Corus Entertainment : Annual Report 2023

annual report 2023

contents

4 Financial Highlights

6 Message to Shareholders

9 Board of Directors Executive Leadership Team

Officers

1. Corus Television Brands
2. Corus Radio Brands
3. Management's Discussion and Analysis

50 Management's Responsibility for Financial Reporting

51 Independent Auditor's Report

1. Consolidated Statements of Financial Position
2. Consolidated Statements
   of Income and Comprehensive Income
3. Consolidated Statements of Changes in Equity
4. Consolidated Statements of Cash Flows
5. Notes to Consolidated Financial Statements

103 Corporate Information

Corus Entertainment Annual Report 2023 | 3

financial highlights

2023

$1,511	$334
million	million
consolidated revenue	consolidated segment profit1

$107	22%
million	consolidated segment
free cash flow1	profit margin1

3.62x

proforma net debt to

segment profit1,2

at August 31, 2023

1 Segment profit, segment profit margin, free cash flow and proforma net debt to segment profit do not have a standardized meaning prescribed by IFRS. The Company believes these non-IFRS measures are frequently used as key measures to evaluate performance. For definitions, explanations and reconciliations refer to the "Key Performance Indicators and Non-GAAPFinancial Measures" section of Management's Discussion and Analysis on page 12.

2 Proforma net debt to segment profit ratio excludes contributions to segment profit from Toon Boom Animation Inc. for the most recent four quarters.

4 | Corus Entertainment Annual Report 2023

ANNUAL SELECTED FINANCIAL INFORMATION(1)

The following table presents summary financial information for Corus for each of the listed years ended August 31:

(in millions of Canadian dollars, except per share amounts)	2023	2022
Revenue	1,511.2	1,598.6
Segment profit (2)	334.0	443.6
Net loss attributable to shareholders	(428.8)	(245.0)
Adjusted net income attributable to shareholders (2)	28.6	106.9
Basic loss per share	($2.15)	($1.19)
Adjusted basic earnings per share (2)	$0.14	$0.52
Diluted loss per share	($2.15)	($1.19)
Free cash flow(2)	106.8	239.6
Total assets	2,746.1	3,502.5
Long-term debt (inclusive of current portion)	1,092.4	1,261.7
Cash dividends declared per share	$0.1750	$0.2350
Class A Voting
Class B Non-Voting	$0.1800	$0.2400

Notes:

1. For further information refer to Management's Discussion and Analysis on page 12.
2. Segment profit, adjusted net income attributable to shareholders, adjusted basic earnings per share, and free cash flow do not have a standardized meaning prescribed by IFRS. The Company believes these non-IFRS measures are frequently used as key measures to evaluate performance. For definitions, explanations and reconciliations refer to the "Key Performance Indicators and Non-GAAPFinancial Measures" section of Management's Discussion and Analysis on page 12.

FISCAL 2023 FINANCIAL PROFILE

Business Segment	Sources of Revenue	Business
Revenues	Segment Profit
television	advertising	television
57%
93%	96%

radio		subscriber	radio
7%		33%
distribution,	%
	production		4
	& other
	10%

Corus Entertainment Annual Report 2023 | 5

message to shareholders

This is a challenging time for our business. In an unusual year marked by an advertising recession, media industry labour actions and near-term cost pressures, we focused on navigating a difficult environment and reducing our operating costs while advancing important initiatives that position Corus for a video-first future. In the coming quarters, we are poised to benefit from the normalization of our foreign programming supply and Canadian content spending obligations, and a streamlined operating structure as we advance our strategic plan and its priorities.

Post-pandemic distortions which first materialized in mid-2022 continue to affect advertising demand across the broader media industry. These include supply chain disruptions, labour shortages, inflation, rising interest rates and shifts in consumer behaviour. We have successfully navigated similar cycles in the past, benefitting significantly from a return in advertising spending once the advertising recovery takes hold.

The Writer's Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) strikes, which impacted our Fall 2023 foreign programming supply, are now resolved (WGA) or pending ratification (SAG-AFTRA). We are excited to welcome a strong line-up of hit programming back to our prime-time schedule in the coming months, which is expected to positively impact audience levels and advertising demand.

The one-timeCOVID-19 'catch up' regulatory spending obligation which increased programming costs for fiscal 2022 and 2023 by over $50 million in aggregate is now also in the rear-view mirror.

Against this backdrop, our results for the year were:

• Consolidated revenue of $1.5 billion;
• Consolidated segment profit1 of $334 million;
• Free cash flow1 of $107 million; and
• Year-endleverage of 3.62x proforma net debt to segment profit1,2.

fit for the future

We have taken prudent actions to ensure the resiliency of our company over the longer-term. Our "Fit for the Future" initiatives demonstrate the purposeful work we are doing to streamline our operating model and rationalize our asset base.

In response to a challenging operating environment, we proactively secured amendments to our credit agreement, and redirected our use of free cash flow1 to debt repayment. This will provide additional financial flexibility while we position Corus for the expected eventual recovery in advertising and the normalization of our content supply and programming costs.

Our long-term goal to drive net debt to segment profit1 below 2.5 times is our priority. We have paid down $912 million of total debt in the last five years, demonstrating a consistently strong commitment to financial and operating discipline.

We have tenaciously implemented cost cuts and workforce structural reviews throughout the company while ensuring minimal disruption to our operations or clients. Our guiding principle is to deliver reductions quarter by quarter, as we find ways to work differently to improve productivity across all aspects of our business and lower our cost base. In the fourth quarter we rationalized our asset base, successfully completing the sale of Toon Boom Animation Inc., with net proceeds of $141 million used to pay down bank debt.

our video first strategy

At Corus, we are purposefully moving from being a Television broadcaster to a multi-platform video aggregator, delivering content everywhere our audiences are while we expand our cross-platform monetization capabilities. This is what we call our "Video First" strategy.

We see significant opportunity ahead in the large and expanding total addressable premium video advertising market. The successful renewal, extension and broadening of the rights acquired through our content supply agreements are foundational to this strategy. These targeted investments support the long-term viability of our traditional channels business while we simultaneously identify streaming opportunities in premium digital video.

Corus is pursuing a partner-led,capital-light streaming strategy. Our extensive content licensing agreements with our US studio partners provide access to the depth and breadth of content we require for our multi-platform networks, linear and digital alike. Our required Canadian content spending produces beloved local content in service of our networks and platforms in Canada while providing an opportunity to grow our content licensing revenues the world over.

6 | Corus Entertainment Annual Report 2023

Our leading portfolio of streaming platforms in Canada includes STACKTV, the Global TV App, our Global News over-the-top (OTT) news streams, TELETOON+, and now Pluto TV3. This highly complementary portfolio addresses the Subscription Video on Demand (SVOD), Advertising Supported Video on Demand (AVOD) and Free Advertising Supported Television (FAST) digital market segments and appeals to premium video subscribers, cord-cutters, cord- nevers and advertisers who want to reach them. We are actively pursuing new distribution partners to support the continued growth of these premium video services.

And finally, Pluto TV3 is now available in Canada - The most robust content launch of any international market, Paramount Global's Pluto TV features a channel line-up that pairs their content with Corus Entertainment's original Canadian content. Pluto TV is off to a great start. Corus is the domestic advertising representative for Pluto TV, which is now Canada's largest FAST platform4.

We measure our streaming and digital platforms' progress through our New Platform Revenue1 metric, which was $33 million or 13% of total Television advertising and subscriber revenue in our fourth quarter and increased to $146 million or 11% of total Television advertising and subscriber revenue for the year.

A few notable highlights of our Video-First strategy in action include:

The optimization of our Kids portfolio. Our long-lived heritage network TELETOON was rebranded as Cartoon Network on linear platforms and on STACKTV last Fall. As part of an additional channel rebrand, Corus introduced a new kids' television channel from our partners at Warner Bros Discovery, with the debut of Boomerang.

The TELETOON brand remains alive and well as TELETOON+, available as an SVOD service on Amazon Prime Video and Bell platforms, and is jam packed with fan favourite series from Warner Bros Discovery and Cartoon Network.

Two years ago, STACKTV launched Dynamic Advertising Insertion in partnership with Amazon Prime Video. This popular offering for advertisers is becoming a significant revenue contributor to our digital advertising portfolio and represents a compelling growth opportunity.

The Global TV App is a first-of-its-kind TV Everywhere product designed to improve the value proposition and viewing experience for traditional television subscribers with live and on demand access to our most popular networks and brands anytime, anywhere in one app. With the additions of Magnolia Network Canada and Lifetime this past year, the Global TV App now provides 11 channels for authenticated subscribers in Canada. And, for those who like FREE, we introduced an all new "Freeplay" section, featuring 24/7 FAST Television access to fan favourite series and movies which has meaningfully improved the Global TV App's audience delivery.

growing slate of original content

Outside of our domestic portfolio, the international content marketplace continues to evolve, providing opportunities for our owned content business. As operators of streaming platforms look to balance their production investments with more cost-effective content acquisitions, this is a perfect set up for our owned content offerings at Corus. Our growing slate of content in production and for sale benefitted from this demand, resulting in significant distribution, production and other revenue growth of 21% this past year. Original series from our content portfolio, comprised of Nelvana, Corus Studios, Aircraft Pictures and Waterside Studios, are building audiences across leading networks and streaming services in the U.S. and around the world.

Girl from "The Most Magnificent Thing"

1 Segment profit, free cash flow, net debt to segment profit, proforma net debt to segment profit, and new platform revenue do not have a standardized meaning prescribed by IFRS.

The Company believes these non-IFRS measures are frequently used as key measures to evaluate performance. For definitions, explanations and reconciliations refer to the "Key Performance Indicators and Non-GAAPFinancial Measures" section of Management's Discussion and Analysis on page 12.

2 Proforma net debt to segment profit ratio excludes contributions to segment profit from Toon Boom Animation Inc. for the most recent four quarters.

3 Corus is the domestic advertising representative and an original content partner for Pluto TV, a Paramount Company, which is the leading free ad-supported streaming television (FAST) service.

4 Source: Numeris VAM Data, Ontario, May 1, 2023 - July 30, 2023.

Corus Entertainment Annual Report 2023 | 7

advanced focus on sustainability

We remain committed to our People, Planet and Responsibility Goals and have a sound roadmap in place to advance our ESG efforts. Despite a year of distortions in the macroeconomic environment and continued evolution of the media industry, our targeted approach to ESG delivered strong results.

In 2023, our aim was to advance real change within Corus for our people, our partners and our audiences. Overall, we focused on advancing our diversity, equity and inclusion (DEI) action plan, expanding our well-being offerings for employees, augmenting our youth engagement and mentorship, focusing on energy and waste efficiencies in our direct operations to prepare for a decarbonization plan and engaging with suppliers to help pave the way for more progress on environmental and social risk due diligence.

This past year, we looked for opportunities to reduce our operating footprint, engaged with our clients and business partners on how Corus can support their ESG goals and continued to make a positive impact in our communities, while enabling our teams to grow and thrive in a respectful and inclusive workplace.

Our ESG performance over the past year is a testament to the remarkable work taking place, in our operations and in the communities in which we live and work. We look forward to advancing our sustainability goals while contributing to a sustainable, inclusive media and entertainment industry - a journey that will sharpen and strengthen Corus for the future.

view to the future

It is precisely at these moments when we see the true character of our Corus team at play. Despite a challenging year, our talented team remains steadfast in their efforts to advance our strategic priorities and support the needs of our clients and partners.

We are controlling what we can control, building on our run- rate cost savings as we continue to implement our "Fit for the Future" initiatives, designed to rationalize our asset base and streamline our operating model to improve productivity across all aspects of our business while lowering costs.

We are prudent allocators of capital and have made some difficult yet forward-thinking decisions to accelerate the repayment of debt and improve the financial flexibility of our company. Advertising is a cyclical business and, at some point in the quarters ahead, we expect a rebound in advertising demand and revenue. We will enter this rebound with a streamlined cost structure, a much-needed return to regular levels of required Canadian program spending and a normalized supply of high-quality foreign programming. Regulatory change is on the horizon, with strides towards modernization of Canadian broadcasting regulations well underway. We are actively participating in this process and support its goal to ensure a more fair and equitable broadcasting system.

In the meantime, our work continues as we move beyond being a television broadcaster to becoming an aggregator of premium digital video and building cross-platform monetization capabilities to embrace the Video First business model of the future. This model builds on our extensive relationships with world-leading studios and distributors, our 'client first' approach with advertisers and the pursuit of audiences across all video platforms. We have a well-thought- out strategy and we are confident that it is the right one for Corus to create value over the longer-term.

Doug Murphy	Heather Shaw
President and CEO	Executive Chair

8 | Corus Entertainment Annual Report 2023

board of directors

Heather Shaw

Chair of the Board of Directors

Doug Murphy

President and Chief Executive Officer

Fernand Bélisle

Independent Lead Director

Chair of the Human Resources and

Compensation Committee

Michael Boychuk*

Member of the Audit Committee

Stephanie Coyles*

Member of the Audit Committee

Member of the Corporate Governance Committee

Charmaine Crooks

Member of the Human Resources and Compensation Committee

Michael D'Avella*

Sameer Deen*

Member of the Corporate Governance Committee

Mark Hollinger

Chair of the Corporate Governance Committee

Member of the Human Resources and

Compensation Committee

Barry James

Chair of the Audit Committee

Margaret O'Brien

Member of the Audit Committee

Julie Shaw

Vice Chair of the Board of Directors

• Director has chosen to not stand for re-election at the 2024 Annual General Meeting of Shareholders as part of Corus' cost-reduction initiatives.

executive leadership team

Doug Murphy

President and Chief Executive Officer

John Gossling, FCPA, FCA

Executive Vice President and Chief Financial Officer

Cheryl Fullerton

Executive Vice President,

People and Communications

Shawn Kelly

Executive Vice President, Technology

Jennifer Lee

Executive Vice President and General Counsel

Greg McLelland

Executive Vice President and Chief Revenue Officer

Troy Reeb

Executive Vice President, Networks and Content

officers

Heather Shaw

Executive Chair

Executive Leadership Team

All members of the Executive Leadership Team are Officers of the Company.

Corus Entertainment Annual Report 2023 | 9

Corus Television

Conventional Stations

B.C.	Calgary	Regina	Durham	Montreal
Okanagan	Edmonton	Winnipeg	Peterborough	New Brunswick
Lethbridge	Saskatoon	Toronto	Kingston	Halifax

News Programming

1

Lifestyle

Drama

Kids

Original Content

Multi-platform Presence: Premium Digital Video Streaming + Digital Platforms

2

1 BC1 is a specialty network dedicated to Global News programming. 2 Corus is the domestic advertising representative and an original content partner for Pluto TV, a Paramount Company, which is the leading free ad-supported streaming television (FAST) service.

10 | Corus Entertainment Annual Report 2023