Company Exceeds All Financial Targets For The Year

YEAR-END HIGHLIGHTS:

  • Net income of $40 million
  • Earnings per share of $0.94
  • Consolidated EBITDA** up 32%
  • Positive cash flow on Nelvana
  • Cash flow target exceeded
  • Advertising revenue growth of 7% for Radio and 9% for Television

(Toronto, Canada) Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) announced strong gains in Net Income and EBITDA for the fourth quarter and full year. Outstanding performances were achieved from its Television and Radio divisions which delivered pro forma EBITDA growth of 18% and 10%, respectively for the year, exceeding targets despite a volatile economy. The Content division performed up to expectations, recovering strongly from last year’s loss with a solid profit and positive cash flow while transitioning to a new management team and a new strategy.

“This has been an excellent year for Corus,” said John Cassaday, President and CEO. “We delivered top line growth, despite the negative impact in Canada of a number of unforeseen events, including war uncertainties and SARS. Our exceptional performance in growing earnings and delivering cash flow of $35.0 million for the year reflects our efforts to integrate our assets and focus the entire organization on operational improvement.”

Fourth Quarter Results

Consolidated revenues for the fourth quarter ending August 31, 2003 was $175.1 million, up 2% compared to $171.8 million a year ago*. Increased revenues in the Television and Radio divisions were offset by lower production and distribution revenues in the Content division as the result of a planned decrease in production. Net income for the quarter was $12.4 million or $0.29 per share, up from a loss of $189.9 million or loss per share of $4.45 last year.

EBITDA for the quarter grew significantly to $41.7 million compared to $4.4 million last year. Television and Radio achieved EBITDA growth of 24% and 9% respectively and Content reduced its EBITDA loss to $0.9 million in 2003 from $32.3 million last year. The Company’s EBITDA margin for the fourth quarter improved to 24% from 3% last year.

“We saw good revenue growth in the fourth quarter from the Radio division and from both our youth and adult targeted television networks, pointing to positive momentum in the ad market for fiscal 2004.”

Corus Radio revenues increased to $57.7 million for the quarter, up 4% from $55.5 million last year driven by a 7% increase in national advertising sales for the quarter. EBITDA was $16.6 million, up 9% from $15.3 million last year. Radio EBITDA margins for the quarter grew to 29% from 28% last year.

Television revenues for the quarter were $75.2 million, up 2% from $73.7 million last year reflecting strong growth in advertising revenues, up 6% for the quarter. EBITDA for the fourth quarter grew by 24% to $29.3 million from $23.6 million last year. EBITDA margin for the quarter improved to 39% from 32% last year.

Fourth quarter results for the Content division show a decline in revenue of 3% to $44.1 million from $45.5 million last year. Nelvana’s results for the quarter reflect a 33% decline in production revenue, as a result of a planned decrease in production deliveries. This was largely offset by a significant increase in merchandising revenues from the Branded Consumer Products business, reinforcing the value of Nelvana’s new growth strategy. EBITDA for the quarter was a loss of $0.9 million, as compared to a loss of $32.3 million in the fourth quarter of last year.

Full Year Results

Fiscal 2003 consolidated revenues were $643.9 million, down 5% from $674.5 million due to several business divestitures in 2002 and 2003 and the planned reduction in Nelvana’s production slate. On a pro forma basis, revenues were up 2% over the previous year reflecting the advertising growth from Corus’ core radio and television assets. Net income for the year was $40.0 million or $0.94 per share, compared to a loss of $168.6 million or $3.96 per share last year.

Consolidated EBITDA was strong for the year, up 32% to $165.3 million from $125.6 million in fiscal 2002. On a pro forma basis, EBITDA was up 38% from $119.7 million last year. EBITDA margin ended the year at 26% compared to 19% last year.

Year-end results for the Radio division showed strong gains in national and local sales for the year, driving an increase in overall Radio revenues of 7% to $226.0 million in fiscal 2003 from $211.4 million last year. EBITDA for the year grew 10% to $58.1 million, up from $52.9 million last year. Corus Radio ended the year with a 26% EBITDA margin, up from 25% a year ago.

The Television division enjoyed impressive audience growth in fiscal 2003, posting a 40% increase in adult viewers age 25-54 across the specialty analog services, YTV, W Network and CMT. Overall, television revenues for the year were down 1% over prior year at $306.9 million, mainly due to the loss in revenue from the disposition of Viewers’Choice in fiscal 2002. On a pro forma basis, overall television revenues were up 2% reflecting advertising revenue growth of 5%, led by W Network’s strong performance. Despite premium subscriber declines in Spring/Summer 2002 due to pricing activities by broadcast distribution undertakings, Movie Central, Corus’ western-based pay television service, finished the year with 658,000 subscribers, up 8% from the prior year. Television EBITDA grew 14% in the year to $113.4 million from $99.1 million last year. On a pro forma basis, EBITDA increased by 18%. EBITDA margin was 37% compared to 32% on a pro forma basis, reflecting the division’s ability to maximize synergies and cost efficiencies across its services.

The Content division delivered revenues for the year of $116.3 million, down 27% from $159.9 million in fiscal 2002. The full year fiscal 2003 results do not reflect the operations of Klutz, the U.S. publishing business, which was disposed of in fiscal 2002. On a pro forma basis, Content revenues were down 6%, in line with expectations based on a reduced production slate and a shift in strategy towards a market-driven consumer products business model. For the Branded Consumer Products business, revenues were up 89% on a pro forma basis for the year, driven by strong merchandising sales from Beyblade and Rescue Heroes during the year. EBITDA for the year was $3.2 million, up from a loss of $21.0 million last year (loss of $24.2 on a pro forma basis) and the division delivered EBITDA margin of 3% compared to a negative margin on a pro forma basis last year. The Content division also exceeded its target of a cash flow neutral position in its operations.

“Corus set clear targets and strategies at the outset of this fiscal year and we’re very pleased that we’ve exceeded these targets,” added Heather Shaw, Executive Chair of Corus Entertainment. “The Company has demonstrated its ability to integrate and effectively operate the assets it has assembled and deliver value to its shareholders. Corus is well positioned to benefit from continued growth in the Canadian advertising sector.”

Corus Entertainment is a Canadian-based media and entertainment company. Corus is a market leader in both specialty TV and Radio. Corus also owns Nelvana Limited, a leading international producer and distributor of children’s programming and products. The company’s other interests include publishing, television broadcasting and advertising services. A publicly traded company, Corus is listed on the Toronto (CJR.B) and New York (CJR) Exchanges. Corus’ Web site can be found at www.corusentertainment.com.

* The results for the year ended August 31, 2002 have been restated to adopt the proportionate consolidation of certain investments and amended Canadian accounting standard for foreign currency translation.

** EBITDA is provided to assist investors in determining the ability of the Company to generate cash from operations to cover financial charges before income and expense items from investing activities, income taxes and items not considered to be in the ordinary course of business. It is also widely used for valuation purposes. A reconciliation of EBITDA and net income is provided in the consolidated statements of income (loss) and retained earnings (deficit). EBITDA (which corresponds to the line item “Operating income before the following in the consolidated statements of income (loss) and retained earnings (deficit)) is calculated as net income before minority interest, equity earnings from investees, income tax expense (recovery), goodwill and intangible impairment loss, asset write-downs, hedge transaction loss, restructuring charges, other expense (income), loss (gain) on sale of investments, interest on long-term debt, amortization and depreciation. A listing of these items is disclosed in the consolidated statements of income (loss) and retained earnings (deficit). These items are excluded in the determination of EBITDA as they are non-cash in nature, pre-tax, financing charges, income or expense from investing activities or are not considered to be in the ordinary course of business. EBITDA should not be considered in isolation of, or as a substitute for, (1) net income or loss, as an indicator of the Company’s operating performance, or (2) cash flows from operating, investing and financing activities, as a measure of the Company’s liquidity.

*** Pro forma information (including pro forma revenues; pro forma EBITDA and pro forma EBITDA margin) is provided to assist investors in comparing results between periods after giving effect to significant acquisitions and divestitures. In particular, results from the same period in fiscal 2002 have been adjusted to reflect operating results of all businesses reporting in the current period as if the businesses had been owned for the same number of days in the prior year. Pro forma information is provided on the basis of the Company’s reportable business segments (Television, Radio and Content) for revenues and EBITDA the measure of profitability reviewed by the chief operating decision maker of these divisions, since there were acquisitions and/or dispositions in each of these divisions during fiscal 2002 or fiscal 2003.

Certain statements in this press release may constitute forward-looking statements and are subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and specialty 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; and, changes in accounting standards. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. 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 arise after the date thereof or otherwise.

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For further information, please contact:

John Cassaday President and Chief Executive Officer Corus Entertainment Inc. (416) 642-3770

Tom Peddie Senior Vice President & Chief Financial Officer Corus Entertainment Inc. (416) 642-3780

Kerry Morgan Vice President, Communications Corus Entertainment Inc. (416) 642-3792

Financial Highlights

Full financial details are available on the Corus Entertainment Web site at www.corusentertainment.com under Financial Info.