SELECTED ANNUAL FINANCIAL INFORMATION

(in thousands of $ except for per-share data)	2006	2005	2004
Revenues	593,650	549,610	518,737
EBITDA(1)	191,745	172,616	154,536
Earnings from continuing operations before income taxes	175,501	159,156	138,658
Net earnings from continuing operations	123,759	104,446	77,167
Net earnings	123,507	107,595	74,184
Weighted average number of shares outstanding - basic	53,800	55,864	55,638
Earnings per share from continuing operations - basic	2.30	1.87	1.39
Earnings per share from continuing operations - diluted	2.26	1.84	1.37
Earnings per share - basic	2.30	1.93	1.33
Earnings per share - diluted	2.26	1.90	1.31
Cash and cash equivalents, and short-term investments	113,686	100,870	73,899
Long-term debt	—	—	—
Total assets	1,400,360	1,378,375	1,319,518
Cash dividends per share (Class A and B shares)	0.30	0.20	0.15

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").

The variances over the two most recent years that are explained throughout this MD&A relate to financial results excluding the impact of future income tax rate changes that occurred during Fiscal 2006. The impact resulting from future income tax rate changes is explained in the Income Taxes section.

The most significant variances between Fiscal 2005 and 2004 pertain to the growth of advertising revenue in all three segments of the Company as well as the growth of subscription-related revenue, both in pay and specialty television. Fiscal 2005 also included three months of additional revenues related to five regional FM radio stations obtained from Corus Entertainment Inc. ("Corus") on May 29, 2005 (see note 3 of the audited consolidated financial statements).

CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS

		3 months			12 months
(in thousands of $ except for per-share data)	2006	2005	% Change	2006	2005	% Change
Revenues	146,097	139,971	4%	593,650	549,610	8%
Operating expenses	95,755	93,535	2%	401,905	376,994	7%
EBITDA(1)	50,342	46,436	8%	191,745	172,616	11%
Depreciation and amortization	8,036	4,123	95%	19,629	15,732	25%
Interest income, net	(1,236)	(702)	76%	(3,385)	(2,272)	49%
Earnings before income taxes	43,542	43,015	1%	175,501	159,156	10%
Income tax provision before undernoted net   future income tax recovery(2)	14,377	14,706	-2%	60,533	54,710	11%
Net earnings before undernoted net   future income tax recovery(2)(3)	29,165	28,309	3%	114,968	104,446	10%
Net future income tax recovery resulting from   income tax rate changes(2)	(23,606)	—	n/a	(8,791)	—	n/a
Net earnings from continuing operations	52,771	28,309	86%	123,759	104,446	18%
Earnings per share - basic before undernoted   impact of future income tax rate changes(2)(3)	0.55	0.51	8%	2.14	1.87	14%
Earnings per share - impact of future income tax   rate changes(2)	0.44	—	n/a	0.16	—	n/a
Earnings per share - basic	0.99	0.51	94%	2.30	1.87	23%
Weighted average number of shares outstanding -   basic	53,357	55,306	n/a	53,800	55,864	n/a
Cash flow from continuing operations(3)	43,632	40,380	8%	145,143	130,836	11%

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").
(2) See "Income Taxes".
(3) See "Supplementary Measures" section.

OVERALL ANALYSIS

Revenues
Television revenues are derived from subscription fees, advertising sales and pay-per-view sales. Pay-television subscription revenues tend to follow the growth trend of digital television subscribers in the same markets, while specialty television subscriber revenues generally show lower growth rates as the networks are distributed on high-penetration analog and digital tiers. Television and Radio advertising revenues are derived from advertising aired on the Company's broadcasting properties and they vary according to market conditions, the quality of programming and the effectiveness of the sales organization. Outdoor Advertising revenues are derived from the sale of advertising on the Company's inventory of outdoor panels and are influenced by the number of panels in inventory, their location and size, occupancy levels and, market and general economic conditions.

Revenues are detailed as follows:

		3 months			12 months
(in thousands of $)	2006	2005	% Change	2006	2005	% Change
Subscription related - Television	86,702	81,570	6%	340,927	316,785	8%
Advertising
Television	15,161	15,553	-3%	80,279	74,453	8%
Radio	29,430	28,423	4%	118,465	110,361	7%
Outdoor Advertising	12,301	12,347	—	46,963	42,152	11%
Total Advertising	56,892	56,323	1%	245,707	226,966	8%
Other	2,503	2,078	20%	7,016	5,859	20%
Total Revenues	146,097	139,971	4%	593,650	549,610	8%

Subscription-related revenue gains were driven by subscriber growth, both in pay and specialty television. Advertising revenues for the year also increased over those of last year in all of the Company's businesses. Market growth, effective sales organizations and favourable ratings are responsible for the growth.

Operating Expenses
The increase of operating expenses in Fiscal 2006 is attributable to higher programming charges in Television, salary increases and other operating expenses. The Company's most significant operating expenses are television programming costs which totaled $202.0 million in Fiscal 2006 compared to $191.3 million in Fiscal 2005, and salaries and benefits which amounted to $119.9 million in Fiscal 2006 compared to $110.1 million in the prior year. Variances are explained in the "Business Segment Performance" section.

EBITDA⁽¹⁾
The Company's EBITDA has increased due to higher subscriber revenues in Television and higher advertising revenues in all segments. The overall EBITDA margin for Fiscal 2006 increased from 31.4% to 32.3%, while the EBITDA margin for the fourth quarter increased from 33.2% to 34.5%, driven mainly by increases in subscription-related revenues.

EBITDA⁽¹⁾by Segment

		3 months			12 months
(in thousands of $)	2006	2005	% Change	2006	2005	% Change
Television	38,731	37,636	3%	155,529	139,253	12%
Radio	11,581	8,308	39%	41,123	36,724	12%
Outdoor Advertising	5,688	5,367	6%	15,456	12,990	19%
Corporate	(5,658)	(4,875)	16%	(20,363)	(16,351)	25%
EBITDA(1)	50,342	46,436	8%	191,745	172,616	11%
EBITDA margin(2)	34.5%	33.2%	4%	32.3%	31.4%	3%

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").
(2) See "Supplementary Measures".

EBITDA by segment is reviewed in the "Business Segment Performance" section.

Depreciation and Amortization
During the second quarter of Fiscal 2006, the Company launched a new musical website-based radiolibre.ca, the development of which began in the fourth quarter of Fiscal 2005. All development costs for the website were capitalized as pre-operating costs. During the fourth quarter of Fiscal 2006, the Company reviewed the assumptions supporting the recoverability of the project costs, including related property, plant and equipment, and the project's discounted estimated future cash flows. As a result, an impairment charge of $4.2 million was recorded in depreciation ($1.3 million) and in amortization of deferred charges ($2.9 million) on the audited consolidated statement of earnings and retained earnings for the year ended August 31, 2006.

The increases in depreciation of property, plant and equipment ($1.2 million for the fourth quarter and $1.8 million for the year) and in the amortization expense ($2.7 million for the fourth quarter and $2.1 million for the year) are essentially attributable to the previously explained impairment charge of $4.2 million related to radiolibre.ca. Excluding this impairment charge, the amortization expense has decreased as compared to last year's due mainly to certain deferred charges that became fully amortized in the course of Fiscal 2005.

Interest
Interest income is shown net of expenses in the audited consolidated statements of earnings and retained earnings. Interest income is earned on cash, cash equivalents and short-term investments. Interest expense includes mainly stand-by fees on the Company's credit facilities. The increase in net interest income is due to the increase in cash balances and the increase of interest rates, as well as a reduction of stand-by fees. The interest rates relating to income earned on cash, cash equivalents and short-term investments in Fiscal 2006 varied between 2.0% and 4.3%.

Income Taxes
The effective income tax rate for the year of 29.5% is lower than the statutory rate of 34.1% due mainly to a net non-cash future income tax recovery of $8.8 million recorded in the fiscal year, and resulting from enacted changes in the Québec and Federal general corporate income tax rates, as explained below.

On June 22, 2006, the Federal government enacted a decrease in the general corporate income tax rate from 22.12% to 19.00% to be phased in between January 1, 2008 and January 1, 2010. On December 13, 2005, the Québec government enacted an increase in the general corporate income tax rate from 8.9% to 11.9% which is being phased in between January 1, 2006 and January 1, 2009. Accordingly, the Company was required to re-measure its future income tax assets and liabilities using the newly enacted corporate income tax rates over which the Company has no control, taking into account the rates anticipated to be in effect when the respective future income tax assets are realized or liabilities are settled. This resulted in a non-cash future income tax recovery of $23.6 million ($0.44 per share) recorded in the fourth quarter of Fiscal 2006 and a non-cash future income tax expense of $14.8 million ($0.28 per share) recorded in the first quarter of Fiscal 2006. Changes in future income tax rates thus resulted in a net recovery of $8.8 million ($0.16 per share) in the audited consolidated statement of earnings and retained earnings for the year ended August 31, 2006.

Excluding the net future income tax recovery resulting from the changes in the Québec and Federal general corporate income tax rates, the effective income tax rate for the year would have been 34.5% which is slightly higher than the statutory rate of 34.1% and last year's rate of 34.4%, mainly due to the non-deductible stock-based compensation expense, partly offset by the impact of changes in the geographical allocation of the Company's taxable income. For the fourth quarter of Fiscal 2006, excluding the future income tax recovery resulting from the changes in the Federal general income tax rate, the effective income tax rate would have been 33.0% which is lower than the statutory rate of 34.1% and last year's rate of 34.2% due to the impact of changes in the geographical allocation of the Company's taxable income, partly offset by the increase of the non-deductible stock-based compensation expense.

Net Earnings and Earnings per Share ("EPS") from Continuing Operations
Excluding the impact of the net non-cash future income tax recovery related to the previously explained changes in the Québec and Federal general corporate income tax rates, increases in both net earnings and EPS, as compared to last year, are due mainly to higher EBITDA⁽¹⁾. Net earnings growth on this basis is lower than the EBITDA growth due mainly to the non-recurring impairment charge of $4.2 million ($2.9 million net of income tax recovery) recorded in the fourth quarter of Fiscal 2006 related to the radiolibre.ca musical website project (see "Depreciation and Amortization"). Excluding this impairment charge, net earnings growth from continuing operations, before the impact of future income tax rate changes, would have been 13% for the year and for the quarter. This also resulted in $0.05 reduction of EPS for both the quarter and the year. Excluding the impairment charge, EPS growth from continuing operations, before the impact of future income tax rate changes, would have been 17% for the year (18% for the fourth quarter). On this basis, EPS growth is higher than the growth of net earnings, due to a decrease of the weighted average number of shares outstanding in Fiscal 2006 as compared to last year, mainly as a result of shares repurchased under the Company's normal course issuer bids announced on December 8, 2004 and December 7, 2005.⁽²⁾

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").
(2) See "Financial Condition".

Discontinued Operations
In Fiscal 2006, a loss of $0.3 million was recorded in discontinued operations as a result of additional costs incurred during the year in connection with the exchange of the Company's AM radio assets in the province of Québec and its CFOM-FM station in Quebec City (see notes 3 and 4 of the audited consolidated financial statements).

In Fiscal 2005, results and cash flows from the operation of these stations were included in discontinued operations until May 29, 2005, on which date the asset exchange transaction was closed.

Also in Fiscal 2005, the Company recorded an income tax benefit of $4.9 million related to a prior year's capital loss incurred by the Company with regards to a previously discontinued operation. The Company also received additional consideration totalling $315,000 related to the sale in Fiscal 2004 of its investment in Artech Digital Entertainments Inc. (see note 4 of the audited consolidated financial statements).

Net Earnings and EPS
Net earnings and EPS include the net earnings or loss from discontinued operations.

BUSINESS SEGMENT PERFORMANCE

Television

		3 months			12 months
(in thousands of $)	2006	2005	% Change	2006	2005	% Change
Revenues	104,366	99,201	5%	428,222	397,097	8%
Operating expenses	65,635	61,565	7%	272,693	257,844	6%
EBITDA(1)	38,731	37,636	3%	155,529	139,253	12%
EBITDA margin(2)	37.1%	37.9%	-2%	36.3%	35.1%	3%

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").
(2) See "Supplementary Measures".

The Television segment performed strongly in Fiscal 2006 due to the growth of advertising sales and increases in the number of pay and specialty television subscribers which generated commensurate revenue gains of 8%. These increases resulted from the continuing expansion of digital distribution services, high-quality and exclusive programming, and strong brand recognition.

Pay-television revenues (The Movie Network ("M"), Super Écran ("S"), Mpix and cinépop) increased by 9% both in the quarter and in the year. The number of pay-television subscribers as at August 31, 2006 increased by 6% year-over-year as compared to a 5% increase as at August 31, 2005. In Fiscal 2006, Super Écran was number one amongst all pay and specialty services in Québec in the 25-54 age category.⁽³⁾

Revenues from Astral's specialty television networks rose by 1% for the fourth quarter and 6% for the year. Specialty television advertising revenues decreased by 3% for the quarter and increased by 8% for the year, while specialty subscriber revenue growth was 3% for the quarter and 6% for the twelve-month period. In Fiscal 2006, Family was the number one network in reaching children 8-14 and teens 12-17 in Canada.⁽⁴⁾ For Fiscal 2006, the Canadian specialty television market grew by an estimated 10% year-over-year, while the overall Québec French television advertising market grew by 5%. Despite the return of NHL hockey and the broadcast of the 2006 Winter Olympics, Astral's French specialty networks maintained their market share. The strong performance of Astral's specialty television networks is owed mainly to targeted (made-to-measure) original programming, favourable ratings, focused sales strategies and optimal inventory management. The Company's television advertising revenues accounted for 19% of total Television revenues in both Fiscal 2006 and Fiscal 2005.

Television operating expenses for the fourth quarter were 7% higher than those of last year (6% for the year) due mainly to higher programming costs. These costs vary according to the number of subscribers and to Canadian content ("Cancon") spending requirements which are calculated as a percentage of the prior year's revenues. Programming costs have risen mainly in accordance with the higher number of subscribers and related revenues generated by the Company's pay networks, as well as increased advertising and subscription revenues from its specialty networks, and as a result of the launch of cinépop.

The EBITDA margin of Astral's Television group is amongst the highest in the industry. The Television EBITDA margin for the quarter and for the year has increased as a result of higher advertising and subscriber revenues and effective cost containment measures implemented to mitigate the impact of additional programming spending requirements.

On November 1, 2005, the Company launched cinépop, a national French-language digital pay-television service that is dedicated to the movie lover, offering a variety of movies from all eras, as well as related programming. Pre-operation costs for the service were capitalized until March 2006 when it started generating revenues. The network will incur operating losses in the early years following its launch, which are not expected to be material. In Fiscal 2006, cinépop incurred an EBITDA loss of $1.4 million ($0.6 million for the quarter). Excluding this loss, the Television EBITDA margin was 37.6% for the quarter and 36.6% for the year.

(3) Source: BBM, Québec francophone, all day, August 29, 2005-August 27, 2006.
(4) Source: Nielsen Media Research, English cable & satellite households, August 29, 2005-August 27, 2006.

Radio

		3 months			12 months
(in thousands of $)	2006	2005	% Change	2006	2005	% Change
Revenues	29,430	28,423	4%	118,465	110,361	7%
Operating expenses before undernoted adjustment	17,849	17,571	2%	77,342	72,176	7%
EBITDA(1) before undernoted adjustment	11,581	10,852	7%	41,123	38,185	8%
EBITDA margin(2) before undernoted adjustment	39.4%	38.2%	3%	34.7%	34.6%	—
Retroactive increase of music royalty fees	—	2,544(3)	n/a	—	1,461	n/a
EBITDA(1)	11,581	8,308	39%	41,123	36,724	12%
EBITDA margin(2)	39.4%	29.2%	35%	34.7%	33.3%	4%

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").
(2) See "Supplementary Measures".
(3) Includes $1.5 million to provide for the impact of rate increases over the period prior to Fiscal 2005 and $1.0 million
     for the first nine months of Fiscal 2005.

Astral's radio stations in the province of Québec recorded a revenue increase of 5% for the quarter and 9% for the year (4% for the year excluding revenues in the first nine months of Fiscal 2006 from the five FM stations obtained from Corus at the end of the third quarter of Fiscal 2005), while the overall Québec radio market increased by approximately 4% for the quarter and 6% for Fiscal 2006.

Excluding the impact in Fiscal 2005 of legislated retroactive royalty fee increases (see below), Radio's operating expenses for the fourth quarter increased by 2% as compared to last year's corresponding period. Radio's operating expenses for the year were higher than last year's mainly as a result of the integration of the five FM radio stations obtained from Corus. Excluding the operating expenses related to the stations obtained from Corus, Radio's operating expenses increased by 3% for the year ended August 31, 2006 as compared to the prior year.

On October 14, 2005, the Copyright Board of Canada issued a decision setting the amount of royalties that commercial radio stations are required to pay for the use of music. The decision provides for an increase of approximately 30% in the amount of fees payable under two separate tarifs (Society of Composers, Authors, and Music Publishers of Canada ("SOCAN") and the Neighbouring Rights Collective of Canada ("NRCC")), and is retroactive to January 1, 2003. For the year ended August 31, 2006, the impact of the decision is a fee increase of $1.4 million ($0.2 million for the fourth quarter). In the fourth quarter of Fiscal 2005, the Company recorded a charge of $2.9 million in order to fully provide for the impact of rate increases covering the period of January 1, 2003 to August 31, 2005.

Astral Media Radio's EBITDA margin is amongst the highest in the industry. For the fourth quarter, Radio's EBITDA margin was 39.4%, compared to last year's corresponding EBITDA margin of 38.2%, excluding the retroactive royalty charge recorded in the fourth quarter of Fiscal 2005. For the twelve-month period, excluding the impact in Fiscal 2006 of the integration of the five FM stations obtained from Corus, the Radio group recorded an EBITDA margin of 35.3% compared to 34.6% for last year, excluding the retroactive increase of music royalty fees.

Outdoor Advertising

		3 months			12 months
(in thousands of $)	2006	2005	% Change	2006	2005	% Change
Revenues	12,301	12,347	—	46,963	42,152	11%
Operating expenses	6,613	6,980	-5%	31,507	29,162	8%
EBITDA(1)	5,688	5,367	6%	15,456	12,990	19%
EBITDA margin(2)	46.2%	43.5%	6%	32.9%	30.8%	7%

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").
(2) See "Supplementary Measures".

Astral Media Outdoor posted strong revenue and EBITDA increases in Fiscal 2006, despite intense competition in the industry. Revenue growth was mainly attributable to the improved performance in the Montréal and Toronto markets which saw increases in both pricing and occupancy levels. Through prudent and highly focused expansion in prime locations, Astral Media Outdoor has been able to strengthen its position in both markets. The increase in operating expenses for the year is mainly due to the rental costs of new advertising panels built in Fiscal 2005 and 2006 and to the variable costs related to the increase of revenues. Increases in rental costs for renewed leases have stabilized and did not have a significant impact on operating expenses. The increase of EBITDA is mainly attributable to the increase in revenues.

On February 13, 2006, Astral Media Outdoor launched a new entertainment network at Montréal-Trudeau Airport. The network delivers mainly entertainment and information content via 80 flat screen monitors in various areas of the airport.

Corporate EBITDA⁽¹⁾

		3 months			12 months
(in thousands of $)	2006	2005	% Change	2006	2005	% Change
Corporate costs	(4,117)	(4,109)	—	(15,033)	(13,748)	9%
Stock-based compensation	(1,541)	(766)	101%	(5,330)	(2,603)	105%
Corporate EBITDA(1)	(5,658)	(4,875)	16%	(20,363)	(16,351)	25%

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").

Total Corporate EBITDA charges increased by $0.8 million in the fourth quarter of Fiscal 2006 and $4.0 million for the year compared to the same periods last year. Of these amounts, $0.8 million for the fourth quarter and $2.7 million for the year are attributable to higher expenses resulting from the accounting for non-cash stock-based compensation costs, mainly related to grants made in the second quarter of both Fiscal 2005 and Fiscal 2006. The increase in other Corporate costs is due mainly to increased salaries and miscellaneous general expenses.

QUARTERLY PERFORMANCE
Approximately 60% of the Company's revenues are subscriber-based revenues that do not vary significantly on a quarter-to-quarter basis. The remaining 40% consists mostly of advertising revenues that tend to follow seasonal patterns, with the second quarter being the least favourable.

Operating expenses are generally stable on a quarter-to-quarter basis as they tend to be incurred evenly over the year. The resulting quarterly EBITDA margins will therefore tend to vary on the basis of advertising revenue fluctuations.

Quarterly performance should therefore be interpreted taking the above factors into consideration.

The following table highlights the Company's quarterly performance for the past two years:

			2006
(in thousands of $ except for per-share data)	Quarter 1(1)	Quarter 2	Quarter 3	Quarter 4(1)	Total(1)
Revenues	153,830	138,189	155,534	146,097	593,650
EBITDA(2)	48,730	38,437	54,236	50,342	191,745
Net earnings from continuing operations	30,039	22,541	33,223	29,165	114,968
EPS from continuing operations - basic	0.55	0.42	0.62	0.55	2.14
EPS from continuing operations - diluted	0.54	0.41	0.61	0.54	2.10
Net earnings	30,039	22,541	33,223	28,913	114,716
EPS - basic	0.55	0.42	0.62	0.55	2.14
EPS - diluted	0.54	0.41	0.61	0.54	2.10

			2005
(in thousands of $ except for per-share data)	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Revenues	139,958	125,730	143,951	139,971	549,610
EBITDA(2)	42,474	34,432	49,274	46,436	172,616
Net earnings from continuing operations	25,576	20,373	30,188	28,309	104,446
EPS from continuing operations - basic	0.46	0.36	0.54	0.51	1.87
EPS from continuing operations - diluted	0.45	0.36	0.53	0.50	1.84
Net earnings	25,220	19,438	29,623	33,314	107,595
EPS - basic	0.45	0.35	0.53	0.60	1.93
EPS - diluted	0.44	0.34	0.52	0.59	1.90

(1) Before impact of future income tax rate changes (see "Income Taxes" and "Supplementary Measures").
(2) Earnings before interest, taxes, depreciation and amortization ("EBITDA") (see "Supplementary Measures").