Broadcaster,  10/26/2006


Corus Announces Strong Fourth Quarter and Year-End Results

Corus Entertainment Inc. announced fourth quarter and year end financial results today. Corus completed
a very successful fiscal year with strong operating results and cash flows.

"It was a strong year for Corus and the fourth quarter was no exception. We had another excellent quarter for our Television division, driven by strong
ratings and subscriber growth for our brands," said John Cassaday, President and Chief Executive Officer, Corus Entertainment Inc. "Our Content business continued to post positive results and Radio remained strong outside Québec, where we are integrating newly acquired stations."

Fourth Quarter Results
----------------------

Consolidated revenues for the fourth quarter ended August 31, 2006 were
$185.0 million, up 6% from $175.3 million last year. Consolidated segment
profit was $44.5 million, up 5% from $42.6 million last year. Net income for
the quarter was $46.6 million ($1.11 basic and $1.09 diluted), compared to
income of $9.7 million ($0.23 basic and $0.22 diluted) last year. Net income
for the quarter was positively impacted by approximately $37.0 million in
income tax rate changes and other income tax items.

Corus Television contributed quarterly revenues of $94.7 million, up 13%
from $83.4 million last year, led by continued specialty advertising growth of
20% and subscriber growth of 12%. Quarterly segment profit increased to
$34.1 million, up 11% from $30.8 million last year.

Corus Radio revenues were $66.3 million, up 2% from $65.3 million last
year. Segment profit was $15.8 million, essentially unchanged from the prior
year. On a same station(*) basis, both revenues and segment profit were up by
approximately 4%.

Corus Content revenues were $26.8 million, down 4% from $28.0 million
last year. Segment profit was $2.6 million, compared to $1.8 million last
year.

Full Year Results
-----------------

Consolidated revenues for the year ended August 31, 2006 were
$726.3 million, up 6% from $683.1 million last year. Consolidated segment
profit was $214.1 million, up 10% from $195.3 million last year. Net income
for the year was $35.5 million ($0.84 basic and $0.82 diluted earnings per
share), compared to $71.1 million ($1.66 basic and $1.65 diluted earnings per
share) last year, as the Company recorded a $132.0 million pre-tax debt
refinancing charge related to the purchase of the Senior Subordinated Notes
and the termination of cross-currency agreements associated with those notes
in the second quarter of fiscal 2006. In addition, net income was positively
impacted by approximately $37.0 million in income tax rate changes and other
income tax items.

Corus Television, led by specialty advertising growth of 14% and
subscriber growth of 10%, contributed full year revenues of $393.3 million, up
11% from $354.2 million last year. Movie Central increased its subscriber base
from 748,000 at August 31, 2005 to 822,000 at the end of the fiscal year. Full
year segment profit increased to $164.2 million, up 17% from $140.8 million
last year.

Corus Radio revenues were $268.4 million, up 6% from $252.7 million last
year. Segment profit was $68.4 million, down 1% from $69.0 million last year.
Revenue and segment profit were impacted by the sale of Corus' Red Deer assets
and the multi-station swap in the province of Québec. On a same station(*)
basis, revenues were up 6% and segment profit was up by approximately 7%.

Corus Content revenues were $72.1 million, down 12% from $82.3 million
last year. Segment profit was $5.6 million, compared to $3.6 million last
year. Revenues were down in fiscal 2006 as fewer episodes were delivered and
Beyblade merchandising revenues declined towards the end of fiscal 2005. The
division continues to generate positive cash flow.

Corus has continued to purchase shares under its Normal Course Issuer Bid
announced in December 2005. At the end of August 2006, the Company had
purchased for cancellation 1,034,700 Class B Non-Voting Shares at an average
price of $35.56 per share.

"We are particularly pleased with the excellent progress that we are
making in generating cash," said Heather Shaw, Executive Chair, Corus
Entertainment Inc. "This supports our desire to enhance shareholder value
through such means as increased dividends and share buybacks."

Corus Entertainment Inc. reports in Canadian dollars.

--------------------------------------------
(*) See "Supplemental Earnings Measures"

About Corus Entertainment Inc.
Corus Entertainment Inc. is a Canadian-based media and entertainment
company. Corus is a market leader in specialty television and radio with
additional assets in pay television, advertising and digital audio services,
television broadcasting, children's book publishing and children's animation.
The company's multimedia entertainment brands include YTV, Treehouse, W
Network, Movie Central, Nelvana, Kids Can Press and radio stations including
CKNW, CKOI and Q107. Corus creates engaging branded entertainment experiences
for its audiences across multiple platforms. A publicly traded company, Corus
is listed on the Toronto (CJR.B) and New York (CJR) exchanges. Experience
Corus on the web at www.corusent.com.

Supplemental Earnings Measures
In addition to providing earnings measures in accordance with Canadian
and U.S. generally accepted accounting principles ("GAAP"), the Company
presents certain supplemental earnings measures and financial information.
With the exception of radio same station results, these have been outlined in
the Management's Discussion and Analysis contained in the Annual Report for
the year ended August 31, 2005. These measures and financial information do
not have any standardized meaning prescribed by GAAP and are therefore
unlikely to be comparable to similar measures presented by other companies.

Radio same station results
Radio same station segment results represent the revenues and segment
profit for the 43 radio stations whose results are included in the first three
quarters of fiscals 2006 and 2005 and the 51 stations whose results are
included in the fourth quarter of fiscals 2006 and 2005.



CORUS(TM) ENTERTAINMENT

-------------------------------------------------------------------------
Fourth Quarter 2006
Report to Shareholders
-------------------------------------------------------------------------

For the Twelve Months Ended August 31, 2006
(Unaudited)



CORUS ENTERTAINMENT INC.
Fourth Quarter Report to Shareholders

-------------------------------------------------------------------------
HIGHLIGHTS
-------------------------------------------------------------------------
(These highlights are derived
from the unaudited consolidated
financial statements) Three months ended Nine months ended
(thousands of Canadian dollars August 31, August 31,
except per share data) 2006 2005 2006 2005

Revenues 184,979 175,279 726,270 683,069
Segment profit
Radio 15,844 15,783 68,352 69,005
Television 34,141 30,756 164,240 140,782
Content 2,637 1,772 5,553 3,568
Corporate (7,851) (5,972) (23,998) (18,611)
Eliminations (256) 232 (28) 567
-------- -------- -------- --------
44,515 42,571 214,119 195,311
-------- -------- -------- --------
-------- -------- -------- --------

Net income 46,642 9,662 35,471 71,114
Earnings per share
Basic $1.11 $0.23 $0.84 $1.66
Diluted 1.09 0.22 0.82 1.65

Weighted average number of
shares outstanding
(in thousands)
Basic 41,961 42,793 42,461 42,761
Diluted 42,901 43,412 43,247 43,095


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Significant Events in the Quarter
-------------------------------------------------------------------------

- On June 1, 2006 the Company introduced its new direct-to-family
broadband video storefront TreehouseDirect.
- On June 2, 2006 the Company announced that effective Wednesday,
June 7, 2006, its ticker symbol on the Toronto Stock Exchange ("TSX")
would be modified as part of a broader symbol change initiative
previously announced by the TSX. The ticker symbol CJR.NV.B
previously used on the TSX for the Company's Class B Non-Voting
Shares was replaced by the ticker symbol CJR.B.
- On June 2, 2006 as part of Corus Entertainment's integrated
multiplatform strategy, Treehouse announced that it will launch its
new live-action preschool series This is Emily Yeung on mobile,
online and on video-on-demand (VOD) prior to its broadcast premiere.
- On June 13, 2006 the Company announced that Jane and the Dragon, a
Nelvana co-production, and Corus-supported series ReGenesis and
Terminal City had won 2006 Banff World Television Festival Awards.
- On July 13, 2006 Corus and Astral Media announced that they had
reached an agreement to purchase the remaining 20% of TELETOON
network from Cookie Jar Entertainment. The deal, subject to Canadian
Radio-television and Telecommunications Commission ("CRTC") review,
will give both Corus and Astral a 50% ownership in the network. The
purchase price for Cookie Jar's 20% stake is approximately
$96.0 million.
- On July 25, 2006 Corus Custom Networks announced that it had
reformatted its TV Listings enabling broadcasters to use broadcast-
ready ads.
- On August 28, 2006 Corus' programming and original properties
garnered 61 Gemini nominations. Highlights include 31 nominations for
Movie Central programs and nominations for Nelvana's Jane and the
Dragon and Miss Spider's Sunny Patch Friends.
- As at August 31, 2006 the Company had purchased an additional 257,900
Class B Non-Voting Shares for cancellation under its Normal Course
Issuer Bid at an average price of $36.40 per share. In total the
Company has acquired 1,034,700 shares under this bid.
- The CRTC renewed the following Corus licenses: YTV Canada Inc. to
August 31, 2013 (increasing the Canadian Program Expense condition
from 35% of annual gross revenues to a new level of 40%); Corus
specialty and pay services (The Documentary Channel, SCREAM,
Discovery Kids, CMT, W Network, Encore Avenue, and Movie Central) on
an administrative basis to August 31, 2009 on the same license
conditions; and a variety of radio station licenses (renewed or set
down for public hearing).

-------------------------------------------------------------------------
Significant Events Subsequent to the Quarter
-------------------------------------------------------------------------

- On September 9, 2006 YTV launched its new Saturday morning
programming block CRUNCH. The comedy-driven animated programming
block took over the 7 a.m. to noon programming slot, with popular
series including: Captain Flamingo, SpongeBob SquarePants, The Fairly
OddParents and Danny Phantom, as well as the new and soon-to-be
audience favourites Viva Pinata, The Far Out Adventures of Team
Galaxy and Shuriken School.
- On September 9, 2006 Qubo, the new U.S. market multi-platform
television network for kids launched. A partnership between Corus
Entertainment, ION Media, NBC Universal, Scholastic and Classic
Media/Big Idea, the venture launched with a block on NBC, Telemondo
and iNetwork. Future Qubo multi-platform offerings will include a
dedicated 24/7 digital television kids network that will launch
across ION Media Networks' nationwide television station group and a
branded website.
- On September 12, 2006 the Company announced a new organizational
structure for its Television and Content divisions. The Television
division now focuses on two strategic portfolios - a Kids portfolio
and a Lifestyle, Drama and Movies portfolio. The changes included
integrating Nelvana Studios into the Television division, closing the
Movie Central operation in Edmonton, and creating Nelvana
Enterprises, a separate business unit that will focus on leveraging
Corus' intellectual property internationally.
- On September 28, 2006 the Company held its annual Investor Day. The
Company confirmed that it will achieve its consolidated free cash
flows target and its segment profit guidance for the fiscal year
2006. The Company also provided fiscal 2007 financial guidance
targets of free cash flow of between $85 to $100 million and a
consolidated segment profit range of $230 to $240 million.
- On September 28, 2006 the Company announced plans to develop a
network of massive multiplayer online games ("MMOGs") in partnership
with Québec-based Frima Studio Inc. Unparalleled in the marketplace,
this immersive online game initiative for kids, code-named
Constellation, is set to launch later this year on YTV.com.
- On October 2, 2006 the Company announced that it has reached an
agreement to buy Winnipeg radio station CJZZ 99.1 Cool FM and
Kitchener radio station CKBT 91.5 The Beat from CanWest MediaWorks.
The transaction is subject to approval by the CRTC and the
acquisition price for the two stations is approximately
$15.0 million.
- Telelatino Network Inc. received CRTC approval for new category 2
specialty services to be known as Music Television Espanol, Spanish
Sports TV 1, Spanish Entertainment TV, Spanish Sports TV 2, Spanish
Entertainment TV, and Italian Entertainment TV.
>>

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Management's Discussion and Analysis
-------------------------------------------------------------------------

Management's Discussion and Analysis of the financial position and
results of operations for the twelve month period ended August 31, 2006 is
prepared at September 30, 2006. The following should be read in conjunction
with Management's Discussion and Analysis, consolidated financial statements
and the notes thereto included in our August 31, 2005 Annual Report and the
consolidated financial statements and notes of the current quarter. The
financial highlights included in the discussion of the segmented results are
derived from the unaudited consolidated financial statements. All amounts are
stated in Canadian dollars unless specified otherwise.

Cautionary statement regarding forward-looking statements

To the extent any statements made in this report contain information that
is not historical; these statements are forward-looking statements within the
meaning of applicable securities laws. These forward-looking statements
related to, among other things, our objectives, goals, strategies, intentions,
plans, estimates and outlook and can generally be identified by the use of the
words such as "believe", "anticipate", "expect", "intend", "plan", "will",
"may" and other similar expressions. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. Although Corus believes that the
expectations reflected in such forward-looking statements are reasonable, such
statements involve risks and uncertainties and undue reliance should not be
placed on such statements. Certain material factors or assumptions are applied
in making forward-looking statements and actual results may differ materially
from those expressed or implied in such statements. Important factors that
could cause actual results to differ materially from these expectations
include, among other things: our ability to attract and retain advertising
revenues; audience acceptance of our television programs and cable networks;
our ability to recoup production costs, the availability of tax credits and
the existence of co-production treaties; our ability to compete in any of the
industries in which we do business; the opportunities (or lack thereof) that
may be presented to and pursued by us; conditions in the entertainment,
information and communications industries and technological developments
therein; changes in laws or regulations or the interpretation or application
of those laws and regulations; our ability to integrate and realize
anticipated benefits from our acquisitions and to effectively manage our
growth; our ability to successfully defend ourselves against litigation
matters arising out of the ordinary course of business; and changes in
accounting standards. Additional information about these factors and about the
material assumptions underlying such forward-looking statements may be found
in our Annual Information Form. Corus cautions that the foregoing list of
important factors that may affect future results is not exhaustive. When
relying on our forward-looking statements to make decisions with respect to
Corus, investors and others should carefully consider the foregoing factors
and other uncertainties and potential events. Unless otherwise required by
applicable securities laws, we disclaim any intention or obligation to
publicly update or revise any forward-looking statements whether as a result
of new information, events or circumstances that arises after the date thereof
or otherwise.

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Overview of Consolidated Results
-------------------------------------------------------------------------

The fourth quarter was highlighted by strong revenue growth from
Television and another quarter of positive segment profit contribution from
Content. Radio results were flat compared to the prior year, reflecting
disappointing results in the Québec market. The year-to-date results are
impacted by a pre-tax $132.0 million debt refinancing loss resulting from the
purchase and cancellation of its Senior Subordinated Notes ("Notes") and the
termination of the associated cross-currency agreements. These transactions
resulted in an after-tax loss of $1.95 per share in the second quarter and
year to date.

Financial Results

Revenues

Revenues for the fourth quarter were $185.0 million, an increase of 6%
over $175.3 million last year. Radio and Television experienced increases of
2% and 13% respectively. For the year, revenues of $726.3 million represented
a 6% increase over $683.1 million last year. Radio and Television experienced
increases of 6% and 11% respectively. Content decreased by 4% for the fourth
quarter and 12% for the year. Please refer to the discussion of segmented
results for additional analysis of revenues.

Direct cost of sales, general and administrative expenses

Direct cost of sales, general and administrative expenses for the fourth
quarter were $140.5 million, up 6% from $132.7 million in the prior year. For
the year, expenses were $512.2 million, up 5% from the prior year. Expense
increases in Television were a result of higher revenues, while increases in
Radio were a result of the integration of the new stations in Québec. Expenses
at Content decreased as a result of lower revenues, while Corporate expenses
increased as a result of stock-based compensation and costs incurred in the
process of improving internal controls. Please refer to the discussion of
segmented results for additional analysis of expenses.

Depreciation

Depreciation expense for the fourth quarter was $5.6 million, a decrease
of $0.3 million from last year, while for the twelve-month period depreciation
of $21.3 million represented a $2.4 million decrease from the prior year. This
decrease reflects a lower capital cost base, particularly in the Television
division, and continues a trend reflecting lower capital expenditures in that
division in recent years.

Amortization

Amortization expense for the fourth quarter was $0.6 million, down from
$1.1 million last year, while for the year amortization of $2.9 million
represented a decrease of $1.7 million from last year. The decrease is a
result of certain deferred start-up and reformatting costs becoming fully
amortized, as well as the write-off in the second quarter of deferred
financing costs associated with the Notes. The write-off of these costs has
been recorded as a component of the debt restructuring loss. The remaining
deferred start-up costs of $0.4 million will be fully amortized over the next
several quarters, while $5.3 million in deferred financing charges relating to
the new bank facility is being amortized over the remaining life of the
facility.

Interest on long-term debt

Interest expense for the fourth quarter was $8.5 million, down from
$14.3 million last year, while for the year interest expense was $43.1
million, representing a decrease of $12.5 million from $55.6 million last
year. The Company refinanced its debt at the end of January 2006, with the
result that the Notes, which paid interest at an effective rate of 9.33%, were
replaced with bank debt paying interest on a floating rate plus a margin.
Interest rate swap agreements fix the interest rate at 4.13% plus a margin on
$400.0 million of the bank debt for the full term of the facility. The
effective interest rate for the fourth quarter was 5.3% on bank debt, compared
to 9.4%, primarily on the Notes, in the prior year.

Debt restructuring loss

In the second quarter of fiscal 2006, the Company purchased and cancelled
U.S. $373.6 million of its Notes. Concurrently, the cross-currency agreements
which fixed the exchange rate on the principal and interest on the Notes were
effectively terminated. In order to fund the purchase of the Notes, the
Company amended its credit facility with a syndicate of banks. These
transactions resulted in the Company recording a pre-tax debt restructuring
loss of $132.0 million in the second quarter. The components of this loss
include mark-to-market payments on the cross-currency agreement terminations,
consent and tender premiums, the non-cash write-off of deferred financing
charges related to the Notes, and other fees. The after-tax impact of these
transactions on the fiscal year was approximately $1.95 per share.

Other expense (income), net

Other expense for the fourth quarter was $8.3 million, compared to
$5.3 million in the prior year, while for the year other expense of $11.7
million represented a decrease of $17.2 from income of $5.5 million in the
prior year. The current year includes restructuring charges of $4.2 million
incurred in the Radio segment in the third quarter and $6.7 million incurred
in the Content segment in the fourth quarter. The prior year included foreign
exchange and derivative gains of $3.3 million and $4.4 million, respectively.
The financial instruments which gave rise to these gains were terminated in
fiscal 2005 so there is no corresponding impact in fiscal 2006. In addition,
the prior year includes a realized contingent consideration gain of
$4.1 million, a broadcast license impairment of $4.1 million and the
retroactive portion of a performing rights tariff increase in the amount of
$3.8 million.

Income taxes

Income tax recovery for the fourth quarter was $25.9 million on income
before taxes of $21.6 million, and for the year was $36.0 million on income
before taxes of $3.2 million. Income tax expense in the fourth quarter was
reduced by approximately $37.0 million in long-term future tax rate changes
and other items as described in note 8 to the unaudited consolidated financial
statements. Excluding these items, the effective tax rate for the fourth
quarter was 51.4%, compared with the Company's 35.2% statutory rate. This
difference is due to the impact of the fourth quarter long-term future tax
rate change on the tax asset recorded in the second quarter in connection with
the debt refinancing loss.

Net income

Net income for the fourth quarter was $46.6 million, compared to
$9.7 million last year, while for the year net income of $35.5 million
represented a decrease of $35.6 million from the prior year. Earnings per
share for the fourth quarter were $1.11 basic and $1.09 diluted, compared with
earnings per share of $0.23 basic and $0.22 diluted last year. For the year,
earnings per share were $0.84 per share basic and $0.82 diluted, compared to
basic and diluted earnings per share of $1.66 and $1.65 respectively. The
after-tax impact of the debt refinancing transaction in the second quarter of
fiscal 2006 was a loss of approximately $1.95 per share.

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Radio
-------------------------------------------------------------------------

The Radio division comprises 51 radio stations situated primarily in nine
of the ten largest Canadian markets by population and in the densely populated
area of southern Ontario. Corus is Canada's leading radio operator in terms of
revenues and audience reach.

<<
Financial Highlights

Three months ended Twelve months ended
August 31, August 31,
(thousands of Canadian dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
Revenues 66,287 65,270 268,367 252,685
Direct cost of sales, general
and administrative expenses 50,443 49,487 200,015 183,680
-------------------------------------------------------------------------
Segment profit 15,844 15,783 68,352 69,005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

The quarter and year-to-date results of fiscal 2006 reflect the impact of
acquisitions and disposals that occurred in both fiscals 2006 and 2005. A
reconciliation of Radio same station results is provided on page 15.

Revenues for the fourth quarter were $66.3 million, up 2% from the
corresponding period last year. For the year, revenues of $268.4 million were
up 6% from a year ago. On a same station basis revenues were up 4% and 6% over
the prior year for the quarter and year, respectively. Revenue growth for the
quarter was experienced in Western Canada and Ontario, with Vancouver and
Calgary contributing above market average growth in the quarter, as indicated
by the Trans-Canada Radio Advertising by Market ("TRAM") Report for the three
months ended August 31, 2006. Local airtime sales for the fourth quarter
decreased over the prior year by 4%, while national airtime sales increased by
11% in the quarter. For the full year, both local and national airtime sales
increased by 5%, while interactive and other revenues also increased. On a
same station basis, local airtime sales increased by 4% while national airtime
sales increased by 5% in the quarter. Although fiscal 2006 was a challenging
year in major markets like Toronto and Montreal, where Corus' growth did not
keep pace with the market average growth, Corus Radio believes that its assets
continue to be competitively positioned to take advantage of the strong ad
market.

Direct cost of sales, general and administrative expenses for the fourth
quarter were $50.4 million, up 2% from the corresponding period last year. For
the year, expenses of $200.0 million were up 9% over the prior year. On a same
station basis expenses were up 4% and 5% over the prior year for the three-
and twelve-month periods respectively. This same station expense growth is
attributed to increased investments in new media and programming content,
principally related to professional hockey which was unavailable last year and
contributed approximately $2.6 million in costs to the current year. During
the year Corus Radio incurred $4.2 million in expenses related to
restructuring costs primarily in Western Canada. These costs are reflected in
Other expense (income), net. Expenses related to the integration of the
recently acquired Québec stations are higher than managements' expectations
and this combined with lower than anticipated revenue growth has had a
negative impact on results for the quarter and year to date.
Segment profit for the fourth quarter was $15.8 million, unchanged from
last year, while for the year segment profit of $68.4 million represented a 1%
decrease from the prior year. On a same station basis, segment profit
increased by 4% and 7% over the prior year for the three- and twelve-month
periods respectively.

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Television
-------------------------------------------------------------------------

The Television division comprises the following: specialty television
networks YTV, W Network, Treehouse TV, Corus' 80% interest in Country Music
Television Limited ("CMT"), a 50.5% interest in Telelatino, a 40% interest in
TELETOON and a 20% interest in Food Network; Corus' premium television
services Movie Central and Encore Avenue; interests in three digital
television channels: SCREAM, Discovery Kids Canada and The Documentary
Channel; Corus Custom Networks, a cable advertising service; three local
television stations; and Max Trax, a residential digital music service.

<<
Financial Highlights

Three months ended Twelve months ended
August 31, August 31,
(thousands of Canadian dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
Revenues 94,650 83,449 393,349 354,201
Direct cost of sales, general
and administrative expenses 60,509 52,693 229,109 213,419
-------------------------------------------------------------------------
Segment profit 34,141 30,756 164,240 140,782
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

Revenues for the fourth quarter were $94.7 million, up 13% from the
corresponding period last year. Revenues of $393.3 million for the year
represented an 11% growth over the prior year. Revenue growth was driven by
advertising growth of 18% and 13% for the quarter and year, respectively, and
subscriber growth of 12% and 10% for the quarter and year, respectively.
Subscriber revenues for the quarter and year include retroactive fee
adjustments of $2.3 million and $4.7 million, respectively. Excluding these
items, subscriber revenue growth for both the quarter and year was 7%. The
strong advertising results were driven by double-digit growth in YTV, CMT, W,
TELETOON and Telelatino. In total, specialty advertising revenues grew 20%
over the prior year's quarter. Specialty advertising growth for the year was
14%, while total revenues from local and other television properties grew by
5% over the prior year. Subscriber revenue growth was driven by Movie Central,
which finished the year with 822,000 subscribers, up 10% from 748,000 at
August 31, 2005. The Company attributes this increase to successful marketing
campaigns surrounding high-profile HBO programming, including Rome and the
sixth season of The Sopranos, which launched in March 2006. As expected, the
rate of subscriber growth slowed in the fourth quarter as churn rates in the
summer months are traditionally higher.

Direct cost of sales, general and administrative expenses were
$60.5 million for the fourth quarter, up 15% from the prior year, and
$229.1 million for the year, up 7% from the prior year. The increase was
primarily due to higher programming costs, as amortization of program rights
increased by 10% over the prior year. These costs fluctuate in proportion to
changes in subscriber levels, as a result of program supply agreements, and
Canadian content requirements based on the prior year's revenues, as a result
of conditions of license. These increased costs were offset by effective cost
containment in other general and administrative overhead, which increased by
2% over the prior year, due to higher marketing costs as well as bad debt
expense incurred in the first quarter of this year.

Segment profit for the fourth quarter was $34.1 million, up 11% from the
prior year, while segment profit of $164.2 million for the year represented a
17% increase over the prior year.

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Content
-------------------------------------------------------------------------

The Content division participates in the production and distribution of
television programs and the sale and licensing of related products and rights.

<<
Financial Highlights

Three months ended Twelve months ended
August 31, August 31,
(thousands of Canadian dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
Revenues 26,769 27,950 72,125 82,318
Direct cost of sales, general
and administrative expenses 24,132 26,178 66,572 78,750
-------------------------------------------------------------------------
Segment profit 2,637 1,772 5,553 3,568
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

Revenues for the fourth quarter were $26.8 million, a decrease of 4% from
the prior year. For the year, revenues of $72.1 million represented a 12%
decrease from the prior year. During the fourth quarter and full year, Content
delivered 47 and 107 completed episodes respectively, compared to 12 and 111
episodes in the prior year periods. The decrease in revenues from the prior
year was due to the decline in Beyblade revenues towards the end of fiscal
2005. The Beyblade decline is not likely to reverse and merchandising revenues
will not return to the levels of the past few fiscal years until new brands
come on line. Included in Content's revenues for the quarter and year are
intercompany revenues of $2.7 million and $7.1 million, respectively. These
revenues are eliminated upon consolidation.

Direct cost of sales, general and administrative expenses for the fourth
quarter were $24.1 million, down 8% from the prior year. For the year,
expenses of $66.6 million represent a decrease of 15% from the prior year. The
decrease reflects ongoing diligence in expense control, as well as lower film
amortization and third-party participation costs that fluctuate in proportion
to revenues. During the fourth quarter Content incurred $6.7 million in
expenses related to the restructuring of the Toronto studio and the closure of
foreign offices. These costs are reflected in Other expense (income), net.

Segment profit for the fourth quarter was $2.6 million, compared to
$1.8 million last year. For the year segment profit was $5.6 million compared
to $3.6 million in the prior year. The Content division continues to perform
in line with the Company's current expectations of modest segment profit and
neutral to positive free cash flow.

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Corporate
-------------------------------------------------------------------------

The Corporate segment results represent the incremental cost of corporate
overhead in excess of the amount allocated to the operating segments.

<<
Financial Highlights

Three months ended Twelve months ended
August 31, August 31,
(thousands of Canadian dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
Stock-based compensation 5,045 2,178 11,596 6,766
Other general and
administrative costs 2,806 3,794 12,402 11,845
-------------------------------------------------------------------------
General and administrative
expenses 7,851 5,972 23,998 18,611
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

General and administrative expenses increased to $7.9 million in the
fourth quarter from $6.0 million in the same period last year, and for the
year increased to $24.0 million from $18.6 million last year.

Stock-based compensation includes the expenses related to the Company's
Performance Share Units and the issuance of stock options. The increase in the
quarter and full year expenses reflect the impact of Corus' higher average
share price in fiscal 2006 compared to the same periods last year.

In the fourth quarter, the Company recorded the impact of a refund
related to employee benefits. The increase in other general and administrative
costs of $0.6 million for the year relate primarily to increased costs of
information technology and costs associated with implementing the requirements
of the Sarbanes-Oxley Act and new Canadian securities standards.

-------------------------------------------------------------------------
Quarterly Consolidated Financial Information
-------------------------------------------------------------------------

The following table sets forth certain unaudited data derived from the
unaudited consolidated financial statements for each of the eight most recent
quarters ended August 31, 2006. In management's opinion, these unaudited
consolidated financial statements have been prepared on a basis consistent
with the audited consolidated financial statements contained in the Company's
Annual Report for the year ended August 31, 2005.

<<
(thousands of
Canadian dollars Net Earnings (loss)
except per share Segment income per share
amounts Revenues profit (loss) Basic Diluted

2006
4th Qtr 184,979 44,515 46,642 $1.11 $1.09
3rd Qtr 181,562 57,702 23,154 0.55 0.54
2nd Qtr 164,388 42,151 (65,732) (1.54) (1.54)
1st Qtr 195,341 69,751 31,407 0.73 0.72
2005
4th Qtr 175,279 42,571 9,662 $0.23 $0.22
3rd Qtr 171,890 52,351 19,430 0.45 0.45
2nd Qtr 155,300 38,024 12,945 0.30 0.30
1st Qtr 180,600 62,365 29,077 0.68 0.68
>>

Seasonal Fluctuations

As discussed in Management's Discussion and Analysis for the year ended
August 31, 2005, Corus' operating results are subject to seasonal fluctuations
that can significantly impact quarter-to-quarter operating results. In
particular, as the Company's broadcasting businesses are dependent on general
advertising and retail cycles associated with consumer spending activity, the
first quarter results tend to be the strongest and second quarter results tend
to be the weakest in a fiscal year.

Significant items causing variations in quarterly results

<<
- Net income for the fourth quarter of fiscal 2006 was positively
impacted by approximately $37.0 million in income tax rate changes
and other income tax items.
- The second quarter of fiscal 2006 was impacted by the purchase and
cancellation of the Company's Notes, as well as the termination of
the cross-currency agreements associated with the Notes. The after-
tax impact of these transactions was approximately $82.6 million or
$1.95 per share.
>>

-------------------------------------------------------------------------
Risks and Uncertainties
-------------------------------------------------------------------------

In fiscal 2006 a number of regulatory proceedings and decisions occurred
which may have an impact on Corus. These include the granting of a pay
television license by the Canadian Radio-television and Telecommunications
Commission ("CRTC") to an entity allowing it to compete with our premium
television services and the start-up of satellite radio. The CRTC is also
conducting radio and television policy reviews that may impact Corus'
regulated entities.

Except as noted above, there have been no material changes in any risks
or uncertainties facing the Company since the year ended August 31, 2005.

-------------------------------------------------------------------------
Financial Position
-------------------------------------------------------------------------

Total assets at August 31, 2006 were $1.84 billion, compared to
$1.93 billion at August 31, 2005. The following discussion describes the
significant changes in the consolidated balance sheet since August 31, 2005.

Current assets decreased by $91.4 million. Cash and cash equivalents
decreased by $94.5 million. This decrease is the result of financing
activities related to the purchase of the Notes and the termination of the
associated cross-currency agreements as well as the purchase of the Company's
shares through the Normal Course Issuer Bid. Accounts receivable decreased by
$12.4 million. This decrease is primarily in the Content division, from
receipts related to significant revenues recorded at the end of fiscal 2005.

Non-current assets increased by $5.3 million. Investments and other
assets decreased by $7.2 million, as the Company divested itself of an
interest in a privately owned Canadian media company. Property, plant and
equipment increased by $2.4 million as capital expenditures of $23.6 million
were offset by depreciation of $21.3 million. The property, plant and
equipment balance had declined through the first three quarters of fiscal
2006, as the significant investments from fiscals 2001 and 2002 were
depreciated, however capital expenditures in the fourth quarter were higher
than in the first three quarters as the Company invests in consolidating its
Montreal Radio facilities. Program and film rights (current and non-current)
increased by $35.7 million, as accruals for acquired rights of $159.3 million
were offset by amortization of $124.3 million. Program rights increased due to
the renewal of multi-year output arrangements, summer license term start dates
for some of the key fall launch programming, and increases in condition of
license requirements due to revenue growth. Film investments increased by
$2.4 million as net film spending of $44.4 million was offset by film
amortization and accruals for tax credits. This increase is primarily in
projects in development and process for series that will be delivered in
future periods. Deferred charges decreased by $9.9 million due to amortization
and the write-off of deferred financing charges as a result of the refinancing
transactions in the second quarter. This was offset by the addition of new
deferred financing charges related to the new bank facility. Broadcast
licenses decreased by $3.8 million and goodwill decreased by $4.1 million as a
result of the sale of two radio stations in the first quarter.

Current liabilities increased by $5.7 million. Accounts payable and
accrued liabilities increased by $4.1 million and income taxes payable
increased by $1.5 million. Accounts payable and accrued liabilities related to
working capital decreased by $25.8 million, due to the change in timing of the
payment of interest on long-term debt, while non-working capital accruals for
program rights and film investments increased by $20.9 million, as the Company
grows its program rights assets. In addition, the Company accrued $9.0 million
for dividends to be paid in the first quarter of fiscal 2007.

Non-current liabilities decreased by $79.1 million. Long-term debt
increased by $151.2 million, resulting from the refinancing transaction in the
second quarter. The Company paid $436.0 million to purchase its Notes, and has
drawn down $595.8 million on its new bank facility. This bank facility
combined with an existing cash balance was used to finance the purchase of the
Notes and terminate the associated cross-currency agreements. Deferred credits
decreased by $167.1 million as a result of the termination of the
cross-currency agreements associated with the Notes and the payment of public
benefit liabilities. Net future tax liability (including current future tax
asset) decreased by $75.3 million primarily as a result of the tax impact of
the refinancing transaction in the second quarter and changes in long-term
rates and other items in the fourth quarter.

Share capital decreased by $15.3 million as a result of the repurchase
and cancellation of shares with a book value of $21.7 million under the
Company's recently implemented issuer bid. This was offset by the receipt of
$6.0 million on the exercise of employee stock options, in response to a
recent increase in the Company's share price. Contributed surplus increased by
$3.3 million as a result of expensing stock-based compensation for the year.
Cumulative translation adjustment increased by $1.5 million due to the effect
of the strengthening Canadian dollar on the translation of the net assets of
self-sustaining foreign operations.

-------------------------------------------------------------------------
Liquidity and Capital Resources
-------------------------------------------------------------------------

Cash flows

Overall, the Company's cash and cash equivalents position has decreased
by $94.5 million in fiscal 2006, compared to an increase of $42.9 million in
the prior year. This is due to the refinancing of the Company's debt in the
second quarter and the repurchase of shares through a Normal Course Issuer
Bid. Free cash flow for the year was $93.8 million compared to $80.8 million
in the prior year.

Cash provided by operating activities in fiscal 2006 is $111.0 million,
compared to $102.4 million last year. This increase is primarily due to cash
provided by an $18.8 million increase in segment profit; an increase of
$19.1 million in non-cash add-backs for stock-based compensation and
amortization of program and film rights; and an $8.8 million decrease in net
additions to film assets; offset by an increased investment in non-cash
working capital of $12.8 million and higher payments for program rights of
$12.4 million.

Cash used in investing activities in fiscal 2006 is $17.2 million,
compared to $21.6 million last year. The current year includes $10.6 million
in proceeds from the sale of certain radio and other assets, and $5.4 million
from the disposal of investments, while capital expenditures are ahead of the
prior year. The increased capital expenditures relate to the consolidation of
the Montréal radio facilities.

Cash used in financing activities in fiscal 2006 is $188.2 million
compared to $37.9 million last year. In the second quarter of fiscal 2006, the
Company purchased and cancelled its Notes, terminated the cross-currency
agreement associated with the Notes, and amended its credit facility. The
Company financed this transaction through a drawdown of the amended credit
facility. Through the third and fourth quarters of fiscal 2006, the Company
continued to purchase outstanding Notes, and repaid a portion of its revolving
credit facility. In the fourth quarter, the Company continued purchasing its
own shares under an issuer bid that began in the second quarter of fiscal
2006. To the end of the fourth quarter, 1,034,700 shares had been purchased
for cash consideration of $36.8 million.

Liquidity

As at August 31, 2006, the Company has available $200.0 million under a
revolving term credit facility that matures on January 24, 2011. Interest
rates on the Company's facilities fluctuate with Canadian bankers' acceptances
and LIBOR.

As at August 31, 2006, the Company had a cash balance of $43.6 million
and a working capital balance of $88.3 million. Management believes that cash
flow from operations and existing credit facilities will provide the Company
with sufficient financial resources to fund its operations for the next
12 months.

Net debt and adjusted net debt

At August 31, 2006, net debt was $552.7 million, up from $307.1 million
at August 31, 2005. Adjusted net debt at August 31, 2006 was $552.7 million,
up from $465.9 million at August 31, 2005. This increase in net debt is a
result of the cash flows incurred to buy back the Notes and terminate the
associated cross-currency agreements. Adjusted net debt to segment profit at
August 31, 2006 was 2.6 times, up from 2.4 times at August 31, 2005. This
ratio remains below management's stated guidance range of 3.0 to 3.5 times.

Off-balance sheet arrangements and derivative financial instruments

During the second quarter of fiscal 2006 the Company entered into
Canadian interest rate swap agreements to fix the interest rate on its
outstanding bank loans. The estimated fair value of these agreements at
August 31, 2006 is $1.3 million. No asset has been included in the
consolidated balance sheet.

As at August 31, 2005, the consolidated balance sheet included a
liability of $158.8 million related to a cross-currency agreement. Corus
terminated this agreement in the second quarter of fiscal 2006 as part of the
refinancing of its debt. The fair value of the liability at the date of its
termination was included in the debt refinancing loss recorded in the second
quarter of fiscal 2006.

-------------------------------------------------------------------------
Outstanding Share Data
-------------------------------------------------------------------------

As at September 30, 2006, 1,723,929 Class A Voting Shares and 40,339,436
Class B Non-Voting Shares were issued and outstanding.

-------------------------------------------------------------------------
Key Performance Indicators
-------------------------------------------------------------------------

The Company measures the success of its strategies using a number of key
performance indicators. With the exception of radio same station segment
results, these have been outlined in the Management's Discussion and Analysis
contained in the Annual Report for the year ended August 31, 2005, including a
discussion as to their relevance, definitions, calculation methods and
underlying assumptions. Certain key performance indicators are not
measurements in accordance with Canadian or U.S. generally accepted accounting
principles ("GAAP") and should not be considered as an alternative to net
income or any other measure of performance under Canadian or U.S. GAAP.

The following tables reconcile those key performance indicators that are
not in accordance with GAAP measures:

<<
Free cash flow

Three months ended Twelve months ended
August 31, August 31,
(thousands of Canadian dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities 44,903 41,346 111,018 102,416
Investing activities (15,081) (11,476) (17,249) (21,623)
-------------------------------------------------------------------------
Free cash flow 29,822 29,870 93,769 80,793
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Net debt and adjusted net debt

As at As at
August 31, August 31,
(thousands of Canadian dollars) 2006 2005
-------------------------------------------------------------------------
Long-term debt 596,362 445,162
Cash and cash equivalents (43,636) (138,086)
-------------------------------------------------------------------------
Net debt 552,726 307,076
Unrealized cumulative foreign exchange gains - 158,838
-------------------------------------------------------------------------
Adjusted net debt 552,726 465,914
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Adjusted net debt to segment profit

As at As at
August 31, August 31,
(thousands of Canadian dollars except ratios) 2006 2005
-------------------------------------------------------------------------
Adjusted net debt (numerator) 552,726 465,914
Segment profit(1) (denominator) 214,119 195,311
-------------------------------------------------------------------------
Adjusted net debt to segment profit 2.6 2.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Reflects aggregate amounts for the most recent four quarters, as
detailed in the table in the "Quarterly Consolidated Financial
Information" section of Management's Discussion and Analysis.

Radio same station segment results

Radio same station segment results represent the revenues and segment
profit for the 43 radio stations whose results are included in the first three
quarters of fiscals 2006 and 2005 and the 51 radio stations whose results are
included in the fourth quarter of fiscals 2006 and 2005. With the acquisition
and sale of certain stations over the past several quarters, the radio same
station segment results metric has been included in this Managements'
Discussion and Analysis to enhance the Company's disclosure.

Three months ended Twelve months ended
August 31, August 31,
(thousands of Canadian dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------

Total Radio revenues 66,287 65,270 268,367 252,685
Adjustment for stations not
in both fiscal periods - (1,374) (12,664) (10,397)
-------------------------------------------------------------------------
Radio same station revenues 66,287 63,896 255,703 242,288
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Total Radio direct cost of
sales, general and
administrative expenses 50,443 49,487 200,015 183,680
Adjustment for stations
not in both fiscal periods - (883) (15,182) (7,516)
-------------------------------------------------------------------------
Radio same station direct cost
of sales, general and
administrative expenses 50,443 48,604 184,833 176,164
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Total Radio segment profit 15,844 15,783 68,352 69,005
Adjustment for stations not
in both fiscal periods - (491) 2,518 (2,881)
-------------------------------------------------------------------------
Radio same station segment
profit 15,844 15,292 70,870 66,124
-------------------------------------------------------------------------
-------------------------------------------------------------------------


-------------------------------------------------------------------------
Consolidated Financial Statements
-------------------------------------------------------------------------

CORUS ENTERTAINMENT INC.
CONSOLIDATED BALANCE SHEETS

As at As at
(unaudited) August 31, August 31,
(thousands of Canadian dollars) 2006 2005
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 43,636 138,086
Accounts receivable 142,934 155,343
Prepaid expenses and other 7,332 10,948
Program and film rights 104,723 93,725
Future tax asset 14,535 6,498
-------------------------------------------------------------------------
Total current assets 313,160 404,600
-------------------------------------------------------------------------

Tax credits receivable 13,226 12,292
Investments and other assets 29,642 36,886
Property, plant and equipment, net 78,417 76,041
Program and film rights 79,380 54,715
Film investments (note 2) 60,779 58,417
Deferred charges 5,655 15,560
Broadcast licenses (note 3) 505,212 509,052
Goodwill (note 3) 756,738 760,801
-------------------------------------------------------------------------
1,842,209 1,928,364
-------------------------------------------------------------------------
-------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities (note 4) 176,384 172,236
Income taxes payable 4,583 3,049
-------------------------------------------------------------------------
Total current liabilities 180,967 175,285
-------------------------------------------------------------------------

Long-term debt (note 5) 596,362 445,162
Deferred credits (note 6) 28,691 195,789
Future tax liability 80,447 147,744
Other long-term liabilities 26,865 22,895
Non-controlling interest 11,379 11,227
-------------------------------------------------------------------------
Total liabilities 924,711 998,102
-------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital (note 7) 870,563 885,911
Contributed surplus 6,878 3,558
Retained earnings 51,585 50,802
Cumulative translation adjustment (note 13) (11,528) (10,009)
-------------------------------------------------------------------------
Total shareholders' equity 917,498 930,262
-------------------------------------------------------------------------
1,842,209 1,928,364
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes

On behalf of the Board,

John M. Cassaday Heather A. Shaw
President and Chief Executive Officer Executive Chair
October 26, 2006


CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS

(unaudited)
(in thousands of Three months ended Twelve months ended
Canadian dollars August 31, August 31,
except per share amounts) 2006 2005 2006 2005
-------------------------------------------------------------------------
Revenues 184,979 175,279 726,270 683,069
Direct cost of sales, general
and administrative expenses 140,464 132,708 512,151 487,758
Depreciation 5,569 5,882 21,302 23,710
Amortization 566 1,129 2,872 4,577
Interest on long-term debt 8,524 14,285 43,105 55,561
Debt refinancing loss (note 5) - - 131,951 -
Other expense (income), net
(note 4) 8,274 5,295 11,667 (5,494)
-------------------------------------------------------------------------
Income before income taxes and
non-controlling interest 21,582 15,980 3,222 116,957
Income tax expense (recovery)
(note 8) (25,933) 5,749 (36,005) 42,810
Non-controlling interest 873 569 3,756 3,033
-------------------------------------------------------------------------
Net income for the period 46,642 9,662 35,471 71,114

Retained earnings (deficit),
beginning of period 17,945 43,270 50,802 (17,122)
Dividends (9,020) (2,130) (19,586) (3,190)
Share repurchase excess
(note 7) (3,982) - (15,102) -
-------------------------------------------------------------------------
Retained earnings, end of
period 51,585 50,802 51,585 50,802
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Earnings per share (note 11)
Basic $1.11 $0.23 $0.84 $1.66
Diluted 1.09 0.22 0.82 1.65
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Weighted average number of
shares outstanding
(in thousands)
Basic 41,961 42,793 42,461 42,761
Diluted 42,901 43,412 43,247 43,095
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes


CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited) Three months ended Twelve months ended
(in thousands of August 31, August 31,
Canadian dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income for the period 46,642 9,662 35,471 71,114
Add (deduct) non-cash items:
Depreciation 5,569 5,882 21,302 23,710
Amortization of program
and film rights 32,304 26,776 124,327 110,630
Amortization of
film investments 17,436 19,165 39,450 43,693
Other amortization 566 1,129 2,872 4,577
Future income taxes (33,360) (1,787) (74,232) 8,601
Non-controlling interest 873 569 3,756 3,033
Foreign exchange losses
(gains) 1 - (355) (2,747)
Stock-based compensation 5,586 2,178 12,137 6,766
Unrealized derivative gains - - - (3,278)
Broadcast license impairment - 4,108 - 4,108
Debt refinancing loss - - 131,951 -
Other 476 2,014 3,433 1,769
Net change in non-cash working
capital balances related to
operations 10,086 18,498 (9,898) 2,235
Payment of program and
film rights (31,616) (36,580) (134,751) (122,368)
Net additions to
film investments (9,660) (10,268) (44,445) (49,427)
-------------------------------------------------------------------------
Cash provided by operating
activities 44,903 41,346 111,018 102,416
-------------------------------------------------------------------------

INVESTING ACTIVITIES
Additions to property,
plant and equipment (8,950) (8,441) (23,598) (19,217)
Decrease (increase) in
investments, net (2,702) 1,571 5,374 665
Decrease in public benefits
associated with acquisitions (3,429) (4,606) (9,594) (9,893)
Proceeds from sale of assets - - 10,569 6,822
-------------------------------------------------------------------------
Cash used in investing
activities (15,081) (11,476) (17,249) (21,623)
-------------------------------------------------------------------------

FINANCING ACTIVITIES
Increase (decrease) in
bank loans (30,093) - 592,687 (34,017)
Notes repurchase and swap
termination (88) - (727,829) -
Additions to deferred
financing charges - - (6,000) (832)
Decrease in other long-term
liabilities (165) (191) (648) (820)
Issuance of shares under
stock option plan 1,945 915 5,981 1,650
Shares repurchased (9,387) - (36,789) -
Dividends paid (4,195) (2,130) (10,547) (3,190)
Dividends paid to
non-controlling interest - - (5,304) (937)
Other - - 230 208
-------------------------------------------------------------------------
Cash used in financing
activities (41,983) (1,406) (188,219) (37,938)
-------------------------------------------------------------------------

Net increase (decrease) in
cash and cash equivalents
during period (12,161) 28,464 (94,450) 42,855
Cash and cash equivalents,
beginning of period 55,797 109,622 138,086 95,231
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 43,636 138,086 43,636 138,086
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes


Corus Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
August 31, 2006
(in thousands of Canadian dollars except share information)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The interim consolidated financial statements include the accounts of
Corus Entertainment Inc. and its subsidiaries ("Corus" or the
"Company"). The notes presented in these interim consolidated
financial statements include only significant events and transactions
occurring since the Company's last fiscal year and are not fully
inclusive of all matters normally disclosed in the Company's annual
audited financial statements. As a result, these interim consolidated
financial statements should be read in conjunction with the Company's
consolidated financial statements for the year ended August 31, 2005.

These interim consolidated financial statements follow the same
accounting policies and methods of application as the fiscal 2005
annual consolidated financial statements.

Corus' operating results are subject to seasonal fluctuations that
can significantly impact quarter-to-quarter operating results.
Accordingly, one quarter's operating results are not necessarily
indicative of a subsequent quarter's operating results. Each of the
broadcasting businesses (Radio and Television) and the Content
business has unique seasonal aspects.

For the broadcasting businesses, operating results are dependent on
general advertising and retail cycles associated with consumer
spending activity. Accordingly, operating results for the first
quarter tend to be the strongest, reflecting pre-Christmas
advertising activity, and for the second quarter tend to be the
weakest, consistent with lower consumer spending in winter months.

For the Content business, operating results are dependent on the
timing and number of television programs made available for delivery
in the period, as well as the timing of merchandising royalties
received, none of which can be predicted with certainty.
Consequently, Content's operating results may fluctuate significantly
from quarter to quarter. As well, cash flows may fluctuate and are
not necessarily closely related to revenue recognition.

2. FILM INVESTMENTS

As at As at
August 31, August 31,
2006 2005
---------------------------------------------------------------------
Projects in development and in process,
net of advances 17,397 15,876
Completed projects and distribution rights 28,721 28,796
Investments in third-party-produced
film projects 14,661 13,745
---------------------------------------------------------------------
60,779 58,417
---------------------------------------------------------------------
---------------------------------------------------------------------

3. BROADCAST LICENSES AND GOODWILL

During the first quarter of fiscal 2006, the Company completed the
sale of two radio stations for an aggregate purchase price of $9,115.
There were reductions of $3,840 and $4,063 in broadcast licenses and
goodwill, respectively, and an immaterial loss was recorded on these
dispositions.

4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

In fiscal 2006 the Company recorded restructuring expenses of $4,165
in the Radio segment and $6,728 in the Content segment related
primarily to severance and other restructuring activities. These
costs are included in Other expense (income), net. As at August 31,
2006, $4,861 of this provision remains unpaid. The Company
anticipates that this provision will be substantially paid in fiscal
2007.

5. LONG-TERM DEBT
As at As at
August 31, August 31,
2006 2005
---------------------------------------------------------------------
Senior Subordinated Notes 601 445,162
Bank loans 595,761 -
---------------------------------------------------------------------
596,362 445,162
---------------------------------------------------------------------
---------------------------------------------------------------------

On March 7, 2002, Corus issued U.S.$375,000 aggregate principal
amount of 8.75% Senior Subordinated Notes (the "Notes") due in 2012
at a price of 99.186% of their aggregate principal amount. The
Company entered into cross-currency agreements to fix the liability
for interest and principal payments on the Notes. The agreements
resulted in an effective interest rate of 9.33% on the Canadian
dollar equivalent of the U.S. debt. The exchange rate applicable to
the principal portion of the debt was fixed at Cdn.$1.6107,
translating to approximately Cdn.$604,000.

On December 15, 2005, the Company commenced a cash tender offer and
consent solicitation for its Notes. On January 23, 2006, the Company
completed its tender offer for the Notes, and as a result
U.S.$373,646 of the Notes were acquired by the Company and cancelled,
leaving U.S.$1,354 outstanding. Concurrently, the cross-currency
agreements were effectively terminated. As at August 31, 2006,
U.S.$544 of the Notes remains outstanding.

In order to fund the purchase of the Notes, the Company's credit
facility with a syndicate of banks was amended and its operating loan
facility was terminated. The amendment resulted in an extension of
the maturity of the credit facility to January 24, 2011. The amount
committed is $800,000, of which $300,000 is available on a revolving
basis (the "Revolving Facility") and $500,000 on a non-revolving
basis (the "Term Facility"), and is repayable at maturity. Funds are
available to the Company in both Canadian and U.S. dollars and charge
interest on a fluctuating basis plus a margin. Other terms of the
amended credit facility are substantially similar to the prior credit
facility. As at August 31, 2006, $100,000 of the Revolving Facility
and all of the Term Facility were utilized in Canadian dollars.

Interest rates on the balance of the bank loans fluctuate with
Canadian bankers' acceptances and LIBOR. The Company has entered into
Canadian interest rate swap agreements to fix the interest rate at
4.13% plus a margin on $400,000 of the Term Facility for the full
term of the facility.

These transactions resulted in the Company recording a $131,951 debt
refinancing loss in the second quarter of fiscal 2006. The components
of this loss include mark-to-market payments on the cross-currency
agreement termination, consent and tender premiums, the write-off of
deferred financing charges, and underwriting and other fees.


6. DEFERRED CREDITS
As at As at
August 31, August 31,
2006 2005
---------------------------------------------------------------------
Public benefits associated with acquisitions 11,615 21,209
Cross-currency agreements translated into
Canadian dollars at the current rate (note 4) - 158,838
Unearned revenue from distribution and
licensing of film rights 11,415 12,320
Other 5,661 3,422
---------------------------------------------------------------------
28,691 195,789
---------------------------------------------------------------------
---------------------------------------------------------------------


7. SHARE CAPITAL

Authorized

The Company is authorized to issue, upon approval of holders of no
less than two-third of the existing Class A shares, an unlimited
number of Class A participating shares ("Class A Voting Shares"), as
well as an unlimited number of Class B non-voting participating
shares ("Class B Non-Voting Shares"), Class A Preferred Shares, and
Class 1 and Class 2 preferred shares.

Issued and Outstanding
The changes in the Class A Voting and Class B Non-Voting Shares since
August 31, 2005 are summarized as follows:

Class A Class B
Voting Shares Non-Voting Shares Total
---------------------- -----------------------
No. $ No. $ $
-------------------------------------------------------------------------
Balance,
August 31,
2005 1,724,929 26,715 41,078,119 859,196 885,911
Conversion of
Class A Voting
Shares to
Class B Non-
Voting Shares (1,000) (15) 1,000 15 -
Issuance of
shares under
Stock Option
Plan - - 237,110 6,109 6,109
Shares
repurchased - - (1,034,700) (21,687) (21,687)
Repayment of
executive stock
purchase loans - - - 230 230
-------------------------------------------------------------------------
Balance,
August 31,
2006 1,723,929 26,700 40,281,529 843,863 870,563
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Stock Option Plan

Under the Company's Stock Option Plan, the Company may grant options
to purchase Class B Non-Voting Shares to eligible officers, directors
and employees of or consultants to the Company. The maximum number of
shares that can be reserved for issuance under the plan is 4,084,642.
All options granted are for terms not to exceed ten years from the
grant date. The exercise price of each option equals the market price
of the Company's stock on the date of the grant. Options vest 25% on
each of the first, second, third and fourth anniversary dates of the
date of grant.

During fiscal 2006, the Company granted 272,000 stock options with a
weighted average exercise price of $32.39 per share and a term of
seven and a half years. The weighted average fair value of the stock
options granted in fiscal 2006 was $11.16 per option.

As at August 31, 2006, the Company has outstanding stock options for
3,429,642 Class B Non-Voting Shares, of which 2,652,945 are
exercisable.

The fair value of each option granted was estimated on the date of
the grant using the Black-Scholes option pricing model with the
following assumptions:

Fiscal Fiscal
2006 2005
---------------------------------------------------------------------
Expected life Five years Five years
Risk-free interest rate 3.73% 4.31%
Dividend yield 0.31% 0.21%
Volatility 33.33% 35.98%
---------------------------------------------------------------------
---------------------------------------------------------------------

The estimated fair value of the options is amortized to income over
the option's vesting period on a straight-line basis. The Company has
recorded stock-based compensation expense for the three- and twelve-
month periods of $734 and $2,915, respectively (2005 - $559 and
$2,271). This charge has been credited to contributed surplus.

For options granted to employees up to August 31, 2003, had
compensation costs for the Company's Stock Option Plan been
determined based on the fair value based method of accounting for
stock-based compensation, the Company's net income and earnings per
share would have been reduced to the pro forma amounts indicated
below:

Three months ended Twelve months ended
August 31, August 31,
2006 2005 2006 2005
---------------------------------------------------------------------
Net income 46,642 9,662 35,471 71,114
Pro forma net income 46,459 9,418 34,284 69,598
Pro forma basic earnings
per share 1.11 0.22 0.81 1.63
Pro forma diluted earnings
per share 1.08 0.22 0.79 1.62
---------------------------------------------------------------------
---------------------------------------------------------------------

Long-term Incentive Plan

In fiscal 2006, the Company implemented a new long-term incentive
plan for senior management based on shareholder appreciation targets.
The Company has recorded stock-based compensation expense for both
the three- and twelve-month periods of $533 (2005 - nil). This charge
has been credited to contributed surplus.

Normal Course Issuer Bid

On December 15, 2005, the Company announced its intention to make a
normal course issuer bid for its Class B Non-Voting Shares through
the facilities of the Toronto Stock Exchange. The Company intends to
purchase for cancellation a maximum of 3,000,000 Class B Non-Voting
Shares.

During the twelve months ended August 31, 2006, the Company
repurchased and cancelled 1,034,700 Class B Non-Voting Shares for a
total cash consideration of $36,789. This cash consideration exceeded
the carrying value of the shares repurchased by $15,102, which amount
was charged to retained earnings.

8. INCOME TAXES

Significant components of the income tax expense attributable to
operations are as follows:

2006 2005
---------------------------------------------------------------------
Current tax expense 38,227 34,209
Future tax expense (recovery) relating to
origination and reversal of temporary
differences (12,978) 2,559
Future tax expense (recovery) resulting from
utilization (recognition) of losses (24,552) 9,035
Future tax expense (recovery) resulting from
tax rate changes (11,835) 254
Recovery of various future tax liabilities (25,187) -
Other 320 (3,247)
---------------------------------------------------------------------
Income tax expense (recovery) (36,005) 42,810
---------------------------------------------------------------------
---------------------------------------------------------------------

Included in income tax recovery for the fourth quarter and year is a
change in long-term future tax rates resulting in a recovery of
$11,835 and a recovery of $25,187 relating to future tax liabilities
that are deemed in the current period to be no longer required as the
result of various tax planning strategies.

9. BUSINESS SEGMENT INFORMATION

The Company's business activities are conducted through three
reportable operating segments:

Radio

The Radio segment comprises 51 radio stations, situated primarily in
high-growth urban centres in Canada. Revenues are derived from
advertising broadcast over these stations.

Television

The Television segment includes interests in several specialty
television networks, pay television, conventional television
stations, a digital music service and cable advertising services.
Revenues are generated from subscriber fees and advertising.

Content

The Content segment includes the production and distribution of
television programs and the sale and licensing of related products.
Revenues are generated from licensing of proprietary films and
television programs, merchandise licensing and publishing.

The accounting policies of the segments are the same as those
described in the summary of significant accounting policies.
Management evaluates each business segment's performance based on
revenues less direct cost of sales, general and administrative
expenses. Transactions between reporting segments are recorded at
fair value.

(a) Revenues and segment profit

Three months ended August 31, 2006
Tele- Cor- Elimi- Consoli-
Radio vision Content porate nations dated
-------------------------------------------------------------------------
Revenue 66,287 94,650 26,769 - (2,727) 184,979
Direct cost of
sales, general
and administrative
expenses 50,443 60,509 24,132 7,851 (2,471) 140,464
-------------------------------------------------------------------------
Segment profit 15,844 34,141 2,637 (7,851) (256) 44,515
Depreciation 1,734 1,938 977 920 - 5,569
Amortization - 266 - 300 - 566
Interest on
long-term debt - - - 8,524 - 8,524
Other expense
(income), net 70 544 6,769 891 - 8,274
-------------------------------------------------------------------------
Income (loss)
before income
taxes and non-
controlling
interest 14,040 31,393 (5,109) (18,486) (256) 21,582
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Three months ended August 31, 2005
Tele- Cor- Elimi- Consoli-
Radio vision Content porate nations dated
-------------------------------------------------------------------------
Revenue 65,270 83,449 27,950 - (1,390) 175,279
Direct cost of
sales, general
and administrative
expenses 49,487 52,693 26,178 5,972 (1,622) 132,708
-------------------------------------------------------------------------
Segment profit 15,783 30,756 1,772 (5,972) 232 42,571
Depreciation 1,825 2,307 838 912 - 5,882
Amortization - 465 - 664 - 1,129
Interest on
long-term debt - - - 14,285 - 14,285
Other expense
(income), net 7,882 40 (3,763) 1,136 - 5,295
-------------------------------------------------------------------------
Income (loss)
before income
taxes and non-
controlling
interest 6,076 27,944 4,697 (22,969) 232 15,980
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Twelve months ended August 31, 2006
Tele- Cor- Elimi- Consoli-
Radio vision Content porate nations dated
-------------------------------------------------------------------------
Revenue 268,367 393,349 72,125 - (7,571) 726,270
Direct cost of
sales, general
and administrative
expenses 200,015 229,109 66,572 23,998 (7,543) 512,151
-------------------------------------------------------------------------
Segment profit 68,352 164,240 5,553 (23,998) (28) 214,119
Depreciation 6,899 7,427 3,215 3,761 - 21,302
Amortization - 1,065 - 1,807 - 2,872
Interest on
long-term debt - - - 43,105 - 43,105
Debt restructuring
loss - - - 131,951 - 131,951
Other expense
(income), net 4,000 901 6,468 298 - 11,667
-------------------------------------------------------------------------
Income (loss)
before income
taxes and non-
controlling
interest 57,453 154,847 (4,130) (204,920) (28) 3,222
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Twelve months ended August 31, 2005
Tele- Cor- Elimi- Consoli-
Radio vision Content porate nations dated
-------------------------------------------------------------------------
Revenue 252,685 354,201 82,318 - (6,135) 683,069
Direct cost of
sales, general
and administrative
expenses 183,680 213,419 78,750 18,611 (6,702) 487,758
-------------------------------------------------------------------------
Segment profit 69,005 140,782 3,568 (18,611) 567 195,311
Depreciation 6,979 9,060 3,926 3,745 - 23,710
Amortization - 1,859 - 2,718 - 4,577
Interest on
long-term debt - - - 55,561 - 55,561
Other expense
(income), net 7,982 312 (3,641) (10,147) - (5,494)
-------------------------------------------------------------------------
Income (loss)
before income
taxes and non-
controlling
interest 54,044 129,551 3,283 (70,488) 567 116,957
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The Corporate segment represents the incremental cost of corporate
overhead in excess of the amount allocated to the other operating
segments.

(b) Segment assets
As at As at
August 31, August 31,
2006 2005
---------------------------------------------------------------------
Radio 706,007 713,427
Television 916,065 878,323
Content 127,999 145,947
Corporate 94,836 191,963
Eliminations (2,698) (1,296)
---------------------------------------------------------------------
1,842,209 1,928,364
---------------------------------------------------------------------
---------------------------------------------------------------------

Assets are located primarily within Canada.

10. FINANCIAL INSTRUMENTS

Fair values

The fair values of long-term debt and derivative financial
instruments have been determined as follows:

Long-term debt

The carrying value of the Company's bank loans approximates their
fair value because interest charges under the terms of the bank
loans are based on current Canadian bankers' acceptance and LIBOR
rates.

Derivative financial instruments

The estimated fair values of these agreements are as follows:

August 31, 2006 August 31, 2005
-------------------- --------------------
Carrying Estimated Carrying Estimated
value fair value value fair value
---------------------------------------------------------------------

Cross-currency agreements - - (158,838) (242,005)
Interest rate swap agreements - 1,325 - -
---------------------------------------------------------------------
---------------------------------------------------------------------

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

11. EARNINGS PER SHARE

The following is a reconciliation of the numerator and denominators
(in thousands) used for the computation of the basic and diluted
earnings per share amounts:

Three months ended Twelve months ended
August 31, August 31,
2006 2005 2006 2005
---------------------------------------------------------------------
Net income for the
period (numerator) 46,642 9,662 35,471 71,114
---------------------------------------------------------------------
---------------------------------------------------------------------

Weighted average number
of shares outstanding
(denominator)
Weighted average number
of shares outstanding -
basic 41,961 42,793 42,461 42,761
Effect of dilutive
securities 940 619 786 334
---------------------------------------------------------------------
Weighted average number
of shares outstanding -
diluted 42,901 43,412 43,247 43,095
---------------------------------------------------------------------
---------------------------------------------------------------------

12. CONSOLIDATED STATEMENTS OF CASH FLOWS

Interest paid, interest received and income taxes paid and classified
as operating activities are as follows:

Three months ended Twelve months ended
August 31, August 31,
2006 2005 2006 2005
---------------------------------------------------------------------
Interest paid 8,360 37 61,025 53,855
Interest received 376 1,085 2,643 2,995
Income taxes paid 12,451 6,904 38,218 36,279
---------------------------------------------------------------------
---------------------------------------------------------------------

13. FOREIGN EXCHANGE GAINS AND LOSSES

The Company has reflected certain gains and losses in its
consolidated statements of income (loss) and retained earnings as a
result of exposure to foreign currency exchange rate fluctuations. A
portion of these gains and losses relates to operating activities
while other portions are of a financing nature. Foreign exchange
gains and losses are reflected in the consolidated financial
statements as follows:

Three months ended Twelve months ended
August 31, August 31,
2006 2005 2006 2005
---------------------------------------------------------------------
Direct cost of sales,
general and administrative
expenses 212 (179) (511) (829)
Other income, net 185 815 487 (3,338)
---------------------------------------------------------------------
Total foreign exchange loss
(gains) 397 636 (24) (4,167)
---------------------------------------------------------------------
---------------------------------------------------------------------

An analysis of the cumulative translation adjustment shown separately
in shareholders' equity is as follows:

---------------------------------------------------------------------
Balance, August 31, 2005 (10,009)
Effect of exchange rate fluctuation on translation
of net assets of self-sustaining foreign operations (1,519)
---------------------------------------------------------------------
Balance, August 31, 2006 (11,528)
---------------------------------------------------------------------
---------------------------------------------------------------------

14. SUBSEQUENT EVENTS

On July 13, 2006 Corus and Astral Media announced that they had
reached an agreement to purchase the remaining 20% of TELETOON
network from Cookie Jar Entertainment. The deal, which received
Canadian Radio-television and Telecommunications Commission ("CRTC")
approval on August 28, 2006, will give both Corus and Astral Media a
50% ownership in the network. The purchase price for Cookie Jar
Entertainment's 20% stake is approximately $96,000. The transaction
was completed subsequent to the end of fiscal 2006.

On September 12, 2006 the Company announced a new organizational
structure for its Television and Content divisions, including
relocating the Movie Central operation from Edmonton to Toronto.
These changes will result in severance and other restructuring
expenses of approximately $5,000 to be recorded in the first quarter
of fiscal 2007.

On October 2, 2006 the Company announced that it has reached an
agreement to buy two radio stations from CanWest MediaWorks. The
transaction is subject to approval by the CRTC and the acquisition
price for the two stations is approximately $15,000.

15. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS

Certain comparative consolidated amounts have been reclassified from
those previously presented to conform to the presentation of the
fiscal 2006 consolidated financial statements.

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