Score Media Reports Continued Growth in Sales and Operating Income with Year-end Results



    TORONTO, Nov. 13 /CNW/ - Score Media Inc. (TSX: SCR) announces its
financial results for the fiscal year ended August 31, 2007:

    
    -   Revenues for the year ended August 31, 2007 increased by $4.4 million
        to $33.5 million compared to $29.1 million in the year ended
        August 31, 2006, an increase of 15.1%.

    -   EBITDA for the year ended August 31, 2007 increased to $5.9 million
        compared $5.3 million in the prior year, an increase of 11.3%.

    -   Net income for the year ended August 31, 2007 was $2.8 million, or
        $0.03 per share compared to $13.0 million or $0.14 per share in the
        prior year. For the year ended August 31, 2007, net income was net of
        income tax expense of $0.9 million compared to income tax recovery of
        $9.1 million in the prior year.

    -   Fourth quarter revenues increased to $7.2 million compared to
        $6.9 million in the prior year, an increase of 4.4%.

    -   Fourth quarter EBITDA was $0.8 million compared to $1.0 million in
        the prior year. Fourth quarter EBITDA was net of stock based
        compensation expenses of $0.6 million compared to $0.1 million in the
        prior year, an increase of $0.5 million.

    -   During fiscal 2007, Score Media launched its cross-platform coverage
        of two major sports properties - NCAA Men's Basketball Championship
        Tournament (also known as "March Madness") and Barclays Premier
        League football - each featuring extensive coverage on television,
        online and on mobile. These properties and other core programming,
        including World Wrestling Entertainment's Raw and a full schedule of
        NBA and NCAA football games, contributed to another year of record
        audiences for The Score Television Network.

    -   Also during fiscal 2007, The Score's website, theScore.com, underwent
        a major redesign. The first component of the new site launched in
        March 2007 as part of Score Media's cross-platform coverage of NCAA
        March Madness, and led to the site achieving record numbers of both
        unique visitors and pageviews.

    -   In October 2007, Score Media announced the launch of its next
        generation mobile sports applications - ScoreMobile 2.0 and Score
        Mobile iPhone Edition
    

    "2007 was another successful year for Score Media, where we achieved
continued growth in revenue and operating income in a rapidly changing media
environment," said John Levy, Chairman and Chief Executive Officer. "During
the past year we launched several key components of our sports media platform,
including a new website, two mobile applications and a mobile video service.
Fully-integrated with the core of our business, these assets will enable Score
Media to realize the strong growth potential of our brand and our relationship
with hardcore sports fans."
    During 2007, the Company continued to grow its Hardcore Sports Radio
(HSR) business (available across North America to listeners on the SIRIUS
Satellite Radio network) with the addition of unique and innovative content,
including the new programs Drive This!, Game On and Sports Rage with Gabriel
Morency. In addition, during 2007, HSR launched its website,
hardcoresportsradio.com, featuring daily podcasts, blogs, lines, expert picks
and a live stream of HSR.
    In March 2007, the Company launched its cross-platform coverage of NCAA
March Madness, featuring extensive coverage of the college men's basketball
tournament on television, online, on mobile devices and on video-on-demand.
The Score will be the exclusive Canadian broadcast partner of NCAA March
Madness through 2010. Additionally, during fiscal 2007, the Company's
wholly-owned subsidiaries, The Score Television Network and Score Media
Ventures, acquired broadcast, Internet and mobile rights to Barclays Premier
League football. The Company's coverage of BPL football kicked-off in August
2007, and included a television broadcast of the premier game of the week,
exclusive Internet and mobile highlights and features, and a new integrated
cross-platform news program, The Footy Show. Cross-platform coverage of major
live sporting events, as well as all sports news and information, is a core
strategy for Score Media, and this multi-media approach to satisfying consumer
demand for sports and entertainment will be advanced in fiscal 2008.
    In March 2007, Score Media Ventures launched Score Mobile Video - a
mobile video clips service which is available across Canada to customers of
every major wireless carrier. Score Mobile Video gives viewers access to
signature Score programming packaged specifically for mobile viewing in 2-3
minute clips. Score Mobile Video features exclusive mobile coverage of
highlights and features from the NCAA March Madness tournament and Barclays
Premier League football, including previews, in-game highlights, features and
fantasy analysis. In addition, fans of The Score can access other premier
Score programming on-the-go, including Cabbie on the Street, Branded, The
Spin, Hardcore Championship Fighting, and exclusive fantasy analysis from The
Score's experts.
    During fiscal 2007, The Score's website underwent a major site redesign
and transformed from a complementary source of data for The Score Television
Network to a sports portal with its own unique peer-driven culture and user
generated content.
    The first component of the new website, a March Madness portal featuring
exclusive video content and tournament analysis, was launched in March 2007 as
part of Score Media's cross platform coverage of NCAA March Madness. New site
features, including full data feeds, live game logs and web-exclusive video
content were also introduced as part of the NHL and NBA playoffs. By the end
of October 2007, the site re-launch was complete and the site was re-named
theScore.com.

    ABOUT SCORE MEDIA INC.

    Score Media is a media company committed to creating consumer value
through creative solutions, technology and innovation in response to sports
fans' growing desire for increased participation in their consumption of
sports content. The Company's main asset is The Score Television Network ("The
Score"), a national specialty television service providing sports, news,
information, highlights and live event programming, available across Canada in
more than 6.2 million homes. Score Media also operates Hardcore Sports Radio,
a satellite radio network available across North America on Sirius Satellite
Radio, and other interactive assets including theScore.com, Score Mobile and
Score Poker.

    Forward-looking (safe harbour) statement

    Statements made in this news release that relate to future plans, events
or performances are forward-looking statements. Any statement containing words
such as "believes", "plans", "expects" or "intends" and other statements which
are not historical facts contained in this release are forward-looking, and
these statements involve risks and uncertainties and are based on current
expectations. Consequently, actual results could differ materially from the
expectations expressed in these forward-looking statements.



    
    FULL YEAR RESULTS

    The following tables reconcile net income to net income before interest,
income taxes, depreciation and amortization:

    -------------------------------------------------------------------------
                                                           Year         Year
                                                          ended        ended
                                                      August 31,   August 31,
                                                           2007         2006
    -------------------------------------------------------------------------

    Net income for the period                         $   2,787    $  13,036
    Less:
      Income from discontinued operations                     -           91
      Income tax recovery/(expense)                        (861)       9,142
    Add back:
      Depreciation and amortization                       2,112        1,159
      Interest expense, net                                 149          360
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA                                            $   5,909    $   5,322
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Year ended August 31, 2007 compared to Year ended August 31, 2006

    Consolidated

    The following selected financial data of the Company as it relates to the
three years ended August 31, 2007, is derived from the audited financial
statements of the Company.

                             Year ended August 31
                      ($000's except per share amounts)

                                           ----------------------------------

                                           ----------------------------------
                                             2007         2006         2005
                                           ----------------------------------
    Earnings Statement Data
    Revenue                                 33,534       29,075       25,063
    EBITDA                                   5,909        5,322        4,788
    Net income                               2,787       13,036        2,753
    Earnings per share - basic and diluted    0.03         0.14         0.03
    Dividends declared per share                 -            -            -

    Balance Sheet Data
    Total Assets                            35,705       32,086        9,274
    Long-term Financial Liabilities          9,302        9,090       10,000



    -------------------------------------------------------------------------
                                                            Income
                               Income     Income           per share
                                from     from dis-            from    Income
    Quarterly                continuing  continued   Net   continuing   per
    Results         Revenue  operations operations  income operations  share
    -------------------------------------------------------------------------
                    ($000's)  ($000's)   ($000's)  ($000's)    ($)      ($)
    -------------------------------------------------------------------------
    August 31, 2007  7,218       931         -       931      0.01      0.01
    -------------------------------------------------------------------------
    May 31, 2007     9,364       723         -       723      0.01      0.01
    -------------------------------------------------------------------------
    February 28,
     2007            7,731       262         -       262      0.00      0.00
    -------------------------------------------------------------------------
    November 30,
     2006            9,221       871         -       871      0.01      0.01
    -------------------------------------------------------------------------
    August 31, 2006  6,935     9,805         -     9,805      0.11      0.11
    -------------------------------------------------------------------------
    May 31, 2006     8,010     1,618        91     1,709      0.02      0.02
    -------------------------------------------------------------------------
    February 28,
     2006            6,750       413         -       413      0.00      0.00
    -------------------------------------------------------------------------
    November 30,
     2005            7,380     1,109         -     1,109      0.01      0.01
    -------------------------------------------------------------------------
    

    The Company's revenues have historically reflected a seasonality trend,
with the third quarter (ending May 31st) being the strongest, followed by the
first quarter (ending November 30th), the fourth quarter (ending August 31st),
and finally the second quarter (ending February 28th). This seasonality
reflects general trends for sports media advertising, which in turn reflects
the schedules (particularly the playoffs) of the major sports leagues.
    Revenues for the year ended August 31, 2007 increased by $4.4 million to
$33.5 million compared to $29.1 million in the year ended August 31, 2006.
This increase was due to a combination of greater television subscriber
revenue, increased television advertising revenue, and revenues from Hardcore
Sports Radio and Score Media's interactive properties that were launched
during the past 2 years.
    Television advertising revenue increased by approximately $3.3 million
during the year, reflecting successes in broadcasting several new live event
sports programs, as well as continued advertising growth associated with the
Company's news programs. The Score also benefited from brand-extension
marketing, as television sales were buoyed by cross-promoting the television
network with other platforms such as Score Mobile, Score Poker and
theScore.com. This advertising growth was supplemented with revenue of
approximately $0.6 million from the new business units. The Company
anticipates continued growth in fiscal 2008 and beyond from each of these
properties.
    Television subscriber fee revenue increased by approximately $0.5 million
for the year ended August 31, 2007 compared to the prior period. This increase
in subscriber revenue reflected continued growth in the subscriber base with
several broadcast distribution undertakings compared to fiscal 2006. During
the year ended August 31, 2007, two customers represented 11% and 10% (2006 -
12% and 12%) of the Company's consolidated revenue. Both of the customers are
Broadcast Distribution Undertakings ("BDUs") that have represented consistent
and stable revenue over the last several years.
    Production and other direct expenses were $14.2 million for the year
ended August 31, 2007 compared to $12.9 million in the prior year, an increase
of $1.3 million. This increase resulted from higher programming expenses
associated with the Company's new business initiatives and more live event
programming expenses amounting to $0.8 million, and increased sports data
acquisition expenses amounting to $0.5 million.
    Selling, general and administrative expenses were $9.9 million for the
year ended August 31, 2007 compared to $8.9 million in the prior year, an
increase of $1.0 million. This increase resulted from greater occupancy costs
at the Company's facilities in the amount of $0.5 million, and increased
compensation costs - primarily due to non-cash stock-based compensation in the
amount of $0.7 million. These increases were offset by reductions in marketing
expenses in the amount of $0.2 million.
    Program rights were $3.6 million for the year ended August 31, 2007
compared to $2.0 million in the prior year, an increase of $1.6 million. The
increase in program rights at The Score reflects higher program rights fees
for Toronto Raptors and other professional basketball, NCAA March Madness
basketball, Barclays Premier League football, and Canadian college football.
In addition, The Score increased its rights fees for poker programming in
fiscal 2007 compared to the prior year.
    Interest expense for the year ended August 31, 2007 was $0.1 million
compared to the $0.4 million in the prior year. For the year ended August 31,
2007, interest expense includes interest on bank loans of $0.6 million (net of
interest income of $0.5 million), compared to interest on bank loans of
$0.6 million (net of interest income of $0.2 million) for the year ended
August 31, 2006. The decrease of approximately $0.4 million reflects lower
borrowings of bank debt due to improved cash flow from operations and cash
proceeds from an equity issue completed in February 2006.
    On February 8, 2006 the Company completed the sale of 11,800,000 Class A
Subordinate Voting shares ("Class A Shares") to the public at a price of $0.85
per share. On February 15, 2006, the underwriter exercised an option to
acquire 1,770,000 Class A Subordinate Voting shares at $0.85 per share, being
the price of the offering to cover over-allotments, representing an amount of
15% of the total number of Class A Subordinate voting shares offered. The net
proceeds of the offering amounted to $10.4 million.
    Depreciation and amortization expense for the year ended August 31, 2007
was $2.1 million compared to $1.2 million in the prior year. Depreciation
expense increased to $1.7 million for the year ended August 31, 2007 compared
to $1.0 million in the prior year, reflecting increased capital expenditures
in the latest fiscal year at The Score for new television broadcasting
equipment and television facilities, as well as new equipment and expenditures
to develop intellectual properties and interactive programming for Score
Mobile, Score Poker, theScore.com and Hardcore Sports Radio. Amortization
expense increased to $0.4 million compared to $0.1 million in the prior year
as a result of fully amortizing a bank financing fee associated with the
Company's previous credit facility; the Company refinanced the credit facility
with a new financial institution in August 2007.
    For the year ended August 31, 2007, fixed asset additions were
approximately $5.5 million compared to $2.0 million in the prior year, an
increase of $3.5 million. The increase in fixed assets reflects increased
investment in television and radio broadcasting equipment, information
technology and development of new media assets.
    Future income tax expense for the year ended August 31, 2007, amounted to
$0.9 million compared to a future income tax recovery of $9.1 million for the
year ended August 31, 2006. Future income tax recovery in 2006 pertains to the
release of valuation allowance recorded against the future tax assets which
primarily consist of non-capital loss carry forwards. In assessing the
realization of future income tax assets, management considers whether it is
more likely than not that some portion or all of the future income tax assets
will be realized. The ultimate recognition of future income tax assets is
dependent upon the generation of future taxable income before the expiry of
non-capital losses and the years in which other temporary differences are
deductible. Management considers the scheduled reversals of future income tax
liabilities, the character of the income tax assets and the tax planning
strategies in place in making this assessment. To the extent that management
believes that the realization of future income tax assets does not meet the
more likely than not realization criterion, a valuation allowance is recorded
against the future tax assets.
    In making an assessment of whether future income tax assets are more
likely than not to be realized, management regularly prepares information
regarding the expected use of such assets by reference to its internal budgets
and income forecasts. Based on management's estimates of the expected
realization of future income tax assets, during 2006 the Company reduced the
valuation allowance to reflect that it is more likely than not those certain
future income tax assets will be realized.
    For the year ended August 31, 2007, the income tax expense of
$0.9 million drew down the future tax asset. The Company's effective tax rate
was approximately 24% compared to its statutory tax rate of 36% due to an
additional release of valuation allowance that was recorded against future tax
assets in the prior year.
    The valuation allowance at August 31, 2007 of $15.1 million includes
$15.0 million of income tax assets primarily relating to non-capital loss
carry forwards of certain related corporate entities within the consolidated
group, including the parent company Score Media Inc.
    Net income for the year ended August 31, 2007 was $2.8 million, or $0.03
per share based on a diluted weighted average 98.7 million Class A Shares and
Special Voting Shares outstanding compared to $13.0 million, or $0.14 per
share based on a diluted weighted average 91.1 million Class A Shares and
Special Voting Shares outstanding in the prior year. For the year ended
August 31, 2007, net income was net of income tax expense of $0.9 million
compared to income tax recovery of $9.1 million in the prior year.
    For the year ended August 31, 2007, net income also included non-cash
stock based compensation expenses and depreciation which were higher than the
prior year. Stock based compensation expenses were $0.7 million for the
current year compared to $0.2 million in the prior year, an increase of
$0.5 million. The increase resulted primarily from the July 2007 vesting of
stock options issued to the CEO pursuant to his Management Services Agreement.
Depreciation was $1.7 million in the current year compared to $1.0 million in
the prior year, an increase of $0.7 million. The increase resulted from
capital expenditures incurred to support new television and radio broadcasting
equipment and the development of new media assets. In addition, there was no
income from discontinued operations in the current year, and for the year
ended August 31, 2006 net income included $0.1 million of income from
discontinued operations.
    Upon approval from the Company's shareholders in February 2007, the
Company reduced the stated capital of the Class A Shares by $70.7 million
pursuant to section 38(1) of the Canada Business Corporations Act. The
reduction in stated capital decreased the accumulated deficit of the Company
as at February 28, 2007 to nil. No cash distribution was made in connection
with the reduction in stated capital and this transaction had no impact on the
Company's liquidity or results of operations.

    Liquidity and Capital Resources

    Cash flows provided by continuing operations for the year ended
August 31, 2007 were $5.7 million compared to $3.5 million provided by
continuing operations in the prior year. The increase of $2.2 million reflects
an improvement in operating results in the current year and movements in
operating working capital.
    For fiscal 2008, the Company anticipates that cash flows provided by
operations will increase compared to fiscal 2007 based on anticipated
increases in both advertising and subscriber revenues with more moderate
increases in operating expenses. The Company's new business initiatives,
particularly Score Mobile and theScore.com, are expected to contribute to
increased operating profitability in fiscal 2008.
    Cash flows provided by financing activities for the year ended August 31,
2007 were $0.4 million compared to cash flows provided by financing activities
of $9.7 million in the prior year. The decrease of $9.3 million was primarily
as a result of the proceeds of an issue of equity securities in the 2006. On
February 8, 2006 the Company completed the sale of 11,800,000 Class A Shares
to the public at a price of $0.85 per share. On February 15, 2006, the
underwriter exercised an option to acquire 1,770,000 Class A Shares at $0.85
per share, being the price of the offering to cover over-allotments,
representing an amount of 15% of the total number of Class A Shares initially
offered. As a result, a total of 13,570,000 Class A Shares were issued for
gross proceeds of $11.5 million. Costs of the transaction totaled $1.1 million
and the net proceeds were $10.4 million.
    As part of the offering of the Class A Shares, the Company granted the
underwriter 949,900 warrants to acquire 949,900 Class A Shares at an exercise
price of $0.85 per warrant as partial compensation for services rendered.
During the year ended August 31, 2007, the underwriter exercised the
949,900 warrants for net proceeds of $0.8 million.
    On August 28, 2007, the Company entered into a new $25 million revolving
three-year term credit facility with a Canadian chartered bank. The revolving
credit facility is available to fund capital improvements and for general
corporate purposes. The credit facility allows the Company to borrow by way of
prime rate loans, bankers' acceptances ("BAs") or letters of guarantee. Loans
and BAs bear interest at rates that are dependent on financial ratios. The
provisions of the Company's bank credit facility impose restrictions, the most
significant of which are restrictions on investments, sales of assets, and the
maintenance of certain financial covenants. Financial covenants include total
funded debt to EBITDA (earnings before interest, taxes, depreciation and
amortization) and maximum capital expenditure amounts.
    Loans under the credit facility are secured by a pledge of substantially
all the assets of the Company, including a pledge of all the issued and
outstanding shares of each of its subsidiaries and the subordination and
pledge of shareholder and inter-company loans.
    In August 2007 the Company drew $9.3 million from the credit facility
with the proceeds used to retire the existing term loan then in existence.
    The Company believes that the equity issue in February 2006 together with
its new credit facility provides it with sufficient working capital lines of
credit to support its operations for the foreseeable future.
    Cash flows used in investment activities for the year ended August 31,
2007 were $5.6 million compared to cash flows used in investment activities of
$2.1 million in the prior year, an increase of $3.5 million. For the year
ended August 31, 2007, fixed asset additions were approximately $5.5 million
compared to $2.0 million in the prior year, while additions to deferred
charges for the year ended August 31, 2007 were $0.2 million compared to
$0.1 million in the prior year. Fixed asset additions resulted primarily from
new investments in television and radio broadcasting equipment, information
technology and development of new media technologies.
    For fiscal 2008, the Company anticipates a capital expenditure program
for replacing and purchasing new fixed assets that will result in costs of
approximately $15 million. These expenditures include the completion of a new
high definition television studio and high definition television equipment,
developing a 'street-front' presence at The Score's location, and continued
development expenditures for Score Mobile, theScore.com and other interactive
initiatives. The fiscal 2008 capital expenditure program can be financed by
cash flows from operations and cash and cash equivalents on hand.
    Other than the credit facilities described above, the Company has no
other financial instruments and thus believes that there are no price, credit
or liquidity risks that it could be subject to from such instruments.

    Contractual Obligations

    The Company has no debt guarantees, capital leases or long-term
obligations other than loans and the capital lease which are disclosed on the
Consolidated Balance Sheets as at August 31, 2007, and August 31, 2006 and the
Notes thereto.
    Contractual operating obligations are as follows:

    
    -------------------------------------------------------------------------
    Contractual
     Obligations
     (in thousands                                             There-
     of dollars)        2008    2009    2010    2011    2012   after   Total
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Operating lease
     obligations       1,932   1,452   1,230     728     578   1,167   7,137
    -------------------------------------------------------------------------
    Programming
     rights
     obligations       2,382   1,938   2,026      30       -       -   6,376
    -------------------------------------------------------------------------
    Long-term debt
     obligations           -       -   9,250       -       -       -   9,250
    -------------------------------------------------------------------------
    Total              4,364   3,390  12,506     758     578   1,167  22,763
    -------------------------------------------------------------------------
    

    Related Party Transactions

    During 2007, the Company obtained consulting services from a director of
the Company. In 2006, the Company retained legal services from a law firm, one
partner of which is a director of the Company. The services were provided in
the ordinary course of business and amounted to $27,000 and nil (2006 -
$26,000 and $8,000), respectively.
    The Company entered into a lease in December 2005 for a property
partially owned by a director and officer of the Company. The lease ended
August 31, 2006 and continued on a month-to-month basis until May 15, 2007
when the Company entered into a five year lease for such premises; the
aggregate rent paid during 2007 amounted to $116,000 (2006 - $105,000).
    All related party transactions have been reported at their fair values.
    The Company announced on June 20, 2007 that its controlling shareholder,
Levfam Holdings Inc. ("Levfam") had delivered a notice to CW Media Inc.,
formerly Alliance Atlantis Communications Inc., a shareholder of the Company,
offering to sell all of the Class A Shares and Special Voting Shares of the
Company held by Levfam and its affiliates and associates for a price of $2.90
per share.
    The Company's Board of Directors established a special committee to
assess any potential change of control transaction that may result from
Levfam's notice to CW Media. The special committee retained Genuity Capital
Markets as its financial advisor in connection with any potential change of
control transaction involving the Company. Levfam's notice was provided
pursuant to a Respective Rights Agreement made November 24, 2000, to which
Levfam, CW Media and the Company are parties. The provisions of the Respective
Rights Agreement provided that CW Media had a 30 day period in which to choose
to accept the offer set forth in the notice, and as CW Media did not accept
the offer, Levfam has a period of 120 days during which it may enter into a
binding agreement to sell its shares in the Company to one or more third
parties, provided that such sale is made for a price and on terms and
conditions no more favourable than those offered to CW Media in the notice.
There can be no assurance that any transaction will be agreed with another
third party to acquire Levfam's shares on the permitted terms.
    The Company also announced on June 20, 2007 that it had entered into an
agreement with Levfam relating to the sale to Levfam of the Company's Hardcore
Sports Radio business for a price of $1.5 million. The sale is conditional
upon the acquisition by CW Media or other third parties of Levfam's shares of
the Company at a price of not less than $2.90 per Class A Share, in addition
to a number of other conditions. The agreement may be terminated if the sale
by Levfam of its share of the Company to CW Media or a third party has not
been completed by November 17, 2007, unless Levfam enters into such an
agreement prior to that date, is diligently pursuing the sale transaction, and
completes the sale by June 20, 2008. The Company's Board of Directors, upon
the recommendation of the special committee, approved the proposed Hardcore
Sports Radio transaction. Genuity Capital Markets provided the special
committee with advice as to the appropriateness of the consideration to be
received by the Company.
    As at June 20, 2007 Levfam and certain of its affiliates and associates
held 36,743,552 Class A Shares, representing approximately 37.8% of the total
number of Class A Shares outstanding, and 5,566 Special Voting Shares,
representing 55.7% of the total number of the Special Voting Shares
outstanding.
    There can be no assurance that any transaction will be agreed with
another third party to acquire Levfam's shares on the permitted terms.

    Critical Accounting Estimates

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Significant estimates are used in determining, but not
limited to, the allowance for doubtful accounts, income tax valuation
allowances, the useful lives of depreciable assets and the recoverability of
fixed assets and deferred charges. In making such estimates and assumptions,
management consults with employees knowledgeable in the area; gathers relevant
information; and where appropriate, seeks advice from qualified third parties
and makes judgments which in the opinion at that time represent fair, balanced
and appropriate conservative estimates and assumptions. Actual results could
differ from those estimates.

    Allowance for doubtful accounts
    -------------------------------
    The Company has an accounts receivable balance of $6.6 million at
August 31, 2007 ($6.3 million at August 31, 2006). The valuation of accounts
receivable requires significant estimates to be made by management and the
valuation of these balances could have a significant impact on the Company's
consolidated financial statements. These accounts receivable are comprised of
amounts arising from: (a) contractual arrangements with major cable and
direct-to-home ("DTH") satellite companies for distribution of its standard
definition and high definition television service, each of which varies in
length; and (b) a large and diverse base of advertisers that contract with the
Company's television, radio, internet and other interactive operations. The
Company determines an allowance for doubtful accounts based on knowledge of
the financial conditions of its customers, the aging of the receivables,
customer and industry concentrations, the current business environment and
historical experience. At August 31, 2007, management has consistently applied
this methodology and the Company has had a history of minimal bad debt loss. A
change in any of the factors impacting the estimate of the allowance for
doubtful accounts will directly impact the amount of bad debt expense recorded
in selling, general and administrative expenses.

    Income tax estimates
    --------------------
    Management continually reviews the estimates of the valuation of future
income tax assets recorded on the balance sheet to ensure they are
appropriate. This involves the use of judgment in the estimation of future
income projections on an entity by entity basis, actual tax exposures,
assessing temporary differences that result from differing treatments in items
for accounting purposes versus tax purposes, and in estimating the
recoverability of the benefits arising from tax loss carry forwards. We are
required to assess whether it is more likely than not that future income tax
assets will be realized prior to the expiration of the related tax loss carry
forwards.
    Changes in the forecasts of future profitability, the utilization of
income tax loss carry forwards and the valuation allowance could have a
material impact on the reported amounts for future income tax assets and
future income tax expense.

    Acquired program rights
    -----------------------
    Acquired program rights are carried at the lower of cost less accumulated
amortization and net realizable value. Acquired program rights and the related
liabilities are recorded when the license period begins and the program is
available for use.
    The cost of acquired program rights are charged to expense over their
estimated useful life based on the current year's revenue to estimated total
gross revenue from such programs. Estimates of total gross revenue can change
significantly due to a variety of factors, including the level of market
acceptance of the products and advertising rates. Accordingly, revenue
estimates are reviewed periodically and amortization is adjusted, if
necessary.

    Stock-based compensation
    ------------------------
    The Company records stock based compensation expense over the vesting
period of the options based on the estimated fair value of the stock options
granted. The Company's policy is to determine the exercise price of an option
based on the average trading price for five days prior to the grant.
    The Company uses the Black-Scholes option pricing model to estimate the
fair value of stock options on the grant date and the amount is expensed over
the vesting period of the stock options. The assumptions used in the
calculation of fair value include the risk free interest rate, dividend yield,
volatility factor and expected life of the options.
    The risk free interest rate is based on the then current risk free
interest rate for the expected life of the option. The dividend yield is based
on the Company's historical practice of dividend payments. The volatility
factor is based on analysis of the history of the Company's share price and
management's estimate of the expected volatility over the respective terms of
the options. The expected life of the option is based on the expected length
of time options are estimated to remain outstanding.

    Useful lives of depreciable assets
    ----------------------------------
    The Company depreciates the cost of fixed assets over their respective
estimated useful lives. These estimates of useful lives involve estimation and
judgment. In determining the estimates of useful lives, the Company considers
industry trends and changing technologies. On an annual basis, the Company
reassesses the estimated useful lives to ensure they correspond with the
anticipated life of the respective assets. If a technological change happens
more quickly than anticipated, the Company may have to revise the estimates of
useful lives of fixed assets which could result in higher depreciation expense
in future periods or an impairment charge to write-down the value of the fixed
assets.

    Recoverability of long-lived assets
    -----------------------------------
    Long-lived assets, including fixed assets and intangible assets with
finite useful lives, are depreciated over their estimated useful lives. The
Company reviews for impairment annually, or more frequently, if events or
changes in circumstances indicate that the carrying amount may not be
recoverable. If the sum of undiscounted cash flows expected to result from the
use and eventual disposition of a group of assets is less than its carrying
amount, it is considered to be impaired. These analyses involve estimates of
future cash flows and estimated periods of use. If the undiscounted net cash
flows associated with a group of long-lived assets exceed the carrying
amounts, impairment losses are measured as the excess of the carrying amount
over the fair value.

    Adoption of New Accounting Pronouncements

    Non-monetary transactions
    -------------------------
    In 2005, the CICA issued Handbook Section 3831, Non-monetary transactions
("CICA 3831"), replacing Section 3830, Non-monetary transactions. CICA 3831
requires that an asset exchanged or transferred in a non-monetary transaction
must be measured at its fair value except when: the transaction lacks
commercial substance; the transaction is an exchange of a product or property
held for sale in the ordinary course of business for a product or property to
be sold in the same line of business to facilitate sales to customers other
than the parties to the exchange; neither the fair value of the asset received
nor the fair value of the asset given up is reliably measurable; or the
transaction is a non-monetary non-reciprocal transfer to owners that
represents a spin-off or other form of restructuring or liquidation. In these
cases the transaction must be measured at the carrying value. The new
requirements were effective for transactions occurring in periods commencing
after January 1, 2006. This new standard did not have a material impact on the
Company's consolidated financial statements.

    Recent Canadian Accounting Pronouncements

    Financial Instruments
    ---------------------
    In 2005, the CICA issued Handbook Section 3855, Financial Instruments -
Recognition and Measurement, Handbook Section 1530, Comprehensive Income, and
Handbook Section 3865, Hedges. The new standards will be effective for interim
and annual financial statements commencing in fiscal 2008. Earlier adoption is
permitted. The Company is assessing the impact of these new standards.

    Risks and Uncertainties

    Risks Related to the Nature of the Specialty Television Industry
    ----------------------------------------------------------------
    The specialty television industry in which the Company operates involves
a substantial degree of risk. There can be no assurance of the economic
success of any specialty television channel as revenues depend on audience
acceptance, which cannot be accurately predicted. Audience acceptance is
impacted by the specialty television service's content, reviews of critics,
marketing and promotions, the quality and acceptance of other competing
services, the availability of alternative forms of entertainment, leisure
activities, general economic conditions, public tastes generally and other
intangible factors. The lack of audience acceptance for the Company's
specialty television channels could have an adverse impact on the Company's
business, results of operations, prospects or financial condition.

    Regulatory Environment
    ----------------------
    The specialty television services industry is regulated by the Canadian
Radio-television and Telecommunications Commission ("CRTC"), which grants and
renews licenses. The Company's broadcasting licenses must be renewed from time
to time, typically every seven years and cannot be transferred without
regulatory approval. The Company's inability to renew its licenses on
favourable terms, or at all, would have an adverse impact on its results of
operations, prospects and financial condition. Changes in the regulations
governing the specialty television industry, including decisions by regulators
affecting the Company's broadcasting operations, such as the granting or
renewal of licenses or the granting of additional broadcasting licenses to
competitors or the introduction of new regulations by regulators, could
adversely impact operating results, prospects and financial condition of the
Company.
    The CRTC is undertaking a review of the regulatory frameworks for
broadcasting distribution undertakings and discretionary programming services.
The Public Hearing associated with this review will likely address in detail a
number of areas of regulation impacting specialty television license holders
including genre exclusivity, the authorization of non-Canadian satellite
services, access and preponderance, distribution and linkage, and programming
obligations. The results of this Public Hearing, including possible changes to
the regulatory framework and the timing of the implementation of any such
changes, cannot be predicted.

    Dependence on Broadcast Distribution Undertakings
    -------------------------------------------------
    The Score is dependent on BDUs (including cable, DTH and Multipoint
Distribution System (MDS) distributors) for distribution of its specialty
television services. If any of the distribution agreements are terminated and
the Company is unable to secure similar agreements, there could be a
significant negative impact on revenues. There could be a further negative
impact on revenues if distribution agreements with BDUs are not renewed on
terms at least comparable to current terms. During the year ended August 31,
2007, subscriber revenue from two BDUs represented 11% and 10% of the
Company's consolidated revenue respectively.

    Programming and Production Costs
    --------------------------------
    Programming costs, including program acquisitions, rights fees,
production costs, publishing costs and distribution costs continue to rise and
may be subject to future increases. These increases or the inability to renew
major programming rights agreements may adversely affect operating results of
the Company.

    General Economic Conditions
    ---------------------------
    The Company's revenues and results of operations are and will continue to
be influenced by prevailing general economic conditions. In the event of a
general economic downturn or a recession, purchasers and potential purchasers
of the Company's advertising inventory may substantially reduce their
advertising budgets. In the event of such an economic downturn, there can be
no assurance that the Company's operating results, prospects and financial
condition would not be materially adversely affected.

    Reliance on Key Personnel
    -------------------------
    The Company relies to a significant degree on the experience, leadership
and skills of John Levy and other members of the executive management team. If
any of these individuals were to be unavailable, the Company could find it
difficult to locate replacement individuals with similar skills and knowledge
of the industry. There are other senior executives and production personnel
engaged by the Company who provide useful services and who would be difficult
for the Company to replace on short notice. A loss of any of these key
personnel could have an adverse impact on the business, results of operations,
and financial condition of the Company.

    Management of Growth
    --------------------
    Growth in the Company's businesses will place demands on its managerial
and operations resources. If the Company is unable to manage its growth
effectively, this could have a material adverse effect on its financial
condition and results of operations.

    Competition
    -----------
    The television broadcasting business, in which the Company is engaged is
intensely competitive, fragmented and subject to rapid technological change
and frequent new content and service introductions and enhancements. Many of
the Company's existing competitors are significantly larger and have
substantially greater financial, technical, personnel, marketing and other
resources than the Company and may have more established reputations for
success in their respective businesses. The Company may also face future
competition from new services. There can be no assurance that the Company will
be able to successfully compete with such competitors and competitive
pressures may result in downward pressure on subscriptions, subscription rates
and advertising revenues.

    Canadian Ownership
    ------------------
    In order for the Company's broadcasting subsidiaries to renew or amend
their broadcasting licenses, the Company must meet certain Canadian ownership
requirements as set out in the Direction and be controlled in fact by
Canadians. Failure to comply with the Direction will prevent the Company's
broadcasting subsidiaries from being issued broadcasting licenses or from
having these licenses renewed or amended which would materially adversely
affect the business of the Company. Provisions in the Company's articles
permit the board of directors to impose certain restrictions on the ownership
and transfer of the Company's voting shares if in the view of the directors
restrictions are necessary to ensure the Company's broadcasting subsidiaries
remain eligible to be issued CRTC licenses or renew or amend these licenses.
These restrictions include prohibiting the issuance of the Company's shares or
refusing to register the transfer of such shares in certain circumstances.
Such provisions may have the effect of limiting transactions involving a
change of control of the Company to those undertaken only by Canadian
acquirers. Any amendment of certain provisions of the Company's articles
(including provisions regarding the issuance or transfer of shares) will
require the affirmative vote of at least 66 2/3% of the outstanding shares
voting thereon.

    Control and Significant Interest of Concentrated Shareholder Base
    -----------------------------------------------------------------
    Entities controlled by John Levy own 55.7% of the Company's Special
Voting Shares and approximately 37.6% of the Company's Class A Shares. In
addition, CanWest Media Inc. ("CW") owns 44.3% of the Special Voting Shares
and approximately 21.9% of the Class A Shares. Through John Levy's indirect
ownership of the Special Voting Shares and the rights of John Levy, and Levfam
in the Respective Rights Agreement and the Voting Rights Agreement, John Levy
controls the Company and is entitled to nominate a majority of the members of
the board of directors of the Company. As a result of Levfam's rights of first
refusal in the Respective Rights Agreement, and CW's rights of first offer in
the same agreement, each of these entities will have significant influence
over any sale of the Company's shares or any sale of the shares, or all or
substantially all of the assets of, the Company or any other specialty channel
owned directly or indirectly by the Company.
    In addition, if John Levy divests his indirect ownership interest in
Class A Shares below the Threshold Amount (as defined in "Principal
Shareholders - Respective Rights Agreement and Voting Rights Agreement -
Deemed Conversion") following which the Special Voting Shares indirectly owned
by him are deemed to have been converted to Class A Shares, CW (for so long as
it owns Class A Shares at least equal to the Threshold Amount) will hold a
majority of the Special Voting Shares, will acquire the rights of John Levy
and Levfam in the Respective Rights Agreement and Voting Rights Agreement and
will control the Company.
    Due to the shareholdings and contractual rights of John Levy and Levfam
referred to above, John Levy will be in a position to determine whether the
Company or its operations are acquired by a third party, to significantly
influence the election of the boards of directors of the Company and its
subsidiaries, and to generally direct the affairs of the Company.

    Possible Volatility of Stock Price
    ----------------------------------
    The market price of the Company's Class A Shares has been volatile due to
the emerging nature of the Company as well as general stock market volatility
in the past year. There is no guarantee this volatility will subside in the
future. Hence, a potential investor in the Company's shares must be prepared
to incur a loss and should generally have a longer investment time horizon.
The Company believes it can build significant shareholder value over time by
applying its growth strategies and focusing on the markets in which it
operates.

    Regulatory Approval of Certain Transactions Involving the Company
    -----------------------------------------------------------------
    Transfers of ownership or control of a licensed broadcasting undertaking
such as a specialty television service are subject to prior CRTC approval. In
addition, the acquisition of certain levels of ownership in a licensed
broadcasting undertaking must receive prior approval by the CRTC. Attempts by
the Company to undertake selective acquisitions of licensed broadcasting
undertakings are subject to prior CRTC approval. Future strategic alliances
and partnership opportunities may also be subject to CRTC approval. CRTC
approval for such initiatives cannot be guaranteed. Should the CRTC not grant
any necessary approvals or should it impose costly conditions on such
approvals, the Company's growth strategy will be adversely affected.

    Risks Related to Online Poker
    -----------------------------
    Although the Company believes that the operation of a play-for-fun poker
website is lawful in Canada, there remains a risk that the legality of such
activity, and the advertising of the same or similar activities, may be
challenged by Canadian legal authorities, or by authorities in other
jurisdictions. If such a challenge were to occur and be upheld, it could
involve substantial litigation expense, penalties, or other remedies or
restrictions being imposed on the Company.

    Disclosure Controls and Procedures

    Based on their evaluation of the Company's disclosure controls and
procedures as of the end of the period, the Chief Executive Officer and Chief
Financial Officer have concluded that such controls and procedures are
effective.

    Outlook

    Moving forward into 2008, the Company intends to continue to focus on
growing its primary asset, The Score Television Network while expanding the
development of related sports media properties and applications such as
Hardcore Sports Radio, Score Poker, Score Mobile, theScore.com and novel
web-based initiatives.

    %SEDAR: 00003035E




For further information:

For further information: Patrick Michaud, Executive Vice President and
CFO, (416) 977-6787 ext 206

Organization Profile

Score Media Inc.

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