Newfoundland Capital Corporation Limited - Third Quarter 2007 - Period Ended September 30 (unaudited)



    DARTMOUTH, NS, Nov. 8 /CNW/ - Newfoundland Capital Corporation Limited
(the "Company"), one of Canada's leading radio broadcasters, today announces
its financial results for the third quarter ended September 30, 2007.

    Highlights

    The Company had a strong quarter with double digit top-line
    growth.

    
    - Revenue growth of 11% to $25.4 million in the quarter was primarily due
      to organic growth while year-to-date revenue grew by 8% to
      $71.1 million from a combination of organic and new station growth.
    - Earnings before interest, taxes, depreciation and amortization
      ("EBITDA"(1)) were $3.8 million in the quarter, ahead of last year by
      44%, or $1.1 million due to improved results in the broadcasting
      segment. Year-to-date EBITDA of $11.0 million was $1.9 million ahead of
      last year when this year's $1.3 million loss and last year's
      $7.1 million gain from marketable securities were excluded.
    - Net income of $1.3 million ($0.12 per share) in the quarter compared
      favourably to last year's nominal amount. Year to date net income of
      $14.5 million ($1.31 per share) was $5.9 million better than 2006 due
      to gains from the disposal of an equity accounted investment and the
      disposal of Halterm Income Fund Trust Units.
    - A dividend of $0.15 per share was paid in September.

    Significant events

    - In July, the Company launched "The Fox" in Edson, Alberta following the
      Canadian Radio-television and Telecommunications Commission's ("CRTC")
      approval of the Company's request to convert the AM station to FM.
    - On October 1, the Company completed the purchase of the 38% minority
      interest in Atlantic Stereo Limited, which operates the two FM licences
      in Moncton, New Brunswick, for $6.9 million.

    "One of our stated objectives this year was to take measures to increase
revenue in markets where we face new competition which we achieved. We are
very pleased to see growth across our operating portfolio, particularly
organic growth", commented Rob Steele, President and Chief Executive Officer.
He also commented: "in the most recent Trans-Canada Radio Advertising by
Market ("TRAM") Report, the Company outpaced the market with organic growth of
9% in the quarter as compared to the 0.5% growth posted by the TRAM for the
same period. The Company has a number of radio station launches planned in the
next six to twelve months and we are eager to expand in markets such as Fort
McMurray and Lac La Biche, Alberta, as well as Kentville and Sydney, Nova
Scotia".

    Financial Highlights - Third Quarter
    (thousands of dollars except share information)        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue                                           $  25,405      22,788
    EBITDA(1)                                             3,770       2,621
    Net income                                            1,332           9
    -------------------------------------------------------------------------
    Earnings per share - basic & diluted                   0.12        0.00
    Share price, NCC.A (closing)                          17.05       17.45
    Weighted average number of shares outstanding
     (in thousands)                                      11,091      11,197
    -------------------------------------------------------------------------
    Total assets                                        214,772     212,866
    Long-term debt                                       46,995      46,636
    Shareholders' equity                                100,344      89,213
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to page 13 for the reconciliation of EBITDA to net income.


    Management's Discussion and Analysis

    The following interim discussion and analysis of financial condition and
results of operations of Newfoundland Capital Corporation Limited (the
"Company") has been prepared as of November 8, 2007. The purpose of the
Management's Discussion and Analysis ("MD&A") is to provide readers with
additional complementary information regarding the Company's financial
condition and results of operations and should be read in conjunction with the
unaudited interim consolidated financial statements and related notes for the
periods ended September 30, 2007 and 2006 as well as the annual audited
consolidated financial statements and related notes and the MD&A contained in
the Company's 2006 Annual Report. These documents along with the Company's
Annual Information Form and other public information are filed electronically
with various securities commissions in Canada through the System for
Electronic Document Analysis and Retrieval ("SEDAR") and can be accessed at
www.sedar.com.
    Management's discussion and analysis of financial condition and results of
operations contains forward-looking statements. By their very nature, these
statements involve inherent risks and uncertainties, many of which are beyond
the Company's control, which could cause actual results to differ materially
from those expressed in such forward-looking statements. Readers are cautioned
not to place undue reliance on these statements. The Company disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

    Corporate profile

    The Company is one of Canada's leading radio broadcasters with 76 licences
across Canada. The Company reaches millions of listeners each week through a
variety of formats and is a recognized industry leader in radio programming,
sales and networking.

    Strategy and objectives

    The overall goal is to increase value for shareholders. To accomplish
this, the Company seeks to achieve growth by adding new licences to its
portfolio of assets through business and licence acquisitions and through the
Canadian Radio-television and Telecommunications Commission ("CRTC") licence
application process, by converting AM stations to FM, and by maximizing
returns on existing operations. The section below describes some of the
Company's developments to date.

    Corporate developments

    The corporate developments below should be considered when reviewing the
"Overview of consolidated operating results" section.

    2007 developments

    - January 19, 2007 - the Company's investment in Halterm Income Fund
      Trust Units was disposed of for $14.5 million resulting in a gain on
      disposal of $10.8 million. The proceeds were used to repay long-term
      debt.
    - February 1, 2007 - the CRTC approved the Company's application to
      convert its AM signal to FM in Edson, Alberta. The FM station has been
      on-air since July featuring classic hits.
    - March 19, 2007 - the Company successfully launched the new Calgary,
      Alberta FM station, FUEL 90.3, featuring an adult album alternative
      format. Upon the launch date, the Company capitalized the costs that
      were associated with obtaining the new licence in the amount of
      $4.9 million. Additional information is contained in Note 3 of the
      unaudited interim consolidated financial statements.
    - April 4, 2007 - the Company's request to convert its AM station in
      Halifax, Nova Scotia to FM was approved. The CRTC imposed certain
      conditions associated with this approval. The Company is currently
      examining its options with respect to the conditions.
    - April 12, 2007 - the Company disposed of its 29.9% interest in Larche
      Communications (Kitchener) Inc. which operates an FM radio station in
      Kitchener-Waterloo, Ontario for proceeds of $4.0 million resulting in a
      gain on disposal of $3.8 million.
    - May 16, 2007 - the Company now owns 100% of one of its subsidiaries,
      3937844 Canada Inc., having acquired the minority shareholder's 23.7%
      interest for cash consideration of $10.7 million. As a result,
      $0.5 million was added to the value of broadcast licences.
      3937844 Canada Inc. owns and operates 21 of the Company's 33 licences
      throughout the province of Alberta. Additional information is contained
      in Note 3 of the unaudited interim consolidated financial statements.
    - July 4, 2007 - the Company received approval by the CRTC to convert its
      AM licence to FM in Carbonear, Newfoundland and Labrador. The FM
      station will be launched within six months.
    - July 6, 2007 - the CRTC approved the Company's application for two new
      FM licences in Nova Scotia, one in Sydney and one in Kentville. The
      work required to launch these stations is in progress with official
      launch dates expected to be within the next twelve months.
    - October 1, 2007 - subsequent to quarter end, the Company acquired the
      37.8% non-controlling interest in Atlantic Stereo Limited which
      operates the two FM licences in Moncton, New Brunswick for cash
      consideration of $6.9 million.  The Company now owns 100% of this
      subsidiary.

    2006 developments

    - January 18, 2006 - awarded a new FM radio licence in Lac La Biche,
      Alberta. This is the first commercial radio station to serve this
      community and is expected to launch in the fourth quarter of 2007.
    - March 10, 2006 - awarded full-station status, from repeater status, in
      Bonnyville, Alberta which allows the Company to originate and broadcast
      from that community. KOOL-FM, featuring contemporary hits, was launched
      in May 2006.
    - March 23, 2006 - the CRTC approved the purchase of CKJS Limited which
      held the CKJS-AM broadcast licence in Winnipeg, Manitoba. The
      transaction was completed April 30, 2006 for aggregate consideration of
      $2.3 million. Additional information is contained in Note 3 of the
      unaudited interim consolidated financial statements.
    - March 24, 2006 - awarded an FM radio licence in Charlottetown, Prince
      Edward Island and a conversion of the Company's existing station,
      CHTN-AM, from an AM to FM signal. The stations were launched in the
      Summer of 2006.
    - August 2, 2006 - the CRTC awarded the Company a second FM licence in
      Calgary, Alberta which was launched in March 2007.
    - November 15, 2006 - awarded a new FM radio licence to broadcast in Fort
      McMurray, Alberta. The station is expected to launch in early 2008.

    The results of the above acquired or launched stations have been included
in the consolidated financial statements since the respective acquisition and
launch dates.

    Overview of consolidated operating results

    The Company has one separately reportable segment - broadcasting, which
derives its revenue from the sale of broadcast advertising. Corporate and
other derives its revenue from hotel operations.


                  Three months ended Sept. 30    Nine months ended Sept. 30
                  ---------------------------- ------------------------------
                                       Growth                        Growth
    (thousands of                   ----------                    -----------
     dollars except                  To-  Org-                     To-  Org-
     percentages)     2007    2006  tal  anic       2007    2006  tal  anic
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue
      Broad-
       casting    $ 24,427  21,836   12%    9%    68,430  63,374    8%    4%
      Corporate
       and other       978     952    3%    3%     2,652   2,499    6%    6%
                  -----------------               ---------------
                  $ 25,405  22,788   11%    9%    71,082  65,873    8%    5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated revenue of $25.4 million increased by 11%, or $2.6 million in
the quarter and year-to-date revenue of $71.1 million rose 8%, or $5.2
million. The most significant revenue gains came from the broadcasting segment
with revenue totaling $24.4 million which was 12%, or $2.6 million better than
the same quarter last year while year-to-date broadcasting revenue increased
8%, or $5.1 million, to $68.4 million. Same station revenue improved by 9% in
the quarter and 4% year-to-date. Contributing significantly to the organic
revenue growth this quarter were stations across Newfoundland and Labrador and
Alberta, including Edmonton which posted positive growth in the face of new
competition. A mix of organic and incremental growth led to the increased
revenue year-to-date. Incremental revenue was generated by the new stations in
Charlottetown, Prince Edward Island, Winnipeg, Manitoba as well as Bonnyville
and Calgary, Alberta.
    When comparing the Company's growth to the industry, which is measured by
the Trans-Canada Radio Advertising by Market ("TRAM") Report, the Company is
outpacing market. The Company's organic growth of 9% in the quarter was better
than the 0.5% growth posted by the TRAM for the same period. 4% organic
revenue growth for the nine months ended September 30, 2007 was also better
than the 2% posted by TRAM for that period.
    Corporate and other revenue was higher than last year due to an increase
in hotel revenue.

    Other income (expense)

    Other income (expense) consists primarily of realized and unrealized
investment gains and losses related to marketable securities. In the third
quarter this was a net expense of $0.8 million, which was 30%, or $0.4 million
better than last year. The decline in value of marketable securities this
quarter was $0.6 million as compared to a $1.6 million provision for decline
in the same quarter last year. Year-to-date, other income (expense) was a net
expense of $1.1 million as compared to income of $7.9 million for the same
period last year as the prior period included net gains of $7.1 million from
the Company's marketable securities.

    Operating expenses

    Operating expenses in the quarter were 10%, or $1.8 million higher than
last year and year-to-date operating expenses were 5%, or $2.6 million greater
than last year. Increased operating expenses were in line with higher variable
costs associated with higher revenue. In addition, this quarter benefited from
the reduction of approximately $0.4 million of CRTC Part II fees of which $0.3
million related to the first two quarters of 2007. At this point, there has
been no appeal of the December 2006 Federal Court of Canada ruling that stated
that these fees were an unlawful tax which is why the Company deemed it
inappropriate to continue to accrue these fees.

    Earnings before interest, taxes, depreciation
    and amortization (EBITDA(1))

                  Three months ended Sept. 30    Nine months ended Sept. 30
                  ---------------------------- ------------------------------
                                       Growth                        Growth
    (thousands of                   ----------                    -----------
     dollars except                  To-  Org-                     To-  Org-
     percentages)     2007    2006  tal  anic       2007    2006  tal  anic
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA(1)
      Broad-
       casting    $  6,433   5,561   16%   17%    17,685  15,476   14%   15%
      Corporate
       and other    (2,663) (2,940)   -     -     (6,649)  2,010    -     -
                  -----------------              ----------------
                  $  3,770   2,621   44%   47%    11,036  17,486  (37%) (37%)
    -------------------------------------------------------------------------
    % of Revenue
      Broadcasting      26%     25%   1%    1%        26%     24%   2%    1%
      Total             15%     12%   3%    6%        16%     24%  (8%)  (8%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated EBITDA in the quarter of $3.8 million was 44%, or
$1.1 million ahead of the same period last year due to increases in the
broadcasting segment.  Year-to-date EBITDA of $11.0 million was down 37%, or
$6.5 million compared to 2006. Last year's results included net gains of
$7.1 million from the disposal of marketable securities.
    Broadcasting EBITDA has continued to improve and at $6.4 million was ahead
of the same quarter last year by 16%, or $0.9 million. Year-to-date
broadcasting EBITDA of $17.7 million was better than the same period last year
by 14%, or $2.2 million. Growth in organic operations, combined with reduced
CRTC fees discussed earlier contributed to these increases. The stations
across Alberta and Newfoundland and Labrador were the primary contributors to
organic EBITDA growth.

    Depreciation and amortization

    Depreciation and amortization expense was 9%, or $0.1 million higher than
the third quarter last year and 8%, or $0.2 million higher than year-to-date
comparatives. The reason for these increases is the higher depreciable asset
base in 2007.

    Interest expense

    Interest expense was lower than last year. The Company's lower long-term
debt balance helped to offset slightly higher interest rates.

    Accretion of other liabilities

    Accretion of other liabilities arises from discounting Canadian Content
Development ("CCD") commitments to reflect the fair value of the obligations.
The expense recognized in the quarter and the nine months ended September 30,
2007 was higher than last year because of additional CCD obligations related
to the new Calgary, Alberta licence.

    Loss (income) on equity accounted investment

    The Company's 29.9% interest in Larche Communications (Kitchener) Inc. was
sold on April 12, 2007 and as a result, there was no amount for income on
equity accounted investment since then. Year-to-date results include the
Company's proportionate share of the losses realized up to the date the
interest was sold.

    Gain on disposal of equity accounted investment

    The Company disposed of its interest in Larche Communications
(Kitchener) Inc. for proceeds of $4.0 million which resulted in a $3.8 million
gain in the second quarter.

    Gain on disposal of long-term investment

    On January 19, 2007, the Halterm Income Fund Trust Units were disposed of
for proceeds of $14.5 million (2006 - $0.4 million) which resulted in a
year-to-date gain of $10.8 million (2006 - $0.2 million).

    Income taxes

    The effective income tax rate in the quarter was 13% and 24% for the
nine month period ended September 30, 2007. The effective tax rates are less
than the statutory rates because of the lower tax rate attributed to realized
capital gains and lower future income tax expense as a result of reversals of
temporary differences. The comparative provision for income taxes was also
lower than the statutory rate because in June 2006 the Company re-measured its
future income tax assets and liabilities due to the enactment of lower general
corporate tax rates in Canada, resulting in a future income tax recovery of
$1.3 million.

    Non-controlling interest in subsidiaries' earnings

    Non-controlling interest in subsidiaries' earnings in the quarter and
year-to-date was lower than 2006. This is attributed to the fact that the
Company purchased one of its minority interests during the second quarter, no
longer requiring the use of non-controlling interest accounting since the
acquisition date. Subsequent to the end of the third quarter, the remaining
minority interest was purchased.

    Net income                   Three months ended       Nine months ended
                                    September 30             September 30
    (thousands of dollars)         2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net income                 $  1,332           9      14,547       8,682
    -------------------------------------------------------------------------

    Net income of $1.3 million was 147% ahead of the same quarter last year.
Year-to-date net income of $14.5 million was 68%, or $5.9 million higher than
last year mainly due to this year's gains that arose from the disposals of
Halterm Income Fund Trust Units and the equity accounted investment in Larche
Communications (Kitchener) Inc.

    Selected Quarterly Financial Information

    The Company's revenue is derived primarily from the sale of advertising
airtime which is subject to seasonal fluctuations. The first quarter of the
year is generally a period of lower retail spending. Other factors affecting
the variability of net income in the quarters presented below are as follows.
In 2006, an $8.7 million gain realized on marketable securities positively
affected the second quarter while the third quarter was negatively impacted by
a $1.6 million decline in the value of marketable securities. The 2007 first
quarter's net income was impacted by the $10.8 million gain on disposal of the
Halterm Income Fund Trust Units and the second quarter was affected by the
$3.8 million gain on disposal of the equity accounted investment in Larche
Communications (Kitchener) Inc.

    (thousands
     of
     dollars
     except
     per               2007                        2006                  2005
     share   ------------------------ -------------------------------- ------
     data)        3rd     2nd     1st     4th     3rd     2nd     1st     4th
    -------------------------------------------------------------------------
    Revenue  $ 25,405  26,159  19,518  28,064  22,788  24,522  18,563  24,600
    Net
     income     1,332   5,807   7,408   3,285       9   7,506   1,167   2,691
    Earnings
     per
     share
      - Basic    0.12    0.53    0.67    0.29    0.00    0.67    0.10    0.24
      - Diluted  0.12    0.51    0.64    0.28    0.00    0.65    0.10    0.23
    -------------------------------------------------------------------------

    Liquidity and capital resources

    Selected cash flow information - three months ended September 30, 2007

    The cash from operating activities of $3.6 million, combined with net debt
borrowings of $2.4 million were used to make CCD payments totaling
$2.4 million, to pay dividends of $1.7 million and to purchase property and
equipment of $2.0 million.

    Selected cash flow information - three months ended September 30, 2006

    In the third quarter of 2006, cash from operations of $2.7 million
combined with net bank borrowings of $1.3 million were used to pay dividends
of $1.7 million and to purchase property and equipment of $1.8 million.

    Selected cash flow information - nine months ended September 30, 2007

    The cash generated from operating activities was $1.1 million. These
funds, combined with proceeds of $18.5 million from the disposals of Halterm
Income Fund Trust Units and the equity accounted investment, were used to
acquire the non-controlling interest in 3937844 Canada Inc. for $10.7 million,
to repurchase capital stock of $3.7 million, to purchase property and
equipment of $3.8 million, to pay $3.3 million toward CCD and to pay dividends
of $3.3 million.

    Selected cash flow information - nine months ended September 30, 2006

    The cash generated from operations of $10.7 million was used to purchase
property and equipment of $3.7 million, to finance the $2.3 million Winnipeg,
Manitoba acquisition, to pay $3.4 million of dividends and to repurchase
$2.0 million of capital stock.
    Expenditures in capital assets in the third quarter were due to the
upcoming relocation to new premises in Ottawa, Ontario, capital requirements
for the new Lac La Biche FM licence and upgrades of assets throughout the
Company. In addition to these expenditures, prior quarters' capital costs
included the launch of the new FM licence in Calgary, Alberta and converting
the AM station to FM in Edson, Alberta. In the next twelve months, the Company
will spend approximately $9.0 million to launch new licences, complete the AM
to FM conversions and to perform other upgrades throughout the Company.
    The Company expects its level of cash flow and the availability of its
credit facility to be sufficient to fund working capital, capital
expenditures, contractual obligations, the purchase of the minority interest
in Atlantic Stereo Limited and other cash requirements as described above.

    Credit facility and capital structure

    In September 2007 the Company received approval to increase its syndicated
credit facility from $65.0 million to $80.0 million. The revolving credit
facility is renewed annually; the current maturity date is April 2008. This
type of credit facility provides flexibility because there are no scheduled
repayment terms. Covenants for the facility require that the Company maintain
certain financial ratios. The Company was in compliance with the covenants
throughout the quarter and at quarter end, and expects to be for the
foreseeable future. As at September 30, 2007 the Company had $2.1 million of
bank indebtedness outstanding and $53.7 million of long-term debt, of which
$6.7 million was current. The current portion of long-term debt includes an
allocation of $6.7 million of the revolving facility; however, since this is a
revolving term credit facility, there are no scheduled repayments. Working
capital was $3.5 million compared to $9.7 million as at December 31, 2006; the
decline was primarily due to the above-described allocation of $6.7 million of
long-term debt.

    Annual impairment testing of intangible assets

    The Company performed its annual impairment analysis of its long-lived
intangible assets, which consist of broadcast licences and goodwill. The
Company's policy for assessing impairment remained unchanged from the
accounting policy published in the 2006 annual report. As at August 31, 2007,
the Company concluded that no provision for impairment of broadcast licences
or goodwill was required.

    Contractual obligations

    In addition to the Company's contractual obligations disclosed in the 2006
Annual Report, the Company is committed to fund CCD payments related to the
conversions of AM to FM signals and the new FM licences described under
"Corporate Developments". The commitments aggregating $1.3 million are payable
at a rate of $0.2 million per year for seven years.

    Financial condition

    Capital employed

    Assets at quarter end totalled $214.8 million, down from $217.8 million at
December 31, 2006 primarily due to the decrease in current assets. At quarter
end the capital structure consisted of 47% equity ($100.3 million) and 53%
debt ($114.5 million). Total bank debt is 56% of equity, compared to the year
end ratio of 60%. The total bank debt to EBITDA ratio, calculated in
accordance with the Company's credit facility, was 3.3 to 1.

    Share repurchases

    The Company has approval under a Normal Course Issuer Bid to repurchase up
to 497,012 Class A Subordinate Voting Shares ("Class A shares") and
62,913 Class B Common Shares. This bid expires January 29, 2008. In the
quarter, no Class A shares were repurchased. For the same period in 2006,
24,300 Class A shares were purchased for a total cost of $0.5 million.
Year-to-date, the Company repurchased 198,800 of its outstanding Class A
shares (2006 - 119,400) for a total cost of $3.7 million (2006 - $2.0 million)
which resulted in reducing capital stock by $0.8 million (2006 - $0.5 million)
and retained earnings by $2.9 million (2006 - $1.5 million).

    Outstanding share data

    The weighted average number of shares outstanding was 11,091,000 as
compared to last year's 11,197,000; the reduction mainly due to share
repurchases. As at November 8, 2007, there are 9,833,000 Class A shares and
1,258,000 Class B Common Shares outstanding.

    Executive compensation

    Cashless exercise of stock options

    In May 2007, the Company received shareholder and Toronto Stock Exchange
("TSX") approval to amend certain aspects of the Executive Stock Option Plan,
including the option to exercise options on a cashless basis. On May 31, 2007,
195,000 options were exercised on a cashless basis to acquire Class A shares
of the Company at a weighted average exercise price of $12.75. The Company
issued 67,271 Class A shares with an aggregate value equal to the difference
between the exercise price of the options and the fair market value of the
Company's Class A shares. The fair market value of the Class A shares was
based on the volume weighted average trading price of one Class A share on the
TSX over the period of five consecutive trading days ended on and including
the day prior to May 31, 2007. This transaction resulted in increasing
year-to-date capital stock and decreasing year-to-date contributed surplus by
$0.7 million.

    Executive stock option plan

    In the quarter, no Class A shares were issued pursuant to the Executive
Stock Option Plan. In 2006, 15,000 Class A shares were issued in the third
quarter for proceeds of $0.1 million. Year-to-date, 91,021 Class A shares were
issued as follows: 23,750 (2006 - 20,050) Class A shares were issued for
proceeds of $0.2 million (2006 - $0.2 million) and 67,271 Class A shares were
issued as a result of a cashless exercise of 195,000 options, described above.
No options were granted in the quarter or year-to-date. Last year, the Company
granted 115,000 options at a weighted average exercise price of $16.53. During
the quarter, 105,000 options expired bringing the number of stock options
outstanding for Class A shares to 655,000 at prices ranging from $7.30 to
$16.53; 630,000 are vested. In May 2006, the expiry date of certain options
subject to expire was extended resulting in a one-time charge to compensation
expense in the amount of $0.8 million. Compensation expense related to stock
options for the three months ended September 30, 2007 was $nil (2006 -
$0.1 million) and year-to-date was $0.2 million (2006 - $1.2 million).

    Stock appreciation rights plan

    In January 2006, the Company granted 425,000 stock appreciation rights at
a reference price of $16.53. 30,000 of these rights have expired. On March 2,
2007, 5,000 stock appreciation rights were granted at a reference price of
$18.41 and on August 9, 2007, 85,000 stock appreciation rights were granted at
a reference price of $19.91. The rights vest at a rate of 50% at the end of
year three, 25% at the end of year four and 25% at the end of year five. The
rights are exercisable as they vest. At the date of exercise, cash payments
are made to the holders based on the difference between the market value of
the Company's Class A shares and the reference price. All rights granted under
this plan expire on the 60th day following the 5th anniversary of the grant
date. The Class A shares' market price at quarter end was lower than it had
been throughout 2007 and as a result, the cumulative compensation expense and
liability related to the stock appreciation rights plan ("SAR Plan") was
reduced. For the three months ended September 30, 2007, the compensation
expense and liability were reduced by $0.1 million. For the same period last
year, the expense was less than $0.1 million. Year-to-date compensation
expense aggregated $0.1 million (2006 - less than $0.1 million) and the total
obligation included in other liabilities was $0.2 million (2006 - less than
$0.1 million).

    Derivative financial instruments and financial risk management

    Interest rate risk management

    The Company has two interest rate swap agreements having a notional amount
of $20.0 million and $5.0 million, expiring February 27, 2009 and February 27,
2011, respectively (2006 - $30.0 million). The Company enters into interest
rate swap agreements to hedge interest rate risk on a portion of its long-term
debt whereby the Company will exchange the three-month bankers' acceptance
floating interest rate for a fixed interest rate during the term of the
agreements. The difference between the fixed and floating rates is settled
quarterly with the bank and recorded as an increase or decrease to interest
expense. The Company formally assesses effectiveness of the swaps at inception
and on a regular basis and has concluded that the swaps are effective in
offsetting changes in interest rates. The estimated fair value of the interest
rate swaps at September 30, 2007 was a gain receivable of less than $0.1
million. For the three months ended September 30, 2007, the net change in the
fair value of the swaps was a loss of $0.2 million, before income tax recovery
of $0.1 million and these were recorded in other comprehensive income ("OCI").
Year-to-date the net change in fair value recognized in OCI was a gain of
$0.2 million, before income tax expense of $0.1 million. For the same period
last year, the fair value of the swap agreements was a loss payable of $0.2
million; however, this was not recorded since prior to January 1, 2007 there
was no requirement to adjust derivatives designated as hedges on the balance
sheet at their fair value when they qualified for hedge accounting. The
accumulated loss at January 1, 2007 of $0.2 million was recorded, net of
income tax recoveries of $0.1 million, as a transition adjustment to opening
accumulated other comprehensive income ("AOCI").

    Share price volatility management

    In July 2006, the Company entered into an agreement to hedge its
obligations under the SAR Plan using an equity total return swap agreement to
reduce the volatility in cash flow and earnings due to possible future
increases in the Company's share price. Gains or losses realized on the
quarterly settlement dates are recognized in income in the same period as the
SAR Plan compensation expense. Unrealized gains and losses, to the extent that
the hedge is effective, are deferred and included in OCI until such time as
the hedged item affects net income. If at any time, the hedge is deemed to be
ineffective or the hedge is terminated or de-designated, gains or losses,
including those previously recognized in OCI, will be recorded in net income
immediately.
    The Company has concluded that this cash flow hedge is effective. As at
September 30, 2007, the estimated fair value of the loss payable was
$0.2 million. The net change in the fair value of the swap in the quarter,
recognized in OCI, was a loss of $0.9 million. Of this amount, before-tax
realized losses of $0.2 million were transferred from OCI to net income
bringing the third quarter OCI before-tax loss to $0.7 million. Before-tax
unrealized losses in OCI aggregated $0.2 million for the nine months ended
September 30, 2007 while before-tax realized gains totaling less than
$0.1 million were transferred from OCI to net income year-to-date. OCI income
tax recovery related to this cash flow hedge in the quarter was $0.3 million
while the year-to-date recovery was $0.1 million. The accumulated loss at
January 1, 2007 related to this cash flow hedge was less than $0.1 million and
was recorded, net of income tax recoveries of less than $0.1 million, as a
transition adjustment to opening AOCI.

    Credit risk management

    Credit exposure on financial instruments arises from the possibility that
a counterparty to an instrument in which the Company is entitled to receive
payment of an unrealized gain fails to perform. Credit exposure is managed
through credit approval and monitoring procedures. The Company does not
anticipate any counterparties that it currently transacts with will fail to
meet their obligations as the counterparties are Canadian Chartered Banks. At
September 30, 2007 and 2006, there was no credit exposure to the Company
related to its financial instruments.
    The Company is subject to normal credit risk with respect to its
receivables and it maintains a provision for potential credit losses. A large
customer base and geographic dispersion minimize this risk.

    Adoption of new accounting policies

    The Company's accounting policies have remained unchanged since the 2006
Annual Report except for the accounting policies adopted January 1, 2007 as a
result of new policies issued by the Canadian Institute of Chartered
Accountants ("CICA"): Section 1530 Comprehensive Income, Section 3855
Financial Instruments - Recognition and Measurement and Section 3865 Hedges.
The changes in the accounting policies were applied retroactively without
restatement.

    Section 1530 Comprehensive Income

    This Section introduces the concept of comprehensive income which consists
of net income and OCI and represents the change in equity during a period from
transactions and other events from non-owner sources. Items to be recognized
in OCI include unrealized changes in the fair value of the effective portion
of cash flow hedging instruments, gains or losses on financial assets
classified as available-for-sale and the associated income tax effect of OCI
components. Amounts recognized in OCI eventually are reclassified to the
income statement. As a result of adopting this Section, the Company's
consolidated financial statements now include a consolidated statement of
comprehensive income and a consolidated statement of AOCI. AOCI is a separate
line item reported in the statement of shareholders' equity.

    Section 3855 Financial Instruments - Recognition and Measurement

    Section 3855 prescribes that all financial instruments are to be recorded
on the consolidated balance sheets at their fair value upon adoption of this
policy and on initial recognition of financial instruments. Thereafter,
measurement at fair value is required except for financial instruments
classified as held-to-maturity investments, loans and receivables or other
financial liabilities, which are to be measured at amortized cost using the
effective interest method ("EIM"). The Company has classified its financial
assets and liabilities according to the provisions covered under Section 3855;
details are included in Note 2 of the unaudited interim consolidated financial
statements.
    "Held for trading" is a defined term and an accounting concept in
accordance with CICA Handbook Section 3855 Financial Instruments which defines
held for trading assets as those that are able to be sold in the near term.
This term does not necessarily reflect management's intention related to those
assets defined as held for trading. Instruments classified as held for trading
are measured at fair value with unrealized gains and losses recorded
immediately in net income. Marketable securities were classified as held for
trading because they may be sold in the near term. The fair value of
marketable securities is based on the quoted share prices in active markets.
For the quarter ended September 30, 2007, the change in fair value of
marketable securities, recognized in other income (expense) on the unaudited
interim consolidated income statements, was a loss of $0.6 million bringing
the year-to-date loss to $1.3 million.
    Assets classified as available-for-sale are measured at fair value with
unrealized gains and losses recognized in other comprehensive income. Fair
value of the Company's available-for-sale asset on January 1, 2007 was based
on the quoted unit price in active markets.
    The financial instruments classified as loans and receivables and other
liabilities are measured using amortized cost using EIM. Under the EIM,
interest income and expense are calculated and recorded using the effective
interest rate which is the rate that exactly discounts estimated future cash
receipts or payments throughout the expected life of the financial instrument.
Interest income and expense related to financial assets and financial
liabilities are being recorded using the EIM.
    Current assets' and current liabilities' carrying values are
representative of their fair values due to the relatively short period to
maturity. The fair value of long-term debt approximates the carrying value
because the floating interest rate is reflective of the market interest rate
available to the Company. The carrying values of the Company's other financial
assets and liabilities approximate their fair values as at September 30, 2007.
    Transaction costs directly attributable to financial instruments
classified as other than held for trading are included in the initial carrying
value of such instruments and are amortized using the EIM.
    In accordance with Section 3855, the Company conducted a search for
embedded derivatives in its contractual arrangements dated or modified
subsequent to January 1, 2003. An embedded derivative is a component of a
hybrid instrument that also includes a non-derivative host contract, with the
effect that some of the cash flows of the combined instrument vary in a way
similar to a stand-alone derivative. When certain conditions are met, an
embedded derivative is separated from the host contract and accounted for
separately as a derivative on the balance sheet at fair value. The Company's
policy is to recognize embedded derivatives on the consolidated balance sheet,
when applicable. This rule has no impact on the consolidated financial
statements of the Company at this time.

    Section 3865 Hedges

    This Section applies to designated hedging relationships and provides
guidance by specifying how hedge accounting is applied and what disclosures
are required. In particular, derivatives designated as hedges must be recorded
on the balance sheet at fair value on adoption date; off-balance sheet
accounting is no longer permitted. Gains and losses from any ineffectiveness
in hedging relationships must now be identified, measured and recorded in net
income immediately. Gains and losses arising from the hedged risk in a cash
flow hedge, to the extent that the hedging relationship is effective, are
deferred and included in OCI until such time as the hedged item affects net
income.

    Transitional adjustments due to the adoption of new accounting policies

    As at January 1, 2007, the Company's investment in Halterm Income Fund
Trust Units was classified as an available-for-sale asset. It was disposed of
on January 19, 2007 for proceeds of $14.5 million which resulted in an
after-tax gain on disposal of $8.9 million. Section 3855 stipulates that
available-for-sale assets are to be recorded at fair value on the balance
sheet on the transition date and Section 1530 specifies that unrealized gains
or losses on available-for-sale assets are to be recorded in OCI until the
gains or losses are realized. As a result, on January 1, 2007, the Company
adjusted the carrying value of the investment and opening accumulated other
comprehensive income by $8.9 million. On the date of disposal, the realized
gain was transferred from OCI to net income.
    As at January 1, 2007, net cash flow hedge losses aggregating $0.1 million
were recorded as an adjustment to opening AOCI as a result of recognizing the
derivatives at fair value on the balance sheet. For further information on the
effect of adopting these new accounting policies on the Company's derivative
financial instruments, refer to Note 7 of the unaudited interim consolidated
financial statements.

    Future accounting policy changes

    The CICA released new sections that will be applicable to the Company
effective for years beginning on or after October 31, 2007. Section 1535
Capital Disclosures introduces new disclosure requirements surrounding an
entity's objectives, policies and procedures for managing capital. Section
3862 Financial Instruments - Disclosures and Section 3863 - Financial
Instruments - Presentation build on Section 3861 and provide additional
presentation and disclosure guidance for financial instruments. Other than the
additional disclosure and presentation requirements, the Company anticipates
no significant financial impact as a result of adopting these new Sections on
January 1, 2008.

    Subsequent event

    As disclosed under "Corporate developments", on October 1, 2007, the
Company acquired the 37.8% minority interest in Atlantic Stereo Limited, which
operates the two FM licences in Moncton, New Brunswick, for cash consideration
of $6.9 million. Additional information is contained in Note 12 of the
unaudited interim consolidated financial statements.

    Critical accounting estimates

    There has been no substantial change in the Company's critical accounting
estimates since the publication of the 2006 Annual Report except for certain
estimates required in determining fair value in conjunction with the adoption
of new accounting policies described in Note 2 of the unaudited interim
consolidated financial statements.

    Risks and opportunities

    There has been no substantial change in the Company's risks and
opportunities since the publication of the 2006 Annual Report, except for the
following update to the CRTC licence fees. On December 15, 2006, the Federal
Court of Canada ruled that the CRTC Part II fees were an unlawful tax. The
Company deemed that because there has been no appeal of the December 2006
ruling that it was no longer appropriate to accrue for these fees in its 2007
results. The results of this determination were described earlier under the
heading Operating expenses. The decision could still be appealed and the
outcome of the appeal could affect future results.

    Changes in internal controls over financial reporting

    There were no changes in the Company's internal controls over financial
reporting that occurred in the three months and nine months ending
September 30, 2007 that have materially affected, or are likely to materially
affect, the Company's internal controls over financial reporting.

    Outlook

    For the remainder of 2007 the Company is focused on the work required to
launch the new radio stations and the continued growth and development of the
radio stations in its most competitive markets. To this end, management is
working on the following initiatives:

    - The ongoing development of programming and marketing initiatives
      through intensive research of markets and music to increase
      listenership.
    - Ensure all fixed costs provide a positive return on investment.
    - Continue to reduce variable costs as a percentage of revenue as
      properties mature and begin to provide enhanced operating margins.
    - Launch the new FM licences and integrate them into the Company's
      operating platform. New FM licences include Lac La Biche and Fort
      McMurray, Alberta and Sydney and Kentville, Nova Scotia. These four new
      station launches will be completed within the next twelve months and
      will contribute to incremental revenue in 2008.

    In addition to managing current operations, the Company continues to apply
to the CRTC for new licences and for additional AM to FM conversions. The CRTC
awarded the Company the ability to convert AM signals to FM in Edson, Alberta,
Halifax, Nova Scotia and Carbonear, Newfoundland and Labrador. The Edson
station was launched in July, and management hopes to complete the Carbonear
conversion as soon as possible. Other conversions will be explored throughout
the remainder of 2007.
    Management remains focused on accretive acquisitions as opportunities
present themselves.

    Non-GAAP Measure

    (1) EBITDA is defined as net income excluding depreciation and
        amortization expense, interest expense, accretion of other
        liabilities, loss (income) on equity accounted investment, gain on
        disposal of equity accounted investment, gain on disposal of long-
        term investment, provision for income taxes and non-controlling
        interest in subsidiaries' earnings. A calculation of this measure is
        as follows:

                                 Three months ended       Nine months ended
                                      September               September
    (thousands of dollars)         2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net income                 $  1,332           9      14,547       8,682
    Non-controlling interest
     in subsidiaries'
     earnings                       125         162         417         476
    Provision for
     income taxes                   211         520       4,624       2,490
    Gain on disposal of
     long-term investment             -           -     (10,843)       (168)
    Gain on disposal of equity
     accounted investment             -           -      (3,826)          -
    Loss (income) on equity
     accounted investment             -         (38)         14         (33)
    Accretion of other
     liabilities                    357         207       1,005         923
    Interest expense                722         820       2,190       2,427
    Depreciation and
     amortization expense         1,023         941       2,908       2,689
                               --------------------- ------------------------
    EBITDA                     $  3,770       2,621      11,036      17,486
    -------------------------------------------------------------------------

    This measure is not defined by generally accepted accounting principles
and is not standardized for public issuers. This measure may not be comparable
to similar measures presented by other public enterprises. The Company has
included this measure because the Company's key decision makers believe
certain investors use it as a measure of the Company's financial performance
and for valuation purposes. The Company also uses this measure internally to
evaluate the performance of management.

    Newfoundland Capital Corporation Limited
    Notice of Disclosure of Non-Auditor Review of Interim Financial
    Statements for the three months and nine months ended September 30, 2007
    and 2006

    Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a)
issued by the Canadian Securities Administrators, the interim financial
statements must be accompanied by a notice indicating that the financial
statements have not been reviewed by an auditor if an auditor has not
performed a review of the interim financial statements.
    The accompanying unaudited interim consolidated financial statements of
the Company for the three months and nine months ended September 30, 2007 and
2006 have been prepared in accordance with Canadian generally accepted
accounting principles and are the responsibility of the Company's management.
    The Company's independent auditors, Ernst & Young LLP, have not performed
a review of these interim consolidated financial statements in accordance with
the standards established by the Canadian Institute of Chartered Accountants
for a review of interim financial statements by an entity's auditor.

    Dated this 8th day of November, 2007


    Interim Consolidated Balance Sheets
    (unaudited)

                                                   September 30 December 31
    (thousands of dollars)                                 2007        2006
    -------------------------------------------------------------------------

    Assets
    Current assets
      Marketable securities                            $ 12,758      12,404
      Receivables                                        19,083      20,783
      Note receivable                                         -         927
      Prepaid expenses                                    1,267         610
      Current future income tax assets                    1,858       1,925
      Other asset (note 2)                                    -       3,704
                                                      -----------------------
        Total current assets                             34,966      40,353
    Property and equipment                               33,749      32,392
    Other assets                                          3,856       8,069
    Broadcast licences (note 3)                         136,428     131,267
    Goodwill (note 3)                                     4,225       4,337
    Future income tax assets                              1,548       1,344
                                                      -----------------------
                                                       $214,772     217,762
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities
      Bank indebtedness                                $  2,056         802
      Accounts payable and accrued liabilities           16,152      19,459
      Dividends payable                                       -       1,680
      Income taxes payable                                6,483       8,711
      Current portion of long-term debt                   6,736          23
                                                      -----------------------
        Total current liabilities                        31,427      30,675
    Long-term debt                                       46,995      53,771
    Other liabilities                                    18,121      17,083
    Future income tax liabilities                        16,748      13,631
    Non-controlling interest in subsidiaries (note 3)     1,137      11,680
    Shareholders' equity                                100,344      90,922
                                                      -----------------------
                                                       $214,772     217,762
    -------------------------------------------------------------------------
    Commitments (note 11)
    Subsequent event (note 12)
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Income
    (unaudited)

                                 Three months ended       Nine months ended
    (thousands of dollars            September 30            September 30
     except per share data)        2007        2006        2007        2006
    -------------------------------------------------------------------------
    Revenue                    $ 25,405      22,788      71,082      65,873
    Other income (expense)         (830)     (1,190)     (1,109)      7,938
                               ----------------------------------------------
                                 24,575      21,598      69,973      73,811
    Operating expenses           20,805      18,977      58,937      56,325
    Depreciation                    863         848       2,453       2,352
    Amortization of
     deferred charges               160          93         455         337
                               ----------------------------------------------
    Operating income              2,747       1,680       8,128      14,797
    Interest                        722         820       2,190       2,427
    Accretion of other
     liabilities (note 3)           357         207       1,005         923
    Loss (income) on equity
     accounted investment             -         (38)         14         (33)
    Gain on disposal of
     equity accounted
      investment (note 3)             -           -      (3,826)          -
    Gain on disposal of
     long-term investment
     (note 2)                         -           -     (10,843)       (168)
                               ----------------------------------------------
                                  1,668         691      19,588      11,648
    Provision for income
     taxes (note 8)                 211         520       4,624       2,490
                               ----------------------------------------------
                                  1,457         171      14,964       9,158
    Non-controlling interest
     in subsidiaries' earnings      125         162         417         476
                               ----------------------------------------------
    Net income                 $  1,332           9      14,547       8,682
    -------------------------------------------------------------------------

    Earnings per share
     (note 9)
      - basic                  $   0.12        0.00        1.31        0.77
      - diluted                    0.12        0.00        1.27        0.75
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Shareholders' Equity
     (unaudited)

                                                          Nine months ended
                                                             September 30
    (thousands of dollars)                                 2007        2006
    -------------------------------------------------------------------------
    Retained earnings, beginning of period             $ 45,525      38,441
    Net income                                           14,547       8,682
    Dividends declared                                   (1,664)     (1,678)
    Repurchase of capital stock (note 4)                 (2,890)     (1,525)
                                                       ----------------------
    Retained earnings, end of period                     55,518      43,920
    Capital stock (note 4)                               43,345      43,304
    Contributed surplus                                   1,567       1,989
    Accumulated other comprehensive income (note 2)         (86)          -
                                                       ----------------------
    Total shareholders' equity                         $100,344      89,213
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Comprehensive Income
    (unaudited)

                                                   Three months Nine months
                                                          ended       ended
                                                      September   September
    (thousands of dollars)                             30, 2007    30, 2007
    -------------------------------------------------------------------------
    Net income                                         $  1,332      14,547
                                                       ----------------------
    Other comprehensive income (loss):
    Net change in fair values of cash flow hedges
     (note 7)
      Net change in fair value of interest rate swaps      (166)        191
      Net change in fair value of equity total return
       swap                                                (735)       (181)
      Income tax recovery on the net change in fair
       value of interest rate swaps and equity total
       return swap                                          362          27
                                                       ----------------------
                                                           (539)         37
    Net change in fair value of asset available-for-sale
     (note 2)
      Realized gain on disposal of Halterm Income
        Fund Trust Units transferred to net income,
         net of income taxes of $1,952                        -      (8,891)
                                                       ----------------------
    Other comprehensive income (loss)                      (539)     (8,854)
                                                       ----------------------
    Comprehensive income                               $    793       5,693
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statement of Accumulated Other
    Comprehensive Income
    (unaudited)

                                                          Nine months ended
                                                               September 30
    (thousands of dollars)                                             2007
    -------------------------------------------------------------------------
    Accumulated other comprehensive income, beginning of
     period                                                        $      -
    Transition adjustment for cash flow hedges, net of income
     tax recovery of $77 (notes 2 and 7)                               (123)
    Transition adjustment for unrealized gains associated with
     available-for-sale investment, net of income taxes of
     $1,952 (note 2)                                                  8,891
                                                                   ----------
    Accumulated other comprehensive income, beginning of period       8,768
    Other comprehensive income for the period                        (8,854)
                                                                   ----------
    Accumulated other comprehensive income, end of period          $    (86)
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Interim Consolidated Statements of Cash Flows
    (unaudited)


                                 Three months ended       Nine months ended
                                     September 30            September 30
    (thousands of dollars)         2007        2006        2007        2006
    -------------------------------------------------------------------------
    Operating Activities
    Net income                 $  1,332           9      14,547       8,682
    Items not involving cash
      Depreciation and
       amortization               1,023         941       2,908       2,689
      Future income taxes
       (recovery)                   298         (31)      1,494          10
      Gain on disposal of
       long-term investment
       (note 2)                       -           -     (10,843)       (168)
      Gain on disposal of
       equity accounted
       investment (note 3)            -           -      (3,826)          -
      Executive stock-based
       compensation plans
       (notes 4 and 6)             (129)        147         279       1,220
      Accretion of other
       liabilities (note 3)         357         207       1,005         923
      Non-controlling interest
       in subsidiaries'
       earnings                     125         162         417         476
      Other                         147        (101)       (238)       (257)
                               ----------------------------------------------
                                  3,153       1,334       5,743      13,575
    Change in non-cash working
     capital relating to
     operating activities           449       1,329      (4,623)     (2,889)
                               ----------------------------------------------
                                  3,602       2,663       1,120      10,686
    -------------------------------------------------------------------------
    Financing Activities
    Change in bank indebtedness  (2,292)        321       1,254         812
    Long-term debt borrowings     4,700       1,015      13,700       4,515
    Long-term debt repayments        (5)         (6)    (13,763)     (4,539)
    Issuance of capital stock
     (note 4)                         -         120         185         163
    Repurchase of capital stock
     (note 4)                         -        (451)     (3,737)     (2,034)
    Dividends paid               (1,664)     (1,678)     (3,343)     (3,373)
    Canadian Content Development
     commitment payments         (2,431)       (256)     (3,289)     (1,169)
    Other                             -           -        (605)       (302)
                               ----------------------------------------------
                                 (1,692)       (935)     (9,598)     (5,927)
    -------------------------------------------------------------------------
    Investing Activities
    Note receivable                   -           -       1,000       1,000
    Property and equipment
     additions                   (2,043)     (1,774)     (3,810)     (3,663)
    Acquisition of businesses,
     licences and non-
     controlling interest
     (note 3)                         -           -     (10,745)     (2,296)
    Proceeds from disposal of
     Halterm Income Fund Trust
     Units and equity accounted
     investment (notes 2 and 3)       -           -      18,547         399
    Deferred charges                114        (132)       (582)       (547)
    Employee share purchase loan
     repayment                        -           -       2,826           -
    Other                            19         178       1,242         348
                               ----------------------------------------------
                                 (1,910)     (1,728)      8,478      (4,759)
    -------------------------------------------------------------------------
    Cash, beginning and end
     of period                 $      -           -           -           -
    -------------------------------------------------------------------------
    Supplemental Cash Flow
     Information
      Interest paid            $    768         570       2,374       2,315
      Income taxes paid           1,864         550       2,626       1,524
    -------------------------------------------------------------------------
    See accompanying notes to the interim consolidated financial statements


    Notes to the Interim Consolidated Financial Statements - September 30,
    2007 and 2006 (unaudited)
    -------------------------------------------------------------------------

    1. ACCOUNTING PRESENTATIONS AND DISCLOSURES

    The interim financial statements presented herein were prepared by the
    Company and follow the same accounting policies and their methods of
    application as the 2006 annual financial statements. These financial
    statements are prepared in accordance with Canadian generally accepted
    accounting principles ("GAAP") for interim financial statements. They do
    not include all of the information and disclosures required by GAAP for
    annual financial statements. Accordingly, these financial statements
    should be read in conjunction with the Company's audited consolidated
    financial statements and the accompanying notes contained in the
    Company's 2006 Annual Report.

    Certain of the comparative figures have been reclassified to conform to
    the financial statement presentation adopted in the current year.

    The Company's accounting policies have remained unchanged since the 2006
    Annual Report with the exception of the adoption of new accounting
    policies described in Note 2.

    2. ADOPTION OF NEW ACCOUNTING POLICIES

    Effective January 1, 2007, the Company has adopted the following new
    accounting policies as issued by the Canadian Institute of Chartered
    Accountants ("CICA"): Section 1530 Comprehensive Income, Section 3855
    Financial Instruments - Recognition and Measurement and Section 3865
    Hedges. The changes in the accounting policies were applied retroactively
    without restatement.

    Section 1530 Comprehensive Income

    This Section introduces the concept of comprehensive income which
    consists of net income and other comprehensive income ("OCI") and
    represents the change in equity during a period from transactions and
    other events from non-owner sources. Items to be recognized in OCI
    include unrealized changes in the fair value of the effective portion of
    cash flow hedging instruments, gains or losses on financial assets
    classified as available-for-sale and the associated income tax effect of
    OCI components. Amounts recognized in OCI eventually must be reclassified
    to the income statement. As a result of adopting this Section, the
    Company's consolidated financial statements now include a consolidated
    statement of comprehensive income and a consolidated statement of
    accumulated other comprehensive income ("AOCI"). AOCI is a separate line
    item reported in the statement of shareholders' equity.

    Section 3855 Financial Instruments - Recognition and Measurement

    Section 3855 prescribes that all financial instruments are to be recorded
    on the consolidated balance sheets at their fair value upon adoption of
    this policy and on initial recognition of financial instruments.
    Thereafter, measurement at fair value is required except for financial
    instruments classified as held-to-maturity investments, loans and
    receivables or other financial liabilities, which are to be measured at
    amortized cost using the effective interest method ("EIM"). The Company
    has classified its financial instruments as shown in the following table.
    Subsequent to fair value recognition on January 1, 2007, the adoption
    date, the financial instruments will be measured as follows based on
    their classification.

    Asset / Liability               Classification               Measurement
    -------------------------------------------------------------------------
    Cash and bank indebtedness    Held for trading(1)             Fair value
    Marketable securities         Held for trading                Fair value
    Investment in Halterm
     Income Fund Trust Units    Available-for-sale                Fair value
    Receivables              Loans and receivables  Amortized cost using EIM
    Note receivable          Loans and receivables  Amortized cost using EIM
    Accounts payable and
     accrued liabilities         Other liabilities  Amortized cost using EIM
    Long-term debt               Other liabilities  Amortized cost using EIM
    Canadian Content
     Development commitments,
     included in other
     liabilities                 Other liabilities  Amortized cost using EIM
    -------------------------------------------------------------------------

    (1) "Held for trading" is a defined term and an accounting concept in
    accordance with CICA Handbook Section 3855 Financial Instruments which
    defines held for trading assets as those that are able to be sold in the
    near term. This term does not necessarily reflect management's intention
    related to those assets defined as held for trading.

    Instruments classified as held for trading are measured at fair value
    with unrealized gains and losses recorded immediately in net income. Fair
    value of marketable securities is based on the quoted share prices in
    active markets. For the quarter ended September 30, 2007, the change in
    fair value of marketable securities, recognized in other income (expense)
    in the interim consolidated statements of income, was a loss of $649,000
    bringing the year-to-date loss to $1,276,000.

    Assets classified as available-for-sale are measured at fair value with
    unrealized gains and losses recognized in other comprehensive income.
    Fair value of the Company's available-for-sale asset on January 1, 2007
    was based on the quoted unit price in active markets.

    The financial instruments classified as loans and receivables and other
    liabilities are measured using amortized cost using EIM. Under the EIM,
    interest income and expense are calculated and recorded using the
    effective interest rate which is the rate that exactly discounts
    estimated future cash receipts or payments throughout the expected life
    of the financial instrument. Interest income and expense related to
    financial assets and financial liabilities are being recorded using the
    EIM.

    Current assets' and current liabilities' carrying values are
    representative of their fair values due to the relatively short period to
    maturity. The fair value of long-term debt approximates the carrying
    value because the floating interest rate is reflective of the market
    interest rate available to the Company. The carrying values of the
    Company's other financial assets and liabilities approximate their fair
    values as at September 30, 2007.

    Transaction costs directly attributable to financial instruments
    classified as other than held for trading are included in the initial
    carrying value of such instruments and are amortized using EIM.

    In accordance with Section 3855, the Company conducted a search for
    embedded derivatives in its contractual arrangements dated or modified
    subsequent to January 1, 2003.

    An embedded derivative is a component of a hybrid instrument that also
    includes a non-derivative host contract, with the effect that some of the
    cash flows of the combined instrument vary in a way similar to a
    stand-alone derivative. When certain conditions are met, an embedded
    derivative is separated from the host contract and accounted for
    separately as a derivative on the balance sheet at fair value. The
    Company's policy is to recognize embedded derivatives on the consolidated
    balance sheet, when applicable. This rule has no impact on the
    consolidated financial statements of the Company at this time.

    Section 3865 Hedges

    This Section applies to designated hedging relationships and provides
    guidance by specifying how hedge accounting is applied and what
    disclosures are required. In particular, derivatives designated as hedges
    must be recorded on the balance sheet at fair value on adoption date;
    off-balance sheet accounting is no longer permitted. Gains and losses
    from any ineffectiveness in hedging relationships must now be identified,
    measured and recorded in net income immediately. Gains and losses arising
    from the hedged risk in a cash flow hedge, to the extent that the hedging
    relationship is effective, are deferred and included in other
    comprehensive income until such time as the hedged item affects net
    income.

    Transitional adjustments due to the adoption of new accounting policies

    As at January 1, 2007, the Company's investment in Halterm Income Fund
    Trust Units was classified as an available-for-sale asset with a book
    value of $3,704,000. It was disposed of on January 19, 2007 for proceeds
    of $14,547,000 which resulted in a gain on disposal of $10,843,000
    ($8,891,000 after-tax). In 2006, certain units were disposed of for
    proceeds of $399,000 resulting in a $168,000 gain ($138,000 after-tax).
    Section 3855 stipulates that available-for-sale assets are to be recorded
    at fair value on the balance sheet on the transition date and Section
    1530 specifies that unrealized gains or losses on available-for-sale
    assets are to be recorded in OCI until the gains or losses are realized.
    As a result, on January 1, 2007, the Company adjusted the carrying value
    of the investment and opening accumulated other comprehensive income by
    $8,891,000. On the date of disposal, the realized gain was transferred
    from OCI to net income.

    As at January 1, 2007, cash flow hedge losses aggregating $200,000, net
    of income tax recoveries of $77,000, were recorded as an adjustment to
    opening AOCI as a result of recognizing the derivatives at fair value on
    the balance sheet. For further information on the effect of adopting
    these new accounting policies on the Company's derivative financial
    instruments, refer to Note 7.

    3. ADDITIONS, ACQUISITIONS AND DISPOSALS

    Broadcast licence additions

    On July 31, 2007, the Company launched the FM station in Edson, Alberta.
    Upon the launch date, the Company became obligated to pay $5,000 in
    Canadian Content Development ("CCD") commitments per year for seven
    years. $35,000 was capitalized as broadcast licences and recorded in
    other liabilities. Costs incurred related to the award of new broadcast
    licences such as application costs were also capitalized bringing the
    total amount for broadcast licences related to this station to $48,000.

    On March 19, 2007, the Company launched its new FM radio station in
    Calgary, Alberta. Upon the launch date, the Company became obligated to
    pay $1,000,000 in CCD commitments per year for seven years. Using the
    amortized cost basis to record these commitments on the consolidated
    balance sheets, $4,718,000 was capitalized as broadcast licences and
    recorded in other liabilities. Costs incurred related to the award of new
    broadcast licences such as application costs are also capitalized
    bringing the total amount capitalized to broadcast licences related to
    this station to $4,907,000.

    Annual impairment testing of broadcast licences and goodwill

    The Company performed its annual impairment analysis of its long-lived
    intangible assets, which consist of broadcast licences and goodwill. The
    Company's policy for assessing impairment remained unchanged from the
    accounting policy published in the 2006 annual report. As at August 31,
    2007, the Company concluded that no provision for impairment of broadcast
    licences or goodwill was required.

    Business acquisitions

    On May 16, 2007, the Company acquired the minority shareholder's 23.66%
    interest in 3937844 Canada Inc. for cash consideration of $10,745,000. In
    addition, cash consideration of $255,000 was paid regarding a loan due to
    the minority interest shareholder. 3937844 Canada Inc. owns and operates
    twenty-one licences throughout the province of Alberta. The original
    76.34% had been acquired in April 2002 for $30,660,000. The Company
    accounted for this acquisition of non-controlling interest as a step
    purchase. The acquisition was financed by the Company's credit facility.

    The excess of the purchase price over the net book value of the
    non-controlling interest acquired was allocated to the net identifiable
    assets acquired on the basis of their estimated fair market values using
    the purchase method of accounting. The allocation of the $391,000 excess
    was as follows: $504,000 to broadcast licences and $113,000 as a future
    tax liability.

    On April 30, 2006, the Company acquired 100% of the common shares of CKJS
    Limited ("CKJS") entitling it to the property, assets, broadcast licence
    and rights of CKJS used in connection with the operation of an AM radio
    station in Winnipeg, Manitoba. Consideration was $2,296,000 and the fair
    value of the most significant assets acquired and liabilities assumed was
    allocated as follows: broadcast licences - $1,630,000, goodwill -
    $727,000, fixed assets - $550,000, customer-related intangible assets -
    $310,000 and future income tax liabilities - $629,000. The
    customer-related intangible assets were included in other assets and are
    being amortized on a straight-line basis over twenty years. Goodwill was
    not deductible for tax purposes. A provision for professional fees and
    restructuring costs (employee relocation and involuntary termination
    costs) was included in working capital as part of the purchase price
    allocation, of which a portion remained unspent one year after the
    acquisition date. During the quarter, the unspent portion was adjusted
    against the value attributed to goodwill.

    Disposal of equity accounted investment

    On April 12, 2007, the Company disposed of its 29.9% interest in Larche
    Communications (Kitchener) Inc. which operates an FM radio station in
    Kitchener, Ontario. The proceeds were $4,000,000 which resulted in a gain
    on disposal of $3,826,000.

    Accretion expense on Canadian Content Development

    CCD commitments are capitalized as broadcast licences and recorded as
    other liabilities and are measured based on the amortized cost using EIM.
    This measurement basis gives rise to accretion expense which amounted to
    $357,000 for the third quarter (2006 - $207,000) and $1,005,000
    year-to-date (2006 - $923,000).

    4. CAPITAL STOCK

    Share repurchases

    The Company has approval under a Normal Course Issuer Bid to repurchase
    up to 497,012 Class A Subordinate Voting Shares ("Class A shares") and
    62,913 Class B Common Shares. This bid expires January 29, 2008. In the
    quarter, no Class A shares were repurchased (2006 - 24,300 Class A shares
    were purchased for a total cost of $451,000). Year-to-date, the Company
    repurchased 198,800 of its outstanding Class A shares (2006 - 119,400)
    for a total cost of $3,737,000 (2006 - $2,034,000) which resulted in
    reducing capital stock by $847,000 (2006 - $509,000) and retained
    earnings by $2,890,000 (2006 - $1,525,000).

    Cashless exercise of stock options

    In May 2007, the Company received shareholder and Toronto Stock Exchange
    ("TSX") approval to amend certain aspects of the Executive Stock Option
    Plan, including the option to exercise options on a cashless basis. On
    May 31, 2007, 195,000 options were exercised on a cashless basis to
    acquire Class A shares of the Company at a weighted average exercise
    price of $12.75. The Company issued 67,271 Class A shares with an
    aggregate value equal to the difference between the exercise price of the
    options and the fair market value of the Company's Class A shares. The
    fair market value of the Class A shares was based on the volume weighted
    average trading price of one Class A share on the TSX over the period of
    five consecutive trading days ended on and including the day prior to
    May 31, 2007. This transaction resulted in increasing capital stock and
    decreasing contributed surplus by $693,000.

    Executive stock option plan

    In the quarter, no Class A shares were issued pursuant to the Executive
    Stock Option Plan. In 2006, 15,000 Class A shares were issued in the
    third quarter for proceeds of $120,000. Year-to-date, 91,021 Class A
    shares were issued as follows: 23,750 (2006 - 20,050) Class A shares were
    issued for proceeds of $185,000 (2006 - $163,000) and 67,271 Class A
    shares were issued as a result of a cashless exercise of 195,000 options,
    described above. No options were granted in the quarter or year-to-date.
    Last year, the Company granted 115,000 options at a weighted average
    exercise price of $16.53. During the quarter, 105,000 options expired
    bringing the number of stock options outstanding for Class A shares to
    655,000 at prices ranging from $7.30 to $16.53; 630,000 are vested. In
    May 2006, the expiry date of certain options subject to expire was
    extended resulting in a one-time charge to compensation expense in the
    amount of $791,000. Compensation expense related to stock options for the
    three months ended September 30, 2007 was $nil (2006 - $104,000) and
    year-to-date was $177,000 (2006 - $1,154,000).

    5. EMPLOYEE BENEFIT PLANS

                                 Three months ended       Nine months ended
                                     September 30            September 30
    (thousands of dollars)         2007        2006        2007        2006
    -------------------------------------------------------------------------
    Defined contribution
     plan expense                $  351         299       1,015         996
    Defined benefit plan
     expense                        126         132         377         396
    -------------------------------------------------------------------------

    6. STOCK APPRECIATION RIGHTS

    In January 2006, the Company granted 425,000 stock appreciation rights at
    a reference price of $16.53. 30,000 of these rights have expired. On
    March 2, 2007, 5,000 stock appreciation rights were granted at a
    reference price of $18.41 and on August 9, 2007, 85,000 stock
    appreciation rights were granted at a reference price of $19.91. The
    rights vest at a rate of 50% at the end of year three, 25% at the end of
    year four and 25% at the end of year five. The rights are exercisable as
    they vest. At the date of exercise, cash payments are made to the holders
    based on the difference between the market value of the Company's Class A
    shares and the reference price. All rights granted under this plan expire
    on the 60th day following the 5th anniversary of the grant date. The
    Class A shares' market price at quarter end was lower than it had been
    throughout 2007 and as a result, the cumulative compensation expense and
    liability related to the stock appreciation rights plan ("SAR Plan") was
    reduced. For the three months ended September 30, 2007, the compensation
    expense and the liability were reduced by $129,000. For the same period
    last year, the expense was $43,000. Year-to-date compensation expense was
    $102,000 (2006 - $66,000) and the total obligation included in other
    liabilities was $205,000 (2006 - $66,000).

    7. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

    (a) Interest rate risk management

    The Company has two interest rate swap agreements having a notional
    amount of $20,000,000 and $5,000,000, expiring February 27, 2009 and
    February 27, 2011, respectively (2006 - $30,000,000). The Company enters
    into interest rate swap agreements to hedge interest rate risk on a
    portion of its long-term debt whereby the Company will exchange the
    three-month bankers' acceptance floating interest rate for a fixed
    interest rate during the term of the agreements. The difference between
    the fixed and floating rates is settled quarterly with the bank and
    recorded as an increase or decrease to interest expense. The Company
    formally assesses effectiveness of the swaps at inception and on a
    regular basis and has concluded that the swaps are effective in
    offsetting changes in interest rates. The estimated fair value of the
    interest rate swaps at September 30, 2007 was a gain receivable of
    $39,000. The net change in the fair value of the swaps recognized as a
    loss in OCI in the third quarter aggregated $166,000, before income tax
    expense recovery of $68,000. Year-to-date the net change in fair value
    recognized in OCI was a gain of $191,000, before income tax expense of
    $65,000. For the same period last year, the fair value of the swap
    agreements was a loss payable of $204,000; however, this was not recorded
    since prior to January 1, 2007 there was no requirement to adjust
    derivatives designated as hedges on the balance sheet at their fair value
    when they qualified for hedge accounting. The accumulated loss at
    January 1, 2007 of $153,000 was recorded, net of income tax recoveries of
    $60,000, as a transition adjustment to opening accumulated other
    comprehensive income.

    (b) Share price volatility risk management

    In July 2006, the Company entered into a cash-settled equity total return
    swap agreement to manage its exposure to fluctuations in its stock-based
    compensation costs related to the stock appreciation rights plan.
    Compensation costs associated with the SAR Plan fluctuate as a result of
    changes in the market price of the Company's Class A shares. The
    Corporation entered into this swap for a total of 425,000 notional Class
    A shares with a hedged price of $17.55. The swap expires July 2011;
    however, the Company may elect to terminate the agreement prior to that
    date if the Class A share market price is equal to or less than the SAR
    Plan reference price of $16.53. The swap is settled on every quarterly
    settlement date. If the Company's share price is in excess of the hedged
    price on the settlement date, the Company is entitled to receive the
    difference per share, and if the Company's share price is less than the
    hedged price, the Company is obligated to pay the difference per share. A
    settlement date can automatically be triggered if during any 24 hour
    trading period, the share price drops by 10% or more. In this event, the
    Company must cash settle on that date based on that day's share price;
    however, on the quarterly settlement date if the share price has
    rebounded, the Company is reimbursed an amount equal to the difference
    between the hedged price and the share price which triggered the
    automatic settlement.

    The swap includes an interest and dividend component. Interest is accrued
    and payable by the Company on quarterly settlement dates. Any dividends
    paid on the Class A shares are reimbursed to the Company on the quarterly
    settlement dates.

    In order to qualify for hedge accounting, there must be reasonable
    assurance that the instrument is and will continue to be an effective
    hedge. At the inception of the hedge and on an ongoing basis, the Company
    formally assesses and documents whether the hedging relationship is
    effective in offsetting changes in cash flows of the hedged item. Gains
    or losses realized on the quarterly settlement dates are recognized in
    other income in the same period as the SAR Plan compensation expense.
    Unrealized gains and losses, to the extent that the hedge is effective,
    are deferred and included in other comprehensive income until such time
    as the hedged item affects net income. If at any time, the hedge is
    deemed to be ineffective or the hedge is terminated or de-designated,
    gains or losses, including those previously recognized in OCI, will be
    recorded in net income immediately.

    The Company has concluded that this cash flow hedge is effective. The
    estimated fair value of the loss payable as at September 30, 2007 was
    $212,000. The net change in the fair value of the swap in the quarter,
    recognized in OCI, was a loss of $935,000. Of this amount, before-tax
    realized losses of $200,000 were transferred from OCI to net income
    bringing the third quarter OCI before-tax loss to $735,000. Before-tax
    unrealized losses in OCI aggregated $181,000 for the nine months ended
    September 30, 2007 while before-tax realized gains totaling $9,000 were
    transferred from OCI to net income year-to-date. OCI income tax recovery
    booked in the quarter was $294,000 bringing the year-to-date OCI income
    tax recovery to $92,000. The accumulated loss at January 1, 2007 related
    to this cash flow hedge was $47,000 and was recorded, net of income tax
    recoveries of $17,000, as a transition adjustment to opening AOCI.

    (c) Credit risk management

    Credit exposure on financial instruments arises from the possibility that
    a counterparty to an instrument in which the Company is entitled to
    receive payment of an unrealized gain fails to perform. Credit exposure
    is managed through credit approval and monitoring procedures. The Company
    does not anticipate any counterparties that it currently transacts with
    will fail to meet their obligations as the counterparties are Canadian
    Chartered Banks. At September 30, 2007 and 2006, there was no credit
    exposure to the Company related to its financial instruments.

    The Company is subject to normal credit risk with respect to its
    receivables and it maintains a provision for potential credit losses. A
    large customer base and geographic dispersion minimize this risk.

    8. INCOME TAXES

    In June 2006, the Federal government enacted a decline in the general
    corporate income tax rate from 22% to 19% which will be phased in over a
    period between January 1, 2008 and January 1, 2010. Certain Provincial
    governments also reduced general corporate income tax rates. Future
    income tax assets and liabilities were re-measured using the newly
    enacted tax rates that are expected to be in effect when the related
    future tax assets and liabilities are settled. This resulted in a
    non-cash future income tax recovery of $1,300,000 in June 2006 netted
    against the provision for income taxes.

    9. EARNINGS PER SHARE

                                 Three months ended       Nine months ended
                                     September 30            September 30
    (thousands)                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Weighted average common
     shares used in
     calculation of basic
     earnings per share          11,091      11,197      11,095      11,213

    Incremental common shares
     calculated in accordance
     with the treasury stock
     method                         330         368         396         341
                               ----------------------------------------------
    Weighted average common
     shares used in calculation
     of diluted earnings
     per share                   11,421      11,565      11,491      11,554
    -------------------------------------------------------------------------

    10. SEGMENTED INFORMATION

    The Company has one separately reportable segment - broadcasting, which
    consists of the operations of the Company's radio and television
    stations. This segment derives its revenue from the sale of broadcast
    advertising. The reportable segment is a strategic business unit that
    offers different services and is managed separately. The Company
    evaluates performance based on earnings before depreciation and
    amortization. Corporate and other consists of a hotel and the head office
    functions. Its revenue relates to hotel operations and its other income
    relates to investment income. Details of segment operations are set out
    below.


    (thousands of       Broad- Corporate           Broad- Corporate
     dollars)          casting  & other   Total   casting  & other    Total
    -------------------------------------------------------------------------
                    Three months ended Sept. 30  Nine months ended Sept. 30
                    ---------------------------  ----------------------------
    2007
    Revenue           $ 24,427     978   25,405    68,430   2,652    71,082
    Other income
     (expense)               -    (830)    (830)        -  (1,109)   (1,109)
                    ---------------------------  ----------------------------
                        24,427     148   24,575    68,430   1,543    69,973
    Operating
     expenses           17,994   2,811   20,805    50,745   8,192    58,937
    Depreciation and
     amortization          952      71    1,023     2,706     202     2,908
                    ---------------------------  ----------------------------
    Operating
     income (loss)    $  5,481  (2,734)   2,747    14,979  (6,851)    8,128
                    ---------------------------------------------------------

    Assets employed                              $193,330  21,442   214,772
    Goodwill          $   (112)      -     (112)    4,225       -     4,225
    Capital
     expenditures     $  1,868     175    2,043     3,402     408     3,810
    -------------------------------------------------------------------------
    2006
    Revenue           $ 21,836     952   22,788    63,374   2,499    65,873
    Other income
     (expense)               -  (1,190)  (1,190)        -   7,938     7,938
                    ---------------------------------------------------------
                        21,836    (238)  21,598    63,374  10,437    73,811
    Operating
     expenses           16,275   2,702   18,977    47,898   8,427    56,325
    Depreciation
     and
     amortization          879      62      941     2,517     172     2,689
                    ---------------------------------------------------------
    Operating
     income (loss)    $  4,682  (3,002)   1,680    12,959   1,838    14,797
                    ---------------------------------------------------------
    Assets employed                              $175,135  37,731   212,866
    Goodwill          $      -       -        -     4,337       -     4,337
    Capital
     expenditures     $  1,699      75    1,774     3,423     240     3,663
    -------------------------------------------------------------------------
    

    11. COMMITMENTS

    During 2007, the Canadian Radio-television and Telecommunications
    Commission ("CRTC") awarded the Company conversions from AM signals to FM
    in Halifax, Nova Scotia and Carbonear, Newfoundland and Labrador. In
    July, the CRTC awarded the Company two new FM licences in Nova Scotia;
    one to serve Kentville and one to serve Sydney. As a result, the Company
    has committed to pay an aggregate of $180,000 annually for seven years
    towards CCD. The Company recognizes CCD commitments on its consolidated
    balance sheets as broadcast licences and other liabilities on the dates
    the station conversions are completed and launched.

    12. SUBSEQUENT EVENT

    On October 1, 2007, the Company acquired the minority shareholders' 37.8%
    interest in Atlantic Stereo Limited, which operates the two FM licences
    in Moncton, New Brunswick, for cash consideration of $6,900,000, funded
    by the Company's credit facility. The Company had acquired a 46.9%
    interest in 1991 and in 1997 purchased an additional 15.3% to gain
    effective control.

    The excess of the purchase price over the net book value of the
    non-controlling interest acquired of approximately $5,800,000 will be
    allocated to the net identifiable assets acquired on the basis of their
    estimated fair market values using the purchase method of accounting. The
    majority of the excess is expected to be allocated to broadcast licences.

    About Newfoundland Capital Corporation Limited

    Newfoundland Capital Corporation Limited (TSX: NCC.A, NCC.B) is one of
Canada's leading radio broadcasters with 76 licences across Canada. The
Company reaches millions of listeners each week through a variety of formats
and is a recognized industry leader in radio programming, sales and
networking.
    %SEDAR: 00002995E




For further information:

For further information: REF: Robert G. Steele, President and Chief
Executive Officer, Scott G.M. Weatherby, Chief Financial Officer and Corporate
Secretary, Newfoundland Capital Corporation Limited, 745 Windmill Road,
Dartmouth, Nova Scotia B3B 1C2, Tel: (902) 468-7557, Fax: (902) 468-7558,
e-mail: investorrelations@ncc.ca, Web: www.ncc.ca


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