 2013.                                                                                                                                                                                                                                                                          
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(ii) |  | The 45,500,000 subordinated debentures of $1 each fully paid have a base interest rate of 15%. The
rate of interest paid will be adjusted to the rate of dividend distribution (grossed up for Australian non- resident interest
withholding tax to the extent such dividends are franked) should the dividend distribution amount exceed the base rate in any
year. An equivalent amount of interest is also payable in the same proportion to any additional dividend distributions that
may be paid from retained earnings. The notes cannot be redeemed until 30 December 2042, except to the extent that
convertible debentures have to be converted.
|    
|     |  | Since inception of the subordinated debentures, The Ten Group Pty Limited, has claimed a tax deduction for the
interest paid on the debentures each year. As part of the settlement reached with the Australian Taxation Office
during the previous year, The Ten Group Pty Limited will receive debenture interest tax deductions until 30 June
2004.                                                                                                                                                                                                                                                                                                    
|    
|(iv) |  | The 455,000 convertible debentures of $1.01 each partly paid to 10 cents have a market linked interest rate and can each
be converted to 1,000 ordinary shares at the option of the debenture holder in certain circumstances within 45 years from date
of issue. The new ordinary shares would need to be subscribed for at the price of $0.10 per share.                                                                                                                                                                                                                                                                                                
|    
|(v)  |  | The Eye Corp Pty Limited consolidated entity has granted a fixed and floating charge over all assets as security for the
bank overdraft.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Off-balance sheet financial assets and liabilities

Except for the interest rate swap contracts and the foreign currency swap contract in note (i) above, the consolidated entity
has no other off-balance sheet financial assets and liabilities.

Interest rate risk exposures

The consolidated entity enters into interest rate swaps to manage cash flow risks associated with the interest rates on
borrowings that are floating. Interest rate swaps allow the consolidated entity to swap floating rate borrowings into fixed
rates.

Credit risk exposures

The credit risk on financial assets of the consolidated entity which have been recognised in the balance sheet is the carrying
amount, net of any provisions for doubtful debts.

Net fair value of financial assets and liabilities

The net fair value of financial assets and liabilities of the consolidated entity is their carrying value. For equity
investments, the net fair value is an assessment by the Directors based on any special circumstances pertaining to a
particular investment.

Page 31



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|32 |  | EMPLOYEE ENTITLEMENTS
|-- |  | ---------------------

|                                |  |      |       |      |  |  |       | 
|------------------------------- |  | ---- | ----- | ---- |  |  | ----- | 
|                                |  | 2003 |       | 2002
|Number of employees             |  |      |       |      |  |  |       | 
|Number of employees at year end |  |      | 1,282 |      |  |  | 1,289 | 
|                                |  |      |       |      |  |  |       | 

The Ten Executive Option Plan

The Ten Executive Option Plan involves the issue of options in
Ten Network Holdings Limited to executives and senior
management of the Company and its controlled entities. The
total number of options that may be issued have been limited
to 5% of the issued capital of The Ten Group Pty Limited. At
balance date total options issued amounted to 10,510,000. A
total of 675,000 of these options are exercisable subject to
performance hurdles at a price of $2.11 per share over the
next year. A total of 200,000 of these options are
exercisable subject to performance hurdles at a price of $2.09
per share over the next two years. A total of 1,385,000 of
these options are exercisable subject to performance hurdles
at a price of $2.41 per share over the next two years. A
total of 750,000 of these options are exercisable subject to
performance hurdles at a price of $2.25 per share over the
next three years. A total of 7,500,000 of these options are
exercisable on certain nominated dates at a price of $1.90 per
share over the next nine years. All issued options are also
subject to various vesting date arrangements. As of balance
date, 5,183,500 options may be exercised, due to hurdle and
vesting date preconditions having been met.

During the year ended 31 August 2003, 3,125,000 options were
exercised at a price of $1.92 per share, 3,700,000 options
were exercised at a price of $2.11 per share and 300,000
options were exercised at a price of $2.09 per share.

Directors have had regard to the particular capital structure
of the Company and Ten Network Holdings Limited and have
implemented arrangements to ensure that dilution arising from
the issue of new shares in Ten Network Holdings Limited under
the terms of the Plan are matched at the Company level.

The Ten Employee Award Plan

This plan was established as a reward and incentive plan for
employees of The Ten Group Pty Limited and its controlled
entities. A controlled entity contributed $1,000 per
employee in 1998 for the on-market purchase of shares of Ten
Network Holdings Limited on behalf of each employee. Although
the shares are registered in the name of each employee, these
shares are restricted from being traded for a period of three
years from the date of grant, except for the termination of
the employee or hardship circumstances. The plan is also
designed to accommodate further contributions by The Ten Group
Pty Limited and its controlled entities, however there is no
commitment by the Company to make future contributions.

The Ten Employee Savings Plan

The Ten Employee Savings Plan was established as a mechanism
for employees of the Company and its controlled entities for
the purchase of shares in Ten Network Holdings Limited.
Employees may set aside amounts from their remuneration and
reward arrangements for the on-market purchase of such shares.

Page 32



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|33 |  | RELATED PARTY INFORMATION
|-- |  | -------------------------

|                                                      |                         |         |       |      |    |       |          |         |       |      |         |         |       | 
|----------------------------------------------------- | ----------------------- | ------- | ----- | ---- | -- | ----- | -------- | ------- | ----- | ---- | ------- | ------- | ----- | 
|                                                      |                         |         |       |      |    |       |          | 2003    |       | 2002
|                                                      |                         |         |       | Note |    | $000 |          | $000  
|Ownership interest in related entities                |                         |         |       |      |    |       |          |         |       |      |         |        
|Controlled entities                                   |                         |         | 11    |      |    |       |         |         |       |      |        |        
|Associated companies- equity accounted                |                         |         | 10,26 | (a)  |    |       | 8,635    |         |       |      | 2,888   |        
|                                                      |                         | - other |       |      | 11 |       |          |         | 2,119 |      |         |         | 2,119 | 
|Joint venture companies                               |                         |         | 10,26 | (b)  |    |       | 1,527    |         |       |      |        |        
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|                                                      |                         |         |       |      |    |       | 12,281   |         |       |      | 5,007   |        
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|Dividends                                             |                         |         |       |      |    |       |          |         |       |      |         |        
|Dividends to controlling entities                     |                         |         |       |      |    |       | 44,936   |         |       |      |        |        
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|Amounts receivable from/(payable to) related entities |                         |         |       |      |    |       |          |         |       |      |         |        
|Controlled entities                                   |                         |         |       |      |    |       |          |         |       |      |         |        
|                                                      | Receivable              |         |       | 6,9  |    |       |          |        |       |      |         |        |      
|                                                      | Payable                 |         |       | 19   |    |       |          |        |       |      |         |        |      
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|                                                      |                         |         |       |      |    |       |         |         |       |      |        |        
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|Associated companies                                  |                         |         |       |      |    |       |          |         |       |      |         |        
|                                                      | Receivable              |         |       | 6,9  |    |       |          | 688     |       |      |         | 793     |      
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|Related entities                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|                                                      | Payable                 |         |       | 16   |    |       |          | (61,803 | )     |      |         | (6,825  | )    
|                                                      | Subordinated debentures |         |       | 20   |    |       |          | (45,500 | )     |      |         | (45,500 | )    
|                                                      | Convertible debentures  |         |       | 20   |    |       |          | (45     | )     |      |         | (45     | )    
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        
|                                                      |                         |         |       |      |    |       | (107,348 | )       |       |      | (52,370 | )      
|                                                      |                         |         |       |      |    |       |          |         |       |      |         |        

The amount of debenture interest ultimately payable is dependent on the amount of any dividend paid.

Financial transactions with related entities

|                                                      |  |      |  |                                                                                                                                                
|----------------------------------------------------- |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|Entitys name                                         |  | Note |  | Nature of transaction at normal commercial terms                                                                                               
|                                                      |  |      |  |                                                                                                                                                
|Between controlled entities:                          |  |      |  |                                                                                                                                                
|Network Ten Pty Limited                               |  | 2    |  | Interest on loans $26.4m (2002: $26.4m)                                                                                                        
|Eye Corp Pty Limited                                  |  | 2    |  | Interest on loans $nil (2002: $3.2m)                                                                                                           
|Eye Corp Pty Limited                                  |  |      |  | Purchase of Out-of-home advertising by Network Ten Pty Limited of $0.3m
(2002: $0.7m)                                                          
|Eye Corp Pty Limited                                  |  |      |  | Rental income charged by Network Ten Pty Limited, Network Ten
(Adelaide) Pty Limited and Network Ten (Perth) Pty Limited of $0.1m
(2002: $0.2m)
|Eye Corp Pty Limited                                  |  |      |  | Loan from The Ten Group Pty Limited of $79.4m (2002: $46.2m)                                                                                   
|Network Ten Pty Limited                               |  | 3    |  | Debt collection fee revenue of $89.3m (2002: $79.4m)
Management fees of $469.0m (2002: $425.9m)                                                
|Network Ten (Adelaide) Pty Limited                    |  | 3    |  | Debt collection fee revenue of $11.9m (2002: $10.1m)
Management fees of $32.6m (2002: $29.9m)                                                  
|Network Ten (Perth) Pty LimitedWith related entities: |  | 3    |  | Debt collection fee revenue of $15.1m (2002: $13.2m)
Management fees of $39.7m (2002: $36.2m)                                                  
|CanWest Global Communications Corp. (Group)           |  | 3    |  | Interest on subordinated and convertible debentures $87.8m (2002: $6.8m)                                                                       

Page 33



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|33 |  | RELATED PARTY INFORMATION (continued)
|-- |  | -------------------------------------

Contracts with Directors

During the financial year, Competitive Foods Australia Limited entered into
agreements in respect of the purchase of television airtime (through an
advertising agency) from a controlled entity on normal commercial terms and
conditions. Mr JJ Cowin, a Director of the Company, is Chairman of, and has a
substantial interest in, Competitive Foods Australia Limited.

Also during the financial year, Investec Wentworth Pty Limited provided the
consolidated entity with corporate consultancy services on normal commercial
terms and conditions. Mr GH Levy, a Director of the Company, is a Director of
Investec Wentworth Pty Limited.

Loans to/from Directors

Loans to Directors of controlled entities disclosed in Note 9 were repaid
during the current period. No interest was payable on the loans.

Network Agreements

The Company has networking agreements with a number of its controlled entities
whereby advertising revenues derived by those controlled entities are assigned
to the Company. Revenues assigned by those controlled entities totalled
$581.7m (2002: $513.3m). Management fees payable by the Company to controlled
entities under the agreements totalled $541.4m (2002: $492.1m). Debt
collection fees are also collected by the Company totalling $116.3m (2002:
$102.7m).

Controlling Entities

The ultimate parent entity in the wholly owned group is The Ten Group Pty
Limited. The ultimate parent entity is Ten Network Holdings Limited, a company
listed on the Australian Stock Exchange, which at 31 August 2003 had a
beneficial interest of 84.06% (2002: 83.73%) and an economic interest of 42.35%
(2002: 41.87%).



|34 |  | CONTINGENT LIABILITIES
|-- |  | ----------------------

General

As part of its normal operations as a television broadcaster, the consolidated
entity has received writs for defamation and various claims for damages. At
balance date, the aggregate of all such claims will not give rise to any
material liability.

Details and estimates of other maximum amounts of contingent liabilities are as
follows:

|                                                                                                                                                                                                                                                       |  |       |        |       |  |  |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----- | ------ | ----- |  |  | ------ | 
|                                                                                                                                                                                                                                                       |  | 2003  |        | 2002 
|                                                                                                                                                                                                                                                       |  | $000 |        | $000
|Unsecured guarantees by the
parent entity and
consolidated entity in
respect of leases of
controlled entities                                                                                                                                          |  |       | 34,856 |       |  |  | 39,053 | 
|Secured guarantees by a
controlled entity, Eye Corp
Pty Limited, in respect of
leases of certain of its
controlled entities. The
guarantees are secured by a
fixed and floating charge
over all assets of the Eye
Corp Pty Limited consolidated
entity |  |       | 1,910  |       |  |  | 1,768  | 
|                                                                                                                                                                                                                                                       |  |       |        |       |  |  |        | 
|                                                                                                                                                                                                                                                       |  |       | 36,766 |       |  |  | 40,821 | 
|                                                                                                                                                                                                                                                       |  |       |        |       |  |  |        | 

No material losses are anticipated in respect of any of the above contingent liabilities.

Page 34



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|35 |  | SEGMENT INFORMATION
|-- |  | -------------------

Business segments

The consolidated entity is organised into the following divisions by service
type.

Television

Operation of commercial television licences TEN-10 (Sydney), ATV-10
(Melbourne), TVQ-10 (Brisbane), ADS-10 (Adelaide) and NEW-10 (Perth).

Out-of-home

Advertising media outside the home environment.

Ventures

Investments in the online industry.

Geographical segments

The consolidated entity operates principally within Australia.

Inter-segment transactions

Segment revenues, expenses and results include transactions between segments.
Such transactions are priced on an arms-length basis and are eliminated on
consolidation.

Page 35



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|35 |  | SEGMENT INFORMATION (continued)
|-- |  | -------------------------------

Primary reporting  business segments

|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |         |  
|----------------------------------------------- | ------------- | ----- | ---------- | ----- | ----------- | ----- | ----------- | ----- | ------------ |  | ------------- | - |  |  | --------- | ------- | -
|                                                |               |       |            |       |             |       |             |       |              |  | Eliminations/ |   |  |  |          
|                                                |               |       | Television |       | Out-of-home |       | Unallocated |       | Consolidated
|2003                                            |               | $000 |            | $000 |             | $000 |             | $000
|                                                |               |       |            |       |             |       |             |      
|Revenue                                         |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Sales to external customers                     |               |       | 660,384    |       |             |       | 69,481      |       |              |  |              |   |  |  | 729,865   |        
|Inter-segment sales                             |               |       | 119        |       |             |       | 289         |       |              |  | (408          | ) |  |  |          |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Total sales revenue                             |               |       | 660,503    |       |             |       | 69,770      |       |              |  | (408          | ) |  |  | 729,865   |        
|Other revenue                                   |               |       | 3,033      |       |             |       | 97          |       |              |  |              |   |  |  | 3,130     |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Total revenue                                   |               |       | 663,536    |       |             |       | 69,867      |       |              |  | (408          | ) |  |  | 732,995   |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Segment Result                                  |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Result                                          |               |       | 210,308    |       |             |       | 2,808       |       |              |  |              |   |  |  | 213,116   |        
|Share of associates and joint ventures profit |               |       | 193        |       |             |       | 2,237       |       |              |  |              |   |  |  | 2,430     |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|EBITDA                                          |               |       | 210,501    |       |             |       | 5,045       |       |              |  |              |   |  |  | 215,546   |        
|Depreciation                                    |               |       | (12,883    | )     |             |       | (4,743      | )     |              |  |              |   |  |  | (17,626   | )      
|Amortisation                                    |               |       |           |       |             |       | (3,517      | )     |              |  |              |   |  |  | (3,517    | )      
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|EBIT                                            |               |       | 197,618    |       |             |       | (3,215      | )     |              |  |              |   |  |  | 194,403   |        
|Non-recurring Items                             |               |       | (20,000    | )     |             |       |            |       |              |  |              |   |  |  | (20,000   | )      
|Borrowing costs                                 |               |       |            |       |             |       |             |       |              |  |               |   |  |  | (117,333  | )      
|Interest revenue                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  | 2,539     |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Profit before tax                               |               |       |            |       |             |       |             |       |              |  |               |   |  |  | 59,609    |        
|Income tax revenue/(expense)                    |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|                                                | Normal        |       |            |       |             |       |             |       |              |  |               |   |  |  |           | (23,503 | )
|                                                | Non-recurring |       |            |       |             |       |             |       |              |  |               |   |  |  |           | 50,726  |  
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Net Profit after tax                            |               |       |            |       |             |       |             |       |              |  |               |   |  |  | 86,832    |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Depreciation and amortisation                   |               |       | 12,883     |       |             |       | 8,260       |       |              |  |              |   |  |  | 21,143    |        
|Other non-cash expenses                         |               |       | 20,000     |       |             |       |            |       |              |  |              |   |  |  | 20,000    |        
|Assets                                          |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Segment assets                                  |               |       | 1,416,377  |       |             |       | 112,720     |       |              |  |              |   |  |  | 1,529,097 |        
|Investments in associates and joint ventures    |               |       | 7,962      |       |             |       | 4,319       |       |              |  |              |   |  |  | 12,281    |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Consolidated total assets                       |               |       |            |       |             |       |             |       |              |  |               |   |  |  | 1,541,378 |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Liabilities                                     |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Segment liabilities                             |               |       | 927,216    |       |             |       | 26,419      |       |              |  |              |   |  |  | 953,635   |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        
|Acquisitions of non-current assets              |               |       | 27,666     |       |             |       | 2,206       |       |              |  |              |   |  |  | 29,872    |        
|                                                |               |       |            |       |             |       |             |       |              |  |               |   |  |  |           |        

Page 36



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|35 |  | SEGMENT INFORMATION (continued)
|-- |  | -------------------------------

|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |         |  
|---------------------------------- | ------------- | ----- | ---------- | ----- | ----------- | ----- | -------- | ----- | ----------- | ----- | ------------ |  |  |  | ------------- | - |  |  | --------- | ------- | -
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  | Eliminations/ |   |  |  |          
|                                   |               |       | Television |       | Out-of-home |       | Ventures |       | Unallocated |       | Consolidated
|2002                               |               | $000 |            | $000 |             | $000 |          | $000 |             | $000
|                                   |               |       |            |       |             |       |          |       |             |      
|Revenue                            |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Sales to external customers        |               |       | 587,453    |       |             |       | 78,102   |       |             |       |             |  |  |  |              |   |  |  | 665,555   |        
|Inter-segment sales                |               |       | 171        |       |             |       | 667      |       |             |       |             |  |  |  | (838          | ) |  |  |          |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Total sales revenue                |               |       | 587,624    |       |             |       | 78,769   |       |             |       |             |  |  |  | (838          | ) |  |  | 665,555   |        
|Other revenue                      |               |       | 1,172      |       |             |       | 143      |       |             |       | 142          |  |  |  |              |   |  |  | 1,457     |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Total revenue                      |               |       | 588,796    |       |             |       | 78,912   |       |             |       | 142          |  |  |  | (838          | ) |  |  | 667,012   |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Segment Result                     |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Result                             |               |       | 173,590    |       |             |       | 1,019    |       |             |       | 142          |  |  |  |              |   |  |  | 174,751   |        
|Share of associates profit        |               |       |           |       |             |       | 916      |       |             |       |             |  |  |  |              |   |  |  | 916       |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|EBITDA                             |               |       | 173,590    |       |             |       | 1,935    |       |             |       | 142          |  |  |  |              |   |  |  | 175,667   |        
|Deprecation                        |               |       | (10,953    | )     |             |       | (5,300   | )     |             |       |             |  |  |  |              |   |  |  | (16,253   | )      
|Amortisation                       |               |       | (1,543     | )     |             |       | (10,754  | )     |             |       |             |  |  |  |              |   |  |  | (12,297   | )      
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|EBIT                               |               |       | 161,094    |       |             |       | (14,119  | )     |             |       | 142          |  |  |  |              |   |  |  | 147,117   |        
|Non-recurring items                |               |       | (20,015    | )     |             |       | (178,421 | )     |             |       |             |  |  |  |              |   |  |  | (198,436  | )      
|Borrowing costs                    |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  | (37,355   | )      
|Interest revenue                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  | 923       |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Loss before tax                    |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  | (87,751   | )      
|Income tax expense                 |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|                                   | Normal        |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           | (34,372 | )
|                                   | Non-recurring |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           | (36,158 | )
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Net Loss after tax                 |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  | (158,281  | )      
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Depreciation and amortisation      |               |       | 12,496     |       |             |       | 16,054   |       |             |       |             |  |  |  |              |   |  |  | 28,550    |        
|Other non-cash expenses            |               |       | 16,522     |       |             |       | 169,540  |       |             |       |             |  |  |  |              |   |  |  | 186,062   |        
|Assets                             |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Segment assets                     |               |       | 1,451,437  |       |             |       | 137,366  |       |             |       |             |  |  |  |              |   |  |  | 1,588,803 |        
|Investments in associates          |               |       | 2,119      |       |             |       | 2,888    |       |             |       |             |  |  |  |              |   |  |  | 5,007     |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Consolidated total assets          |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  | 1,593,810 |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Liabilities                        |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Segment liabilities                |               |       | 731,547    |       |             |       | 69,040   |       |             |       |             |  |  |  |              |   |  |  | 800,587   |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        
|Acquisitions of non-current assets |               |       | 20,509     |       |             |       | 5,004    |       |             |       |             |  |  |  |              |   |  |  | 25,513    |        
|                                   |               |       |            |       |             |       |          |       |             |       |              |  |  |  |               |   |  |  |           |        

Page 37



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|35 |  | SEGMENT INFORMATION (continued)
|-- |  | -------------------------------

|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|----------------------------------------- |  | ---------- | ------- | ----------- |  | -------- | ------- | ------------ |  |  | ------- | - |  |  | ------- | -
|                                          |  | Television |         | Out Of Home |  | Ventures |         | Consolidated
|2001                                      |  | $000      |         | $000       |  | $000    |         | $000       
|                                          |  |            |         |             |  |          |         |             
|Revenue                                   |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Sales to external customers               |  |            | 501,823 |             |  |          | 49,359  |              |  |  |        |   |  |  | 551,182 |  
|Inter-segment sales                       |  |            |        |             |  |          |        |              |  |  |        |   |  |  |        |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Total sales revenue                       |  |            | 501,823 |             |  |          | 49,359  |              |  |  |        |   |  |  | 551,182 |  
|Other revenue                             |  |            | 7,102   |             |  |          | 49      |              |  |  |        |   |  |  | 7,151   |  
|Non-recurring revenue                     |  |            | 105,824 |             |  |          |        |              |  |  |        |   |  |  | 105,824 |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Total revenue                             |  |            | 614,749 |             |  |          | 49,408  |              |  |  |        |   |  |  | 664,157 |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Result                                    |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Segment result before
non-recurring items |  |            | 147,498 |             |  |          | (10,562 | )            |  |  | (1,858  | ) |  |  | 135,078 |  
|Non-recurring items                       |  |            | 65,615  |             |  |          | (6,490  | )            |  |  | (29,243 | ) |  |  | 29,882  |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Segment result                            |  |            | 213,113 |             |  |          | (17,052 | )            |  |  | (31,101 | ) |  |  | 164,960 |  
|Share of associates profit/(loss)        |  |            |         |             |  |          |         |              |  |  |         |   |  |  | 588     |  
|Borrowing costs                           |  |            |         |             |  |          |         |              |  |  |         |   |  |  | (93,263 | )
|Interest revenue                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  | 1,354   |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Profit before tax                         |  |            |         |             |  |          |         |              |  |  |         |   |  |  | 73,639  |  
|Income tax expense                        |  |            |         |             |  |          |         |              |  |  |         |   |  |  | (23,822 | )
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Net profit                                |  |            |         |             |  |          |         |              |  |  |         |   |  |  | 49,817  |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Depreciation and amortisation             |  |            | 8,800   |             |  |          | 12,743  |              |  |  |        |   |  |  | 21,543  |  
|Other non-cash expenses                   |  |            | 11,189  |             |  |          |        |              |  |  | 29,243  |   |  |  | 40,432  |  
|Assets                                    |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Segment assets                            |  |            | 637,116 |             |  |          | 350,371 |              |  |  | 457     |   |  |  | 987,944 |  
|Investments in associates                 |  |            |        |             |  |          | 2,384   |              |  |  |        |   |  |  | 2,384   |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Consolidated total assets                 |  |            |         |             |  |          |         |              |  |  |         |   |  |  | 990,328 |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Liabilities                               |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Segment liabilities                       |  |            | 649,477 |             |  |          | 76,603  |              |  |  | 27,157  |   |  |  | 753,237 |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  
|Acquisitions of non-current assets        |  |            | 18,852  |             |  |          | 4,405   |              |  |  |        |   |  |  | 23,257  |  
|                                          |  |            |         |             |  |          |         |              |  |  |         |   |  |  |         |  

Page 38



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|36 |  | NOTES TO THE STATEMENTS OF CASH FLOWS
|-- |  | -------------------------------------

|                                                                                                                     |  |       |         |       |  |       |          |   |  |  |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | ----- | ------- | ----- |  | ----- | -------- | - |  |  | ------- | -
|                                                                                                                     |  | 2003  |         | 2002  |  | 2001 
|                                                                                                                     |  | $000 |         | $000 |  | $000
|Reconciliation of profit/(loss) from ordinary
activities after income tax to net cash flow from
operating activities |  |       |         |       |  |       |          |   |  |  |         |  
|Net profit/(loss) from ordinary activities after
income tax                                                          |  |       | 86,832  |       |  |       | (158,281 | ) |  |  | 49,817  |  
|                                                                                                                     |  |       |         |       |  |       |          |   |  |  |         |  
|Non-cash revenue                                                                                                     |  |       | (2,430  | )     |  |       | (916     | ) |  |  | (4,331  | )
|Non-cash expenses                                                                                                    |  |       | 21,143  |       |  |       | 28,550   |   |  |  | 20,524  |  
|Dividends from associates                                                                                            |  |       | 1,915   |       |  |       | 280      |   |  |  |        |  
|Profit on sale of non-current assets                                                                                 |  |       | 73      |       |  |       | (459     | ) |  |  | (65,632 | )
|Write down of program rights  Columbia features                                                                     |  |       | 20,000  |       |  |       |         |   |  |  |        |  
|Non-cash tax benefit due to tax consolidations                                                                       |  |       | (44,726 | )     |  |       |         |   |  |  |        |  
|Write down of Out-of-home goodwill and other charges                                                                 |  |       |        |       |  |       | 178,422  |   |  |  |        |  
|Write down of non-current assets                                                                                     |  |       |        |       |  |       | 20,015   |   |  |  | 29,243  |  
|Debenture interest                                                                                                   |  |       | 87,791  |       |  |       | 6,825    |   |  |  | 71,271  |  
|Amount (paid)/refunded from provisions                                                                               |  |       | (17,123 | )     |  |       | (10,111  | ) |  |  | (879    | )
|Net increase/(decrease) in tax provisions                                                                            |  |       | 55,162  |       |  |       | (17,486  | ) |  |  | (31,222 | )
|Net increase/(decrease) in accrued revenue and
expense items in payables/(receivables)                               |  |       | (10,702 | )     |  |       | (23,747  | ) |  |  | (49,446 | )
|                                                                                                                     |  |       |         |       |  |       |          |   |  |  |         |  
|Net cashflow from operating activities                                                                               |  |       | 197,935 |       |  |       | 23,092   |   |  |  | 19,345  |  
|                                                                                                                     |  |       |         |       |  |       |          |   |  |  |         |  

Non cash financing and investing activities

During the year Ten Network Holdings Limited issued 350,000 shares to
Copplemere Pty Limited in consideration for the acquisition by Ten Network
Holdings Limited from Copplemere Pty Limited of 350,000 shares in The Ten Group
Pty Limited pursuant to the relevant exchange deeds detailed in the Prospectus.



|37 |  | DEED OF CROSS GUARANTEE
|-- |  | -----------------------

There are two separate Deeds of Cross Guarantee within the consolidated entity.
The Ten Group Pty Limited is the holding company under the first of the Deeds
and those wholly owned subsidiaries party to The Ten Group Pty Limited Deed are
listed in Note 25(a), reference note (i).

Eye Corp Pty Limited is the holding company under the second Deed of Cross
Guarantee and those wholly owned subsidiaries party to the Eye Corp Pty Limited
Deed are listed in Note 25(a), reference note (ii).

The controlled entities party to the Deeds of Cross Guarantee have been granted
relief from the necessity to prepare a financial report and Directors report
under Class Order 98/1418 (as amended by Class Orders 98/2017, 00/0321,
01/1087, 02/0248 and 02/1017) issued by the Australian Securities and
Investments Commission. Under the Deeds of Cross Guarantee each of the
companies party to each of the Deeds guarantees the debts of the other named
companies.

An abridged consolidated statement of financial performance and consolidated
statement of financial position, comprising The Ten Group Pty Limited and
controlled entities which are a party to The Ten Group Pty Limited Deed, after
eliminating all transactions between parties to the Deed of Cross Guarantee, at
31 August is set out below:

Page 39



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|38 |  | DEED OF CROSS GUARANTEE (continued)
|-- |  | -----------------------------------

|                                                                                                  |                                                   |                    |           |              |         |       |           |           |         | 
|------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------ | --------- | ------------ | ------- | ----- | --------- | --------- | ------- | 
|                                                                                                  |                                                   |                    |           | Consolidated
|                                                                                                  |                                                   |                    |           | 2003         |         | 2002 
|                                                                                                  |                                                   |                    |           | $000        |         | $000
|Abridged Statement of financial performance                                                       |                                                   |                    |           |              |         |       |           |          
|Profit/(loss) from ordinary activities before income tax                                          |                                                   |                    | 63,884    |              |         |       | (67,335   | )        
|Income tax benefit/(expense) relating to ordinary activities                                      |                                                   |                    | 27,894    |              |         |       | (72,249   | )        
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Profit/(loss) from ordinary activities after income tax                                           |                                                   |                    | 91,778    |              |         |       | (139,582  | )        
|Profit/(loss) from extraordinary items after income tax                                           |                                                   |                    |          |              |         |       |          |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Net profit/(loss)                                                                                 |                                                   |                    | 91,778    |              |         |       | (139,582  | )        
|Retained profits at the beginning of year                                                         |                                                   |                    | 21,953    |              |         |       | 161,675   |          
|Adjustment to retained profits at beginning of year on
initial adoption of AASB 1020 Income Taxes |                                                   |                    | (44,108   | )            |         |       |          |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|                                                                                                  |                                                   |                    | 69,623    |              |         |       | 22,093    |          
|Dividends provided or paid                                                                        |                                                   |                    | (53,602   | )            |         |       |          |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Retained earnings at end of year                                                                  |                                                   |                    | 16,021    |              |         |       | 22,093    |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Statement of financial position                                                                   |                                                   |                    |           |              |         |       |           |          
|                                                                                                  | Cash assets                                       |                    |           | 19,375       |         |       |           | 11,799    |        
|                                                                                                  | Receivables                                       |                    |           | 116,641      |         |       |           | 147,241   |        
|                                                                                                  | Inventories                                       |                    |           | 122,411      |         |       |           | 126,503   |        
|                                                                                                  | Current tax receivable                            |                    |           |             |         |       |           | 65,542    |        
|                                                                                                  | Other                                             |                    |           | 1,076        |         |       |           | 3,883     |        
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Total current assets                                                                              |                                                   |                    | 259,503   |              |         |       | 354,968   |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|                                                                                                  | Receivables                                       |                    |           | 74,121       |         |       |           | 30,517    |        
|                                                                                                  | Inventories                                       |                    |           | 3,005        |         |       |           | 1,565     |        
|                                                                                                  | Investments accounted for using the equity method |                    |           | 5,843        |         |       |           |          |        
|                                                                                                  | Other financial assets                            |                    |           | 27,119       |         |       |           | 27,528    |        
|                                                                                                  | Property, plant and equipment                     |                    |           | 71,806       |         |       |           | 62,698    |        
|                                                                                                  | Intangibles                                       |                    |           | 1,077,823    |         |       |           | 1,077,823 |        
|                                                                                                  | Other                                             |                    |           | 1,268        |         |       |           |          |        
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Total non-current assets                                                                          |                                                   |                    | 1,260,985 |              |         |       | 1,200,131 |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Total assets                                                                                      |                                                   |                    | 1,520,488 |              |         |       | 1,555,099 |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|                                                                                                  | Payables                                          |                    |           | 204,494      |         |       |           | 143,137   |        
|                                                                                                  | Provisions                                        |                    |           | 29,633       |         |       |           | 24,155    |        
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Total current liabilities                                                                         |                                                   |                    | 234,127   |              |         |       | 167,292   |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|                                                                                                  | Payables                                          |                    |           | 9,378        |         |       |           | 28,326    |        
|                                                                                                  | Interest-bearing liabilities                      |                    |           | 430,630      |         |       |           | 505,545   |        
|                                                                                                  | Deferred tax liabilities                          |                    |           | 224,286      |         |       |           | 32,042    |        
|                                                                                                  | Provisions                                        |                    |           | 1,796        |         |       |           | 1,971     |        
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Total non-current liabilities                                                                     |                                                   |                    | 666,090   |              |         |       | 567,884   |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Total liabilities                                                                                 |                                                   |                    | 900,217   |              |         |       | 735,176   |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Net assets                                                                                        |                                                   |                    | 620,271   |              |         |       | 819,783   |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|                                                                                                  |                                                   | Contributed equity |           |              | 59,934  |       |           |           | 45,500  | 
|                                                                                                  |                                                   | Reserves           |           |              | 544,316 |       |           |           | 752,330 | 
|                                                                                                  |                                                   | Retained earnings  |           |              | 16,021  |       |           |           | 22,093  | 
|                                                                                                  |                                                   |                    |           |              |         |       |           |          
|Total Equity                                                                                      |                                                   |                    | 620,271   |              |         |       | 819,923   |          
|                                                                                                  |                                                   |                    |           |              |         |       |           |          

Page 40



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|38 |  | DIVIDENDS
|-- |  | ---------

Dividends proposed or paid by the Company are:

|                                          |  |       |      |        |  |                 |        |        |  |                  |  |            |    |   |  |  |     |   |  | 
|----------------------------------------- |  | ----- | ---- | ------ |  | --------------- | ------ | ------ |  | ---------------- |  | ---------- | -- | - |  |  | --- | - |  | 
|                                          |  | Cents |      | Total  |  |                 |        |        |  | Tax rate for     |  |            |    |  
|                                          |  | per   |      | amount |  |                 |        |        |  | franking         |  | Percentage
|                                          |  | share |      | $000  |  | Date of Payment |        | credit |  | franked         
|2003                                      |  |       |      |        |  |                 |        |        |  |                  |  |            |    |   |  |  |     |   |  | 
|Dec  ordinary dividend proposed and paid |  |       | 6.6  |        |  |                 | 30,032 |        |  | 20 December 2002 |  |            | 30 | % |  |  | 100 | %
|Jun  ordinary dividend proposed and paid |  |       | 5.1  |        |  |                 | 23,570 |        |  | 30 June 2003     |  |            | 30 | % |  |  | 100 | %
|2002                                      |  |       |      |        |  |                 |        |        |  |                  |  |            |    |   |  |  |     |   |  | 
|Final  ordinary dividend paid            |  |       | 14.2 |        |  |                 | 66,221 |        |  | 20 December 2001 |  |            | 30 | % |  |  | 100 | %

|                                                                   |  |       |        |       |  |             |        |  |  |  |       | 
|------------------------------------------------------------------ |  | ----- | ------ | ----- |  | ----------- | ------ |  |  |  | ----- | 
|                                                                   |  |       |        |       |  | The Company |        |  |  | 
|                                                                   |  | 2003  |        | 2002  |  | 2001       
|                                                                   |  | $000 |        | $000 |  | $000      
|Dividend franking account                                          |  |       |        |       |  |             |        |  |  |  |       | 
|Franking credits (30%) available for the subsequent financial year |  |       | 43,141 |       |  |             | 37,488 |  |  |  | 8,970 | 
|                                                                   |  |       |        |       |  |             |        |  |  |  |       | 

The above amounts represent the balances of the franking accounts as at the end
of the financial year, adjusted for:



|(a) |  | franking credits that will arise from the payment of income tax payable
as at the reporting date;              
|--- |  | ---------------------------------------------------------------------------------------------------------------
|   
|(b) |  | franking debits that will arise from the payment of dividends proposed or
provided as at the reporting date;   
|   
|(c) |  | franking credits that will arise from the receipt of dividends recognised
as receivables at reporting date; and
|   
|(d) |  | franking credits that may be prevented from being distributed in the
subsequent year.                          
|   
|39  |  | SUBSEQUENT EVENTS                                                                                              

On 8 October 2003 the Directors declared a special dividend of 5.5 cents per
share to be paid on 19 December 2003. The special dividend is a result of the
additional distributable earnings from the implementation of the tax
consolidations regime on 1 July 2003.

Except for the special dividend noted above, at the date of this report, no
matters or circumstances have arisen since balance date that have significantly
affected or may significantly affect:



| |  | the operations in financial years subsequent to 31 August 2003 of the consolidated entity and the entities it controls from
time to time; or
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the results of those operations; or                                                                                                         
| 
| |  | the state of affairs in financial years subsequent to 31 August 2003 of the consolidated entity.                                            

Page 41



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|40 |  | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
|-- |  | ------------------------------------------------------

The consolidated financial statements of The Ten Group Pty Limited are prepared
in accordance with Generally Accepted Accounting Principles applicable in
Australia (AUS GAAP) (refer Note 1), which differ in some respects from
Generally Accepted Accounting Principles in the United States (US GAAP).

The following are reconciliations of the net profit and shareholders equity
applying US GAAP. This summary is not intended to be a comprehensive US GAAP
report. All amounts are in Australian dollars.



|(a) |  | Revaluation of Non-Current Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Under AUS GAAP the consolidated entity may revalue certain assets from time
to time to amounts supported by independent valuations. The revaluation
increments and decrements are included in the consolidated entitys asset
revaluation reserve. Revalued buildings are depreciated over their
estimated useful lives to the entity (land is not depreciated). Under US
GAAP, revaluations of land and buildings, and profit and loss on sale of
revalued buildings, are adjusted to reinstate the historical cost basis for
US GAAP purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(b) |  | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | Under AUS GAAP, amounts paid on the acquisition of television licenses are
not amortised. Under US GAAP, in the years prior to 2002, these intangible
assets were amortised on a straight-line basis over forty years. Upon
adoption of SFAS142 on September 1, 2001, the Company deemed these licenses
to have an indefinite life and therefore ceased amortisation (see note 40(m)
for further discussion on the adoption of SFAS142).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(c) |  | Investment Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Under AUS GAAP, shares in listed securities (refer note 11) are carried at
original cost unless a permanent diminution in the value of an equity
security occurs. In circumstances where there has been a permanent
diminution the loss is taken to the profit and loss statement. For US GAAP
purposes, the Company, in accordance with SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities, classifies its quoted
equity securities as available-for-sale. Accordingly, the securities are
carried at fair value with changes in fair value (net of tax) being recorded
as an item of other comprehensive income until realised. Realised gains and
losses on securities classified as available-for-sale, along with the
associated deferred tax, are recorded in earnings in the year of sale based
on the specific identification of each individual security sold. A decline
in the fair value of available-for-sale securities below cost that is deemed
other than temporary is charged to earnings, resulting in the establishment
of a new cost basis for the security.                                                                                                               
|   
|(d) |  | Executive Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | Under AUS GAAP, no charge attributable to the options issued under the Ten
Executive Option Plan has been recognised in the profit and loss statements.
Under US GAAP, the Company, as permitted by SFAS No. 123,, Accounting for
Stock Based Compensation, follows the provisions of Accounting Principles
Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees,
and related provisions in accounting for compensation expense related to the
issuance of stock options. Under APB No. 25, the Ten Executive Option Plan
would be treated as a variable stock award plan and, as such, the
compensation expense recognised over the life of the plan would be adjusted
in each accounting period for changes in the quoted market price of the
shares. Compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the Companys stock at the measurement
date over the exercise price, multiplied by the number of options issued.
The total compensation cost is amortised over the service (vesting) period.
The compensation expense has no net equity impact as share capital is
increased as the compensation cost is recorded over the vesting period.

Page 42



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|40  |  | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(e) |  | Purchase Price Allocation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | Under AUS GAAP a deferred tax liability has been recognised in the current
year representing predominantly the difference between the book and tax
value of television licences arising from book value revaluations recorded
against asset revaluation reserve. AASB 1020 Income taxes requires the
company to revisit purchase price allocations on the acquisition of
television licenses. The revaluation of licenses occurred partially as a
pre-acquisition revaluation and subsequent to acquisition. Under AUS GAAP
the deferred tax liability is therefore partially recorded against the asset
revaluation reserve (reflecting the variance in book and tax values arising
from equity) and partially against opening retained earnings (reflecting the
variance in book and tax values from pre-acquisition revaluation reserves
recorded against opening retained earnings in the Companys purchase price
accounting). No such opening retained earnings entry is recorded under US
GAAP.
|   
|    |  | US GAAP required deferred tax amounts to be recorded in purchase
combinations. A deferred tax asset arose which was recognised on the basis
that it is more likely than not that those amounts will be realised.
Recognition of such deferred tax asset created negative goodwill, which the
Company has proportionately allocated against certain non-current assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(f) |  | Developing Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Under AUS GAAP, costs incurred in the development of major new activities
are capitalised until the operations have commenced on a commercial basis.
Thereafter, these costs are amortised over the period that benefits are
expected to be received. In 1999/2000, the Company invested in a joint
venture which capitalised its development costs on this basis. In the
following year, these costs were fully written off under AUS GAAP upon the
closure of the joint venture. Under US GAAP, expenditures not satisfying
the criteria for deferral are charged to operating income in the period
incurred.                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(g) |  | Capitalised Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | Under AUS GAAP material items of expenditure relating to the introduction of
digital television are capitalised to the extent that management consider
that it is probable that future economic benefits embodied in the
expenditure will eventuate and can be reliably measured. Under US GAAP such
development costs are written off as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(h) |  | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | SFAS No. 130, Reporting Comprehensive Income requires the reporting and
display of comprehensive income and its components in financial statements.
Comprehensive income consists of net income and other gains and losses
affecting shareholders equity that, under US GAAP are excluded from net
income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(i) |  | Deferred Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | Under AUS GAAP, the Company changed its deferred tax accounting policy from
the income statement method to the balance sheet method of tax-effect
accounting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | For US GAAP purposes, the Company utilises SFAS 109 Accounting for Income
Taxes (the balance sheet method of tax effect accounting). In addition to
the deferred tax accounting recognised in respect of business combinations,
as described in note 40 (f), the deferred tax effects of the various
differences between US GAAP and AUS GAAP are also recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(j) |  | Tax consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | During the year, the group adopted Australian tax consolidation legislation
which allowed an uplift in the tax cost base of the underlying assets. The
impact of the uplift is recorded in the groups deferred tax accounting.
Under AUS GAAP, the uplift in the tax base of assets was recorded as a
credit to income tax expense and asset revaluation reserve. This reflects
the reversal of the income statement impact of the initial recognition of
the deferred tax liability with the balance of the movement relating to the
revaluation of assets. Under US GAAP, the full uplift in the tax base of
assets is recorded direct to the income statement as no revaluation of
assets is recorded under US GAAP as described in note 40 (a).                                                                                                                                                                                                                                                     

Page 43



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|40  |  | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(k) |  | Derivative Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |  | Under AUS GAAP derivative instruments are recognized in the financial
statements to the extent described in note 31. For US GAAP purposes, SFAS
133 Accounting for Derivative Instruments and Hedging Activities became
applicable on September 1, 2000 and requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions
are met, a derivative may be specifically designated as a hedge and changes
in the fair value of the hedge recorded as a component of other
comprehensive income. The Ten Group Pty has not designated its interest
rate swaps as hedges in accordance with SFAS 133 and as a result the changes
in the fair value are required to be recognized in earnings for US GAAP
purposes.                                                                                               
|   
|(l) |  | Goodwill and Other Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | On September 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 142 Goodwill and Other Intangible Assets (SFAS 142) for
USGAAP reporting purposes. In accordance with SFAS 142, the Company ceased
amortizing goodwill and other indefinite lived intangibles upon adoption.
Historically, the Company had classified amortization of goodwill and other
intangibles as a non-operating expense. In accordance with SFAS 142, 2001
results have not been restated for the effects of ceasing goodwill
amortization.                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | The adoption of SFAS 142 required the performance of a goodwill impairment
test upon adoption. As of September 1, 2001, the Company had approximately
$257 million of goodwill related to the acquisition of Eye Corp., in 2000.
As the carrying amount of this goodwill exceeded its fair value it was
determined to be impaired by $102 million. A charge was therefore recorded
as the cumulative effect of a change in accounting principle in the
Statement of Operations for the year ended August 31, 2002 to reduce the
goodwill to its recoverable amount.                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | SFAS 142 further requires the performance of an impairment test for goodwill
and other indefinite lived intangibles on an annual basis and between annual
tests if an event occurs or circumstances change that would more likely than
not reduce the fair value of a reporting unit below its carrying amount.
The remaining goodwill carrying value of $155 million was determined to be
further impaired by $70 million and a charge was recorded as a non-operating
expense to reduce the goodwill to its recoverable amount.                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(m) |  | Cash Flow Statement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | The preparation of the Companys Australian GAAP consolidated cash flow
statement does not differ in any material respect from the preparation under
US GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(n) |  | Recently issued financial accounting standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | In April 2003, the Financial Accounting Standards Board (FASB) issued
Statement No. 149 (SFAS 149), Amendment of SFAS No. 133 on Derivative
Instruments and Hedging Activities. The Statement amends and clarifies
accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under
SFAS 133. In particular, it (1) clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a
derivative as discussed in SFAS 133, (2) clarifies when a derivative
contains a financing component, (3) amends the definition of an underlying
to conform it to the language used in FIN 45 and (4) amends certain other
existing pronouncements. SFAS No. 149 is effective for contracts entered
into or modified after June 30, 2003, except as stated below and for hedging
relationships designated after June 30, 2003.
|   
|    |  | The provisions of SFAS 149 that relate to SFAS 133 Implementation Issues
that have been effective for fiscal quarters that began prior to June 15,
2003, should continue to be applied in accordance with their respective
effective dates. In addition, certain provisions relating to forward
purchases or sales of when-issued securities or other securities that do not
yet exist, should be applied to existing contracts as well as new contracts
entered into after June 30, 2003. SFAS 149 should be applied prospectively.
The Company has adopted this Statement which had no material impact on its
financial position.                                                                                                                                                                                                                                                                                                        

Page 44



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|40  |  | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(o) |  | Recently issued financial
accounting standards (continued)
In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150 (SFAS 150), Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS 150 modifies the
accounting for certain financial instruments that, under previous guidance,
issuers could account for as equity. The Statement requires that those
instruments be classified as liabilities in statements of financial
position. SFAS 150 affects an issuers accounting for three types of
freestanding financial instruments, namely:



| | - |  | Mandatorily redeemable shares, which the issuing company is
obligated to buy back in exchange for cash or other assets.                                                                                                                     
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | - |  | Financial Instruments, other than outstanding shares, that do or
may require the issuer to buy back some of its equity shares in
exchange for cash or other assets. These instruments include put
options and forward purchase contracts.   
|
| | - |  | Unconditional obligations that can be settled with equity shares,
the monetary value of which is fixed, tied solely or predominantly to a
variable such as a market index, or varies inversely with the value of
the issuers equity shares.



| |  | SFAS 150 does not apply to features embedded in financial instruments that
are not derivatives in their entirety. In addition to its requirements for
the classification and measurement of financial instruments within its
scope, SFAS 150 also requires disclosures about alternative ways of settling
those instruments and the capital structure of entities, all of whose shares
are mandatorily redeemable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | SFAS 150 is effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. It is to be implemented by
reporting the cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the Statement and
still existing at the beginning of the interim period of adoption.
Restatement is not permitted. The Company is currently evaluating the impact
of SFAS 150 on its results of operations and financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | In November 2002, the FASB issued FASB Interpretation No. (FIN) 45,
Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others. This
Interpretation elaborates on the disclosures to be made by a guarantor in
its interim and annual financial statements about its obligations under
certain guarantees that it has issued. It also clarifies that a guarantor
is required to recognize, at the inception of a guarantee, a liability for
the fair value of the obligation undertaken in issuing the guarantee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | This Interpretation does not prescribe a specific approach for subsequently
measuring the guarantors recognized liability over the term of the related
guarantee. This Interpretation also incorporates, without change, the
guidance in FASB Interpretation No. 34, Disclosure of Indirect Guarantees of
Indebtedness of Others,which is being superseded. The disclosure
requirements are effective for fiscal year 2003 and have been included in
Note 37. The provisions for initial recognition and measurement are
effective on a prospective basis for guarantees that are issued or modified
after December 31, 2002. The Company, upon adoption of this interpretation
did not have a material impact on the Companys financial position or
results of operations.                                                                                                                                                                                                                                                                                 
|
| |  | In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest
Entities, an Interpretation of ARB No.51. In October 2003, the Board
finalized the proposed FASB Staff Position (FSP) 46-e, Effective Date of
Interpretation 46 (FIN 46), for Certain Interests Held by a Public Entity
(Proposed FSP). FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the equity
investors in the entity do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity
to finance its activities without additional subordinated financial support
from other parties. The Final FSP allows public entities to defer the
effective date for applying the provisions of FIN 46 to interests held by
the public entity in certain
variable interest entities (VIEs) or potential VIEs until the end of the
first interim or annual period ending after December 15, 2003 if both of the
following two conditions are met:



| | 1. |  | The VIE or potential VIE was created before February 1, 2003;
and,                                                                                               
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | The public entity has not issued financial statements
reporting that VIE in accordance with FIN 46, other than in
disclosures required by paragraph 26 of FIN 46.

Page 45



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|40  |  | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)                                                                                                                                                                          
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(o) |  | Recently issued financial accounting standards (continued)                                                                                                                                                                                  
|   
|    |  | The Company does not expect the adoption of FIN 46 to have a material impact
on the Companys financial position or results of operations.                                                                                                  
|   
|    |  | The Australian Accounting Standards Board (AASB) has not issued nor
revised any accounting standards that are not effective for the fiscal
periods reported upon in the consolidated financial statements.                                
|   
|    |  | From 1 January 2005, all entities reporting under the Corporations Actwill
be required to apply International Financial Reporting Standards (IFRS).
The impacts of IFRS will be confirmed once the standards have mandatory
applicability.

Page 46



---



##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2003



|40 |  | UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
|-- |  | ------------------------------------------------------------------

The application of accounting principles generally accepted in the United
States, as described above, would have had the following approximate effect on
consolidated net income and stockholders equity.

|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |         |  
|----------------------------------------------------------------------- | ------------------------------------------------------------------------------- |  | -------- | -------- | -------- |  | -------- | -------- | - |  | ------ | ------- | -
|                                                                        |                                                                                 |  | 2003     |          | 2002     |  | 2001    
|                                                                        |                                                                                 |  | (A$000) |          | (A$000) |  | (A$00)
|Net income as reported in the profit and loss statements under
AUS GAAP |                                                                                 |  | 86,886   |          |          |  | (128,491 | )        |   |  | 55,268 |        
|Adjustments required to accord with US GAAP                             |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|                                                                        | Depreciation expense (a)                                                        |  |          | 10       |          |  |          | 56       |   |  |        | 56      |  
|                                                                        | Intangible assets  amortisation expense (b)                                    |  |          |         |          |  |          |         |   |  |        | (6,776  | )
|                                                                        | Executive Option Plan (d)                                                       |  |          | (2,656   | )        |  |          | (568     | ) |  |        | 3,192   |  
|                                                                        | Developing business (f)                                                         |  |          |         |          |  |          |         |   |  |        | 2,021   |  
|                                                                        | Capitalised costs (g)                                                           |  |          |         |          |  |          | 5,036    |   |  |        | (748    | )
|                                                                        | Increase in profit on sale of revalued assets (a)                               |  |          |         |          |  |          |         |   |  |        | 1,059   |  
|                                                                        | Fair value of financial instruments (k)                                         |  |          | (9,521   | )        |  |          | 2,302    |   |  |        | (3,774  | )
|                                                                        | Amortisation of goodwill (l)                                                    |  |          | 2,805    |          |  |          | 10,043   |   |  |        |        |  
|                                                                        | Additional writedown of goodwill to recoverable amount (l)                      |  |          |         |          |  |          | (10,043  | ) |  |        |        |  
|                                                                        | Income tax consolidation (j)                                                    |  |          | 16,667   |          |  |          |         |   |  |        |        |  
|                                                                        | Tax effect of adjustments (i)                                                   |  |          | 2,853    |          |  |          | (2,218   | ) |  |        | (2,211  | )
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|Net income under US GAAP                                                |                                                                                 |  | 97,044   |          |          |  | (123,883 | )        |   |  | 48,087 |        
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|Other comprehensive income:                                             |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|                                                                        | Foreign currency translation                                                    |  |          | (431     | )        |  |          |         |   |  |        |        |  
|                                                                        | Unrealised holding gains/(losses) on available-for-sale
securities (net of tax) |  |          |         |          |  |          | 4,708    |   |  |        | (16,555 | )
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|Comprehensive income/(loss)                                             |                                                                                 |  | 96,613   |          |          |  | (119,175 | )        |   |  | 31,532 |        
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|                                                                       
|                                                                        |                                                                                 |  | 2003     |          | 2002    
|                                                                        |                                                                                 |  | (A$000) |          | (A$000)
|Shareholders equity as reported in the balance sheet under AUS GAAP    |                                                                                 |  | 587,724  |          |          |  | 793,298  |          |   |  |        |        
|Adjustments required to accord with US GAAP                             |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|                                                                        | Impact of tax consolidation on revaluation of assets                            |  |          | 225,413  |          |  |          |         |   |  |        |         |  
|                                                                        | Revaluation of assets (a)                                                       |  |          | (751,270 | )        |  |          | (751,270 | ) |  |        |         |  
|                                                                        | Accumulated depreciation  PPE (a)                                              |  |          | 12,919   |          |  |          | 12,909   |   |  |        |         |  
|                                                                        | Accumulated amortisation  Intangibles (b)                                      |  |          | (50,629  | )        |  |          | (50,629  | ) |  |        |         |  
|                                                                        | Fair value of financial instruments (k)                                         |  |          | (10,993  | )        |  |          | (1,472   | ) |  |        |         |  
|                                                                        | Amortisation of goodwill (l)                                                    |  |          | 2,805    |          |  |          | 10,043   |   |  |        |         |  
|                                                                        | Additional writedown of goodwill to recoverable amount (l)                      |  |          |         |          |  |          | (10,043  | ) |  |        |         |  
|                                                                        | Impact of tax consolidation (j)                                                 |  |          | 44,115   |          |  |          |         |   |  |        |         |  
|                                                                        | Tax effect of adjustments (i)                                                   |  |          | 22,513   |          |  |          | 19,660   |   |  |        |         |  
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|Shareholders equity under US GAAP                                      |                                                                                 |  | 82,597   |          |          |  | 22,496   |          |   |  |        |        
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|                                                                       
|                                                                        |                                                                                 |  | 2003    
|                                                                        |                                                                                 |  | (A$000)
|Reconciliation of US GAAP shareholders equity                           |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|Opening shareholders equity under US GAAP                               |                                                                                 |  | 22,496   |          |          |  |          |          |   |  |        |        
|                                                                        | US GAAP comprehensive income                                                    |  |          | 96,613   |          |  |          |          |   |  |        |         |  
|                                                                        | Share capital movements                                                         |  |          | 17,090   |          |  |          |          |   |  |        |         |  
|                                                                        | Dividends paid                                                                  |  |          | (53,602  | )        |  |          |          |   |  |        |         |  
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        
|Closing shareholders equity under US GAAP                              |                                                                                 |  | 82,597   |          |          |  |          |          |   |  |        |        
|                                                                        |                                                                                 |  |          |          |          |  |          |          |   |  |        |        

Page 47



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##### 



THE TEN GROUP PTY LIMITED AND CONTROLLED ENTITIES
DIRECTORS DECLARATION

The directors declare that the financial statements and notes set out on pages
2 to 37:



|(a) |  | comply with Accounting Standards and other mandatory professional
reporting requirements;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | give a true and fair view of the companys and consolidated entitys
financial position as at 31 August 2003 and of their performance, as
represented by the results of their operations and their cash flows, for
the financial year ended on that date; and                                                                                                                                                                                                                                                                                                                                        
|   
|(c) |  | accounting principles generally accepted in Australia vary in certain
significant respects from accounting principles generally accepted in the
United States of America. The application of accounting principles
generally accepted in the United States of America would have affected the
determination of consolidated shareholders equity and financial position,
as of 31 August 2003 and 2002 and the determination of the consolidated
results of operations for each of the three years ended 31 August 2003 to
the extent summarised in Note 40 to the consolidated financial statements.

In the directors opinion:



|(a) |  | there are reasonable grounds to believe that the company will be able to
pay its debts as and when they become due and payable; and                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | at the date of this declaration, there are reasonable grounds to believe
that the Company and the subsidiaries identified in Note 25(a), reference
note (i), will be able to meet any obligations or liabilities to which
they are, or may become, subject by virtue of the deed of cross guarantee
between the Company and those subsidiaries pursuant to ASIC Class Order
98/1418.

SIGNED at Sydney on 8 October 2003 except for note 40 which is dated 20
February 2004, in accordance with a resolution of the Directors.

(-s- [ILLEGIBLEE])Director

Page 48



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##### 



REPORT OF INDEPENDENT AUDITORS
TO THE BOARD OF DIRECTORS OF THE TEN GROUP PTY LIMITED

We have audited the accompanying consolidated statements of financial position
of The Ten Group Pty Limited and its controlled entities as of 31 August, 2003
and 2002, and the related consolidated statements of financial position and
cash flows for each of the three years in the period ended 31 August 2003.
These consolidated 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 Australia and the United States of America. Those standards
require that we plan and perform the audits to obtain reasonable assurance
about 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. We believe
that our audits provide a reasonable basis for our opinion.

As discussed in note 1(b) to the financial statements, the Company changed its
method of accounting for income taxes in the year ended 31 August 2003.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Ten Group Pty
Limited and its controlled entities at 31 August 2003 and 2002 and the results
of their operations and cash flows for each of the three years in the period
ended 31 August 2003, in conformity with accounting principles generally
accepted in Australia.

Accounting principles generally accepted in Australia vary in certain
significant respects from accounting principles generally accepted in the
United States of America. The application of the latter would have affected the
determination of consolidated net income for each of the three years in the
period ended 31 August 2003 and the determination of consolidated shareholders
equity at 31 August 2003 and 2002 to the extent summarized in Note 40 to the
consolidated financial statements.

(-s- PRICEWATERHOUSECOOPERS)

PricewaterhouseCoopers
Chartered Accountants

Sydney, Australia
8 October 2003

Page 49



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##### 



ITEM 18. FINANCIAL STATEMENTS

Not applicable.

ITEM 19. EXHIBITS

Exhibit No.
    
    Exhibit
    
    Page No.1.1
    
    Articles of Incorporation of CanWest Media Inc.,
as amended. (1)1.2
    
    By-laws of CanWest Media Inc.(1)4.1
    
    Purchase Agreement, dated May 10, 2001, among
CanWest Media Inc., the Guarantors identified
therein, CIBC World Markets Corp., Salomon Smith
Barney Inc., Banc of America Securities LLC,
Scotia Capital (USA) Inc., BMO Nesbitt Burns
Corp., RBC Dominion Securities Corp. and TD
Securities (USA) Inc.(1)4.2
    
    Indenture, dated as of May 17, 2001, among
CanWest Media Inc., the Guarantors named therein
and The Bank of New York, as Trustee.(1)4.3
    
    Registration Rights Agreement, dated as of May
17, 2001, among CanWest Media Inc., the
Guarantors named therein, CIBC World Markets
Corp., Salomon Smith Barney Inc., Banc of
America Securities LLC, Scotia Capital (USA)
Inc., BMO Nesbitt Burns Corp., RBC Dominion
Securities Corp. and TD Securities (USA) Inc.(1)4.4
    
    Guarantee, dated as of May 17, 2001, executed by the Guarantors identified therein.(1)4.5
    
    Demand Registration Rights Agreement, dated as
of May 17, 2001, among CanWest Media Inc.,
CanWest Communications Corporation and the
Guarantors named therein.(1)4.6
    
    License Agreement #2000-13, dated October 6,
2000, between CanWest Global Broadcasting Inc.
and Fireworks Distributing Corporation.(1)4.7
    
    Development Letter Agreement, dated as of August
31, 1999, between CanWest Global Broadcasting
Inc. and Fireworks Media Inc.(1)4.8
    
    License Agreement #2000-12, dated August 16,
2000, between CanWest Global Broadcasting Inc.
and Fireworks Distributing Corporation.(1)4.9
    
    Letter Agreement, dated as of August 25, 2000,
between Global Television Network Inc. and
Fireworks Entertainment.(1)4.10
    
    Employment Agreement, dated April 18, 2000,
between CanWest Global Communications Corp. and
Gerry Noble.(1)4.11
    
    Television License Agreement, dated November 20,
2000, between CanWest Entertainment
International Distribution and TV3 Network
Service Ltd. (1)4.12
    
    Television License Agreement, dated November 20,
2000, between CanWest Entertainment
International Distribution and TV3 Network
Services Ltd.(1)4.13
    
    Standard Television Agreement, dated August 12,






---



##### 



Exhibit No.
    
    Exhibit
    
    Page No.1998, between CanWest Global Broadcasting Inc.
and Fireworks Entertainment Inc., as amended.
(1)4.14
    
    Transaction Agreement, dated July 30, 2000,
among Hollinger International Inc., Southam Inc.
(n/k/a XSTM Holdings (2000) Inc.), Hollinger
Canadian Newspapers, Limited Partnership and HCN
Publications Company and CanWest Global
Communications Corporation. (1)4.15
    
    Amending Agreement to the Transaction Agreement,
dated November 15, 2000, among Hollinger
International Inc., Southam Inc. (n/k/a XSTM
Holdings (2000) Inc.), Hollinger Canadian
Newspapers, Limited Partnership and HCN
Publications Company and CanWest Global
Communications Corporation.(1)4.16
    
    Services Agreement, dated as of November 15,
2000, among CanWest Global Communications
Corporation, The National Post Company and
Hollinger International Inc.(1)4.17
    
    Transition Services Agreement, dated as of
November 15, 2000, among CanWest Global
Communications Corporation, Hollinger Canadian
Newspapers G.P. Inc. and Hollinger Canadian
Operating Company.(1)4.18
    
    Services Agreement, dated as of November 15,
2000, among CanWest Global Communications
Corporation, Hollinger Canadian Newspapers G.P.
Inc. and Hollinger Canadian Operating
Company.(1)4.19
    
    Employee Interim Services Agreement, dated as of
November 15, 2000, among Hollinger International
Inc., Hollinger Canadian Newspapers, Limited
Partnership and CanWest Global Communications
Corporation. (1)4.20
    
    Pension and Employee Benefit Plans Agreement,
dated as of November 15, 2000, among Hollinger
International Inc., Southam Inc. (n/k/a XSTM
Holdings (2000) Inc.), Hollinger Canadian
Newspapers, Limited Partnership, HCN
Publications Company, Hollinger Canadian
Operating Company ULC and CanWest Global
Communications Corporation.(1)4.21
    
    Asset Transfer Agreement, dated November 15,
2000, between 3815668 Canada Inc. and CanWest
Media Inc.(1)4.22
    
    Trust Indenture, dated as of November 15, 2000,
between CanWest Media Inc. and CanWest Global
Communications Corporation.(1)4.23
    
    Credit Agreement, dated as of November 7, 2000,
among CanWest Media Inc., as borrower, CanWest
Global Communications Corp., as guarantor, the
financial institutions identified on the
signature pages thereto, as lenders, Canadian
Imperial Bank of Commerce, as co-lead arranger,
joint bookrunner and syndication agent, The Bank
of Nova Scotia, as co-lead arranger, joint






---



##### 



Exhibit No.
    
    Exhibit
    
    Page No.bookrunner and administrative agent, and Bank of
America Canada, as arranger and documentation
agent.(1)4.24
    
    Collateral Covenant Agreement, dated as of
November 16, 2000, among each of the parties
listed in Schedule A thereto, as guarantors,
and The Bank of Nova Scotia, as administrative
agent.(1)4.25
    
    Form of Guarantee among each of the entities
listed in Exhibit 10.1 hereto, as guarantors,
The Bank of Nova Scotia, as administrative agent
and the persons listed as lenders in the Credit
Agreement dated November 7, 2000 (included in
Exhibit 10.19).(1)4.26
    
    Form of Securities Pledge Agreement between each
of the entities listed in Exhibit 10.2 hereto
and The Bank of Nova Scotia, as administrative
agent.(1)4.27
    
    Form of Security Agreement between each of the
entities listed in Exhibit 10.3 hereto and The
Bank of Nova Scotia, as administrative agent.(1)4.28
    
    Form of Note Pledge Agreement between each of
the entities listed in Exhibit 10.4 hereto and
The Bank of Nova Scotia, as administrative
agent.(1)4.29
    
    Southam Executive Retirement Plan, dated as of
June 6, 1994, between Southam Inc. (n/k/a XSTM
Holdings (2000) Inc.) and Don Babick. (1)4.30
    
    Amendment to Southam Executive Retirement Plan,
dated as of June 29, 1994, between Southam Inc.
(n/k/a XSTM Holdings (2000) Inc.) and Don
Babick.(1)4.31
    
    Share Purchase Agreement, dated as of November
8, 1999, between CanWest Global Communications
Corp. and Cathton Holdings Ltd.(1)4.32
    
    Amended and Restated Master Agreement, dated
November 8, 1999, among CanWest Global
Communications Corp., Shaw Communications Inc.,
Corus Entertainment Inc. and WIC Western
International Communications Ltd. (1)4.33
    
    Proposed Purchase of Corus Class B Shares, dated
as of February 18, 2000, among Liberty CJR Inc.,
Corus Entertainment Inc., Shaw Communications
Inc., CanWest Global Communications Corp., and
WIC Western International Communications Ltd.(1)4.34
    
    Amalgamation Agreement, dated as of March 27,
2000, between WIC Western International
Communications Ltd. and CW Newco Inc.(1)4.35
    
    Management Services Agreement, dated as of
November 15, 2000, among The Ravelston
Corporation Limited, CanWest Global
Communications Corporation and The National Post
Company.(1)4.36
    
    Amended and Restated Partnership Agreement,
dated as of November 15, 2000, among Global
Communications Limited, NP Holdings Company and
3048510 Nova Scotia Company.(1)






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##### 



Exhibit No.
    
    Exhibit
    
    Page No.4.37
    
    Asset Transfer Agreement, dated November 15,
2000, between CanWest Media Inc. and Global
Television Network Inc.(1)4.38
    
    Asset Transfer Agreement, dated November 15,
2000, between Global Television Network Inc. and
Global Communications Limited.(1)4.39
    
    Variation Deed, entered into in August 1998,
among CanWest Global Communications Corp., CGS
International Holdings (Netherlands) B.V., CGS
Shareholding (Netherlands) B.V., CGS Debenture
Holding (Netherlands) B.V., The Ten Group Pty.
Limited, Ten Network Holdings Limited,
Telecasters North Queensland Limited, TNQ
Television Limited, Donholken Pty. Limited,
Selli Pty. Limited, Turnand Pty. Limited and
Numeration Pty. Limited.(1)4.40
    
    Deed of Guarantee and Indemnity, dated as of
November 7, 2000, among CanWest Television NZ
Limited, TV3 Network Services Limited, TV4
Network Limited, Global Television Properties
Limited, CanWest NZ Television Holdings Limited,
CanWest NZ Finance Limited, CanWest NZ Radio
Holdings Limited, CanWest Radio NZ Limited and
Media Investments Limited and The Bank of Nova
Scotia.(1)4.41
    
    Share Pledge Agreement, dated November 13, 2000,
between CGS International Holdings (Netherlands)
B.V. and The Bank of Nova Scotia. (1)4.42
    
    Form of Deed of Mortgaged Shares between each of
the entities listed in Exhibit 10.5 hereto and
The Bank of Nova Scotia.(1)4.43
    
    Form of Charge between each of the entities
listed in Exhibit 10.6 hereto and The Bank of
Nova Scotia.(1)4.44
    
    Form of Pledge Agreement by each of the entities
listed in Exhibit 10.7 hereto in favor of The
Bank of Nova Scotia.(1)4.45
    
    Form of Exchange Agent Agreement between CanWest
Media Inc. and The Bank of New York, as exchange
agent.(1)4.46
    
    Share Purchase Agreement, dated April 12, 2001,
among L.R. Sherman, CanWest Television Inc.,
CHUM Limited and Global Television Network
Inc.(2)4.47
    
    Amalgamation Agreement, dated as of September 1,
2001, among Global Communications Limited,
CanWest Broadcasting (2001) LTD., CanWest
Television Inc., CanWest Properties Limited, and
4434129 Manitoba LTD., Formerly 3649091 Canada
LTD. (3)4.48
    
    Amending Agreement to the Senior Secured Credit
Facilities, dated as of September 5, 2001, among
CanWest Media Inc., as borrower, CanWest Global
Communications Corp., as guarantor, the
financial institutions identified on the






---



##### 



Exhibit No.
    
    Exhibit
    
    Page No.signature pages thereto, as lenders, Canadian
Imperial Bank of Commerce, as co-lead arranger,
joint bookrunner and syndication agent, The Bank
of Nova Scotia, as co-lead arranger, joint
bookrunner and administration agent, and Bank of
America Canada, as arranger and documentation
agent. (3)4.49
    
    Retirement Compensation Arrangement Plan, dated
January 1, 2002, approved on behalf of CanWest
Global Communications Corp. (3)4.50
    
    Retirement Compensation Arrangement Trust
Agreement, dated as of February 7, 2002, between
CanWest Global Communications Corp. and Royal
Trust Corporation of Canada. (3)4.51
    
    General Conveyance, dated as of March 31, 2002,
between NP Holdings Company and Global Television Network Inc. (3)4.52
    
    Letter Agreement, dated May 22,2002, between
CanWest Global Communications Corp. and Richard
C. Camilleri. (3)4.53
    
    Amending Agreement No. 2 to the Senior Secured
Credit Facilities, dated as of July 15, 2002,
among CanWest Media Inc., as borrower, CanWest
Global Communications Corp., as guarantor, the
financial institutions identified on the
signature pages thereto, as lenders, The Bank of
Nova Scotia, as co-lead arranger, joint
bookrunner and administrative agent, Canadian
Imperial Bank of Commerce, as co-lead arranger,
joint bookrunner and syndication agent, and Bank
of America, N.A., as arranger and documentation
agent. (3)4.54
    
    Supplemental Indenture, dated as of August 6,
2002, between CanWest Media Inc. and The Bank of
New York. (3)4.55
    
    Letter Agreement, dated August 6, 2002, between
CanWest Global Communications Corp. and TV3
Television Network Limited. (3)4.56
    
    Share Purchase Agreement, dated August 8, 2002,
among Global Communications Limited, G.T.C.
Transcontinental Group LTD., and CanWest Global
Communications Corp. (3)4.57
    
    Letter Agreement, dated January 8, 2003, between
CanWest Media Inc. on behalf of CanWest
Publications Inc. and Donald Babick. (3)4.58
    
    Share Purchase Agreement, dated January 24,
2003, among Global Communications Limited,
CanWest Global Communications Corp., and Osprey
Media Holdings Inc. (3)4.59
    
    Letter Agreement, dated February 3, 2003,
between CanWest Global Communications Corp. on
behalf of Global Television Network Inc. and
Gerry Noble. (3)4.60
    
    Non-Competition, Non-Solicitation, and
Confidentiality Agreement, dated as of February
14, 2003, between CanWest Global Communications
Corp. and Global Communications Limited, and






---



##### 



Exhibit No.
    
    Exhibit
    
    Page No.Osprey Media Holdings Inc. (3)4.61
    
    Form of Amended and Restated Advertising
Representation Agreement, dated February 14,
2003, between each of the entities listed in
Exhibit 10.8 and CanWest Media Sales Limited. (3)4.62
    
    Form of Amended and Restated CanWest News
Services Agreement, dated February 14, 2003,
between each of the entities listed in Exhibit
10.9 and CanWest Publications Inc. (3)4.63
    
    Pension and Employee Benefit Plans Agreement,
dated as of February 14, 2003, among Global
Communications Limited, CanWest Global
Communications Corp., and Osprey Media Holdings
Inc. (3)4.64
    
    Transitional Services Agreement, dated February
14, 2003, between CanWest Publications Inc. and
Osprey Media Holdings Inc. (3)4.65
    
    Form of Amended and Restated CanWest Editorial
Services Agreement, dated February 14, 2003,
between each of the entities listed in Exhibit
10.10 and CanWest Publications Inc. (3)4.66
    
    Form of Amended and Restated Electronic
Distribution Agreement, dated February 14, 2003,
between each of the entities listed in Exhibit
10.11 and Infomart Limited. (3)4.67
    
    Second Supplemental Indenture, dated as of February 27,
2003, among CanWest Media Inc., each of the guarantors
identified therein and The Bank of New York. (4)4.68
    
    Purchase Agreement, dated as of March 31, 2003, among
CanWest Media Inc., the Guarantors identified therein,
Salomon Smith Barney Inc., CIBC World Markets Corp.,
Scotia Capital (USA) Inc., BMO Nesbitt Burns Corp., RBC
Dominion Securities Corporation, Banc of America
Securities LLC and TD Securities (USA) Inc. (4)4.69
    
    Registration Rights Agreement, dated as of April 3, 2003,
among CanWest Media Inc., the Guarantors named therein,
Salomon Smith Barney Inc., CIBC World Markets Corp., Scotia
Capital (USA) Inc., BMO Nesbitt Burns Corp., RBC Dominion
Securities Corporation, Banc of America Securities LLC and
TD Securities (USA) Inc. (4)4.70
    
    Guarantee, dated as of April 3, 2003, executed by the
Guarantors identified therein (4)4.71
    
    Third Supplemental Indenture, dated as of April 23, 2003,
among CanWest Media Inc., each of the guarantors
identified therein and The Bank of New York. (4)4.72
    
    First Supplemental Indenture, dated as of September 22,
2003, among CanWest Media Inc., each of the New Guarantors
and The Bank of New York. (5)4.73
    
    Fourth Supplemental Indenture, dated as of September 22,
2003, among CanWest Media Inc., each of the New Guarantors
and The Bank of New York. (5)4.74
    
    Second Supplemental Indenture, dated as of February 25,
2004, among CanWest Media Inc., each of the New Guarantors
and The Bank of New York.4.75
    
    Fifth Supplemental Indenture, dated as of February 25,
2004, among CanWest Media Inc., each of the New Guarantors
and The Bank of New York.4.76
    
    Letter Agreement, dated December 2, 2002 between CanWest Global
Communications Corp. on behalf of CanWest Publications Inc. and Bob
Calvert.4.77
    
    Letter Agreement, dated January 27, 2003 between CanWest Media
Inc. and Bob Calvert.4.78
    
    Amending Agreement No. 3 to the Senior Secured Credit
Facilities, dated as of March 27, 2003, among CanWest Media
Inc., as borrower, CanWest Global Communications Corp., as guarantor,
the financial institutions identified on the signature pages thereto,
as lenders, Canadian Imperial Bank of Commerce, The Bank of Nova
Scotia and Bank of America Canada.4.79
    
    Amending Agreement No. 4 to the Senior Secured Credit Facilities
dated as of August 29, 2003, among CanWest Media Inc., CanWest
Global Communications Corp., the financial institutions identified on
the signature pages thereto, as lenders, Canadian Imperial Bank of
Commerce, The Bank of Nova Scotia and Bank of America Canada.7
    
    Statement Regarding Computation of Ratios






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##### 



Exhibit No.
    
    Exhibit
    
    Page No.8
    
    See Item 4C. Organizational Structure in Part I of this Annual Report.10.1
    
    List of entities party to the form of agreement
in Exhibit 4.25. (1)10.2
    
    List of entities party to the form of agreement
in Exhibit 4.26. (1)10.3
    
    List of entities party to the form of agreement
in Exhibit 4.27. (1)10.4
    
    List of entities party to the form of agreement
in Exhibit 4.28. (1)10.5
    
    List of entities party to the form of agreement
in Exhibit 4.42. (1)10.6
    
    List of entities party to the form of agreement
in Exhibit 4.43.(1)10.7
    
    List of entities party to the form of agreement
in Exhibit 4.44.(1)10.8
    
    List of entities party to the form of agreement
in Exhibit 4.60.(3)10.9
    
    List of entities party to the form of agreement
in Exhibit 4.61.(3)10.10
    
    List of entities party to the form of agreement
in Exhibit 4.64.(3)10.11
    
    List of entities party to the form of agreement
in Exhibit 4.65.(3)12.1
    
    Certifications required by Rule 13a-14(a) or Rule 15d-14(a)12.2
    
    Certifications required by Rule 13a-14(a) or Rule 15d-14(a)13.1
    
    Certification pursuant to 18 U.S.C. Section 1350 asadopted pursuant to Section 906 of the Sarbanes-Oxley Actof 200213.2
    
    Certification pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002




---

|(1) |  | Previously filed as an Exhibit to the Registration Statement on
Form F-4 of the Company filed on September 4, 2001, SEC File Number
333-00000 and incorporated by reference herein.  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Previously filed as an Exhibit to the Annual Report on Form 20-F of
the Company filed on February 28, 2002, SEC File Number 333-13878 and
incorporated by reference herein.          
|   
|(3) |  | Previously filed as an Exhibit to the Annual Report on Form 20-F of
the Company filed on February 28, 2003, SEC File Number 333-13878 and
incorporated by reference herein.          
|   
|(4) |  | Previously filed as an Exhibit to the Registration Statement on
Form F-4 of the Company filed on June 18, 2003, SEC File Number
333-10625 and incorporated by reference herein.      
|   
|(5) |  | Previously filed as an Exhibit to the Registration Statement on
Form F-3 of the Company filed on September 25, 2003, SEC File Number
333-109123 and incorporated by reference herein.

SIGNATURES

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.

CANWEST MEDIA INC.By:
    
    /s/ JOHN MAGUIREName:Title:
    
    John Maguire
Chief Financial OfficerDate:
    February 26, 2004