As filed with the Securities and Exchange Commission on April 10, 2013

Registration No. 333 -    

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

QUEBECOR MEDIA INC.

(Exact name of Registrant as specified in its charter)

Province of Québec	4841	[Not applicable]
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

Quebecor Media Inc.

612 St-Jacques Street

Montréal, Québec H3C 4M8

Canada

(514) 380-1999

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

CT Corporation System

111 Eighth Avenue

New York, New York 10011

(212) 894-8600

(Name, address, including zip code, and telephone number, including area code of agent for service)

Copies to:

Chloé Poirier	Peter Wiazowski
Quebecor Media Inc.	Norton Rose Canada LLP
612 St-Jacques Street	1 Place Ville Marie, Suite 2500
Montréal, Québec H3C 4M8	Montréal, Quebec H3B 1R1
Canada	Canada
(514) 380-1999	(514) 847-4747

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable following the effectiveness of this registration statement.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per unit	Proposed maximum aggregate offering price(1)	Amount of registration fee
5 3/4% Senior Notes due January 15, 2023	US$850,000,000	100%	US$850,000,000	US$115,940

(1) Estimated solely for the purpose of calculating the registration fee under Rule 457(f) of the Securities Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 10, 2013

PROSPECTUS

QUEBECOR MEDIA INC.

Offer to Exchange

5 ³/₄% Senior Notes due January 15, 2023 (US$850,000,000 aggregate principal amount)

which have been registered under the Securities Act of 1933

for

all outstanding 5 ³/₄% Senior Notes due January 15, 2023

(US$850,000,000 aggregate principal amount)

The Exchange Offer:

• We are offering to exchange, without novation, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, all initial 5 ³/₄% Senior Notes due January 15, 2023 issued on October 11, 2012, which we refer to as the “initial notes,” that are validly tendered and not validly withdrawn, for an equal principal amount of new registered 5 ³/₄% Senior Notes due January 15, 2023, which we refer to as the “exchange notes.” We will not receive any proceeds from the exchange offer.

• You may withdraw tenders of initial notes at any time prior to the expiration of the exchange offer.

• The exchange offer expires at 5:00 PM, New York City time, on                     , 2013, unless we extend the exchange offer.

The Exchange Notes:

• The terms of the exchange notes are substantially identical to the initial notes, except for the elimination of certain transfer restrictions, registration rights and additional interest provisions relating to the initial notes.

• The exchange notes, like the initial notes, will be unsecured, and will rank effectively junior in right of payment to all of the existing and future indebtedness and other obligations, including trade payables, of our subsidiaries.

We have not applied, and do not intend to apply, for listing of the exchange notes on any national securities exchange or automated quotation system.

See “Risk Factors” beginning on page 12 of this prospectus before participating in this exchange offer.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

All untendered initial notes will continue to be subject to the restrictions on transfer set forth in the initial notes and in the indenture. In general, the initial notes may not be offered or sold, unless registered under the Securities Act of 1933, as amended (which we refer to as the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws.

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of those exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for initial notes where those initial notes were acquired by that broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration date, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

The date of this prospectus is                     , 2013.

You should rely only on the information contained in this prospectus or the documents to which we have referred you, copies of which may be obtained from us upon request. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state or other jurisdiction where the offer is not permitted.

TABLE OF CONTENTS

	Page
Explanatory Notes		ii
Industry and Market Data		ii
Enforceability of Civil Liabilities		ii
Cautionary Note Regarding Forward-Looking Statements		iii
Presentation of Financial Information		iv
Exchange Rate Data		iv
Summary		1
Risk Factors		12
Use of Proceeds		27
Consolidated Capitalization		28
Selected Consolidated Financial Information And Operating Data		29
Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Business		86
Regulation		119
Management		132
Certain Relationships and Related party Transactions		143
Our Shareholders		145
Description of other Indebtedness		146
The Exchange Offer		151
Description of the Notes		162
Certain U.S. Federal Income Tax Considerations		215
Certain Canadian Federal Income Tax Considerations		217
Plan of Distribution		220
Legal Matters		220
Independent Auditors		220
Where You Can Find More Information		221
Index to Financial Statements		F-1

The exchange notes have not been and will not be qualified for public distribution under the securities laws of any province or territory of Canada. The exchange notes are not being offered and may not be offered, directly or indirectly, in Canada or to any resident thereof except in accordance with the securities laws of the provinces and territories of Canada. The initial notes were issued pursuant to exemptions from the prospectus requirements of the applicable Canadian provincial and territorial securities laws and may be sold in Canada only pursuant to an exemption therefrom.

U.S. Bank National Association, by acceptance of its duties as trustee under the indenture with Quebecor Media governing the notes, has not reviewed this prospectus and has made no representations as to the information contained herein.

EXPLANATORY NOTES

In this prospectus, unless otherwise specified, the terms “we,” “our,” “us,” the “Company” and “Quebecor Media” refer to Quebecor Media Inc., a corporation under the Business Corporations Act (Québec) and its consolidated subsidiaries, collectively. All references in this prospectus to “Videotron” are references to our wholly-owned subsidiary Videotron Ltd. and its subsidiaries; all references in this prospectus to “Sun Media” are references to our indirect wholly-owned subsidiary Sun Media Corporation and its subsidiaries; all references in this prospectus to “Le SuperClub Vidéotron” are references to our indirect wholly-owned subsidiary Le SuperClub Vidéotron ltée; all references in this prospectus to “TVA Group” are references to our public subsidiary TVA Group Inc. and its subsidiaries; all references in this prospectus to “Archambault Group” are references to our wholly-owned subsidiary Archambault Group Inc. and its subsidiaries; all references in this prospectus to “Nurun” are references to our wholly-owned subsidiary Nurun Inc. and its subsidiaries; all references to “Quebecor Media Printing” are references to our wholly-owned subsidiary Quebecor Media Printing Inc.; and all references to “Quebecor Media Network” are references to our wholly-owned subsidiary Quebecor Media Network Inc. All references in this prospectus to “Quebecor” or “our parent company” are references to Quebecor Inc., all references to “Capital CDPQ” are refererences to CDP Capital d’Amérique Investissements inc. and all references to “CDPQ” are references to Caisse de dépôt et de placement du Québec. In this prospectus, all references to the “CRTC” are references to the Canadian Radio-television and Telecommunications Commission.

All references in this prospectus to our “Existing Notes” are references to, collectively, our 7 ³/₄% Senior Notes due 2016 originally issued on January 17, 2006, our 7 ³/₄% Senior Notes due 2016 originally issued on October 5, 2007, our 7 ³/₈% Senior Notes due January 15, 2021 originally issued on January 5, 2011, our 6 ⁵/₈% Senior Notes due 2023 originally issued on October 11, 2012 and the initial notes.

INDUSTRY AND MARKET DATA

Industry statistics and market data used throughout this prospectus were obtained from internal surveys, market research, publicly available information and industry publications, including the CRTC, BBM Canada (“BBM”), the National Cable & Telecommunications Association (“NCTA”), A.C. Nielsen Media Research, SNL Kagan, Newspapers Canada, the Audit Bureau of Circulations, NADbank^® Inc. (“NADbank^®”) and ComScore Media Metrix. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of this information is not guaranteed. Cable penetration and market share data contained in this prospectus is generally based on sources published in the first quarter of 2013.

“Readership” (as opposed to paid circulation, which is defined as average sales of a newspaper per issue) is an estimate of the number of people who read or looked into an average issue of a newspaper and is measured by an independent survey conducted by NADbank^®. According to the NADbank^® 2011 Study, readership estimates are based upon the number of people responding to the Newspaper Audience Databank survey circulated by NADbank^® who report having read or looked into one or more issues of a given newspaper during a given period equal to the publication interval of the newspaper.

Information contained in this document concerning the media industry, our general expectations concerning this industry and our market positions and market shares may also be based on estimates and assumptions made by us based on our knowledge of the industry and which we believe to be reliable. We believe, however, that this data is inherently imprecise, although generally indicative of relative market positions and market shares. Industry and company data is approximate and may reflect rounding in certain cases.

ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Province of Québec. Substantially all of our directors, controlling persons and officers, as well as certain of the experts named in this prospectus, are residents of Canada, and all or a substantial portion of their assets and substantially all of our assets are located outside the United States. We have agreed to accept service of process in any suit, action or proceeding with respect to the indenture or the notes brought in any federal or state court located in New York City by an agent designated for such purpose, and to submit to the jurisdiction of such courts in connection with such suits, actions or proceedings. However, it may be difficult for holders of the notes to effect service within the United States upon directors, officers and experts who are not residents of the United States or to realize in the United States upon judgments of courts of the United States predicated upon civil liability under U.S. federal or state securities laws or other laws of the United States. We have been advised by Norton Rose Canada LLP, our legal counsel, that there is doubt as to the enforceability in Canada against us or against our directors, officers and experts who are not residents of the United States, in original actions or in actions for enforcement of judgments of courts of the United States, of liabilities predicated solely upon U.S. federal or state securities laws.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. All statements other than statements of historical facts included in this prospectus, including, without limitation, statements under the captions “Summary,” Risk Factors,” “Use of Proceeds,” “Consolidated Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as statements located elsewhere in this prospectus regarding the prospects of our industry and our prospects, plans, financial position and business strategy, may constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate as well as beliefs and assumptions made by our management. Such statements include, in particular, statements about our plans, prospects, financial position and business strategies. Words such as “may,” “will,” “expect,” “continue,” “intend,” “estimate,” “anticipate,” “plan,” “foresee,” “believe” or “seek” or the negatives of these terms or variations of them or similar terminology are intended to identify such forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things: our anticipated business strategies; anticipated trends in our business; anticipated reorganizations of any of our segments or businesses, and any related restructuring provisions or impairment charges; and our ability to continue to control costs. We can give no assurance that these estimates and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material. Some important factors that could cause actual results to differ materially from those expressed in these forward-looking statements include, but are not limited to:

• our ability to successfully continue developing our 4G network and facilities-based mobile offering;

• general economic, financial or market conditions and variations in the businesses of our local, regional or national newspapers and broadcasting advertisers;

• the intensity of competitive activity in the industries in which we operate;

• fragmentation of the media landscape;

• new technologies that would change consumer behaviour towards our product suite;

• unanticipated higher capital spending required to deploy our network or to address continued development of competitive alternative technologies, or the inability to obtain additional capital to continue the development of our business;

• our ability to implement successfully our business and operating strategies and manage our growth and expansion;

• our ability to successfully restructure our newspapers operations to optimize their efficiency in the context of the changing newspapers industry;

• disruptions to the network through which we provide our digital television, Internet access and telephony services, and our ability to protect such services from piracy;

• labour disputes or strikes;

• changes in our ability to obtain services and equipment critical to our operations;

• changes in laws and regulations, or in their interpretations, which could result, among other things, in the loss (or reduction in value) of our licenses or markets or in an increase in competition, compliance costs or capital expenditures;

• our substantial indebtedness, the tightening of credit markets, and the restrictions on our business imposed by the terms of our debt; and

• interest rate fluctuations that affect a portion of our interest payment requirements on long-term debt.

We caution you that the above list of cautionary statements is not exhaustive. These and other factors could cause actual results to differ materially from our expectations expressed in the forward-looking statements included in this prospectus, and further details and descriptions of these and other factors are disclosed in this prospectus, including under the section “Risk Factors.” Each of these forward-looking statements speaks only as of the date of this prospectus. We will not update these statements unless the securities laws require us to do so.

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PRESENTATION OF FINANCIAL INFORMATION

IFRS and Functional Currency

Our audited consolidated financial statements for the years ended December 31, 2012, 2011 and 2010 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Prior to the adoption of IFRS on January 1, 2011, for all periods up to and including the year ended December 31, 2010, our audited consolidated financial statements were prepared in accordance with accounting principles generally accepted in Canada in effect prior to January 1, 2011, which we refer to as “Canadian GAAP.”

In this prospectus, references to Canadian Dollars, CAN$ or $ are to the lawful currency of Canada, our functional currency, and references to US Dollars or US$ are to the currency of the United States.

Non-IFRS/Non-Canadian GAAP/Non-U.S. GAAP Measures

In this prospectus, we use certain financial measures that are not calculated in accordance with IFRS, Canadian GAAP or accounting principles generally accepted in the United States (“U.S. GAAP”). We use these non-IFRS (and non-Canadian GAAP and non-U.S. GAAP) financial measures, such as average monthly revenue per user (“ARPU”), operating income, cash flows from segment operations and free cash flows from continuing operating activities, because we believe that they are meaningful measures of our performance. Our method of calculating these non-IFRS (and non-Canadian GAAP and non-U.S. GAAP) financial measures may differ from the methods used by other companies and, as a result, the non-IFRS (and non-Canadian GAAP and non-U.S. GAAP) financial measures presented in this prospectus may not be comparable to other similarly titled measures disclosed by other companies.

We provide a definition of operating income, cash flows from segment operations, free cash flows from continuing operating activities and ARPU under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating and Financial Review and Prospects — Non-IFRS Financial Measures.” We also provide a definition of operating income, and a reconciliation of operating income to the most directly comparable financial measure under each of IFRS, Canadian GAAP and U.S. GAAP in footnote 1 to the tables under “Selected Consolidated Financial Information and Operating Data.” When we discuss cash flow from segment operations in this prospectus, we provide the detailed calculation of the measure in the same section. When we discuss free cash flow from continuing operations in this prospectus, we provide a reconciliation to the most directly comparable IFRS financial measure in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating and Financial Review and Prospects.”

Unless otherwise indicated, information provided in this prospectus, including all operating data presented, is as of December 31, 2012.

EXCHANGE RATE DATA

The following table sets forth, for the periods indicated, the average, high, low and end of period noon rates published by the Bank of Canada. Such rates are set forth as U.S. dollars per CAN$1.00 and are the rates published by the Bank of Canada. On April 9, 2013, the noon rate was CAN$1.00 equals US$0.9841. We do not make any representation that Canadian dollars could have been converted into U.S. dollars at the rates shown or at any other rate. You should note that the rates set forth below may differ from the actual rates used in our accounting processes and in the preparation of our consolidated financial statements.

Year Ended:	Average (1)	High	Low	Period End
December 31, 2012	1.0004	1.0299	0.9599	1.0051
December 31, 2011	1.0111	1.0583	0.9430	0.9833
December 31, 2010	0.9709	1.0054	0.9278	1.0054
December 31, 2009	0.8757	0.9716	0.7692	0.9555
December 31, 2008	0.9381	1.0289	0.7711	0.8166

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Month Ended:	Average (2)	High	Low	Period End
April 2013 (through April 9, 2013)	0.9840	0.9868	0.9806	0.9841
March 31, 2013	0.9759	0.9846	0.9696	0.9846
February 28, 2013	0.9902	1.0040	0.9723	0.9723
January 31, 2013	1.0079	1.0164	0.9923	1.0008
December 31, 2012	1.0105	1.0162	1.0048	1.0051
November 30, 2012	1.0030	1.0074	0.9972	1.0068
October 31, 2012	1.0130	1.0243	0.9996	1.0004
September 30, 2012	1.0222	1.0299	1.0099	1.0166

(1) The average of the daily noon rates for each day during the applicable year.

(2) The average of the daily noon rates for each day during the applicable month.

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian company to non-resident investors. There are no laws of Canada or exchange restrictions affecting the remittance of dividends, interest, royalties or similar payments to non-resident holders of our securities, except as described under “Certain Canadian Federal Income Tax Considerations.”

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SUMMARY

The following summary highlights selected information included in this prospectus to help you understand Quebecor Media Inc., the exchange offer and the exchange notes. This summary may not contain all of the information that is important to you. For a more complete understanding of Quebecor Media Inc., the exchange offer and the exchange notes, we encourage you to read this entire prospectus carefully. In particular, you should read the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this prospectus, as well as the consolidated financial statements and notes thereto and related Management’s Discussion and Analysis included elsewhere in this prospectus.

Unless otherwise indicated or the context otherwise requires, the terms “Quebecor Media” “we,” “us,” “our” and our “Company,” as used in this prospectus refer to Quebecor Media Inc. and its consolidated subsidiaries. In this prospectus, references to Canadian dollars, CAN$ or $ are to the currency of Canada, and references to U.S. dollars or US$ are to the currency of the United States. As used in this prospectus, the term “initial notes” refers to the 5 ³/₄% Senior Notes due January 15, 2023 issued on October 11, 2012 in a private offering, and the term “exchange notes” refers to the 5 ³/₄% Senior Notes due January 15, 2023 offered under this prospectus. The term “notes” refers to the initial notes and the exchange notes, collectively.

Our Business

Quebecor Media is one of Canada’s leading media companies, with activities in cable distribution, telecommunications, newspaper publishing, production and distribution of printing products, television broadcasting, book, magazine and video retailing, publishing and distribution, music recording, production and distribution, and new media services. Through its operating subsidiaries, Quebecor Media holds leading positions in the creation, promotion and distribution of news, entertainment and Internet-related services that are designed to appeal to audiences in every demographic category. Quebecor Media continues to pursue a convergence strategy to capture synergies within its portfolio of media properties.

We operate in the following industry segments: Telecommunications, News Media, Broadcasting, Leisure and Entertainment, and Interactive Technologies and Communications.

Telecommunications

Through Videotron we are the largest cable operator in the Province of Québec and the third largest in Canada, in each case based on the number of cable customers, as well as an Internet service provider and a provider of cable and mobile telephony services in the Province of Québec. Our cable network covers approximately 78% of the Province of Québec’s approximately 3 million residential and commercial premises.

Our mobile network, which was launched in September 2010, is the cornerstone of a corporate business strategy geared toward harnessing all of our creative resources and providing consumers with access to technology, services and information. The deployment of our 4G network and our enhanced offering of mobile communication services for residential and business customers allow us to consolidate our position as a provider of integrated telecommunication services.

In addition, through our Le SuperClub Vidéotron subsidiary, we are the franchisor of the largest chain of video and video game rental stores in the Province of Québec and among the largest of such chains in Canada. We had a total of 205 retail locations as of December 31, 2012.

Videotron Business Sector is a premier full-service business telecommunications provider serving businesses of small, medium and large size. In recent years, we have significantly grown our customer base and have become an important player in the business telecommunication segment in the Province of Québec. Products and services include Internet, television, cable and mobile telephony services, and business solutions products such as hosting, private network connectivity and audio and video transmission.

News Media

Our newspaper publishing operations, which we conduct through our Sun Media operating subsidiary, are the largest newspaper publisher in Canada based on total paid and unpaid circulation, according to management estimates. With a 23.3% average market share, our newspaper publishing operations are the second largest newspaper publisher in Canada in terms of weekly paid circulation, according to the Newpapers Canada’s “Daily Circulation Report 2011” (the “Newspapers Canada Circulation Data”). As of December 31, 2012, our News Media segment published 36 paid-circulation dailies, six free commuter dailies and 229 community weekly newspapers, magazines, buyers guides, farm publications and other specialty

publications. Our publications have an established presence on the Internet and offer classified and local advertising, as well as other services for local advertisers and readers. As of December 31, 2012, the combined weekly circulation of our News Media segment’s paid and unpaid newspapers was approximately 14.2 million copies, according to internal statistics.

In the second quarter of 2011, all of the internet portals that were formally owned by Canoe Inc. were transferred to Sun Media (other than Réseau Contact and Jobboom which were transferred to Videotron), including the Canoe Network, which logs over 10.3 million unique visitors per month in Canada, including more than 5.1 million in the Province of Québec, and ranks as the number one general news destination in Canada (according to ComScore Media Metrix figures for December 2012).

Our News Media segment is also engaged in the distribution of newspapers, magazines, inserts and flyers; commercial printing and related services to third-parties through our national network of printing and production facilities.

Quebecor Media continues the development of its News Media segment in order to broaden its revenue streams. In this regard, the QMI Agency established two newsrooms in Montréal and Toronto, creating multiplatform teams for event coverage, and centralizing photo coverage across Canada. Since July 1, 2010, the QMI Agency has been the main supplier of general Canadian news content to our media properties. In addition, we continue to leverage our printing capacities and distribution services with Quebecor Media Network which offers flyer printing and distributing across Canada.

Broadcasting

Through TVA Group, we operate the largest private French-language television network in North America as well as 8 specialty services. Also through TVA Group, we hold minority interests in Sun News General Partnership and in the specialty channel Evasion. According to data published by the BBM People Meters (which is based on a measurement methodology using audimetry), we had a 32.2% market share of French-speaking viewers in the Province of Québec for the period from January 1, 2012 through December 31, 2012 and according to the Canadian TVB Report for the period from January 1, 2012 through November 30, 2012, our share of the Province of Québec’s French-language broadcast television advertising market was 41.5%.

For the period from January 1, 2012 through December 31, 2012, we aired thirteen of the fifteen most popular TV programs in the Province of Québec, including Céline Dion… sans attendre, Le Banquier-Spécial Halloween and Star Académie 2012. In addition, for the same period in 2012, the Réseau TVA (“TVA Network”) had 23 of the top 30 French-language prime time television shows in the Province of Québec, according to BBM People Meter data. Since May 1999, the TVA Network, which consists of ten stations, has been included in the basic channel line-up of most cable and satellite providers across Canada, enabling us to reach a significant portion of the French-speaking population of Canada outside the Province of Québec.

TVA Group also publishes 75 magazines, making it Quebec’s largest publisher of French-language magazines. TVA Group also offers custom publishing, commercial printed production services and premedia services that promote customers’ trademarks through print media.

Leisure and Entertainment

Our activities in the Leisure and Entertainment segment consist primarily of retailing CDs, books, DVDs, Blu-ray discs, musical instruments, games and toys, video games, gifts and magazines through the Archambault chain of stores and the archambault.ca e-commerce site, online sales of downloadable music and ebooks through the archambault.ca e-commerce site, distribution of CDs, DVDs and Blu-ray discs (through Select, a division of Archambault Group), online music distribution by way of file transfer and streaming music service (through Select Digital, a division of Archambault Group), music recording and video production (through Musicor, a division of Archambault Group), the recording of live concerts, the production of live-event video shows and television advertising (through Les Productions Select TV Inc., a subsidiary of Archambault Group) and the production of music shows and concerts (through Musicor Spectacles, a division of Archambault Group). Through its production capacity made possible with Musicor Spectacles and Les Productions Select TV, Archambault Group is now fully integrated in Canada’s music industry, as a producer of a wider offering of media solutions, and a growing participant in the live-event production industry.

We are also involved in book publishing and distribution through academic publisher CEC Publishing Inc. (“CEC Publishing”), 16 general literature publishers under the Groupe Sogides Inc. (“Sogides Group”) umbrella, and Messageries A.D.P. Inc. (“Messageries ADP”), the exclusive distributor for approximately 170 Québec and European French-language publishers.

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Interactive Technologies and Communications

Through Nurun, we provide interactive communication and technology services in North America, Europe and China. Nurun helps companies and other organizations develop innovative interactive products, including interface design, technical platform implementation, which includes e-commerce, online marketing programs, client relationships and social media strategy. Nurun’s clients include organizations and multinational corporations such as L’Oréal, Groupe Danone, Jean Coutu Group, Tag Heuer, Videotron, Home Depot, Google, Sony, McDonald’s, Walmart Canada, Pirelli, Sky Italy BBVA and the Government of Québec.

Our Shareholders

Quebecor Media is a 75.36% owned subsidiary of Quebecor, a communications holding company. The remaining 24.64% of Quebecor Media is owned by Capital CDPQ, a subsidiary of the Caisse de dépôt et placement du Québec, one of Canada’s largest fund managers. Neither Quebecor nor Capital CDPQ is an obligor or a guarantor of our obligations under the notes offered.

Our Corporate Structure

The following chart illustrates the relationship among Quebecor Media and its significant operating subsidiaries and holdings as of December 31, 2012 and indicates the jurisdiction of incorporation or formation of each entity. In each case, unless otherwise indicated, Quebecor Media owns a 100% equity and voting interest in its subsidiaries (where applicable, the number on the top indicates the percentage of equity owned directly and indirectly by Quebecor Media and the number on the bottom indicates the percentage of voting rights held).

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Our Principal Executive Office

Our principal executive office is located at 612 St-Jacques Street, Montréal, Québec, Canada H3C 4M8. Our telephone number is (514) 380-1999. With respect to the notes, our agent for service of process in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

4

Summary of the Exchange Offer

The summary below describes the principal terms of the exchange offer and the exchange notes. Some of the terms and conditions described below are subject to important limitations and exceptions. The “Description of the Notes” section of this prospectus contains a more detailed description of the terms and conditions of the exchange notes.

On October 11, 2012, we sold US$850,000,000 aggregate principal amount of our 5 ³/₄% Senior Notes due January 15, 2023 (which we refer to as the “initial notes”) in a private placement exempt from the registration requirements of the Securities Act, and the initial purchasers of these initial notes then resold them in reliance on other exemptions from the registration requirements of the Securities Act. Also on October 11, 2012, we entered into a registration rights agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of itself and the other initial purchasers of the initial notes, which we refer to as the registration rights agreement, in connection with the offering of the initial notes. Under the registration rights agreement, we agreed, among other things, to deliver to you this prospectus and to keep the exchange offer open for not less than 20 business days after the date on which the exchange offer is mailed to the holders of the initial notes. In addition, we agreed that if the exchange offer is not completed by October 7, 2013, we will file, and use our best efforts to cause to become effective, a shelf registration statement covering the resale of the initial notes. You are entitled to exchange your initial notes for our new 5 ³/₄% Senior Notes due January 15, 2023 (which we refer to as the “exchange notes”) in the exchange offer. The exchange notes are identical in all material respects to the initial notes except that:

• the exchange notes have been registered under the Securities Act and will be freely tradeable by persons who are not affiliated with us;

• the exchange notes are not entitled to the rights which are applicable to the initial notes under the registration rights agreement; and

• our obligation to pay special interest on the notes if (a) the exchange offer registration statement that includes this prospectus is not declared effective by September 6, 2013 or (b) if the exchange offer is not consummated by October 7, 2013, in each case, at incremental rates ranging from 0.25% per annum to 1.0% per annum depending on how long we fail to comply with these deadlines, does not apply to the exchange notes.

The Exchange Offer We are offering to exchange, without novation, up to US$850.0 million aggregate principal amount of our new 5 ³/₄% Senior Notes due January 15, 2023, which have been registered under the Securities Act, for up to US$850.0 million aggregate principal amount of our old 5 ³/₄% Senior Notes due January 15, 2023, which were issued on October 11, 2012. In order to exchange your initial notes, you must properly tender them and we must accept your tender. We will exchange all outstanding initial notes that are properly tendered and not validly withdrawn. Initial notes may be exchanged only in integral multiples of US$1,000.

Expiration of the Exchange Offer The exchange offer will expire at 5:00 p.m., New York City time, on                      , 2013, unless we decide to extend the expiration date.

Conditions to the Exchange Offer The exchange offer is subject to customary conditions, some of which we may waive. See “The Exchange Offer — Conditions to the Exchange Offer.”

Procedures for Tendering Initial notes If you wish to exchange your initial notes for exchange notes pursuant to the exchange offer, you must complete, sign and date the letter of transmittal according to the instructions contained in this prospectus and the letter of transmittal. You must also mail or otherwise deliver the letter of transmittal, together with your initial notes and any other required documents, to the exchange agent at the address set forth on the cover of the letter of transmittal. If you hold initial notes through the Depository Trust Company, or DTC, and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC, or ATOP, by which you will agree to be bound by the letter of transmittal.

By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:

• you are authorized to tender the initial notes and to acquire exchange notes, and that we will acquire good and unencumbered title thereto;

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• you are acquiring the exchange notes in the ordinary course of business;

• you have no arrangement or understanding with any person to participate in the distribution of the exchange notes;

• if you are a broker-dealer that will receive exchange notes for your own account in exchange for initial notes that were acquired as a result of market-making or other trading activities, you will deliver a prospectus, as required by law, in connection with any resale of the exchange notes received in respect of such initial notes pursuant to the exchange offer; and

• you are not our “affiliate” as defined in Rule 405 under the Securities Act.

See “The Exchange Offer — Procedures for Tendering Initial notes.”

Special Procedures for Beneficial Owners If you own a beneficial interest in initial notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian, and you wish to tender your initial notes in the exchange offer, you should contact the registered holder as soon as possible and instruct the registered holder to tender on your behalf.

Guaranteed Delivery Procedures If you wish to tender your initial notes and your initial notes are not immediately available or you cannot deliver your initial notes, the letter of transmittal or any other documents required by the letter of transmittal to the exchange agent or comply with the applicable procedures under DTC’s Automated Tender Offer Program by the expiration date, you must tender your initial notes pursuant to the guaranteed delivery procedures described in this prospectus under the heading “The Exchange Offer — Procedures for Tendering Initial notes — Guaranteed Delivery Procedures.”

Withdrawal Rights You may withdraw the tender of your initial notes at any time prior to 5:00 p.m., New York City time, on the expiration date.

Acceptance of Initial Notes and Delivery of Exchange Notes If all the conditions to the completion of this exchange offer are satisfied, we will accept any and all initial notes that are properly tendered in this exchange offer on or before 5:00 p.m., New York City time, on the expiration date. We will return any initial note that we do not accept for exchange to you without expense promptly after the expiration date. We will deliver the exchange notes to you promptly after the expiration date and acceptance of your initial notes for exchange. Please refer to the section in this prospectus entitled “The Exchange Offer — Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes.”

Consequences of Failure to Exchange the Initial Notes for the Exchange Notes All unexchanged initial notes will continue to be subject to transfer restrictions. In general, the initial notes may not be offered or sold unless registered under the Securities Act or pursuant to an exemption from registration under the Securities Act and applicable state securities laws. Therefore, the market for secondary resales of any unexchanged initial notes is likely to be minimal. Other than in connection with the exchange offer, we do not currently anticipate that we will register the initial notes under the Securities Act.

Resale of the Notes Based on interpretations by the staff of the Securities and Exchange Commission, or the SEC, set forth in no-action letters issued to third parties, we believe that the exchange notes issued in the exchange offer may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that you are:

• authorized to tender the initial notes and to acquire exchange notes, and that we will acquire good and unencumbered title thereto;

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• acquiring the exchange notes in the ordinary course of business;

• not participating, do not intend to participate, and have no arrangement or understanding with any person to participate in the distribution of the exchange notes; and

• not a broker-dealer who purchased your initial notes directly from us for resale pursuant to Rule 144A or any other available exemption under the Securities Act.

We do not intend to seek our own no-action letter, and there is no assurance that the SEC staff would make a similar determination with respect to the exchange notes. If this interpretation is inapplicable and you transfer any exchange notes issued to you in the exchange offer without delivering a prospectus or without an exemption under the Securities Act, you may incur liability under the Securities Act. We do not assume and will not indemnify you against this liability.

Each broker-dealer that receives exchange notes for its own account in exchange for the initial notes that were acquired by this broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of those exchange notes. See “Plan of Distribution.”

Any holder of notes who:

• is our “affiliate” as defined in Rule 405 under the Securities Act;

• does not acquire the exchange notes in the ordinary course of its business;

• tenders in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of the exchange notes; or

• is a broker-dealer that purchased initial notes from us to resell them pursuant to Rule 144A or any other available exemption under the Securities Act,

cannot rely on the position of the SEC staff expressed in the no-action letters described above and, in the absence of an exemption, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the exchange notes.

Obligations of Broker-Dealers If you are a broker-dealer (1) who receives exchange notes, you must acknowledge that you will deliver a prospectus in connection with any resales of the exchange notes, (2) who acquired the initial notes as a result of market making or other trading activities, you may use the exchange offer prospectus as supplemented or amended, in connection with resales of the exchange notes, or (3) who acquired the initial notes directly from us in the initial offering and not as a result of market making and trading activities, you must, in the absence of an exemption, comply with the registration and prospectus delivery requirements of the Securities Act in connection with resales of the exchange notes.

Federal Income Tax Consequences The exchange of the initial notes for the exchange notes will generally not be a taxable event for U.S. federal income tax purposes. See “Certain U.S. Federal Income Tax Considerations.”

Use of Proceeds We will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer. We are making this exchange solely to satisfy our obligations under the registration rights agreement entered into in connection with the offering of the initial notes.

We will pay all expenses incidental to the exchange offer. See “Use of Proceeds” and “The Exchange Offer — Fees and Expenses.”

Exchange Agent U.S. Bank National Association is the exchange agent for the exchange offer.

Dissenter or Appraisal Rights Holders of initial notes will not have dissenters’ rights or appraisal rights in connection with the exchange offer.

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Summary of Terms of the Exchange Notes

The summary below describes the principal terms of the exchange notes. Some of the terms and conditions described below are subject to important limitations and exceptions. The “Description of the Notes” section of this prospectus contains a more detailed description of the terms and conditions of the exchange notes. You should carefully read the entire prospectus, including the section entitled “Risk Factors” and our consolidated financial statements and the notes relating to those statements included elsewhere in this prospectus.

Issuer Quebecor Media Inc.

Exchange Notes US$850,000,000 aggregate principal amount of our new 5 ³/₄% Senior Notes due 2023.

Maturity January 15, 2023.

Interest Annual rate: 5 ³/₄%.

Payment frequency: every six months on June 15 and December 15, beginning on December 15, 2012.

Ranking The exchange notes will be senior unsecured obligations of Quebecor Media. Accordingly, the notes will be:

• senior unsecured obligations of Quebecor Media;

• equal in rank with all of Quebecor Media’s existing and future unsecured and unsubordinated indebtedness;

• effectively subordinated to all of Quebecor Media’s existing and future secured indebtedness, including any borrowings under our senior secured credit facilities, to the extent of the value of the assets securing such indebtedness; and

• structurally subordinated to all of the existing and future liabilities, including trade payables, of Quebecor Media’s subsidiaries.

As at December 31, 2012, we had $4.4 billion of consolidated long-term debt.

Optional Redemption At our option, we may redeem some or all of the exchange notes at any time or from time to time, at the make-whole redemption price described under “Description of the Notes — Optional Redemption.”

Additional Amounts Any payments made by us with respect to the exchange notes will be made without withholding or deduction for Canadian taxes unless required by law. If we are required by law to withhold or deduct for Canadian taxes with respect to a payment to the holders of exchange notes, we will pay the additional amount necessary so that the net amount received by the holders of exchange notes after the withholding is not less than the amount that they would have received in the absence of the withholding. See “Description of the Notes — Payment of Additional Amounts.”

Tax Redemption We may also redeem the exchange notes, in whole but not in part, at any time at 100% of the principal amount of the exchange notes, plus accrued and unpaid interest, if any, to the date of redemption in the event of changes affecting Canadian withholding taxes that would require Quebecor Media to pay “additional amounts” to holders of the exchange notes. See “Description of the Notes — Redemption for Changes in Withholding Taxes” and “— Payment of Additional Amounts.”

Change of Control If we experience specific kinds of changes in control, we will be required to offer to repurchase all of the exchange notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

Asset Sales If we or our restricted subsidiaries sell assets, under certain circumstances we will be required to make an offer to purchase the exchange notes with the proceeds of such asset sales at a purchase price of 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. See “Description of the Notes — Repurchase at the Option of Holders — Asset Sales.”

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Certain Covenants The indenture under which the exchange notes will be issued, among other things, limits our ability and the ability of our restricted subsidiaries to:

• incur indebtedness;

• create liens;

• pay dividends on or redeem or repurchase our stock;

• make certain types of investments;

• restrict dividends or other payments from restricted subsidiaries;

• enter into transactions with affiliates;

• issue guarantees of debt; and

• sell assets or merge with other companies.

These covenants contain important exceptions, limitations and qualifications. See “Description of the Notes.” Certain covenants will cease to apply to the exchange notes if at any time the exchange notes obtain investment grade ratings from any two of Moody’s Investors Service, Inc., Standard & Poor’s Ratings Service and DBRS Limited (or successors or replacements of any of the foregoing), provided that no event of default has occurred and is continuing. See “Description of the Notes — Covenants — Covenant Termination.”

Use of Proceeds We will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer. We are making this exchange solely to satisfy our obligations under the registration rights agreement entered into in connection with the offering of the initial notes. See “Use of Proceeds.”

Absence of an Active Public Market for the Exchange Notes We do not intend to apply for the exchange notes to be listed on any securities exchange or to arrange for any quotation system to quote them. The exchange notes are new securities with no established market for them. We cannot assure you that a market for these exchange notes will develop or that this market will be liquid. Please see the subsection of this prospectus entitled “Risk Factors — Risks Related to the Exchange Offer and the Notes — There is currently no active trading market for the exchange notes. If an active trading market does not develop for the exchange notes, you may not be able to resell them.”

Exchange Offer; Registration Rights We entered into a registration rights agreement with the initial purchasers of the Notes on October 11, 2012. The registration rights agreement requires us to file this exchange offer registration statement and contains customary provisions with respect to registration procedures, indemnity and contribution rights. We intend the registration statement relating to this prospectus and the exchange offer to satisfy our obligations under the registration rights agreement. If we do not comply with our obligations under the registration rights agreement, we will be required to pay additional special interest on the initial notes and/or the exchange notes under specific circumstances. See “The Exchange Offer — Purpose and Effect of the Exchange Offer.”

Transfer Restrictions The exchange notes are not being offered for sale and may not be offered or sold directly or indirectly in Canada except in accordance with applicable securities laws of the provinces and territories of Canada. We are not required, and do not intend, to qualify by prospectus in Canada the exchange notes, and accordingly, the exchange notes will be subject to restrictions on resale in Canada.

Risk Factors

You should refer to the information set forth in the section entitled “Risk Factors” before participating in this exchange offer.

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Summary Consolidated Financial Information and Operating Data

The summary consolidated financial information and operating data presented below as at and for each of the periods and dates indicated have been derived from, and should be read together with, our consolidated financial statements and the accompanying notes included elsewhere in this prospectus. Our consolidated financial statements are reported in Canadian dollars and have been prepared in accordance with IFRS.

The summary consolidated financial information and operating data presented below as at and for each of the years in the three-year period ended December 31, 2012 have been derived from our audited consolidated financial statements, which are comprised of consolidated balance sheets as at December 31, 2012, 2011 and 2010 and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the years in the three-year period ended December 31, 2012.

The summary consolidated financial information and operating data presented below are qualified in their entirety by the more detailed information appearing in our consolidated financial statements and the related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this prospectus. Our historical results are not necessarily indicative of our future financial condition or results of operations.

IFRS DATA

	Year Ended December 31,
	2012			2011			2010
	(in millions, except ratio)
STATEMENT OF INCOME DATA:
Revenues
Telecommunications	$	2,635.1		$	2,430.7		$	2,228.8
News Media		960.0			1,018.4			1,015.0
Broadcasting		461.1			445.5			448.2
Leisure and Entertainment		292.5			312.9			302.5
Interactive Technologies and Communications		145.5			120.9			98.0
Inter-segment		(142.4	)		(121.8	)		(92.4	)
		4,351.8			4,206.6			4,000.1
Employee costs		(1,057.8	)		(1,011.4	)		(935.3	)
Purchase of goods and services		(1,888.7	)		(1,859.0	)		(1,712.9	)
Amortization		(597.7	)		(509.3	)		(396.7	)
Financial expenses		(326.4	)		(311.5	)		(300.7	)
Gain on valuation and translation of financial instruments		198.3			54.6			46.1
Restructuring of operations, impairment of assets and other special items		(29.4	)		(30.2	)		(37.1	)
Impairment of goodwill and intangible assets		(201.5	)		—			—
Loss on debt refinancing		(67.7	)		(6.6	)		(12.3	)
Income taxes		(137.0	)		(146.4	)		(162.6	)
Net income	$	243.9		$	386.8		$	488.6
Net income attributable to:
Shareholders		245.7			374.0			470.3
Non-controlling interests		(1.8	)		12.8			18.3
OTHER FINANCIAL DATA AND RATIO:
Operating income(1) (unaudited)	$	1,405.3		$	1,336.2		$	1,351.9
Additions to property, plant, equipment and intangible assets		805.5			872.3			784.2
Comprehensive income		237.0			310.5			484.8
Comprehensive income attributable to:
Equity shareholders		241.6			305.9			469.0
Non-controlling interests		(4.6	)		4.6			15.8

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	As at and for the Year Ended December 31,
	2012		2011		2010
	(in millions)
BALANCE SHEET DATA:
Cash and cash equivalents	$	228.7	$	146.4	$	242.7
Total assets		8,960.8		8,998.7		8,558.3
Total debt (current and long-term portions)		4,428.7		3,697.9		3,513.4
Capital stock		4,116.1		1,752.4		1,752.4
Equity attributable to shareholders		2,030.5		2,889.3		2,683.4
Dividends		100.0		100.0		87.5
Number of common shares outstanding		103.3		123.6		123.6

(1) Operating income and ratios based on this measure are not required by or recognized under IFRS. We define operating income, as reconciled to net income under IFRS, as net income before amortization, financial expenses, gain on valuation and translation of financial instruments, restructuring of operations, impairment of assets and other special items, impairment of goodwill and intangible assets, loss on debt refinancing and income taxes. Operating income, and ratios using this measure, are not intended to be regarded as alternatives to other financial operating performance measures or to the consolidated statement of cash flows as a measure of liquidity and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Our parent company, Quebecor, considers the media segment as a whole and uses operating income in order to assess the performance of its investment in Quebecor Media. Our management and Board of Directors use this measure in evaluating our consolidated results as well as results of our operating segments. As such, this measure eliminates the significant level of non-cash depreciation of tangible assets and amortization of certain intangible assets, and it is unaffected by the capital structure or investment activities of Quebecor Media and of its affiliates. Operating income is also relevant because it is a significant component of our annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of capitalized tangible and intangible assets used in generating revenues in our segments. We use other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from continuing operating activities. In addition, measures like operating income are commonly used by the investment community to analyze and compare the performance of companies in the industries in which we are engaged. Our definition of operating income may not be the same as similarly titled measures reported by other companies therefore limiting its usefulness as a comparative measure. See “Presentation of Financial Information — Non-IFRS/Non-Canadian GAAP/Non-U.S. GAAP Measures.” Our operating income is calculated from and reconciled to net income under IFRS for the years ended December 31, 2012, 2011 and 2010 in the table below:

	Year Ended December 31,
	2012			2011			2010
	(in millions)
Reconciliation of operating income to net income (IFRS)
Operating Income
Telecommunications	$	1,225.0		$	1,098.8		$	1,047.3
News Media		115.1			150.1			191.4
Broadcasting		38.1			50.5			74.9
Leisure and Entertainment		13.1			26.6			27.6
Interactive Technologies and Communications		9.8			7.9			6.0
Head office		4.2			2.3			4.7
		1,405.3			1,336.2			1,351.9
Amortization		(597.7	)		(509.3	)		(396.7	)
Financial expenses		(326.4	)		(311.5	)		(300.7	)
Gain on valuation and translation of financial instruments		198.3			54.6			46.1
Restructuring of operations, impairment of assets and other special items		(29.4	)		(30.2	)		(37.1	)
Impairment of goodwill and intangible assets		(201.5	)		—			—
Loss on debt refinancing		(67.7	)		(6.6	)		(12.3	)
Income taxes		(137.0	)		(146.4	)		(162.6	)
Net income	$	243.9		$	386.8		$	488.6

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RISK FACTORS

An investment in the exchange notes involves risks. You should consider carefully the risks described below as well as the other information appearing elsewhere in this prospectus before you decide to tender your initial notes in the exchange offer.

Risks Relating to Our Business

We operate in highly competitive industries that are experiencing rapid technological developments, and our inability to compete successfully could have a material adverse effect on our business, prospects, revenues, financial condition and results of operations.

Our cable business competes against providers of direct broadcast satellite (or “DBS,” which in Canada are also referred to as “DTH,” for “direct-to-home” satellite providers), multichannel multipoint distribution systems (or “MDS”), and satellite master antenna television systems. In addition, we compete against incumbent local exchange carriers (or “ILECs”), which have secured licenses to launch video distribution services using video digital subscriber line (or “VDSL”) technology (also known as internet protocol television or “IPTV”). The main ILEC in our market holds a regional license to provide terrestrial broadcasting distribution in Montréal and several other communities in the Province of Québec. The same ILEC recently launched its own IPTV service in Montréal (including a portion of the greater Montreal area) and in Québec City. A full rollout throughout the Province of Québec is expected in the years to come. The direct access to some broadcasters’ web sites that provide in high definition streaming video-on-demand content is also available for some of the same channels we offer in our television programming. In addition, third-party Internet access providers could launch IP video services in our footprint.

We also face competition from illegal providers of cable television services and illegal access to non-Canadian DBS (also called grey market piracy), as well as from signal theft of DBS that enables customers to access programming services from U.S. and Canadian DBS without paying any fees (also called black market piracy). Competitors in the video business also include the video store industry (rental & sale) as well as other emerging content delivery platforms. Furthermore, over-the-top (“OTT”) content providers, such as Netflix, are expected to compete for viewership.

Due to ongoing technological developments, the distinction between traditional platforms (broadcasting, Internet and telephony) is fading rapidly. For instance, the Internet, as well as distribution over mobile devices, are becoming important broadcasting and distribution platforms. In addition, mobile operators, with the development of their respective 4G and Long Term Evolution and Advanced (also known as “LTE”) networks, are now offering wireless and fixed wireless Internet services. In addition, our VoIP telephony service also competes with Internet-based solutions.

In our Internet access business, we compete against other Internet service providers (or “ISPs”) offering residential and commercial Internet access services as well as WiMAX and open Wi-Fi networks in some cities. In addition, satellite operators such as Xplornet are increasing their existing high-speed Internet access (“HSIA”) capabilities with the launch of high-throughput satellites, targeting households in rural and remote locations and claiming future download speeds of up to 25 Mbps. The CRTC also requires cable and ILEC network providers, including ourselves, to offer wholesale access to our high-speed Internet systems to third party ISP competitors for the purpose of providing retail Internet access services. These third party ISP competitors may also provide telephony and networking applications.

Our cable telephony business has numerous competitors, including ILECs, competitive local exchange carriers (or “CLECs”), mobile telephony service operators and other providers of telephony, VoIP and Internet communications, including competitors that are not facilities-based and therefore have a much lower infrastructure cost. In addition, internet protocol-based (“IP-based”) products and services are generally subject to downward pricing pressure, lower margins and technological evolution, all of which could have an adverse effect on our business, prospects and results of operation.

In our mobile telephony business, we compete against a mix of market participants, some of them being active in some or all the products we offer, with others offering only mobile telephony services in our market. In addition, users of mobile voice and data systems may find their communications needs satisfied by other current or developing adjunct technologies, such as Wi-Fi, WiMax, “hotspots” or trunk radio systems, which have the technical capability to handle mobile data communication and mobile telephone calls. There can be no assurance that current or future competitors will not provide network capacity and/or services comparable or superior to those we provide or may in the future provide, or at lower prices,

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adapt more quickly to evolving industry trends or changing market requirements, or introduce competing services. For instance, some providers of mobile telephony services (including most of the incumbent carriers as well as at least one other new entrant) have launched lower-cost mobile telephony services in order to acquire additional market share and increase their respective mobile telephony penetration rates in our market. Also, the Canadian incumbents have started rolling out their LTE 4G networks, and this technology is expected to become an industry standard. The cost of implementing, modifying our existing network or competing against future technological innovations may be prohibitive to us, and we may lose customers if we fail to keep pace with these changes or fail to keep pace with surging network capacity demand. Any of these factors could adversely affect our ability to operate our mobile business successfully and profitably. Moreover, we may not be able to compete successfully in the future against existing or potential competitors, and increased competition could have a material adverse effect on our business, prospects, revenues, financial condition and results of operations. See also the risk factor “— Videotron is using a technology for which only a limited number of handsets is available, which could increase our customer acquisition costs and reduce our competitiveness”

Finally, a few of our competitors are offering special discounts to customers who subscribe to two or more of their services (cable television or IPTV, internet, residential phone and mobile telephony services). As a result, should we fail to keep our existing customers and lose them to such competitors, we may end up losing up to one subscriber for each of our services. This could have an adverse effect on our business, prospects, revenues, financial condition and results of operation.

We have entered into roaming agreements with other mobile operators in order to provide worldwide coverage to our mobile telephony customers. Our inability to renew, or substitute for, these agreements at their respective terms and on acceptable terms may place us at a competitive disadvantage, which could adversely affect our ability to operate our mobile business successfully and profitably.

We have entered into roaming agreements with multiple carriers around the world (including Canada, the United States and Europe), and have established worldwide coverage. Our inability to renew, or substitute for, these agreements at their respective terms and on acceptable terms may place us at a competitive disadvantage, which could adversely affect our ability to operate our mobile business successfully and profitably.

In addition, various aspects of mobile communications operations, including the ability of mobile providers to enter into interconnection agreements with traditional landline telephone companies and the ability of mobile providers to manage data traffic on their networks, are subject to regulation by the CRTC. Regulations adopted or actions taken by the government agencies having jurisdiction over any mobile business that we may develop could adversely affect our mobile business and operations, including actions that could increase competition or our costs.

Our reputation may be negatively impacted, which could have a material adverse effect on our business, financial condition and results of operations.

We have generally enjoyed a good reputation among the public. Our ability to maintain our existing customer relationships and to attract new customers depends to a large extent on our reputation. While we have put in place certain mechanisms to mitigate the risk that our reputation may be tarnished, including good governance practices and a code of ethics, we cannot be assured that we will continue to enjoy a good reputation nor can we be assured that events that are beyond our control will not cause our reputation to be negatively impacted. The loss or tarnishing of our reputation could have a material adverse effect on our business, prospects, financial condition and results of operations.

Videotron is using a technology for which only a limited offer of handsets is available, which could increase our customer acquisition costs and reduce our competitiveness.

Advanced wireless services (“AWS”) in the 2GHz range is a spectrum that has not been broadly used until recently for mobile telephony. While certain mobile device suppliers offer hardware for AWS technology, there are still only a limited number of AWS handsets on the market, which could reduce our ability to compete with our competitors that offer a broader range of handsets. As a result, the handset portfolio for AWS we are currently offering does not include certain more popular devices and is not as broad as those of certain other providers. Moreover, most handset manufacturers have reduced the number of stock keeping units in their portfolio. In addition, the handsets available to us are sometimes subject to an exclusivity period which varies in length when they are released to market. If manufacturers continue to offer exclusivity on future products in Canada, this could potentially reduce the number of handsets available to us in the AWS band. We could potentially incur higher customer acquisition costs due to a smaller market for this type of technology and could potentially have a reduced offer of handsets to offer to our customers, which could slow the growth of our customer base and adversely affect our ability to operate our mobile business successfully and competitively.

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We are regularly required to make capital expenditures to remain technologically and economically competitive. We may not be able to obtain additional capital to implement our business strategies and make certain capital expenditures.

Our strategy of maintaining a leadership position in the suite of products and services we offer and launching new products and services requires capital investments in our network and infrastructure to support growth in our customer base and demands for increased bandwidth capacity and other services. In this regard, we have in the past required substantial capital for the upgrade, expansion and maintenance of our network and the launch and deployment of new or additional services. We expect that additional capital expenditures will be required in the short and medium term in order to expand and maintain our systems and services, including expenditures relating to advancements in Internet access and high definition television (“HDTV”), as well as the cost of our mobile services infrastructure deployment.

The demand for wireless data services has been growing at unprecedented rates and it is projected that this demand will further accelerate, driven by the following increases: levels of broadband penetration; need for personal connectivity and networking; affordability of smartphones and Internet-only devices (e.g., high-usage data devices such as mobile Internet keys, tablets and electronic book readers); multimedia-rich services and applications; wireless competition; and possibly unlimited data plans. The anticipated levels of data traffic will represent a growing challenge to the current mobile network’s ability to serve this traffic. We may have to acquire additional spectrum, if available and if economically reasonable, in order to address this increased demand. The ability to acquire additional spectrum (if needed) is dependent on the timing and the rules established by Industry Canada. If we are not successful in acquiring additional spectrum if needed on reasonable terms, it could have a material adverse effect on our business, prospects and financial condition. See also “Regulation — Canadian Telecommunications Services — Regulatory Framework for Mobile Wireless Services.”

There can be no assurance that we will be able to obtain the funds necessary to finance our capital improvement programs, new strategies and services or other capital expenditure requirements, whether through cash from operations, additional borrowings or other sources. If we are unable to generate sufficient funds or obtain additional financing on acceptable terms, we may not be able to implement our business strategies or proceed with the capital expenditures and investments required to maintain our leadership position, and our business, financial condition, results of operations, reputation and prospects could be materially adversely affected. Even if we are able to obtain adequate funding, the period of time required to upgrade our network could have a material adverse effect on our ability to successfully compete in the future. Moreover, additional funds that we invest in our business may not translate into incremental revenues.

See also the risk factors “— We operate in highly competitive industries that are experiencing rapid technological developments, and our inability to compete successfully could have a material adverse effect on our business, prospects, revenues, financial condition and results of operations”, “— We compete, and will continue to compete, with alternative technologies, and we may be required to invest a significant amount of capital to address continuing technological evolution and development” and “— We may be required from time to time to refinance certain of our indebtedness. Our inability to do so on favorable terms, or at all, could have a material adverse effect on us.”

We may need to support increasing costs in securing access to support structures needed for our cable network.

We require access to the support structures of hydro electric and telephone utilities and to municipal rights of way to deploy our cable network. Where access to the structures of telephone utilities cannot be secured, we may apply to the CRTC to obtain a right of access under the Telecommunications Act (Canada) (the “Telecommunications Act”). We have entered into comprehensive support structure access agreements with all of the major hydro electric companies and all of the major telecommunications companies in our service territory. Our agreement with Hydro-Québec, the most significant of them, expired in December 2012. Negotiations are under way toward renewing this agreement. An increase in rates charged by Hydro-Québec could have a significant impact on Videotron’s cost structure.

We may not successfully implement our business and operating strategies.

Our business strategies are based on leveraging an integrated platform of media assets. Our strategies include offering multi-platform advertising solutions, generating and distributing content across a spectrum of media properties and assets, launching and deploying additional value-added products and services, pursuing cross-promotional opportunities, maintaining our advanced broadband network, pursuing enhanced content development to reduce costs, further integrating the operations

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of our subsidiaries, leveraging geographic clustering and maximizing customer satisfaction. We may not be able to fully implement these strategies or realize their anticipated results without incurring significant costs or at all. In addition, our ability to successfully implement these strategies could be adversely affected by a number of factors beyond our control, including operating difficulties, increased ongoing operating costs, regulatory developments, general or local economic conditions, increased competition, technological changes and the other factors described in this “Risk Factors” section. While the centralization of certain business operations and processes has the advantage of standardizing our practices, thereby reducing costs and increasing our effectiveness, it also represents a risk in itself should a business solution implemented by a centralized office throughout the organization fail to produce the intended results. We may also be required to make capital expenditures or other investments, which may affect our ability to implement our business strategies to the extent we are unable to secure additional financing on acceptable terms or generate sufficient funds internally to cover these requirements. Any material failure to implement our strategies could have a material adverse effect on our reputation, business, financial condition, prospects and results of operations and on our ability to meet our obligations, including our ability to service our indebtedness.

We could be adversely impacted by consumers’ switch from landline telephony to mobile telephony.

The recent trend toward mobile substitution or “cord-cutting” (when users cancel their landline telephony services and opt for mobile telephony services only) is largely the result of the increasing mobile penetration rate in Canada and the various unlimited offers launched by mobile operators. We may not be successful in converting our existing cable telephony subscriber base to our mobile telephony services, which could have a material adverse effect on our business, financial condition, prospects and results of operations.

We compete, and will continue to compete, with alternative technologies and we may be required to invest a significant amount of capital to address continuing technological evolution and development.

The media industry is experiencing rapid and significant technological change, which has resulted in alternative means of program and content transmission. The continued growth of the Internet has presented alternative content distribution options that compete with traditional media. Furthermore, in each of our broadcasting markets, industry regulators have authorized DTH, microwave services and VDSL services and may authorize other alternative methods of transmitting television and other content with improved speed and quality. We may not be able to successfully compete with existing or newly developed alternative technologies, such as IPTV, or we may be required to acquire, develop or integrate new technologies. The cost of the acquisition, development or implementation of new technologies could be significant and our ability to fund such implementation may be limited and could have a material adverse effect on our ability to successfully compete in the future. Any such difficulty or inability to compete could have a material adverse effect on our business, reputation, prospects, financial condition or results of operations.

The continuous technological improvement of the Internet, combined with higher download speeds and cost reductions for customers, may divert a portion of our existing television subscriber base from our video-on-demand services to new video-over-the-Internet model. While having a positive impact on the demand for our Internet services, video-over-the-Internet could adversely impact the demand for our video-on-demand services.

We have grown rapidly and are seeking to continue our growth. If we do not effectively manage our growth, our business, results of operations and financial condition could be adversely affected.

We have experienced substantial growth in our business and have significantly expanded our operations in recent years. We have sought in the past, and may in the future seek, to make opportunistic or strategic acquisitions and further expand the types of businesses in which we participate, as was the case for our expansion into facilities-based mobile telephony operations, under appropriate conditions. We can provide no assurance that we will be successful in either developing or fulfilling the objectives of any such acquisition or business expansion.

In addition, our expansion and acquisitions may require us to incur significant costs or divert significant resources, and may limit our ability to pursue other strategic and business initiatives, which could have an adverse effect on our business, financial condition, prospects or results of operations. Furthermore, if we are not successful in managing and integrating any acquired businesses, or if we are required to incur significant or unforeseen costs, our business, results of operations and financial condition could be adversely affected.

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We depend on key personnel.

Our success depends to a large extent upon the continued services of our senior management and our ability to retain skilled employees. There is intense competition for qualified management and skilled employees, and our failure to recruit, train and retain such employees could have a material adverse effect on our business, financial condition or operating results. In addition, to implement and manage our businesses and operating strategies effectively, we must maintain a high level of efficiency, performance and content quality, continue to enhance our operational and management systems, and continue to effectively attract, train, motivate and manage our employees. If we are not successful in these efforts, it may have a material adverse effect on our business, prospects, results of operations and financial condition.

Our News Media and Broadcasting businesses face substantial competition for advertising and circulation revenues/audience.

Advertising revenue is the primary source of revenue for our News Media business and our Broadcasting business. Our revenues and operating results in these businesses depend on the relative strength of the economy in our principal newspapers and television markets, as well as the strength or weakness of local, regional and national economic factors. These economic factors affect the levels of retail, national and classified News Media advertising revenue, as well as television advertising revenue. Since a significant portion of our advertising revenue is derived from retail and automotive sector advertisers, weakness in these sectors and in the real estate industry has had, and may continue to have, an adverse impact on the revenues and results of operations of our News Media and Broadcasting businesses. Continuing or deepening softness in the Canadian or U.S. economy could further adversely affect key national advertising revenue.

Advertising revenues for our News Media business are also driven by readership and circulation levels, as well as market demographics, price, service and advertiser results. Readership and circulation levels tend to be based upon the content of the newspaper, service, availability and price. A prolonged decline in readership and circulation levels in our newspaper business and lack of audience acceptance for our content would have a material effect on the rate and volume of our newspaper advertising revenues (as rates reflect circulation and readership, among other factors), and it could also affect our ability to institute circulation price increases for our print products, all of which could have a material adverse effect on our results of operations, financial condition, business and prospects.

The newspaper industry is experiencing structural changes, including the growing availability of free access to media, shifting readership habits, digital transferability, the advent of real-time information and secular changes in the advertising industry as well as the declining frequency of regular newspaper buying, particularly among young people, who increasingly rely on non-traditional media as a source for news. As a result, competition for advertising spend and circulation revenues comes not only from other newspapers and traditional medium, but also from digital media technologies, which have introduced a wide variety of media distribution platforms (including, most significantly, the Internet and distribution over wireless devices and e-readers) to readers and advertisers.

While we continue to pursue initiatives to offer value-added advertising solutions to our advertisers and to maintain our circulation base, such as investments in the re-design and overhaul of our newspaper websites and the publication of e-editions of a number of our newspapers, we may not be successful in retaining our historical share of advertising revenues or transfer our audience to our new digital products. The ability of our News Media business to grow and succeed over the long-term depends on various factors, including our ability to attract advertisers and readers (including subscribers) to our online sites. Our new initiatives developed to generate additional revenues from our websites (such as digital platform advertising and/or our paywall revenue model) may not be accepted by users and consequently, negatively affect online traffic. In addition, we can provide no assurance that we will be able to recover the costs associated with the implementation of these initiatives through increased circulation, advertising and digital revenues.

In broadcasting, the proliferation of cable and satellite channels, progress in mobile and wireless technology, the migration of television audiences to the Internet and the viewing public’s increased control over the manner, content and timing of their media consumption through personal video recording devices, have all contributed to the fragmentation of the television viewing audience and in a more challenging advertising sales environment. For example, the increased availability of personal video recording devices and video programming on the Internet, as well as increased access to various media through mobile devices, have the potential to reduce the viewing of our content through traditional distribution outlets. Some of these new technologies also give consumers greater flexibility to watch programming on a time-delayed or on-demand basis or to fast-forward or skip advertisements within our programming, which may adversely impact the advertising revenues we receive. Delayed viewing and advertising skipping have the potential to become more common as the penetration of personal video recording devices increases and content becomes increasingly available via Internet sources. If the broadcasting market continues to fragment, our audience share levels and our advertising revenues, results of operations, financial condition, business and prospects could be materially adversely affected.

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Our financial performance could be materially adversely affected if we cannot continue to distribute a wide range of television programming on commercially reasonable terms.

The financial performance of our cable and mobile services businesses depends in large part on our ability to distribute a wide range of appealing, conveniently-scheduled television programming at reasonable rates. We obtain television programming from suppliers pursuant to programming contracts. These suppliers have become, in recent years, vertically integrated and are now more limited in number. The quality and amount of television programming we offer affect the attractiveness of our services to customers and, accordingly, the rates we can charge for these services. We may be unable to maintain key programming contracts at commercially reasonable rates for television programming. Loss of programming contracts, our inability to obtain programming at reasonable rates or our inability to pass-through rate increases to our customers could have a material adverse effect on our business, financial condition, results of operations and prospects.

In addition, our ability to attract and retain cable customers depends, to a certain extent, upon our capacity to offer quality content, high definition programming, an appealing variety of programming choices and packages, as well as multiplatform distribution and on-demand content, at competitive prices. If the number of specialty channels being offered does not increase at the level and the pace comparable to our competitors, if the content offered on such channels does not receive audience acceptance, or if we are unable to offer multiplatform availability, high definition programming and on-demand content, it may have a significant negative impact on revenues from our cable operations.

We may be adversely affected by variations in our costs, quality and variety of our television programming.

The most significant costs in television broadcasting are programming and production costs. Increased competition in the television broadcasting industry, developments affecting producers and distributors of programming content, the vertical integration of distributors and broadcasters, changes in viewer preferences and other developments could impact both the availability and the costs of programming content and the costs of production. Future increases or volatility in programming and production costs could adversely affect the operating results of the Company. Developments in cable, satellite or other forms of distribution could also affect both the availability and the cost of programming and production and increase competition for advertising expenditures.

We may be adversely affected by variations in the cost of newsprint. In addition, our newspaper operations are labour-intensive, resulting in a relatively high fixed-cost structure.

Newsprint, which is the basic raw material used to publish newspapers, has historically been and may continue to be subject to significant price volatility. During 2012, the total newsprint consumption of our newspaper operations was approximately 140,300 metric tonnes. Newsprint represents our single largest raw material expense and one of our most significant operating costs. Newsprint expense represented approximately 9.4 % ($79.8 million) of our News Media segment’s operating expenses for the year ended December 31, 2012. Changes in the price of newsprint could significantly affect our income, and volatile or increased newsprint costs have had, and may in the future have, a material adverse effect on our results of operations.

In order to obtain more favourable pricing, we source substantially all of our newsprint from a single newsprint producer (our “Newsprint Supplier”). Pursuant to the terms of our agreement with our Newsprint Supplier, we obtain newsprint at a discount to market prices, receive additional volume rebates if certain thresholds are met and benefit from a ceiling on the unit cost of newsprint. Our agreement with our Newsprint Supplier expires on December 31, 2014 and there can be no assurance that we will be able to renew this agreement or that our Newsprint Supplier will continue to supply newsprint to us on favourable terms or at all after the expiry of our agreement. If we are unable to continue to source newsprint from our Newsprint Supplier on favourable terms, or if we are unable to otherwise source sufficient newsprint on terms acceptable to us, our costs could increase materially, which could materially adversely affect the profitability of our newspaper business and our results of operations. We also rely on our Newsprint Supplier for deliveries of newsprint. The availability of our newsprint supply, and therefore our operations, may be adversely affected by various factors, including labor disruptions affecting our Newsprint Supplier or the cessation of operations of our Newsprint Supplier.

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In addition, since our newspaper operations are labour intensive and located across Canada, our newspaper business has a relatively high fixed-cost structure. During periods of economic contraction, our revenue may decrease while certain costs remain fixed, resulting in decreased earnings.

We provide our digital television, Internet access and cable telephony services through a single clustered network, which may be more vulnerable to widespread disruption.

We provide our digital television, Internet access and cable telephony services through a primary headend and our analog television services through twelve additional regional headends in our single clustered network. Despite available emergency backup or replacement sites, a failure in our primary headend, including pursuant to exogenous threats, such as natural disasters, sabotage or terrorism, or dependence on certain external infrastructure providers (such as electricity), could prevent us from delivering some of our products and services throughout our network until we have resolved the failure, which may result in significant customer dissatisfaction, loss of revenues and potential civil litigation.

We are dependent upon our information technology systems and those of certain third-parties. The inability to enhance our systems, or to protect them from a security breach or disaster, could have an adverse impact on our financial results and operations.

The day-to-day operation of our business is highly dependent on information technology systems, including those of certain third-party suppliers. An inability to maintain and enhance our existing information technology systems or obtain new systems to accommodate additional customer growth or to support new products and services could have an adverse impact on our ability to acquire new subscribers, retain existing customers, produce accurate and timely billing, generate revenue growth and manage operating expenses, all of which could adversely impact our financial results and position. In addition, although we use industry standard networks and established information technology security and survivability/disaster recovery practices, a security breach or disaster or a violation of our internet security could have a material adverse effect on our reputation, business, prospects, financial condition and results of operations.

We may not be able to protect our services from piracy, which may have an adverse effect on our customer base and lead to a possible decline in revenues.

In our cable, Internet access and telephony business, we may not be able to protect our services and data from piracy. We may be unable to prevent electronic attacks to gain unauthorized access to our network, analog and digital programming, and our Internet access services. We use encryption technology to protect our cable signals from unauthorized access and to control programming access based on subscription packages. We may not be able to develop or acquire adequate technology to prevent unauthorized access to our network, programming and data, which may have an adverse effect on our customer base and lead to a possible decline in our revenues as well as significant remediation costs and legal claims.

Malicious and abusive Internet practices could impair our cable data services.

Our cable data customers utilize our network to access the Internet and, as a consequence, we or they may become victim of common malicious and abusive Internet activities, such as unsolicited mass advertising (or spam) and dissemination of viruses, worms and other destructive or disruptive software. These activities could have adverse consequences on our network and our customers, including deterioration of service, excessive call volume to call centers and damage to our customers’ equipment and data or ours. Significant incidents could lead to customer dissatisfaction and, ultimately, to loss of customers or revenue, in addition to increased costs to service our customers and protect our network. Any significant loss of cable data, customers or revenue, or a significant increase in costs of serving those customers could adversely affect our reputation, growth, business, prospects, financial condition and results of operations.

We depend on third-party suppliers and providers for services, information and other items critical to our operations.

We depend on third-party suppliers and providers for certain services, hardware and equipment that are critical to our operations and network evolution. These materials and services include set-top boxes, mobile telephony handsets and network equipment, cable and telephony modems, servers and routers, fibre-optic cable, telephony switches, inter-city links, support structures, software, the “backbone” telecommunications network for our Internet access and telephony services, and construction services for expansion and upgrades of our cable and mobile networks. These services and equipment are available from a limited number of suppliers and therefore we face the risks of supplier disruption, including pursuant to business difficulties, restructuring or supply-chain issues. If no supplier can provide us with the equipment or services that we

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require or that comply with evolving Internet and telecommunications standards or that are compatible with our other equipment and software, our business, financial condition and results of operations could be materially adversely affected. In addition, if we are unable to obtain critical equipment, software, services or other items on a timely basis and at an acceptable cost, our ability to offer our products and services and roll out our advanced services may be delayed, and our business, financial condition and results of operations could be materially adversely affected. See also the risk factor “— Videotron is using a technology for which only a limited offer of handsets is available, which could increase our customer acquisition cost and reduce our competitiveness”.

In addition, we obtain significant information through licensing arrangements with content providers. Some providers may seek to increase fees for providing their proprietary content. If we are unable to renegotiate commercially acceptable arrangements with these content providers or find alternative sources of equivalent content, our News Media operations may be adversely affected.

We may be adversely affected by litigation and other claims.

In the normal course, we are involved in various legal proceedings and other claims relating to the conduct of our business. Although, in the opinion of our management, the outcome of current pending claims and other litigation is not expected to have a material adverse effect on our reputation, results of operations, liquidity or financial position, a negative outcome in respect of any such claim or litigation could have such an adverse effect. Moreover, the cost of defending against lawsuits and diversion of management’s attention could be significant. See also “Business — Legal Proceedings” in this prospectus.

We may be adversely affected by strikes and other labour protests.

At December 31, 2012, approximately 40% of our employees were represented by collective bargaining agreements. Through our subsidiaries, we are currently party to 98 collective bargaining agreements

We are not currently subject to a labour dispute. Nevertheless, we can neither predict the outcome of current or future negotiations relating to labour disputes, union representation or renewal of collective bargaining agreements, nor provide any assurance that we will not experience future work stoppages, strikes or other forms of labour protests pending the outcome of any current or future negotiations. If our unionized workers engage in a strike or any other form of work stoppage, we could experience a significant disruption to our operations, damage to our property and/or interruption to our services, which could adversely affect our business, assets, financial position, results of operations and reputation. Even if we do not experience strikes or other forms of labour protests, the outcome of labour negotiations could adversely affect our business and results of operations. Such could be the case if current or future labour negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations. In addition, our ability to make short-term adjustments to control compensation and benefits costs is limited by the terms of our collective bargaining agreements.

We could be impacted by increased pension plan liabilities.

The economic cycle and employee demographics could have a negative impact on the funding of our defined benefit pension plans and the related expenditures. There is no guarantee that the expenditures and contributions required to fund these pension plans will not increase in the future and therefore negatively impact our operating results and financial position. Risks related to the funding of defined benefit plans may materialize if total obligations with respect to a pension plan exceed the total value of its trust fund. Shortfalls may arise due to lower-than-expected returns on investments, changes in the discount rate used to assess the pension plan’s obligations, and actuarial losses. This risk is mitigated by policies and procedures instituted by us and our pension committees to monitor investment risk and pension plan funding. It is also mitigated by the fact that some of the Company’s defined benefit pension plans are no longer offered to new employees.

We may be adversely affected by exchange rate fluctuations.

Most of our revenues and expenses are denominated in Canadian dollars. However, certain expenditures, such as the purchase of set-top boxes and cable modems, mobile devices (handsets) and certain capital expenditures, including certain costs related to the development and maintenance of our mobile network, are paid in U.S. dollars. Also, a substantial portion of our debt is denominated in U.S. dollars, and interest, principal and premium, if any, thereon is payable in U.S. dollars. For the purposes of financial reporting, any change in the value of the Canadian dollar against the U.S. dollar during a given financial reporting period would result in a foreign exchange gain or loss on the translation of any unhedged U.S. dollar-denominated

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debt into Canadian dollars. Consequently, our reported earnings and debt could fluctuate materially as a result of foreign-exchange gains or losses. Although we have entered into transactions to hedge the exchange rate risk with respect to 100% of our U.S. dollar-denominated debt outstanding at December 31, 2012, and we intend in the future to enter into such transactions for new U.S. dollar-denominated debt, these hedging transactions could, in certain circumstances, prove economically ineffective and may not be successful in protecting us against exchange rate fluctuations, or we may in the future be required to provide cash and other collateral to secure our obligations with respect to such hedging transactions, or we may in the future be unable to enter into such transactions on favorable terms or at all.

In addition, certain cross-currency interest rate swaps entered into by the Company and its subsidiaries include an option that allows each party to unwind the transaction on a specific date at the then-fair value.

The fair value of the derivative financial instruments we are party to is estimated using period-end market rates and reflects the amount we would receive or pay if the instruments were terminated and settled at those dates, as adjusted for counterparties’ non-performance risk. At December 31, 2012, the net aggregate fair value of our cross-currency interest rate swaps and foreign-exchange forward contracts was in a net liability position of $262.9 million on a consolidated basis.

Certain of the commodities we consume in our daily operations are traded on commodities exchanges or are negotiated on their respective markets in U.S. dollars and, therefore, although we pay our suppliers in Canadian dollars, the prices we pay for such commodities may be affected by fluctuations in the exchange rate. We may in the future enter into transactions to hedge the exchange rate risk related to the prices of some of those commodities. However, fluctuations of the exchange rate for our commodities purchases that are not hedged could affect the prices we pay for such commodities and could have an adverse effect on our results of operations.

The volatility and disruptions in the capital and credit markets could adversely affect our business, including the cost of new capital, our ability to refinance our scheduled debt maturities and meet our other obligations as they become due.

The capital and credit markets have experienced significant volatility and disruption over the last several years, resulting in periods of upward pressure on the cost of new debt capital and severe restrictions in credit availability for many companies. In these periods, the disruptions in the capital and credit markets have also resulted in higher interest rates or greater credit spreads on issuance of debt securities and increased costs under credit facilities. Disruptions in the capital and credit markets could increase our interest expense, thereby adversely affecting our results of operations and financial position.

Our access to funds under our existing credit facilities is dependent on the ability of the financial institutions that are parties to those facilities to meet their funding commitments. Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our credit facilities are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.

Longer-term volatility and continued disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation of financial institutions, reduced alternatives or failures of significant financial institutions could adversely affect our access to the liquidity and the affordability of funding needed for our businesses in the longer term. Such disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Continued market disruptions and broader economic challenges may lead to lower demand for certain of our products and increased incidences of customers’ inability to pay or timely pay for the services or products that we provide. Events such as these could adversely impact our results of operations, cash flows, financial position and prospects.

Risks Relating to Regulation

We are subject to extensive government regulation and policy-making. Changes in government regulation or policies could adversely affect our business, financial condition, prospects and results of operations.

Our operations are subject to extensive government regulation and policy-making in Canada. Laws and regulations govern the issuance, amendment, renewal, transfer, suspension, revocation and ownership of broadcast programming and distribution licenses. With respect to distribution, regulations govern, among other things, the distribution of Canadian and non-Canadian programming services and the maximum fees to be charged to the public in certain circumstances. There are significant restrictions on the ability of non-Canadian entities to own or control broadcasting licenses and telecommunications

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carriers in Canada, although the federal government recently eliminated the foreign ownership restrictions on telecommunications companies with less than 10 percent of total Canadian telecommunications market revenues. Our broadcasting distribution and telecommunications operations (including Internet access service) are regulated respectively by the Broadcasting Act (Canada) (the “Broadcasting Act”) and the Telecommunications Act and regulations thereunder. The CRTC, which administers the Broadcasting Act and the Telecommunications Act, has the power to grant, amend, suspend, revoke and renew broadcasting licenses, approve certain changes in corporate ownership and control, and make regulations and policies in accordance with the Broadcasting Act and the Telecommunications Act, subject to certain directions from the federal cabinet. Our wireless and cable operations are also subject to technical requirements, license conditions and performance standards under the Radiocommunication Act (Canada) (the “Radiocommunication Act”), which is administered by Industry Canada.

In addition, laws relating to communications, data protection, e-commerce, direct marketing and digital advertising and the use of public records have become more prevalent in recent years. Existing and proposed legislation and regulations, including changes in the manner in which such legislation and regulations are interpreted by courts in Canada, the United States and other jurisdictions may impose limits on our collection and use of certain kinds of information. For a more extensive description of the regulatory environment affecting our business, see “Regulation”.

Changes to the laws, regulations and policies governing our operations, the introduction of new laws, regulations, policies or terms of license, the issuance of new licenses, including additional spectrum licenses to our competitors or changes in the treatment of the tax deductibility of advertising expenditures could have a material adverse effect on our business (including how we provide products and services), financial condition, prospects and results of operations. In addition, we may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. It is difficult to predict in what form laws and regulations will be adopted or how they will be construed by the relevant courts, or the extent to which any changes might adversely affect us.

Industry Canada may not renew Videotron’s AWS licenses on acceptable terms, or at all.

Videotron’s AWS licenses were issued in December 2008 for a term of ten years. At least two years before the end of this term, and any subsequent term, Videotron may apply for a renewed license for a term of up to ten years. AWS license renewal, including whether license fees should apply for a subsequent license term, will be subject to a public consultation process initiated in year eight of the license.

We are required to provide third-party ISPs with access to our cable systems, which may result in increased competition.

The largest cable operators in Canada, including Videotron, have been required by the CRTC to provide third-party ISPs with access to their cable systems at mandated cost-based rates. Several third-party ISPs are interconnected to our cable network and are thereby providing retail Internet access services.

The CRTC also requires large cable carriers, such as us, to allow third party ISPs to provide telephony and networking (LAN/VPN) applications in addition to retail Internet access services. As a result of these requirements, we may experience increased competition for retail cable Internet and residential telephony customers. In addition, because our third-party Internet access rates are regulated by the CRTC, we could be limited in our ability to recover our costs associated with providing this access.

We are subject to a variety of environmental laws and regulations.

We are subject to a variety of environmental laws and regulations. Certain of our facilities are subject to federal, provincial, state and municipal laws and regulations concerning, among other things, emissions to the air, water and sewer discharge, the handling and disposal of hazardous materials and waste, recycling, the soil remediation of contaminated sites, or otherwise relating to the protection of the environment. In addition, laws and regulations relating to workplace safety and worker health, which, among other things, regulate employee exposure to hazardous substances in the workplace, also govern our operations. Failure to comply with present or future laws or regulations could result in substantial liability to us. Environmental laws and regulations and their interpretation have changed rapidly in recent years and may continue to do so in the future. Our properties, as well as areas surrounding those properties, particularly those in areas of long-term industrial use, may have had historic uses, or may have current uses, in the case of surrounding properties, which may affect our properties and require further study or remedial measures. We cannot provide assurance that all environmental liabilities have been determined, that any prior owner of our properties did not create a material environmental condition not known to us, that a material environmental condition does not otherwise exist as to any of our properties, or that expenditure will not be required to deal with known or unknown contamination.

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Concerns about alleged health risks relating to radiofrequency emissions may adversely affect our business.

Some studies have alleged links between radiofrequency emissions from certain wireless devices and cell sites and various health problems or possible interference with electronic medical devices, including hearing aids and pacemakers. All our cell sites comply with applicable laws and we rely on our suppliers to ensure that the network equipment and customer equipment supplied to us meets all applicable safety requirements. While there is no definitive evidence of harmful effects from exposure to radiofrequency emissions when the limits imposed by applicable laws and regulations are complied with, additional studies of radiofrequency emissions are ongoing and we cannot be sure that the results of any such future studies will not demonstrate a link between radiofrequency emissions and health problems.

The current concerns over radiofrequency emissions or perceived health risks of exposure to radiofrequency emissions could lead to additional governmental regulation, diminished use of wireless services, including Videotron’s, or expose us to potential litigation. Any of these could have a material adverse effect on our business, prospects, revenues, financial condition and results of operations.

Subject to the realization of various conditions and factors, we may have to record, in the future, asset impairment charges, which could be material and could adversely affect our future reported results of operations and shareholders’ equity.

We have recorded, in the past, asset impairment charges which, in some cases, have been material. Subject to the realization of various factors, including, but not limited to, continuous weak economic or market conditions, we may be required to record, in accordance with International Financial Reporting Standard (IFRS) accounting valuation principles, a non-cash charge if the financial statement carrying value of an asset is in excess of its recoverable value. Any such asset impairment charge could be material and may adversely affect our future reported results of operations and shareholders’ equity, although such charges would not affect our cash flow.

Risks Relating to the Exchange Offer and the Notes

If you do not properly tender your initial notes, you will not receive exchange notes in the exchange offer, and you may not be able to sell your initial notes.

We registered the exchange notes, but not the initial notes, under the Securities Act. We will only issue exchange notes in exchange for initial notes that are timely received by the exchange agent, together with all required documents, including a properly completed and duly signed letter of transmittal. Therefore, you should allow sufficient time to ensure timely delivery of the initial notes, and you should carefully follow the instructions on how to tender your initial notes.

Neither we nor the exchange agent is required to tell you of any defects or irregularities with respect to your tender of the initial notes. If you do not tender your initial notes or if we do not accept your initial notes because you did not tender your initial notes properly, then, after we consummate the exchange offer, you will continue to hold initial notes that are subject to the existing transfer restrictions. In general, you may not offer or sell the initial notes unless they are registered under the Securities Act or offered or sold in a transaction exempt from, or not subject to, the registration requirements of the Securities Act and applicable state securities laws.

Although we may in the future seek to acquire unexchanged initial notes, if any, in open market or privately negotiated transactions, through subsequent exchange offers or otherwise, we have no present plans to acquire any unexchanged initial notes or to file with the SEC a shelf registration statement to permit resales of any unexchanged initial notes. In addition, and except for initial purchasers or holders of initial notes who are prohibited by applicable law or SEC policy from participating in the exchange offer or who may not resell the notes acquired in the exchange offer without delivering a prospectus and this prospectus is not appropriate or available for such resales, holders who do not tender their initial notes will not have any further registration rights and will not have the right to receive special interest on their initial notes.

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The market for the initial notes may be significantly more limited after the exchange offer.

Because we anticipate that most holders of initial notes will elect to exchange their initial notes, we expect that the liquidity of the market for any initial notes remaining after the completion of the exchange offer may be substantially limited. Any initial notes tendered and exchanged in the exchange offer will reduce the aggregate principal amount of the initial notes outstanding. Accordingly, the liquidity of the market for any initial notes could be adversely affected and you may be unable to sell them. The extent of the market for the initial notes and the availability of price quotations would depend on a number of factors, including the number of holders of initial notes remaining outstanding and the interest of securities firms in maintaining a market in the initial notes. An issue of securities with a smaller number of units available for trading may command a lower, and more volatile, price than would a comparable issue of securities with a larger number of units available for trading. Therefore, the market price for the initial notes that are not exchanged may be lower and more volatile as a result of the reduction in the aggregate principal amount of the initial notes outstanding.

Our indebtedness and significant interest payment requirements could adversely affect our financial condition and therefore make it more difficult for us to fulfill our obligations, including our obligations under our Existing Notes.

We currently have a substantial amount of debt and significant interest payment requirements. As at December 31, 2012, we had $4.4 billion of consolidated long-term debt. Our indebtedness could have significant consequences, including the following:

• increase our vulnerability to general adverse economic and industry conditions;

• require us to dedicate a substantial portion of our cash flow from operations to making interest and principal payments on our indebtedness, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes;

• limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;

• place us at a competitive disadvantage compared to our competitors that have less debt or greater financial resources; and

• limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds on commercially reasonable terms, if at all.

Although we have significant indebtedness, as at December 31, 2012, we had approximately $1 billion available for additional borrowings under our existing credit facilities on a consolidated basis, and the indentures governing our outstanding Existing Notes permit us to incur substantial additional indebtedness in the future. If we or our subsidiaries incur additional debt, the risks we now face as a result of our leverage could intensify. For more information regarding our long-term debt and its maturities, as well as our latest financing transactions, refer to Notes 18 and 19 to our audited consolidated financial statements for the year ended December 31, 2012, which are included in this prospectus. See also the risk factor “— Restrictive covenants in our outstanding debt instruments may reduce our operating and financial flexibility, which may prevent us from capitalizing on certain business opportunities.”

Restrictive covenants in our outstanding debt instruments may reduce our operating and financial flexibility, which may prevent us from capitalizing on certain business opportunities.

Our senior secured credit facilities and the respective indentures governing our outstanding Existing Notes and the exchange notes contain a number of operating and financial covenants restricting our ability to, among other things:

• incur indebtedness;

• create liens;

• pay dividends on or redeem or repurchase our stock;

• make certain types of investments;

• restrict dividends or other payments from restricted subsidiaries;

• enter into transactions with affiliates;

• issue guarantees of debt; and

• sell assets or merge with other companies.

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If we are unable to comply with these covenants and are unable to obtain waivers from our creditors, we would be unable to make additional borrowings under our senior secured credit facilities, our indebtedness under these agreements would be in default and could, if not cured or waived, result in an acceleration of such indebtedness and cause cross-defaults under our other debt, including the notes and our Existing Notes. If our indebtedness is accelerated, we may not be able to repay our indebtedness or borrow sufficient funds to refinance it, and any such prepayment or refinancing could adversely affect our financial condition. In addition, if we incur additional debt in the future or refinance existing debt, we may be subject to additional covenants, which may be more restrictive than those to which we are currently subject. Even if we are able to comply with all applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us.

We are a holding company and depend on our subsidiaries to generate sufficient cash flow to meet our debt service obligations, including payments on our Existing Notes.

We are a holding company and a substantial portion of our assets are the capital stock of our subsidiaries. As a holding company, we conduct substantially all of our business through our subsidiaries, which generate substantially all of our revenues. Consequently, our cash flow and ability to service our debt obligations, including our outstanding Existing Notes, are dependent upon the cash flow of our existing and future subsidiaries and the distribution of this cash flow to us, or upon loans, advances or other payments made by these entities to us. The ability of these entities to pay dividends or make loans, advances or payments to us will depend upon their operating results and will be subject to applicable laws and contractual restrictions contained in the instruments governing their debt. Videotron has outstanding several series of debt securities and each of Videotron and TVA Group has credit facilities that limit the ability of each to distribute cash to us. In addition, if our existing or future subsidiaries incur additional debt in the future or refinance existing debt, we may be subject to additional contractual restrictions contained in the instruments governing that debt which may be more restrictive than those that we are currently subject to.

The ability of our subsidiaries to generate sufficient cash flow from operations to allow us to make scheduled payments on our debt obligations will depend on their future financial performance, which will be affected by a range of economic, competitive and business factors as well as structural changes, many of which are outside of our or their control. If the cash flow and earnings of our operating subsidiaries and the amount that they are able to distribute to us, as dividends or otherwise, are not sufficient for us, we may not be able to satisfy our debt obligations. If we are unable to satisfy our debt obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We can provide no assurance that any such alternative refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance these obligations on commercially reasonable terms, could have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be required from time to time to refinance certain of our indebtedness. Our inability to do so on favorable terms, or at all, could have a material adverse effect on us.

We may be required from time to time to refinance certain of our existing debt at or prior to maturity. Our ability to obtain additional financing to repay such existing debt at maturity will depend upon a number of factors, including prevailing market conditions and our operating performance. The tightening of credit availability and the challenges affecting global capital markets could also limit our or our subsidiaries’ ability to refinance existing maturities. There can be no assurance that any such financing will be available to us on favorable terms or at all. See also the risk factor “— The volatility and disruptions in the capital and credit markets could adversely affect our business, including the cost of new capital, our ability to refinance our scheduled debt maturities and meet our other obligations as they become due.”

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We may not be able to finance an offer to purchase the exchange notes in the event of a change of control as required by the indenture governing our Existing Notes because we may not have sufficient funds at the time of the change of control or our Senior Secured Credit Facilities may not allow the repurchases.

If we experience certain change of control (as that term is defined in the indenture governing the notes, as well as in the respective indentures governing out Existing Notes), or if we or our subsidiaries dispose of significant assets under specified circumstances, we may be required to make an offer to repurchase all of the exchange notes and our Existing Notes prior to maturity. We can provide no assurance that we will have sufficient funds or be able to arrange for additional financing to repurchase the notes following such change of control or asset sale. There is no sinking fund with respect to the exchange notes.

In addition, a change of control would be an event of default under our Senior Secured Credit Facilities. Any future credit agreement or other agreements relating to our senior indebtedness to which we become a party may contain similar provisions. Our failure to repurchase our Existing Notes and the exchange notes upon a change of control would, pursuant to the terms of the respective indentures governing our outstanding Existing Notes, constitute an event of default under such indentures. Any such default could, in turn, constitute an event of default under future senior indebtedness, any of which may cause the related debt to be accelerated after the expiry of any applicable notice or grace periods. If debt were to be accelerated, we may not have sufficient funds to repurchase the notes and repay the debt.

There is currently no active trading market for the exchange notes. If an active trading market does not develop for the exchange notes, you may not be able to resell them.

No active trading market currently exists for the exchange notes and an active trading market may not develop in the future. The exchange notes will not be listed on any securities exchange. If an active trading market does not develop, it could have an adverse effect on the market price of, and your ability to sell, the exchange notes. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market for the exchange notes, if any, may be subject to similar disruptions. The trading price may depend upon prevailing interest rates, the market for similar securities, and other factors, including general economic conditions and our financial condition, performance and prospects. These factors could adversely affect you as a holder of exchange notes.

In addition, the market for non-investment grade debt has historically, including recently, been subject to disruptions that have caused volatility in prices of securities. It is possible that the market for the exchange notes will be subject to such disruptions. Any such disruptions may have a negative effect on a holder’s ability to sell the exchange notes, regardless of our prospects and financial performance.

Canadian bankruptcy and insolvency laws may impair the trustee’s ability to enforce remedies under the indentures governing the exchange notes or the exchange notes themselves.

The rights of the trustee, who represent the holders of the exchange notes, to enforce remedies could be delayed by the restructuring provisions of applicable Canadian federal bankruptcy, insolvency and other restructuring legislation if the benefit of such legislation is sought with respect to us. For example, both the Bankruptcy and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada) contain provisions enabling an insolvent person to obtain a stay of proceedings against its creditors and to file a proposal to be voted on by the various classes of its affected creditors. A restructuring proposal, if accepted by the requisite majorities of each affected class of creditors, and if approved by the relevant Canadian court, would be binding on all creditors within each affected class, including those creditors that did not vote to accept the proposal. Moreover, this legislation, in certain instances, permits the insolvent debtor to retain possession and administration of its property, subject to court oversight, even though it may be in default under the applicable debt instrument, during the period that the stay against proceedings remains in place. In addition, it may be possible in certain circumstances to restructure certain debt obligations under the corporate governing statute applicable to the debtor.

The powers of the court under the Bankruptcy and Insolvency Act (Canada), and particularly under the Companies’ Creditors Arrangement Act (Canada), have been interpreted and exercised broadly so as to protect a restructuring entity from actions taken by creditors and other parties. Accordingly, we cannot predict whether payments under the notes would be made during any proceedings in bankruptcy, insolvency or other restructuring, whether or when the trustee could exercise its rights under the indenture governing the notes or whether and to what extent holders of the notes would be compensated for any delays in payment, if any, of principal, interest and costs, including the fees and disbursements of the trustee.

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Non-U.S. holders of our Existing Notes are subject to restrictions on the transfer or resale of our Existing Notes.

Although we have registered certain series of our Existing Notes under the Securities Act, we did not, and we do not intend to, qualify our notes by prospectus in Canada, and, accordingly, the Existing Notes remain subject to restrictions on resale and transfer in Canada. In addition, non-U.S. holders remain subject to restrictions imposed by the jurisdiction in which the holder is resident.

U.S. investors in the exchange notes may have difficulties enforcing civil liabilities.

We are incorporated under the laws of the Province of Québec. Substantially all of our Directors, controlling persons and officers are residents of Canada or other jurisdictions outside the United States, and all or a substantial portion of their assets and substantially all of our assets are located outside the United States. We have agreed to accept service of process in any suit, action or proceeding with respect to the indentures or the exchange notes brought in any federal or state court located in New York City by an agent designated for such purpose, and to submit to the jurisdiction of such courts in connection with such suits, actions or proceedings. However, it may be difficult for holders of initial notes or exchange notes to effect service of process within the United States upon directors, controlling persons, officers and experts who are not residents of the United States or to enforce against us or them in the United States upon judgments of courts of the United States predicated upon civil liability under United States federal or state securities laws or other laws of the United States. In addition, there is doubt as to the enforceability in Canada of liabilities predicated solely upon United States federal or state securities laws against us or against our directors, controlling persons, officers and experts who are not residents of the United States, in original actions or in actions for enforcement of judgments of courts of the United States.

Although the exchange notes are referred to as “senior notes”, they are effectively subordinated to our secured indebtedness and structurally subordinated to the liabilities of our subsidiaries.

The exchange notes are unsecured and, therefore, are effectively subordinated to any secured indebtedness that we may incur to the extent of the assets securing such indebtedness. In the event of a bankruptcy or similar proceeding involving us, the assets that serve as collateral for any secured indebtedness will be available to satisfy the obligations under the secured indebtedness before any payments are made on the notes. The notes are effectively subordinated to any borrowings under our senior secured credit facilities. In addition, our senior secured credit facilities and the respective indentures governing our Existing Notes and the notes permit us to incur additional secured indebtedness in the future, which could be significant.

Our subsidiaries will not guarantee the exchange notes and will have no obligation, contingent or otherwise, to pay amounts due under the notes or to make any funds available to pay those amounts, whether by dividend, distribution, loan or other payment. Holders of exchange notes do not have a claim as a creditor against our subsidiaries. The exchange notes are, therefore, structurally subordinated to all indebtedness and other obligations of our subsidiaries. In the event of insolvency, liquidation, reorganization, dissolution or other winding up of any such subsidiary, all of such subsidiary’s creditors (including trade creditors) would be entitled to payment in full out of such subsidiary’s assets before the holders of the exchange notes would be entitled to any payment.

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USE OF PROCEEDS

We will not receive any cash proceeds from the issuance of the exchange notes in exchange for the outstanding initial notes. We are making this exchange solely to satisfy our obligations under the registration rights agreement entered into in connection with the offering of the initial notes. In consideration for issuing the exchange notes, we will receive initial notes in like aggregate principal amount. Because we are exchanging the exchange notes for the initial notes, which have substantially identical terms, the issuance of the exchange notes will not result in any increase in our indebtedness.

The initial notes were issued on October 11, 2012, and the net proceeds to us from the offering of the initial notes, after deducting the fees payable to the initial purchasers and the expenses of the offering, were approximately $821 million.

We applied the proceeds from the offering of the initial notes, together with the proceeds from a concurrent private placement of $500 million aggregate principal amount of 6 ⁵/₈% Senior Notes due 2023 and liquidity available to us, to (i) repurchase for cancellation from CDP Capital of 20,351,307 of Quebecor Media common shares for an aggregate purchase price of $1.0 billion, (ii) redeem and retire US$320.0 million aggregate principal amount of our issued and outstanding 7 ³/₄% Existing Notes due 2016 issued in 2007 and (iii) pay related transaction fees, expenses and premiums.

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CONSOLIDATED CAPITALIZATION

The following table presents our cash and cash equivalents and our consolidated capitalization at December 31, 2012 under IFRS, on an actual basis. You should read this table in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus and with the information under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Other Indebtedness.”

	At December 31, 2012
	(Canadian dollars in millions)
Cash and cash equivalents		$	228.7
Long-term debt, including current portion:
Quebecor Media
Senior Secured Credit Facilities
Revolving credit facility			—
Export financing facility			31.9
7 3/4% Senior Notes due 2016			631.7
7 3/8% Senior Notes due 2021			325.0
5 3/4% Senior Notes due 2023			847.0
6 5/8% Senior Notes due 2023			500.0
Videotron
Senior secured credit facilities
Revolving credit facility			—
Export financing facility			58.9
6 3/8% Senior Notes due 2015			173.9
9 1/8% Senior Notes due 2018			704.3
7 1/8% Senior Notes due 2020			300.0
6 7/8% Senior Notes due 2021			300.0
5% Senior Notes due 2022			795.9
TVA Group
Revolving credit facility			—
Term Loan due 2014			75.0
Sub-total long-term debt			4,743.6
Adjustments related to embedded derivatives			(254.5	)
Financing fees, net of amortization			(60.4	)
Total long-term debt, including current portion			4,428.7
Equity attributable to shareholders			2,030.5
Total consolidated capitalization		$	6,459.2

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SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA

You should read the following selected consolidated financial information and operating data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

The following tables present selected consolidated financial information for our business presented in accordance with IFRS for each of the years ended December 31, 2012, 2011 and 2010. We derived this selected consolidated financial information from our audited consolidated financial statements, which are comprised of consolidated balance sheets as at December 31, 2012, 2011 and 2010 and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the years in the three-year period ended December 31, 2012. The selected consolidated financial information presented below should be read in conjunction with the information contained under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Operating and Financial Review and Prospects” and our audited consolidated financial statements as at December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010 and notes thereto, which are included in this prospectus. Our consolidated financial statements as at December 31, 2012, 2011 and 2010 and for the years ended December 31, 2012, 2011 and 2010 have been audited by Ernst & Young LLP, an independent registered public accounting firm. Ernst & Young LLP’s report on these consolidated financial statements (other than our consolidated balance sheet as at December 31, 2010) is included in this prospectus.

In separate tables below, we also present selected consolidated financial information presented in accordance with Canadian GAAP and, separately, in accordance with U.S. GAAP for each of the years ended December 31, 2010, 2009 and 2008. We derived this selected consolidated financial information from our audited consolidated financial statements comprised of consolidated balance sheets as at December 31, 2010, 2009 and 2008 and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the years ended December 31, 2010, 2009 and 2008, which are not included in this prospectus. We derived this U.S. GAAP selected consolidated financial information also from our consolidated financial statements as at December 31, 2010, 2009 and 2008 and for the years ended December 31, 2010, 2009 and 2008, which include a discussion of the principal differences between Canadian GAAP and U.S. GAAP. Our consolidated financial statements as at December 31, 2010, 2009 and 2008 and for the years ended December 31, 2010, 2009 and 2008 prepared in accordance with Canadian GAAP have been audited by Ernst & Young LLP, an independent registered public accounting firm. Ernst & Young LLP’s report on those consolidated financial statements prepared in accordance with Canadian GAAP is not included in this prospectus.

We caution you that the separate tables below include financial information based on IFRS, Canadian GAAP and U.S. GAAP, respectively. The information based on IFRS is not comparable to information prepared in accordance with Canadian GAAP or the information prepared in accordance with U.S. GAAP.

Our historical results are not necessarily indicative of our future financial condition or results of operations.

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IFRS DATA

	Year Ended December 31,
	2012			2011			2010
	(in millions, except ratio)
STATEMENT OF INCOME DATA:
Revenues
Telecommunications	$	2,635.1		$	2,430.7		$	2,228.8
News Media		960.0			1,018.4			1,015.0
Broadcasting		461.1			445.5			448.2
Leisure and Entertainment		292.5			312.9			302.5
Interactive Technologies and Communications		145.5			120.9			98.0
Inter-segment		(142.4	)		(121.8	)		(92.4	)
		4,351.8			4,206.6			4,000.1
Employee costs		(1,057.8	)		(1,011.4	)		(935.3	)
Purchase of goods and services		(1,888.7	)		(1,859.0	)		(1,712.9	)
Amortization		(597.7	)		(509.3	)		(396.7	)
Financial expenses		(326.4	)		(311.5	)		(300.7	)
Gain on valuation and translation of financial instruments		198.3			54.6			46.1
Restructuring of operations, impairment of assets and other special items		(29.4	)		(30.2	)		(37.1	)
Impairment of goodwill and intangible assets		(201.5	)		—			—
Loss on debt refinancing		(67.7	)		(6.6	)		(12.3	)
Income taxes		(137.0	)		(146.4	)		(162.6	)
Net income	$	243.9		$	386.8		$	488.6
Net income attributable to:
Shareholders		245.7			374.0			470.3
Non-controlling interests		(1.8	)		12.8			18.3
OTHER FINANCIAL DATA AND RATIO:
Operating income(1) (unaudited)	$	1,405.3		$	1,336.2		$	1,351.9
Additions to property, plant, equipment and intangible assets		805.5			872.3			784.2
Comprehensive income		237.0			310.5			484.8
Comprehensive income attributable to:
Equity shareholders		241.6			305.9			469.0
Non-controlling interests		(4.6	)		4.6			15.8
Ratio of earnings to fixed charges or coverage deficiency(2) (unaudited)		2.1x			2.6x			3.0x

	As at and for the Year Ended December 31,
	2012		2011		2010
	(in millions)
BALANCE SHEET DATA:
Cash and cash equivalents	$	228.7	$	146.4	$	242.7
Total assets		8,960.8		8,998.7		8,558.3
Total debt (current and long-term portions)		4,428.7		3,697.9		3,513.4
Capital stock		4,116.1		1,752.4		1,752.4
Equity attributable to shareholders		2,030.5		2,889.3		2,683.4
Dividends		100.0		100.0		87.5
Number of common shares outstanding		103.3		123.6		123.6

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CANADIAN GAAP DATA

	Year Ended December 31,
	2010			2009			2008
	(in millions, except ratio)
STATEMENT OF INCOME DATA:
Revenues
Telecommunications	$	2,228.8		$	2,020.4		$	1,827.2
News Media		1,015.0			1,035.7			1,187.7
Broadcasting		448.2			439.0			436.7
Leisure and Entertainment		302.5			307.8			301.9
Interactive Technologies and Communications		98.0			91.0			89.6
Inter-segment		(92.4	)		(87.5	)		(83.7	)
		4,000.1			3,806.4			3,759.4
Cost of sales, selling and administrative expenses		(2,652.3	)		(2,521.7	)		(2,639.8	)
Amortization		(399.7	)		(341.5	)		(316.7	)
Financial expenses		(265.4	)		(238.2	)		(276.0	)
Gain (loss) on valuation and translation of financial instruments		46.1			61.5			(3.7	)
Restructuring of operations, impairment of assets and other special items		(50.3	)		(29.6	)		(54.6	)
Impairment of goodwill and intangible assets		—			(13.6	)		(671.2	)
Loss on debt refinancing		(12.3	)		—			—
Income taxes		(166.7	)		(177.3	)		(155.2	)
Non-controlling interest		(18.8	)		(23.8	)		(23.2	)
Income from discontinued operations		—			2.9			2.3
Net income (loss)	$	480.7		$	525.1		$	(378.7	)
OTHER FINANCIAL DATA AND RATIO:
Operating income(1) (unaudited)	$	1,347.8		$	1,284.7		$	1,119.6
Additions to property, plant, equipment and intangible assets		819.5			602.6			1,103.2
Comprehensive income (loss)		524.0			555.2			(438.3	)
Ratio of earnings to fixed charges or coverage deficiency(3)(4) (unaudited)		3.0x			3.3x		$	212.4

	As at and for the Year Ended December 31,
	2010		2009		2008
	(in millions)
BALANCE SHEET DATA:
Cash and cash equivalents	$	242.7	$	300.0	$	22.5
Total assets		8,731.1		8,293.0		7,994.4
Total debt (current and long-term portions)		3,513.4		3,761.2		4,335.8
Capital stock		1,752.4		1,752.4		1,752.4
Shareholders’ equity		2,868.2		2,430.8		1,942.0
Dividends		87.5		75.0		65.0
Number of common shares outstanding		123.6		123.6		123.6

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U.S. GAAP DATA

	Year Ended December 31,
	2010			2009			2008
	(in millions, except ratio)
STATEMENT OF INCOME DATA:
Revenues
Telecommunications	$	2,235.5		$	2,029.8		$	1,827.7
News Media		1,015.0			1,035.7			1,187.7
Broadcasting		448.2			439.0			436.7
Leisure and Entertainment		302.5			307.8			301.9
Interactive Technologies and Communications		98.0			91.0			89.6
Inter-segment		(92.4	)		(87.5	)		(83.7	)
		4,006.8			3,815.8			3,759.9
Cost of sales, selling and administrative expenses		(2,665.0	)		(2,551.4	)		(2,634.6	)
Amortization		(399.7	)		(341.5	)		(316.5	)
Financial expenses		(265.4	)		(238.2	)		(276.0	)
Gain on valuation and translation of financial instruments		24.0			18.6			0.1
Restructuring of operations, impairment of assets and other special items		(50.3	)		(29.6	)		(54.6	)
Impairment of goodwill and intangible assets		—			(13.6	)		(667.4	)
Loss on debt refinancing		(12.3	)		—			—
Income taxes		(156.8	)		(162.8	)		(165.1	)
Income from discontinued operations		—			2.9			2.5
Net income (loss)	$	481.3		$	500.2		$	(351.7	)
Net income (loss) attributable to:
Equity shareholders		462.6			475.1			(376.7	)
Non-controlling interests		18.7			25.1			25.0
OTHER FINANCIAL DATA AND RATIO:
Operating income(1)	$	1,341.8		$	1,264.4		$	1,125.3
Additions to property, plant, equipment and intangible assets		811.1			600.8			1,103.2
Comprehensive income (loss)		420.9			495.0			(376.4	)
Comprehensive income (loss) attributable to:
Equity shareholders		410.9			474.0			(401.2	)
Non-controlling interests		10.0			21.0			24.8
Ratio of earnings to fixed charges or coverage deficiency(4)(5) (unaudited)		2.9x			3.1x		$	198.9

	As at and for the Year Ended December 31,
	2010		2009(1)		2008
	(in millions)
BALANCE SHEET DATA:
Cash and cash equivalents	$	242.7	$	300.0	$	22.5
Total assets		8,623.5		8,231.3		7,967.6
Total debt (current and long-term portions)		3,579.2		3,782.6		4,318.6
Capital stock		1,752.4		1,752.4		1,752.4
Shareholders’ equity		2,687.2		2,363.4		1,953.1
Dividends		87.5		75.0		65.0
Number of common shares outstanding		123.6		123.6		123.6

(1) Operating income and ratios based on this measure are not required by or recognized under IFRS, Canadian GAAP or U.S. GAAP. We define operating income, as reconciled to net income under IFRS, as net income before amortization, financial expenses, gain on valuation and translation of financial instruments, restructuring of operations, impairment of assets and other special items, impairment of goodwill and intangible assets, loss on debt refinancing and income taxes. We defined operating income, as reconciled to net income (loss) under Canadian GAAP, as net income (loss) before amortization, financial expenses, gain or loss on valuation and translation of financial instruments, restructuring of operations, impairment of assets and other special items, impairment of goodwill and intangible assets, loss on debt refinancing, income taxes, non-controlling interests and income from

32

discontinued operations. Under U.S. GAAP, we defined operating income, as reconciled to net income (loss) under U.S. GAAP, as net income (loss) before amortization, financial expenses, gain on valuation and translation of financial instruments, restructuring of operations, impairment of assets and other special items, impairment of goodwill and intangible assets, loss on debt refinancing, income taxes, and income from discontinued operations. Operating income, and ratios using this measure, are not intended to be regarded as alternatives to other financial operating performance measures or to the consolidated statement of cash flows as a measure of liquidity and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS, Canadian GAAP or U.S. GAAP. Our parent company, Quebecor, considers the media segment as a whole and uses operating income in order to assess the performance of its investment in Quebecor Media. Our management and Board of Directors use this measure in evaluating our consolidated results as well as results of our operating segments. As such, this measure eliminates the significant level of non-cash depreciation of tangible assets and amortization of certain intangible assets, and it is unaffected by the capital structure or investment activities of Quebecor Media and of its affiliates. Operating income is also relevant because it is a significant component of our annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of capitalized tangible and intangible assets used in generating revenues in our segments. We use other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from continuing operating activities. In addition, measures like operating income are commonly used by the investment community to analyze and compare the performance of companies in the industries in which we are engaged. Our definition of operating income may not be the same as similarly titled measures reported by other companies therefore limiting its usefulness as a comparative measure. See “Presentation of Financial Information — Non-IFRS/Non-Canadian GAAP/Non-U.S. GAAP Measures.” Our operating income is calculated from and reconciled to net income under IFRS for the years ended December 31, 2012, 2011 and 2010 in the table below:

	Year Ended December 31,
	2012			2011			2010
	(in millions)
Reconciliation of operating income to net income (IFRS)
Operating Income
Telecommunications	$	1,225.0		$	1,098.8		$	1,047.3
News Media		115.1			150.1			191.4
Broadcasting		38.1			50.5			74.9
Leisure and Entertainment		13.1			26.6			27.6
Interactive Technologies and Communications		9.8			7.9			6.0
Head office		4.2			2.3			4.7
		1,405.3			1,336.2			1,351.9
Amortization		(597.7	)		(509.3	)		(396.7	)
Financial expenses		(326.4	)		(311.5	)		(300.7	)
Gain on valuation and translation of financial instruments		198.3			54.6			46.1
Restructuring of operations, impairment of assets and other special items		(29.4	)		(30.2	)		(37.1	)
Impairment of goodwill and intangible assets		(201.5	)		—			—
Loss on debt refinancing		(67.7	)		(6.6	)		(12.3	)
Income taxes		(137.0	)		(146.4	)		(162.6	)
Net income	$	243.9		$	386.8		$	488.6

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The following table provides a reconciliation under Canadian GAAP of operating income to net income (loss) as presented in our historical consolidated financial statements not included in this prospectus:

	Year Ended December 31,
	2010			2009			2008
	(in millions)
Reconciliation of operating income to net income (loss) (Canadian GAAP)
Operating Income
Telecommunications	$	1,047.0		$	981.9		$	808.7
News Media		189.2			190.5			216.3
Broadcasting		76.2			80.0			66.0
Leisure and Entertainment		27.5			25.9			20.2
Interactive Technologies and Communications		6.0			4.1			5.1
Head office		1.9			2.3			3.3
		1,347.8			1,284.7			1,119.6
Amortization		(399.7	)		(341.5	)		(316.7	)
Financial expenses		(265.4	)		(238.2	)		(276.0	)
Gain (loss) on valuation and translation of financial instruments		46.1			61.5			(3.7	)
Restructuring of operations, impairment of assets and other special items		(50.3	)		(29.6	)		(54.6	)
Impairment of goodwill and intangible assets		—			(13.6	)		(671.2	)
Loss on debt refinancing		(12.3	)		—			—
Income taxes		(166.7	)		(177.3	)		(155.2	)
Non-controlling interest		(18.8	)		(23.8	)		(23.2	)
Income from discontinued operations		—			2.9			2.3
Net income (loss)	$	480.7		$	525.1		$	(378.7	)

The following table provides a reconciliation under U.S. GAAP of operating income to net income (loss) as presented in our historical consolidated financial statements not included in this prospectus:

	Year Ended December 31,
	2010			2009			2008
	(in millions)
Reconciliation of operating income to net income (loss) (U.S. GAAP)
Operating Income
Telecommunications	$	1,039.4		$	976.1		$	809.8
News Media		190.4			178.8			217.2
Broadcasting		76.3			79.9			67.1
Leisure and Entertainment		27.5			25.9			20.5
Interactive Technologies and Communications		6.0			4.1			5.1
Head office		2.2			(0.4	)		5.6
		1,341.8			1,264.4			1,125.3
Amortization		(399.7	)		(341.5	)		(316.5	)
Financial expenses		(265.4	)		(238.2	)		(276.0	)
Gain on valuation and translation of financial instruments		24.0			18.6			0.1
Restructuring of operations, impairment of assets and other special items		(50.3	)		(29.6	)		(54.6	)
Impairment of goodwill and intangible assets		—			(13.6	)		(667.4	)
Loss on debt refinancing		(12.3	)		—			—
Income taxes		(156.8	)		(162.8	)		(165.1	)
Income from discontinued operations		—			2.9			2.5
Net income (loss)	$	481.3		$	500.2		$	(351.7	)
Net income (loss) attributable to:
Equity shareholders		462.6			475.1			(376.7	)
Non-controlling interest		18.7			25.1			25.0

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(2) For the purpose of calculating the ratio of earnings to fixed charges under IFRS, (i) earnings consist of net income, plus income taxes, fixed charges, amortized capitalized interest, less interest capitalized and (ii) fixed charges consist of interest expensed and capitalized, plus premiums and discounts amortization, financing fees amortization and an estimate of the interest within rental expense.

(3) For the purpose of calculating the ratio of earnings to fixed charges under Canadian GAAP, (i) earnings consist of net income (loss), plus non-controlling interest, income taxes, fixed charges, amortized capitalized interest, less interest capitalized and (ii) fixed charges consist of interest expensed and capitalized, plus premiums and discounts amortization, financing fees amortization and an estimate of the interest within rental expense.

(4) Coverage deficiencies are expressed in millions of Canadian dollars. Our 2008 coverage deficiency was significant due to the non-cash charge related to an impairment of goodwill and intangible assets in the amount of $671.2 million pursuant to Canadian GAAP and in the amount of $667.4 million pursuant to U.S. GAAP.

(5) For the purpose of calculating the ratio of earnings to fixed charges under U.S. GAAP, (i) earnings consist of net income (loss), plus income taxes, fixed charges, amortized capitalized interest, less interest capitalized and (ii) fixed charges consist of interest expensed and capitalized, plus premiums and discounts amortization, financing fees amortization and an estimate of the interest within rental expense.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management Discussion and Analysis provides information concerning the operating results and financial condition of Quebecor Media Inc. (“Quebecor Media” or the “Corporation”). This discussion should be read in conjunction with the consolidated financial statements and accompanying notes. The Corporation’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

All amounts are in Canadian dollars (“CAN dollars”), unless otherwise indicated. This discussion contains forward-looking statements, which are subject to a variety of factors that could cause actual results to differ materially from those contemplated by these statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed under “Cautionary Statement Regarding Forward-Looking Statements” and in “Risk Factors.”

OVERVIEW

Quebecor Media is one of Canada’s leading media companies, with activities in cable distribution, telecommunications, newspaper publishing, production and distribution of printing products, television broadcasting, book, magazine and video retailing, publishing and distribution, music recording, production, distribution and streaming, new media services, video game development, out-of-home advertising and Quebec Major Junior Hockey League (“QMJHL”). Through its operating subsidiaries, Quebecor Media holds leading positions in the creation, promotion and distribution of news, entertainment and Internet-related services that are designed to appeal to audiences in every demographic category. Quebecor Media continues to pursue a convergence strategy to capture synergies within its portfolio of media properties.

Quebecor Media’s operating subsidiaries’ primary sources of revenue include: subscriptions for cable television, Internet access, cable and mobile telephony services and business solutions; newspaper advertising, circulation and Internet/portal services; television broadcasting, advertising, distribution and subscription; book and magazine publishing and distribution; retailing, distribution (traditional distribution and digital download) and production of music products (CDs, DVDs and Blu-ray discs, musical instruments, music recording and live event promotion and production); and rental and sale of videos and games.

The major components of Quebecor Media’s segments’ costs are comprised of employee costs and purchase of goods and services costs, which include royalties, rights and creation costs, cost of retail products, marketing, circulation and distribution expenses, service and printing contracts, and paper, ink and printing supplies.

TREND INFORMATION

Some of Quebecor Media’s lines of business are cyclical in nature. They are dependent on advertising and, in the News Media segment in particular, circulation sales. Operating results are therefore sensitive to prevailing economic conditions, especially in Québec, Ontario and Alberta.

In the News Media segment, circulation, measured in terms of copies sold, has been generally declining in the industry over the past several years. Also, the traditional run of press advertising for major multimarket retailers has been declining over the past few years due to consolidation in the retail industry, combined with a shift in marketing strategy toward other media. In order to respond to such competition, the News Media operations continue to develop their Internet presence through branded websites, including French—and English-language portals and specialized sites.

Changes in the price of newsprint can have a significant effect on the News Media segment’s operating results as newsprint is its principal expense, besides wages and benefits, representing approximately 9.4% ($79.8 million) of the News Media segment’s operating expenses for the year ended December 31, 2012. Newsprint prices have historically experienced significant volatility.

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Competition continues to be intense in the cable and alternative multichannel broadcast distribution industry and in the mobile telephony market. Moreover, the significant subscriber growth recorded in the Telecommunications sector in past years is not necessarily representative of future growth, due to the penetration rates currently reached.

The Telecommunications segment has in the past required substantial capital for the upgrade, expansion and maintenance of its network, the launch and expansion of new or additional services to support growth in its customer base, and demands for increased bandwidth capacity and other services. The Corporation expects that additional capital expenditures will be required in the short and medium term in order to expand and maintain the Telecommunications segment’s systems and services, including expenditures relating to the cost of its mobile services infrastructure upgrade, as well as costs relating to advancements in Internet access and high definition (“HD”) television. Moreover, the demand for wireless data services has been growing at unprecedented rates and it is projected that this demand will further increase in the future. The anticipated levels of data traffic will represent a growing challenge to the current mobile network’s ability to serve this traffic. The Telecommunications segment may have to acquire additional spectrum, as available, in order to address this increased demand.

The broadcasting industry is undergoing a period of significant change. Television audiences are fragmenting as viewing habits shift not only toward specialty channels, but also toward content delivery platforms that allow users greater control over content and timing, such as the Internet, video on demand and mobile devices. Audience fragmentation has prompted many advertisers to review their strategies. The Broadcasting segment is taking steps to adjust to the profound changes occurring in its industry so as to maintain its leadership position and offer audiences and advertisers alike the best available content, when they want it and on the media platform they want.

QUEBECOR MEDIA’S SEGMENTS

Quebecor Media’s subsidiaries operate in the following business segments: Telecommunications, News Media, Broadcasting, Leisure and Entertainment, and Interactive Technologies and Communications.

QUEBECOR MEDIA’S INTEREST IN SUBSIDIARIES

Table 1 shows Quebecor Media’s equity interest in its main subsidiaries as of December 31, 2012.

Table 1

Quebecor Media’s interest (direct and indirect) in its main subsidiaries

December 31, 2012

	Percentage of equity			Percentage of vote
Videotron Ltd.		100.0	%		100.0	%
Sun Media Corporation		100.0			100.0
Quebecor Media Printing Inc.		100.0			100.0
TVA Group Inc.		51.4			99.9
Archambault Group Inc.		100.0			100.0
Sogides Group Inc.		100.0			100.0
CEC Publishing Inc.		100.0			100.0
Nurun Inc.		100.0			100.0

Quebecor Media’s interest in its subsidiaries has not varied significantly over the past three years.

On June 30, 2012, Sun Media Corporation bought a 2% interest in SUN News General Partnership (“SUN News”) from TVA Group Inc. (“TVA Group”), bringing its interest to 51%.

On May 1, 2011, Canoe Inc. (“Canoe”) was wound up and its operations integrated into Sun Media Corporation, with the exception of the operations of the specialty sites jobboom.com and reseaucontact.com, which were integrated into Videotron Ltd (“Videotron”).

On January 1, 2011, Osprey Media Publishing Inc. (“Osprey Media”) was wound up and its operations integrated into Sun Media Corporation.

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HIGHLIGHTS SINCE END OF 2011

Quebecor Media’s sales increased by $145.2 million (3.5%) to $4.35 billion in 2012, mainly because of the 8.4% revenue growth in the Telecommunications segment.

Telecommunications

• Videotron reported revenue growth for all of its major services in 2012: Internet access (up $74.3 million or 10.6%), cable television ($66.7 million or 6.6%), mobile telephony ($58.9 million or 52.3%), and cable telephony ($18.2 million or 4.2%).

• The net increase in revenue generating units¹ was 221,800 in 2012 compared with 379,100 in 2011. The 2011 figure constituted the largest one-year increase in revenue generating units since 2008, resulting mainly from the end of over-the-air analog television broadcasting in Canada.

• The Telecommunications segment’s operating income increased by $126.2 million (11.5%) in 2012.

• At the end of February 2013, Videotron launched illico Club Unlimited, a new subscription video on demand service that carries the largest unlimited on-demand selection of French-language titles in Canada.

• Videotron rolled out illico TV new generation across its service area in the first half of 2012. illico TV new generation offers subscribers to Videotron’s digital service an entirely new interface for accessing video on demand, managing recordings, customizing the program guide, and using online services. It features innovative functions that deliver a smoother and more intuitive navigation experience.

• On May 17, 2012, Videotron launched Ultimate Speed Internet 200, an Internet access service that sets a new standard for speed.

News Media

• On February 15, 2013, Quebecor Media and Le Sac Plus announced a multiyear agreement to print and distribute JYSK Canada store flyers in Québec and English Canada. A Québec-wide media campaign developed by Quebecor Media will be carried by all of its media properties. The agreement provides for printing more than 4 million flyers per week and the distribution of nearly 23 million flyers per year in the Le Sac Plus door-knob bag in Québec. The agreement also involves Sun Media Corporation newspapers, another example of the News Media segment’s complementary multiproduct offerings.

• On November 13, 2012, Sun Media Corporation also announced new restructuring initiatives designed to streamline its organizational structure to support better execution of business processes, while improving cost effectiveness. These initiatives are expected to yield total annual savings exceeding $45.0 million.

• On September 27, 2012, Sun Media Corporation announced the reorganization of its news operations. At the same time, it announced the reorganization of its editorial, advertising and industrial operations across Canada, outside Québec, to focus on customers and on business opportunities at the local and national levels.

• On June 21, 2012, following an invitation to tender, Quebecor Media was selected to install, maintain and advertise on Société de transport de Montréal (“STM”) bus shelters for the next 20 years. It was Quebecor Media’s first move into a line of business that is experiencing significant technological change.

• Sun Media Corporation announced the acquisition of Pub Extra magazine, which is distributed monthly to nearly 190,000 households in the Montréal North Shore area. It also closed the acquisition of the community weekly L’Impact de Drummondville, with a circulation of nearly 50,000, and launched a new weekly in the Bois-Francs area, L’Écho de Victoriaville, with a circulation of more than 40,000. Quebecor Media’s Québec community newspapers network now has a combined weekly circulation of over 2.5 million copies.

• On April 19, 2012, Quebecor Media Network Inc. (“Quebecor Media Network”) announced an exclusive agreement to distribute the Sears Canada Inc. (“Sears Canada”) national flyer in the Le Sac Plus door-knob bag. Under the agreement, Quebecor Media Network will distribute more than 100 million pieces of promotional literature per year for Sears Canada.

¹  The sum of cable television, cable and mobile Internet access, and cable telephony service subscriptions and subscriber connections to the mobile telephony service.

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Broadcasting

• The 2012 edition of Star Académie was a resounding television and commercial success that had positive ripple effects across Quebecor Media’s properties and provided new opportunities for sharing value-added content. The weekly gala and the daily show broadcast on TVA Network were seen by an average of 2.2 million and 1.4 million viewers respectively. The Star Académie 2012 CD, released on March 6, 2012, sold more than 125,000 copies and was number one on the Canadian French-language charts and Québec charts (Source: Nielsen SoundScan).

• On May 31, 2012, TVA Group closed the sale of its interest in the specialty channels mysteryTV and The Cave.

Other highlights

• In October 2012, the Corporation completed its annual review of its three-year strategic plan. In view of continuous weak economic and market conditions in the newspaper and music industries, the Corporation recorded a total non-cash charge of $187.0 million for impairment of goodwill, mastheads and customer relationships.

• On March 25, 2012, Quebecor Media and Québec City announced finalization of the functional and technical program for the multipurpose arena to be built in Québec City.

• On April 4, 2012, Archambault Group Inc. (“Archambault Group”) launched ZIK, a music streaming service that offers unlimited interactive access to millions of tracks, including the largest catalogue of French-language music.

Financing

A number of financial transactions were carried out during 2012.

• On December 17, 2012, Quebecor Media prepaid the outstanding balance of its term loan “B” for a cash consideration of $153.9 million.

• On October 11, 2012, Quebecor Media took advantage of favourable conditions on the debt markets to purchase for cancellation 20,351,307 of its common shares held by CDP Capital d’Amérique Investissement inc. (“CDP Capital”), a subsidiary of Caisse de dépôt et placement du Québec, for an aggregate purchase price of $1.0 billion. The following financial operations were carried out as part of this major transaction:

• Issuance, on October 11, 2012, of US$850.0 million aggregate principal amount of Senior Notes bearing interest at 5.75% and maturing in 2023, and $500.0 million aggregate principal amount of Senior Notes bearing interest at 6.625% and maturing in 2023, the latter being one of the largest single-tranche high-yield offerings ever completed in Canada;

• Quebecor Media increased the size of the offering as a result of oversubscription and favourable financing terms, which provided an opportunity to extend the maturities of its credit instruments by redeeming, in November 2012, US$320.0 million in aggregate principal amount of its 7.75% Senior Notes issued in 2007 and maturing in 2016.

• In March 2012, Videotron issued US$800.0 million aggregate principal amount of 5.0% Senior Notes maturing in 2022.

• In March 2012, Videotron redeemed all of its 6.875% Senior Notes maturing in January 2014 in the aggregate principal amount of US$395.0 million.

• In March and April 2012, Quebecor Media redeemed US$260.0 million principal amount of its 7.75% Senior Notes maturing in March 2016 and settled the related hedging contracts.

• Quebecor Media and TVA Group amended their bank credit facilities to extend the maturity dates to 2016 and 2017 respectively and to increase Quebecor Media’s revolving credit facility maturing in 2016 by $200.0 million.

• Finally, Sun Media Corporation repaid the $37.6 million balance on its term loan credit facility and cancelled all its credit facilities.

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NON-IFRS FINANCIAL MEASURES

The non-IFRS financial measures used by the Corporation to assess its financial performance, such as operating income, cash flows from segment operations, free cash flows from continuing operating activities, and average monthly revenue per user (“ARPU”), are not calculated in accordance with or recognized by IFRS. The Corporation’s method of calculating these non-IFRS financial measures may differ from the methods used by other companies and, as a result, the non-IFRS financial measures presented in this document may not be comparable to other similarly titled measures disclosed by other companies.

Operating Income

The Corporation defines operating income, as reconciled to net income under IFRS, as net income before amortization, financial expenses, gain (loss) on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, impairment of goodwill and intangible assets, loss on debt refinancing, and income taxes. Operating income as defined above is not a measure of results that is consistent with IFRS. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation’s parent company, Quebecor Inc. (“Quebecor”), considers the media segment as a whole and uses operating income in order to assess the performance of its investment in Quebecor Media. The Corporation’s management and Board of Directors use this measure in evaluating its consolidated results as well as the results of its operating segments. This measure eliminates the significant level of impairment and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of Quebecor Media and its segments. Operating income is also relevant because it is a significant component of the Corporation’s annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of capitalized tangible and intangible assets used in generating revenues in the Corporation’s segments. Quebecor Media uses other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from continuing operating activities. In addition, measures like operating income are commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Corporation is engaged. Quebecor Media’s definition of operating income may not be the same as similarly titled measures reported by other companies.

40

Table 2 below provides a reconciliation of operating income to net income as disclosed in the Corporation’s condensed consolidated financial statements. The consolidated income statement data for the three-month periods ended December 31, 2012 and 2011 presented in Table 2 below is derived from the unaudited consolidated statements for such periods not included in this prospectus.

Table 2

Reconciliation of the operating income measure used in this report to the net income measure used in the condensed consolidated financial statements

(in millions of Canadian dollars)

	Year ended December 31									Three months ended December 31
	2012			2011			2010			2012			2011
Operating (loss) income:
Telecommunications	$	1,225.0		$	1,098.8		$	1,047.3		$	310.4		$	294.7
News Media		115.1			150.1			191.4			38.6			47.0
Broadcasting		38.1			50.5			74.9			17.2			20.6
Leisure and Entertainment		13.1			26.6			27.6			5.0			7.6
Interactive Technologies and Communications		9.8			7.9			6.0			3.4			2.5
Head Office		4.2			2.3			4.7			—			(0.8	)
		1,405.3			1,336.2			1,351.9			374.6			371.6
Amortization		(597.7	)		(509.3	)		(396.7	)		(166.8	)		(137.3	)
Financial expenses		(326.4	)		(311.5	)		(300.7	)		(91.7	)		(76.0	)
Gain (loss) on valuation and translation of financial instruments		198.3			54.6			46.1			(43.2	)		82.5
Restructuring of operations, impairment of assets and other special items		(29.4	)		(30.2	)		(37.1	)		(0.6	)		(11.2	)
Impairment of goodwill and intangible assets		(201.5	)		—			—			—			—
Loss on debt refinancing		(67.7	)		(6.6	)		(12.3	)		(60.4	)		—
Income taxes		(137.0	)		(146.4	)		(162.6	)		4.2			(61.4	)
Net income	$	243.9		$	386.8		$	488.6		$	16.1		$	168.2

Cash Flows from Segment Operations

Cash flows from segment operations represents operating income, less additions to property, plant and equipment and additions to intangible assets (excluding disbursements for licence acquisitions and renewals), plus proceeds from disposal of assets. The Corporation uses cash flows from segment operations as a measure of the liquidity generated by its segments. Cash flows from segment operations represents funds available for interest and income tax payments, expenditures related to restructuring programs, business acquisitions, the payment of dividends, and the repayment of long-term debt. Cash flows from segment operations is not a measure of liquidity that is consistent with IFRS. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. Cash flows from segment operations is used by the Corporation’s management and Board of Directors to evaluate cash flows generated by its segments’ operations. When cash flows from segment operation is reported, a detail calculation is provided in the same section of the report.

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Free Cash Flows from Continuing Operating Activities

Free cash flows from continuing operating activities consists of cash flows provided by operating activities, minus additions to property, plant and equipment and additions to intangible assets (excluding disbursements for licence acquisitions and renewals), plus proceeds from disposal of assets. The Corporation uses free cash flows from continuing operating activities as a measure of total liquidity generated on a consolidated basis. Free cash flows from continuing operating activities represents funds available for business acquisitions, the payment of dividends and the repayment of long-term debt. Free cash flows from continuing operating activities is not a measure of liquidity that is consistent with IFRS. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. The Corporation’s definition of free cash flows from continuing operating activities may not be identical to similarly titled measures reported by other companies.

Table 9 provides a reconciliation of free cash flows from continuing operating activities of the Corporation to cash flows provided by its operating activities reported in the consolidated financial statements.

Average Monthly Revenue per User

ARPU is an industry metric that the Corporation uses to measure its monthly cable television, Internet access, cable telephony and mobile telephony revenues per average basic cable customer. ARPU is not a measurement that is consistent with IFRS and the Corporation’s definition and calculation of ARPU may not be the same as identically titled measurements reported by other companies. The Corporation calculates ARPU by dividing its combined cable television, Internet access, cable telephony and mobile telephony revenues by the average number of basic customers during the applicable period, and then dividing the resulting amount by the number of months in the applicable period.

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2012/2011 FINANCIAL YEAR COMPARISON

The 2011 financial year contained an additional week in the News Media, Broadcasting, Leisure and Entertainment, and Interactive Technologies and Communications segments.

Analysis of consolidated results of Quebecor Media

Revenues: $4.35 billion, an increase of $145.2 million (3.5%).

• Revenues increased in Telecommunications ($204.4 million or 8.4% of segment revenues), Interactive Technologies and Communications ($24.6 million or 20.3%) and Broadcasting ($15.6 million or 3.5%).

• Revenues decreased in News Media ($58.4 million or-5.7%) and Leisure and Entertainment ($20.4 million or -6.5%).

Operating income: $1.41 billion, an increase of $69.1 million (5.2%).

• Operating income increased in Telecommunications ($126.2 million or 11.5% of segment operating income) and Interactive Technologies and Communications ($1.9 million or 24.1%).

• Operating income decreased in News Media ($35.0 million or-23.3%), Leisure and Entertainment ($13.5 million or -50.8%) and Broadcasting ($12.4 million or -24.6%).

• The change in the fair value of Quebecor Media stock options resulted in a $10.4 million unfavourable variance in the consolidated stock-based compensation charge in 2012 compared with 2011. The fair value of the options increased in 2012, whereas it decreased in 2011. The change in the fair value of Quebecor stock options resulted in a $2.6 million unfavourable variance in the Corporation’s consolidated stock-based compensation charge in 2012.

Net income attributable to shareholders: $245.7 million compared with $374.0 million in 2011, a decrease of $128.3 million.

• The decrease was mainly due to:

• $201.5 million charge for impairment of goodwill and intangible assets recorded in 2012;

• $88.4 million increase in amortization charge;

• $61.1 million unfavourable variance in loss on debt refinancing;

• $14.9 million increase in financial expenses.

Partially offset by:

• $143.7 million favourable variance in gain on valuation and translation of financial instruments;

• $69.1 million increase in operating income.

Amortization charge: $597.7 million, an $88.4 million increase due essentially to the impact of significant capital expenditures since 2010 in the Telecommunications segment, including amortization of 4G network equipment and impact of emphasis on equipment leasing in the promotional strategy.

Financial expenses: $326.4 million, an increase of $14.9 million due mainly to higher indebtedness.

Gain on valuation and translation of financial instruments: $198.3 million in 2012 compared with $54.6 million in 2011. The positive variance of $143.7 million was mainly due to a favourable change in the fair value of early settlement options caused by interest rate and credit premium fluctuations.

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Charge for restructuring of operations, impairment of assets and other special items: $29.4 million in 2012 compared with $30.2 million in 2011, a favourable variance of $0.8 million.

• In 2012, a $31.8 million charge for restructuring of operations was recorded in the News Media segment, mainly in connection with staff-reduction programs implemented in the third quarter of 2012, compared with an $11.0 million net charge in 2011 for restructuring initiatives implemented that year. Also as part of those initiatives, a $7.5 million charge for impairment of certain assets was recorded in 2012, compared with a $0.8 million charge for impairment of intangible assets recorded in 2011.

• A $12.9 million gain on disposal of businesses was recorded in 2012 in the Broadcasting segment as a result of the sale by TVA Group of its interest in the specialty channels mysteryTV and The Cave. A $0.1 million restructuring charge was also recorded in the Broadcasting segment in 2012. In 2011, the Broadcasting segment recognized a $0.7 million charge for impairment of intangible assets, a $0.8 million restructuring charge related primarily to staff reductions, and a $0.2 million charge for other special items.

• In connection with the startup of its 4G network, the Telecommunications segment recorded a $0.5 million charge for migration costs in 2012, compared with $14.8 million in 2011. In addition, a $0.6 million charge for restructuring of other operations was recorded in the segment in 2011.

• In 2012, $2.4 million in other special items was recorded in other segments, compared with $1.3 million in 2011.

Charge for impairment of goodwill and intangible assets: $201.5 million in 2012.

• In October 2012, the Corporation completed its annual review of its three-year strategic plan. Continuing weak economic and market conditions in the newspaper and music industries led the Corporation to perform impairment tests on the News Media and Music cash generating units (“CGUs”). Quebecor Media concluded that the recoverable amount based on value in use was less than the carrying amount of both CGUs. Accordingly, a non-cash goodwill impairment charge of $145.0 million (without any tax consequences) and a non-cash impairment charge of $30.0 million on mastheads and customer relationships were recorded in the News Media segment and a goodwill impairment charge of $12.0 million (without any tax consequences) was recorded in the Leisure and Entertainment segment.

• As a result of new tariffs adopted in 2012 with respect to business contributions for costs related to waste recovery services provided by Québec municipalities, the costs of magazine publishing activities have been adversely affected. Accordingly, the Corporation reviewed its business plan for the segment and determined that goodwill was no longer fully recoverable. A $14.5 million non-cash goodwill impairment charge (without any tax consequences) was therefore recorded in 2012.

Loss on debt refinancing: $67.7 million in 2012 compared with $6.6 million in 2011, a $61.1 million unfavourable variance.

• In 2012, Videotron redeemed all of its 6.875% Senior Notes maturing in January 2014 in the aggregate principal amount of US$395.0 million. During the same period, Quebecor Media redeemed US$580.0 million principal amount of its outstanding 7.75% Senior Notes maturing in March 2016 and settled some of the related hedging contracts. Finally, Quebecor Media prepaid the outstanding balance of its term loan “B” credit facility for a cash consideration of $153.9 million. The transactions generated a total $67.7 million loss on debt refinancing including a gain of $15.3 million previously reported in “Other comprehensive income.”

• On July 18, 2011, Videotron redeemed and withdrew US$255.0 million principal amount of its issued and outstanding 6.875% Senior Notes maturing in 2014 and settled the related hedges. On February 15, 2011, Sun Media Corporation redeemed and withdrew the entirety of its 7.625% Senior Notes in the aggregate principal amount of US$205.0 million and settled the related hedges. The transactions generated a $6.6 million loss on debt refinancing, including a loss of $0.8 million previously reported in “Other comprehensive income.”

Income tax expense: $137.0 million (effective tax rate of 24.8%, considering only taxable and deductible items) in 2012, compared with $146.4 million (effective tax rate of 27.5%) in 2011.

• The $9.4 million favourable variance was due primarily to lowering of statutory tax rate.

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SEGMENTED ANALYSIS

Telecommunications

Videotron, in Quebecor Media’s Telecommunications segment, is the largest cable operator in Québec and the third-largest in Canada by customer base. Its state-of-the-art network passes 2,701,200 homes and businesses. As of December 31, 2012, the total number of revenue generating units stood at 4,917,300. At that date, Videotron had 1,855,000 cable television customers, including 1,484,600 subscribers to its illico Digital TV service. Videotron is also an Internet Service Provider and telephony service provider, with 1,387,700 subscribers to its cable Internet access services and 1,264,900 subscribers to its cable telephony service. In September 2010, Videotron also launched a 4G network to deliver advanced mobile telephony services, including high-speed Internet access, mobile television, and many other functionalities supported by smartphones. As of December 31, 2012, there were 402,600 subscriber connections to Videotron’s mobile service. Videotron also includes Videotron Business Solutions, a full-service business telecommunications provider that offers telephony, high-speed data transmission, Internet access, hosting, and cable television services, and Le SuperClub Vidéotron ltée (“Le SuperClub Vidéotron”) and its franchise network, which sells and rents DVDs, Blu-ray discs and console games. The Telecommunications segment also includes the activities of two specialty websites, the employment and training site jobboom.com and the dating site reseaucontact.com.

2012 operating results

Revenues: $2.64 billion, an increase of $204.4 million (8.4%).

• Combined revenues from all cable television services increased $66.7 million (6.6%) to $1.08 billion, due primarily to higher revenue per client resulting from increases in some rates, the impact of migration to digital, leasing of digital set-top boxes, and an increase in subscriptions to HD services.

• Revenues from Internet access services increased $74.3 million (10.6%) to $772.5 million. The favourable variance was mainly due to customer growth and increases in some rates.

• Revenues from cable telephony service increased $18.2 million (4.2%) to $454.9 million, primarily as a result of customer base growth and more lines for business customers.

• Revenues from mobile telephony service increased $58.9 million (52.3%) to $171.6 million, essentially due to customer growth.

• Revenues of Videotron Business Solutions increased $1.8 million (2.9%) to $64.9 million.

• Revenues from customer equipment sales decreased $12.5 million (-22.4%) to $43.4 million, mainly because of campaigns promoting cable television equipment leasing.

• Revenues of Le SuperClub Vidéotron decreased $2.3 million (-10.6%) to $19.3 million, mainly as a result of store closures.

• Other revenues decreased $0.7 million (-2.3%) to $29.2 million.

ARPU: $111.57 in 2012 compared with $103.28 in 2011, an increase of $8.29 (8.0%).

Customer statistics

Revenue generating units – As of December 31, 2012, the total number of revenue generating units stood at 4,917,300, an increase of 221,800 (4.7%) from the end of 2011 (Table 4). In 2011, the number of revenue generating units increased by 379,100. The 2011 figure constituted the largest one-year increase in revenue generating units since 2008, resulting largely from the marketing of bundled services, including mobile telephony, and the end of over-the-air analog television broadcasting. Revenue generating units are the sum of cable television, cable and mobile Internet access, and cable telephony service subscriptions and subscriber connections to the mobile telephony service.

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Cable television – The combined customer base for all of Videotron’s cable television services decreased by 6,500 (-0.3%) in 2012 (Table 4), compared with an increase of 49,900 in 2011. As of December 31, 2012, Videotron had 1,855,000 customers for its cable television services, a household and business penetration rate of 68.7% (number of subscribers as a proportion of the total 2,701,200 homes and businesses passed by Videotron’s network as of the end of December 2012, up from 2,657,300 at the end of December 2011), compared with 70.1% a year earlier.

• As of December 31, 2012, the number of subscribers to the illico Digital TV service stood at 1,484,600, a 12-month increase of 83,800 (6.0%), compared with a 181,200-subscriber increase in 2011. As of December 31, 2012, illico Digital TV had a household and business penetration rate of 55.0% versus 52.7% a year earlier.

• The customer base for analog cable television services decreased by 90,300 (-19.6%) in 2012, compared with a decrease of 131,300 customers in 2011, largely as a result of customer migration to illico Digital TV.

Cable Internet access – The number of subscribers to cable Internet access services stood at 1,387,700 at December 31, 2012, an increase of 55,200 (4.1%) from year-end 2011, compared with an increase of 80,400 in 2011 (Table 4). At December 31, 2012, Videotron’s cable Internet access services had a household and business penetration rate of 51.4%, compared with 50.1% a year earlier.

Cable telephony service – The number of subscribers to cable telephony service stood at 1,264,900 at December 31, 2012, an increase of 59,600 (4.9%) from year-end 2011, compared with an increase of 91,000 in 2011 (Table 4). At December 31, 2012, the cable telephony service had a household and business penetration rate of 46.8% versus 45.4% a year earlier.

Mobile telephony service – As of December 31, 2012, the number of subscriber connections to the mobile telephony service stood at 402,600, an increase of 112,000 (38.5%) from year-end 2011, compared with an increase of 154,500 connections in 2011 (Table 3).

Table 3

Telecommunications segment year-end customer numbers (2008-2012)

(in thousands of customers)

	2012		2011		2010		2009		2008
Cable television:
Analog		370.4		460.7		592.0		692.9		788.3
Digital		1,484.6		1,400.8		1,219.6		1,084.1		927.3
		1,855.0		1,861.5		1,811.6		1,777.0		1,715.6
Cable Internet		1,387.7		1,332.5		1,252.1		1,170.6		1,063.8
Cable telephony		1,264.9		1,205.3		1,114.3		1,014.0		852.0
Mobile telephony1		402.6		290.6		136.1		82.8		63.4
Internet over wireless2		7.1		5.6		2.3		—		—
Total (revenue generating units)		4,917.3		4,695.5		4,316.4		4,044.4		3,694.8

¹  Thousands of connections

²  Internet over wireless subscriptions have been added to revenue generating units because of recent growth.

Operating income: $1.23 billion, an increase of $126.2 million (11.5%).

• The increase in operating income was mainly due to:

• impact of higher revenues.

Partially offset by:

• increases in some operating expenses, among them network maintenance costs (including the 4G network), customer service costs incurred to support customer base growth, and marketing expenses;

• $7.5 million increase in stock-based compensation charge.

Cost/revenue ratio: Operating costs for all Telecommunications segment operations, expressed as a percentage of revenues, were 53.5% in 2012, compared with 54.8% in 2011.

• The decrease was mainly due to the impact of revenue growth (as the fixed component of operating costs does not fluctuate in proportion to revenues), partially offset by the increase in some operating costs.

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Cash flows from operations

Cash flows from segment operations: $484.3 million in 2012, compared with $306.5 million in 2011 (Table 4).

• The $177.8 million increase was due to the $126.2 million increase in operating income and the $55.7 million decrease in additions to property, plant and equipment, mainly reflecting lower investment in the 4G network and in network modernization, partially offset by the $5.1 million increase in additions to intangible assets.

Table 4: Telecommunications

Cash flows from operations

(in millions of Canadian dollars)

	2012			2011			2010
Operating income	$	1,225.0		$	1,098.8		$	1,047.3
Additions to property, plant and equipment		(669.6	)		(725.3	)		(651.4	)
Additions to intangible assets		(78.3	)		(73.2	)		(71.9	)
Proceeds from disposal of assets		7.2			6.2			7.7
Cash flows from segment operations	$	484.3		$	306.5		$	331.7

News Media

In Quebecor Media’s News Media segment, Sun Media Corporation operates Canada’s largest newspaper chain, counting both paid and free circulation, according to corporate figures. As of December 31, 2012, Sun Media Corporation was publishing 36 paid-circulation dailies and 6 free dailies, including newspapers in 9 of the 10 largest urban markets in the country. It also publishes 229 community weeklies, magazines, weekly buyers’ guides, farm publications, and other specialty publications. According to corporate figures, the aggregate circulation of the News Media segment’s paid and free newspapers was approximately 14.2 million copies per week as of December 31, 2012. Sun Media Corporation holds a 51% interest in the English-language news and opinion specialty channel SUN News, launched in April 2011 in partnership with TVA Group, which holds 49%.

Sun Media Corporation’s newspapers disseminate information in traditional print form as well as through 8 urban daily news portals (journaldemontreal.com, journaldequebec.com, ottawasun.com, torontosun.com, lfpress.com, winnipegsun.com, edmontonsun.com and calgarysun.com), the portals of nearly 200 community newspapers, free dailies and magazines, as well as specialty information portals. The Canoe network also operates a number of sites, including canoe.ca, canoe.tv and lesacplus.ca, as well as the e-commerce sites micasa.ca (real estate), autonet.ca (automobiles), space.canoe.ca and espace.canoe.ca (social networking), classifiedExtra.ca (classified ads), and canoeklix.com (cost-per-click advertising solutions). The News Media segment’s portals log over 10.3 million unique visitors per month in Canada, including 5.1 million in Québec (according to comScore Media Metrix figures for December 2012).

As well, the News Media segment is engaged in the distribution of newspapers, magazines, inserts and flyers through the Quebecor Media Network, among others. The segment also includes QMI Agency, a news agency that provides content to all Quebecor Media properties and external customers. In addition, the News Media segment offers commercial printing and related services to other publishers through its national printing and production platform, and is also engaged in outdoor advertising through Quebecor Media Out of Home.

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2012 operating results

Revenues: $960.0 million, a decrease of $58.4 million (-5.7%).

• Advertising revenues decreased 8.3%; circulation revenues decreased 3.8%; digital revenues increased 0.3%; combined revenues from commercial printing and other sources increased 6.4%, mainly because of higher volume in flyer distribution.

• Revenues decreased 5.8% at the urban dailies and 7.5% at the community newspapers.

• Portal revenues decreased 22.0%. Revenues unrelated to website development decreased 18.4%. Website development has been transferred to the Nurun Inc. subsidiary (“Nurun”).

Operating income: $115.1 million, a decrease of $35.0 million (-23.3%).

• The decrease was due primarily to:

• impact of revenue decrease;

• unfavourable variance related to investments in Quebecor Media Network;

• unfavourable impact on 2012 comparative analysis of recognition in 2011 of non-recurring gains on rationalization of postretirement benefits of $5.8 million;

• $4.0 million unfavourable variance in multimedia employment tax credits;

• $3.4 million increase in stock-based compensation charge.

Partially offset by:

• $30.5 million favourable impact related to restructuring initiatives announced in November 2011 and 2012, and to other reductions in operating expenses.

Cost/revenue ratio: Operating costs for all News Media segment operations, expressed as a percentage of revenues, were 88.0% in 2012 compared with 85.3% in 2011. The increase was due to the unfavourable impact of investments in Quebecor Media Network, the fixed component of operating costs, which does not fluctuate in proportion to revenue decreases, the unfavourable impact on the 2012 comparative analysis of the recognition in 2011 of gains on rationalization of postretirement benefits, multimedia tax credits, and the stock-based compensation charge, partially offset by the favourable impact in 2012 of lower operating expenses.

Cash flows from operations

Cash flows from segment operations: $97.9 million in 2012 compared with $131.2 million in 2011 (Table 5), a decrease of $33.3 million, mainly due to the $35.0 million decrease in operating income.

Table 5: News Media

Cash flows from operations

(in millions of Canadian dollars)

	2012			2011			2010
Operating income	$	115.1		$	150.1		$	191.4
Additions to property, plant and equipment		(6.5	)		(13.7	)		(11.4	)
Additions to intangible assets		(11.9	)		(10.8	)		(12.0	)
Proceeds from disposal of assets1		1.2			5.6			44.5
Cash flows from segment operations	$	97.9		$	131.2		$	212.5

¹  2010 figures include the sale of certain tangible assets.

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Broadcasting

In the Broadcasting segment, TVA Group operates the largest French-language private television network in North America. TVA Group is the sole owner of 6 of the 10 television stations in the TVA Network and the specialty channels LCN, addik^TV, Argent, Prise 2, Yoopa, CASA, Moi&cie (formerly Mlle) and TVA Sports. TVA Group also holds interests in two other TVA Network affiliates and the Évasion specialty channel. As well, TVA Group holds a 49% interest in the English-language news and opinion specialty channel SUN News, launched in April 2011 in partnership with Sun Media Corporation, which holds 51%. TVA Group’s TVA Accès division is engaged in commercial production, its TVA Boutiques inc. subsidiary in teleshopping and online shopping, and its TVA Films division in the distribution of films and television programs. The TVA Publications Inc. (“TVA Publications”) subsidiary publishes more than 75 general-interest and entertainment magazines spread across more than 20 brands. It is the largest publisher of French-language magazines in Québec. Its TVA Studio division specializes in commercial production for the magazines.

2012 operating results

Revenues: $461.1 million, an increase of $15.6 million (3.5%).

• Revenues from television operations increased $18.9 million, mainly due to:

• increased subscription revenues at the specialty channels, attributable largely to the TVA Sports, SUN News, LCN, Moi&cie and Yoopa channels.

Partially offset by:

• unfavourable variance caused by the sale of TVA Group’s interest in the specialty channels mysteryTV and The Cave in the second quarter of 2012.

• Total publishing revenues decreased $3.3 million, mainly because of lower newsstand and advertising revenues.

Operating income: $38.1 million, a decrease of $12.4 million (-24.6%).

• Operating income from television operations decreased $6.7 million, mainly due to:

• full year of operating costs at TVA Sports in 2012, compared with four months in 2011;

• $1.9 million increase in stock-based compensation charge.

Partially offset by:

• impact of increased advertising and subscription revenues at the specialty channels.

• Operating income from publishing operations decreased by $5.8 million, mainly as a result of:

• impact of recognition of a $3.4 million charge related to the adoption of new tariffs for 2010, 2011 and 2012 with respect to business contributions for costs related to waste recovery services provided by Québec municipalities, of which $2.3 million is attributable to 2010 and 2011;

• impact of revenue decrease.

Cost/revenue ratio: Operating costs for all Broadcasting segment operations, expressed as a percentage of revenues, were 91.8% in 2012, compared with 88.7% in 2011. The increase in costs as a proportion of revenues was mainly due to the operating loss at TVA Sports, higher operating expenses at some other specialty channels, and recognition of costs related to waste-recovery services.

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Cash flows from operations

Cash flows from segment operations: $12.7 million in 2012, compared with $14.2 million in 2011 (Table 6). The $1.5 million decrease was due to the $12.4 million decline in operating income, partially offset by a $10.9 million decrease in additions to property, plant and equipment and additions to intangible assets.

Table 6: Broadcasting

Cash flows from operations

(in millions of Canadian dollars)

	2012			2011			2010
Operating income	$	38.1		$	50.5		$	74.9
Additions to property, plant and equipment		(22.1	)		(30.5	)		(18.5	)
Additions to intangible assets		(3.3	)		(5.8	)		(5.9	)
Proceeds from disposal of assets		—			—			0.8
Cash flows from segment operations	$	12.7		$	14.2		$	51.3

Leisure and Entertainment

The operations of the Leisure and Entertainment segment consist primarily of retail sales of CDs, books, DVDs, Blu-ray discs, musical instruments, games and toys, video games, gift ideas and magazines through the chain of stores operated by Archambault Group and the archambault.ca e-commerce site. They also include online sales of downloadable music and e-books; distribution of CDs and videos (Distribution Select); the ZIK music streaming service; distribution of music to Internet download services (Select Digital); music recording and video production (Musicor); recording of live concerts, production of concert videos and television commercials (Les Productions Select TV inc.), and concert promotion (Musicor Spectacles). With Musicor Spectacles and Les Productions Select TV inc., Archambault Group is a fully integrated Canadian music corporation, a producer offering a complete range of media solutions, and an increasingly active player in the concerts and cultural events industry.

The Leisure and Entertainment segment is also engaged in the book industry (Book division), specifically academic publishing through CEC Publishing Inc., general literature through 16 publishing houses, and physical and digital distribution through Messageries ADP inc. (“Messageries ADP”), the exclusive distributor for approximately 170 Québec and European French-language publishers. The general literature publishing houses and Messageries ADP are operated under the Sogides Group Inc. umbrella.

The Leisure and Entertainment segment also includes the QMJHL hockey team, Armada de Blainville-Boisbriand, and BlooBuzz Studios LP, a new Québec video game developer created in February 2012.

2012 operating results

Revenues: $292.5 million, a decrease of $20.4 million (-6.5%) compared with 2011.

• Archambault Group’s revenues decreased 4.2%, mainly because of:

• 5.0% decrease in retail sales due to lower sales of CDs, videos and books than in 2011, which included an extra week;

• 9.3% decrease in distribution revenues reflecting the larger number of successful CD releases in 2011.

• The Book division’s revenues decreased by 11.7%, mainly because of lower sales of textbooks in the academic segment following completion of the education reform in Québec and lower revenues from general literature publishing and distribution.

Operating income: $13.1 million, a decrease of $13.5 million (-50.8%) compared with 2011, due primarily to impact of decrease in revenues.

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Cash flows from operations

Cash flows from segment operations: $3.2 million in 2012 compared with $18.6 million in 2011 (Table 7).

• The $15.4 million decrease was due to the $13.5 million decrease in operating income and the $1.8 million increase in additions to intangible assets.

Table 7: Leisure and Entertainment

Cash flows from operations

(in millions of Canadian dollars)

	2012			2011			2010
Operating income	$	13.1		$	26.6		$	27.6
Additions to property, plant and equipment		(6.3	)		(6.3	)		(4.2	)
Additions to intangible assets		(3.6	)		(1.8	)		(5.4	)
Proceeds from disposal of assets		—			0.1			—
Cash flows from segment operations	$	3.2		$	18.6		$	18.0

Interactive Technologies and Communications

The Interactive Technologies and Communications segment consists of Nurun, which is engaged in Internet, intranet and extranet development, technological platforms, e-commerce, interactive television, automated publishing solutions, and e-marketing and online customer relationship management strategies and programs. Nurun has offices in North America, Europe and China.

2012 operating results

Revenues: $145.5 million, an increase of $24.6 million (20.3%).

• The increase was mainly due to:

• impact of acquisition of an interactive advertising agency in the United States in the third quarter of 2011;

• higher volume from customers in North America, generated by new contracts, among other things;

• higher volume from government customers.

Partially offset by:

• lower volumes in Europe.

Operating income: $9.8 million, an increase of $1.9 million (24.1%). The favourable variance was mainly due to impact of revenue increase, partially offset by higher labour costs related to strategic personnel retention programs and provision for bonuses.

Cash flows from operations

Cash flows from segment operations: $5.6 million in 2012 compared with $3.6 million in 2011 (Table 8).

• The $2.0 million increase was mainly due to the $1.9 million increase in operating income.

Table 8: Interactive Technologies and Communications

Cash flows from operations

(in millions of Canadian dollars)

	2012			2011			2010
Operating income	$	9.8		$	7.9		$	6.0
Additions to property, plant and equipment		(4.2	)		(4.3	)		(2.6	)
Cash flows from segment operations	$	5.6		$	3.6		$	3.4

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2012/2011 FOURTH QUARTER COMPARISON

The fourth quarter of the 2011 financial year contained an additional week in the News Media, Broadcasting, Leisure and Entertainment, and Interactive Technologies and Communications segments.

Analysis of consolidated results of Quebecor Media

Revenues: $1.14 billion, a decrease of $5.6 million (-0.5%).

• Revenues decreased in News Media ($31.1 million or-11.3% of segment revenues), Leisure and Entertainment ($16.7 million or -15.7%) and Broadcasting ($2.7 million or-2.1%).

• Revenues increased in Telecommunications ($43.5 million or 6.9%).

Operating income: $374.6 million, an increase of $3.0 million (0.8%).

• Operating income increased in Telecommunications ($15.7 million or 5.3% of segment operating income) and Interactive Technologies and Communications ($0.9 million or 36.0%).

• Operating income decreased in News Media ($8.4 million or-17.9%), Broadcasting ($3.4 million or-16.5%), and Leisure and Entertainment ($2.6 million or -34.2%).

• The change in the fair value of Quebecor Media stock options resulted in a $3.1 million unfavourable variance in the consolidated stock-based compensation charge in the fourth quarter of 2012 compared with the same period of 2011. The change in the fair value of Quebecor stock options resulted in a $1.8 million unfavourable variance in the Corporation’s consolidated stock-based compensation charge in the fourth quarter of 2012.

Net income attributable to shareholders: $11.4 million in the fourth quarter of 2012, compared with $162.7 million in the same period of 2011, an unfavourable variance of $151.3 million.

• The unfavourable variance was due primarily to:

• $125.7 million unfavourable variance in gains and losses on valuation and translation of financial instruments;

• recognition of a $60.4 million loss on debt refinancing;

• $29.5 million increase in amortization charge;

• $15.7 million increase in financial expenses.

Partially offset by:

• $10.6 million decrease in charge for restructuring of operations, impairment of assets and other special items.

Amortization charge: $166.8 million compared with $137.3 million in the fourth quarter of 2011, an increase of $29.5 million due essentially to the same factors as those noted above in the 2012/2011 financial year comparison.

Financial expenses: $91.7 million, an increase of $15.7 million, due primarily to higher indebtedness.

Loss on valuation and translation of financial instruments: $43.2 million in the fourth quarter of 2012 compared with an $82.5 million gain in the same period of 2011. The unfavourable variance of $125.7 million was mainly due to an unfavourable change in the fair value of early settlement options caused by interest rate and credit premium fluctuations.

Charge for restructuring of operations, impairment of assets and other special items: $0.6 million in the fourth quarter of 2012, compared with $11.2 million in the same period of 2011, a favourable variance of $10.6 million.

• A $0.3 million net charge reversal was recorded in the News Media segment in the fourth quarter of 2012, compared with an $8.9 million net charge for restructuring of operations recorded in the fourth quarter of 2011 in connection with staff-reduction programs.

• A $0.9 million net charge for restructuring and other special items was recorded in other segments in the fourth quarter of 2012, compared with $2.3 million in the same period of 2011.

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Loss on debt refinancing: $60.4 million in the fourth quarter of 2012 compared with nil in the same period of 2011.

• In the fourth quarter of 2012, Quebecor Media redeemed US$320.0 million principal amount of its 7.75% Senior Notes maturing in March 2016. The transaction generated a $60.4 million loss on debt refinancing.

Reversal of income tax expense: $4.2 million in the fourth quarter of 2012, compared with a $61.4 million income tax expense (effective tax rate of 26.8%) in the fourth quarter of 2011.

• The $65.6 million favourable variance was mainly due to:

• impact of decrease in income before income tax;

• impact of tax rate mix on various components of gains or losses on valuation and translation of financial instruments.

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SEGMENTED ANALYSIS

Telecommunications

Revenues: $678.3 million, an increase of $43.5 million (6.9%), essentially due to the same factors as those noted above in the 2012/2011 financial year comparison.

• Combined revenues from all cable television services increased $12.6 million (4.8%) to $274.3 million.

• Revenues from Internet access services increased $12.4 million (6.8%) to $195.6 million.

• Revenues from cable telephony service increased $4.8 million (4.3%) to $116.3 million.

• Revenues from mobile telephony service increased $13.8 million (40.2%) to $48.1 million.

• Revenues from Videotron Business Solutions decreased $0.4 million (-2.4%) to $16.1 million.

• Revenues from customer equipment sales increased $1.2 million (8.7%) to $15.0 million.

• Revenues of Le SuperClub Vidéotron decreased $0.8 million (-13.3%) to $5.2 million.

• Other revenues decreased $0.1 million (-1.3%) to $7.7 million.

ARPU: $114.02 in fourth quarter 2012 compared with $106.09 in the same period of 2011, an increase of $7.93 (7.5%).

Customer statistics

Revenue generating units – 59,400-unit increase (1.2%) in the fourth quarter of 2012, compared with a 102,200-unit increase in the same period of 2011.

Cable television – 2,100 (0.1%) increase in combined customer base for all cable television services in the fourth quarter of 2012, compared with an increase of 17,300 in the same quarter of 2011.

• illico Digital TV: 26,800 (1.8%) subscriber increase in the fourth quarter of 2012, compared with an increase of 52,700 in the same period of 2011.

• Analog cable TV: 24,700 (-6.3%) subscriber decrease in the fourth quarter of 2012, compared with a decrease of 35,400 in the fourth quarter of 2011.

Cable Internet access – 18,100 (1.3%) increase in the fourth quarter of 2012, compared with an increase of 26,100 in the same period of 2011.

Cable telephony – 15,200 (1.2%) subscriber increase in the fourth quarter of 2012, compared with an increase of 25,900 in the same period of 2011.

Mobile telephony service – 24,300 (6.4%) increase in subscriber connections in the fourth quarter of 2012, compared with an increase of 32,500 in the same period of 2011.

Operating income: $310.4 million, an increase of $15.7 million (5.3%).

• The increase in operating income was mainly due to:

• impact of higher revenues.

Partially offset by:

• increases in some operating expenses, related mainly to customer service costs, network maintenance, and advertising and sponsorship expenses;

• $1.3 million increase in stock-based compensation charge.

Cost/revenue ratio: Operating costs for all Telecommunications segment operations, expressed as a percentage of revenues, were 54.3% in the fourth quarter of 2012 compared with 53.6% in the same period of 2011. The increase was mainly due to certain operating expense increases in the fourth quarter of 2012.

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News Media

Revenues: $244.5 million, a decrease of $31.1 million (-11.3%), due in part to the extra week in 2011.

• Advertising revenues decreased 13.8%; circulation revenues decreased 9.1%; combined revenues from commercial printing and other sources decreased 4.3%; digital revenues increased 2.5%.

• Revenues decreased 10.0% at the urban dailies and 13.7% at the community newspapers.

• Portal revenues decreased 25.4% because of lower advertising revenues at the special-interest portals.

Operating income: $38.6 million, a decrease of $8.4 million (-17.9%).

• The decrease was due primarily to:

• impact of revenue decrease;

• unfavourable variance related to investments in Quebecor Media Out of Home, which started up in the fourth quarter of 2012.

Partially offset by:

• $7.7 million favourable impact related to restructuring initiatives announced in November 2011 and 2012, and to other efforts to reduce operating expenses;

• $2.1 million favourable variance in multimedia employment tax credits.

Cost/revenue ratio: Operating costs for all News Media segment operations, expressed as a percentage of revenues, were 84.2% in the fourth quarter of 2012 compared with 82.9% in the same period of 2011. The increase was mainly due to the unfavourable impact of investments in Quebecor Media Out of Home and to the fixed component of operating costs, which does not fluctuate in proportion to revenue decreases, partially offset by the favourable impact of the reduction in operating costs in 2012.

Broadcasting

Revenues: $128.9 million, a decrease of $2.7 million (-2.1%).

• Revenues from television operations decreased $2.1 million, mainly due to:

• lower advertising revenues at the TVA Network and the specialty services, due in part to the extra week in 2011;

• unfavourable variance resulting from the sale by TVA Group of its interest in the specialty channels mysteryTV and The Cave in the second quarter of 2012.

Partially offset by:

• increased subscription revenues at the specialty channels, including TVA Sports and LCN.

• Total publishing revenues decreased $0.9 million, mainly because of lower newsstand and advertising revenues.

Operating income: $17.2 million, a decrease of $3.4 million (-16.5%).

• Operating income from television operations decreased by $2.9 million, mainly as a result of impact of revenue decrease.

• Operating income from publishing operations decreased by $0.7 million, also due to impact of lower revenues.

Cost/revenue ratio: Operating costs for all Broadcasting segment operations, expressed as a percentage of revenues, were 86.7% in the fourth quarter of 2012, compared with 84.3% in the same period of 2011. The increase was mainly due to the decrease in revenues at TVA Network, since the fixed component of operating costs does not fluctuate in proportion to revenues.

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Leisure and Entertainment

Revenues: $89.5 million, a decrease of $16.7 million (-15.7%) due in part to the extra week in 2011.

• Archambault Group’s revenues decreased 15.5%, mainly because of:

• 8.2% decrease in revenues from retail sales, as well as lower sales of CDs and books;

• 36.3% decrease in distribution revenues, primarily because of a larger number of successful releases in the fourth quarter of 2011 than in the same period of 2012;

• The Book division’s revenues decreased 16.5%, mainly because Messageries ADP distributed fewer books in the fourth quarter of 2012 than in the same period of 2011, in both the mass market and bookstore segments.

Operating income: $5.0 million in the fourth quarter of 2012, a decrease of $2.6 million (-34.2%) compared with the same period of 2011. The unfavourable variance was due primarily to impact of revenue decrease.

Interactive Technologies and Communications

Revenues: $35.8 million, a decrease of $0.2 million (-0.6%).

• The decrease was mainly due to:

• decrease in volume in Europe.

Offset by:

• customer growth in the United States;

• higher volume from government customers.

Operating income: $3.4 million, an increase of $0.9 million (36.0%). The favourable variance was mainly due to a larger contribution to operating margin from the Montréal operations and to revenue growth in the United States.

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2011/2010 FINANCIAL YEAR COMPARISON

The 2011 financial year contained an additional week in the News Media, Broadcasting, Leisure and Entertainment, and Interactive Technologies and Communications segments.

Analysis of consolidated results of Quebecor Media

Revenue: $4.21 billion, an increase of $206.5 million (5.2%).

• Revenues increased in Telecommunications ($201.9 million or 9.1% of segment revenues), Interactive Technologies and Communications ($22.9 million or 23.4%), Leisure and Entertainment ($10.4 million or 3.4%), and News Media ($3.4 million or 0.3%).

• Revenues decreased in Broadcasting ($2.7 million or -0.6%).

• New activities generated a $29.4 million unfavourable variance in intersegment sales in 2011.

Operating income: $1.34 billion, a decrease of $15.7 million (-1.2%).

• Operating income decreased in News Media ($41.3 million or -21.6% of segment operating income), Broadcasting ($24.4 million or -32.6%), and Leisure and Entertainment ($1.0 million or -3.6%).

• Operating income increased in Telecommunications ($51.5 million or 4.9%) and Interactive Technologies and Communications ($1.9 million or 31.7%).

• The change in the fair value of Quebecor Media stock options resulted in a $12.8 million favourable variance in the consolidated stock-based compensation charge in 2011 compared with 2010. The fair value of the options decreased in 2011, whereas it increased in 2010. The change in the fair value of Quebecor stock options resulted in a $6.6 million favourable variance in the Corporation’s consolidated stock-based compensation charge in 2011.

Net income attributable to shareholders: $374.0 million in 2011, compared with $470.3 million in 2010, a decrease of $96.3 million.

• The decrease was mainly due to:

• $112.6 million increase in amortization charge;

• $15.7 million decrease in operating income;

• $10.8 million increase in financial expenses.

Partially offset by:

• $8.5 million favourable variance in gain on valuation and translation of financial instruments;

• $6.9 million decrease in charge for restructuring of operations, impairment of assets and other special items;

• $5.7 million decrease in loss on debt refinancing.

Amortization charge: $509.3 million, a $112.6 million increase essentially due to significant capital expenditures in 2010 and 2011 in the Telecommunications segment, including commencement of amortization of 4G network equipment and licences following network launch in September 2010, and impact of emphasis on equipment leasing in the promotional strategy.

Financial expenses: $311.5 million, an increase of $10.8 million.

• The increase was due mainly to:

• higher base interest rates and the impact of fixed-and floating-rate debt rebalancing on the average interest rate paid on the debt.

Partially offset by:

• $6.3 million favourable variance in other financial expenses, reflecting among other things a reduction in interest following the settlement of a dispute.

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Gain on valuation and translation of financial instruments: $54.6 million in 2011 compared with $46.1 million in 2010, a favourable variance of $8.5 million.

• The variance was due to a favourable change in the fair value of early settlement options due to interest rate and credit premium fluctuations, and to fluctuations in the ineffective portion of derivative financial instruments.

Charge for restructuring of operations, impairment of assets and other special items: $30.2 million in 2011 compared with $37.1 million in 2010, a favourable variance of $6.9 million.

• In connection with the startup of its 4G network in the third quarter of 2010, the Telecommunications segment recorded a $14.8 million charge for migration costs in 2011, compared with $13.9 million in 2010. In addition, a $0.6 million charge for restructuring of other operations was recorded in 2011, the same as in 2010. A $3.3 million gain on disposal of assets and a $0.2 million charge for impairment of assets were also recorded in the Telecommunications segment in 2010.

• An $11.0 million charge for restructuring of operations was recorded in the News Media segment in 2011 in connection with staff-reduction programs, compared with a $17.9 million charge in 2010. As a result of these initiatives, a $0.8 million non-cash impairment charge on intangible assets was recorded in the segment in 2011, compared with $3.5 million in 2010. In addition, some segment assets were sold in 2010, resulting in a $4.9 million net gain.

• In 2010, the Broadcasting segment decided to terminate programming on its Sun TV conventional television station on the launch of the new SUN News specialty channel. In connection with this repositioning, the Broadcasting segment recognized an $8.2 million asset impairment charge on equipment and broadcast rights in 2010, compared with a $0.7 million asset impairment charge in 2011. In addition, a $0.8 million restructuring charge was recorded in 2011, primarily in connection with staff reductions, compared with $1.4 million in 2010. Finally, the Broadcasting segment recorded a $0.2 million charge for other special items in 2011, compared with a $0.5 million gain on disposal of assets in 2010.

• A $0.2 million net charge for restructuring of operations and other special items was recorded in other segments in 2011, compared with $0.9 million in 2010. A $1.1 million charge for other special items was recorded in 2011, compared with a $0.8 million gain in 2010.

Loss on debt refinancing: $6.6 million in 2011 compared with $12.3 million in 2010.

• On July 18, 2011, Videotron redeemed US$255.0 million principal amount of its issued and outstanding 6.875% Senior Notes maturing in 2014 and settled the related hedges for a total cash consideration of $303.1 million. The transaction generated a $2.7 million gain on debt refinancing.

• On February 15, 2011, Sun Media Corporation redeemed and withdrew the entirety of its 7.625% Senior Notes in the aggregate principal amount of US$205.0 million and settled the related hedges for a total cash consideration of $308.2 million. The transaction generated a $9.3 million loss on debt refinancing.

• On January 14, 2010, Quebecor Media made a US$170.0 million early payment on drawings on its term loan “B” and settled a corresponding portion of the related hedge agreements for a total cash disbursement of $206.7 million. As a result of this transaction, a $10.4 million loss on debt refinancing was charged to income.

• In May 2010, Osprey Media paid down the balance of its term credit facility and settled related hedge agreements for a total cash consideration of $116.3 million. As a result of this transaction, a $1.9 million loss on debt refinancing was charged to income.

Income tax expense: $146.4 million (effective tax rate of 27.5%) in 2011, compared with $162.6 million (effective tax rate of 25.0%) in 2010.

• The $16.2 million favourable variance was due to reduced income before income taxes, partially offset by the impact of a decrease in deferred income tax liabilities recorded in 2010 in light of developments in tax audits, jurisprudence and tax legislation.

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SEGMENTED ANALYSIS

Telecommunications

Revenues: $2.43 billion, an increase of $201.9 million (9.1%).

• Combined revenues from all cable television services topped $1 billion for the first time, increasing by $62.0 million (6.5%) to $1.01 billion, mainly because of the higher ARPU generated by increases in some rates and the success of HD packages, the increase in pay TV orders, and the impact of customer base growth.

• Revenues from Internet access services increased $54.0 million (8.4%) to $698.2 million. The favourable variance was mainly due to customer growth, increases in some rates and customer migration to upgraded service plans.

• Revenues from cable telephony service increased $26.8 million (6.5%) to $436.7 million, primarily as a result of customer base growth and more lines per customer.

• Revenues from mobile telephony service increased $59.6 million (112.1%) to $112.7 million, essentially due to customer growth resulting largely from the launch of the new network in September 2010.

• Revenues of Videotron Business Solutions increased $3.2 million (5.4%) to $63.0 million, mainly because of higher revenues from network solutions.

• Revenues from customer equipment sales decreased $4.0 million (-6.7%) to $55.9 million, mainly because of promotional strategies that emphasized cable equipment leasing, partially offset by increased sales of mobile telephony equipment.

• Revenues of Le SuperClub Vidéotron decreased $1.6 million (-6.9%) to $21.6 million, mainly as a result of store closures in 2011, partially offset by higher revenues from franchise fees.

• Other revenues increased $1.9 million (6.8%) to $29.9 million.

ARPU: $103.28 in 2011 compared with $95.73 in 2010, an increase of $7.55 (7.9%).

Customer statistics

Revenue generating units – As of December 31, 2011, the total number of revenue generating units stood at 4,695,500, an increase of 379,100 (8.8%) from the end of 2010 (Table 3). The net increase in revenue generating units in 2011 was 39.4% higher than in 2010 and constituted the largest annual increase, in absolute terms, in three years. This excellent performance was due to the effective strategy of marketing bundled services, including mobile telephony service, at a time of technological change in television broadcasting. The number of revenue generating units increased by 272,000 in 2010. Revenue generating units are the sum of cable television, Internet access and cable telephony service subscriptions and subscriber connections to the mobile telephony service.

Cable television – The combined customer base for all of Videotron’s cable television services increased by 49,900 (2.8%) in 2011 (Table 3), compared with an increase of 34,600 in 2010. As of December 31, 2011, Videotron had 1,861,500 customers for its cable television services, a household and business penetration rate of 70.1% (number of subscribers as a proportion of the total 2,657,300 homes and businesses passed by Videotron’s network as of the end of December 2011), compared with 69.3% at the end of December 2011.

• The customer base for the Digital TV service stood at 1,400,800 at December 31, 2011, an increase of 181,200 (14.9%) during the year, compared with a 135,500 increase in 2010. It was the largest annual customer growth for Digital TV since the service was launched in 1999. As of December 31, 2011, illico Digital TV had a household and business penetration rate of 52.7% versus 46.7% a year earlier.

• Migration from analog to digital service was the main reason for the 131,300 (-22.2%) decrease in the customer base for analog cable television services in 2011. By comparison, the number of subscribers to analog cable services decreased by 100,900 in 2010.

Cable Internet access – The number of subscribers to cable Internet access services stood at 1,332,500 at December 31, 2011, an increase of 80,400 (6.4%) from year-end 2010, compared with an increase of 81,500 in 2010 (Table 3). At December 31, 2011, Videotron’s cable Internet access services had a household and business penetration rate of 50.1%, compared with 47.9% a year earlier.

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Cable telephony service – The number of subscribers to cable telephony service stood at 1,205,300 at the end of December 2011, an increase of 91,000 (8.2%) from year-end 2010, compared with an increase of 100,300 in 2010 (Table 3). At December 31, 2011, the IP telephony service had a household and business penetration rate of 45.4%, compared with 42.7% a year earlier.

Mobile telephony service – As of December 31, 2011, the number of subscriber connections to the mobile telephony service stood at 290,600, an increase of 154,500 (113.5%) from year-end 2010, compared with an increase of 53,300 connections in 2010 (Table 3). At December 31, 2011, there were 3,100 connections to the Mobile Virtual Network Operator network.

Operating income: $1.10 billion, an increase of $51.5 million (4.9%).

• The increase in operating income was mainly due to:

• impact of higher revenues;

• $10.6 million reduction in stock-based compensation charge.

Partially offset by:

• increases in operating expenses, among them costs related to the roll-out of the 4G network, including acquisition costs and site overhead costs;

• capitalization of some operating expenses during the build-out of the new mobile network, which also explains the unfavourable variance in operating expenses in 2011 compared with 2010.

Cost/revenue ratio: Operating costs for all Telecommunications segment operations, expressed as a percentage of revenues, were 54.8% in 2011, compared with 53.0% in 2010.

• The increase was mainly due to operating cost increases related to the roll-out of the 4G network, partially offset by the impact of increases in some rates.

Cash flows from segment operations: $306.5 million in 2011, compared with $331.7 million in 2010, a decrease of $25.2 million.

• The $51.5 million increase in operating income was offset by a $73.9 million increase in additions to property, plant and equipment, mainly reflecting impact of emphasis on equipment leasing in the promotional strategy.

News Media

Revenues: $1.02 billion, an increase of $3.4 million (0.3%).

• Combined revenues from commercial printing and other sources increased 14.2%, advertising revenues were flat, and circulation revenues decreased 5.1%.

• Revenues decreased 3.6% at the urban dailies and increased 3.5% at the community newspapers. Excluding business acquisitions, revenues of the community newspapers decreased 2.3%.

• Portal revenues decreased 5.2%, essentially because of lower revenues at the specialty portals, due primarily to the transfer of intercompany website development operations to the Nurun subsidiary and a decrease in advertising revenues.

Operating income: $150.1 million, a decrease of $41.3 million (-21.6%).

• The decrease was due primarily to:

• unfavourable variance related to investments in Quebecor Media Network and Quebecor MediaPages^™;

• impact of revenue decreases at the urban dailies and community newspapers on a same-store basis;

• increases in some operating expenses, including community newspaper startup costs in Québec;

• $4.7 million increase in newsprint costs.

Partially offset by:

• $5.8 million favourable impact of rationalization of postretirement benefits;

• $3.9 million favourable variance related to the stock-based compensation plan;

• $2.4 million favourable impact related to restructuring initiatives announced in November 2011;

• $2.4 million favourable variance in multimedia employment tax credits;

• contribution from acquired businesses.

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Cost/revenue ratio: Operating costs for all News Media segment operations, expressed as a percentage of revenues, were 85.3% in 2011, compared with 81.1% in 2010.

• The increase was due mainly to:

• spending on community newspaper launches in Québec, as well as on Quebecor Media Network and Quebecor MediaPages^™;

• unfavourable impact of fixed component of operating costs (which does not fluctuate in proportion to revenue decreases);

• impact of higher newsprint costs.

Partially offset by:

• cost reductions related to postretirement benefits, compensation plans and employment tax credits.

Cash flows from segment operations: $131.2 million in 2011, compared with $212.5 million in 2010.

• The $81.3 million decrease was due primarily to a $41.3 million decrease in operating income and a $38.9 million unfavourable variance in proceeds from disposal of assets, resulting primarily from the sale of certain tangible assets in 2010.

Broadcasting

Revenues: $445.5 million, a decrease of $2.7 million (-0.6%).

• Revenues from television operations increased $1.6 million, mainly due to:

• increased advertising and subscription revenues at the specialty channels;

• higher revenues at the TVA Network, including increases in revenues from advertising, production, and the sale of content;

• higher revenues at TVA Accès.

Partially offset by:

• decrease in advertising revenues in light of repositioning of the Sun TV conventional television station following the creation of SUN News;

• decrease in revenues at TVA Films, reflecting the larger number of successful releases in 2010.

• Total publishing revenues decreased $4.4 million, mainly because of lower newsstand and advertising revenues, partially offset by higher revenues at TVA Studio.

Operating income: $50.5 million, a decrease of $24.4 million (-32.6%).

• Operating income from television operations decreased $23.3 million, mainly due to:

• startup operating losses at the SUN News, TVA Sports and Moi&cie specialty channels;

• higher content costs at the TVA Network and specialty channels as a result of the programming strategy.

Partially offset by:

• impact of increased advertising and subscription revenues at the specialty channels.

• Operating income from publishing operations decreased by $1.0 million, mainly as a result of impact of revenue decrease, partially offset by savings in operating costs.

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Cost/revenue ratio: Operating costs for all Broadcasting segment operations, expressed as a percentage of revenues, were 88.7% in 2011 compared with 83.3% in 2010. The increase in costs as a proportion of revenues was mainly due to higher operating expenses related to the launch of the SUN News, TVA Sports and Moi&cie specialty channels, and to higher content costs.

Cash flows from segment operations: $14.2 million in 2011 compared with $51.3 million in 2010, a decrease of $37.1 million, mainly due to the $24.4 million decrease in operating income and the $12.0 million increase in additions to property, plant and equipment, primarily reflecting spending on the new specialty channels.

Leisure and Entertainment

Revenues: $312.9 million, an increase of $10.4 million (3.4%).

• Archambault Group’s revenues increased 8.3%, mainly because of:

• 25.2% increase in distribution revenues, primarily because of new intercompany DVD distribution activities;

• increased production sales as a result of higher revenues from concert production and music recording, including the successful show Le retour de nos idoles.

• The Book division’s revenues decreased by 5.1%, mainly because of lower sales of textbooks in the academic segment following completion of the education reform in Quebec, and lower distribution and publishing revenues in the general literature segment.

Operating income: $26.6 million in 2011, a decrease of $1.0 million from 2010, due primarily to decreased revenues in the Book division, partially offset by the positive impact of increased revenues and operating margins at Archambault Group.

Cash flows from segment operations: $18.6 million in 2011 compared with $18.0 million in 2010.

• The $0.6 million favourable variance was due to the $1.5 million decrease in additions to property, plant and equipment and intangible assets, partially offset by the $1.0 million decrease in operating income.

Interactive Technologies and Communications

Revenues: $120.9 million, an increase of $22.9 million (23.4%).

• The increase was mainly due to:

• higher volume from customers in Canada (generated by, among other things, the transfer of intercompany technological activities from the News Media segment) and in Europe;

• impact of acquisition of a digital agency in the United States in the third quarter of 2011.

Partially offset by:

• decrease in volume in the United States.

Operating income: $7.9 million, an increase of $1.9 million (31.7%), mainly as a result of the favourable impact of the revenue increase.

Cash flows from segment operations: $3.6 million in 2011, compared with $3.4 million in 2010.

• The $0.2 million favourable variance was due to the $1.9 million increase in operating income, partially offset by the $1.7 million increase in additions to property, plant and equipment.

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CASH FLOWS AND FINANCIAL POSITION

This section provides an analysis of sources and uses of cash flows, as well as an analysis of the financial position as of the balance sheet date. This section should be read in conjunction with the discussions on trends under “Trend Information” above and on the Corporation’s financial risks under “Financial Instruments and Financial Risk” below.

Operating activities

2012 financial year

Cash flows provided by continuing operating activities: $1.14 billion in 2012 compared with $882.2 million in 2011.

• The $260.1 million favourable variance was mainly due to:

• $276.9 million favourable variance in the net change in non-cash balances related to operations, mainly because of favourable variances in income tax liabilities, inventory, accounts payable, accrued charges, and provisions for restructuring of operations;

• $126.2 million increase in operating income in the Telecommunications segment.

Partially offset by:

• $74.7 million unfavourable variance in current income taxes;

• operating income decreases in News Media ($35.0 million), Leisure and Entertainment ($13.5 million) and Broadcasting ($12.4 million);

• $13.4 million increase in cash interest expense.

2011 financial year

Cash flows provided by continuing operating activities: $882.2 million in 2011 compared with $834.8 million in 2010.

• The $47.4 million increase was due primarily to:

• $74.2 million favourable variance in current income taxes;

• $51.5 million increase in operating income in the Telecommunications segment.

Partially offset by:

• operating income decreases in News Media ($41.3 million) and Broadcasting ($24.4 million);

• $10.5 million increase in cash interest expense.

2012/2011 financial year comparison

Profit growth in the Telecommunications segment had a favourable impact on cash flows in 2012 and 2011. On the other hand, the costs of product and service launches and the negative impact of more aggressive competition and weak market conditions in the News Media and Broadcasting segments had an unfavourable impact on cash flows provided by operating activities. Finally, the deferral of current income taxes of a general partnership created in 2011 had the effect of deferring some income tax expenses.

Working capital: Negative $81.7 million at December 31, 2012, compared with negative $71.8 million at December 31, 2011. The impact of an increase in cash and cash equivalents was outweighed by decreases in accounts receivable, inventory and income tax credits, and increases in accounts payable, accrued charges, provisions, and income tax liabilities.

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Investing activities

2012 financial year

Additions to property, plant and equipment: $710.6 million in 2012 compared with $780.7 million in 2011. The $70.1 million decrease was mainly due to:

• $55.7 million decrease in additions to property, plant and equipment in the Telecommunications segment, mainly because of reduced spending on the 4G network and network modernization;

• $8.4 million decrease in the Broadcasting segment and a $7.2 million decrease in the News Media segment.

Additions to intangible assets: $94.9 million in 2012 compared with $91.6 million in 2011.

Business acquisitions: $2.0 million in 2012 compared with $55.7 million in 2011, a $53.7 million decrease mainly due to impact of acquisitions in 2011 of community newspapers in the News Media segment and of a digital agency in the United States in the Interactive Technologies and Communications segment.

Disposal of businesses: $18.7 million in 2012, mainly reflecting the sale of the Broadcasting segment’s interest in the specialty channels mysteryTV and The Cave.

2011 financial year

Additions to property, plant and equipment: $780.7 million compared with $689.0 million in 2010. The $91.7 million variance was due primarily to:

• $73.9 million increase in additions to property, plant and equipment in the Telecommunications segment, mainly due to emphasis on equipment leasing in the segment’s promotional strategy;

• $12.0 million increase in additions to property, plant and equipment in the Broadcasting segment, primarily reflecting spending on the new specialty channels.

Additions to intangible assets: $91.6 million in 2011 compared with $95.2 million in 2010.

Proceeds from disposal of assets: $12.0 million in 2011 compared with $53.0 million in 2010. The $41.0 million decrease essentially reflects the disposal of certain tangible assets in the News Media segment in the second quarter of 2010.

Business acquisitions: $55.7 million in 2011 compared with $3.1 million in 2010, a $52.6 million increase, mainly due to the acquisition of community newspapers in the News Media segment in 2011, and to the acquisition of a digital agency in the United States in the Interactive Technologies and Communications segment.

Free cash flows from continuing operating activities

2012 financial year

Free cash flows from continuing operating activities: $345.2 million in 2012 compared with $21.9 million in 2011 (Table 9).

• The $323.3 million increase was essentially due to:

• $260.1 million increase in cash flows provided by continuing operating activities;

• $70.1 million decrease in additions to property, plant and equipment.

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2011 financial year

Free cash flows from continuing operating activities: $21.9 million in 2011 compared with $103.6 million in 2010 (Table 9).

• The $81.7 million decrease was mainly due to:

• $91.7 million increase in additions to property, plant and equipment;

• $41.0 million decrease in proceeds from disposal of assets.

Partially offset by:

• $47.4 million increase in cash flows provided by continuing operating activities.

Table 9

Cash flows provided by continuing operating activities reported in the financial statements and free cash flows from continuing operating activities

(in millions of Canadian dollars)

	2012			2011			2010
Operating income:
Telecommunications	$	1,225.0		$	1,098.8		$	1,047.3
News Media		115.1			150.1			191.4
Broadcasting		38.1			50.5			74.9
Leisure and Entertainment		13.1			26.6			27.6
Interactive Technologies and Communications		9.8			7.9			6.0
Head Office		4.2			2.3			4.7
		1,405.3			1,336.2			1,351.9
Cash interest expense1		(312.1	)		(298.7	)		(288.2	)
Cash portion of charge for restructuring of operations, impairment of assets and other special items2		(34.8	)		(28.7	)		(33.9	)
Current income taxes		(57.0	)		17.7			(56.5	)
Other		6.2			(2.1	)		0.8
Net change in non-cash balances related to operations		134.7			(142.2	)		(139.3	)
Cash flows provided by continuing operating activities		1,142.3			882.2			834.8
Additions to property, plant and equipment and additions to intangible assets, less proceeds from disposal of assets:
Telecommunications		(740.7	)		(792.3	)		(715.6	)
News Media		(17.2	)		(18.9	)		21.1
Broadcasting		(25.4	)		(36.3	)		(23.6	)
Leisure and Entertainment		(9.9	)		(8.0	)		(9.6	)
Interactive Technologies and Communications		(4.2	)		(4.3	)		(2.6	)
Head Office		0.3			(0.5	)		(0.9	)
		(797.1	)		(860.3	)		(731.2	)
Free cash flows from continuing operating activities	$	345.2		$	21.9		$	103.6

¹  Interest on long-term debt, foreign currency translation on short-term monetary items and other interest expenses (see note 4 in the consolidated financial statements).

²  Charge for restructuring and other items (see note 6 in the consolidated financial statements).

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Financing activities

2012 financial year

Consolidated debt (long-term debt plus bank borrowings): $726.8 million increase in 2012; $17.6 million favourable net variance in assets and liabilities related to derivative financial instruments.

• Summary of debt increases in 2012:

• issuance by Videotron on March 14, 2012 of US$800.0 million aggregate principal amount of Senior Notes for net proceeds of $787.6 million, net of financing fees of $11.9 million. The Notes bear interest at 5.0% and mature on July 15, 2022;

• Issuance by Quebecor Media on October 11, 2012 of US$850.0 million aggregate principal amount of Senior Notes bearing interest at 5.75% and maturing in 2023, and $500.0 million aggregate principal amount of Senior Notes bearing interest at 6.625% and maturing in 2023, for total net proceeds of $1.31 billion, net of financing fees of $16.5 million.

• Summary of debt reductions in 2012:

• repayment by Videotron in March 2012 of all of its 6.875% Senior Notes maturing in January 2014, in the aggregate principal amount of US$395.0 million;

• repayment by Quebecor Media in March, April and November 2012 of US$580.0 million aggregate principal amount of its 7.75% Senior Notes maturing in March 2016;

• prepayment by Quebecor Media in December 2012 of the outstanding balance on its term loan “B” for a cash consideration of $153.9 million;

• $195.8 million decrease in debt due to favourable variance in fair value of embedded derivatives, resulting mainly from interest rate and credit premium fluctuations;

• estimated $53.2 million favourable impact of exchange rate fluctuations. Any decrease in this item is offset by an increase in the liability (or decrease in the asset) related to cross-currency swap agreements entered under “Derivative financial instruments”;

• repayment of $37.6 million balance on Sun Media Corporation’s term credit facility on February 3, 2012 and cancellation of the facility;

• current payments, totalling $47.4 million, on the credit facilities and other debt of TVA Group, Quebecor Media and Videotron.

• Total proceeds of $1.31 billion from the issuance by Quebecor Media on October 11, 2012 of 5.75% Senior Notes maturing in 2023 and of 6.625% Senior Notes maturing in 2023 were used to purchase for cancellation 20,351,307 common shares of Quebecor Media’s capital stock held by CDP Capital for a total cash consideration of $1.00 billion and to redeem US$320.0 million in aggregate principal amount of its 7.75% Senior Notes maturing in 2016.

• Assets and liabilities related to derivative financial instruments totalled a net liability of $262.9 million at December 31, 2012, compared with a net liability of $280.5 million at December 31, 2011. The favourable net variance of $17.6 million was due to:

• settlement of hedges by Quebecor Media following repayment in March and April 2012 of US$260.0 million aggregate principal amount of its 7.75% Senior Notes;

• favourable impact of interest rate trends in Canada, compared with the United States, on the fair value of derivative financial instruments.

Partially offset by:

• unfavourable impact of exchange rate fluctuations on the value of derivative financial instruments.

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• On January 25, 2012, Quebecor Media amended its bank credit facilities to extend the maturity of its $100.0 million revolving credit facility from January 2013 to January 2016 and added a new $200.0 million revolving credit facility “C,” also maturing in January 2016. In December 2012, this credit facility was combined with the existing facility for a total amount of $300.0 million.

• On February 24, 2012, TVA Group amended its bank credit facilities to extend the maturity of its $100.0 million revolving credit facility from December 2012 to February 2017.

• On June 4, 2012, Videotron announced a public exchange offer for the exchange of the entirety of its outstanding 5% Senior Notes maturing on July 15, 2022 for an equivalent principal amount of Notes registered pursuant to the Securities Act of 1933. The exchange was completed on July 20, 2012.

2011 financial year

Consolidated debt (long-term debt plus bank borrowings): $183.6 million increase in 2011; $170.7 million favourable net variance in assets and liabilities related to derivative financial instruments.

• Summary of debt increases in 2011:

• issuance by Videotron on July 5, 2011 of $300.0 million aggregate principal amount of Senior Notes for net proceeds of $294.8 million, net of financing fees of $5.2 million. The Notes bear interest at a rate of 6.875%, payable twice yearly on June 15 and December 15, and mature on July 15, 2021;

• issuance by Quebecor Media on January 5, 2011 of $325.0 million principal amount of Senior Notes for net proceeds of $319.9 million, net of financing fees of $5.1 million. The Notes bear interest at a rate of 7.375%, payable twice yearly on June 15 and December 15, and mature on January 15, 2021;

• use by Videotron of $69.6 million drawn on its secured export financing facility;

• estimated $32.3 million unfavourable impact of exchange rate fluctuations. Any increase in this item is offset by a decrease in the liability (or increase in the asset) related to cross-currency swap agreements entered under “Derivative financial instruments.”

• Summary of debt reductions in 2011:

• repayment on July 18, 2011 of US$255.0 million principal amount of Videotron’s 6.875% Senior Notes maturing in 2014;

• early repayment on February 15, 2011 of the entirety of Sun Media Corporation’s outstanding 7.625% Senior Notes maturing in 2013, in the aggregate principal amount of US$205.0 million;

• $52.5 million decrease in debt due to favourable variance in fair value of embedded derivatives, resulting mainly from interest rate and credit premium fluctuations;

• current payments totalling $30.2 million on Quebecor Media’s credit facility and other debt.

• Assets and liabilities related to derivative financial instruments totalled a net liability of $280.5 million at December 31, 2011, compared with a net liability of $451.2 million at December 31, 2010. The $170.7 million favourable net variance was caused primarily by:

• settlement of hedges by Videotron following repayment, on July 18, 2011, of US$255.0 million principal amount of Videotron’s 6.875% Senior Notes;

• settlement and revocation by Sun Media Corporation of hedges following the early repayment and withdrawal of all its outstanding Senior Notes on February 15, 2011;

• favourable impact of exchange rate fluctuations on value of derivative financial instruments.

Partially offset by:

• unfavourable impact of interest rate trends in Canada, compared with the United States, on the fair value of derivative financial instruments.

• On July 20, 2011, Videotron amended its $575.0 million revolving credit facility to extend the expiry date from April 2012 to July 2016 and to modify some of the terms and conditions.

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Financial position at December 31, 2012

Net available liquidity: $1.09 billion for the Corporation and its wholly owned subsidiaries, consisting of $215.5 million in cash and $874.9 million in available unused lines of credit.

Consolidated debt: $4.43 billion at December 31, 2012, a $726.8 million increase compared with December 31, 2011; $17.6 million favourable net variance in assets and liabilities related to derivative financial instruments (see “Financing Activities” above).

• Consolidated debt essentially consisted of Videotron’s $2.13 billion debt ($1.86 billion at December 31, 2011), TVA Group’s $74.4 million debt ($96.4 million at December 31, 2011) and Quebecor Media’s $2.23 billion debt ($1.71 billion at December 31, 2011). Sun Media Corporation’s debt was paid down in full in the first quarter of 2012 ($37.4 million at December 31, 2011).

As of December 31, 2012, minimum principal payments on long-term debt in the coming year and thereafter were as follows:

Table 10

Minimum principal payments on Quebecor Media’s long-term debt

12 month ending December 31

(in millions of Canadian dollars)

2013	$	21.3
2014		96.4
2015		195.2
2016		642.4
2017		10.7
2018 and thereafter		3,777.6
Total	$	4,743.6

The weighted average term of Quebecor Media’s consolidated debt was approximately 7.1 years as of December 31, 2012 (5.1 years as of December 31, 2011). The debt consists of approximately 90.9% fixed rate debt (84.7% as of December 31, 2011) and 9.1% floating rate debt (15.3% as of December 31, 2011).

Management believes that cash flows and available sources of financing should be sufficient to cover requirements for capital investments, working capital, interest payments, debt repayments, pension plan contributions, and dividends (or distributions). The Corporation has access to cash flows generated by its subsidiaries through dividends (or distributions) and cash advances paid by its wholly owned subsidiaries. The Corporation believes it will be able to meet future debt maturities, which are fairly staggered over the coming years.

Pursuant to their financing agreements, the Corporation and its subsidiaries are required to maintain certain financial ratios. The key indicators listed in these financing agreements include debt service coverage ratio and debt ratio (long-term debt over operating income). At December 31, 2012, the Corporation and its subsidiaries were in compliance with all required financial ratios.

Dividends: In 2012, the Board of Directors of Quebecor Media declared and paid dividends totalling $100.0 million. In 2011, the Board of Directors of Quebecor Media declared and paid dividends totalling $100.0 million.

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Analysis of consolidated balance sheet at December 31, 2012

Table 11

Consolidated balance sheet of Quebecor Media

Analysis of main variances between December 31, 2011 and December 31, 2012

(in millions of Canadian dollars)

	December 31, 2012		December 31, 2011		Difference			Main reason for difference
Assets
Cash and cash equivalents	$	228.7	$	146.4	$	82.3		Cash flows from operating activities in excess of investing and financing activities
Property, plant and equipment		3,353.2		3,156.0		197.2		Additions to property, plant and equipment (see “Investing activities” above), less amortization for the period
Intangible assets		956.7		1,041.0		(84.3	)	Partial write-down of customer relationships and mastheads in the News Media segment and amortization, partially offset by current acquisitions
Goodwill		3,371.6		3,543.8		(172.2	)	Partial write-down of goodwill in the News Media segment, the Leisure and Entertainment segment’s Music division, and the TVA Group’s publishing segment
Liabilities
Long-term debt, including short-term portion and bank indebtedness		4,428.7		3,701.9		726.8		See “Financing activities”
Derivative financial instruments1		262.9		280.5		(17.6	)	See “Financing activities”
Net future tax liabilities2		570.8		514.1		56.7		Use of tax benefits and capital cost allowance in excess of book amortization

¹  Current and long-term liabilities less long-term assets

²  Long-term liabilities less long-term assets

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ADDITIONAL INFORMATION

Contractual Obligations

At December 31, 2012, material contractual obligations of operating activities included: capital repayment and interest on long-term debt; operating lease arrangements; capital asset purchases and other commitments; and obligations related to derivative financial instruments, less estimated future receipts on derivative financial instruments. Table 12 below shows a summary of these contractual obligations.

Table 12

Contractual obligations of Quebecor Media as of December 31, 2012

(in millions of Canadian dollars)

	Total		Under 1 year		1-3 years		3-5 years		5 years or more
Long-term debt1	$	4,743.6	$	21.3	$	291.6	$	653.1	$	3,777.6
Interest payments2		2,501.3		314.8		697.3		574.9		914.3
Operating leases		385.8		61.7		88.0		61.3		174.8
Additions to property, plant and equipment and other commitments		318.2		93.6		104.8		29.6		90.2
Derivative financial instruments3		294.4		24.7		143.1		40.9		85.7
Total contractual obligations	$	8,243.3	$	516.1	$	1,324.8	$	1,359.8	$	5,042.6

¹  The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest risk, embedded derivatives and financing fees.

²  Estimated interest payable on long-term debt, based on interest rates, hedging of interest rates and hedging of foreign exchange rates as of December 31, 2012.

³  Estimated future disbursements, net of receipts, related to foreign exchange hedging using derivative financial instruments.

On October 30, 2012, Quebecor Media signed an agreement to install, maintain and advertise on STM bus shelters for the next 20 years. The agreement includes, among other terms, a commitment from Quebecor Media to pay total royalties of $120.0 million over the 20-year period. This commitment could increase based on future advertising revenues generated by the agreement.

Videotron leases sites for its 4G network and other equipment under operating lease arrangements and has contracted long-term commitments to acquire services and equipment for a total future consideration of $132.2 million. During the year ended December 31, 2012, Videotron renewed or extended several leases and signed new operating lease arrangements.

In the normal course of business, TVA Group contracts commitments regarding broadcast rights for television programs and films, as well as distribution rights for audiovisual content. The outstanding balance on such commitments was $85.7 million at December 31, 2012.

Large quantities of newsprint, paper and ink are among the most important raw materials used by Quebecor Media. In 2012, the total newsprint consumption of its News Media segment’s operations was approximately 140,300 metric tonnes. Newsprint accounted for approximately 9.4% ($79.8 million) of the News Media segment’s operating expenses for the year ended December 31, 2012. In order to obtain more favourable pricing, Quebecor Media sources substantially all of its newsprint from a single newsprint producer. Quebecor Media currently obtains newsprint from this supplier at a discount to market prices, and receives additional volume rebates for purchases above certain ceiling thresholds. However, there can be no assurance that this supplier will continue to supply newsprint to Quebecor Media on favourable terms or at all.

Pension Plan Contributions

The expected employer contributions to the Corporation’s defined benefit pension plans and post-retirement benefit plans will be $56.7 million in 2013 (contributions of $59.4 million were paid in 2012).

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Related Party Transactions

The following describes transactions in which the Corporation and its directors, executive officers and affiliates are involved. The Corporation believes that each of the transactions described below was on terms no less favourable to Quebecor Media than could have been obtained from independent third parties.

Operating transactions

During the year ended December 31, 2012, the Corporation and its subsidiaries made purchases and incurred rent charges with the parent corporation and affiliated companies in the amount of $14.4 million ($11.7 million in 2011 and $14.8 million in 2010), which are included in purchase of goods and services. The Corporation and its subsidiaries made sales to an affiliated corporation in the amount of $3.8 million ($3.2 million in 2011 and $3.6 million in 2010). These transactions were concluded on terms equivalent to those that prevail on an arm’s length basis and were accounted for at the consideration agreed between parties.

Corporate reorganization

In the second quarter of 2010, the Corporation announced the creation of SUN News, a partnership between TVA Group and Sun Media Corporation. The partnership has launched an English-language news and opinion specialty channel in the spring of 2011. In connection with the launch of this new specialty channel, the Corporation terminated the operations of its general-interest television station, Sun TV, and undertook a related corporate reorganization.

On June 28, 2012, the Canadian Radio-television and Telecommunications Commission (“CRTC”) approved the sale of a 2% interest in SUN News by TVA Group to Sun Media Corporation. The transaction closed on June 30, 2012 and, as a result, Sun Media Corporation holds a 51% interest and TVA Group a 49% interest in SUN News.

Management arrangements

The parent corporation has entered into management arrangements with the Corporation. Under these management arrangements, the parent corporation and the Corporation provide management services to each other on a cost-reimbursement basis. The expenses subject to reimbursement include the salaries of the Corporation’s executive officers, who also serve as executive officers of the parent corporation.

In 2012, the Corporation received an amount of $1.7 million, which is included as a reduction in employee costs ($2.0 million in 2011 and $2.1 million in 2010), and incurred management fees of $1.1 million ($1.1 million in 2011 and 2010) with the Corporation’s shareholders.

Tax transactions

In 2012, the parent corporation transferred $43.4 million of non-capital losses (none in 2011 and $26.4 million in 2010) to the Corporation and its subsidiaries in exchange for a total cash consideration of $10.2 million (none in 2011 and $6.0 million in 2010). This transaction was concluded on terms equivalent to those that prevail on an arm’s length basis and was accounted for at the consideration agreed between the parties. As a result, the Corporation recorded a reduction of $1.5 million in its income tax expense in 2012 (none in 2011 and $1.5 million in 2010).

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Off-Balance Sheet Arrangements

Guarantees

In the normal course of business, the Corporation enters into numerous agreements containing guarantees, including the following:

Operating leases

The Corporation has guaranteed a portion of the residual values of certain assets under operating leases for the benefit of the lessor. Should the Corporation terminate these leases prior to term (or at the end of the lease terms) and should the fair value of the assets be less than the guaranteed residual value, then the Corporation must, under certain conditions, compensate the lessor for a portion of the shortfall. In addition, the Corporation has provided guarantees to the lessor of certain premises with leases with expiry dates through 2017. Should the lessee default under the agreement, the Corporation must, under certain conditions, compensate the lessor. As of December 31, 2012, the maximum exposure with respect to these guarantees was $16.8 million and no liability has been recorded in the consolidated balance sheet. The Corporation has not made any payments relating to these guarantees in prior years.

Business and asset disposals

In the sale of all or part of a business or an asset, in addition to possible indemnification relating to failure to perform covenants and breach of representations or warranties, the Corporation may agree to indemnify against claims related to the past conduct of the business. Typically, the term and amount of such indemnification will be limited by the agreement. The nature of these indemnification agreements prevents the Corporation from estimating the maximum potential liability it could be required to pay to guaranteed parties. The Corporation has not accrued any amount in respect of these items in the consolidated balance sheet. The Corporation has not made any payments relating to these guarantees in prior years.

Outsourcing companies and suppliers

In the normal course of its operations, the Corporation enters into contractual agreements with outsourcing companies and suppliers. In some cases, the Corporation agrees to provide indemnifications in the event of legal procedures initiated against them. In other cases, the Corporation provides indemnification to counterparties for damages resulting from the outsourcing companies and suppliers. The nature of the indemnification agreements prevents the Corporation from estimating the maximum potential liability it could be required to pay. No amount has been accrued in the consolidated balance sheets with respect to these indemnifications. The Corporation has not made any payments relating to these guarantees in prior years.

Financial instruments and financial risk

The Corporation’s financial risk management policies have been established in order to identify and analyze the risks faced by the Corporation, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and in the Corporation’s activities.

Quebecor and its subsidiaries use a number of financial instruments, mainly cash and cash equivalents, trade receivables, long-term investments, bank indebtedness, trade payables, accrued liabilities, long-term debt, and derivative financial instruments. As a result of their use of financial instruments, the Corporation and its subsidiaries are exposed to credit risk, liquidity risk and market risks relating to foreign exchange fluctuations and interest rate fluctuations.

In order to manage its foreign exchange and interest rate risks, the Corporation and its subsidiaries use derivative financial instruments (i) to set in CAN dollars all future payments on debts denominated in U.S. dollars (interest and principal) and certain purchases of inventories and other capital expenditures denominated in a foreign currency, (ii) to achieve a targeted balance of fixed- and floating-rate debts, and (iii) to reverse existing hedging positions through offsetting transactions. The Corporation and its subsidiaries do not intend to settle their derivative financial instruments prior to their maturity as none of these instruments is held or issued for speculative purposes. The Corporation and its subsidiaries designate their derivative financial instruments either as fair value hedges or cash flow hedges when they qualify for hedge accounting.

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Table 13

Description of derivative financial instruments

As of December 31, 2012

(in millions of dollars)

Foreign exchange forward contracts

Maturity	CAN dollar average exchange rate per one U.S. dollar		Notional amount sold		Notional amount bought
Quebecor Media
20131		0.9871	US$	157.3	$	155.3
20162		1.0154	US$	320.0	$	324.9
Videotron
Less than 1 year		0.9961	$	87.8	US$	88.1
20143		1.0151	US$	395.0	$	401.0

Cross-currency interest rate swaps

Hedged item	Hedging instrument
	Period covered	Notional       amount		Annual interest rate on notional amount in CAN dollars			CAN dollar exchange rate on interest and capital payments per one U.S. dollar
Quebecor Media
7.750% Senior Notes due 2016	2007 to 2016	US$	380.0		7.69	%		1.0001
5.750% Senior Notes due 20232	2007 to 2016	US$	320.0		7.69	%		0.9977
7.750% Senior Notes due 2016	2006 to 2016	US$	265.0		7.39	%		1.1597
5.750% Senior Notes due 2023	2016 to 2023	US$	431.3		7.27	%		0.9792
5.750% Senior Notes due 2023	2012 to 2023	US$	418.7		6.85	%		0.9759
No hedged item1	2009 to 2013	US$	109.8		Bankers’ acceptances 3 months + 2.22	%		1.1625
No hedged item1	2006 to 2013	US$	46.6		6.45	%		1.1625

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Cross-currency interest rate swaps (continued)

Hedged item	Hedging instrument
	Period covered	Notional       amount		Annual interest rate on notional amount in CAN dollars			CAN dollar exchange rate on interest and capital payments per one U.S. dollar
Videotron
5.000% Senior Notes due 20223	2003 to 2014	US$	200.0		Bankers’ acceptances 3 months + 2.73	%		1.3425
5.000% Senior Notes due 20223	2004 to 2014	US$	60.0		Bankers’ acceptances 3 months + 2.80	%		1.2000
5.000% Senior Notes due 20223	2003 to 2014	US$	135.0		7.66	%		1.3425
6.375% Senior Notes due 2015	2005 to 2015	US$	175.0		5.98	%		1.1781
9.125% Senior Notes due 2018	2008 to 2018	US$	455.0		9.65	%		1.0210
9.125% Senior Notes due 2018	2009 to 2018	US$	260.0		9.12	%		1.2965
5.000% Senior Notes due 2022	2014 to 2022	US$	543.1		6.01	%		0.9983
5.000% Senior Notes due 2022	2012 to 2022	US$	256.9		5.81	%		1.0016

¹  These cross-currency interest rate swaps, maturing in January 2013, were used by the Corporation to hedge the foreign currency exposure under its term loan “B” credit facility that was prepaid in full in December 2012. In conjunction with the prepayment of the term loan “B” and pending the maturity of these swaps in January 2013, the Corporation has entered into US$157.3 million offsetting foreign exchange forward contracts to reverse the hedging position related to the January 17, 2013 notional exchange.

²  The Corporation initially entered into these cross-currency interest rate swaps to hedge the foreign currency risk exposure under its 7.75% Senior Notes due 2016 redeemed in 2012. These swaps are now used to set in CAN dollars all coupon payments through 2016 on US$431.3 million of notional amount under its 5.75% Senior Notes due 2023 issued on October 11, 2012. In conjunction with the repurposing of these swaps, the Corporation has entered into US$320.0 million offsetting foreign exchange forward contracts to reverse the hedging position related to the March 15, 2016 notional exchange.

³  Videotron initially entered into these cross-currency interest rate swaps to hedge the foreign currency risk exposure under its 6.875% Senior Notes due 2014 and redeemed in 2012. These swaps are now used to set in CAN dollars all coupon payments through 2014 on US$543.1 million of notional amount under its 5.00% Senior Notes due 2022 issued on March 14, 2012. In conjunction with the repurposing of these swaps, Videotron has entered into US$395.0 million offsetting foreign exchange forward contracts to reverse the hedging position related to the January 15, 2014 notional exchange.

Certain cross-currency interest rate swaps entered into by the Corporation and its subsidiaries include an option that allows each party to unwind the transaction on a specific date at the then settlement amount.

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The gains on valuation and translation of financial instruments for 2012, 2011 and 2010 are summarized in Table 14.

Table 14

Gain on valuation and translation of financial instruments

(in millions of Canadian dollars)

	2012			2011			2010
Gain on embedded derivatives and derivative financial instruments for which hedge accounting is not used	$	(197.5	)	$	(55.2	)	$	(41.3	)
Gain on foreign currency translation of financial instruments for which hedge accounting is not used		—			—			(6.9	)
Gain on the ineffective portion of cash flow hedges		(1.1	)		—			—
Loss on the ineffective portion of fair value hedges		0.3			0.6			2.1
	$	(198.3	)	$	(54.6	)	$	(46.1	)

A $33.1 million gain was recorded in 2012 under “Other comprehensive income” in relation to cash flow hedging relationships ($9.5 million loss in 2011 and $43.0 million gain in 2010).

Fair value of financial instruments

The carrying amount of accounts receivable (classified as loans and receivables), accounts payable, accrued charges and provisions (classified as other liabilities) approximates their fair value since these items will be realized or paid within one year or are due on demand. Other financial instruments classified as loans and receivables or as available for sale are not significant and their carrying value approximates their fair value.

The fair value of long-term debt is estimated based on quoted market prices when available or on valuation models. When the Corporation uses valuation models, the fair value is estimated using discounted cash flows using year-end market yields or the market value of similar instruments with the same maturity.

The fair value of cash equivalents and bank indebtedness, classified as held for trading and accounted for at their fair value on the consolidated balance sheets, is determined using inputs that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

The fair value of derivative financial instruments recognized on the consolidated balance sheets is estimated as per the Corporation’s valuation models. These models project future cash flows and discount the future amounts to a present value using the contractual terms of the derivative instrument and factors observable in external markets data, such as period-end swap rates and foreign exchange rates. An adjustment is also included to reflect non-performance risk impacted by the financial and economic environment prevailing at the date of the valuation in the recognized measure of the fair value of the derivative instruments by applying a credit default premium estimated using a combination of observable and unobservable inputs in the market to the net exposure of the counterparty or the Corporation.

The fair value of early settlement options recognized as embedded derivatives is determined by option pricing models using market inputs, including volatility and discount factors.

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The carrying value and fair value of long term debt and derivative financial instruments as of December 31, 2012 and 2011 are as follows:

Table 15

Fair value of long-term debt and derivative financial instruments

(in millions of Canadian dollars)

	2012						2011
Asset (liability)	Carrying value			Fair value			Carrying value			Fair value
Long-term debt1	$	(4,743.6	)	$	(5,007.6	)	$	(3,848.1	)	$	(4,002.2	)
Derivative financial instruments2
Early settlement options		264.9			264.9			138.0			138.0
Interest rate swaps		—			—			(0.9	)		(0.9	)
Foreign exchange forward contracts3		0.1			0.1			3.2			3.2
Cross-currency interest rate swaps3		(263.0	)		(263.0	)		(282.8	)		(282.8	)

¹  The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest risk, embedded derivatives and financing fees.

²  The fair value of derivative financial instruments designated as hedges is a liability position of $168.9 million as of December 31, 2012 ($280.5 million as of December 31, 2011).

³  The value of foreign exchange forward contracts entered into to reverse existing hedging positions is netted from the value of the offset financial instruments.

The estimated sensitivity on income and other comprehensive income, before income tax, of a 100 basis-point variance in the credit default premium used to calculate the fair value of derivative financial instruments as of December 31, 2012, as per the Corporation’s valuation models, is as follows:

Increase (decrease)	Income			Other comprehensive income
Increase of 100 basis points	$	0.1		$	2.0
Decrease of 100 basis points		(0.1	)		(2.0	)

Due to the judgment used in applying a wide range of acceptable techniques and estimates in calculating fair value amounts, fair values are not necessarily comparable among financial institutions or other market participants and may not be realized in an actual sale or on the immediate settlement of the instrument.

Credit risk management

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial asset fails to meet its contractual obligations.

In the normal course of business, the Corporation continuously monitors the financial condition of its customers and reviews the credit history of each new customer. As of December 31, 2012, no customer balance represented a significant portion of the Corporation’s consolidated trade receivables. The Corporation establishes an allowance for doubtful accounts based on the specific credit risk of its customers and historical trends. The allowance for doubtful accounts amounted to $29.6 million as of December 31, 2012 ($30.4 million as of December 31, 2011). As of December 31, 2012, 9.9 % of trade receivables were 90 days past their billing date (7.9 % as of December 31, 2011).

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The following table shows changes to the allowance for doubtful accounts for the years ended December 31, 2012 and 2011:

	2012			2011
Balance as of beginning of year	$	30.4		$	39.1
Charged to income		35.0			20.0
Utilization		(35.8	)		(28.7	)
Balance at end of year	$	29.6		$	30.4

The Corporation believes that the diversity of its customer base and its product lines are instrumental in reducing its credit risk, as well as the impact of fluctuations in product-line demand. The Corporation does not believe that it is exposed to an unusual level of customer credit risk.

As a result of their use of derivative financial instruments, the Corporation and its subsidiaries are exposed to the risk of non-performance by a third party. When the Corporation and its subsidiaries enter into derivative contracts, the counterparties (either foreign or Canadian) must have credit ratings at least in accordance with the Corporation’s risk management policy and are subject to concentration limits.

Liquidity risk management

Liquidity risk is the risk that the Corporation and its subsidiaries will not be able to meet their financial obligations as they fall due or the risk that those financial obligations will have to be met at excessive cost. The Corporation and its subsidiaries manage this exposure through staggered debt maturities. The weighted average term of the Corporation’s consolidated debt was approximately 7.1 years as of December 31, 2012 (5.1 years as of December 31, 2011).

Market risk

Market risk is the risk that changes in market prices due to foreign exchange rates, interest rates and/or equity prices will affect the value of the Corporation’s financial instruments. The objective of market risk management is to mitigate and control exposures within acceptable parameters while optimizing the return on risk.

Foreign currency risk

Most of the Corporation’s consolidated revenues and expenses, other than interest expense on U.S.-dollar-denominated debt, purchases of set-top boxes, handsets and cable modems and certain capital expenditures, are received or denominated in CAN dollars. A large portion of the interest, principal and premium, if any, payable on its debt is payable in U.S. dollars. The Corporation and its subsidiaries have entered into transactions to hedge the foreign currency risk exposure on 100% of their U.S.-dollar-denominated debt obligations outstanding as of December 31, 2012, to hedge their exposure on certain purchases of set-top boxes, handsets, cable modems, and capital expenditures, and to reverse existing hedging positions through offsetting transactions. Accordingly, the Corporation’s sensitivity to variations in foreign exchange rates is economically limited.

The following table summarizes the estimated sensitivity on income and other comprehensive income, before income tax, of a variance of $0.10 in the year-end exchange rate of a CAN dollar per one U.S. dollar as of December 31, 2012:

Increase (decrease)	Income			Other comprehensive income
Increase of $0.10
U.S.-dollar-denominated accounts payable	$	(0.7	)	$	—
Gain on valuation and translation of financial instruments and derivative financial instruments		1.0			79.6
Decrease of $0.10
U.S.-dollar-denominated accounts payable		0.7			—
Gain on valuation and translation of financial instruments and derivative financial instruments		(1.0	)		(79.6	)

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Interest rate risk

Some of the Corporation’s and its subsidiaries’ revolving and bank credit facilities bear interest at floating rates based on the following reference rates: (i) Bankers’ acceptance rate, (ii) Canadian London Interbank Offered Rate (“LIBOR”), (iii) U.S. LIBOR, (iv) Canadian prime rate, and (v) U.S. prime rate. The Senior Notes issued by the Corporation and its subsidiaries bear interest at fixed rates. The Corporation and its subsidiaries have entered into various interest rate and cross-currency interest rate swap agreements in order to manage cash flow and fair value risk exposure due to changes in interest rates. As of December 31, 2012, after taking into account the hedging instruments, long-term debt was comprised of 90.9% fixed-rate debt (84.7% in 2011) and 9.1% floating-rate debt (15.3% in 2011).

The estimated sensitivity on interest payments of a 100 basis-point variance in the year-end Canadian Bankers’ acceptance rate as of December 31, 2012 is $4.5 million.

The estimated sensitivity on income and other comprehensive income, before income tax, of a 100 basis-point variance in the discount rate used to calculate the fair value of financial instruments as of December 31, 2012, as per the Corporation’s valuation models, is as follows:

Increase (decrease)	Income			Other comprehensive income
Increase of 100 basis points	$	0.1		$	2.0
Decrease of 100 basis points		(0.1	)		(2.0	)

Capital management

The Corporation’s primary objective in managing capital is to maintain an optimal capital base in order to support the capital requirements of its various businesses, including growth opportunities.

In managing its capital structure, the Corporation takes into account the asset characteristics of its subsidiaries and planned requirements for funds, leveraging their individual borrowing capacities in the most efficient manner to achieve the lowest cost of financing. Management of the capital structure involves the issuance of new debt, the repayment of existing debt using cash flows generated by operations, and the level of distributions to shareholders. The Corporation has not significantly changed its strategy regarding the management of its capital structure since the last financial year.

The Corporation’s capital structure is composed of equity, bank indebtedness, long-term debt, net assets and liabilities related to derivative financial instruments, less cash and cash equivalents. The capital structure is as follows:

Table 16

Capital structure of Quebecor Media

(in millions of Canadian dollars)

	2012			2011
Bank indebtedness	$	—		$	4.0
Long-term debt		4,428.7			3,697.9
Derivative financial instruments		262.9			280.5
Cash and cash equivalents		(228.7	)		(146.4	)
Net liabilities		4,462.9			3,836.0
Equity	$	2,161.9		$	3,025.5

The Corporation is not subject to any externally imposed capital requirements other than certain restrictions under the terms of its borrowing agreements, which relate, among other things, to permitted investments, inter-corporation transactions, the declaration and payment of dividends or other distributions.

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Contingencies

In February 2012, a settlement was reached in legal proceedings against some of the Corporation’s subsidiaries, initiated by another corporation in relation to printing contracts, including the cancellation of printing contracts. The settlement will have no material impact on the Corporation’s financial statements.

In addition, a number of other legal proceedings against the Corporation and its subsidiaries are pending. In the opinion of the management of the Corporation and its subsidiaries, the outcome of these proceedings is not expected to have a material adverse effect on the Corporation’s results or on its financial position.

Critical Accounting Policies and Estimates

Revenue recognition

The Corporation recognizes operating revenues when the following criteria are met:

• the amount of revenue can be measured reliably;

• the receipt of economic benefits associated with the transaction is probable;

• the costs incurred or to be incurred in respect of the transaction can be measured reliably;

• the stage of completion can be measured reliably where services have been rendered; and

• significant risks and rewards of ownership, including effective control, have been transferred to the buyer where goods have been sold.

The portion of revenue that is unearned is recorded under “Deferred revenue” when customers are invoiced.

Revenue recognition policies for each of the Corporation’s main segments are as follows:

Telecommunications

The Telecommunications segment provides services under arrangements with multiple deliverables, for which there are two separate accounting units: one for subscriber services (cable television, Internet, cable telephony or mobile telephony, including connection costs and rental of equipment); the other for equipment sales to subscribers. Components of multiple deliverable arrangements are separately accounted for, provided the delivered elements have stand-alone value to the customer and the fair value of any undelivered elements can be objectively and reliably determined. Arrangement consideration is allocated among the separate accounting units based on their relative fair values.

Cable connection revenues are deferred and recognized as revenues over the estimated average period that subscribers are expected to remain connected to the network. The incremental and direct costs related to cable connection costs, in an amount not exceeding the revenue, are deferred and recognized as an operating expense over the same period. The excess of those costs over the related revenues is recognized immediately in income. Operating revenues from cable and other services, such as Internet access, cable and mobile telephony, are recognized when services are rendered. Promotional offers and rebates are accounted for as a reduction in the service revenue to which they relate. Revenues from equipment sales to subscribers and their costs are recognized in income when the equipment is delivered. Promotional offers related to equipment, with the exclusion of mobile devices, are accounted for as a reduction of related equipment sales on delivery, while promotional offers related to the sale of mobile devices are accounted for as a reduction of related equipment sales on activation. Operating revenues related to service contracts are recognized in income over the life of the specific contracts on a straight-line basis over the period in which the services are provided.

News Media

Revenues derived from circulation are recognized when the publication is delivered, net of provisions for estimated returns based on the segment’s historical rate of returns. Advertising revenues are also recognized when the publication is delivered. Website advertising is recognized when advertisements are placed on websites. Revenues from the distribution of publications and products are recognized upon delivery, net of provisions for estimated returns.

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Broadcasting

Revenues derived from the sale of advertising airtime are recognized when the advertisement has been broadcast on television. Revenues derived from subscriptions to specialty television channels are recognized on a monthly basis at the time service is rendered. Circulation revenues derived from publishing activities are recognized when the publication is delivered, net of provisions for estimated returns based on the segment’s historical rate of returns. Revenues from advertising related to publishing activities are also recognized when the publication is delivered. Website advertising is recognized when advertisements are placed on websites.

Revenues derived from the distribution of televisual products and movies and from television program rights are recognized over the broadcasting period or over the viewing period in theatres based on a percentage of revenues generated, when exploitation, exhibition or sale can commence, and the license period of the arrangement has begun.

Revenues generated from the distribution of DVD and Blu-ray units are recognized at the time of their delivery, less a provision for estimated returns, or are accounted for based on a percentage of retail sales.

Leisure and Entertainment

Revenues derived from music distribution, book publishing and distribution activities are recognized on delivery of the products, net of provisions for estimated returns based on the segment’s historical rate of returns.

Impairment of assets

For the purposes of assessing impairment, assets are grouped in CGUs, which represent the lowest levels for which there are separately identifiable cash inflows generated by those assets. The Corporation reviews at each balance sheet date whether events or circumstances have occurred to indicate that the carrying amounts of its long-lived assets with finite useful lives may be less than their recoverable amounts. Goodwill, other intangible assets having an indefinite useful life, and intangible assets not yet available for use are tested for impairment on April 1 of each financial year, as well as whenever there is an indication that the carrying amount of the asset or the CGU, to which an asset has been allocated, exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use of the asset or the CGU. Fair value less costs to sell represents the amount an entity could obtain at the valuation date from the asset’s disposal in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. The value in use represents the present value of the future cash flows expected to be derived from the asset or the CGU.

The Corporation uses the discounted cash flow method to estimate the value in use, consisting of future cash flows derived mainly from the most recent budget and three-year strategic plan approved by the Corporation’s management and presented to the Board of Directors. These forecasts consider each CGU’s past operating performance and market share as well as economic trends, along with specific and market industry trends and corporate strategies. A range of growth rates is used for cash flows beyond this three-year period. The discount rate used by the Corporation is a pre-tax rate derived from the weighted average cost of capital pertaining to each CGU, which reflects the current market assessment of (i) the time value of money, and (ii) the risk specific to the assets for which the future cash flow estimates have not been risk-adjusted. The perpetual growth rate has been determined with regard to the specific markets in which the CGUs participate.

An impairment loss is recognized in the amount by which the carrying amount of an asset or a CGU exceeds its recoverable amount. When the recoverable amount of a CGU to which goodwill has been allocated is lower than the CGU’s carrying amount, the related goodwill is first impaired. Any excess amount of impairment is recognized and attributed to assets in the CGU, prorated to the carrying amount of each asset in the CGU.

An impairment loss recognized in prior periods for long-lived assets with finite useful lives and intangible assets having an indefinite useful life, other than goodwill, can be reversed through the consolidated statements of income up to the extent that the resulting carrying value does not exceed the carrying value that would have been the result if no impairment losses had been previously recognized.

The determination of CGUs requires judgment when determining the lowest level for which there are separately identifiable cash inflows generated by the asset category.

In addition, when determining the fair value less costs to sell of an asset or CGU, assessment of the information available at the valuation date is based on management’s judgment and may involve estimates and assumptions. Furthermore, the discounted cash flow method used in determining the value in use of an asset or CGU relies on the use of estimates such as the amount and timing of cash flows, expected variations in the amount or timing of those cash flows, the time value of money as represented by the risk-free rate, and the risk premium associated with the asset or CGU.

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Therefore, the judgment used in determining the recoverable amount of an asset or CGU may affect the amount of the impairment loss to an asset or CGU to be recorded, as well as the potential reversal of the impairment charge in the future.

Based on the data and assumptions used in its last impairment test, the Corporation believes that at this time there are no significant amounts of long-lived assets with finite useful lives, or goodwill and intangible assets with indefinite useful lives on its books that present a significant risk of impairment in the near future.

The net book value of goodwill as at December 31, 2012 was $3.37 billion, and the net book value of intangible assets with indefinite useful lives as at December 31, 2012 was $148.2 million.

Derivative financial instruments and hedge accounting

The Corporation uses various derivative financial instruments to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. The Corporation does not hold or use any derivative financial instruments for speculative purposes. Under hedge accounting, the Corporation documents all hedging relationships between hedging items and hedged items, as well as its strategy for using hedges and its risk management objective. It also designates its derivative financial instruments as either fair value hedges or cash flow hedges when they qualify for hedge accounting. The Corporation assesses the effectiveness of derivative financial instruments when the hedge is put in place and on an ongoing basis.

The Corporation generally enters into the following types of derivative financial instruments:

• The Corporation uses foreign exchange forward contracts to hedge foreign currency rate exposure on anticipated equipment or inventory purchases in a foreign currency. The Corporation also uses foreign exchange forward contracts in combination with cross-currency interest rate swaps to hedge foreign currency rate exposure on interest and principal payments on long-term debt. These foreign exchange forward contracts are designated as cash flow hedges.

• The Corporation uses cross-currency interest rate swaps to hedge (i) foreign currency rate exposure on interest and principal payments on foreign currency denominated debt and/or (ii) fair value exposure on certain debt resulting from changes in interest rates. The cross-currency interest rate swaps that set all future interest and principal payments on U.S.-dollar-denominated debt in fixed CAN dollars are designated as cash flow hedges. The Corporation’s cross-currency interest rate swaps that set all future interest and principal payments on U.S.-dollar-denominated debt in fixed CAN dollars, in addition to converting the interest rate from a fixed rate to a floating rate, or converting a floating rate index to another floating rate index, are designated as fair value hedges.

• The Corporation uses interest rate swaps to manage fair value exposure resulting from changes in interest rates on certain debt. These swap agreements require a periodic exchange of payments without the exchange of the notional principal amount on which the payments are based. These interest rate swaps are designated as fair value hedges when they convert the interest rate from a fixed rate to a floating rate, or as cash flow hedges when they convert the interest rate from a floating rate to a fixed rate.

Under hedge accounting, the Corporation applies the following accounting policies:

• For derivative financial instruments designated as fair value hedges, changes in the fair value of the hedging derivative recorded in income are substantially offset by changes in the fair value of the hedged item to the extent that the hedging relationship is effective. When a fair value hedge is discontinued, the carrying value of the hedged item is no longer adjusted and the cumulative fair value adjustments to the carrying value of the hedged item are amortized to income over the remaining term of the original hedging relationship.

• For derivative financial instruments designated as cash flow hedges, the effective portion of a hedge is reported in other comprehensive income until it is recognized in income during the same period in which the hedged item affects income, while the ineffective portion is immediately recognized in income. When a cash flow hedge is discontinued, the amounts previously recognized in the accumulated other comprehensive income are reclassified to income when the variability in the cash flows of the hedged item affects income.

Any change in the fair value of these derivative financial instruments recorded in income is included in gain or loss on valuation and translation of financial instruments. Interest expense on hedged long-term debt is reported at the hedged interest and foreign currency rates.

Derivative financial instruments that do not qualify for hedge accounting, including derivatives that are embedded in financial or non-financial contracts that are not closely related to the host contracts, such as early settlement options on long-term debt, are reported on a fair value basis in the consolidated balance sheets. Any change in the fair value of these derivative financial instruments is recorded in income as a gain or loss on valuation and translation of financial instruments.

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Early settlement options are not considered closely related to their debt contract and are accordingly accounted for separately from the debt when the corresponding option exercise price is not approximately equal to the amortized cost of the debt.

The judgment used in determining the fair value of derivative financial instruments including embedded derivatives, using valuation and pricing models, may have a significant effect on the value of the gain or loss on valuation and translation of financial instruments recorded in the consolidated statements of income, and the value of the gain or loss on derivative financial instruments reported in the consolidated statements of comprehensive income. Also, valuation and financial models are based on a number of assumptions, including future cash flows, period-end swap rates, foreign exchange rates, credit default premium, volatility and discount factors.

In addition, judgment is required to determine if an option exercise price is not approximately equal to the amortized cost of the debt. This determination may have a significant impact on the amount of gains or losses on valuation and translation of financial instruments recorded in the consolidated statements of income.

Pension and postretirement benefits

The Corporation offers defined contribution pension plans and defined benefit pension plans to some of its employees.

Quebecor Media’s defined benefit obligations with respect to defined benefit pension and postretirement benefits are measured at present value and assessed on the basis of a number of economic and demographic assumptions, which are established with the assistance of Quebecor Media’s actuaries. Key assumptions relate to the discount rate, the expected return on the plan’s assets, the rate of increase in compensation, retirement age of employees, healthcare costs, and other actuarial factors. Defined benefit pension plan assets are measured at fair value and consist of equities and corporate and government fixed-income securities.

Actuarial gains and losses are recognized immediately through other comprehensive income and in retained earnings. Actuarial gains and losses arise from the difference between the actual rate of return on plan assets for a given period and the expected rate of return on plan assets for that period, experience adjustments on liabilities, or changes in actuarial assumptions used to determine the defined benefit obligation.

The recognition of the net benefit asset is limited under certain circumstances to the amount recoverable, which is primarily based on the extent to which the Corporation can unilaterally reduce future contributions to the plan. In addition, an adjustment to the net benefit asset or the net benefit obligation can be recorded to reflect a minimum funding liability in a certain number of the Corporation’s pension plans. Changes in the net benefit asset limit or in the minimum funding liability are recognized immediately in other comprehensive income and in retained earnings. The assessment of the amount recoverable in the future, for the purpose of calculating the limit on the net benefit asset, is based on a number of assumptions, including future service costs and reductions in future plan contributions.

As an alternative to the recognition policy in other comprehensive income chosen by the Corporation, an accounting policy might have been adopted, applicable to all defined benefit plans, whereby actuarial gains and losses, as well as changes in the net benefit asset limit or in the minimum funding adjustment, are recognized immediately in income or expense as they occur. The Corporation might have also elected as an accounting policy choice to account for actuarial gains and losses using the corridor method, as permitted under IFRS.

The Corporation considers all the assumptions used to be reasonable in view of the information available at this time. However, variances from those assumptions could have a material impact on the costs and obligations of pension plans and postretirement benefits in future periods.

Stock-based compensation

Stock-based awards to employees that call for settlement in cash or other assets at the option of the employee are accounted for at fair value and classified as a liability. The compensation cost is recognized in expenses over the vesting period. Changes in the fair value of stock-based awards between the grant date and the measurement date result in a change in the liability and compensation cost.

Estimates of the fair value of stock option awards are determined by applying an option-pricing model, taking into account the terms and conditions of the grant and assumptions such as the risk-free interest rate, the dividend yield, the expected volatility and the expected remaining life of the option.

The judgment and assumptions used in determining the fair value of liability classified stock-based awards may have an effect on the compensation cost recorded in the statements of income.

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Provisions

Provisions are recognized when (i) the Corporation has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation, and when (ii) the amount of the obligation can be reliably estimated. Restructuring costs, comprised primarily of termination benefits, are recognized when a detailed plan for the restructuring exists and a valid expectation has been raised in those affected that the plan will be carried out.

Provisions are reviewed at each balance sheet date and changes in estimates are reflected in the consolidated statements of income in the reporting period in which changes occur.

The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the balance sheet date or to transfer it to a third party at that time, and is adjusted for the effect of time value when material. The amount recognized for onerous contracts is the lower of the cost necessary to fulfill the obligations, net of expected economic benefits deriving from the contracts, and any indemnity or penalty arising from failure to fulfill those obligations.

No amounts are recognized for obligations that are possible but not probable or for those for which an amount cannot be reasonably estimated.

Allowance for doubtful accounts

The Corporation maintains an allowance for doubtful accounts to cover anticipated losses from customers who are unable to pay their debts. The allowance is reviewed periodically and is based on an analysis of specific significant accounts outstanding, the age of the receivable, customer creditworthiness, and historical collection experience.

Business combinations

A business combination is accounted for by the acquisition method. The cost of an acquisition is measured at the fair value of the consideration given in exchange for control of the business acquired at the acquisition date. This consideration can be comprised of cash, assets transferred, financial instruments issued, or future contingent payments. The identifiable assets and liabilities of the business acquired are recognized at their fair value at the acquisition date. The excess of the purchase price over the sum of the values ascribed to the acquired assets and assumed liabilities is recorded as goodwill. The judgments made in determining the estimated fair value and the expected useful life of each acquired asset, and the estimated fair value of each assumed liability, can significantly impact net income, because, among other things, of the impact of the useful lives of the acquired assets, which may vary from projections. Also, future income taxes on temporary differences between the book and tax value of most of the assets are recorded in the purchase price equation, while no future income taxes are recorded on the difference between the book value and the tax value of goodwill. Consequently, to the extent that greater value is ascribed to long-lived than to shorter-lived assets under the acquisition method, less amortization may be recorded in a given period.

Determining the fair value of certain acquired assets, assumed liabilities and future contingent considerations requires judgment and involves complete absolute reliance on estimates and assumptions. The Corporation primarily uses the discounted future cash flows approach to estimate the value of acquired intangible assets.

The estimates and assumptions used in the allocation of the purchase price at the date of acquisition may also have an impact on the amount of an impairment charge to be recognized, if any, after the date of acquisition, as discussed above under “Impairment of assets.”

Income taxes

Deferred income taxes are accounted for using the liability method. Under this method, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the consolidated financial statements and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the substantive enactment date. A deferred tax asset is recognized initially when it is probable that future taxable income will be sufficient to use the related tax benefits and may be subsequently reduced, if necessary, to an amount that is more likely than not to be realized.

The assessment of deferred income taxes is judgmental in nature and is dependent on assumptions and estimates as to the availability and character of future taxable income. The ultimate amount of deferred income tax assets realized could be slightly different from that recorded, since it is influenced by the Corporation’s future operating results.

The Corporation is at all times under audit by various tax authorities in each of the jurisdictions in which it operates. A number of years may elapse before a particular matter for which management has established a reserve is audited and resolved. The number of years between each tax audit varies depending on the tax jurisdiction. Management believes that its estimates are reasonable and reflect the probable outcome of known tax contingencies, although the final outcome is difficult to predict.

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Recent Accounting Pronouncements

Unless otherwise indicated, based on current facts and circumstances, the Corporation does not expect to be materially affected by the application of the following standards.

(i) IFRS 9 – Financial Instruments is required to be applied retrospectively for periods beginning January 1, 2015, with early adoption permitted.

IFRS 9 simplifies the measurement and classification for financial assets by reducing the number of measurement categories and removing complex rule-driven embedded derivative guidance in IAS 39, Financial Instruments: Recognition and Measurement. The new standard also provides a fair value option in the designation of a non-derivative financial liability and its related classification and measurement.

(ii) IFRS 10 – Consolidated Financial Statements is required to be applied retrospectively for periods beginning January 1, 2013, with early adoption permitted.

IFRS 10 replaces SIC-12 Consolidation – Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements and provides additional guidance regarding the concept of control as the determining factor in whether an entity should be included in the consolidated financial statements of the parent corporation.

(iii) IFRS 11 – Joint Arrangements is required to be applied retrospectively for periods beginning January 1, 2013, with early adoption permitted.

IFRS 11 replaces IAS 31, Interests in Joint Ventures, with guidance that focuses on the rights and obligations of the arrangement, rather than its legal form. It also withdraws the option to proportionately consolidate an entity’s interests in joint ventures. The new standard requires that such interests be recognized using the equity method.

(iv) IFRS 12 – Disclosure of Interests in Other Entities is required to be applied retrospectively for periods beginning January 1, 2013, with early adoption permitted.

IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose entities, and other off-balance sheet vehicles.

(v) IAS 19 – Post-employment Benefits (including Pensions) (Amended) is required to be applied retrospectively for periods beginning January 1, 2013.

Amendments to IAS 19 involve, among other changes, the immediate recognition of the re-measurement component in other comprehensive income, thereby removing the accounting option previously available in IAS 19 to recognize or to defer recognition of changes in defined benefit obligations and in the fair value of plan assets directly in the consolidated statements of income. IAS 19 allows amounts recorded in other comprehensive income to be recognized either immediately in retained earnings or as a separate category within equity. IAS 19 also introduces a net interest approach that replaces the expected return on assets and interest costs on the defined benefit obligation with a single net interest component determined by multiplying the net defined benefit liability or asset by the discount rate used to determine the defined benefit obligation. In addition, all past service costs are required to be recognized in profit or loss when the employee benefit plan is amended and no longer spread over any future service period.

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The adoption of the amended standard will have the following impacts will have the following impacts on years ended December 31:

Consolidated statements of income

Increase (decrease)	2012			2011
Employee costs	$	4.4		$	2.8
Net interest cost on defined benefit plans		12.3			9.8
Income tax expense		(4.5	)		(3.4	)
Net income	$	(12.2	)	$	(9.2	)
Net income attributable to:
Shareholders	$	(11.1	)	$	(8.4	)
Non-controlling interests		(1.1	)		(0.8	)

Consolidated statements of comprehensive income

Increase (decrease)	2012			2011
Net income	$	(12.2	)	$	(9.2	)
Actuarial loss		(18.3	)		(14.2	)
Deferred income taxes related to actuarial loss		4.9			3.8
Comprehensive income	$	1.2		$	1.2
Comprehensive income attributable to:
Shareholders	$	0.7		$	0.7
Non-controlling interests		0.5			0.5

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BUSINESS

History and Development of Quebecor Media Inc.

Our legal and commercial name is Quebecor Media Inc. Our registered office is located at 612 St-Jacques Street, Montréal, Québec, Canada H3C 4M8, and our telephone number is (514) 380-1999. Our corporate website may be accessed through the URL http://www.quebecor.com. The information found on our corporate website or any other website to which we refer in this prospectus does not, however, form part of this prospectus and is not incorporated herein by reference. Our agent for service of process in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

Quebecor Media was incorporated in Canada on August 8, 2000 under Part 1A of the Companies Act (Québec) (since February 14, 2011, the Business Corporations Act (Québec)).

Since December 31, 2009, we have undertaken and/or completed several business acquisitions, combinations, divestitures and business development projects and financing transactions through our direct and indirect subsidiaries, including, among others, the following:

• We have continued to actively pursue the roll-out of Videotron’s 4G network. As of December 31, 2012, Videotron’s mobile telephony service was available to more than 7 million people across the Province of Québec and in Eastern Ontario. During 2012, we activated 112,058 net new lines on our new advanced mobile network at a pace of approximately 9,338 net new lines per month, bringing our total mobile customer base to 402,636 activated lines.

• On October 11, 2012, we repurchased 20,351,307 of our common shares held by CDP Capital for an aggregate purchase price of $1.0 billion, paid in cash, and, concurrently, with that transaction, Quebecor purchased 10,175,653 of our common shares held by CDP Capital. Following completion of these transactions, Quebecor’s interest in Quebecor Media increased from 54.7% to 75.4% and CDP Capital’s interest decreased from 45.3% to 24.6%.

• On October 11, 2012, Quebecor Media issued US$850.0 million aggregate principal amount of its 5 ³/₄% Senior Notes due 2023 for net proceeds of $820.7 million (net of financing expenses) and $500.0 million aggregate principal amount of its 6  ⁵/₈% Senior Notes due 2023 for net proceeds of $493.8 million (net of financing expenses). Quebecor Media used the proceeds of these offerings to finance: (i) the repurchase for cancellation from CDP Capital of 20,351,307 of its common shares for an aggregate purchase price of $1.0 billion, (ii) the redemption and retirement of US$320.0 million aggregate principal amount of its issued and outstanding 7  ³/₄% Senior Notes due 2016 issued in 2007 and (iii) for the payment of related transaction fees and expenses.

• On June 21, 2012, following an invitation to tender, Quebecor Media was selected to install, maintain and manage the advertising on Société de transport de Montréal (STM) bus shelters for the next 20 years.

• In March and April 2012, Quebecor Media repurchased and retired US$260.0 million aggregate principal amount of its 7 ³/₄% Senior Notes due 2016 issued in 2006.

• On March 14, 2012, Videotron issued US$800.0 million aggregate principal amount of its 5% Senior Notes due 2022 for net proceeds of $787.6 million (net of financing expenses). Videotron used the proceeds to repurchase and retire all US$395.0 million aggregate principal amount of its outstanding 6 ⁷/₈% Senior Notes due 2014, to fully repay the borrowings under its revolving credit facility, to pay related fees and expenses and the remainder for general corporate purposes.

• On February 24, 2012, TVA Group amended its bank credit facilities to extend the maturity of its $100.0 million revolving credit facility from December 2012 to February 2017.

• Effective February 3, 2012, Sun Media Corporation repaid and terminated its syndicated credit agreement, and its term loan credit facility. Sun Media Corporation’s liabilities no longer include any long-term debt.

• On January 25, 2012, we amended our bank credit facilities to extend the maturity of our $100.0 million revolving credit facility from January 2013 to January 2016 and added a new $200.0 million revolving credit facility “C,” also maturing in January 2016. In December 2012, these credit facilities were combined to create a credit facility for a total available amount of $300.0 million.

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• In the third quarter of 2011, Nurun completed the acquisition of Odopod, a digital agency in San Francisco, California, that has expertise in brand promotion and interactive product development.

• On September 12, 2011, TVA Group launched the TVA Sports channel that broadcasts Ottawa Senators, Toronto Blue Jays, Montréal Impact, Interbox, Ultimate Fighting Championship, Québec Major Junior Hockey League (“QMJHL”) and Canadian Hockey League events, among others.

• On August 31, 2011, our subsidiary, Quebecor Media Network Inc. (“Quebecor Media Network”), launched Le Sac Plus. In addition to distributing all Quebecor Media community newspapers in the Province of Québec, Le Sac Plus door-knob bag contains advertising materials, such as flyers, leaflets, product samples and other value-added promotions every week.

• In June, 2011, we acquired a QMJHL franchise, which is now known as L’Armada de Blainville-Boisbriand.

• On July 20, 2011, Videotron amended its $575.0 million revolving credit facility to extend the expiry date from April 2012 to July 2016 and to modify certain other terms and conditions thereof.

• On July 5, 2011, Videotron issued $300.0 million aggregate principal amount of its 6 ⁷/₈% Senior Notes due 2021 for net proceeds of $294.8 million (net of financing expenses). Videotron used the net proceeds to redeem and retire US$255.0 million in aggregate principal amount of Videotron’s issued and outstanding 6 ⁷/₈% senior notes due 2014.

• On April 18, 2011, we launched Sun News, an English-language news and opinion specialty channel.

• In March 2011, Quebecor Media reached an agreement with Québec City granting Quebecor Media management and naming rights for a 25-year period to the new multipurpose arena/amphitheatre to be built in Québec City. These rights represent a major asset to Quebecor Media that will allow the Company to pursue initiatives to leverage growth and convergence opportunities and to cross-promote its brands, programs and other content. Pursuant to agreements entered into with Québec City in early September 2011, we will implement our business plan for the management of this multipurpose arena.

• On February 3, 2011, Quebecor Media expanded its distribution network in the Province of Québec and its stable of community newspapers with the acquisition of Les Hebdos Montérégiens’ 15 newspapers.

• On January 5, 2011, Quebecor Media issued $325.0 million aggregate principal amount of its 7 ³/₈% Senior Notes due 2021 for net proceeds of $319.9 million (net of financing expenses). Quebecor Media used the net proceeds to effect a contribution (the “QMI Contribution”) to Sun Media and for general corporate purposes. On February 15, 2011, Sun Media used the proceeds of the QMI Contribution to redeem and retire all of its outstanding 7 ⁵/₈% Senior Notes due 2013 and to finance the settlement and termination of related hedging contracts.

• On September 9, 2010, Videotron launched its High Speed Packet Access (“HSPA+”) mobile communication network.

• In September 2010, Videotron launched illico mobile, a service delivered over its 4G network that provides customers with mobile telephone access to several television and Galaxy Music channels, and to the illico mobile store.

• In June 2010, Videotron launched illico web (illicoweb.tv), an Internet television service offering an exceptional variety of content to our digital television and Internet customers, at no additional cost. Customers can access from a computer thousands of French and English movies, series and music from several different television channels.

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• In January 2010, Videotron issued $300.0 million aggregate principal amount of its 7 ¹/₈% Senior Notes due 2020 for net proceeds of $293.9 million (net of financing expenses). Videotron used the proceeds to repay the drawings under its senior secured credit facilities and for general corporate purposes.

Overview

Quebecor Media is one of Canada’s leading media companies, with activities in cable distribution, telecommunications, newspaper publishing, production and distribution of printing products, television broadcasting, book, magazine and video retailing, publishing and distribution, music recording, production and distribution, and new media services. Through its operating subsidiaries, Quebecor Media holds leading positions in the creation, promotion and distribution of news, entertainment and Internet-related services that are designed to appeal to audiences in every demographic category. Quebecor Media continues to pursue a convergence strategy to capture synergies within its portfolio of media properties.

We operate in the following industry segments: Telecommunications, News Media, Broadcasting, Leisure and Entertainment, and Interactive Technologies and Communications.

Competitive Strengths

Leading Market Positions

In our Telecommunications segment, we are the largest cable operator in the Province of Québec and the third largest in Canada, in each case based on the number of cable customers. We believe that our strong market position has enabled us to launch and deploy new products and services more effectively. For example, since the introduction of our cable Internet access service, we estimate that we have become the largest provider of such service in the areas we serve. Our extensive proprietary and third-party retail distribution network of stores and points of sale, including both the Le SuperClub Vidéotron stores and our Videotron branded stores and kiosks, assist us in marketing and distributing our advanced telecommunications services, such as cable Internet access, digital television and cable and mobile telephony, on a large scale basis. We are the franchisor of the largest chain of video stores in the Province of Québec through our Le SuperClub Vidéotron subsidiary. Sun Media is the largest newspaper publisher in Canada based on total paid and unpaid circulation (according to management estimates) and is Canada’s second largest newspaper publisher in terms of weekly paid average circulation according to statistics published in Newspapers Canada Circulation Data. In our Broadcasting segment, we are the largest private-sector broadcaster of French-language entertainment, information and public affairs programs in North America in terms of market share.

Diverse Media Platform

Our diverse media platform allows us to extend our market reach and cross-promote our brands, programs and other content. In addition, it allows us to provide advertisers with an integrated solution for local, regional and national multi-platform advertising. We can leverage our content, management, sales and marketing and production resources to provide superior information and entertainment services to our customers.

Differentiated Bundled Services

Through our technologically advanced fixed and mobile network, we offer a differentiated, bundled suite of entertainment, information and communication services and products, including digital television, cable Internet access, video-on-demand and other interactive television services, as well as residential and commercial cable telephony services using VoIP technology, and mobile telephony services. In addition, we deliver high-quality services and products, including, for example, our standard cable Internet access service that enables our customers to download data at a higher speed than currently offered by standard digital subscriber line, or DSL technology. We also offer the widest range of French-language programming in Canada including content from our illico-on-Demand service available on our illico Digital TV, illico web and illico mobile platforms. Customers can interrupt and resume programming at will on any of these three illico platforms.

Advanced Broadband Network

We are able to leverage our advanced broadband network, substantially all of which is bi-directional, to offer a wide range of advanced services on the same media, such as digital television, video-on-demand, cable Internet access and cable telephony services. We are committed to maintaining and upgrading our network capacity and, to that end, we currently anticipate that ongoing capital expenditures will be required to accommodate the evolution of our products and services and to meet the demand for increased capacity.

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Focused and Highly Reliable Network Cluster

Our single hybrid fibre coaxial clustered network covers approximately 78% of the Province of Québec’s total addressable market and nine of the province’s top ten urban areas. We believe that our single cluster and network architecture provides many benefits, including a higher quality and more reliable network, the ability to launch and deploy new products and services such as illico TV new generation, and a lower cost structure through reduced maintenance and technical support costs.

Strong, Market-Focused Management Team

We have a strong, market-focused management team that has extensive experience and expertise in a range of areas, including marketing, finance, telecommunications, publishing and technology. Under the leadership of our senior management team, we have, among other things, improved penetration of our HSIA offering, our VoIP telephony services, our cable products and our mobile telephony services, including through the successful build-out and launch of our mobile telephony network.

Our Strategy

Our objective is to increase our revenues and profitability by leveraging the convergence and growth opportunities presented by our portfolio of leading media assets. We attribute our strong historical results and positive outlook for growth and profitability to an ability to develop and execute forward-looking business strategies. The key elements of our strategy include:

• Leverage growth opportunities and convergence of content and platforms. We are the largest private sector French language programming broadcaster in North America, a leading producer of French language programming, the largest newspaper publisher in Canada based on total paid and unpaid circulation (according to management estimates), and a leading English and French language Internet news and information portal in Canada. As a result, we are able to generate and distribute content across a spectrum of media properties and platforms. In addition, these multi-platform media assets enable us to provide advertisers with integrated advertising solutions. We are able to provide flexible, bundled advertising packages that allow advertisers to reach local, regional and national markets, as well as special interest and specific demographic groups. We continue to explore and implement initiatives to leverage growth and convergence opportunities, including efforts to accelerate the migration of content generated by our various publications and broadcasters to our other media platforms, the launch of Sun News which is an addition to Sun Media’s English-language news media and website offering, the transfer of the printing of several of our publications to two state-of-the-art facilities owned by Quebecor Media Printing, the creation of Quebecor Media Network and the launch of Le Sac Plus, the sharing of editorial content between our News Media business and QMI Agency, the acquisition of our QMJHL hockey franchise and the broadcast of its games on our TVA Sports channel, and the integration of advertising assets with the creation of our national sales services (“QMI National Sales”) aimed at developing global, integrated and multi-platform advertising and marketing solutions.

• Build on our position as a telecommunications leader with our 4G mobile services. We provide an offering of advanced mobile telecommunications services to consumers and small and medium businesses that are based on effective, reliable technology, diverse and convergent content and unambiguous business policies. Our recently launched mobile service is the cornerstone of a corporate business strategy geared toward harnessing all of our creative resources and providing consumers with access to technology, services and information.

• Introduce new and enhanced products and services. We expect a significant portion of the revenue growth in our Telecommunications segment to be driven by the introduction of new products and services (such as Wideband Internet technology and products and services leveraging our new mobile network) and by the continuing penetration of our existing suite of products and services such as digital cable services, cable Internet access, cable and mobile telephony services, as well as high-definition television, video-on-demand and interactive television content of our digital television, Internet and mobile platforms. We believe that the continued increase in the penetration rate of our digital television, cable Internet access, telephony and mobile voice and data services will result in increased ARPU, and we are focusing sales and marketing efforts on the bundling of these value-added products and services.

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• Cross-promote brands, programs and other content. The geographic overlap of our cable, television, newspaper and magazine publishing, music and video store chains, and Internet platforms enables us to cost effectively promote and co-brand media properties. We will continue to promote initiatives to advance these cross-promotional activities, including the cross-promotion of various businesses, cross-divisional advertising and shared infrastructures. Our efforts to obtain a National Hockey League franchise for Québec City is an example of such initiatives.

• Leverage geographic clustering. Our Videotron subsidiary holds cable licenses that cover approximately 78% of the Province of Québec’s estimated 3 million residential and commercial premises. Geographic clusters facilitate bundled service offerings and, in addition, allow us to tailor our offerings to certain demographic markets. We aim to leverage the highly clustered nature of our systems to enable us to use marketing dollars more efficiently and to enhance customer awareness, increase use of products and services and build brand loyalty.

• Maximize customer satisfaction and build customer loyalty. Across our media platform, we believe that maintaining a high level of customer satisfaction is critical to future growth and profitability. An important factor in our historical growth and profitability has been our ability to attract and satisfy customers with high quality products and services. We will continue our efforts to maximize customer satisfaction and build customer loyalty.

• Manage expenses through success driven capital spending and technology improvements. In our Telecommunications segment, we support the growth in our customer base and bandwidth requirements through strategic success driven modernizations of our network and increases in network capacity. In our News Media segment, we have undertaken restructurings of certain printing facilities and news production operations, and invested in certain technology improvements with a view to modernizing our operations and improving our cost structure. In addition, we continuously seek to manage our salaries and benefits expenses, which comprise a significant portion of our costs.

Telecommunications

Through Videotron we are the largest cable operator in the Province of Québec and the third largest in Canada, in each case based on the on the number of cable customers, as well as an Internet service provider and a provider of cable and mobile telephony services in the Province of Québec. Our cable network covers approximately 78% of the Province of Québec’s approximately 3 million residential and commercial premises.

Our mobile network, which was launched in September 2010, is the cornerstone of a corporate business strategy geared toward harnessing all of our creative resources and providing consumers with access to technology, services and information. The deployment of our 4G network and our enhanced offering of mobile communication services for residential and business customers allow us to consolidate our position as a provider of integrated telecommunication services.

In addition, through our Le SuperClub Vidéotron subsidiary, we are the franchisor of the largest chain of video and video game rental stores in the Province of Québec and among the largest of such chains in Canada. We had a total of 205 retail locations as of December 31, 2012.

Videotron Business Sector is a premier full-service business telecommunications provider serving businesses of small, medium and large size. In recent years, we have significantly grown our customer base and have become an important player in the business telecommunication segment in the Province of Québec. Products and services include Internet, television, cable and mobile telephony services, and business solutions products such as hosting, private network connectivity and audio and video transmission.

We own a 100% voting and 100% equity interest in Videotron.

For the twelve-month period ended December 31, 2012, our Telecommunications operations generated revenues of $2.6 billion and operating income of $1.2 billion. For the year ended December 31, 2011, our Telecommunications operations generated revenues of $2.4 billion and operating income of $1.1 billion.

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Products and Services

Videotron currently offers its customers cable services, mobile telephony services, business telecommunications services and video and video games rental services (as franchisor).

Cable Services

Advanced Cable-Based Products and Services

Cable’s large bandwidth is a key factor in the successful delivery of advanced products and services. Several emerging technologies and increasing Internet usage by our customers have presented us with significant opportunities to expand our sources of revenue. We currently offer a variety of advanced products and services, including cable Internet access, digital television, cable telephony and selected interactive services. In April, 2012, we launched illico TV new generation, offering a new interface with entirely redesigned ergonomics for fluid, intuitive navigation, as well as additional value-added features. We intend to continue to develop and deploy additional added-value services to further broaden our service offering.

• Cable Internet Access. Leveraging our advanced cable infrastructure, we offer cable Internet access to our customers primarily via cable modems. We generally provide this service at download speeds of up to 60 Mbps. In some portions of the network, we offer download speeds of up to 200 Mbps. As of December 31, 2012, we had 1,387,657 cable Internet access customers, representing 74.8% of our basic customers and 51.4% of our total homes passed. Based on internal estimates, we are the largest provider of Internet access services in the areas we serve with an estimated market share of 51.7% as of December 31, 2012.

• Digital Television. We have installed headend equipment capable of delivering digitally encoded transmissions to a two-way digital set-top box in the customer’s home and premises. This digital connection provides significant advantages. In particular, it increases channel capacity, which allows us to increase both programming and service offerings while providing increased flexibility in packaging our services. Our basic digital package includes 29 television channels, audio services providing CD-quality music, 18 AM/FM radio channels, an interactive programming guide as well as television based e-mail capability. Our extended digital basic television offering allows customers to customize their choices with the ability to choose between custom or pre-assembled packages with a selection of more than 300 additional channels, including U.S. super-stations and other special entertainment programs. This also offers customers significant programming flexibility including the option of French-language only, English-language only or a combination of French- and English-language programming, as well as many foreign-language channels. We also offer pre-packaged themed service tiers in the areas of news, sports and discovery. Customers who purchase basic service and one customized package can also purchase channels on an à la carte basis at a specified cost per channel per month or choose one of our customized package adding 10, 20 or 30 of their favorite channels to the basic programming. As part of our digital service offering, customers can also purchase near-video-on-demand services on a per-event basis. As of December 31, 2012, we had 1,484,589 customers for our digital television service, representing 80.0% of our total basic customers and 55.0% of our total homes passed. Our customers have the option to purchase or lease the digital set-top boxes required for digital service.

• Cable Telephony. We offer cable telephony service using VoIP technology. We offer discounts to our customers who subscribe to more than one of our services. As of December 31, 2012, we had 1,264,862 subscribers to our cable telephony service, representing a penetration rate of 68.2% of our basic cable subscribers and 46.8% of our homes passed.

• Video-On-Demand. Video-on-demand service enables digital cable customers to rent content from a library of movies, documentaries and other programming through their digital set-top box, Internet access or mobile phone respectively through illico web and illico mobile. Our digital cable customers are able to rent their video-on-demand selections for a period of up to 24 hours, which they are then able to watch at their convenience with full stop, rewind, fast forward, pause and replay functionality during their rental period. In addition, customers can now resume viewing on-demand programming that was paused on either the television, illico web or illico mobile. We sometimes group movies, events or TV programs available on video-on-demand and offer them, when available, for a period of seven days. We also offer a substantial amount of video-on-demand content free of charge to our digital cable customers, comprised predominantly of previously aired television programs and youth-oriented programming. In March of 2013, we introduced Club Unlimited, a flat-fee plan offering a rich and

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varied selection of unlimited, on-demand content (movies, television shows, children’s shows, documentaries, comedy performances and concerts). In addition, we offer pay television channels on a subscription basis that permits our customers to access and watch most of the movies available on the linear pay TV channels these clients subscribe to.

• Pay-Per-View (Canal Indigo). Canal Indigo is a group of pay-per-view channels that allows our digital customers to order live events and movies based on a pre-determined schedule.

Traditional Cable Television Services

Customers subscribing to our traditional analog “basic” and analog “extended basic” services generally receive a line-up of 42 channels of television programming, depending on the bandwidth capacity of their local cable system. We also feature an expanding offering of optional channels as well as customized selection of channels or channel packages tailored to satisfy the specific needs of the different customer segments we serve.

As of December 31, 2012, we had 370,392 customers for our analog television service, representing 20.0% of our total basic customers.

Mobile Services

On September 9, 2010, we launched our HSPA+ mobile communication network (4G). As of December 31, 2012, most households and businesses on our cable footprint had access to our advanced mobile services. Prior to launching our HSPA+ network, we had been offering mobile wireless telephony services as a Mobile Virtual Network Operator (“MVNO”) since 2006.

Under an arrangement with Industry Canada, Videotron launched fixed wireless Internet access in selected rural areas of the Province of Québec in December, 2011. Powered by our HSPA+ network, this service allows thousands of households and businesses that had no access to high speed cable Internet to benefit from reliable and professionally installed high speed Internet. As a result, we extended our residential and business Internet footprint to dozens of underserved municipalities across the Province of Québec.

Our strategy in the coming years is to build on our position as a telecommunications leader with our 4G mobile services. With these services, we provide an offering of advanced mobile telecommunications services to consumers and small and medium-sized businesses that are based on effective and reliable technology as well as diverse and convergent content. Our mobile service is the cornerstone of a corporate business strategy geared toward harnessing all of our creative resources and providing consumers with access to technology, services and information anytime, anywhere.

As of December 31, 2012, there were 402,636 lines activated on our mobile telephony services, representing a year-over-year increase of 112,058 lines (38.6%).

Business Telecommunications Services

Videotron Business Sector is a premier full-service business telecommunications provider. We serve three customer segments: small and medium-sized businesses, large businesses, and telecommunications carriers. In recent years, we have significantly grown our customer base and have become an important player in the business telecommunications segment in the Province of Québec. Products and services for small and medium-sized businesses are supported by our coaxial technology and our solid expertise in business services. Customized solutions designed to meet customers’ needs incorporating tools such as fiber-optic landlines, high speed Internet access, television, telephony services, website hosting, private network connectivity and audio and video transmission, all based on state-of-the-art technology, are also offered to large businesses and carriers. Videotron also offers mobile communication services, telephony services using our multiple label switching (“MPLS”) network and up to 200Mbps high speed Internet access targeted at small and medium-size businesses using our Hybrid fiber coaxial (“HFC”) network.

Video Rental Services

Through Le SuperClub Vidéotron, we are the franchisor of the largest chain of video and video game rental stores in the Province of Québec and among the largest of such chains in Canada. We had a total of 205 retail locations as of December

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31, 2012. With the majority of these retail locations offering our suite of telecommunication services and products, Le SuperClub Vidéotron is both a showcase and a valuable and cost-effective distribution network for Videotron’s growing array of advanced products and services, such as cable Internet access, digital television and cable and mobile telephony.

Jobboom and Réseau Contact

Jobboom.com is a unique web-based employment site with over 2.5 million members as of December 31, 2012. The activities of Jobboom also include Les Éditions Jobboom (a careers book editor) and Jobboom Formation (an internet directory of continuing education services).

RéseauContact.com is the largest French-language dating and friendship website in the Province of Québec.

Customer Statistics Summary

The following table summarizes our customer statistics for our analog and digital cable and advanced products and services:

	As of December 31,
	2012			2011			2010			2009			2008
Homes passed (1)		2,701,242			2,657,315			2,612,406			2,575,315			2,542,859
Cable
Basic customers (2)		1,854,981			1,861,477			1,811,570			1,777,025			1,715,616
Penetration (3)		68.7	%		70.1	%		69.3	%		69.0	%		67.5	%
Digital customers		1,484,589			1,400,814			1,219,599			1,084,100			927,322
Penetration (4)		80.0	%		75.3	%		67.3	%		61.0	%		54.1	%
Dial-up Internet Access
Dial-up customers		2,258			2,986			3,851			4,988			6,533
Internet Over Wireless
Internet over wireless customers		7,129			5,644			2,319			—			—
Cable Internet Access
Cable modem customers		1,387,657			1,332,551			1,252,104			1,170,570			1,063,847
Penetration (3)		51.4	%		50.1	%		47.9	%		45.5	%		41.8	%
Telephony Services
Cable telephony customers		1,264,862			1,205,272			1,114,294			1,014,038			851,987
Penetration (3)		46.8	%		45.4	%		42.7	%		39.4	%		33.5	%
Mobile telephony lines (5)		402,636			290,578			136,111			82,813			63,402

(1) Homes passed means the number of residential premises, such as single dwelling units or multiple dwelling units, and commercial premises passed by the cable television distribution network in a given cable system service area in which the programming services are offered.

(2) Basic customers are customers who receive basic cable service in either the analog or digital mode.

(3) Represents customers as a percentage of total homes passed.

(4) Represents customers for the digital service as a percentage of basic cable customers.

(5) Prior to September 9, 2010, represents lines under our MVNO service offering.

Industry Overview

Cable Television Industry

Industry Data

Cable television has been available in Canada for more than 50 years and is a well developed market. As of August 31, 2011, the most recent date for which data is available, there were approximately 8.5 million cable television customers in Canada. For the twelve months ended August 31, 2011 (the most recent data available), total industry revenue was estimated to be over $10.9 billion and is expected to grow in the future based on the fact that Canadian cable operators have aggressively upgraded their networks and broadened their offerings of products and services. The following table summarizes the most recent available annual key statistics for the Canadian and U.S. cable television industries.

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	Twelve Months Ended August 31,
	2011		2010		2009		2008		2007		CAGR(1)
	(Dollars in billions and basic cable customers in millions)
Canada
Industry Revenue(2)	$	10.9	$	10.1	$	9.2	$	8.2	$	7.1		11.4	%
Basic Cable Customers(2)		8.5		8.3		8.1		7.9		7.7		2.5	%

	2012			2011			2010			2009			2008			CAGR(3)
	(U.S. dollars in billions, and homes passed and basic cable customers in millions)
U.S.
Industry Revenue		n/a		US$	97.6		US$	93.7		US$	90.2		US$	86.3			n/a
Homes Passed(4)		131.2			130.3			129.3			125.7			124.2			1.10	%
Basic Cable Customers		56.8			58.0			59.8			62.6			63.7			-2.27	%
Basic Penetration		43.7	%		44.4	%		45.5	%		49.8	%		51.3	%		—

Source of Canadian data: CRTC.

Source of U.S. data: NCTA, A.C. Nielsen Media Research and SNL Kagan.

(1) Compounded Canadian annual growth rate from 2007 through 2011.

(2) Including IPTV since 2008.

(3) Compounded U.S. annual growth rate from 2008 through 2012.

(4) “Homes passed” means the number of residential premises, such as single dwelling units or multiple dwelling units, and commercial premises passed by the cable distribution network in a given cable system service area in which the programming services are offered.

Expansion of Digital Distribution and Programming

In recent years, digital technology has significantly expanded the range of services that may be offered to our customers. We now offer 421 channels on our digital platform (82 in HD), including 224 English-language channels, 100 French-language channels, 10 time-shifting channels, 65 radio/music channels and 25 others.

Many programming services have converted to high-definition format and HDTV programming is steadily increasing. We believe that the availability of HDTV programming will continue to increase significantly in the coming years and will result in a higher penetration level of digital distribution.

Our strategy over the coming years will be to continue the expansion in our offering and to maintain the quality of our programming. Our cable television service depends in large part on our ability to distribute a wide range of appealing, conveniently-scheduled television programming at reasonable rates and will be an important factor in our success to maintain the attractiveness of our services to customers. In addition, we will continue working on the expansion of our added-value products, such as video-on-demand, digital television interactive content and certain content, such as certain sporting events, movies and documentaries, using new 3D technologies.

Mobile Telephony Industry

In terms of wireless penetration rate (i.e., the number of active SIM cards and/or connected lines versus total population, expressed as a percentage), the Canadian mobile telephony market is relatively under-developed. Based on The Netsize Guide 2011: Truly mobile, Canada occupies the fortieth position out of forty-one countries in terms of wireless penetration. Comparatively, according to Global Mobile Statistics, the United States had a penetration rate of 94.1% as of November 30, 2011, while Europe’s overall penetration rate reached 120%. As of September 30, 2012, the Province of Québec had a penetration rate under the Canadian average (67.8% vs 77.8% according to the CRTC).

The wireless spectrum auction completed in July 2008 has brought new players onto the market, which led to lower prices for customers. To respond to this new offer, traditional incumbents launched, or have operated for some time, low-price subsidiaries. As of September 30, 2012, incumbents were still dominant in the industry in Canada, with market share of approximately 90% in the Province of Québec, according to internal estimates.

With an increasing number of regional operators competing on price, coverage, handset offers and technological reliability, the Canadian wireless industry is highly competitive. With the deployment of Advanced Wireless Networks throughout the country and the increasing penetration rate among younger customers, the demand for technologically advanced bandwidth-hungry devices (smartphones, tablets, etc.) is increasing rapidly. As of December 31, 2012, there were more than 26.0 million subscribers in Canada.

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Pricing of our Products and Services

Our revenues are derived from the monthly fees our customers pay for cable television, Internet and telephony and mobile services. The rates we charge vary based on the market served and the level of service selected. Rates are usually adjusted annually. We also offer discounts to our customers who subscribe to more than one of our services, when compared to the sum of the prices of the individual services provided to these customers. As of December 31, 2012, the average monthly invoice on recurring subscription fees per customer was $98.80 and approximately 79.0% of our customers were bundling two services or more. A one-time installation fee, which may be waived in part during certain promotional periods, is charged to new customers. Monthly fees for rented equipment, such as set-top boxes, are also charged to customers.

Although our service offerings vary by market, because of differences in the bandwidth capacity of the cable systems in each of our markets and other factors, our services are typically offered at monthly price ranges, which reflect discounts for bundled service offerings.

Our Network Technology

Cable

As of December 31, 2012, our cable systems consisted of 30,126 km of fibre optic cable and 45,444 km of coaxial cable, passing approximately 2.7 million homes and serving approximately 2.1 million customers. Our network is the largest broadband network in the Province of Québec covering approximately 78% of households and, according to our estimates, more than 75% of the businesses located in the major metropolitan areas of the Province of Québec. Our extensive network supports direct connectivity with networks in Ontario, the Maritimes and the United States.

Our cable television networks are comprised of four distinct parts including signal acquisition networks, main headends, distribution networks and subscriber drops. The signal acquisition network picks up a wide variety of television, radio and multimedia signals. These signals and services originate from either a local source or content provider or are picked up from distant sites chosen for satellite or over-the-air reception quality and transmitted to the main headends by way of over-the-air links, coaxial links or fibre optic relay systems. Each main headend processes, modulates, scrambles and combines the signals in order to distribute them throughout the network. Each main headend is connected to the primary headend in order to receive the digital MPEG2 signals and the IP backbone for the Internet services. The first stage of this distribution consists of a fibre optic link which distributes the signals to distribution or secondary headends. After that, the signal uses the hybrid fibre coaxial cable network made of wide-band optical nodes, amplifiers and coaxial cables capable of serving up to 30 km in radius from the distribution or secondary headends to the subscriber drops. The subscriber drop brings the signal into the customer’s television set directly or, depending on the area or the services selected, through various types of customer equipment including set-top boxes and cable modems.

We have adopted the HFC network architecture as the standard for our ongoing system upgrades. HFC network architecture combines the use of fibre optic cable with coaxial cable. Fibre optic cable has excellent broadband frequency characteristics, noise immunity and physical durability and can carry hundreds of video and data channels over extended distances. Coaxial cable is less expensive and requires greater signal amplification in order to obtain the desired transmission levels for delivering channels. In most systems, we deliver our signals via fibre optic cable from the headend to a group of optical nodes and then via coax to the homes passed served by the nodes. Traditionally, our system design provided for cells of approximately 500 homes each to be served by fibre-optic cable. To allow for this configuration, secondary headends were put into operation in the Greater Montréal Area and in the Greater Québec City Area. Remote secondary headends must also be connected with fibre optic links. From the secondary headends to the homes, the customer services are provided through the transmission of a radiofrequency (“RF”) signal which contains both downstream and upstream information (two-way). The loop structure of the two-way HFC networks brings reliability through redundancy, the cell size improves flexibility and capacity, while the reduced number of amplifiers separating the home from the headend improves signal quality and reliability. The HFC network design provided us with significant flexibility to offer customized programming to individual cells of approximately 500 homes, which is critical to our advanced services, such as video-on-demand, Switched Digital Video Broadcast and the continued expansion of our interactive services. Starting in 2008, we began an extensive network modernization effort in the Greater Montréal Area in order to meet the ever expanding service needs of the customer in terms of video, telephony and Internet services. This ongoing modernization implies an extension of the upper limit of the RF

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spectrum available for service offerings and a deep fibre deployment, which significantly extends the fibre portion in the HFC network (thereby reducing the coax portion). Additional optical nodes were systematically deployed to increase the segmentation of customer cells, both for upstream and downstream traffic. This modernization initiative results in (i) a network architecture where the segmentation for the upstream traffic is for 125 homes while that for the downstream traffic is set to 250 (which can evolve to 125 homes), and (ii) the availability of a 1 GHz spectrum for service offerings. The robustness of the network is greatly enhanced (much less active equipment in the network such as RF amplifiers for the coax portion), the service offering potential and customization to the customer base is significantly improved (through the extension of the spectrum to 1 GHz and the increased segmentation) and allows much greater speeds of transmission for Internet services which are presently unrivalled. The overall architecture employs Division Wavelength Multiplexing (“DWM”), which allows us to limit the amount of fibre required, while providing an effective customization potential. As such, in addition to the broadcast information, up to 24 wavelengths can be combined on a transport fibre from the secondary headend to a 3,000 home aggregation point. Each of these wavelengths is dedicated to the specific requirements of 125 homes. The RF spectrum is set with analog content (to be phased out eventually) and digital information using quadrature amplitude modulation. MPEG video compression techniques and the Data over Cable Service Interface Specification (“DOCSIS”) protocol allow us to provide a great service offering of standard definition and high definition video, as well as complete voice and Internet services. This modernization project gives us flexibility to meet customer needs and future network evolution requirements. The modernization of the Greater-Montréal network is scheduled to be completed by 2017.

Our strategy of maintaining a leadership position in respect of the suite of products and services that we offer and launching new products and services requires investments in our network to support growth in our customer base and increases in bandwidth requirements. Approximately 99.7% of our network in the Province of Québec has been upgraded to a bandwidth of 750 MHz or greater. Also, in light of the greater availability of HDTV programming, the ever increasing speed of Internet access and increasing demand for our cable telephony service, further investment in the network will be required.

Mobile Telephony

During 2012, we continued our HSPA + network expansion and densification plan throughout the Province of Québec and over the Greater Ottawa Area. As of December 31, 2012, our network reached approximately 89% of the population of the Province of Québec and most of our cable homes passed, allowing the vast majority of our potential clients to have access to advanced mobile services from Videotron. The majority of our towers and antennas are linked through our fibre-optic network using a MPLS protocol, and our network was built and designed to support important customer growth in coming years.

With the introduction of a new technology called Dual-Carrier technology in August 2011, our HSPA+ mobile communication network (4G) allows data transmission speeds up to 42 Mbps.

Our strategy in the coming years is to build on our position as a telecommunication leader with our 4G mobile services and to keep the technology at the cutting edge as it continues to evolve rapidly and new market standards such as Long Term Evolution-Advanced (“LTE 4G”) are appearing. We also expect to continue to expand our offer of handset devices in 2013.

Marketing and Customer Care

Our long term marketing objective is to increase our cash flow through deeper market penetration of our services, develop new services and continue growth in revenue per customer. We believe that customers will come to view their cable connection as the best distribution channel to the home for a multitude of services. To achieve this objective, we are pursuing the following strategies:

• develop attractive bundle offers to encourage our customers to subscribe to two or more products, which increases ARPU and customer retention as well as increasing our operating margin;

• continue to rapidly deploy advanced products and services;

• encourage our clients to migrate from analog to digital television using attractive incentives;

• design product offerings that provide greater opportunity for customer entertainment and information choices;

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• target marketing opportunities based on demographic data and past purchasing behaviour;

• develop targeted marketing programs to attract former customers, households that have never subscribed to our services and customers of alternative or competitive services;

• enhance the relationship between customer service representatives and our customers by training and motivating customer service representatives to promote advanced products and services;

• leverage the retail presence of Le SuperClub Vidéotron, our Videotron branded stores and kiosks, Archambault stores and third-party commercial retailers;

• cross-promote the wide variety of content and services offered within the Quebecor Media group (including, for example, the content of TVA Group productions and the 1-900 service for audience voting during reality television shows popular in the Province of Québec) in order to distribute our cable, data transmission, cable telephony and mobile telephony services to our existing and future customers;

• introduce new value-added packages of products and services, which we believe increases average revenue per user, or ARPU, and improves customer retention; and

• leverage our business market, using our network and expertise with our commercial customer base, which should enable us to offer additional bundled services to our customers and may result in new business opportunities.

We continue to invest time, effort and financial resources in marketing new and existing services. To increase both customer penetration and the number of services used by our customers, we use coordinated marketing techniques, including door-to-door solicitation, telemarketing, media advertising, e-marketing and direct mail solicitation.

Maximizing customer satisfaction is a key element of our business strategy. In support of our commitment to customer satisfaction, we provide a 24-hour customer service hotline seven days a week for nearly all of our systems, in addition to our web-based customer service capabilities. All of our customer service representatives and technical support staff are trained to assist our customers with respect to all products and services offered by us, which in turn allows our customers to be served more efficiently and seamlessly. Our customer care representatives continue to receive extensive training to develop customer contact skills and product knowledge, which are key contributors to high rates of customer retention as well as to selling additional products and services and higher levels of service to our customers. To assist us in our marketing efforts, we utilize surveys, focus groups and other research tools as part of our efforts to determine and proactively respond to customer needs.

Programming

We believe that offering a wide variety of conveniently scheduled programming is an important factor in influencing a customer’s decision to subscribe to and retain our cable services. We devote resources to obtaining access to a wide range of programming that we believe will appeal to both existing and potential customers. We rely on extensive market research, customer demographics and local programming preferences to determine our channel and package offerings. The CRTC currently regulates the distribution of foreign content in Canada and, as a result, we are limited in our ability to provide such programming to our customers. We obtain basic and premium programming from a number of suppliers, including TVA Group.

Our programming contracts generally provide for a fixed term of up to seven years, and are subject to negotiated renewal. Programming tends to be made available to us for a flat fee per customer. Our overall programming costs have increased in recent years and may continue to increase due to factors including, but not limited to, additional programming being provided to customers as a result of system rebuilds that increase channel capacity, increased costs to produce or purchase specialty programming, inflationary or negotiated annual increases, and the concentration of broadcasters following recent acquisitions in the market.

Competition

We operate in a competitive business environment in the areas of price, product and service offerings and service reliability. We compete with other providers of television signals and other sources of home entertainment. Due to ongoing

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technological developments, the distinctions among traditional platforms (broadcasting, Internet, and telecommunications) are fading rapidly. The Internet as well as mobile devices are becoming important broadcasting and distribution platforms. In addition, mobile operators, with the development of their respective 4G networks, are now offering wireless and fixed wireless Internet services and our VoIP telephony service is also competing with Internet-based solutions.

• Providers of Other Entertainment. Cable systems face competition from alternative methods of distributing and receiving television signals and from other sources of entertainment such as live sporting events, movie theatres and home video products, including digital recorders, OTT content providers, such as Netflix, DVD players and video games. The extent to which a cable television service is competitive depends in significant part upon the cable system’s ability to provide a greater variety of programming, superior technical performance and superior customer service than are available through competitive alternative delivery sources. Our introduction of Club Unlimited, a flat-fee plan offering a rich and varied selection of unlimited, on-demand content aimes to reduce the effect of competition from alternative delivery sources.

• Direct Broadcast Satellite. DBS is a significant competitor to cable systems. DBS delivers programming via signals sent directly to receiving dishes from medium and high-powered satellites, as opposed to cable delivery transmissions. This form of distribution generally provides more channels than some of our television systems and is fully digital. DBS service can be received virtually anywhere in Canada through the installation of a small rooftop or sidemounted antenna. Like digital cable distribution, DBS systems use video compression technology to increase channel capacity and digital technology to improve the quality of the signals transmitted to their customers.

• DSL. The deployment of digital subscriber line technology, known as DSL, provides customers with Internet access at data transmission speeds greater than that available over conventional telephone lines. DSL service is comparable to cable-modem Internet access over cable systems. We also face competition from other providers of DSL services.

• Internet Video Streaming. The continuous technology improvement of the Internet combined with higher download speeds contributes to the emergence of alternative technologies such as IPTV digital content (movies, television shows and other video programming) offered on various Internet streaming platforms. While having a positive impact on the demand for our Internet services, this model could adversely impact the demand for our video-on-demand services.

• VDSL. VDSL technology increases the available capacity of DSL lines, thereby allowing the distribution of digital video. Multi-system operators are now facing competition from ILECs, which have been granted licenses to launch video distribution services using this technology, which operates over copper phone lines. The transmission capabilities of VDSL will be significantly boosted with the deployment of technologies such as vectoring (the reduction or elimination of the effects of far-end crosstalk) and twisted pair bonding (use of additional twisted pairs to increase data carriage capacity). Certain ILECs have already started replacing many of their main feeds with fibre optic cable and positioning VDSL transceivers, a VDSL gateway, in larger multiple-dwelling units, in order to overcome the initial distance limitations of VDSL. With this added capacity, along with the evolution of compression technology, VDSL-2 will offer significant opportunities for services and increase its competitive threat against other multi-system operators.

• Mobile Telephony Services. With our mobile telephony 4G network, we compete against a mix of market participants, some of them being active in some or all the products we offer, while others only offer mobile wireless telephony services in our market. In addition, users of mobile voice and data systems may find their communication needs satisfied by other current or developing adjunct technologies, such as Wi-Fi, WiMax, “hotspots” or trunk radio systems, which have the technical capability to handle mobile data communication and mobile telephone calls. Also, the Canadian incumbents have recently started the deployment of LTE 4G networks and this technology is deemed to become an industry standard. These LTE 4G technologies are being developed in anticipation of the additional network capacity that may be required to address the surging demand for wireless data. Such technologies evolved in the past year but will not offer voice over LTE until 2013.

• Private Cable. Additional competition is posed by satellite master antenna television systems known as “SMATV systems” serving multi dwelling units, such as condominiums, apartment complexes, and private residential communities.

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• Wireless Distribution. Cable television systems also compete with wireless program distribution services such as multi channel multipoint distribution systems, or MDS. This technology uses microwave links to transmit signals from multiple transmission sites to line-of-sight antennas located within the customer’s premises.

• Grey and Black Market DBS Providers. Cable and other distributors of television signals continue to face competition from the use of access codes and equipment that enable the unauthorized decoding of encrypted satellite signals, from unauthorized access to our analog and digital cable signals (black market) and from the reception of foreign signals through subscriptions to foreign satellite television providers that are not lawful distributors in Canada (grey market).

• Telephony Service. Our cable telephony service competes against other telephone companies, including both the incumbent telephone service provider in the Province of Québec, which used to control a significant portion of the telephony market in the Province of Québec, and the other VoIP telephony service providers and mobile wireless telephone service providers.

• Other Internet Service Providers. In the Internet access business, cable operators compete against other Internet service providers offering residential and commercial Internet access services. The CRTC requires the large Canadian incumbent cable operators to offer access to their high-speed Internet system to competitive Internet service providers at mandated rates.

News Media

Our newspaper publishing operations, which we conduct through our Sun Media operating subsidiary, are the largest newspaper publisher in Canada based on total paid and unpaid circulation, according to management estimates. With a 23.3% average market share, our newspaper publishing operations are the second largest newspaper publisher in Canada in terms of weekly paid circulation, according to the Newspapers Canada Circulation Data. As of December 31, 2012, our News Media segment published 36 paid-circulation dailies, six free commuter dailies and 229 community weekly newspapers, magazines, buyers guides, farm publications and other specialty publications. Our publications have an established presence on the Internet and offer classified and local advertising, as well as other services for local advertisers and readers. As of December 31, 2012, the combined weekly circulation of our News Media segment’s paid and unpaid newspapers was approximately 14.2 million copies, according to internal statistics.

In the second quarter of 2011, all of the internet portals that were formally owned by Canoe Inc. were transferred to Sun Media (other than Réseau Contact and Jobboom which were transferred to Videotron), including the Canoe Network, which logs over 10.3 million unique visitors per month in Canada, including more than 5.1 million in the Province of Québec, and ranks as the number one general news destination in Canada (according to ComScore Media Metrix figures for December 2012).

Our News Media segment is also engaged in the distribution of newspapers, magazines, inserts and flyers; commercial printing and related services to third-parties through our national network of printing and production facilities.

Quebecor Media continues the development of its News Media segment in order to broaden its revenue streams. In this regard, the QMI Agency established two newsrooms in Montréal and Toronto, creating multiplatform teams for event coverage, and centralizing photo coverage across Canada. Since July 1, 2010, the QMI Agency has been the main supplier of general Canadian news content to our media properties. In addition, we continue to leverage our printing capacities and distribution services with Quebecor Media Network which offers flyer printing and distributing across Canada.

Quebecor Media owns 100% of the voting and equity interests of Sun Media.

For the year ended December 31, 2012, our News Media operations generated revenues of $960.0 million and operating income of $115.1 million, with 67.2% of these revenues derived from advertising, 17.1% from circulation, 4.5% from digital revenues and 11.2% from commercial printing and other revenues. For the year ended December 31, 2011, our News Media operations generated revenues of $1.02 billion and operating income of $150.1 million, with 69.0% of these revenues derived from advertising, 16.8% from circulation, 4.3% from digital revenues and 9.9% from commercial printing and other revenues.

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Canadian Newspaper Publishing Industry Overview

Newspaper publishing is the oldest segment of the advertising based media industry in Canada. The industry is mature and is dominated by a small number of major newspaper publishers largely segmented in different markets and geographic areas. As of December 31, 2012, our News Media Segment’s combined average weekly circulation (paid and unpaid) was approximately 14.2 million copies, according to internal statistics. According to the Newspapers Canada Circulation Data, Sun Media’s 23.3% market share of paid weekly circulation for Canadian daily newspapers makes our newspaper publishing operations the second largest newspaper publisher in Canada in terms of weekly paid average circulation.

According to the Newspapers Canada Circulation Data, there are approximately 95 paid circulation daily newspapers, numerous paid non-daily publications and free-distribution daily and non-daily publications. Of the 95 paid circulation daily newspapers, 21 have average weekday circulation in excess of 50,000 copies. These include 15 English-language metropolitan newspapers, four French language daily newspapers and two national daily newspapers. In addition to daily newspapers, both paid and unpaid non-daily newspapers are distributed nationally and locally across Canada. Newspaper publishers may also produce and distribute niche publications that target specific readers with customized editorial content and advertising. The newspaper market consists primarily of two segments, broadsheet and tabloid newspapers, which vary in format. With the exception of the broadsheet the London Free Press, all of Sun Media’s urban paid daily newspapers are tabloids.

Newspaper publishers derive revenue primarily from the sale of retail, classified, national and insert advertising, and to a lesser extent through paid subscriptions and single copy sales of newspapers. The mature nature of the Canadian newspaper industry has resulted in limited growth, if any, for traditional newspaper publishers, for many years, and the newspaper industry is now undergoing fundamental changes, including the growing availability of free access to media, shifting readership habits, digital transferability, the advent of real-time information and secular changes in the advertising market. As a result of these changes in the market, competition in the newspaper industry now comes not only from other newspapers (including other national, metropolitan (both paid and free) and suburban newspapers), magazines and more traditional media platforms, such as broadcasters, cable systems and networks, satellite television and radio, direct marketing and solo and shared mail programs, but also from digital media technologies, which have introduced a wide variety of media distribution platforms (including, most significantly, the Internet and distribution over wireless devices) to consumers and advertisers. As a result, the newspaper industry is facing challenges to retain its revenues and circulation/readership, as advertisers and readers become increasingly fragmented in the increasingly populated media landscape.

Advertising and Circulation

Advertising revenue is the largest source of revenue for our News Media operations, representing 67.2% of our newspaper operations’ total revenues in 2012. Advertising rates are based upon the size of the market in which each newspaper operates, circulation, readership, demographic composition of the market and the availability of alternative advertising media. Our strategy is to maximize advertising revenue by providing advertisers with a range of pricing and marketing alternatives to better enable them to reach their target audience. Our newspapers offer a variety of advertising alternatives, including full-run advertisements in regular sections of the newspaper targeted to different readers (including automotive, real estate and travel), geographically targeted inserts, special interest pullout sections and advertising supplements.

The principal categories of advertising revenues in our newspaper operations are classified, retail and national advertising. Classified advertising is made up of four principal sectors: automotive, private party, recruitment and real estate, which appear in the classified section of our newspapers. Retail advertising is display advertising principally placed by local businesses and organizations. Most of our retail advertisers are department stores, electronics stores and furniture stores. National advertising is display advertising primarily from advertisers promoting products or services on a national basis, and sold through our national sales force.

In the smaller community papers, substantially all of the advertising revenues are derived from local retailers and classified advertisers. These newspapers publish advertising supplements with specialized themes such as agriculture, tourism, home improvement and gardening to encourage advertisers to purchase additional lineage in these special editions.

We believe our advertising revenues are diversified not only by category (classified, retail and national), but also by customer and geography. For the year ended December 31, 2012, our top ten national advertisers accounted for approximately 11.4% of the total advertising revenue and approximately 7.6% of the total revenue of our News Media segment. In addition, because we sell advertising in numerous regional markets in Canada, the impact of a decline in any one market can be offset by strength in other markets.

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Circulation sales are our newspaper operations’ second-largest source of revenue and represented 17.1% of total revenues of our News Media segment in 2012. In the large urban markets, newspapers are available through newspaper boxes and retail outlets Monday through Sunday, except the London Free Press, which does not publish a Sunday edition. We offer daily home delivery in each of our newspaper markets. We derive our circulation revenues from single copy sales and subscription sales. Our strategy is to increase circulation revenue by adding newspaper boxes and point-of-sale locations, as well as expanding home delivery. In order to increase readership, we are targeting editorial content to identified groups through the introduction of niche products, and in recent years we have launched e-editions of a number of our newspapers.

Digital revenues represented 4.5% of total revenues for our News Media segment in 2012. Digital revenues are generated from advertising on our websites, digital subscriptions to the e-editions of our newspapers and more recently through paywalls launched in our urban daily newspaper websites. Our News Media segment operates over 200 websites, which include publication websites to complement each of its urban and community paid daily newspaper publications. Revenues from digital products represent a potential growth opportunity for our News Media operations. To this end, in 2012, the News Media segment completed an overhaul and re-launch of its paid urban daily and English community websites to improve the look and feel of our publication websites while at the same time standardizing their format and design. Our strategy is to increase our digital revenues by improving the user’s overall experience by offering rich and visually-appealing content, including photo galleries and video clips, as well as improved navigation and functionalities, which in turn should increase traffic to our websites and provide advertisers with compelling media platforms on which to reach their target audience.

In the third quarter of 2012, Sun Media announced a strategic redesign of its operating structure, including the reorganization of its editorial, advertising and industrial operations into pillars and away from its traditional management-by-publication structure. Concurrent with this announcement, Sun Media appointed new leaders for each of its respective pillars and realigned its management structure with a focus on relationships with the media community – being our readers, advertisers, business opportunities and sales. In addition, the News Media segment announced the elimination of approximately 500 positions throughout its organization, including the closure of two production facilities in Ottawa and Kingston, Ontario, as well as the closure or merger of several unprofitable newspaper publications that were not considered a strategic fit to the News Media segment. The objective of these and other optimization initiatives, when completed, is to deliver more than $45.0 million annualized cost savings and to further streamline and optimize the segment’s operations to focus on its core competencies.

Newspaper Operations

We operate our newspaper business through our Sun Media subsidiary in urban and community markets principally through two groups of products:

• the Urban Daily Group; and

• the Community Newspaper Group.

A majority of Sun Media’s newspapers in the Community Newspaper Group are clustered around our eight paid urban dailies in the Urban Daily Group. Sun Media has strategically established its community newspapers near regional printing facilities in suburban and rural markets across Canada. This geographic clustering enables us to realize operating efficiencies and economic synergies through sharing of management, production, printing, and distribution functions.

Through our wholly-owned subsidiary Quebecor Media Printing, we operate two printing state-of-the-art facilities located in Islington, Ontario, and Mirabel, Québec. 24 Hours in Toronto, the Toronto Sun, and a number of Ontario community publications are printed in Islington, Ontario. The Journal de Montréal, Ottawa Sun and 24 Heures (Montréal), as well as a number of our Québec community publications are printed in Mirabel, Québec.

The Urban Daily Group

Sun Media’s Urban Daily Group is comprised of eight paid daily newspapers, six free daily commuter publications and one free weekly publication.

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Paid daily newspapers

Sun Media’s paid daily newspapers are published seven days a week and are all tabloids with the exception of the broadsheet the London Free Press which is also not published on Sundays. These are mass circulation newspapers that provide succinct and complete news coverage with an emphasis on local news, sports and entertainment. The tabloid format makes extensive use of color, photographs and graphics. Each newspaper contains inserts that feature subjects of interest such as fashion, lifestyle and special sections.

As of December 31, 2012, on a combined weekly basis, the eight paid daily newspapers in Sun Media’s Urban Daily Group had a circulation of approximately 5.1 million copies, according to internal statistics. These newspapers hold either the number one or number two position in each of their respective markets in terms of weekly readership.

Paid circulation is defined as average sales of a newspaper per issue. Readership (as opposed to paid circulation) is an estimate of the number of people who read or looked into an average issue of a newspaper and is measured by an independent survey conducted by NADbank^® Inc. According to the 2011 NADbank^® study (the “NADbank^® Study”), the most recent available survey, readership estimates are based upon the number of people responding to the Newspaper Audience Databank survey circulated by NADbank^® Inc. who report having read or looked into one or more issues of a given newspaper during a given period equal to the publication interval of the newspaper.

The following table lists Sun Media’s paid daily newspapers and their respective readership in 2011 as well as their market position by weekly readership during that period, based on information provided in the NADbank^® Study:

	2011 Average Readership						Market Position By  Readership (1)
Newspaper	Saturday		Sunday		Mon-Fri
Journal de Montréal		617,300		407,900		597,900		1st
Journal de Québec		201,800		127,900		187,300		1st
Toronto Sun		589,400		672,500		642,400		2nd
London Free Press		143,600		n/a		152,400		1st
Ottawa Sun		86,600		74,000		128,200		2nd
Winnipeg Sun		87,600		77,700		120,900		2nd
Edmonton Sun		126,100		134,800		158,200		2nd
Calgary Sun		120,200		126,500		158,500		2nd
Total Average Readership		1,972,600		1,621,300		2,145,800

(1) Based on paid weekly readership data published by the NADbank^® Study.

Journal de Montréal. The Journal de Montréal is published seven days a week and is distributed by Quebecor Media Network. According to the Newspapers Canada Circulation Data, the Journal de Montréal ranks second in paid circulation among non-national dailies in Canada and first among French-language dailies in North America. The Journal de Montréal is the number one newspaper in its market in terms of weekly readership according to the NADbank^® Study. The main competitors of the Journal de Montréal are La Presse and The Montréal Gazette. Its website is accessible at www.journaldemontreal.com.

The following table presents the average daily paid circulation of the Journal de Montréal for the periods indicated:

	YEAR ENDED DECEMBER 31,
	2012		2011		2010
Journal de Montréal
Saturday		248,800		256,400		271,600
Sunday		227,700		232,500		236,900
Monday to Friday		233,700		234,000		242,200

Source: Internal Statistics

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Journal de Québec. The Journal de Québec is published seven days a week and is distributed by Quebecor Media Network. The Journal de Québec is the number one newspaper in its market in terms of weekly readership according to the NADbank^® Study. The main competitor of the Journal de Québec is Le Soleil. Its website is accessible at www.lejournaldequebec.com.

The following table presents the average daily paid circulation of the Journal de Québec for the periods indicated:

	YEAR ENDED DECEMBER 31,
	2012		2011		2010
Journal de Québec
Saturday		114,100		116,800		113,000
Sunday		98,900		103,400		98,800
Monday to Friday		100,500		100,800		96,300

Source: Internal Statistics

Toronto Sun. The Toronto Sun is published seven days a week throughout the greater metropolitan Toronto area. The Toronto Sun is the number two non-national daily newspaper in its market in terms of weekly readership according to the NADbank^® Study.

The Toronto newspaper market is very competitive. The Toronto Sun competes with Canada’s largest newspaper, the Toronto Star and to a lesser extent with the Globe & Mail and the National Post, which are national newspapers. As a tabloid newspaper, the Toronto Sun has a unique format compared to these broadsheet competitors. The competitiveness of the Toronto newspaper market is further increased by several free publications and niche publications relating to, for example, entertainment and television. Its website is accessible at www.torontosun.com.

The following table presents the average daily paid circulation of the Toronto Sun for the periods indicated:

	YEAR ENDED DECEMBER 31,
	2012		2011		2010
Toronto Sun
Saturday		138,300		141,400		149,100
Sunday		177,500		193,800		247,200
Monday to Friday		161,600		166,300		180,200

Source: Internal Statistics

London Free Press. The London Free Press, one of Canada’s oldest daily newspapers, emphasizes national and local news, sports and entertainment and is distributed throughout the London area. It is the only local daily newspaper in its market and is published six days a week, Monday through Saturday. Its website is accessible at www.lfpress.com.

The following table reflects the average daily paid circulation of the London Free Press for the periods indicated:

	YEAR ENDED DECEMBER 31,
	2012		2011		2010
London Free Press
Saturday		75,300		77,600		81,400
Monday to Friday		69,500		70,600		73,000

Source: Internal Statistics

Ottawa Sun. The Ottawa Sun is published seven days a week and is distributed throughout the Ottawa region. The Ottawa Sun is the number two newspaper in its market in terms of weekly readership according to the NADbank^®Study. It competes daily with the English-language broadsheet, the Ottawa Citizen, and also with the French language paper, Le Droit. Its website is accessible at www.ottawasun.com.

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The following table reflects the average daily paid circulation of the Ottawa Sun for the periods indicated:

	YEAR ENDED DECEMBER 31,
	2012		2011		2010
Ottawa Sun
Saturday		33,000		34,800		37,900
Sunday		36,700		37,200		40,800
Monday to Friday		41,500		43,700		44,700

Source: Internal Statistics

Winnipeg Sun. The Winnipeg Sun is published seven days a week and serves the metropolitan Winnipeg area. The Winnipeg Sun is the number two newspaper in its market in terms of weekly readership according to the NADbank^® Study, and it competes with the Winnipeg Free Press. Its website is accessible at www.winnipegsun.com.

The following table reflects the average daily paid circulation of the Winnipeg Sun for the periods indicated:

	YEAR ENDED DECEMBER 31,
	2012		2011		2010
Winnipeg Sun
Saturday		23,300		28,400		34,000
Sunday		24,600		30,100		33,500
Monday to Friday		23,000		28,200		34,800

Source: Internal Statistics

Edmonton Sun. The Edmonton Sun is published seven days a week and is distributed throughout Edmonton. The Edmonton Sun is the number two newspaper in its market in terms of weekly readership according to the NADbank^® Study, and it competes with Edmonton’s broadsheet daily, the Edmonton Journal. Its website is accessible at www.edmontonsun.com.

The following table presents the average daily paid circulation of the Edmonton Sun for the periods indicated:

	YEAR ENDED DECEMBER 31,
	2012		2011		2010
Edmonton Sun
Saturday		40,600		43,100		49,200
Sunday		57,200		53,500		58,800
Monday to Friday		41,900		45,800		51,400

Source: Internal Statistics

Calgary Sun. The Calgary Sun is published seven days a week and is distributed throughout Calgary. The Calgary Sun is the number two newspaper in its market in terms of weekly readership according to the NADbank^® Study, and it competes with Calgary’s broadsheet daily, the Calgary Herald. Its website is accessible at www.calgarysun.com.

The following table presents the average daily circulation of the Calgary Sun for the periods indicated:

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	YEAR ENDED DECEMBER 31,
	2012		2011		2010
Calgary Sun
Saturday		44,900		47,100		46,800
Sunday		54,600		56,600		60,900
Monday to Friday		42,700		45,700		45,700

Source: Internal Statistics

Free daily newspapers

Sun Media publishes free daily commuter publications in six urban markets including Toronto, Montréal, Vancouver, Ottawa, Calgary, and Edmonton. The editorial content of these free daily commuter publications concentrates on the greater metropolitan area of each of these cities, respectively.

The following table reflects the average weekday circulation of our free daily commuter publications:

	YEAR ENDED DECEMBER 31,
FREE DAILY COMMUTER PUBLICATIONS	2012		2011		2010
24 Hours — Toronto		247,100		238,600		246,300
24 Heures — Montréal		159,100		153,200		151,500
24 Hours — Vancouver		118,100		123,100		123,000
24 Hours — Calgary		34,500		37,000		36,000
24 Hours — Edmonton		40,200		35,900		35,800
24 Hours — Ottawa		34,100		35,200		34,600

Source: Internal Statistics

Competition

The newspaper industry is seeing secular changes, including the growing availability of free access to media, shifting readership habits, digital transferability, the advent of real-time information and secular changes in the advertising market, all of which affect the nature of competition in the newspaper industry. Competition increasingly comes not only from other newspapers (including other national, metropolitan (both paid and free) and suburban newspapers), magazines and more traditional media platforms, such as broadcasters, cable systems and networks, satellite television and radio, direct marketing and solo and shared mail programs, but also from digital media technologies, which have introduced a wide variety of media distribution platforms (including, most significantly, the Internet, digital readers (e-readers) and distribution over wireless devices) to consumers and advertisers.

The rate of development of opportunities in, and competition from, these digital media services, including those related to the Internet, is increasing. Through internal development programs, joint initiatives among Quebecor Media and its subsidiaries, and acquisitions, our efforts to explore new opportunities in news, information and communications businesses have expanded and will continue to do so. For instance, in order to leverage synergies and convergence among our subsidiaries, we have launched e-editions of a number of Sun Media’s newspapers, we have transferred the printing of several of our publications to two state-of-the-art facilities owned by Quebecor Media Printing (our wholly-owned subsidiary), we have created Quebecor Media Network which offers advertisers the full range of services from printing to the distribution of advertising materials, including Le Sac Plus, and our News Media business is sharing editorial content with QMI Agency. In addition, with the creation of QMI National Sales, we have integrated our advertising assets to offer our clients global, integrated and multiplatform advertising and marketing solutions. In 2012, we completed an overhaul and re-launch of our Urban Daily and English Community publication websites to improve the look and feel of our publication websites while at the same time standardizing their format and design.

We believe that the high cost associated with starting a major daily newspaper operation represents a barrier to entry to potential new competitors of Sun Media’s Urban Daily Group.

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The Community Newspaper Group

Sun Media’s Community Newspaper Group consists of 28 paid daily community newspapers, 201 community weekly newspapers and shopping guides, and 27 agricultural and other specialty publications. The total average weekly circulation of the publications in Sun Media’s Community Newspaper Group for the year ended December 31, 2012 was approximately 4.2 million free copies and approximately 1.6 million paid copies, according to internal statistics. The table below sets forth the average daily paid circulation and geographic location of the daily newspapers published by Sun Media’s Community Newspaper Group for the year ended December 31, 2012:

NEWSPAPER (1)	LOCATION	AVERAGE DAILY PAID CIRCULATION
The Standard	St. Catharines, Ontario		25,200
The Kingston Whig-Standard	Kingston, Ontario		20,500
The Expositor	Brantford, Ontario		15,100
Niagara Falls Review	Niagara Falls, Ontario		13,700
The Sault Star	Sault Ste Marie, Ontario		12,400
The Tribune	Welland, Ontario		12,200
The Sudbury Star	Sudbury, Ontario		12,100
The Peterborough Examiner	Peterborough, Ontario		11,900
The Observer	Sarnia, Ontario		11,400
The Sun Times	Owen Sound, Ontario		11,300
North Bay Nugget	North Bay, Ontario		11,000
Cornwall Standard Freeholder	Cornwall, Ontario		9,300
The Intelligencer	Belleville, Ontario		8,300
The Recorder & Times	Brockville, Ontario		7,800
The Chatham Daily News	Chatham, Ontario		7,100
Beacon Herald	Stratford, Ontario		7,100
The Daily Press	Timmins, Ontario		6,000
Simcoe Reformer	Simcoe, Ontario		5,200
The Barrie Examiner	Barrie, Ontario		4,700
Packet & Times	Orillia, Ontario		4,700
Daily Herald Tribune	Grande Prairie, Alberta		4,200
Sentinel-Review	Woodstock, Ontario		4,100
The Daily Observer	Pembroke, Ontario		3,800
St. Thomas Time-Journal	St. Thomas, Ontario		3,700
Northumberland Today	Northumberland, Ontario		3,600
Kenora Daily Miner & News	Kenora, Ontario		2,100
Fort McMurray Today	Fort McMurray, Alberta		1,900
Portage Daily Graphic	Portage La Prairie, Manitoba		1,500
Total Average Daily Paid Circulation			241,900

Source: Internal Statistics

(1) The listed newspapers are published at least five days per week, except for the Kenora Daily Miner & News, Portage Daily Graphic and North Bay Nugget, which are published four days per week.

The number of community publications presented on a regional basis is as follows:

Province	Number of Publications
Ontario		122
Québec		76
Alberta		40
Manitoba		13
Saskatchewan		4
New Brunswick		1
Total Publications		256

Source: Internal Statistics

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Our community newspaper publications generally offer news, sports and special features, with an emphasis on local information. We believe that these newspapers cultivate reader loyalty and create franchise value by emphasizing local news, thereby differentiating themselves from national newspapers.

Competition

Several of the Community Newspaper Group’s publications maintain the number one position in the markets that they serve. Our community publications are generally located in small towns and are typically the only daily or weekly newspapers of general circulation published in their respective communities, although some face competition from daily or weekly publications published in nearby locations and circulated in the markets where we publish our daily or weekly publications. Historically, the Community Newspaper Group’s publications have been a consistent source of cash flow, derived primarily from advertising revenue.

Other Operations

Commercial Printing

Our national network of production and printing facilities enables us to provide printing services for web press (coldset and heatset) and sheetfed products, and graphic design for print and electronic media. Web presses utilize rolls of newsprint, whereas sheetfed presses use individual sheets of paper. Heatset web presses, which involve a more complex process than coldset web presses, are generally associated with printing on glossy paper. These operations provide commercial printing services for both Sun Media’s internal printing needs and for third parties. Sun Media’s printing facilities include ten printing facilities for its urban and community daily publications and seven other printing facilities operated by the Sun Media’s Community Newspaper Group in four provinces. Through our wholly-owned subsidiary Quebecor Media Printing, we operate two printing state-of-the-art facilities located in Islington, Ontario, and Mirabel, Québec.

We also offer third party commercial printing services, which provides us with an additional revenue source that leverages existing equipment with excess capacity. In our third party commercial printing operations, we compete with other newspaper publishing companies as well as with commercial printers. Our competitive strengths in this area include our modern equipment, our status in some of our markets as the only local provider of commercial printing services and our ability to price projects on a variable cost basis, as our core newspaper business covers overhead expenses.

Distribution Network

Quebecor Media Network distributes dailies, weeklies, magazines and print media and reaches approximately 200,000 households and 14,000 retail outlets through its operations in the Province of Québec. Moreover, we continue to leverage our printing capacities and distribution services with Quebecor Media Network which offers flyer printing and distributing across Canada. In addition to distributing all Quebecor Media community newspapers in the Province of Québec, Le Sac Plus door-knob bag contains advertising materials, such as flyers, leaflets, product samples, and other value-added promotions every week.

Television

Sun News was launched in April 2011 and offers comprehensive coverage of the events that impact Canadian society and the country’s political and economic life. Sun News General Partnership is a partnership owned by Sun Media (51%) and TVA Group (49%). For additional information see “— Broadcasting” below.

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Internet/Portals

The Canoe Network includes information and service sites for the general public. As such, it is one of the most popular Internet destinations in Canada, in both the English and French speaking markets, and a key vehicle for Internet users and advertisers alike. Advertising revenues constitute a large portion of the Canoe Network’s annual revenues.

Media Properties

The News Media segment operates the following portals and destination sites:

• Canoe Network (canoe.ca), a bilingual portal with more than 374 million page views in December 2012, according to internal statistics;

• Sun Media dedicated websites for its corresponding weekly and daily newspapers (such as www.torontosun.com, www.edmontonsun.com, www.journaldequebec.com and www.journaldemontreal.com), which provide local and national news;

• Canoe.tv, the first Canadian web broadcaster with unique content commissioned by Canoe.tv in addition to video content from traditional sources including Quebecor Media, the Sun Media network of newspapers and various external partners;

• LeSacPlus.ca, a website that gives access to deals, promotional offers and discounts on a wide range of products, services and activities for Québec’s residents.

E-commerce Properties

The following e-commerce properties are included under the Canoe Network umbrella:

• Autonet.ca, one of Canada’s leading Internet sites devoted entirely to automobiles;

• Canoeclassifieds.ca, Vitevitevite.ca (formerly canoeclassees.ca) and our recently launched local classified sites attached to our large urban newspaper brands, through which visitors can view more than 130,000 classified ads, reaching potential purchasers across the country by integrating more than 250 dailies and community newspapers;

• YourLifeMoments.ca, Sun Media’s premier site for announcing, celebrating, sharing all of life’s special moments. YourLifeMoments.ca publishes an average of 2,000 announcements every week from over 250 dailies and community newspapers and is the leader in Canada in this niche market; and

• Micasa.ca, one of the leading real-estate listing sites in the Province of Québec, providing comprehensive property listing services available to all real estate brokers as well as individual homeowners.

In the second quarter of 2011, all of the internet portals that were formerly owned by Canoe Inc. (other than Réseau Contact and Jobboom which were transferred to Videotron) were transferred to Sun Media, including the Canoe Network, which logs over 10.3 million unique visitors per month in Canada, including more than 5.1 million in the Province of Québec, and ranks as the number one general news destination in Canada (according to ComScore Media Metrix figures for December 2012).

Seasonality and Cyclicality

Canadian newspaper publishing companies operating results tend to follow a recurring seasonal pattern with higher advertising revenue in the spring and in the fall. Accordingly, the second and fourth fiscal quarters are typically our strongest quarters, with the fourth quarter generally being the strongest. Due to the seasonal retail decline and generally poor weather, the first quarter has historically been our weakest quarter.

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Our newspaper business is cyclical in nature. Our operating results are sensitive to prevailing local, regional and national economic conditions because of our dependence on advertising sales for a substantial portion of our revenue. Expenditures by advertisers tend to be cyclical reflecting overall economic conditions, as well as budgeting and buying patterns and priorities. In addition, a substantial portion of our advertising revenue is derived from retail and automotive advertisers, who have historically been sensitive to general economic cycles, and our operating results have in the past been materially adversely affected by extended downturns in the Canadian retail and automotive sectors. Similarly, since a substantial portion of our advertising revenue is derived from local advertisers, our operating results in individual markets could be adversely affected by local or regional economic downturns.

Raw Materials

Newsprint, which is the basic raw material used to publish newspapers, has historically been and may continue to be subject to significant price volatility. During 2012, the total newsprint consumption of our newspaper operations was approximately 140,300 metric tonnes. Newsprint represents our single largest raw material expense and one of our most significant operating costs. Newsprint expense represented approximately 9.4% ($79.8 million) of our News Media segment’s operating expenses for the year ended December 31, 2012. Changes in the price of newsprint could significantly affect our earnings, and volatile or increased newsprint costs have had, and may in the future have, a material adverse effect on our results of operations and our financial condition. We manage the effects of newsprint price increases through a combination of, among other things, waste management, technology improvements, web width reduction, inventory management, and by controlling the mix of editorial versus advertising content.

In order to obtain more favourable pricing, we source substantially all of our newsprint from a single newsprint producer (our “Newsprint Supplier”). Pursuant to the terms of our agreement with our Newsprint Supplier, we obtain newsprint at a discount to market prices, receive additional volume rebates for purchases above certain thresholds, and benefit from a ceiling on the unit cost of newsprint.

Broadcasting

Through TVA Group, we operate the largest private French-language television network in North America as well as 8 specialty services. Also through TVA Group, we hold minority interests in Sun News General Partnership and in the specialty chanel Evasion. According to data published by the BBM People Meters (which is based on a measurement methodology using audimetry), we had a 32.2% market share of French-speaking viewers in the Province of Québec for the period from January 1, 2012 through December 31, 2012 and according to the Canadian TVB Report for the period from January 1, 2012 through November 30, 2012, our share of the Province of Québec’s French-language broadcast television advertising market was 41.5%.

For the period from January 1, 2012 through December 30, 2012, we aired thirteen of the fifteen most popular TV programs in the Province of Québec, including Céline Dion… sans attendre, Le Banquier-Spécial Halloween and Star Académie 2012. In addition, for the same period in 2012, TVA Network had 23 of the top 30 French-language prime time television shows in the Province of Québec, according to BBM People Meter data. Since May 1999, the TVA Network, which consists of ten stations, has been included in the basic channel line-up of most cable and satellite providers across Canada, enabling us to reach a significant portion of the French-speaking population of Canada outside the Province of Québec.

TVA Group also publishes 75 magazines, making it Quebec’s largest publisher of French-language magazines. TVA Group also offers custom publishing, commercial printed production services and premedia services that promote customers’ trademarks through print media.

As at December 31, 2012, we own 51.45% of the equity and control 99.97% of the voting power in TVA Group.

For the twelve months ended December 31, 2012, our Broadcasting operations generated revenues of $461.1 million and operating income of $38.1 million. For the year ended December 31, 2011, our Broadcasting operations generated revenues of $445.5 million and operating income of $50.5 million.

Canadian Television Industry Overview

Canada has a well-developed television market that provides viewers with a range of viewing alternatives.

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There are three main French language broadcast networks in the Province of Québec: Société Radio-Canada, “V” and TVA Network. In addition to French language programming, there are three English-language national broadcast networks in the Province of Québec: the Global Television Network, CTV and the Canadian Broadcasting Corporation, known as CBC. Global Television Network, V and CTV are privately held and are commercial networks. CBC and Société Radio-Canada are government owned and financed by a combination of federal government grants and advertising revenue. French language viewers in the Province of Québec also have access to certain U.S. networks.

Drama and comedy programming are the most popular genres with French speaking viewers, followed by news and other information programming. Viewing trends by French speaking viewers are predominantly to French Canadian programs in all genres, with the exception of drama and comedy programs where the viewing has remained evenly split between Canadian and foreign programs.

The following table sets forth the market share of French speaking viewers in the Province of Québec as of December 31, 2012:

Network	Share of Province of Québec Television
TVA Network		23.7	%
Société Radio-Canada		11.8	%
V		8.6	%
TVA Group’s French language specialty TV		8.5	%
Various French language specialty and pay cable TV		37.3	%
Others		10.1	%

Source: BBM People Meters 2012 for the period between January 1, 2012 and December 31, 2012.

Television Broadcasting

Broadcast Network

Our French language network of ten stations, which consists of six owned and four affiliated stations, is available to a significant portion of the French speaking population in Canada.

Our owned and operated stations include: CFTM-TV in Montréal, CFCM-TV in Québec City, CHLT-TV in Sherbrooke, CHEM-TV in Trois-Rivières, CFER-TV in Rimouski Matane-Sept-Iles and CJPM-TV in Saguenay/Lac-St-Jean. Our four affiliated stations are CFEM-TV in Rouyn, CHOT-TV in Gatineau, CHAU-TV in Carleton and CIMT-TV in Rivière-du-Loup. We own a 45% interest of the latter two. A substantial portion of our network’s broadcast schedule is originated from our main station in Montréal. Our signal is transmitted from transmission and retransmission sites authorized by Industry Canada and licensed by the CRTC and is also retransmitted by satellite elsewhere in Canada as a distant signal by various modes of authorized distribution: cable, direct-to-home satellite distribution and multi channel MDS.

TVA Group’s website is accessible at groupetva.ca.

Specialty Broadcasting

Through various subsidiaries, we control or participate in the following 10 specialty services: LCN, a French-language all news service, Évasion, a French-language travel and tourism service, Argent, a French-language economic, business and personal finance news service, addikTV, a national French-language specialty television service devoted to mystery and suspense programming, Prise 2, a French-language specialty television service devoted to the Province of Québec and American television classics, Moi&cie (formerly “Mlle”), a French-language specialty television service dedicated to style, beauty and the well-being of Québec women, CASA, a French-language specialty television service devoted to home-improvements, do-it-yourself and cooking, YOOPA, a French-language specialty television service aimed exclusively at preschoolers, TVA Sports, a French-language specialty television service devoted to sports, and Sun News, a national English-language specialty television service focused on news and opinion. Each of TVA Group’s specialty channels has its own dedicated website.

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Type of Service	Language		Voting Interest
Category A Digital Specialty Services:
•        addikTV		French		100.0	%
•        Argent (LCN—Affaires)		French		100.0	%
•        Évasion		French		8.3	%
Category B Digital Specialty Services:
•        Prise 2		French		100.0	%
•        CASA		French		100.0	%
•        YOOPA		French		100.0	%
•        Moi&cie (formerly “Mlle”)		French		100.0	%
Category C Digital Specialty Services:
•        LCN — Le Canal Nouvelles		French		100.0	%
•        TVA Sports		French		100.0	%
•        Sun News		English		49.0	%*

* On June 30, 2012, TVA Group sold a 2% interest in SUN News to Sun Media Corporation, an affiliated company.

Advertising Sales and Revenue

We derive a majority of our revenues from the sale of air-time to national, regional and local advertisers. For the twelve-month period ended December 31, 2012, we derived approximately 70% of our advertising revenues from national advertisers and 30% from regional and local advertisers.

Programming

We produce a variety of French language programming, including a broad selection of entertainment, news and public affairs programming. We actively promote our programming and seek to develop viewer loyalty by offering a consistent programming schedule.

A majority of our programming is produced by our wholly-owned subsidiary, TVA Productions Inc. Through TVA Productions Inc. (and its affiliate TVA Productions II inc.), we produced approximately 1,600 hours of original programming from January 1, 2012 through December 31, 2012, consisting primarily of soap operas, morning and general interest shows, variety shows and quiz shows.

The remainder of our programming is comprised of foreign and Canadian independently produced programming.

Publishing Activities

TVA Publications Inc. (“TVA Publications”) publishes 75 titles (which include its regular publications, special issues and seasonal publications). Its principal magazines focus on five main market niches: entertainment, women, decoration, services and customized publishing. According to the Audit Bureau of Circulations, TVA Publications represented approximately 69% of newsstand sales of French language magazines in the Province of Québec as of December 31, 2012. TVA Publications is the leading magazine publisher in the Province of Québec and we expect to leverage its focus on entertainment across our television and Internet programming.

Leisure and Entertainment

Our activities in the Leisure and Entertainment segment consist primarily of retailing CDs, books, DVDs, Blu-ray discs, musical instruments, games and toys, video games, gifts and magazines through the Archambault chain of stores and the archambault.ca e-commerce site, online sales of downloadable music and ebooks through the archambault.ca e-commerce site, distribution of CDs, DVDs and Blu-ray discs (through Select, a division of Archambault Group), online music distribution by way of file transfer and streaming music service (through Select Digital, a division of Archambault Group), music recording and video production (through Musicor, a division of Archambault Group), the recording of live concerts, the production of live-event video shows and television advertising (through Les Productions Select TV Inc., a subsidiary of Archambault Group) and the production of music shows and concerts (through Musicor Spectacles, a division of Archambault Group). Through its production capacity made possible with Musicor Spectacles and Les Productions Select TV, Archambault Group is now fully integrated in Canada’s music industry, as a producer of a wider offering of media solutions, and a growing participant in the live-event production industry.

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We are also involved in book publishing and distribution through academic publisher CEC Publishing, 16 general literature publishers under the Sogides Group umbrella, and Messageries ADP, the exclusive distributor for approximately 170 Québec and European French-language publishers.

For the year ended December 31, 2012, the Leisure and Entertainment segment generated revenues of $292.5 million and had an operating income of $13.1 million. For the year ended December 31, 2011, the revenues of our Leisure and Entertainment segment totalled $312.9 million and operating income totalled $26.6 million.

Cultural Products Production, Distribution and Retailing

Archambault Group is one of the largest chains of music and book stores in the Province of Québec with 16 retail locations, consisting of 15 Archambault megastores and one Paragraph bookstore. Archambault Group also offers a variety of games, toys and other gift ideas. Archambault Group’s products are also distributed through its website archambault.ca. Archambault Group also operates music and books downloading services with per-item fees and offers streaming music service through zik.ca.

Archambault Group, through Select, is also one of the largest independent music distributors in Canada with 25% of the Province of Québec market and 62% of the Province of Québec French market. Select has a catalogue of over 6,900 different CDs, LPs or other audio formats and 1,150 DVDs, VHS or other video formats, a large number of which are from French speaking artists. In addition, Archambault Group, through Select Digital, is a digital aggregator of downloadable products with a selection of approximately 140,500 songs available through 196 retailers worldwide.

Book Publishing and Distribution

Through Sogides Group (which is comprised of 16 publishing houses: six in Librex Group Inc., namely Éditions Libre Expression, Éditions Internationales Alain Stanké, Éditions Logiques, Éditions du Trécarré, Éditions Publistar and Les Éditions Québec-Livres, six in Groupe l’Homme, namely Les Éditions de l’Homme, Le Jour Éditeur, Utilis, Les Presses Libres, le Petit Homme and La Griffe and four in Le Groupe Ville-Marie Littérature inc., namely Les Éditions de l’hexagone, VLB Éditeur, Typo and Les Éditions La Bagnole) and the academic publisher CEC Publishing, we are involved in French-language book publishing and we form one of the Province of Québec’s largest book publishing groups. In 2012, we published or reissued a total of 633 titles in paper format and 666 titles in digital format.

Through Messageries ADP, our book distribution company, we are the exclusive distributor for 174 Québec and European French-language publishers. We distribute French-language books to approximately 3,000 retail outlets in Canada. In addition, Messageries ADP distributes approximately 6,500 digital books.

Ownership

We own 100% of the issued and outstanding capital stock of Archambault Group, CEC Publishing and Sogides Group.

Interactive Technologies and Communications

Through Nurun, we provide interactive communication and technology services in North America, Europe and China. Nurun helps companies and other organizations develop innovative interactive products, including interface design, technical platform implementation, which includes e-commerce, online marketing programs, client relationships and social media strategy. Nurun’s clients include organizations and multinational corporations such as L’Oréal, Groupe Danone, Jean Coutu Group, Tag Heuer, Videotron, Home Depot, Google, Sony, McDonald’s, Walmart Canada, Pirelli, Sky Italy BBVA and the Government of Québec.

For the year ended December 31, 2012, our Interactive Technologies and Communications segment including Odopod generated revenues of $145.5 million and operating income of $9.8 million. For the year ended December 31, 2011, our Interactive Technologies and Communications segment generated revenues of $120.9 million and operating income of $7.9 million.

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Ownership

We own 100% of the equity and voting interest in Nurun.

Intellectual Property

We use a number of trademarks for our products and services. Many of these trademarks are registered by us in the appropriate jurisdictions. In addition, we have legal rights in the unregistered marks arising from their use. We have taken affirmative legal steps to protect our trademarks and we believe our trademarks are adequately protected.

Television programming and motion pictures are granted legal protection under the copyright laws of the countries in which we operate, and there are substantial civil and criminal sanctions for unauthorized duplication and exhibition. The content of our newspapers and websites is similarly protected by copyright. We own copyright in each of our publications as a whole, and in all individual content items created by our employees in the course of their employment, subject to very limited exceptions. We have entered into licensing agreements with wire services, freelancers and other content suppliers on terms that we believe are sufficient to meet the needs of our publishing operations. We believe we have taken appropriate and reasonable measures to secure, protect and maintain our rights or obtain agreements from licensees to secure, protect and maintain copyright protection of content produced or distributed by us.

We have registered a number of domain names under which we operate websites associated with our television, publishing and Internet operations. As every Internet domain name is unique, our domain names cannot be registered by other entities as long as our registrations are valid.

Insurance

Quebecor Media is exposed to a variety of operational risks in the normal course of business, the most significant of which are transferred to third parties by way of insurance agreements. Quebecor Media maintains insurance coverage through third parties for property and casualty losses. Quebecor Media believes that it has a combination of third-party insurance and self-insurance sufficient to provide adequate protection against unexpected losses, while minimizing costs.

Environment

Some of our operations are subject to Canadian, provincial and municipal laws and regulations concerning, among other things, emissions to the air, water and sewer discharge, handling and disposal of hazardous materials, the recycling of waste, the soil remediation of contaminated sites, or otherwise relating to the protection of the environment. Laws and regulations relating to workplace safety and worker health, which among other things, regulate employee exposure to hazardous substances in the workplace, also govern our operations.

Compliance with these laws has not had, and management does not expect it to have, a material effect upon our capital expenditures, net income or competitive position. Environmental laws and regulations and the interpretation of such laws and regulations, however, have changed rapidly in recent years and may continue to do so in the future. We have monitored the changes closely and have modified our practices where necessary or appropriate. For example, Québec’s regulation on the recovery and reclamation of products by enterprises officially came into force on July 13, 2011. This regulation will require certain subsidiaries of Quebecor Media, specifically Videotron, to implement a recycling program or to become member of a program from an organization accredited by Recyc-Québec. Recovery rates are stipulated for different categories of products commercialized by companies to which this regulation applies. Starting in 2015, penalties will be imposed upon those companies which fail to achieve the recovery targets set forth in the regulation and will vary as a function of the amount of products commercialized and the actual recovery rates of the company, with potential penalties reaching up to $600,000 annually and with fines for non compliance ranging between $5,000 and $250,000.

Our properties, as well as areas surrounding those properties, particularly those in areas of long-term industrial use, may have had historic uses, or may have current uses, in the case of surrounding properties, which may affect our properties and require further study or remedial measures. We are not currently conducting or planning any material study or remedial measure. Furthermore, we cannot provide assurance that all environmental liabilities have been determined, that any prior owner of our properties did not create a material environmental condition not known to us, that a material environmental condition does not otherwise exist as to any such property, or that expenditure will not be required to deal with known or unknown contamination.

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Legal Proceedings

We are involved from time to time in various claims and lawsuits incidental to the conduct of our business in the ordinary course. In the opinion of our management, the outcome of these proceedings is not expected to have a material adverse effect on our business, results of operations, liquidity or financial position.

Employees

At December 31, 2012, we had approximately 16,865 employees on a consolidated basis. At December 31, 2011 and 2010, we had approximately 16,950 and 16,360 employees on a consolidated basis, respectively. A number of our employees work part-time. The following table sets forth certain information relating to our employees in each of our operating segments as of December 31, 2012.

Operations	Approximate total number of employees		Approximate number of employees under collective agreements		Number of collective agreements
Telecommunications		6,460		3,810		5
News Media		5,180		1,280		72
Broadcasting		2,120		1,230		13
Leisure and Entertainment		1,485		380		8
Interactive Technologies and Communications		1,200		—		—
Corporate(1)		420		—		—
Total		16,865		6,700		98

(1) Includes QMI Agency and National Sales Offices.

At December 31, 2012, approximately 40% of our employees were represented by collective bargaining agreements. Through our subsidiaries, we are currently a party to 98 collective bargaining agreements:

• Videotron is party to five collective bargaining agreements representing approximately 3,810 unionized employees. The two most important collective bargaining agreements, covering unionized employees in the Montréal and Québec City regions, have terms extending to December 31, 2013. There are also two collective bargaining agreements covering unionized employees in the Saguenay and Gatineau regions, with terms running through December 31, 2014 and August 31, 2015, respectively, and one other collective bargaining agreement, covering approximately 50 employees of our SETTE inc. subsidiary, which expired on December 31, 2012. Negotiations regarding this collective bargaining agreement is in progress.

• Sun Media is party to 70 collective bargaining agreements, representing approximately 1,100 unionized employees. 22 collective bargaining agreements have expired, representing approximately 290 unionized employees, or 25% of its unionized workforce. Negotiations regarding these collective bargaining agreements are either in progress or will be undertaken in 2013. Of the other collective bargaining agreements, 14 will expire in 2013, representing approximately 731 employees or 65% of its unionized workforce and the others to expire on various dates through December 2019.

• TVA Group is party to 13 collective bargaining agreements, representing approximately 1,230 unionized employees. Of this number, three collective bargaining agreements, representing approximately 1,080 unionized employees or 50% of its unionized workforce, have expired. Negotiations regarding these collective bargaining agreements are in progress. One agreement was reached on January 13, 2013 with respect to 125 of these unionized employees. Two additional collective bargaining agreements representing approximately 54 unionized employees or less than 1% of its unionized workforce will expire in 2013. The other collective bargaining agreements will expire between 2014 and 2015.

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• Of the other 10 collective bargaining agreements, representing approximately 540 unionized employees, one collective bargaining agreement representing approximately 40 unionized employees is expired. Negotiations regarding this collective bargaining agreement are in progress. The other collective bargaining agreements will expire between April 2015 and December 2017.

We currently have no labour dispute nor do we currently anticipate any such labour dispute in the near future.

We can neither predict the outcome of current or future negotiations relating to labour disputes, union representation or renewal of collective bargaining agreements, nor guarantee that we will not experience further work stoppages, strikes or other forms of labour protests pending the outcome of any current or future negotiations. If our unionized workers engage in a strike or any other form of work stoppage, we could experience a significant disruption to our operations, damage to our property and/or interruption to our services, which could adversely affect our business, assets, financial position, results of operations and reputation. Even if we do not experience strikes or other forms of labour protests, the outcome of labour negotiations could adversely affect our business and results of operations. Such could be the case if current or future labour negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations. In addition, our ability to make short-term adjustments to control compensation and benefits costs is limited by the terms of our collective bargaining agreements.

Organizational Structure

The following chart illustrates the relationship among Quebecor Media and its significant operating subsidiaries and holdings as of December 31, 2012 and indicates the jurisdiction of incorporation of each entity. In each case, unless otherwise indicated, Quebecor Media owns a 100% equity and voting interest in its subsidiaries (where applicable, the number on the top indicates the percentage of equity owned directly and indirectly by Quebecor Media and the number on the bottom indicates the percentage of voting rights held).

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Quebecor, a communications holding company, owns 75.36% of Quebecor Media and CDP Capital, a wholly-owned subsidiary of CDPQ, owns the other 24.64% of Quebecor Media. Quebecor’s primary asset is its interest in Quebecor Media. The CDPQ is one of Canada’s largest pension fund managers.

Property, Plants and Equipment

Our corporate offices are located in leased space at 612 St-Jacques Street, Montréal, Québec, Canada H3C 4M8.

Telecommunications

Videotron’s corporate offices are located in leased space at 612 St-Jacques Street, Montréal, Québec, Canada H3C 4M8, in the same building as Quebecor Media’s head office. Videotron also owns several buildings in Montréal, the largest building of which is located at 2155 Pie IX Street in Montréal (approximately 128,000 square feet). Videotron also owns a building located at 150 Beaubien Street in Montréal (approximately 72,000 square feet). Videotron leases approximately 52,000 square feet of office space in a building located at 800 de la Gauchetière Street in Montréal to accommodate staffing growth. Videotron also leases approximately 54,000 square feet in a building located at 4545 Frontenac Street in Montréal and 47,000 square feet in a building located at 888 De Maisonneuve Street in Montréal. In Québec City, Videotron owns a building of approximately 40,000 square feet where its regional headend for the Québec City region is located. Videotron also owns or leases a significant number of smaller locations for signal reception sites and customer service and business offices.

News Media

Sun Media’s principal business offices are located at 612 St-Jacques Street, Montreal, Québec, Canada, H3C 4M8.

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The following table presents the addresses, the square footage and primary use of the main facilities and other buildings of our newspaper operations. No other single property currently used in our News Media segment exceeds 50,000 square feet. Unless stated otherwise, we own all of the properties listed below.

Address	Use of Property	Floor Space Occupied (sq.  ft.)
Islington, Ontario 2250 Islington Avenue	Operations building, including printing plant — Toronto Sun 24 Hours (Toronto)	546,900
Mirabel, Québec 12800 Brault Street	Operations building, including printing plant — Journal de Montréal 24 Heures (Montréal)	235,000
London, Ontario 369 York Street	Operations building, including printing plant — London Free Press	146,900
Calgary, Alberta 2615-12 Street NE	Operations building, including printing plant — Calgary Sun	90,000
Vanier, Québec 450 Bechard Avenue	Operations building, including printing plant — Journal de Québec	74,000
Toronto, Ontario 333 King Street East	Operations building — Toronto Sun and Head Office (leased until 2020)	71,700
Montréal, Québec 4545 Frontenac Street (2)	Operations building — Journal de Montréal	102,200
Winnipeg, Manitoba 1700 Church Avenue	Operations building, including printing plant — Winnipeg Sun	63,000
St. Catharines, Ontario 17 Queen Street	Operations building — St. Catharines Standard	56,300
Edmonton, Alberta 9300-47 Street	Printing plant — Edmonton Sun	50,700

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Television Broadcasting

Our television broadcasting operations are mainly carried out in Montréal at 1600 De Maisonneuve Boulevard East in a complex of four buildings owned by us which represent a total of approximately 600,000 square feet. We also own buildings in Québec City, Chicoutimi, Trois-Rivières, Rimouski, and Sherbrooke for local broadcasting and lease space in Longueuil for TVA Publications.

Leisure and Entertainment segment and Interactive Technologies and Communications segment

We generally lease space for the business offices, retail outlets and warehousing activities for the operation of our Leisure and Entertainment segment. Business offices for our Interactive Technologies and Communications operations are also primarily leased.

Liens and charges

Borrowings under our senior secured credit facilities and under eligible derivative instruments are secured by a first-ranking hypothec and security agreement (subject to certain permitted encumbrances) on all of our movable property (chattels). Our subsidiaries’ credit facilities are generally secured by first-ranking charges over all of their respective assets.

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REGULATION

Foreign Ownership Restrictions Applicable under the Telecommunications Act (Canada)

On June 29, 2012, the Government of Canada’s omnibus budget implementation bill (C-38) received Royal Assent. Included in the bill were provisions to exempt telecommunications companies with less than 10 percent of total Canadian telecommunications market revenues from foreign investment restrictions under the Telecommunications Act (Canada). Companies that are successful in growing their market shares in excess of 10 percent of total Canadian telecommunications market revenues other than by way of merger or acquisition will continue to be exempt from the restrictions.

Ownership and Control of Canadian Broadcast Undertakings

The Governor in Council, through an Order-in-Council referred to as the Direction to the CRTC (Ineligibility of Non-Canadians), has directed the CRTC not to issue, amend or renew a broadcasting license to an applicant that is a non-Canadian. Canadian, a defined term in the Direction, means, among other things, a citizen or a permanent resident of Canada, a qualified corporation, a Canadian government, a non-share capital corporation of which a majority of the directors are appointed or designated by statute, regulation or specified governmental authorities, or a qualified mutual insurance company, qualified pension fund society or qualified cooperative of which not less than 80% of the directors or members are Canadian. A qualified corporation is one incorporated or continued in Canada, of which the chief executive officer (or if there is no chief executive officer, the person performing functions similar to those performed by a chief executive officer) and not less than 80% of the directors are Canadian, and not less than 80% of the issued and outstanding voting shares and not less than 80% of the votes are beneficially owned and controlled, directly or indirectly, by Canadians. In addition to the above requirements, Canadians must beneficially own and control, directly or indirectly, not less than 66.6% of the issued and outstanding voting shares and not less than 66.6% of the votes of the parent company that controls the subsidiary, and neither the parent company nor its directors may exercise control or influence over any programming decisions of the subsidiary if Canadians beneficially own and control less than 80% of the issued and outstanding shares and votes of the parent corporation, if the chief executive officer of the parent corporation is a non-Canadian or if less than 80% of the parent corporation’s directors are Canadian. There are no specific restrictions on the number of non-voting shares which may be owned by non-Canadians. Finally, an applicant seeking to acquire, amend or renew a broadcasting license must not otherwise be controlled in fact by non-Canadians, a question of fact which may be determined by the CRTC in its discretion. Control is defined broadly in the Direction to mean control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or arrangement, the ownership of a corporation or otherwise. Videotron, TVA Group and Sun Media are qualified Canadian corporations.

Regulations made under the Broadcasting Act require the prior approval of the CRTC for any transaction that directly or indirectly results in (i) a change in effective control of the licensee of a broadcasting distribution undertaking or a television programming undertaking (such as a conventional television station, network or pay or specialty undertaking service), (ii) a person or a person and its associates acquiring control of 30% or more of the voting interests of a licensee or of a person who has, directly or indirectly, effective control of a licensee, or (iii) a person or a person and its associates acquiring 50% or more of the issued common shares of the licensee or of a person who has direct or indirect effective control of a licensee. In addition, if any act, agreement or transaction results in a person or a person and its associates acquiring control of at least 20% but less than 30% of the voting interests of a licensee, or of a person who has, directly or indirectly, effective control of the licensee, the CRTC must be notified of the transaction. Similarly, if any act, agreement or transaction results in a person or a person and its associates acquiring control of 40% or more but less than 50% of the voting interests of a licensee, or a person who has directly or indirectly effective control of the licensee, the CRTC must be notified.

“Diversity of Voices”

The CRTC’s Broadcasting Public Notice CRTC 2008-4, entitled “Diversity of Voices,” sets forth the CRTC’s policies with respect to cross-media ownership; the common ownership of television services, including pay and specialty services; and the common ownership of broadcasting distribution undertakings (“BDUs”). This Notice operates in tandem with the CRTC’s other policies with respect to the common ownership of over-the-air (“OTA”) television and radio undertakings. Pursuant to these policies, the CRTC will generally permit ownership by one person of no more than one conventional television station in one language in a given market. The CRTC, as a general rule, will not approve applications for a change in the effective control of broadcasting undertakings that would result in the ownership or control, by one person, of a local radio station, a local television station and a local newspaper serving the same market. Where a person that controls a local radio station and a local television station acquires a local newspaper serving the same market, the CRTC will, at the earliest

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opportunity, require the licensee to explain why, in light of this policy, its radio or television license(s) should be renewed. The CRTC, as a general rule, will not approve applications for a change in effective control that would result in the control, by one person, of a dominant position in the delivery of television services to Canadians that would impact on the diversity of programming available to television audiences. In terms of BDUs, the CRTC, as a general rule, will not approve applications for a change in the effective control of BDUs in a market that would result in one person being in a position to effectively control the delivery of programming services in that market. The CRTC is not prepared to allow one person to control all BDUs in any given market.

Jurisdiction Over Canadian Broadcast Undertakings

Videotron’s cable distribution undertakings and TVA Group’s programming activities are subject to the Broadcasting Act and regulations made under the Broadcasting Act that empower the CRTC, subject to directions from the Governor in Council, to regulate and supervise all aspects of the Canadian broadcasting system in order to implement the policy set out in the Broadcasting Act. Certain of Videotron’s and TVA Group’s undertakings are also subject to the Radiocommunication Act, which empowers Industry Canada to establish and administer the technical standards that networks and transmission must comply with, namely, maintaining the technical quality of signals.

The CRTC has, among other things, the power under the Broadcasting Act and regulations promulgated thereunder to issue, subject to appropriate conditions, amend, renew, suspend and revoke broadcasting licenses, approve certain changes in corporate ownership and control, and establish and oversee compliance with regulations and policies concerning broadcasting, including various programming and distribution requirements, subject to certain directions from the Federal Cabinet.

Canadian Broadcasting Distribution (Cable Television)

Licensing of Canadian Broadcasting Distribution Undertakings

A cable distribution undertaking distributes broadcasting services to customers predominantly over closed transmission paths. A license to operate a cable distribution undertaking gives the cable television operator the right to distribute television programming services in its licensed service area. Broadcasting licenses may be issued for periods not exceeding seven years and are usually renewed, except in particular circumstances or in cases of a serious breach of the conditions attached to the license or the regulations of the CRTC. The CRTC is required to hold a public hearing in connection with the issuance, suspension or revocation of a license. Videotron operates 52 cable systems pursuant either to the issuance of a license or of an order that exempts certain network operations from the obligation to hold a license.

Cable systems with 20,000 customers or fewer and operating their own local headend are exempted from the obligation to hold a license pursuant to exemption orders issued by the CRTC on February 15, 2010 (Broadcasting Order CRTC 2009-544). These cable systems are required to comply with a number of programming carriage requirements set out in the exemption order and comply with the Canadian ownership and control requirements in the Direction to the CRTC. Pursuant to Decision CRTC 2010-87, Videotron remains with only 8 cable system licences.

In order to conduct our business, we must maintain our broadcasting distribution undertaking licenses in good standing. Failure to meet the terms of our licenses may result in their short-term renewal, suspension, revocation or non-renewal. We have never failed to obtain a license renewal for any cable systems.

Distribution of Canadian Content

The Broadcasting Distribution Regulations issued by the CRTC pursuant to the Broadcasting Act mandate the types of Canadian and non-Canadian programming services that may be distributed by BDUs, including cable television systems. For example, Canadian television broadcasters are subject to “must carry” rules which require terrestrial distributors, like cable and MDS systems, to carry the signals of local television stations and, in some instances, regional television stations as part of their basic service. The guaranteed carriage enjoyed by local television broadcasters under the “must carry” rules is designed to ensure that the signals of local broadcasters reach cable households and enjoy advantageous channel placement. Furthermore, cable operators, DBS operators and MDS operators must offer their customers more Canadian programming than non-Canadian programming services. In summary, each cable television system is required to distribute all of the Canadian programming services that the CRTC has determined are appropriate for the market it serves, which includes local and regional television stations, certain specialty channels and pay television channels, and a pay-per-view service, but does not include Category B and C digital services.

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Broadcasting Distribution Regulations

The Broadcasting Distribution Regulations which came into force in 1998 (the “1998 Regulations”), apply to broadcasting distribution undertakings in Canada. The 1998 Regulations promote competition among broadcasting distribution undertakings and the development of new technologies for the distribution of such services while ensuring that quality Canadian programs are broadcast. The 1998 Regulations introduced important new rules, including the following:

• Competition and Carriage Rules. The 1998 Regulations provide equitable opportunities for all distributors of broadcasting services. Similar to the signal carriage and substitution requirements that are imposed on existing cable television systems, under the 1998 Regulations, new broadcasting distribution undertakings are also subject to carriage and substitution requirements. The 1998 Regulations prohibit a distributor from giving an undue preference to any person, including itself, or subjecting any person to an undue disadvantage. This gives the CRTC the ability to address complaints of anti-competitive behaviour on the part of certain distributors.

• Signal Substitution. A significant aspect of television broadcasting in Canada is simultaneous program substitution, or simulcasting, a regulatory requirement under which Canadian distribution undertakings, such as cable television systems with over 2,000 customers and DTH satellite operators, are required to substitute the foreign programming service, with local Canadian signal, including Canadian commercials, for broadcasts of identical programs by a U.S. station when both programs are exhibited at the same time. These requirements are designed to protect the program rights that Canadian broadcasters acquire for their respective local markets.

• Contribution to local expression, Canadian programming and community television. All distributors, except systems with fewer than 2,000 customers, are required to contribute at least 5% of their gross annual broadcast revenues to the creation and presentation of Canadian programming including community programming. Moreover, distributors were required to contribute 1.5% of their gross annual broadcast revenues to the Local Programming Improvement Fund (LPIF). However, following the public hearing to review the CRTC’s policies and regulations relating to the LPIF, the CRTC published, on July 18, 2012, Broadcasting Regulatory Policy CRTC 2012-385 whereby the CRTC found that it would be inappropriate to maintain the LPIF in the long term. Therefore, in order to mitigate the effects of eliminating this source of funding for local stations, the CRTC will phase out the fund over the next two broadcast years. Specifically, the CRTC reduced the contribution rate from 1.5% to 1% for the 2012-2013 broadcast year. Moreover, the CRTC will, for the 2013-2014 broadcast year, reduce the contribution rate to 0.5%; and as of September 1, 2014, discontinue the LPIF. Further, the CRTC directed all licensed broadcasting distribution undertakings (BDUs) to file a report in order to describe the measures they have taken or will take, commencing September 1, 2012, to reduce subscriber bills by amounts corresponding to the reduction of the LPIF contribution, including evidence that they have notified subscribers concerning these reductions. Accordingly, Videotron filed its compliance report on September 17, 2012.

• Inside Wiring Rules. The CRTC determined that the inside wiring portion of cable networks creates a bottleneck facility that could affect competition if open access is not provided to other distributors. Incumbent cable companies may retain the ownership of the inside wiring but must allow usage by competitive undertakings to which the cable company may charge a just and reasonable fee for the use of the inside wire. On September 3, 2002, the CRTC established a fee of $0.52 per customer per month for the use of cable inside wire in multiple-dwelling units. In Broadcasting Regulatory Policy CRTC 2011-774, the Commission found that it was appropriate to amend the Broadcasting Distribution Regulations to permit access by subscribers and competing broadcasting distribution undertakings to inside wire in commercial and institutional properties. Therefore, the CRTC directed all licensees to negotiate appropriate terms and conditions, including a just and reasonable rate, for the use by competitors of the inside wire such licensees own in commercial and institutional properties. If the inside wire configuration resembles that in a multi-unit dwelling, the CRTC would expect that the established $0.52 per subscriber per month rate would be reasonable. If parties cannot come to an agreement, either party may apply to the CRTC for dispute resolution.

Rates

Our revenue related to cable television is derived mainly from (a) monthly subscription fees for basic cable service; (b) fees for premium services such as specialty services, pay-television, pay-per-view television and video-on-demand; and (c) installation and additional outlets charges.

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The CRTC does not regulate the fees charged by non-cable broadcast distribution undertakings and does not regulate the fees charged by cable providers.

Complaint related to third-party access to TVA VOD content

On January 26, 2011, in Decision CRTC 2011-48, the CRTC set out its findings on complaints filed by TELUS and Bell concerning exclusive TVA content on Videotron’s illico-on-Demand service. The CRTC’s finding set out certain remedies and requirements, including that TVA programs distributed on VOD must be provided without delay to TELUS and to Bell and that the parties negotiate an agreement for the provision of TVA programming by VOD services or agree on a process for determining a reasonable fee and reasonable terms and conditions for the provision of TVA programming by third-party VOD services. In November 2011, Bell and TVA agreed on the terms and conditions pursuant to which TVA programs will be made available, thus ending the complaint. The negotiations with TELUS were suspended.

Vertical Integration

In September 2011, the CRTC released Broadcasting Regulatory Policy CRTC 2011-601 (the “Policy”) setting out its decisions on the regulatory framework for vertical integration. Vertical integration refers to the ownership or control by one entity of both programming services, such as conventional television stations or pay and specialty services, as well as distribution services, such as cable systems or DTH satellite services. The Policy: (i) prohibits companies from offering television programs on an exclusive basis to their mobile or Internet subscribers in a manner that they are dependent on the subscription to a specific mobile or retail Internet access service. Any program broadcast on television, including hockey games and other live events, must be made available to competitors under fair and reasonable terms; (ii) allows companies to offer exclusive programming to their Internet or mobile customers provided that it is produced specifically for an Internet portal or a mobile device; and (iii) adopts a code of conduct to prevent anti-competitive behaviour and ensure all distributors, broadcasters and online programming services negotiate in good faith (to protect Canadians from losing a television service during negotiations, broadcasters must continue to provide the service in question and distributors must continue to offer it to their subscribers.)

On July 26, 2012, the CRTC published Broadcasting Regulatory Policy CRTC 2012-407 and announced amendments to the Television Broadcasting Regulations, 1987, the Pay Television Regulations, 1990, the Specialty Services Regulations, 1990, and the Broadcasting Distribution Regulations. These amendments, related to the distribution of Category B services, the “no head start” rule, the prohibition against tied selling, the standstill provisions and dispute resolution provisions, implement determinations made by the CRTC in Regulatory framework relating to vertical integration, Broadcasting Regulatory Policy CRTC 2011-601, September 21, 2011.

On July 26, 2012, the CRTC published Broadcasting Order CRTC 2012-408. The CRTC amended the terms and conditions of the exemption order for terrestrial broadcasting distribution undertakings serving fewer than 20,000 subscribers. These amendments implement determinations made by the CRTC in Regulatory framework relating to vertical integration, Broadcasting Regulatory Policy CRTC 2011-601, September 21, 2011.

Acquisition of Astral Media Inc. by BCE Inc.

The CRTC held hearings in September 2012 (CRTC’s Broadcasting Notice of Consultation CRTC 2012-370) with regards to an application filed by BCE Inc., on behalf of Astral Media inc. and its licensed broadcasting subsidiaries, for authority to change the effective control of Astral’s broadcasting undertakings so that it is exercised by BCE Inc. A group of industry participants, including the Company, opposed the transaction on the basis that it would be prejudicial to the Canadian broadcasting system since it would cause the market to be too concentrated and would lessen competition. Consequently, it would reduce consumer choice and result in price increases.

On October 18, 2012, the CRTC published Broadcasting Decision CRTC 2012-574, in which it denied BCE’s application as it was not convinced that the transaction would provide significant and unequivocal benefits to the Canadian broadcasting system and to Canadians sufficient to outweigh the concerns related to competition, ownership concentration in television and radio, vertical integration and the exercise of market power.

On November 19, 2012, Astral Media and BCE announced that they had amended their arrangement agreement and submitted a new proposal to the CRTC for approval of Bell’s acquisition of Astral. On March 6, 2013, The CRTC published the Broadcasting Notice of Consultation CRTC 2013-106 in relation to the second application by Astral for authority to change its effective control, and control of its licensed broadcasting subsidiaries, to BCE Inc. The deadline for submitting interventions is April 5, 2013 and a public hearing will be held as of May 6, 2013.

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Digital transition

As a result of Broadcasting Regulatory Policy CRTC 2011-198, on September 1st, 2011, the transition to digital television broadcasting occurred in major markets of Canada. Consequently, a majority of analog transmitters were shut down approximately on the same date.

VOD Conditions of licence

On May 17, 2012, in its Broadcasting Decision CRTC 2012-292, the CRTC renewed the broadcasting licence for Videotron VOD undertaking (illico sur demande) until August 31, 2014, by referring, notably, to the standard conditions of license for VOD undertakings established in Broadcasting Regulatory Policy CRTC 2011-59.

In Broadcasting Regulatory Policy CRTC 2011-59, the CRTC established standard conditions of license to video-on-demand (“VOD”) undertakings pursuant to which exclusive programming rights were prohibited.

New media broadcasting undertakings

On October 22, 2009, the CRTC amended the Exemption Order applying to new media broadcasting undertakings (Appendix A to the Public Notice CRTC 1999-197). As such, the description of a “new media broadcasting undertaking” was amended to encompass all Internet-based and mobile point-to-point broadcasting services, to introduce an undue preference provision for new media broadcasting undertakings, and to introduce a reporting requirement for such undertakings (Broadcasting Order CRTC 2009-660).

On July 28, 2009, in Broadcasting Regulatory Policy CRTC 2009-329 entitled “Review of Broadcasting in New Media,” the CRTC set out its determinations in its proceeding on Canadian broadcasting in new media. However, the CRTC did not determine the legal issue as to whether Internet access providers carry on, in whole or in part, “broadcasting undertakings” pursuant to the Broadcasting Act when they provide access to broadcasting through the Internet. Instead, the CRTC stated that it would refer the matter to the Federal Court of Appeal. Hence, the CRTC referred this question to the Federal Court of Appeal for hearing and determination in its Broadcasting Order CRTC 2009-452. On July 7, 2010, the Federal Court of Appeal determined that ISPs play a “content-neutral role” in the transmission of data and do not carry on broadcasting activities. On February 9, 2012, the Supreme Court of Canada subsequently upheld the Federal Court of Appeal’s decision.

Copyright Board Proceedings

Certain copyrights in radio, television, Internet and pay audio content are administered collectively and tariff rates are established by the Copyright Board of Canada (the “Copyright Board”). Tariffs set by the Copyright Board are generally applicable until a public process is held and a decision of the Copyright Board is rendered for a renewed tariff. Renewed tariffs are often applicable retroactively.

Royalties for the Retransmission of Distant Signals

Following the implementation in 1989 of the Canada-U.S. Free Trade Agreement, the Copyright Act (Canada) was amended to require retransmitters, including Canadian cable television operators, to pay royalties in respect of the retransmission of distant television and radio signals.

Since this legislative amendment, the Copyright Act (Canada) empowers the Copyright Board to quantify the amount of royalties payable to retransmit these signals and to allocate them among collective societies representing the holders of copyright in the works thus retransmitted. Regulated cable television operators cannot automatically recover such paid retransmission royalties from their customers, although such charges might be a component of an application for a basic cable service rate increase based on economic need.

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For the period 2009-2013, the royalties have been set to between $0.48 and $0.98 per customer per month depending on the number of customers receiving the signal. The new tariff has been homologated after negotiation between the industry and collectives.

Royalties for the Transmission of Pay and Specialty Services

In 1989, the Copyright Act (Canada) was amended, in particular, to define copyright as including the exclusive right to “communicate protected works to the public by telecommunication.” Prior to the amendment, it was generally believed that copyright holders did not have an exclusive right to authorize the transmission of works carried on radio and television station signals when these signals were not broadcast but rather transmitted originally by cable television operators to their customers. In 1996, at the request of the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the Copyright Board approved Tariff 17A, which required the payment of royalties by broadcasting distribution undertakings, including cable television operators, that transmit musical works to their customers in the course of transmitting television services on a subscription basis. Through a series of industry agreements, this liability was shared with the pay and specialty programming services.

In March 2004, the Copyright Board changed the name of this tariff from Tariff 17A to Tariff 17. The basic royalty rate is subject to reductions in certain cases, although there is no Francophone market discount. SOCAN has agreed, by filing proposed tariffs, that the 2005 to 2012 tariffs will continue on the same basis as in 2004, the royalty rate remaining at 1.9%. For 2013, SOCAN is seeking an increase to 2.1% which has been opposed by Videotron and the industry.

Royalties for Commercial Television

SOCAN’s Tariff 2.A requires the payment of royalties by commercial television stations to SOCAN in compensation for the right to communicate to the public by telecommunication, in Canada, musical or dramatico musical works forming part of its repertoire. The tariff has been set at a percentage of a television station’s revenues since 1959. In January 1998, the Copyright Board reduced the then applicable rate from 2.1% to 1.8% and set up a “modified blanket license,” allowing television stations to “opt out” of the traditional blanket license for certain programs.

In March 2004, the Copyright Board certified SOCAN’s Tariff 2.A.

SOCAN filed new proposed tariffs with the Copyright Board for the years 2008 through 2012. SOCAN is not seeking any increase or modifications to the current tariff. The royalties are likely to be maintained at 1.9% for the years 2008 through 2012, and a station still has the option to opt out of the traditional blanket license, but on a monthly basis. This election is allowed only twice in each calendar year. For 2013, SOCAN is seeking an increase to 2.1% which has been opposed by TVA Group and the industry.

SOCAN’s proposed Tariff 22.D would require television stations, including TVA, to pay for communications of musical works as part of audiovisual works from Internet sites. Pursuant to the proposed Tariff 22.D, the royalty would be the greater of 15% of Internet gross revenues or 15% of Internet gross operating expenses, with a minimum monthly fee of $200. The proposed tariff has been contested by the industry.

Royalties for Pay Audio Services

The royalties payable by distribution undertakings for the communication to the public by telecommunication of musical works in SOCAN’s repertoire in connection with the transmission of a pay audio signal other than retransmitted signals are as follows: a monthly fee of 12.35% of the affiliation payments payable by a distribution undertaking for the transmission for private or domestic use of a pay audio signal, or an annual fee of 6.175% of the affiliation payments payable where the distribution undertaking is a small cable transmission system, an unscrambled low power or very low power television station or an equivalent small transmission system. SOCAN has filed a proposed Pay Audio Tariff for the years 2008 through 2013 that proposes to maintain those rates.

For its part, Re:Sound filed a proposed Pay Audio Tariff for the period 2012-2013 asking for a monthly fee of 15% of the affiliation payments payable by a distribution undertaking for the transmission for private or domestic use of a pay audio signal, or an annual fee of 7.5% of the affiliation payments payable where the distribution undertaking is a small cable transmission system, an unscrambled low power or very low power television station or an equivalent small transmission system. The proposed rates have been opposed.

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Royalties by Online Music Services

Archambault Group operates an online music downloading service, known as archambault.ca, with per-track fees. In 2007, the Copyright Board rendered two decisions on the tariffs proposed by, on one hand, CMRRA-SODRAC Inc. (CSI), an umbrella organization formed by the Canadian Musical Reproduction Rights Agency (CMRRA) and the Société du droit de reproduction des auteurs, compositeurs et éditeurs du Canada Inc. (SODRAC), for the royalties to be paid by online music services for the reproduction of musical works in CSI’s repertoire (CSI Tariff) and, on the other hand, SOCAN for the royalties to be paid for the public performance of musical works in SOCAN’s repertoire (SOCAN Tariff) for the purposes of communicating and transmitting the musical works in a file to consumers in Canada via the Internet and authorizing consumers in Canada to further reproduce the musical work for their own private use.

The certified tariffs, which resulted from those two decisions, cover a number of years (2005 to 2006 for the CSI Tariff and 1996 to 2007 for the SOCAN Tariff) and establish different formulae for the calculation of royalties payable by online music services that only offer on-demand streams or limited downloads with or without on-demand streams. With respect to services that offer permanent downloads, the combined royalty payable is 11% of the amount paid by the consumer for the download, subject to a minimum of 5.6¢ per permanent download within a bundle of 13 or more files and a minimum of 7.4¢ per permanent download in all other cases. In June 2009, CSI and SOCAN filed proposed tariffs which would double the royalty. The new tariffs have been contested by the industry. In July 2012, the Supreme Court of Canada rendered decisions that clarify the scope of the Copyright Act (Canada), namely, that permanent download of music and short previews are not subject to a copyright royalty, but music streaming is. It is expected that the Copyright Board will change the applicable Tariffs in light of the decisions.

Royalties for Online Music

It is expected that copyright collectives will try to certify tariffs for online music not part of an online music downloading service. This could result in higher costs for operating websites containing online music content.

Royalties for Ringtones

Since 2006, Videotron sells ringtones directly to cellular phone users. After negotiating a proposed increase, SOCAN and the industry, including Videotron, came to an agreement on a new Tariff 24 for the period July 1, 2006 to and including the year 2013, the rate is 6% with a minimum royalty of six cents for the period 2006 to 2009, and 5% with a minimum royalty of five cents for the period 2009 to and including 2013.

In July 2012, the Supreme Court of Canada issued decisions in five copyright cases in which the court ruled that songwriters and music publishers (represented by SOCAN) are not entitled to royalties for certain downloads and samples. Pursuant to those rulings, the industry has requested a refund of the royalties paid and the annulment of Tariff 24. It is expected that this matter will continue to be litigated.

ISP Liability

In 1996, SOCAN proposed a tariff to be applied against ISPs, in respect of composers’/publishers’ rights in musical works communicated over the Internet to ISPs’ customers. SOCAN’s proposed tariff was challenged by a number of industry groups and companies. In 1999, the Copyright Board decided that ISPs should not be liable for the communication of musical works by their customers, although they might be liable if they themselves operated a musical website. In June 2004, the Supreme Court of Canada upheld this portion of the decision of the Copyright Board and determined that ISPs do not incur liability for copyright content when they engage in normal intermediary activities, including web hosting for third parties and caching. As a consequence, ISPs may, however, be found liable if their conduct leads to the inference that they have authorized a copyright violation. At the end of 2012, amendments to the Copyright Act (Canada) received royal assent. The amendments clarify ISPs’ liability by putting in place a notice and notice process (i.e., copyright infringement notices must now be sent to the Internet end-users by ISPs).

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Canadian Broadcast Programming (Off the Air and Thematic Television)

Programming of Canadian Content

CRTC regulations require licensees of television stations to maintain a specified percentage of Canadian content in their programming. Specialty or thematic television channels also have to maintain a specified percentage of Canadian content in their programming generally set forth in the conditions of their license. A licensee is required to devote not less than 55% of the broadcast year, and not less than 50% of the evening broadcast period (6:00 p.m. to midnight) to the broadcast of Canadian programs.

Broadcasting License Fees

Broadcasting licensees are subject to annual license fees payable to the CRTC. The license fees consist of two separate fees. One fee allocates the CRTC’s regulatory costs for the year to licensees based on a licensee’s proportion of the gross revenue derived during the year from the licensed activities of all licensees whose gross revenues exceed specific exemption levels. The other fee, also called the Part II license fee, for broadcasting undertakings that licensed activity exceeds $1,500,000. The total annual amount to be assessed by the Commission is the lower of: a) $100,000,000; and b) 1.365% multiplied by the aggregate fee revenues for the return year terminating during the previous calendar year of all licensees whose fee revenues exceed the applicable exemption levels, less the aggregate exemption level for all those licensees for that return year.

In a call for comments regarding certain aspects of the regulatory framework for over-the-air television, we had asked the regulator to consider leaving off-the-air TV networks like TVA to negotiate a fee with broadcast distributors for the carriage of the signal. On March 22, 2010, in Broadcasting Regulatory Policy CRTC 2010-167, the CRTC referred the question of its jurisdiction on a proposed regime for value for signal to the Federal Court of Appeal. On February 28, 2011, the Federal Court of Appeal rendered its decision determining that the CRTC has the power to establish a system to enable private local television stations to choose to negotiate with broadcasting distribution undertakings a fair value in exchange for the distribution of the programming services broadcast by those stations. An appeal was filed to the Supreme Court of Canada. The decision of the Supreme Court of Canada, published on December 13, 2012, determined that the Broadcasting Act may not be interpreted as authorizing the CRTC to implement the proposed value for signal regime.

Renewal of TVA’s licences

Following the public hearing held by the CRTC with regards to the renewal of TVA’s licences (TVA network and associated conventional television stations, along with several TVA specialty services), the CRTC published, on April 26, 2012, the Broadcasting Decision CRTC 2012-242 including, notably, the following determinations:

• The Commission imposed a condition of licence to the effect that TVA shall, in each broadcast year, devote to the acquisition of or investment in Canadian programming at least 80% of the current broadcast year’s programming expenditures of the network and all conventional television stations of TVA. Moreover, the CRTC did not consider it necessary to impose a condition of licence with respect to either the broadcast of priority programs or to programs of national interest (PNI).

• The CRTC chose to continue to require for the local TVA station in Quebec City, that, of the 18 hours of local programming per broadcast week, 9 hours must focus specifically on the Quebec region, including the 5 hours and 30 minutes of local newscasts (including two newscasts on weekends). The CRTC deemed it unnecessary that the remaining 3 hours and 30 minutes be broadcast exclusively in the local Quebec market and considered that it may be broadcast on the TVA network.

• The CRTC chose to maintain the current Canadian programming expenditures (CPE) requirement for Addik TV at 40%.

The conditions of licence came into force on September 1, 2012 and will remain applicable until August 31, 2015.

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Canadian Telecommunications Services

Jurisdiction

The provision of telecommunications services in Canada is regulated by the CRTC pursuant to the Telecommunications Act. The Telecommunications Act provides for the regulation of facilities-based telecommunications common carriers under federal jurisdiction. With certain exceptions, companies that own or operate transmission facilities in Canada that are used to offer telecommunications services to the public for compensation are deemed “telecommunications common carriers” under the Telecommunications Act administered by the CRTC and are subject to regulation. Cable operators offering telecommunications services are deemed “Broadcast Carriers.”

In the Canadian telecommunications market, Videotron operates as a CLEC and a Broadcast Carrier. Videotron also operates its own 4G mobile wireless network and offers services over this network as a Wireless Service Provider (“WSP”).

The issuance of licenses for the use of radiofrequency spectrum in Canada is administered by Industry Canada under the Radiocommunication Act. Use of spectrum is governed by conditions of license which address such matters as license term, transferability and divisibility, technical compliance, lawful interception, research and development requirements, and requirements related to antenna site sharing and mandatory roaming.

Our AWS licenses were issued on December 23, 2008, for a term of ten years. At a minimum of two years before the end of this term, and any subsequent terms, we may apply for license renewal for an additional license term of up to ten years. AWS license renewal, including whether license fees should apply for a subsequent license term, will be subject to a public consultation process initiated in year eight.

Application of Canadian Telecommunications Regulation

In a series of decisions, the CRTC has determined that the carriage of “non-programming” services by a cable company results in that company being regulated as a carrier under the Telecommunications Act. This applies to a company serving its own customers, or allowing a third party to use its distribution network to provide non-programming services to customers, such as providing access to cable Internet services.

In addition, the CRTC regulates the provision of telephony services in Canada.

Elements of the CRTC’s local telecommunications regulatory framework to which Videotron is subject include: interconnection standards and inter-carrier compensation arrangements; the mandatory provision of equal access (i.e. customer choice of long distance provider); standards for the provision of 911 service, message relay service and certain privacy features; the obligation not to prevent other local exchange carriers from accessing end-users on a timely basis under reasonable terms and conditions in multi dwelling units where Videotron provides service; and the payment of contribution on VoIP revenues for the purposes of the revenue-based contribution regime established by the CRTC to subsidize residential telephone services in rural and remote parts of Canada.

As a CLEC, Videotron is not subject to retail price regulation. ILECs remain subject to retail price regulation in those geographic areas where facilities-based competition is insufficient to protect the interests of consumers. Videotron’s ILEC competitors have requested and been granted forbearance from regulation of local exchange services in the vast majority of residential markets in which Videotron competes, as well as in a large number of business markets, including all of the largest metropolitan markets in the Province of Québec.

Right to Access to Telecommunications and Support Structures

The CRTC has concluded that some provisions of the Telecommunications Act may be characterized as encouraging joint use of existing support structures of telephone utilities to facilitate efficient deployment of cable distribution undertakings by Canadian carriers. We access these support structures in exchange for a tariff that is regulated by the CRTC. If it were not possible to agree on the use or conditions of access with a support structure owner, we could apply to the CRTC for a right of access to a supporting structure of a telephone utility. The Supreme Court of Canada, however, held on May 16, 2003 that the CRTC does not have jurisdiction under the Telecommunications Act to establish the terms and conditions of access to the support structures of hydro-electricity utilities. Terms of access to the support structures of hydro-electricity utilities must therefore be negotiated with those utilities.

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Videotron has entered into comprehensive support structure access agreements with all of the major hydro-electric companies and all of the major telecommunications companies in its service territory. Videotron’s agreement with Hydro-Québec, by far the largest of the hydro-electric companies, expired in December 2012. Negotiations are under way toward renewing this agreement.

On December 2, 2010, the CRTC issued a decision revising the large ILECs’ support structure service rates. Significant increases in rates, retroactive to mid-2009, were approved for some categories of support structures in Videotron’s operating territory. However, radical changes in rating methodology were rejected. A follow-on proceeding is considering further rating adjustments that may lead to further rate increases. We do not expect these changes to have a material impact on Videotron’s network cost structure.

Right to Access to Municipal Rights-of-Way

On September 23, 2011, the CRTC initiated a public proceeding to consider the development of a model agreement for access by Canadian carriers to municipal rights-of-way, such as street crossings and other municipal property, for the purposes of installing operating and maintaining transmission facilities. Issues to be considered include, among other things, liability requirements, types of costs to be recovered, costing methodologies and assumptions and public safety.

On February 7, 2012, the CRTC’s initial public notice was amended to accommodate the formation of an ad hoc carrier-municipality working group tasked with developing a model agreement based on the “Ledcor principles” established in Telecom Decision CRTC 2001-23 and other relevant Commission decisions. The deadline for the ad hoc working group to report back to the Commission has since been extended twice and is now set for April 15, 2013. Any items of non consensus are expected to be ruled on by the Commission by way of a follow-on proceeding.

The outcome of the carrier-municipality working group’s discussions and any follow-on CRTC proceeding could have a material impact on Videotron’s costs for municipal access for its wireline facilities.

Access by Third Parties to Cable Networks

In Canada, access to the Internet is a telecommunications service. While Internet access services are not regulated on a retail (price and terms of service) basis, Internet access for third-party ISPs is mandated and tariffed according to conditions approved by the CRTC for cable operators.

The largest cable operators in Canada, including Videotron, have been required by the CRTC to provide third-party ISPs with access to their cable systems at mandated cost-based rates. In a decision issued on August 30, 2010, the CRTC reaffirmed the network model underlying the cable operators’ third-party Internet access (“TPIA”) services, and also reaffirmed its directive that, at the same time we offer any new retail Internet service speed, we file proposed revisions to our TPIA tariff to include this new speed offering. TPIA tariff items have been filed and approved for all Videotron Internet service speeds. Several third party ISPs are interconnected to our cable network and are thereby providing retail Internet access services.

The CRTC also requires the large cable carriers, such as us, to allow third party ISPs to provide telephony and networking (LAS/VPN) applications services in addition to retail Internet access services. The CRTC has also approved technical solutions for the provision of static IP addresses under TPIA.

In a decision dated November 15, 2011, the CRTC made substantial changes to the practices that may be employed by incumbent telephone companies and cable operators to bill third parties for the access to and use of their underlying networks. The objective of these changes was to grant third parties greater flexibility to bring pricing discipline, innovation and consumer choice to the retail Internet service market. The new rules, which entered into force on February 1, 2012, required Videotron to replace its former end-user usage-based billing model by a new aggregate capacity-based billing model, for the vast majority of Videotron’s third party customers. On February 21, 2013, the CRTC ruled on a series of disputes related to the new wholesale regime. These recent rulings do not fundamentally alter the nature of the new regime. As a result of these changes, we may experience increased competition for retail cable Internet and telephony customers. In addition, because our third-party Internet access rates are regulated by the CRTC, we could be limited in our ability to recover our costs associated with providing this access.

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Telemarketing

On September 30, 2008, a comprehensive reform of the CRTC’s telemarketing rules came into force, including the establishment of a new National Do Not Call List (DNCL). In accordance with new legislative powers granted under Bill C-37, which came into force on June 30, 2006, the CRTC has the authority to fine violators of its telemarketing rules up to $1,500 per violation in the case of an individual and $15,000 per violation in the case of a corporation. Videotron has established internal controls to minimize the risk of breaching these rules and to provide any required investigative assistance in relation to alleged third party violations.

Internet Traffic Management Practices

On October 21, 2009, the CRTC issued a regulatory policy regarding the Internet traffic management practices (ITMPs) of ISPs. The policy attempts to balance the freedom of Canadians to use the Internet for various purposes with the legitimate interests of ISPs to manage the traffic thus generated on their networks, consistent with legislation, including privacy legislation. Among other things, the policy sets rules for ensuring transparency in the use of economic and technical ITMPs, and establishes an ITMP framework that provides a structured approach to evaluating whether existing and future ITMPs are in compliance with the prohibition on unjust discrimination (e.g. as against specific applications or content) found in the Telecommunications Act. Specific rules are also established to ensure that wholesale customers are not subjected to unjust discrimination.

On June 30, 2010, the CRTC determined that the policy framework regarding ITMPs applies to the use of mobile wireless data services to provide Internet access.

While we consider Videotron’s current ITMPs to be fully compliant with the policy, we note that the policy may limit the range of ITMPs Videotron could choose in the future, thereby potentially constraining our ability to recover our costs associated with providing access to our network.

Regulatory Framework for Mobile Wireless Services

On March 14, 2012, the Government of Canada announced its policy framework for the auction of spectrum in the 700 MHz and 2500 MHz bands, both of which are considered attractive candidates for the deployment of LTE 4G mobile wireless technology. The policy framework includes several measures intended to sustain competition and robust investment in wireless telecommunications and promote the timely availability of advanced services, including:

• Foreign investment restrictions have been lifted for companies that initially have a market share of less than 10% of the Canadian telecommunications market.

• Spectrum caps will be employed in both the 700 MHz and the 2500 MHz auctions to ensure that in each region of Canada no fewer than four operators gain access to prime spectrum.

• Tower sharing and roaming policies will be improved and extended.

• Obligations will be imposed on 700 MHz licence holders to ensure advanced wireless services are quickly delivered to rural Canadians.

On March 7, 2013, the Government announced the final rules for the upcoming 700 MHz spectrum auction, which is scheduled to begin on November 19, 2013. In so doing, the government acted to maintain the pro-competitive policy framework it had previously announced in March 2012, notably as it relates to the use of spectrum caps and the strengthening of mandatory roaming and tower sharing rules. We will be studying the detailed auction format and rules in depth and will be setting our auction strategy accordingly.

Expectations are that the Government will hold the 2500 MHz auction approximately one year after the 700 MHz auction. A consultations on the detailed auction design, rules and attributes for the 2500 MHz auction has already been completed and a decision is expected in due course.

On March 7, 2013, Industry Canada also released the final text of its revisions to the mandatory roaming and antenna tower and site sharing rules. These rules were put in place subsequent to the 2008 AWS auction in order to facilitate

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competitive entry into the wireless sector, among other objectives. Among the revisions that have been adopted are: an indefinite extension of the obligation to offer both in-territory and out-of-territory roaming services on commercial terms; measures to improve transparency and information exchange related to tower sharing; and measures to streamline the arbitration process in the event of disputes.

In addition, on March 7, 2013, Industry Canada initiated a consultation on considerations relating to transfers, divisions and subordinate licensing of spectrum licences. Among the matters being considered in this consultation are whether there is a threshold in the form of concentration or a measure of MHz-pop that Industry Canada should apply in deciding whether to conduct a detailed review of licence transfers, or whether some other type of threshold, screen or cap should be used to decide if a detailed review is required. The Department further proposes to introduce a notification requirement related to agreements that provide for the future transfer or division of a spectrum licence, or a subordinate licensing arrangement. Comments and reply comments on Industry Canada’s proposals are to be submitted on April 3 and May 3, 2013 respectively. The Department has stated that a decision on these matters will be made well in advance of the 700 MHz auction. The Department’s decision could have a material impact on the market for any spectrum licenses Videotron may in the future want to transfer or divide.

The CRTC also regulates mobile wireless services under the Telecommunications Act. On August 12, 1994, the CRTC released a decision forbearing from the exercise of most of its powers under the Telecommunications Act as they relate to mobile wireless service. However, the CRTC did maintain its ability to require conditions governing customer confidential information and to place other general conditions on the provision of mobile wireless service. Since 1994, the CRTC has exercised this power, for example, to mandate wireless number portability, and to require all WSPs to upgrade their networks to more precisely determine the location of a person using a mobile phone to call 911.

On October 11, 2012, the CRTC released a decision determining that the conditions for forbearance have not changed sufficiently to require the Commission to regulate rates or interfere in the competitiveness of the retail mobile wireless voice and data services market. However, on the same date, to ensure that consumers are able to participate in the competitive market in an informed and effective manner, and to fulfill the policy objectives of the Telecommunications Act, the CRTC initiated a public proceeding to establish a mandatory code for mobile wireless service providers to address the clarity and content of mobile wireless service contracts and related issues for consumers. This proceeding is currently under way. A decision on the contents of the code, to whom the code should apply, how the code should be enforced and promoted, and how the code’s effectiveness should be assessed and reviewed, is expected in mid-2013.

Municipal Siting Processes for Wireless Antenna Systems

On February 28, 2013, the Canadian Wireless Telecommunications Association, of which Videotron is a member, and the Federation of Canadian Municipalities signed a joint protocol on the siting process for wireless antenna systems. The protocol establishes a more comprehensive notification and consultation process than current regulations, and emphasizes the need for meaningful pre-consultation to ensure local land use priorities and sensitivities are fully reflected in the location and design of new antenna systems. Telecommunications carriers have agreed for the first time to notify municipalities of all antennas being installed before their construction, regardless of height, and to undertake full public consultation for towers under 15 meters — whenever deemed necessary by the municipality.

Effective implementation of the joint protocol requires a willingness on the part of both carriers and municipalities to engage in constructive discussions related to antenna siting within the framework of current Industry Canada regulations. Any efforts by municipalities to refrain from constructive discussions or to impose requirements that fall outside of the framework of current Industry Canada regulations could have a material impact on Videotron’s ability to expand its existing HSPA+ network or to deploy a future LTE network on a timely and cost-effective basis.

Canadian Publishing

Federal and provincial laws do not directly regulate the publication of newspapers in Canada. There are, however, indirect restrictions on the foreign ownership of Canadian newspapers by virtue of certain provisions of the Income Tax Act (Canada), which limits the deductibility by Canadian taxpayers of advertising expenditures which are made in a newspaper other than, subject to limited exceptions, a “Canadian issue” of a “Canadian newspaper.” For any given publication to qualify as a Canadian issue of a Canadian newspaper, the entity that publishes it, if publicly traded on a prescribed stock exchange in Canada, must ultimately be controlled, in law and in fact, by Canadian citizens and, if a private company, must be at least 75% owned, in vote and in value, and controlled in fact by Canadians. In addition, the publication must be printed and published in

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Canada and edited in Canada by individuals resident in Canada. All of our newspapers qualify as “Canadian issues” of “Canadian newspapers” (or otherwise fall outside of the limitation on deductibility of advertising expenses) and, as a result, our commercial advertisers generally have the right to deduct their advertising expenditures with us for Canadian tax purposes.

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MANAGEMENT

Directors and Senior Management

The following table sets forth certain information concerning our directors and executive officers at March 10, 2013:

Name and Municipality of Residence	Age		Position
SERGE GOUIN (1)(3) Outremont, Québec		70	Director, Chairman of the Board of Directors and Chairman of the Compensation Committee
PIERRE KARL PÉLADEAU (1) Outremont, Québec		51	Director, President and Chief Executive Officer
JEAN LA COUTURE, FCPA, FCA (2) Montréal, Québec		66	Director and Chairman of the Audit Committee
ANDRÉ DELISLE (1)(2) Montréal, Québec		66	Director
A. MICHEL LAVIGNE, FCPA, FCA (1)(2)(3) Laval, Québec		62	Director
SAMUEL MINZBERG (3) Westmount, Québec		63	Director
THE RIGHT HONOURABLE BRIAN MULRONEY, P.C., C.C., LL.D. Westmount, Québec		73	Director
NORMAND PROVOST Brossard, Québec		58	Director
JEAN-FRANÇOIS PRUNEAU Repentigny, Québec		42	Chief Financial Officer
FRANCE LAUZIÈRE Town of Mount Royal, Québec		46	Senior Vice President, QMI Content
J. SERGE SASSEVILLE Montréal, Québec		54	Senior Vice President, Corporate and Institutional Affairs
MARC TREMBLAY Westmount, Québec		52	Senior Vice President, Legal Affairs
ÉDITH PERREAULT Candiac, Québec		47	Executive Vice President, National Sales
SYLVAIN BERGERON Longueuil, Québec		52	Vice President, Taxation
GUY DESROCHERS Candiac, Québec		56	Vice President, Internal Audit
ISABELLE LECLERC Montréal, Québec		44	Vice President, Human Resources

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Name and Municipality of Residence	Age		Position
DENIS SABOURIN Kirkland, Québec		52	Vice President and Corporate Controller
CLAUDINE TREMBLAY Montréal, Québec		59	Vice President and Secretary
MARTIN TREMBLAY Montréal, Québec		37	Vice President, Public Affairs
CHLOÉ POIRIER Nuns’ Island, Québec		43	Treasurer
CHRISTIAN MARCOUX Laval, Québec		38	Assistant Secretary

(1) Member of the Executive Committee

(2) Member of the Audit Committee

(3) Member of the Compensation Committee

Serge Gouin, Director, Chairman of the Board of Directors and Chairman of the Compensation Committee. Mr. Gouin has been a Director of Quebecor Media since May 2001, and he re-assumed the position of Chairman of the Board of Directors in May 2005, having also held that position from January 2003 to March 2004. Mr. Gouin also re-assumed the position of Chairman of our Compensation Committee in February 2006, having also held that position from May 2003 to May 2004. Mr. Gouin served as President and Chief Executive Officer of Quebecor Media from March 2004 until May 2005. Mr. Gouin has served as a Director and Chairman of the Board of Directors of Videotron and Sun Media since July 2001 and May 2004, respectively. Mr. Gouin was an Advisory Director of Citigroup Global Markets Canada Inc. from 1998 to 2003. From 1991 to 1996, Mr. Gouin served as President and Chief Operating Officer of Le Groupe Videotron ltée. From 1987 to 1991, Mr. Gouin was President and Chief Executive Officer of Télé-Métropole inc. (now TVA Group). Mr. Gouin is also a member of the Board of Directors of Onex Corporation, Gates Corporation and TVA Group and Chairman of Anges Quebec Capital Fund.

Pierre Karl Péladeau, Director and President and Chief Executive Officer. Mr. Péladeau has been a Director of Quebecor Media since August 2000. Mr. Péladeau has served as President and Chief Executive Officer of Quebecor Media since August 2008, a position he also previously held from August 2000 to March 2004. Mr. Péladeau is also President and Chief Executive Officer of Quebecor and Sun Media. He was Vice Chairman of the Board of Directors and Chief Executive Officer of the Company from May 2006 to August 2008 and President and Chief Executive Officer of Quebecor World Inc., from March 2004 to May 2006. Mr. Péladeau joined Quebecor’s communications division in 1985 as Assistant to the President. Since then, he has occupied various positions within the Quebecor group of companies. In 1998, Mr. Péladeau spearheaded the acquisition of Sun Media and in 2000, he was responsible for the acquisition of Le Groupe Videotron ltée. Mr. Péladeau was also the President and Chief Executive Officer of Videotron from July 2001 until June 2003. Mr. Péladeau is a director of numerous Quebecor group companies and is active in many charitable and cultural organizations. Mr. Péladeau is also Chairman of the Board of the Fondation de l’entrepreneurship.

Jean La Couture, FCPA, FCA, Director and Chairman of the Audit Committee. Mr. La Couture has been a Director of Quebecor Media and the Chairman of its Audit Committee since May 5, 2003 and also is a Director and Chairman of the Audit Committee of Quebecor and Videotron. Mr. La Couture was Director of Quebecor World Inc. from December 2007 to December 2008. Mr. La Couture, a Fellow Chartered Professional Accountant, is President of Huis Clos Ltée., a management and mediation firm. He is also President of the Regroupement des assureurs de personnes à charte du Québec (RACQ), a position he has held since August 1995. From 1972 to 1994, he was President and Chief Executive Officer of three organizations, including The Guarantee Company of North America, a Canadian specialty line insurance company from 1990 to 1994. He is Chairman of the boards of directors of Innergex Renewable Energy Inc., Groupe Pomerleau (a Quebec-based construction company) and Institute of Corporate Directors, Quebec Chapter and a Director of the Caisse de dépôt et placement du Québec.

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André Delisle, Director and member of the Audit Committee. Mr. Delisle has served as a Director of Quebecor Media and a member of its Audit Committee since October 31, 2005. Since that date, he has also served as a Director and member of the Audit Committee of Videotron. From August 2000 until July 2003, Mr. Delisle acted as Assistant General Manager and Treasurer of the City of Montréal. He previously acted as internal consultant for the Caisse de dépôt et placement du Québec from February 1998 until August 2000. From 1982 through 1997, he worked for Hydro-Québec and the Quebec Department of Finance, mainly in the capacity of Chief Financial Officer at Hydro-Québec or Assistant Deputy Minister at the Department of Finance. Mr. Delisle is also a member of the Audit Committee of the Ministère des affaires municipales, Régions et Occupation du territoire (MAMROT) and of the Public Policy Committee of the Association des économistes du Québec (ASDEQ). Mr. Delisle is a member of the Institute of Corporate Directors, a member of the Association of Québec Economists and a member of the Barreau du Québec.

A. Michel Lavigne, FCPA, FCA, Director and member of the Audit Committee and the Compensation Committee. Mr. Lavigne has served as a Director and member of the Audit Committee and the Compensation Committee of Quebecor Media since June 30, 2005. Since that date, Mr. Lavigne has also served as a Director and member of the Audit Committee of Videotron and TVA Group. Mr. Lavigne is a Director of Canada Post, as well as the Chairman of the Board of Directors of Primary Energy Recycling Corporation and Teraxion Inc. Until May 2005, he served as President and Chief Executive Officer of Raymond Chabot Grant Thornton in Montréal, Quebec, as Chairman of the Board of Grant Thornton Canada and as a member of the Board of Governors of Grant Thornton International. Mr. Lavigne is a Fellow Chartered Professional Accountant of the Ordre des comptables professionnels agréés du Québec and a member of the Canadian Institute of Chartered Accountants since 1973.

Samuel Minzberg, Director and member of the Compensation Committee. Mr. Minzberg has been a Director of Quebecor Media since June 2002 and is a member of the Compensation Committee. Mr. Minzberg is a partner with Davies Ward Phillips & Vineberg LLP. From January 1998 to December 2002, he was President and Chief Executive Officer of Claridge Inc., a management and holding company on behalf of the Charles R. Bronfman family. Until December 1997, he was a partner at the Montréal predecessor law firm to Davies Ward Phillips & Vineberg LLP (Montréal). He also serves as a Director of HSBC Bank Canada, HSBC North America Holdings Inc., HSBC Finance Corporation, Reitmans (Canada) Limited and Richmont Mines Inc. Mr. Minzberg received a B.A., B.C.L. and LL.B from McGill University.

The Right Honourable Brian Mulroney, P.C., C.C., LL.D, Director. Mr. Mulroney has been a Director of Quebecor Media since January 31, 2001. Mr. Mulroney also served as Chairman of the Board of Directors of Quebecor World Inc. from April 2002 to July 2009. Mr. Mulroney served as Chairman of the Board of Directors of Sun Media from January 2000 to June 2001. Since 1993, Mr. Mulroney has been a Senior Partner with the law firm Norton Rose Canada LLP (formerly Ogilvy Renault LLP) in Montréal, Québec. Prior to that, Mr. Mulroney was the Prime Minister of Canada from 1984 until 1993. Mr. Mulroney practiced law in Montréal and served as President of The Iron Ore Company of Canada before entering politics in 1983. Mr. Mulroney serves as a Director of a number of public corporations, including Quebecor, Barrick Gold Corporation, Wyndham Worldwide Corporation, The Blackstone Group LP, Lion Capital (London) and Tuckamore Capital.

Normand Provost, Director. Mr. Provost has been a Director of Quebecor Media since July 2004. Mr. Provost has served as Executive Vice President, Private Equity, of the Caisse de dépôt et placement du Québec since November 2003. In addition to his responsibilities in the investment sector, Mr. Provost served as Chief Operations Officer from April 2009 to March 2012. Mr. Provost joined the Caisse de dépôt et placement du Québec in 1980 and has held various management positions during his time there. He namely served as President of CDP Capital Americas from 1995 to 2004. Mr. Provost is a member of the Leaders’ Networking Group of Québec and the Montréal Chamber of Commerce.

Jean-François Pruneau, Chief Financial Officer. Mr. Pruneau has served as Vice President, Finance of the Company from May 2009 to November 2010 and was then promoted Chief Financial Officer. He also serves as Chief Financial Officer of Quebecor and as Vice President of Videotron and Sun Media. From October 2005 to May 2009, Mr. Pruneau served as Treasurer of the Company, Sun Media and Videotron. From February 2007 to May 2009, he also served as Treasurer of Quebecor. Prior to that, Mr. Pruneau served as Director, Finance and Assistant Treasurer Corporate Finance of Quebecor Media. Before joining Quebecor Media in May 2001, Mr. Pruneau was Associate Director of BCE Media from 1999 to 2001. From 1997 to 1999, he served as Corporate Finance Officer at Canadian National Railway. He has been a member of the CFA Institute, formerly the Association for Investment Management and Research, since 2000.

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France Lauzière, Senior Vice President, QMI Content. Ms. Lauzière was appointed to her current position in January 2013. She also serves as Vice President, Programming, Brand and Content of TVA Group Inc. since February 2006. Ms. Lauzière first joined the TVA Group in 2001 as Manager of Variety Programming before taking on the position of General Manager, Programming. In 2007, she also took the responsibilities of managing TVA Productions. Two years later, she established a division called TVA Création.

J. Serge Sasseville, Senior Vice President, Corporate and Institutional Affairs. Mr. Sasseville was promoted Senior Vice President, Corporate and Institutional Affairs in March 2012 from his previous position as Vice President, Corporate and Institutional Affairs of Quebecor Media, a position he held since November 2008. Mr. Sasseville joined the Quebecor Group in 1987 and has served in many capacities both as a lawyer and manager, including Vice President, Legal Affairs and Secretary of Videotron and its subsidiaries and President, Music Sector of Archambault Group. Mr. Sasseville is a member of the boards of directors of Archambault Group and the Quebecor Fund. He is also a member of the Executive Committee and the Vice-Chair of the Board of Directors of CWTA (Canadian Wireless Telecommunications Association) and a member of the Board of Directors of CPAC (Cable Public Affairs Channel). He has been a member of the Barreau du Québec since 1981 and practiced law at the law firm Stein, Monast in Québec City from 1981 to 1987.

Marc Tremblay, Senior Vice President, Legal Affairs. Mr. Tremblay was promoted Senior Vice President, Legal Affairs in March 2012 from his previous position as Vice President, Legal Affairs at Quebecor Media, a position he held from March 2007. Prior to that date, Mr. Tremblay practiced law at Ogilvy Renault LLP (now Norton Rose Canada LLP) for 22 years. He has been a member of the Barreau du Québec since 1983.

Édith Perreault, Executive Vice President, National Sales. Ms. Perreault was appointed to her current position in November 2011. She also serves as Vice President, Sales and Marketing of TVA Group Inc. since February 2007.

Sylvain Bergeron, Vice President, Taxation. Mr. Bergeron was promoted to his current position in February 2011. Mr. Bergeron is also Vice President, Taxation, of Quebecor. Mr. Bergeron joined Videotron in 1990 as Tax Adviser and later became Assistant Director, Taxation of Le Groupe Videotron ltée. Following the acquisition of Le Groupe Vidéotron ltée by the Company, Mr. Bergeron was promoted Director, Taxation of the Company in 2001. Prior to that, Mr. Bergeron was successively Auditor and Tax Specialist for Samson, Belair/Deloitte & Touche, Chartered Accountants. Mr. Bergeron has been a member of the Canadian Institute of the Chartered Accountants and of the Ordre des comptables professionnels agréés (CPA) du Québec (formerly Corporation professionnelle des comptables agréés du Québec) since 1987.

Guy Desrochers, Vice President, Internal Audit. Mr. Desrochers was appointed Vice President, Internal Audit of Quebecor Media in September 2012. He acts in the same capacity for Videotron. Prior to joining Quebecor Media, Mr. Desrochers was in charge of the Internal Audit Services of Molson Coors Brewing Company (Canadian operations) from 2003 to 2012. He also held several financial management positions at Bombardier Aerospace and Pratt & Whitney Canada from 1984 to 2002. He holds a bachelor degree in Business Administration from Laval University, is a member of the Ordre des comptables professionnels agrees (CPA) du Québec (formerly the Corporation des Comptables en Management Accrédités du Québec) since 1984, is a Board member and President of the Executive Committee of the Institute of Internal Auditors (Montreal chapter), and is a Certified Internal Auditor.

Isabelle Leclerc, Vice President, Human Resources. Ms. Leclerc was promoted to her current position in June 2011. From 2007 to her appointment, Ms. Leclerc served as Director, Human Resources and, Senior Director, Talent Management. From 2003 to 2007, Ms. Leclerc held several functions within Quebecor World Inc. Prior to joining Quebecor, Ms. Leclerc was a compensation consultant for 10 years with Towers Perrin and then with Aon Consulting Group. She is a member of the North American professional association World@Work, and Vice President of the board of Mutuelle de Formation FCCQ, a not-for-profit organization, since June 2011. She holds an executive MBA.

Denis Sabourin, Vice President and Corporate Controller. Mr. Sabourin was appointed Vice President and Corporate Controller of Quebecor Media in March 2004. Prior to that date, he held the position of Senior Manager, Control. Mr. Sabourin is also Vice President and Corporate Controller of Quebecor. Prior to joining Quebecor Media, Mr. Sabourin served as corporate controller of Compagnie Unimédia (previously known as Unimédia Inc.) from 1994 to 2001 and as Operating Controller for the Hotel Group Auberges des Gouverneurs Inc. from 1990 to 1994. He also spent seven years with Samson Bélair/Deloitte & Touche, Chartered Accountants. Mr. Sabourin has been a member of the Canadian Institute of Chartered Accountants since 1984.

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Claudine Tremblay, Vice President and Secretary. Ms. Tremblay was appointed Vice President and Secretary of Quebecor Media on January 1, 2008. She holds the same position within Quebecor, TVA Group, Sun Media and Videotron. Prior to her appointment to her current position, Ms. Tremblay was Senior Director, Corporate Secretariat for Quebecor Media, Quebecor World Inc. and Quebecor from 2003 to December 2007. Prior to joining the Quebecor group of companies as Assistant Secretary in 1987, Ms. Tremblay was Assistant Secretary and Administrative Assistant at National Bank of Canada from 1979 to 1987. She has also been a member of the Chambre des notaires du Québec since 1977.

Martin Tremblay, Vice President, Public Affairs. Mr. Tremblay was appointed Vice President, Public Affairs in August 2012. Mr. Tremblay joined the Company in 2010 as Manager, Special Projects and Special Counsel to the President. Prior to that, he had worked for ten years in different political cabinets and at CASACOM, a Montreal public relations firm, as Senior Counsel in public affairs. Mr. Tremblay holds a bachelor degree in Political Science from the Université du Québec à Chicoutimi.

Chloé Poirier, Treasurer. Ms. Poirier was appointed Treasurer of Quebecor Media in July 2009. She also serves as Treasurer of Quebecor, Sun Media and Videotron. Ms. Poirier joined the Company in 2001 as Director, Treasury / Assistant Treasurer, Treasury Operations. Prior to that, she was Analyst, Treasury and Finance with Natrel inc./Agropur from 1997 to 2001 and a trader at the Caisse de dépôt et placement du Québec from 1995 to 1997. She is a Chartered Financial Analyst (CFA) and holds a Bachelor degree in Actuarial Science and an MBA from Université Laval.

Christian Marcoux, Assistant Secretary. Mr. Marcoux was appointed Assistant Secretary of Quebecor Media in January 2008. Mr. Marcoux joined Quebecor Media in 2006 as Senior Legal Counsel, Compliance and was promoted to Director, Compliance, Corporate Secretariat in February 2010. He is also currently acting as Assistant Secretary of Quebecor, TVA Group, Sun Media and Videotron. From January 2004 to December 2006, Mr. Marcoux was Manager, Listed Issuer Services at the Toronto Stock Exchange. Prior to January 2004, Mr. Marcoux practiced law at the law firm BCF LLP for three years. He has been a member of the Barreau du Québec since 2000.

Changes to Corporate Management

On March 14, 2013, Quebecor announced that Mr. Pierre Karl Péladeau will be stepping down as President and Chief Executive Officer of Quebecor and Quebecor Media and will be replaced by Mr. Robert Dépatie, the current President and Chief Executive Officer of Videotron.

Mr. Péladeau will be appointed Chairman of the Board of Quebecor Media and of TVA Group, in replacement of Mr. Serge Gouin, who will be retiring and stepping down after serving as Chairman of the Board of Quebecor Media since the company’s creation in 1999 and of TVA Group since 2011. Mr. Péladeau will also become Vice-Chairman of the Board of Quebecor Inc., which will continue to be chaired by Ms. Françoise Bertrand. Mr. Péladeau will continue overseeing the Quebecor’s strategic files in his new position.

Ms. Manon Brouillette, the current President, Consumer Markets, of Videotron, will be appointed as President and Chief Operating Officer of Videotron. Mr. Dépatie will remain Chief Executive Officer.

The changes are expected to come into effect at the time of Quebecor’s next annual shareholders meeting, to be held in Montréal on May 8, 2013.

Compensation

Compensation of Directors

Our Directors who are also employees of Quebecor Media are not entitled to receive any additional compensation for serving as our Directors. Since January 1, 2011, each Director is entitled to receive an annual director’s fee of $50,000 from Quebecor Media. Directors are also entitled to receive an attendance fee of $2,000 for each meeting of the Board of Directors or committee meeting attended (other than the Audit Committee) and an attendance fee of $3,000 for each Audit Committee meeting attended, each payable quarterly. The Chairman of our Audit Committee receives additional fees of $14,000 per year and the Chairman of our Compensation Committee receives additional fees of $5,000 per year. Each Compensation Committee member, other than the Chairman, also receive additional fees of $2,000 per year. Each Audit Committee member, other than the Chairman, also receives additional fees of $5,000 per year. Each Executive Committee member receives additional fees of $3,000 per year. All of our Directors are reimbursed for travel and other reasonable expenses incurred in attending meetings of the Board of Directors or of one of its committees. Mr. Serge Gouin, who serves as Chairman of the Board of Directors of Quebecor Media, receives compensation from us for acting in such capacity.

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During the financial year ended December 31, 2012, the amount of compensation (including benefits in kind) paid to seven of our Directors (other than Pierre Karl Péladeau) for services in all capacities to Quebecor Media and its subsidiaries (other than TVA Group) was $825,000. None of our Directors have contracts with us or any of our subsidiaries that provide for benefits upon termination of employment.

Compensation of Executive Officers

Compensation of our senior executive officers is composed primarily of base salary and the payment of cash bonuses. Cash bonuses are generally tied to the achievement of financial performance indicators and personal objectives, and they may vary from 15% to 100% of base salary depending upon the level of responsibilities of the senior executive officer. Our executive compensation package is also complemented by long-term incentives in the form of options.

For the financial year ended December 31, 2012, our senior executive officers, as a group, received aggregate compensation of $11.0 million for services they rendered in all capacities during 2012, which amount includes base salary, bonuses, benefits in kind and deferred compensation paid to such senior executive officers.

Quebecor Media’s Stock Option Plan

We maintain a stock option plan to attract, retain and motivate our Directors, executive officers and key contributors, as well as those of our subsidiaries. The Compensation Committee is responsible for the administration of this stock option plan and, as such, designates the participants under the stock option plan and determines the number of options granted, the vesting schedule, the expiration date and any other terms and conditions relating to the options.

Under this stock option plan, 6,180,140 Quebecor Media common shares (representing 6% of all of the outstanding shares of Quebecor Media) have been set aside for Directors, officers, senior employees, and other key employees of Quebecor Media and its subsidiaries. Each option may be exercised within a maximum period of ten years following the date of grant at an exercise price not lower than, as the case may be, the fair market value of the common shares of Quebecor Media at the date of grant, as determined by our Board of Directors (if the common shares of Quebecor Media are not listed on a stock exchange at the time of the grant) or the 5-day weighted average closing price ending on the day preceding the date of the grant of the common shares of Quebecor Media on the stock exchange(s) where such shares are listed at the time of grant. For so long as the shares of Quebecor Media are not listed on a recognized stock exchange, optionees may exercise their vested options during one of the following annual periods: from March 1 to March 30, from June 1 to June 29, from September 1 to September 29 and from December 1 to December 30. Holders of options under the plan have the choice at the time of exercising their options to receive an amount in cash equal to the difference between the fair market value of the common shares, as determined by our Board of Directors, and the exercise price of their vested options or, subject to certain stated conditions, purchase common shares of Quebecor Media at the exercise price. Except under specific circumstances, and unless our Compensation Committee decides otherwise, options vest over a five-year period in accordance with one of the following vesting schedules as determined by our Compensation Committee at the time of grant: (i) equally over five years with the first 20% vesting on the first anniversary of the date of the grant; (ii) equally over four years with the first 25% vesting on the second anniversary of the date of grant; and (iii) equally over three years with the first 33 ¹/₃% vesting on the third anniversary of the date of grant. Pursuant to the terms of this plan, no optionee may hold options representing more than 5% of the outstanding common shares of Quebecor Media.

During the year ended December 31, 2012, an aggregate total of 146,000 options were granted under this plan to officers and employees of Quebecor Media and its subsidiaries, with a weighted average exercise price of $52.06 per share, as determined by Quebecor Media’s Compensation Committee. During the year ended December 31, 2012, a total of 1,480,355 options were exercised by officers and employees of Quebecor Media and its subsidiaries, for aggregate gross value realized of $12.5 million. The value realized on option exercises represents the difference between the option exercise price and the fair market value of Quebecor Media common shares (as determined as set forth above) at the date of exercise. As of December 31, 2012, an aggregate total of 1,349,007 options were outstanding (of which 251,266 were vested as at that date), with a weighted average exercise price of $45.02 per share, as determined by Quebecor Media’s Compensation Committee. For more information on this stock option plan, see Note 22 to our audited consolidated financial statements, which are included elsewhere in this prospectus.

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Quebecor Inc.’s Stock Option Plan

Under a stock option plan established by Quebecor, 6,500,000 Quebecor Class B Shares have been set aside for Directors, officers, senior employees and other key employees of Quebecor and its subsidiaries, including Quebecor Media. The exercise price of each option is equal to the weighted average trading price of Quebecor Class B Shares on the Toronto Stock Exchange over the last five trading days immediately preceding the grant of the option. Each option may be exercised during a period not exceeding ten years from the date granted. Options usually vest as follows:  ¹/₃ after one year,  ²/₃ after two years, and 100% three years after the original grant. Holders of options under the Quebecor stock option plan have the choice, when they want to exercise their options, to acquire Quebecor Class B Shares at the corresponding option exercise price or to receive a cash payment from Quebecor equivalent to the difference between the market value of the underlying shares and the exercise price of the option. The Board of Directors of Quebecor may, at its discretion, affix different vesting periods at the time of each grant.

During the year ended December 31, 2012, 49,447 options to purchase Quebecor Class B Shares, with a weighted average exercise price of $36.86 per share, were granted to one senior executive officer of Quebecor Media. More specifically, the foregoing number represents the portion of all options granted to this executive in the year ended December 31, 2012 which was allocated to us. As of December 31, 2012, a total of 123,742 options to purchase Quebecor Class B Shares, with a weighted average exercise price of $35.72 per share, were held by senior executive officers of Quebecor Media for acting in such capacity. The closing sale price of the Quebecor Class B Shares on the Toronto Stock Exchange on December 31, 2012 was $38.67.

Pension Benefits

Quebecor Media and its subsidiaries maintain a pension plan for their executive officers. The benefits under the Quebecor Media plan equal 2% of the average salary over the best five consecutive years of salary (including bonuses), multiplied by the number of years of membership in the plan as an executive officer. The pension so calculated is payable at the normal retirement age, which is 65 years of age, or sooner at the election of the executive officer, and, from age 61, without early retirement reduction. In addition, the pension may be deferred, but not beyond the age limit under the provisions of the Income Tax Act (Canada), in which case the pension is adjusted to take into account the delay in payment thereof in relation to the normal retirement age. The maximum pension payable under such pension plan is as prescribed by the Income Tax Act (Canada) and is based on a maximum salary of $134,834. An executive officer contributes to the plan an amount equal to 5% of his or her salary up to a maximum of $6,742 in respect of 2013. Quebecor Media closed this pension plan to all new employees hired on and after December 27, 2008. New employees are eligible to enroll on a retirement savings plan.

The total amount contributed by Quebecor Media in 2012 to provide the pension benefits was $73.5 million on a consolidated basis. For a description of the amount set aside or accrued for pension plans and post-retirement benefits by Quebecor Media see Note 28 to our audited consolidated financial statements, which are included in this prospectus.

The table below indicates the annual pension benefits that would be payable at the normal retirement age of 65 years:

	Years of Participation
Compensation	10		15		20		25		30
$134,834 or more	$	26,967	$	40,450	$	53,933	$	67,417	$	80,900

Supplemental Retirement Benefit Plan (“SERP”) for Designated Executives

In addition to the pension plans in force, Quebecor Media and its subsidiaries provide supplemental retirement benefits to certain designated executives. Three senior executive officers of Quebecor Media are participants in a SERP.

Two senior executives participate in the Quebecor Media plan and the benefits are equal, for each year of membership under the plan, to 2% of the difference between their respective average salaries (including bonuses) for the best five consecutive years and the maximum salary under the pension plan. The pension is payable for life without reduction from age 61. Upon a beneficiary’s death after retirement, the plan provides for the payment of a pension to the eligible surviving spouse which represents 50% of the retiree’s pension and payable for up to ten years. The other senior executive officer participates in another SERP established by one of Quebecor Media’s subsidiary.

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As of December 31, 2012, these three senior executive officers of Quebecor Media had credited service of approximately seven years or less. The table below indicates the annual pension benefits that would be payable under Quebecor Media’s plan at the normal retirement age of 65 years:

	Years of Credited Service
Compensation	10		15		20		25		30
$200,000	$	13,033	$	19,550	$	26,067	$	32,583	$	39,100
$300,000	$	33,033	$	49,550	$	66,067	$	82,583	$	99,100
$400,000	$	53,033	$	79,550	$	106,067	$	132,583	$	159,100
$500,000	$	73,033	$	109,550	$	146,067	$	182,583	$	219,100
$600,000	$	93,033	$	139,550	$	186,067	$	232,583	$	279,100
$800,000	$	133,033	$	199,550	$	266,067	$	332,583	$	399,100
$1,000,000	$	173,033	$	259,550	$	346,067	$	432,583	$	519,100
$1,200,000	$	213,033	$	319,550	$	426,067	$	532,583	$	639,100
$1,400,000	$	253,033	$	379,550	$	506,067	$	632,583	$	759,100

Board Practices

In accordance with our charter, our Board of Directors may consist of at least one Director and no more than 20 Directors. Our Board of Directors currently consists of eight Directors. Each Director serves a one-year term and holds office until the next annual general shareholders’ meeting or until the election of his or her successor, unless he or she resigns or his or her office becomes vacant by reason of death, removal or other cause. Pursuant to a Consolidated and Amended Shareholders’ Agreement, dated as of December 11, 2000, as amended, among Quebecor, certain wholly owned subsidiaries of Quebecor, Capital Communications CDPQ Inc. (now Capital CDPQ) and Quebecor Media (the “Company’s Shareholders Agreement”), our Board of Directors is comprised of nominees of each of Quebecor and of Capital CDPQ. In May 2011, our shareholders, acting by written resolution, decreased the size of our Board of Directors from nine directors to eight, and established that Quebecor would be entitled to nominate four directors and Capital CDPQ would be entitled to nominate four directors. See “— The Company’s Shareholders Agreement” below for a description of the Company’s Shareholders Agreement and the shareholders’ resolution decreasing the size of the Board of Directors to eight.

Reference is made to “— Directors and Senior Management” above for the current term of office, if applicable, and the period during which our directors and senior management have served in that office.

Executive Committee

The Executive Committee of our Board of Directors is currently composed of four members, namely Messrs. Pierre Karl Péladeau, Serge Gouin, André Delisle and A. Michel Lavigne. Mr. Gouin is the Chairman of our Executive Committee. Subject to the provisions of the Company’s Shareholders Agreement, the Committee has and may exercise all the powers of the Board of Directors, subject to the restrictions that shall be imposed by the Board of Directors from time to time and by the Business Corporations Act (Québec). However, the Committee does not have the power to grant options, which power has already been delegated by the Board of Directors to its Compensation Committee.

Audit Committee

Our Audit Committee is currently composed of three Directors, namely Messrs. Jean La Couture, André Delisle and A. Michel Lavigne. Mr. La Couture is the Chairman of our Audit Committee and our Board of Directors has determined that Mr. La Couture is an “audit committee financial expert” as defined under SEC rules. Our Board of Directors has adopted the mandate of our Audit Committee in light of the Sarbanes-Oxley Act of 2002 and related SEC rulemaking. Our Audit Committee assists our Board of Directors in overseeing our financial controls and reporting. Our Audit Committee also oversees our compliance with financial covenants and legal and regulatory requirements governing financial disclosure matters and financial risk management.

The current mandate of our Audit Committee provides, among other things, that our Audit Committee reviews our annual and quarterly financial statements before they are submitted to our Board of Directors, as well as the financial information contained in our annual reports on Form 20-F, our management’s discussion and analysis of financial condition and results of operations, our quarterly reports furnished to the SEC under cover of Form 6-K and other documents containing similar information before their public disclosure or filing with regulatory authorities; reviews our accounting policies and

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practices; and discusses with our independent auditors the scope of their audit, as well as our auditors’ recommendations and observations with respect to the audit, our accounting policies and financial reporting, and the responses of our management with respect thereto. Our Audit Committee is also responsible for ensuring that we have in place adequate and efficient internal control and management information systems to monitor our financial information and to ensure that our transactions with related parties are made on terms that are fair for us. Our Audit Committee pre-approves all audit services and permitted non-audit services and pre-approves all the fees pertaining to those services that are payable to our independent auditors, and it submits the appropriate recommendations to our Board of Directors in connection with these services and fees. Our Audit Committee also reviews the scope of the audit and the results of the examinations conducted by our internal audit department. In addition, our Audit Committee recommends the appointment of our independent auditors, subject to our shareholders’ approval. It also reviews and approves our code of ethics (“Code of Ethics”) for the Chief Executive Officer, Chief Financial Officer, controller, principal financial officer and other persons performing similar functions.

Compensation Committee

Our Compensation Committee is composed of Messrs. Serge Gouin, A. Michel Lavigne and Samuel Minzberg. Mr. Gouin is the Chairman of our Compensation Committee. Our Compensation Committee was formed with the mandate to examine and decide upon the global compensation and benefits policies of us and those of our subsidiaries that do not have a Compensation Committee, and to formulate appropriate recommendations to the Board of Directors, among other things, concerning long-term compensation in the form of stock option grants. Our Compensation Committee is also responsible for the review, on an annual basis, of the compensation of our Directors.

Liability Insurance

Quebecor carries liability insurance for the benefit of its Directors and officers, as well as for the Directors and officers of its subsidiaries, including Quebecor Media and our subsidiaries, against certain liabilities incurred by them in such capacity. These policies are subject to customary deductibles and exceptions. The premiums in respect of this insurance are entirely paid by Quebecor, which is then reimbursed by Quebecor Media and its subsidiaries for their ratable portion thereof.

Share Ownership

Except as disclosed below under “— Major Shareholders,” none of our equity securities are held by any of our Directors or senior executive officers. For a description of Quebecor Media’s stock option plan, see “— Quebecor Media’s Stock Option Plan” above.

Major Shareholders

In October 2012 we entered into an agreement (the “CDP Agreement”) with CDPQ regarding a partial sale of Capital CDPQ’s interest in Quebecor Media. The CDP Agreement provided for the following transactions:

• the repurchase and cancellation by Quebecor Media of 20,351,307 shares of Quebecor Media held by Capital CDPQ, representing approximately 36.4% of Capital CDPQ’s interest before closing, for an aggregate purchase price of $1.0 billion; and

• the purchase by Quebecor of 10,175,653 shares of Quebecor Media held by Capital CDPQ, representing approximately 18.2% of Capital CDPQ’s interest before closing.

Following the completion of these transactions, Capital CDPQ indirectly held 25,439,134 shares of our Company, representing a 24.6% interest in Quebecor Media (excluding dilution from options under Quebecor Media’s stock option plan) and Quebecor held, directly and indirectly, 77,812,366 common shares of our Company, representing a 75.4% voting and equity interest in us. The primary asset of Quebecor, a communications holding company, is its interest in us. Capital CDPQ is a wholly owned subsidiary of the CDPQ, one of Canada’s largest pension fund managers.

To the knowledge of our Directors and officers and according to public information available, the only persons or companies which, as at March 12, 2013, beneficially owned or exercised control or direction over more than 10% of the shares of any class of voting shares of Quebecor were: Pierre Karl Péladeau, Beutel, Goodman & Co. Ltd. and Letko, Brosseau & Associates Inc.

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Name	Number of Class A Shares held		% of Class A Shares held		Number of Class B Shares held		% of Class B Shares held		% of voting rights attached to outstanding Class A and B Shares
Pierre Karl Péladeau		17,468,464		89.23%		207,260		0.48%		73.22%
Beutel, Goodman & Co. Ltd.		—		—		9,590,203		22.43%		4.02%
Letko, Brosseau & Associates Inc.		—		—		4,451,309		10.41%		1.87%

The Company’s Shareholders Agreement

We entered into a shareholders’ agreement, dated October 23, 2000, with Quebecor and certain of its wholly owned subsidiaries, and Capital CDPQ, as consolidated and amended by a shareholders’ agreement dated December 11, 2000, which sets forth the rights and obligations of Quebecor and Capital CDPQ as our shareholders. Except as specifically provided in the Company’s Shareholders Agreement, the rights thereunder apply only to shareholders holding at least 10% of our equity shares, which we refer to as “QMI Shares”, on a fully-diluted basis.

The Company’s Shareholders Agreement provides, among other things, for:

(a) standard rights of first refusal with respect to certain transfers of QMI Shares;

(b) standard preemptive rights which permit shareholders to maintain their respective holdings of QMI Shares on a fully diluted basis in the event of issuances of additional QMI Shares or our convertible securities;

(c) rights of representation on our Board of Directors in proportion to shareholdings, with Quebecor initially having five nominees and Capital CDPQ having four nominees to our Board of Directors;

(d) consent rights in certain circumstances with respect to matters relating to us and our non-reporting issuer (public) subsidiaries, including (1) a substantial change in the nature of our business and our subsidiaries taken as a whole, (2) an amendment to our articles or certain of our subsidiaries, (3) the merger or amalgamation of us or certain of our subsidiaries with a person other than an affiliate, (4) the issuance by us or certain of our subsidiaries of shares or of securities convertible into shares except in the event of an initial public offering of QMI Shares, (5) any transaction having a value of more than $75,000,000, other than the sale of goods and services in the normal course of business, and (6) a business acquisition in a business sector unrelated to sectors in which we and certain of our subsidiaries are involved;

(e) standard rights of first refusal in favor of Capital CDPQ with respect to the sale of all or substantially all of the shares or assets of TVA Group or Videotron; and

(f) a non-competition covenant by Quebecor in respect of it and its affiliates pursuant to which Quebecor and its affiliates shall not compete with Quebecor Media and its subsidiaries in their areas of activity so long as Quebecor has “de jure” or “de facto” control of us, subject to certain limited exceptions.

The Company’s Shareholders Agreement provides that once we become a reporting issuer and have a 20% public “float” of QMI Shares, certain provisions of the Company’s Shareholders Agreement will cease to apply, including the consent rights described under subsections (d)(4) and (f) in the description of the Company’s Shareholders Agreement above.

In a separate letter agreement, dated December 11, 2000, Quebecor and Capital CDPQ agreed, subject to applicable laws, fiduciary obligations and existing agreements, to attempt to apply the same board representation and consent rights as set forth in the Company’s Shareholders Agreement to our reporting issuer (public) subsidiaries so long as Capital CDPQ holds at least 20% of the QMI Shares on a fully diluted basis or, in the case of TVA Group only, 10%.

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On May 25, 2011, our shareholders, acting by written resolution, decreased the size of our Board of Directors to eight directors and established that each of Quebecor and Capital CDPQ would be entitled to nominate four directors. See “— Board Practices” above.

In connection with the CDP Agreement and the transactions contemplated thereunder, our shareholders agreed to amend the Company’s Shareholders Agreement and entered into an amending agreement among Quebecor, certain of Quebecor’s wholly-owned subsidiaries, CDPQ and Capital CDPQ providing for, among other things:

(a) the addition of demand registration rights and piggyback registration rights in favour of Capital CDPQ, effective from and after January 1, 2019;

(b) the addition of exit rights, effective on or after January 1, 2019, including the right of Capital CDPQ to require Quebecor Media to carry out an initial public offering and the right of Capital CDPQ to sell its remaining interest in Quebecor Media to a financial third party, without providing any right of first refusal or first offer to Quebecor or Quebecor Media; and

(c) the addition of consent rights in respect of the declaration or payment of cumulative dividends by Quebecor Media in any financial year exceeding the greater of (i) 25% of its consolidated net earnings in the immediately preceding financial year and (ii) $225 million.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The following describes transactions in which the Company and its directors, executive officers and affiliates are involved. The Company believes that each of the transactions described below was on terms no less favourable to Quebecor Media than could have been obtained from independent third parties.

Operating transactions

During the year ended December 31, 2012, the Company and its subsidiaries made purchases and incurred rent charges with the parent corporation and affiliated companies in the amount of $14.4 million ($11.7 million in 2011 and $14.8 million in 2010), which are included in purchase of goods and services. The Company and its subsidiaries made sales to an affiliated corporation in the amount of $3.8 million ($3.2 million in 2011 and $3.6 million in 2010). These transactions were concluded on terms equivalent to those that prevail on an arm’s length basis and were accounted for at the consideration agreed between parties.

Corporate reorganization

In the second quarter of 2010, the Company announced the creation of SUN News, a partnership between TVA Group and Sun Media Corporation. The partnership has launched an English-language news and opinion specialty channel in the spring of 2011. In connection with the launch of this new specialty channel, the Company terminated the operations of its general-interest television station, Sun TV, and undertook a related corporate reorganization.

On June 28, 2012, the CRTC approved the sale of a 2% interest in SUN News by TVA Group to Sun Media Corporation. The transaction closed on June 30, 2012 and, as a result, Sun Media Corporation holds a 51% interest and TVA Group holds a 49% interest in SUN News.

Management arrangements

The parent corporation has entered into management arrangements with the Company. Under these management arrangements, the parent corporation and the Company provide management services to each other on a cost-reimbursement basis. The expenses subject to reimbursement include the salaries of the Company’s executive officers, who also serve as executive officers of the parent corporation.

In 2012, the Company received an amount of $1.7 million, which is included as a reduction in employee costs ($2.0 million in 2011 and $2.1 million in 2010), and incurred management fees of $1.1 million ($1.1 million in 2011 and 2010) with the Company’s shareholders.

Tax transactions

In 2012, the parent corporation transferred $43.4 million of non-capital losses (none in 2011 and $26.4 million in 2010) to the Company and its subsidiaries in exchange for a total cash consideration of $10.2 million (none in 2011 and $6.0 million in 2010). This transaction was concluded on terms equivalent to those that prevail on arm’s length basis and was accounted for at the consideration agreed to between the parties. As a result, the Company recorded a reduction of $1.5 million in its income tax expense in 2012 (none in 2011 and $1.5 million in 2010).

Income Tax Transactions

Unlike corporations in the United States, corporations in Canada are not permitted to file consolidated tax returns. As a result, we enter into certain tax consolidation transactions (issuance of preferred shares and subordinated loans) from time to time through which we are able to recognize certain income tax benefits. For further information regarding these transactions, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Uses of Liquidity and Capital Resources” as well as Note 25 to our audited consolidated financial statements included elsewhere in this prospectus. These transactions are carried out for tax consolidation purposes, on terms equivalent to those that prevail in an arm’s length basis and are accounted for at the consideration agreed between parties.

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Dividend Policy and Dividends

Our authorized share capital consists of (i) common shares, (ii) Cumulative First Preferred Shares, consisting of Series A Shares, Series B Shares, Series C Shares, Series D Shares, Series F Shares and Series G Shares, and (iii) Preferred Shares, Series E. As of December 31, 2012, our issued and outstanding share capital was as follows:

• 103,251,500 common shares outstanding, of which 77,812,366 were held by Quebecor and 25,439,134 were held by Capital CDPQ; and

• 1,630,000 Cumulative First Preferred Shares, Series G, outstanding, all of which were held by 9101-0835 Québec Inc., an indirect wholly-owned subsidiary of Quebecor Media.

Holders of our common shares are entitled, subject to the rights of the holders of any Preferred Shares, to receive such dividends as our Board of Directors shall determine in its discretion. In 2012, the Board of Directors of Quebecor Media declared and paid aggregate cash dividends on our common shares of $100 million. In 2011, the Board of Directors of Quebecor Media declared and paid aggregate cash dividends on our common shares of $100 million. In 2010, the Board of Directors of Quebecor Media declared and paid aggregate cash dividends on our common shares of $87.5 million. We currently expect, to the extent permitted by our Articles of Incorporation, the terms of our indebtedness and applicable law, to continue to pay dividends to our shareholders or reduce paid-up capital in the future.

Holders of our Series A Shares are entitled to receive fixed cumulative preferred dividends at a rate of 12.5% per share per annum. The dividends declared on the Series A Shares are payable semi-annually on a cumulative basis on January 14 and July 14 of each year. No dividends may be paid on any shares ranking junior to the Series A Shares unless all dividends which shall have become payable on the Series A Shares have been paid or set aside for payment.

Holders of our Series B Shares are entitled to receive a cumulative cash dividend, when, as and if declared by the Board of Directors. The dividend shall be payable only upon conversion of the Series B Shares into Common shares. Dividends are determined by the Board of Directors in accordance with our Articles of Incorporation.

Holders of our Series C Shares are entitled to receive fixed cumulative preferred dividends at a rate of 11.25% per share per annum. The dividends declared on the Series C Shares are payable semi-annually on a cumulative basis on June 20 and December 20 of each year. No dividends may be paid on any shares ranking junior to the Series C Shares unless all dividends which shall have become payable on the Series C Shares have been paid or set aside for payment.

Holders of our Series D Shares are entitled to receive fixed cumulative preferred dividends at a rate of 11.0% per share per annum. The dividends declared on the Series D Shares are payable semi-annually on a cumulative basis on June 20 and December 20 of each year. No dividends may be paid on any shares ranking junior to the Series D Shares unless all dividends which shall have become payable on the Series D Shares have been paid or set aside for payment.

Holders of our Series E Shares are entitled to receive a maximum non-cumulative preferred monthly dividend at a rate of 1.25% per month, calculated on the redemption price of the Series E Shares when, as and if declared by the Board of Directors. The Series E Shares rank senior to the common shares but junior to the Series A Shares, Series B Shares, Series C Shares and Series D Shares.

Holders of our Series F Shares are entitled to receive fixed cumulative preferred dividends at a rate of 10.85% per annum per share. The dividends declared on the Series F Shares are payable semi-annually on a cumulative basis on January 14 and July 14 of each year. No dividends may be paid on any shares ranking junior to the Series F Shares unless all dividends which shall have become payable on the Series F Shares have been paid or set aside for payment.

Holders of our Series G Shares are entitled to receive fixed cumulative preferred dividends at a rate of 10.85% per annum per share. The dividends declared on the Series G Shares are payable semi-annually on a cumulative basis on June 20 and December 20 of each year. No dividends may be paid on any shares ranking junior to the Series G Shares unless all dividends which shall have become payable on the Series G Shares have been paid or set aside for payment.

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OUR SHAREHOLDERS

As at the date hereof, Quebecor Media is a 75.36% owned subsidiary of Quebecor, a communications holding company. The remaining 24.64% of Quebecor Media is owned by Capital CDPQ, a subsidiary of the Caisse de dépôt et placement du Québec, one of Canada’s largest pension fund managers. Neither Quebecor nor Capital CDPQ is an obligor or a guarantor of our obligations under the initial notes or the exchange nots offered by this prospectus.

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DESCRIPTION OF OTHER INDEBTEDNESS

Senior Secured Credit Facilities

General

Our Senior Secured Credit Facilities are comprised of a $300.0 million revolving credit facility (“Revolving Facility”) that matures on January 15, 2016. Our Senior Secured Credit Facilities also provide us with the ability to borrow an additional $800 million under an uncommitted incremental facility (or increase to the Revolving Facility), subject to compliance at all times with all financial covenants, absence of default and lenders being willing to fund the incremental amount. This incremental facility (unless made through an increase of the Revolving Facility) will have a term to be agreed with the lenders. We may draw letters of credit under the Senior Secured Credit Facilities. The proceeds of our Revolving Facility may be used for our general corporate purposes.

Interest Rate, Fees and Payments

Borrowings under the Revolving Facility bear interest at the Canadian prime rate, the U.S. prime rate, the bankers’ acceptance rate or U.S. LIBOR, plus, in each case, an applicable margin. With regard to Canadian prime rate advances and U.S. prime rate advances, the applicable margin is determined by our Leverage Ratio (as defined in the Senior Secured Credit Facilities) and ranges from 1.25% when this ratio is less than or equal to 2.75x to 2.00% when this ratio is greater that 4.5x. With regard to bankers’ acceptances and letters of credit, the applicable margin ranges from 2.25% when our Leverage Ratio is less than or equal to 2.75x to 3.00% when this ratio is greater than 4.5x. With regard to U.S. LIBOR advances, the applicable margin ranges from 2.25% when our Leverage Ratio is less than or equal to 2.75x to 3.00% when this ratio is greater than 4.5x. Specified commitment fees or drawing fees may also be payable.

Principal Repayments and Prepayment

Borrowings under the Revolving Facility are repayable in full on January 15, 2016. Quebecor Media is required to apply 100% of the net cash proceeds of asset sales or transfers in excess of $100.0 million to repay borrowings under the credit facility, as well as 50% of the net cash proceeds derived from the issuance of any securities, subject to certain exceptions (including exceptions in respect of reinvestments of such net cash proceeds into Sun Media, Videotron or other acquisitions of assets).

Security

Borrowings under the Senior Secured Credit Facilities and under eligible derivative instruments are secured by a first-ranking hypothec and security agreement (subject to certain permitted encumbrances) on all of our movable property and first-ranking pledges of all of the shares (subject to certain permitted encumbrances) of Sun Media and Videotron.

Covenants and Events of Default

The Senior Secured Credit Facilities contain customary covenants that restrict and limit our ability to, among other things, enter into merger or amalgamation transactions, grant encumbrances, sell assets, pay dividends or make other distributions, issue shares of capital stock, incur indebtedness and enter into related party transactions. In addition, the Senior Secured Credit Facilities contain customary financial covenants. The Senior Secured Credit Facilities contain customary events of default including the non-payment of principal or interest, the breach of any financial covenant, the failure to perform or observe any other covenant, certain bankruptcy events relating to Quebecor Media and its subsidiaries, and the occurrence of a change of control.

7 ³/₄% Senior Notes due 2016

On January 17, 2006, we issued US$525,000,000 aggregate principal amount of our 7 ³/₄% Senior Notes due March 15, 2016 pursuant to an Indenture, dated as of January 17, 2006, by and between Quebecor Media and U.S. Bank National Association, as trustee. These notes are unsecured and mature on March 15, 2016. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are not guaranteed by our subsidiaries. These notes are redeemable, at our option, under certain circumstances and at the redemption prices set forth in the indenture governing these notes. The indenture contains customary restrictive covenants with respect to Quebecor Media and certain of

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its subsidiaries and customary events of default. If an event of default occurs and is continuing, other than our bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 7 ³/₄% Senior Notes due 2016 to be due and payable immediately. These notes were issued under a different indenture from, and do not form a single series and are not fungible with, our 7 ³/₄% Senior Notes due 2016 which we issued in 2007, as described in the following paragraph.

7  ³/₄% Senior Notes due 2016

On October 5, 2007, we issued US$700,000,000 aggregate principal amount of our 7 ³/₄% Senior Notes due March 15, 2016 pursuant to an Indenture, dated as of October 5, 2007, by and between Quebecor Media and U.S. Bank National Association, as trustee. These notes are unsecured and mature on March 15, 2016. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are not guaranteed by our subsidiaries. These notes are redeemable, at our option, under certain circumstances and at the redemption prices set forth in the indenture governing these notes. The indenture contains customary restrictive covenants with respect to Quebecor Media and certain of its subsidiaries and customary events of default. If an event of default occurs and is continuing, other than our bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 7 ³/₄% Senior Notes due 2016 to be due and payable immediately. These notes were issued under a different indenture from, and do not form a single series and are not fungible with, our 7 ³/₄ % Senior Notes due 2016 issued on January 17, 2006, as described in the previous paragraph.

7 ³/₈% Senior Notes due 2021

On January 5, 2011, we issued CAN$325,000,000 aggregate principal amount of our 7 ³/₈% Senior Notes due January 15, 2021 pursuant to an Indenture, dated as of January 5, 2011, by and between Quebecor Media and Computershare Trust Company of Canada, as trustee. These notes are unsecured and mature on January 15, 2021. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are not guaranteed by our subsidiaries. These notes are redeemable, at our option, under certain circumstances and at the redemption prices set forth in the indenture governing these notes. The indenture contains customary restrictive covenants with respect to Quebecor Media and certain of its subsidiaries and customary events of default. If an event of default occurs and is continuing, other than our bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 7 ³/₈% Senior Notes due 2021 to be due and payable immediately.

6  ⁵/₈% Senior Notes due 2023

On October 11, 2012, we issued CAN$500,000,000 aggregate principal amount of our 6 ⁵/₈% Senior Notes due January 15, 2023 pursuant to an Indenture, dated as of October 11, 2012, by and between Quebecor Media and Computershare Trust Company of Canada, as trustee. These notes are unsecured and mature on January 15, 2023. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are not guaranteed by our subsidiaries. These notes are redeemable, at our option, under certain circumstances and at the “make-whole” redemption prices set forth in the indenture governing these notes. The indenture contains customary restrictive covenants with respect to Quebecor Media and certain of its subsidiaries and customary events of default. If an event of default occurs and is continuing, other than our bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 6 ⁵/₈% Senior Notes due 2023 to be due and payable immediately.

Videotron

Videotron Senior Secured Credit Facilities

General

Videotron’s $650.0 million senior secured credit facilities provide for a $575.0 million secured revolving credit facility that matures on July 19, 2016 and a $75.0 million secured export financing facility providing for a term loan that matures on June 15, 2018. The proceeds of the revolving credit facility can be used for general corporate purposes including, without limitation, to issue letters of credit and to pay dividends to Quebecor Media subject to certain conditions. The proceeds of the term loan were used for payments and/or reimbursement of payments of export equipment and local services in relation to Videotron’s contracts for mobile infrastructure equipment with an affiliate of Nokia Corporation and also for the financing of the Finnvera guarantee fee (Finnvera plc being a specialized financing company owned by the State of Finland which is providing an export buyer credit guarantee in favor of the lenders under the export financing facility covering political and commercial risks).

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Interest Rate, Fees and Payments

Advances under Videotron’s revolving credit facility bear interest at the Canadian prime rate, the U.S. prime rate (solely under the swingline commitment) or the bankers’ acceptance rate plus, in each instance, an applicable margin determined by the Leverage Ratio (as defined in Videotron’s credit agreement) of the Relevant Group (as defined in the credit agreement). The applicable margin for Canadian prime rate advances and U.S. prime rate advances ranges from 0.50% when this ratio is less than 1.75x, to 2.00% when this ratio is greater than or equal to 4.25x. The applicable margin for bankers’ acceptance advances or letters of credit fees ranges from 1.50% when this ratio is less than 1.75x, to 3.00% when this ratio is greater than or equal to 4.25x. Videotron has agreed to pay a commitment fee based on the aggregate amount undrawn under its revolving credit facility ranging from 0.3375% when the Leverage Ratio is less than 1.75x, to 0.75% when this ratio is greater than or equal to 4.25x. Advances under Videotron’s export financing facility bear interest at the bankers’ acceptance rate and Canadian LIBOR, plus a margin at a rate of 0.875%.

Principal Repayments and Prepayment

Videotron’s revolving credit facility will be repayable in full on July 19, 2016. Drawdowns under the export financing facility are repayable by way of seventeen equal and consecutive semi-annual payments that commenced on June 15, 2010.

Security and Guarantees

Borrowings under Videotron’s senior secured credit facilities and under eligible derivative instruments are secured by a first-ranking hypothec or security interest (subject to certain permitted encumbrances) on all current and future assets of Videotron and of the guarantors under the credit facilities (which include most, but not all of Videotron’s subsidiaries), guarantees by such guarantors, pledges of shares by Videotron and such guarantors and other security.

Covenants and Events of Default

Videotron’s senior secured credit facilities contain customary covenants that restrict and limit the ability of Videotron and the members of the VL Group (as defined in the credit agreement to mean Videotron and all of its wholly-owned subsidiaries) to, among other things, enter into merger or amalgamation transactions or liquidate or dissolve, grant encumbrances, sell assets, pay dividends or make other distributions, issue shares of capital stock, incur indebtedness and enter into related party transactions. The senior secured credit facilities contain customary financial covenants and customary events of default including the non-payment of principal or interest, the breach of any financial covenant, the failure to perform or observe any other covenant, certain bankruptcy events relating to Videotron or any member of the VL Group (other than an Immaterial Subsidiary, as defined in the credit agreement), and the occurrence of a change of control.

Videotron 6 ³/₈% Senior Notes due 2015

On September 16, 2005, Videotron issued US$175,000,000 aggregate principal amount of its 6 ³/₈% Senior Notes due December 15, 2015, pursuant to an Indenture dated as of September 16, 2005, by and among Videotron, the guarantors party thereto, and Wells Fargo, National Association, as trustee. These notes are unsecured and mature on December 15, 2015. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are guaranteed on a senior unsecured basis by most, but not all, of Videotron’s subsidiaries. These notes are redeemable, at Videotron’s option, under certain circumstances and at the redemption prices set forth in the indenture governing these notes. The indenture contains customary restrictive covenants with respect to Videotron and certain of its subsidiaries, and customary events of default. If an event of default occurs and is continuing, other than Videotron’s bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 6 ³/₈% Senior Notes due 2015 to be due and payable immediately.

Videotron 9 ¹/₈% Senior Notes due 2018

On April 15, 2008, Videotron issued US$455,000,000 aggregate principal amount of its 9 ¹/₈% Senior Notes due April 15, 2018, pursuant to an Indenture dated as of April 15, 2008, by and among Videotron, the guarantors party thereto, and

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Wells Fargo Bank, National Association, as trustee. On March 5, 2009, Videotron issued an additional US$260.0 million aggregate principal amount of these 9 ¹/₈% Senior Notes due April 15, 2018. These notes, which form a single series and class, are unsecured and mature on April 15, 2018. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are guaranteed on a senior unsecured basis by most, but not all, of Videotron’s subsidiaries. These notes are redeemable, at Videotron’s option, under certain circumstances and at the redemption prices set forth in the indenture governing these notes. The indenture contains customary restrictive covenants with respect to Videotron and certain of its subsidiaries, and customary events of default. If an event of default occurs and is continuing, other than Videotron’s bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 9 ¹/₈% Senior Notes due 2018 to be due and payable immediately.

Videotron’s 7 ¹/₈% Senior Notes due 2020

On January 13, 2010, Videotron issued CAN$300,000,000 aggregate principal amount of its 7 ¹/₈% Senior Notes due January 15, 2020, pursuant to an Indenture, dated as of January 13, 2010, by and among Videotron, the guarantors party thereto, and Computershare Trust Company of Canada, as trustee. These notes are unsecured and mature on January 15, 2020. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are guaranteed on a senior unsecured basis by most, but not all, of Videotron’s subsidiaries. These notes are redeemable, at Videotron’s option, under certain circumstances and at the redemption prices set forth in the indenture governing these notes. The indenture contains customary restrictive covenants with respect to Videotron and certain of its subsidiaries, and customary events of default. If an event of default occurs and is continuing, other than Videotron’s bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 7 ¹/₈% Senior Notes due 2020 to be due and payable immediately.

Videotron’s 6 ⁷/₈% Senior Notes due 2021

On July 5, 2011, Videotron issued CAN$300,000,000 aggregate principal amount of its 6 ⁷/₈% Senior Notes due July 15, 2021, pursuant to an Indenture, dated as of July 5, 2011, by and among Videotron, the guarantors party thereto, and Computershare Trust Company of Canada, as trustee. These notes are unsecured and mature on July 15, 2021. Interest on these notes is payable in cash semi-annually in arrears on June 15 and December 15 of each year. These notes are guaranteed on a senior unsecured basis by most, but not all, of Videotron’s subsidiaries. These notes are redeemable, at Videotron’s option, under certain circumstances and at the redemption prices set forth in the indenture governing these notes. This indenture contains customary restrictive covenants with respect to Videotron and certain of its subsidiaries, and customary events of default. If an event of default occurs and is continuing, other than Videotron’s bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then-outstanding notes may declare all the 6 ⁷/₈% Senior Notes due 2021 to be due and payable immediately.

Videotron’s 5% Senior Notes due 2022

On March 14, 2012, Videotron issued US$800,000,000 aggregate principal amount of its 5% Senior Notes due July 15, 2022, pursuant to an Indenture, dated as of March 14, 2012, by and among Videotron, the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee. These notes are unsecured and mature on July 15, 2022. Interest on these notes is payable in cash semi-annually in arrears on January 15 and July 15 of each year. These notes are guaranteed on a senior unsecured basis by most, but not all, of Videotron’s subsidiaries. These notes are redeemable, at Videotron’s option, under certain circumstances and at the make-whole redemption price set forth in the indenture governing these notes. This indenture contains customary restrictive covenants with respect to Videotron and certain of its subsidiaries and customary events of default. If an event of default occurs and is continuing, other than Videotron’s bankruptcy or insolvency, the trustee or the holders of at least 25% in principal amount at maturity of the then outstanding notes may declare all the 5% Senior Notes due 2022 to be due and payable immediately.

TVA Group

TVA Group Revolving Credit Facility

The TVA Group has entered into a credit agreement that consists of a revolving credit facility for a maximum of $100.0 million and matures on February 24, 2017. This revolving credit facility bears interest at the Canadian prime rate, U.S. prime rate, bankers’ acceptances rates or U.S. LIBOR, plus a variable margin related to the ratio of total debt to EBITDA. The revolving credit facility contains certain restrictions, including the obligation to maintain certain financial ratios. In addition, TVA Group is limited with regard to incurrence of indebtedness, investments, dividends and other payments to shareholders.

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TVA Group Term Facility

The TVA Group has entered into a credit agreement that consists of a term facility in the amount of $75.0 million and matures on December 11, 2014. This term facility bears interest at a rate of 5.54% per annum. The term facility contains certain restrictions, including the obligation to maintain certain financial ratios. In addition, TVA Group is limited with regard to incurrence of indebtedness, investments, dividends and other payments to shareholders.

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THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

On October 11, 2012, we sold the initial notes in a private placement exempt from the registration requirements of the Securities Act. In connection with the private placement, we entered into a registration rights agreement with the initial purchasers of the initial notes in which we agreed to file a registration statement relating to an offer to exchange the initial notes for exchange notes. A copy of the registration rights agreement has been filed as an exhibit to the registration statement that includes this prospectus. We also agreed to use our commercially reasonable efforts to file the registration statement with the SEC and to cause it to become effective under the Securities Act.

We are conducting the exchange offer to satisfy our obligations under the registration rights agreement. The exchange notes will have terms substantially identical to the initial notes except that the exchange notes will not contain terms with respect to transfer restrictions and registration rights and additional interest payable for the failure to consummate the exchange offer by the dates set forth in the registration rights agreement. Initial notes in an aggregate principal amount of US$850,000,000 were issued on October 11, 2012.

Under the registration rights agreement, we agreed, among other things, to:

• file an exchange offer registration statement with the SEC with respect to a registered offer to exchange, without novation, the initial notes for the exchange notes no later than May 9, 2013;

• use our best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act no later than September 6, 2013; and

• keep the registered exchange offer open for not less than 20 business days after the date notice of the registered exchange offer is mailed to the holders of the initial notes.

Under the registration rights agreement, we also agreed that in the event:

• we are not permitted to consummate the exchange offer because the exchange offer is not permitted by applicable law or SEC policy;

• the exchange offer is not consummated by October 7, 2013; or

• any holder of notes notifies us following consummation of the exchange offer that:

• it is prohibited by law or SEC policy from participating in the exchange offer; or

• it may not resell the exchange notes acquired by it in the exchange offer to the public without delivering a prospectus and the prospectus contained in the exchange offer registration statement is not appropriate or available for such resales; or

• it is a broker-dealer and owns initial notes acquired directly from Quebecor Media or an affiliate of Quebecor Media; then

we will, at our cost, use our best efforts to cause to be filed and to cause the SEC to declare effective a shelf registration statement with respect to the resale of the initial notes and to keep the shelf registration statement effective for up to two years after the effective date of the shelf registration statement.

Pursuant to the registration rights agreement, we will be required to pay special interest if a registration default exists. A registration default will exist if:

• on or prior to May 9, 2013, the exchange offer registration statement has not been filed with the SEC;

• on or prior to Septemebr 6, 2013, the exchange offer registration statement has not been declared effective;

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• on or prior to October 7, 2013, the registered exchange offer has not been consummated;

• we are required to file the shelf registration statement pursuant to the registration rights agreement and:

• the shelf registration statement has not been filed with the SEC on or prior to the 30^th day (or if the 30^th day is not a business day, on the next business day) after the date on which the obligation to file the shelf registration statement arose under the registration rights agreement; or

• the shelf registration statement has not been declared effective on or prior to 60 days (or if the 60^th day is not a business day, on the next business day) after the date on which the obligation to file the shelf registration statement arose under the registration rights agreement; or

• after either the exchange offer registration statement or the shelf registration statement has been declared effective, the exchange offer registration statement or the shelf registration statement ceases to be effective or usable (subject to certain exceptions) in connection with the resales of the initial notes or the exchange notes in accordance with and during the periods specified in the registration rights agreement.

Terms of the Exchange Offer

We are offering, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, to exchange, without novation, up to US$850,000,000 aggregate principal amount of the exchange notes for a like aggregate principal amount of outstanding initial notes. We will accept for exchange any and all initial notes that are properly tendered on or prior to 5:00 p.m., New York City time, on                     , 2013, or such later time and date to which we extend the exchange offer. We will issue US$1,000 principal amount of the new exchange notes in exchange for each US$1,000 principal amount of outstanding initial notes accepted in the exchange offer. You may tender some or all of your initial notes pursuant to the exchange offer; however, initial notes may only be tendered in integral multiples of US$1,000 in principal amount.

The exchange offer is not conditioned upon any minimum aggregate principal amount of initial notes being tendered for exchange.

As of the date of this prospectus, US$850,000,000 in aggregate principal amount of the initial notes is outstanding. This prospectus, together with the letter of transmittal, is being sent to all holders of the initial notes known to us. There will be no fixed record date for determining registered holders of initial notes entitled to participate in the exchange offer. Our obligation to accept initial notes for exchange pursuant to the exchange offer is subject to certain conditions as set forth below under “ – Conditions to the Exchange Offer.”

The exchange agent will act as agent for the tendering holders for the purpose of receiving the exchange notes from us. If any tendered initial notes are not accepted for exchange because of an invalid tender or otherwise, certificates for the unaccepted initial notes will be returned, without expense, to the tendering holder as promptly as practicable after the expiration date.

Holders of the initial notes do not have appraisal rights or dissenters’ rights under the laws of the State of New York or the indenture. We intend to conduct the exchange offer in accordance with the applicable requirements of the Securities Act, the Exchange Act and the rules and regulations under the Securities Act and the Exchange Act.

The exchange notes will evidence the same continuing indebtedness as that evidenced by the initial notes and the exchange will occur without novation.

None of Quebecor Media, our board of directors and our management recommends that you tender or not tender your initial notes in the exchange offer. In addition, no one has been authorized to make any such recommendation. You must make your own decisions whether to participate in the exchange offer and, if you choose to participate, as to the aggregate principal amount of your initial notes to tender, after reading carefully this prospectus and the letter of transmittal. We urge you to consult your financial and tax advisors in making your decision on what action to take. We also urge you to read carefully the section titled “Risk Factors”.

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Expiration Date; Extensions; Amendments

The expiration date of the exchange offer will be 5:00 p.m., New York City time, on                     , 2013, unless we, in our sole discretion, extend the expiration date of the exchange offer. If we extend the expiration date of the exchange offer, the expiration date of the exchange offer will be the latest time and date to which the exchange offer is extended. We will notify the exchange agent by oral or written notice of any extension of the expiration date and make a public announcement of this extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

In addition, we expressly reserve the right, at any time or from time to time, at our sole discretion:

• to delay the acceptance of the initial notes;

• to extend the exchange offer;

• if we determine any condition to the exchange offer has not occurred or has not been satisfied, to terminate the exchange offer; and

• to waive any condition or, subject to the terms of the registration rights agreement, amend the terms of the exchange offer in any manner.

If the exchange offer is amended in a manner we deem to constitute a material change, we will as promptly as practicable distribute to the registered holders of the initial notes a prospectus supplement that discloses the material change. If we take any of the actions described in the previous paragraph, we will as promptly as practicable give oral or written notice of this action to the exchange agent and will make a public announcement of this action.

During any extension of the exchange offer, all initial notes previously tendered will remain subject to the exchange offer and may be accepted for exchange by us. Any initial notes not accepted for exchange for any reason will be returned without expense to the tendering holder as promptly as practicable after the expiration or termination of the exchange offer.

Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by issuing a timely press release to a financial news service.

Conditions to the Exchange Offer

You must tender your initial notes in accordance with the requirements of this prospectus and the letter of transmittal to participate in the exchange offer.

Notwithstanding any other provision of the exchange offer, or any extension of the exchange offer, we are not required to accept for exchange any initial notes, and we may terminate or amend the exchange offer, if we determine at any time prior to the expiration date that the exchange offer violates applicable law or any applicable interpretation of applicable law by the staff of the SEC.

In addition, we will not be obligated to accept for exchange the initial notes of any holder that has not made to us:

• the representations described under “— Procedures for Tendering Initial Notes — Representations Made by Tendering Holders of Initial Notes” and “Plan of Distribution”, and

• any other representations reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registration of the exchange notes under the Securities Act.

The foregoing conditions are for our sole benefit, and we may assert them regardless of the circumstances giving rise to any such condition, or we may waive the conditions, completely or partially, whenever or as many times as we may choose, in our sole discretion. Our failure at any time to exercise any of the above rights will not be a waiver of those rights, and each right will be deemed to be an ongoing right that may be asserted at any time. Any determination by us concerning the events described above will be final and binding upon all parties. If we determine that a waiver of conditions materially changes the exchange offer, this prospectus will be amended or supplemented, and the exchange offer extended, if appropriate, as described under “— Expiration Date; Extensions; Amendments.”

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In addition, at any time when any stop order is threatened or in effect with respect to the registration statement that includes this prospectus or with respect to the qualification of the indenture under the Trust Indenture Act of 1939, we will not accept for exchange any initial notes tendered, and no exchange notes will be issued in exchange for any such initial notes.

Procedures for Tendering Initial notes

Valid Tender

The tender of a holder’s initial notes and our acceptance of those initial notes will constitute a binding agreement between the tendering holder and us upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal. Except as set forth below, if you wish to tender initial notes pursuant to the exchange offer, you must, on or prior to the expiration date:

• transmit a properly completed and duly executed letter of transmittal, together with all other documents required by the letter of transmittal, to the exchange agent at one of the addresses set forth below under “— Exchange Agent;”

• comply with DTC’s Automated Tender Offer Program procedures (described below) to arrange with DTC to cause an agent’s message to be transmitted with the required information (including a book-entry confirmation), to the exchange agent at one of the addresses set forth below under “—Exchange Agent;” or

• comply with the guaranteed delivery procedures described below.

In addition, on or prior to the expiration date:

• the exchange agent must receive the certificates for the initial notes, together with the properly completed and duly executed letter of transmittal;

• the exchange agent must receive a timely confirmation of a book-entry transfer of the initial notes being tendered into the exchange agent’s account at DTC, together with the properly completed and duly executed letter of transmittal or an agent’s message under DTC’s Automated Tender Offer Program, or ATOP; or

• the holder must comply with the guaranteed delivery procedures described below.

The letter of transmittal or agent’s message may be delivered by mail, facsimile, hand delivery or overnight carrier to the exchange agent.

The term “agent’s message” means a message transmitted to the exchange agent by DTC which states that DTC has received an express acknowledgment from a tendering holder that it agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against this tendering holder. The agent’s message forms a part of book-entry transfer.

If you beneficially own initial notes and those notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian, and you wish to tender your initial notes in the exchange offer, you should contact the registered holder as soon as possible and instruct it to tender the initial notes on your behalf and comply with the instructions set forth in this prospectus and the letter of transmittal.

The tender by a holder that is not withdrawn prior to the expiration date will constitute an agreement between such holder and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

If you tender fewer than all of your initial notes, you should fill in the amount of the initial notes tendered in the appropriate box in the letter of transmittal. If you do not indicate the amount tendered in the appropriate box, we will assume you are tendering all initial notes that you hold.

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The method of delivery of the certificates for the initial notes, the letter of transmittal and all other documents is at your sole election and risk. Instead of delivery by mail, it is recommended that you use an overnight or hand delivery service. If delivery is by mail, it is recommended that you use registered mail, properly insured, with return receipt requested. In all cases, sufficient time should be allowed to assure timely delivery. No letters of transmittal or initial notes should be sent directly to us. Delivery is complete when the exchange agent actually receives the items to be delivered. Delivery of documents to DTC in accordance with DTC’s procedures does not constitute delivery to the exchange agent.

Signature Guarantees

Signatures on a letter of transmittal or a notice of withdrawal described below must be guaranteed by a member firm of a registered national securities exchange or of the Financial Industry Regulatory Authority, a commercial bank or trust company having an office or correspondent in the United States or another “eligible institution” within the meaning of Rule 17Ad-15 under the Exchange Act, unless the initial notes tendered pursuant thereto are tendered:

• by a registered holder of the initial notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

• for the account of an eligible institution.

If a signature on a letter of transmittal or a notice of withdrawal is required to be guaranteed, this guarantee must be by an eligible institution.

If the letter of transmittal is signed by a person other than the registered holder of the initial notes, the initial notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument of transfer or exchange, in form satisfactory to us in our sole discretion, duly executed by, the registered holder, with the signature guaranteed by an eligible institution.

If the letter of transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, this person should sign in that capacity when signing. In addition, this person must submit to us, together with the letter of transmittal, evidence satisfactory to us in our sole discretion of his or her authority to act in this capacity unless we waive this requirement.

DTC: Book-Entry Transfer

Any financial institution that is a participant in DTC’s system may use DTC’s ATOP procedures to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically.

For tenders by book-entry transfer of initial notes cleared through DTC, the exchange agent will make a request to establish an account at DTC with respect to the initial notes for purposes of the exchange offer. Any financial institution that is a DTC participant may make book-entry delivery of initial notes by causing DTC to transfer the initial notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC may use the ATOP procedures to tender initial notes pursuant to the exchange offer. Accordingly, any DTC participant may make book-entry delivery of the initial notes by causing DTC to transfer those initial notes into the exchange agent’s account in accordance with DTC’s ATOP procedures for transfer.

Although delivery of the initial notes pursuant to the exchange offer may be effected through book-entry transfer at DTC, you will not have validly tendered your initial notes pursuant to the exchange offer until on or prior to the expiration date either:

• the properly completed and duly executed letter of transmittal, or an agent’s message, together with any required signature guarantees and any other required documents, has been transmitted to and received by the exchange agent at one of the addresses set forth below under “— Exchange Agent;” or

• the guaranteed delivery procedures described below have been complied with.

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Guaranteed Delivery Procedures

If you wish to tender your initial notes and:

• your initial notes are not immediately available;

• time will not permit your initial notes or other required documents to reach the exchange agent before the expiration date; or

• you cannot complete the procedure for book-entry transfer on a timely basis,

you may tender your initial notes according to the guaranteed delivery procedures described in the letter of transmittal. Those procedures require that:

• tender be made by and through an eligible institution;

• on or prior to the expiration date, the exchange agent receive from this eligible institution a properly completed and duly executed letter of transmittal, or an agent’s message, with any required signature guarantees, and a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided:

• setting forth the name and address of the holder of the initial notes being tendered;

• stating that the tender is being made; and

• guaranteeing that within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered initial notes, in proper form for transfer, or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible institution with the exchange agent; and

• the exchange agent receives the certificates for the initial notes, in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

If you wish to tender your initial notes pursuant to the guaranteed delivery procedures, you must ensure that the exchange agent receives a properly completed and duly executed letter of transmittal, or agent’s message, and notice of guaranteed delivery before the expiration date.

Determination of Validity of Tender

We will resolve in our sole discretion all questions as to the validity, form, eligibility (including time of receipt) and acceptance of any initial notes tendered for exchange. Our determination of these questions and our interpretation of the terms and conditions of the exchange offer, including without limitation the letter of transmittal and its instructions, shall be final and binding on all parties. A tender of initial notes is invalid until all defects and irregularities have been cured or waived. Each holder must cure any and all defects or irregularities in connection with his, her or its tender of initial notes within the reasonable period of time determined by us, unless we waive these defects or irregularities. None of us, our affiliates and assigns, the exchange agent and any other person is under any duty or obligation to give notice of any defect or irregularity with respect to any tender of the initial notes, and none of them shall incur any liability for failure to give any such notice.

We reserve the absolute right in our sole and absolute discretion to:

• reject any and all tenders of initial notes determined to be in improper form or unlawful;

• waive any condition of the exchange offer; and

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• waive any condition, defect or irregularity in the tender of initial notes by any holder, whether or not we waive similar conditions, defects or irregularities in the case of other holders.

Representations Made by Tendering Holders of Initial Notes

By tendering, you will represent to us that, among other things:

• you are acquiring the exchange notes in the ordinary course of business;

• you do not have any arrangement or understanding with any person or entity to participate in the distribution of the exchange notes;

• if you are not a broker-dealer, you are not engaged in and do not intend to engage in a distribution of the exchange notes;

• if you are a broker-dealer that will receive exchange notes for your own account in exchange for initial notes that were acquired by you as a result of market-making activities or other trading activities, you will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the exchange notes received in respect of such initial notes pursuant to the exchange offer (see “Plan of Distribution” elsewhere in this prospectus); and

• you are not our “affiliate” as defined in Rule 405 of the Securities Act.

If you are our “affiliate,” as defined under Rule 405 of the Securities Act, or are engaged in or intend to engage in or have an arrangement or understanding with any person to participate in a distribution of the exchange notes, you will represent and warrant that you (i) may not rely on the applicable interpretations of the staff of the SEC and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

In addition, in tendering initial notes, you must warrant in the letter of transmittal or in an agent’s message that:

• you have full power and authority to tender, exchange, sell, assign and transfer initial notes;

• we will acquire good, marketable and unencumbered title to the tendered initial notes, free and clear of all liens, restrictions, charges and other encumbrances; and

• the initial notes tendered for exchange are not subject to any adverse claims or proxies.

You must also warrant and agree that you will, upon request, execute and deliver any additional documents requested by us or the exchange agent to complete the exchange, sale, assignment and transfer of the initial notes.

Acceptance of Initial Notes; Delivery of Exchange Notes

Upon satisfaction or waiver of all of the conditions to the exchange offer, we will accept all initial notes validly tendered, and not withdrawn, on or prior to the expiration date. We will issue the exchange notes to the exchange agent as promptly as practicable after acceptance of the initial notes. See “— Terms of the Exchange Offer.”

For purposes of the exchange offer, we shall be deemed to have accepted validly tendered initial notes for exchange when, as and if we have given oral or written notice of our acceptance to the exchange agent, with written confirmation of any oral notice to be given promptly thereafter.

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Withdrawal Rights

You may withdraw tenders of your initial notes at any time prior to the expiration date.

For a withdrawal to be effective, the exchange agent must receive a written notice of withdrawal from you. A notice of withdrawal must:

• specify the name of the person tendering the initial notes to be withdrawn;

• identify the initial notes to be withdrawn, including the total principal amount of these initial notes; and

• where certificates for the initial notes have been transmitted, specify the name of the registered holder of the initial notes, if different from the name of the person withdrawing the tender of these initial notes.

If you delivered or otherwise identified certificates representing initial notes to the exchange agent, then you must also submit the serial numbers of the particular certificates to be withdrawn and, unless you are an eligible institution, the signature on the notice of withdrawal must be guaranteed by an eligible institution.

If you tendered initial notes as a book-entry transfer, your notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn initial notes and otherwise comply with the procedures of DTC’s Automated Tender Offer Program system.

You may not withdraw or rescind any notice of withdrawal; however, initial notes properly withdrawn may again be tendered at any time on or prior to the expiration date.

We will determine, in our sole discretion, all questions as to the validity, form and eligibility (including time of receipt) of any and all notices of withdrawal, and our determination of these questions shall be final and binding on all parties. Any initial notes properly withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer and will be returned to the holder without cost as soon as practicable after their withdrawal.

Exchange Agent

U.S. Bank National Association is the exchange agent for the exchange offer. You should direct all tendered initial notes, executed letters of transmittal and other related documents to the exchange agent. You should direct all questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery to the exchange agent at the following addresses and telephone numbers:

Registered & Certified Mail:	Regular Mail or Courier:	In Person by Hand Only:
U.S Bank National Association	U.S Bank National Association	U.S Bank National Association
U.S. Bank West Side Flats Operations Center	U.S. Bank West Side Flats Operations Center	U.S. Bank West Side Flats Operations Center
60 Livingston Ave.	60 Livingston Ave.	60 Livingston Ave.
St. Paul, MN 55107	St. Paul, MN 55107	St. Paul, MN 55107
Attn: Specialized Finance	Attn: Specialized Finance	Attn: Specialized Finance
Reference: Quebecor Media Inc.	Reference: Quebecor Media Inc.	Reference: Quebecor Media Inc.
	or
	Facsimile: 216-623-9202 Toll-free telephone: 1-800-934-6802

If you deliver executed letters of transmittal and any other required documents to an address or facsimile number other than those set forth above, your tender is invalid.

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Accounting Treatment

The exchange notes will be recorded at the same carrying value, in U.S. dollars, as the initial notes, and will be translated into Canadian dollars in accordance with IFRS, as reflected in our accounting records on the date of the exchange. Accordingly, we will recognize no gain or loss for accounting purposes upon the closing of the exchange offer. We will amortize the costs of the initial note offering and the exchange offer over the term of the notes.

Fees and Expenses

We will bear the expenses of soliciting tenders in this exchange offer, including fees and expenses of the exchange agent and trustee and accounting, legal, printing and related fees and expenses.

We will not make any payments to brokers, dealers or other persons soliciting acceptances of this exchange offer. However, we will pay the exchange agent reasonable and customary fees for its services and will reimburse the exchange agent for its reasonable out-of-pocket expenses in connection with this exchange offer. We will also pay brokerage houses and other custodians, nominees and fiduciaries their reasonable out-of-pocket expenses for forwarding copies of the prospectus, letters of transmittal and related documents to the beneficial owners of the initial notes and for handling or forwarding tenders for exchange to their customers.

We will pay all transfer taxes, if any, applicable to the exchange of initial notes in accordance with this exchange offer. However, tendering holders will pay the amount of any transfer taxes, whether imposed on the registered holder or any other persons, if:

(1) certificates representing exchange notes or initial notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the notes tendered;

(2) tendered initial notes are registered in the name of any person other than the person signing the letter of transmittal; or

(3) a transfer tax is payable for any reason other than the exchange of the initial notes in this exchange offer.

If you do not submit satisfactory evidence of the payment of any of these taxes or of any exemption from this payment with the letter of transmittal, we will bill you directly the amount of these transfer taxes.

Your Failure to Participate in the Exchange Offer Will Have Adverse Consequences

The initial notes were not registered under the Securities Act or under the securities laws of any state and you may not resell them, offer them for resale or otherwise transfer them unless they are subsequently registered or resold under an exemption from the registration requirements of the Securities Act and applicable state securities laws. If you do not exchange your initial notes for exchange notes in accordance with this exchange offer, or if you do not properly tender your initial notes in this exchange offer, you will not be able to resell, offer to resell or otherwise transfer the initial notes unless they are registered under the Securities Act or unless you resell them, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act.

In addition, except as set forth in this paragraph, you will not be able to obligate us to register the initial notes under the Securities Act. You will not be able to require us to register your initial notes under the Securities Act unless:

(1) you are prohibited by law or SEC policy from participating in the exchange offer; or

(2) you do not receive freely tradable exchange notes in the exchange offer,

in which case the registration rights agreement requires us to file a registration statement for a continuous offer in accordance with Rule 415 under the Securities Act for the benefit of the holders of the initial notes described in this sentence. We do not currently anticipate that we will register under the Securities Act any initial notes that remain outstanding after completion of the exchange offer.

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Resale of the Exchange Notes

Based on interpretations by the SEC staff set forth in no-action letters issued to third parties in similar transactions, such as Exxon Capital Holding Corporation and Morgan Stanley & Co. Incorporated, we believe that a holder of the exchange notes may offer the exchange notes for resale or resell or otherwise transfer the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act, unless this holder:

• is our “affiliate” within the meaning of Rule 405 under the Securities Act;

• is a broker-dealer who purchased initial notes directly from us for resale under Rule 144A or any other available exemption under the Securities Act;

• acquired the exchange notes other than in the ordinary course of this holder’s business; or

• is participating, intends to participate or has an arrangement or understanding with any person to participate in the distribution of the exchange notes.

Accordingly, holders wishing to participate in the exchange offer must make the applicable representations described in “— Procedures for Tendering Initial Notes — Representations Made by Tendering Holders of Initial Notes” above.

Although we are making the exchange offer in reliance on the interpretations by the SEC staff set forth in these no-action letters, we do not intend to seek our own no-action letter from the SEC. Consequently, we cannot assure you that the SEC staff would make a similar determination with respect to the exchange offer as it did in its no-action letters to third parties. If this interpretation is inapplicable and you resell or otherwise transfer any notes without complying with the registration and prospectus delivery requirements of the Securities Act, you may incur liability under the Securities Act. We do not assume or indemnify you against this liability.

You may not rely on the interpretations of the SEC staff in the above-described no-action letters if you are a holder of initial notes who:

• is our “affiliate” as defined in Rule 405 under the Securities Act;

• does not acquire the exchange notes in the ordinary course of business;

• tenders in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of the exchange notes; or

• is a broker-dealer that purchased initial notes from us to resell them pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act;

in the absence of an exemption, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale or other transfer of the exchange notes.

This prospectus may be used for an offer to resell, for the resale or for other retransfer of exchange notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the initial notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for initial notes, where such initial notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it (i) has not entered into any arrangement or understanding with the issuer or an affiliate of the issuer to distribute the exchange notes and (ii) will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the exchange notes. Please read the section captioned “Plan of Distribution” for more details regarding these procedures for the transfer of exchange notes. We have agreed that, for a period of 180 days after the exchange offer is consummated, we will make this prospectus available to any broker-dealer for use in connection with any resale of the exchange notes.

In order to comply with state securities laws, the exchange notes may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. The exchange offer is not being made to, nor will we accept tenders for exchange from, holders of initial notes in any jurisdiction in which the exchange offer or the acceptance of the exchange offer would not be in compliance with the securities laws or blue sky laws of such jurisdiction.

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The notes are not being offered for sale and may not be offered or sold, directly or indirectly, in Canada, or to any resident thereof, except in accordance with the securities laws of the provinces and territories of Canada. We are not required, and do not intend, to qualify by prospectus in Canada the notes, and accordingly, the notes will remain subject to restrictions on resale in Canada.

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DESCRIPTION OF THE NOTES

You can find the definitions of certain terms used in this description under the subheading “— Definitions.” In this description, the words “Quebecor Media” and “we” refer only to Quebecor Media Inc. and not to any of its Subsidiaries, the term “initial notes” refers to the 5 ³/₄% Senior Notes due 2023 that were issued on October 11, 2012 in a private offering, and the term “exchange notes” refers to the 5 ³/₄% Senior Notes due 2023 offered under this prospectus. The term “notes” refers to the initial notes and the exchange notes, collectively.

Quebecor Media issued the initial notes and will issue the exchange notes under an indenture, dated as of October 11, 2012, among Quebecor Media, as issuer, and U.S. Bank National Association, as trustee. The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the notes. Copies of the indenture are available upon request to Quebecor Media at the address indicated under “Additional Information.” In addition, a copy of the indenture has been filed as an exhibit to the registration statement that includes this prospectus.

The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture. The registered holders of the notes are those that own notes registered in their own names on the books that Quebecor Media or the trustee maintains for this purpose, and not those who own beneficial interests in the notes registered in street name or in notes issued in book-entry form through one or more depositaries. Owners of beneficial interests in the notes should read the information contained under the subheading “— Book-Entry, Delivery and Form.”

Brief Description of the Notes — Principal, Maturity and Interest

We issued US$850,000,000 aggregate principal amount of initial notes on October 11, 2012, and an aggregate principal amount of exchange notes equal to up to US$850,000,000 is being issued in this exchange offer. We are offering to exchange, without novation, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, the exchange notes for all of the initial notes. The terms of the exchange notes will be substantially identical to the terms of the initial notes, except that, inter alia, the exchange notes will not be subject to restrictions on transfer or registration rights, unless held by certain broker-dealers, Quebecor Media’s affiliates, or certain other persons.

Quebecor Media may issue additional notes from time to time under the same indenture (“Additional Notes”). Any issuance of Additional Notes will be subject to compliance with the indenture, including the limitations described under “— Covenants —Incurrence of Indebtedness and Issuance of Preferred Shares.” Any Additional Notes that we issue in the future will be identical in all respects to the notes that we are issuing now, except that notes issued in the future will have different issuance prices and issuance dates. The notes and any Additional Notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Because, however, any Additional Notes may not be fungible with the notes offered hereby for U.S. federal income tax purposes, they may have a different CUSIP number or numbers and may be represented by a different global note or notes. We will issue notes only in fully registered form without coupons, in denominations of US$2,000 and integral multiples of US$1,000 in excess thereof. The notes will mature on January 15, 2023.

Interest on the notes accrues at the rate of 5 ³/₄% per annum and will be payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2012. Quebecor Media will make each interest payment to the holders of record on the immediately preceding June 1 or December 1, as the case may be. Interest on the exchange notes accrues from the most recent date to which interest has been paid with respect to the initial notes or, if no interest has been paid with respect to such notes, from and including the date of original issuance. Holders whose outstanding initial notes are accepted for exchange in the exchange offer will be deemed to have waived the right to receive interest accrued on the outstanding initial notes. Interest on the notes is computed on the basis of a 360-day year comprised of twelve 30-day months.

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The interest rate on the initial notes will increase if a registration default occurs. We refer to any interest payable as a result of this increase in interest rate as “special interest.” You should refer to the description under the section of this prospectus captioned “The Exchange Offer — Purpose and Effect of the Exchange Offer” for a more detailed description of the circumstances under which the interest rate would increase.

Ranking

The notes will be:

• senior unsecured obligations of Quebecor Media;

• equal in rank with all of Quebecor Media’s existing and future unsecured and unsubordinated indebtedness;

• effectively junior in right of payment to all of Quebecor Media’s existing and future secured indebtedness, including any borrowings under the Credit Agreement (as defined below), to the extent of the value of the assets securing that indebtedness; and

• effectively junior in right of payment to all indebtedness and other obligations (including trade payables) of Quebecor Media’s Subsidiaries.

The notes are obligations exclusively of Quebecor Media. Substantially all of the operations of Quebecor Media are conducted through Subsidiaries. Therefore, Quebecor Media’s ability to service its debt, including the notes, will depend on the earnings of its Subsidiaries and their ability to distribute those earnings as dividends, loans or other payments to Quebecor Media. If their ability to make these distributions were restricted, by law or otherwise, then Quebecor Media would not be able to use the cash flow of its Subsidiaries to make payments on the notes.

Quebecor Media principally relies on its shareholder’s claim on the assets of its Subsidiaries. This shareholder’s claim is junior to the claims that creditors (including trade creditors) of Quebecor Media’s Subsidiaries have against those Subsidiaries. Holders of the notes will be creditors only of Quebecor Media. All the existing and future liabilities of such Subsidiaries, including any claims of trade creditors and preferred shareholders, will be effectively senior to the notes. The liabilities, including contingent liabilities, of Quebecor Media’s Subsidiaries may be significant.

Although the indenture contains limitations on the amount of additional indebtedness that Quebecor Media and its Restricted Subsidiaries may incur, the amounts of such additional indebtedness could nevertheless be substantial and may be incurred either by Quebecor Media, its Restricted Subsidiaries or by any other Subsidiaries of Quebecor Media. See “— Covenants — Incurrence of Indebtedness and Issuance of Preferred Shares.” The notes are unsecured obligations of Quebecor Media. Secured Indebtedness of Quebecor Media, including under the Credit Agreement, effectively will be senior to the notes to the extent of the value of the assets securing such Indebtedness.

As at December 31, 2012, Quebecor Media and its consolidated subsidiaries had $4.4 billion of long-term debt outstanding, Quebecor Media, excluding its subsidiaries, had $31.9 million of senior secured long-term debt, and Quebecor Media’s subsidiaries had an aggregate of $4.4 billion of total liabilities, excluding intercompany liabilities.

As of the Issue Date and as of the expiration date of this exchange offer, all of Quebecor Media’s Subsidiaries will be “Restricted Subsidiaries.” Unrestricted Subsidiaries will not be subject to any of the restrictive covenants in the indenture. Under the circumstances described below under the subheading “— Covenants — Designation of Restricted and Unrestricted Subsidiaries,” Quebecor Media will be permitted to designate certain of its other Subsidiaries as Unrestricted Subsidiaries.

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Methods of Receiving Payments on the Notes

While the book-entry system is in effect, payments in respect of the notes, including principal, interest and special interest, if any, will be made to the holders in the manner indicated under “— Book-Entry, Delivery and Form.”

Paying Agent and Registrar for the Notes

The trustee has been appointed to act as paying agent and registrar under the indenture. Quebecor Media may change the paying agent or registrar without prior notice to any holder, and Quebecor Media or any of its Subsidiaries may act as paying agent or registrar. The registrar shall maintain the register on behalf of Quebecor Media.

Transfer and Exchange

A holder may transfer or exchange its notes in accordance with the indenture. In connection with any transfer or exchange of the notes, the registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and Quebecor Media may require a holder to pay any taxes and fees required by law or permitted by the indenture. Quebecor Media is not required to register the transfer of or to exchange any note selected for redemption. Also, Quebecor Media is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

Optional Redemption

Quebecor Media may redeem the notes, in whole or in part, on one or more occasions, upon not less than 30 nor more than 60 days’ notice at a redemption price equal to the greater of:

(a) 100% of the principal amount of the notes to be redeemed, and

(b) as determined by a Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued to (but excluding) the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined below) plus 100 basis points.

plus, in each case, accrued and unpaid interest to (but excluding) the redemption date.

“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

“Comparable Treasury Issue” means the United States Treasury security selected by a Quotation Agent as having a maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such notes.

“Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (2) if the trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such quotations.

“Quotation Agent” means the Reference Treasury Dealer appointed by the trustee after consultation with Quebecor Media.

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“Reference Treasury Dealer” means (1) Merrill Lynch, Pierce, Fenner & Smith Incorporated and its successors; provided, however, that if the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), Quebecor Media will substitute therefor another Primary Treasury Dealer; and (2) any other Primary Treasury Dealers selected by the trustee after consultation with Quebecor Media.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the trustee, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the trustee by such Reference Treasury Dealer at 11:00 a.m. (New York City time) on the third Business Day preceding such redemption date.

See also “— Selection and Notice” below.

Redemption for Changes in Withholding Taxes

If Quebecor Media becomes obligated to pay any Additional Amounts (as defined below) because of a change in the laws or regulations of Canada or any Canadian Taxing Authority, or a change in any official position regarding the application or interpretation thereof, in either case that is publicly announced or becomes effective on or after the Issue Date, Quebecor Media may, at any time, upon not less than 30 nor more than 60 days’ notice, redeem all, but not part, of the notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, provided that at any time that the aggregate principal amount of the notes outstanding is greater than US$20.0 million, any holder of the such notes may, to the extent that it does not adversely affect Quebecor Media’s after-tax position, at its option, waive Quebecor Media’s compliance with the covenant described under the caption “— Payment of Additional Amounts” with respect to such holder’s notes; provided, further, that if any holder waives this compliance, Quebecor Media may not redeem that holder’s notes pursuant to this paragraph.

Prior to any redemption of the notes pursuant to the preceding paragraph, Quebecor Media shall deliver to the trustee an officers’ certificate stating that Quebecor Media is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of redemption have occurred. Quebecor Media will be bound to redeem the notes on the date fixed for redemption.

Payment of Additional Amounts

All payments made by or on behalf of Quebecor Media on or with respect to the notes pursuant to the indenture will be made without withholding or deduction for any Taxes imposed by any Canadian Taxing Authority, unless required by law or the interpretation or administration thereof by the relevant Canadian Taxing Authority. If Quebecor Media (or any other payor) is required to withhold or deduct any amount on account of Taxes imposed by any Canadian Taxing Authority from any payment made under or with respect to any notes that are outstanding on the date of the required payment, it will:

(1) make this withholding or deduction;

(2) remit the full amount deducted or withheld to the relevant government authority in accordance with applicable law;

(3) pay such additional amounts, which we refer to as “Additional Amounts,” as may be necessary so that the net amount received by each holder after this withholding or deduction (including any deduction or withholding for Additional Amounts) will not be less than the amount the holder would have received if these Taxes had not been withheld or deducted;

(4) furnish to the holders, within 30 days after the date the payment of any Taxes is due, certified copies of tax receipts evidencing this payment by Quebecor Media;

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(5) indemnify and hold harmless each holder (other than an Excluded Holder, as defined below), for the amount of (a) any Taxes paid by each such holder as a result of payments made on or with respect to such notes, (b) any liability (including penalties, interest and expenses) arising from or with respect to these payments and (c) any Taxes imposed with respect to any reimbursement under (a) or (b), but excluding any of these Taxes that are in the nature of Taxes on net income, taxes on capital, franchise taxes, net worth taxes and similar taxes; and

(6) at least 30 days prior to each date on which any payment under or with respect to the notes is due and payable, if Quebecor Media becomes obligated to pay Additional Amounts with respect to such payment, deliver to the trustee an officers’ certificate stating the amounts so payable and such other information necessary to enable the trustee to pay these Additional Amounts to holders on the payment date.

Notwithstanding the foregoing, no Additional Amounts will be payable to a person (an “Excluded Holder”) in respect of a payment made to such person under or with respect to a note:

(1) if such person is subject to such Taxes by reason of its being connected with Canada or any province or territory thereof otherwise than by the mere acquisition, holding or disposition of such notes or the receipt of payments thereunder or enforcement of rights thereunder;

(2) if such person waives its right to receive Additional Amounts;

(3) if Quebecor Media does not deal at arm’s length, within the meaning of the Income Tax Act (Canada), with such person at the time of such payment; or

(4) if Quebecor Media does not deal at arm’s length, within the meaning of the Income Tax Act (Canada), with another person to whom Quebecor Media has an obligation to pay an amount in respect of such notes.

Whenever in the indenture there is mentioned, in any context, the payment of principal, premium, if any, redemption price, Change of Control Payment, offer price and interest, special interest or any other amount payable under or with respect to any note, this mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable.

Quebecor Media will pay any present or future stamp, court, documentary or other similar taxes, charges or levies that arise in any jurisdiction from the execution, delivery or registration of, or enforcement of rights under, the indenture or any related document.

The obligations described under this heading will survive any termination, defeasance or discharge of the indenture and will apply mutatis mutandis to any jurisdiction in which any successor Person to Quebecor Media is organized or any political subdivision or taxing authority or agency thereof or therein.

It is understood for purposes of this heading that the determination of Additional Amounts shall be made at the beneficial owner level.

Mandatory Redemption

Except as described below under the caption “— Offers to Repurchase at the Option of Holders,” Quebecor Media is not required to make mandatory redemption or sinking fund payments with respect to the notes.

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Offers to Repurchase at the Option of Holders

Change of Control

Within 30 days following any Change of Control Triggering Event, Quebecor Media will mail a notice to the trustee and each holder describing the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase notes on the date specified in the notice (such date the “Change of Control Payment Date”), pursuant to the procedures required by the indenture and described in the notice. If a Change of Control Triggering Event occurs, each holder of notes will have the right to accept Quebecor Media’s offer to repurchase that holder’s notes, in whole or in part, equal to US$2,000 or an integral multiple of US$1,000 in excess thereof, pursuant to a Change of Control Offer on the terms set forth in the indenture. In the Change of Control Offer, Quebecor Media will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and special interest, if any, on the notes repurchased, to the date of purchase. The Change of Control Payment Date shall be no earlier than 30 days and no later than 60 days from the date the notice is mailed. Quebecor Media will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with these provisions of the indenture, Quebecor Media will comply with the applicable securities laws and regulations and will be deemed not to have breached its obligations under these provisions of the indenture by virtue of this conflict.

On the Change of Control Payment Date, Quebecor Media will, to the extent lawful:

(1) accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;

(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and

(3) deliver or cause to be delivered to the trustee the notes so accepted together with an officers’ certificate stating the aggregate principal amount of notes or portions of notes being purchased by Quebecor Media.

The paying agent will promptly mail or wire transfer to each holder of notes properly tendered the Change of Control Payment for these notes, and Quebecor Media will execute and issue, and the trustee will promptly authenticate and deliver, or cause to be transferred by book-entry, to each such holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided, however, that each such new note will be in a principal amount of US$2,000 or an integral multiple of US$1,000 thereof.

Quebecor Media will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The provisions described above that require Quebecor Media to make a Change of Control Offer following a Change of Control Triggering Event will be applicable regardless of whether any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control Triggering Event, the indenture does not contain provisions that permit the holders of the notes to require that Quebecor Media repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

Quebecor Media will not be required to make a Change of Control Offer upon a Change of Control Triggering Event if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by Quebecor Media and purchases all Notes or portions of Notes properly tendered and not withdrawn under such Change of Control Offer.

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The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of Quebecor Media and its Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the obligation of Quebecor Media to make a Change of Control Offer and the ability of a holder of notes to require Quebecor Media to repurchase such notes pursuant to such an offer as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Quebecor Media and its Restricted Subsidiaries taken as a whole to another Person or group may be uncertain.

In addition to the obligations of Quebecor Media under the indenture with respect to the notes in the event of a Change of Control Triggering Event, the Credit Agreement provides that certain change of control events with respect to Quebecor Media would constitute a default under such agreement. In addition, any future credit facilities or other agreements relating to Indebtedness to which Quebecor Media becomes a party may prohibit or otherwise limit Quebecor Media from purchasing any notes prior to their maturity, and may also provide that certain change of control events with respect to Quebecor Media would constitute a default thereunder. In the event a Change of Control Triggering Event occurs at a time when Quebecor Media is prohibited from purchasing notes, Quebecor Media could seek the consent of its lenders to the purchase of notes or could attempt to refinance the borrowings that contain such restrictions. If Quebecor Media does not obtain such a consent or repay such borrowings, Quebecor Media will remain prohibited or otherwise restricted under the terms of those credit facilities and other agreements from purchasing Notes. In addition, there can be no assurance that Quebecor Media will have sufficient financial resources available to purchase the notes at the time of a Change of Control Triggering Event. In such case, Quebecor Media’s failure to purchase tendered notes would constitute an Event of Default under the indenture. See “Risk Factors — Risks Relating to the Notes — We may not be able to finance a change of control offer as required by the indenture because we may not have sufficient funds at the time of the change of control or our credit facilities may not allow the repurchases.”

Asset Sales

Quebecor Media will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) Quebecor Media, or the Restricted Subsidiary, as the case may be, receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2) at least 75% of the consideration received in the Asset Sale by Quebecor Media or such Restricted Subsidiary is in the form of cash, Cash Equivalents, Replacement Assets or a combination thereof. For purposes of this provision, each of the following shall be deemed to be cash:

(a) any Indebtedness or other liabilities, as shown on Quebecor Media’s or such Restricted Subsidiary’s most recent balance sheet, of Quebecor Media or any Restricted Subsidiary (other than contingent liabilities and Indebtedness that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets pursuant to a written agreement that releases Quebecor Media or such Restricted Subsidiary from further liability with respect to such Indebtedness or liabilities; and

(b) any securities, notes or other obligations received by Quebecor Media or any such Restricted Subsidiary from such transferee that are converted within 90 days of the applicable Asset Sale by Quebecor Media or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion.

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Within 365 days after the receipt of any Net Proceeds from an Asset Sale, Quebecor Media or any of its Restricted Subsidiaries may apply those Net Proceeds at its option:

(1) (a) to permanently repay or reduce Indebtedness, other than Subordinated Indebtedness, of Quebecor Media and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; or (b) to permanently repay or reduce Indebtedness of any of Quebecor Media’s Restricted Subsidiaries;

(2) to acquire, or enter into a binding agreement to acquire, all or substantially all of the assets (other than cash, Cash Equivalents and securities) of any Person engaged in a Permitted Business; provided, however, that any such commitment shall be subject only to customary conditions (other than financing), and such acquisition shall be consummated no later than 180 days after the end of this 365-day period;

(3) to acquire, or enter into a binding agreement to acquire, Voting Stock of a Person engaged in a Permitted Business from a Person that is not a Subsidiary of Quebecor Media; provided, however, that such commitment shall be subject only to customary conditions (other than financing) and such acquisition shall be consummated no later than 180 days after the end of such 365-day period; and provided, further, however, that (a) if the Net Proceeds are from the sale of assets of Quebecor Media or any of its Restricted Subsidiaries or the Equity Interests of any of its Restricted Subsidiaries, after giving effect thereto, the Person so acquired becomes a Restricted Subsidiary of Quebecor Media; and (b) such acquisition is otherwise made in accordance with the indenture, including, without limitation, the covenant described under the caption “—Covenants — Restricted Payments;”

(4) to acquire, or enter into a binding agreement to acquire, previously issued and outstanding Voting Stock of a non-Wholly Owned Restricted Subsidiary of Quebecor Media (a) from a Person that is not an Affiliate of Quebecor Media or (b) in a brokered transaction through the facilities of a stock exchange; provided, however, that such commitment shall be subject only to customary conditions (other than financing) and such acquisition shall be consummated no later than 180 days after the end of such 365-day period;

(5) to make capital expenditures; or

(6) to acquire, or enter into a binding agreement to acquire, other long-term assets (other than securities) that are used or useful in a Permitted Business; provided, however, that such commitment shall be subject only to customary conditions (other than financing) and such acquisition shall be consummated no later than 180 days after the end of this 365-day period.

Pending the final application of any Net Proceeds, Quebecor Media may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds.”

When the aggregate amount of Excess Proceeds exceeds $100.0 million, Quebecor Media will make an Asset Sale Offer to all holders of notes and all holders of other Indebtedness that is pari passu in right of payment with the Notes containing provisions similar to those set forth in the indenture relating to the Notes with respect to offers to purchase or redeem with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount of the notes and such other pari passu Indebtedness, plus accrued and unpaid interest and special interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer and all holders of notes have been given the opportunity to tender

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their notes for purchase in accordance with the Asset Sale Offer and the indenture, Quebecor Media may use these Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such other pari passu Indebtedness shall be purchased on a pro rata basis based on the principal amount of notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

Quebecor Media will comply with the requirements of Rule 14e-1 under the Exchange Act and any other applicable securities laws and regulations to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sales provisions of the indenture, Quebecor Media will comply with the applicable securities laws and regulations and will be deemed not to have breached its obligations under the Asset Sale provisions of the indenture by virtue of such conflict.

Selection and Notice

If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption as follows:

(1) if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which such notes are listed; or

(2) if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee shall deem fair and appropriate.

No note of less than US$2,000 will be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the date of redemption to each holder of notes to be redeemed at its registered address. Notices of redemption may not be conditional.

If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the holder thereof upon cancellation of the original note at Quebecor Media’s expense. Notes called for redemption become irrevocably due and payable on the date fixed for redemption. On and after the redemption date, interest will cease to accrue on notes or portions of them called for redemption, provided that the redemption price has been paid or set aside as provided in the indenture.

Covenants

Covenant Termination

The indenture provides that, if, on any date following the Issue Date, (i) the notes reach Investment Grade Status and (ii) no Default has occurred and is continuing under the indenture, then, beginning on that date and continuing at all times thereafter regardless of any subsequent changes in the ratings of the notes, Quebecor Media will be under no obligation to comply with the terms and conditions described under the captions “— Asset Sales,” “— Restricted Payments,” “— Incurrence of Indebtedness and Issuance of Preferred Shares,” “— Dividend and Other Payment Restrictions Affecting Subsidiaries,” “— Transactions with Affiliates”, “— Designation of Restricted and Unrestricted Subsidiaries” and subparagraph (4) under the caption “— Merger, Consolidation or Sale of Assets,” and such covenants shall cease to apply to the notes. There can be no assurance that the notes will ever achieve or maintain Investment Grade Status.

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Restricted Payments

Quebecor Media will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of Quebecor Media’s or any of its Restricted Subsidiaries’ Equity Interests, including, without limitation, any payment in connection with any merger or consolidation involving Quebecor Media or any of its Restricted Subsidiaries, or to the direct or indirect holders of Quebecor Media’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such, other than dividends, payments or distributions (a) payable in Equity Interests (other than Disqualified Stock or Back-to-Back Securities) of Quebecor Media or (b) to Quebecor Media or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, to the other shareholders of such Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by Quebecor Media or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on a pro rata basis);

(2) purchase, redeem or otherwise acquire or retire for value, including, without limitation, in connection with any merger or consolidation involving Quebecor Media, any Equity Interests of Quebecor Media, other than such Equity Interests of Quebecor Media held by Quebecor Media or any of its Restricted Subsidiaries;

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Back-to-Back Securities or Subordinated Indebtedness of Quebecor Media, except, in the case of Subordinated Indebtedness (other than Back-to-Back Securities), a payment of interest at or within one year of the Stated Maturity of such interest, or principal at or within one year of the Stated Maturity of principal, of such Subordinated Indebtedness; or

(4) make any Restricted Investment;

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and

(2) Quebecor Media would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable fiscal quarter, have been permitted to incur at least US$1.00 of additional Indebtedness, other than Permitted Debt, pursuant to the Debt to Cash Flow Ratio test set forth in the first paragraph of the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Shares;” and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments declared or made by Quebecor Media and its Restricted Subsidiaries after January 17, 2006, excluding Restricted Payments made pursuant to clauses (2), (3), (4), (6), (7), (8), (9), (10) and (11) of the next succeeding paragraph, shall not exceed, at the date of determination, the sum, without duplication, of:

(a) an amount equal to Quebecor Media’s Consolidated Cash Flow from January 1, 2006 to the end of Quebecor Media’s most recently ended full fiscal quarter for which internal financial statements are available, taken as a single accounting period, less 1.5 times Quebecor Media’s Consolidated Interest Expense from January 1, 2006 to the end of Quebecor Media’s most recently ended full fiscal quarter for which internal financial statements are available, taken as a single accounting period (or, if such amount for such period is a deficit, minus 100% of such deficit); plus

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(b) an amount equal to 100% of Capital Stock Sale Proceeds, less any such Capital Stock Sale Proceeds used in connection with:

(i) an Investment made pursuant to clause (6) of the definition of “Permitted Investments;” or

(ii) an incurrence of Indebtedness pursuant to clause (8) of the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Shares;” plus

(c) to the extent that any Restricted Investment that was made after January 17, 2006 is sold for cash or otherwise liquidated or repaid for cash (except to the extent any such payment or proceeds are included in the calculation of Consolidated Cash Flow), the lesser of (i) the cash return of capital with respect to such Restricted Investment, less the cost of disposition, if any, and (ii) the initial amount of such Restricted Investment; plus

(d) to the extent that the Board of Directors of Quebecor Media designates any Unrestricted Subsidiary that was designated as such after January 17, 2006 as a Restricted Subsidiary, the lesser of (i) the aggregate fair market value of all Investments owned by Quebecor Media and its Restricted Subsidiaries in such Subsidiary at the time such Subsidiary was designated as an Unrestricted Subsidiary and (ii) the then aggregate Fair Market Value of all Investments owned by Quebecor Media and its Restricted Subsidiaries in such Unrestricted Subsidiary; plus

(e) $215.0 million.

The preceding provisions will not prohibit:

(1) so long as no Default has occurred and is continuing or would be caused thereby, the payment of any dividend within 60 days after the date the dividend is declared, if at that date of declaration such payment would have complied with the provisions of the indenture; provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments;

(2) so long as no Default has occurred and is continuing or would be caused thereby, the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Indebtedness of Quebecor Media or of any Equity Interests of Quebecor Media in exchange for, or out of the net cash proceeds of the substantially concurrent sale, other than to a Subsidiary of Quebecor Media or an employee stock ownership plan or to a trust established by Quebecor Media or any Subsidiary of Quebecor Media for the benefit of its employees, of, Equity Interests of Quebecor Media (other than Disqualified Stock or Back-to-Back Securities); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(b) of the preceding paragraph;

(3) so long as no Default has occurred and is continuing or would be caused thereby, the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness of Quebecor Media with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

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(4) any payment by Quebecor Media or a Restricted Subsidiary of Quebecor Media to any one of the other of them;

(5) so long as no Default has occurred and is continuing or would be caused thereby, the repurchase, redemption or other acquisition or retirement for value by Quebecor Media of any Equity Interests of Quebecor Media held by any member of Quebecor Media’s, or any of its Subsidiaries’, management pursuant to Quebecor Media’s stock option plans; provided, however, that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed the sum of (a) US$5.0 million in any fiscal year (with unused amounts in any fiscal year being permitted to be carried over to succeeding fiscal years) and (b) Quebecor Media’s liability under Quebecor Media’s stock option plans as of January 17, 2006;

(6) payments of any kind made in connection with or in respect of Back-to-Back Securities; provided, however, that to the extent such payments are made to Affiliates of Quebecor Media (other than its Subsidiaries), all corresponding payments required to be paid by such Affiliates pursuant to the related Back-to-Back Securities shall be received, immediately prior to or concurrently with any such payments, by all applicable Quebecor Media Entities;

(7) so long as no Default has occurred and is continuing or would be caused thereby, any Tax Benefit Transaction;

(8) so long as no Default has occurred and is continuing or would be caused thereby, management fees or similar expenses payable to shareholders of Quebecor Media in an aggregate amount not to exceed US$2.0 million in any calendar year;

(9) (a) the payment of any dividend pursuant to the terms of Disqualified Stock of Quebecor Media or Preferred Shares of any of its Restricted Subsidiaries, provided, that such dividend is included in Quebecor Media’s Consolidated Interest Expense; and (b) the payment of principal at or within one year of the Stated Maturity of Disqualified Stock of Quebecor Media or Preferred Shares of any of its Restricted Subsidiaries, provided¸ that such Disqualified Stock or Preferred Shares was incurred or permitted to be incurred pursuant to the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Shares;”

(10) the repurchase by any of Quebecor Media’s non-Wholly Owned Restricted Subsidiaries of its previously issued and outstanding Equity Interests for consideration equal to the Fair Market Value of the repurchased Equity Interests;

(11) so long as no Default has occurred and is continuing or would be caused thereby, other Restricted Payments in an aggregate amount not to exceed US$200.0 million; and

(12) so long as no Default has occurred and is continuing or would be caused thereby and the Debt to Cash Flow Ratio is no greater than 5.5 to 1.0 (calculated on a pro forma basis as if such payment, including any related financing transaction, had occurred at the beginning of the applicable Measurement Period), the purchase, redemption or other acquisition or retirement for value, of Equity Interests of Quebecor Media held by Caisse de dépôt et placement du Québec or any of its Affiliates.

The amount of any Restricted Payment, other than those effected in cash, shall be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by Quebecor Media or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

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For purposes of this “Restricted Payments” covenant, if (i) any Affiliate of Quebecor Media ceases to be the obligor under or issuer of any Back-to-Back Securities and a Person other than an Affiliate of Quebecor Media becomes the obligor thereunder (or the issuer of any Back-to-Back Preferred Shares) or (ii) any Restricted Subsidiary that is an obligor under or issuer of any Back-to-Back Securities ceases to be a Restricted Subsidiary other than by consolidation or merger with Quebecor Media or another Restricted Subsidiary, then Quebecor Media or such Restricted Subsidiary shall be deemed to have made a Restricted Payment in an amount equal to the accreted value of such Back-to-Back Debt (or the subscription price of any Back-to-Back Preferred Shares) at the time of the assumption thereof by such other Person or at the time such Restricted Subsidiary ceases to be a Restricted Subsidiary.

As of December 31, 2012, we would have been permitted to make Restricted Payments of approximately $3.8 billion under the indenture governing the notes and under the other respective indentures governing the other outstanding senior notes we have issued.

Incurrence of Indebtedness and Issuance of Preferred Shares

Quebecor Media will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness, including Acquired Debt, and Quebecor Media will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any Preferred Shares; provided, however, that Quebecor Media may incur Indebtedness, including Acquired Debt, or issue Disqualified Stock, and its Restricted Subsidiaries may incur Indebtedness, including Acquired Debt, or issue Preferred Shares, if Quebecor Media’s Debt to Cash Flow Ratio at the time of incurrence of such Indebtedness or the issuance of such Disqualified Stock or Preferred Shares, after giving pro forma effect to such incurrence or issuance as of such date and to the use of proceeds therefrom, taking into account any substantially concurrent transactions related to such incurrence, as if the same had occurred at the beginning of the applicable Measurement Period, would have been no greater than 6.0 to 1.0.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness or issuances of Preferred Shares or Disqualified Stock, which we refer to collectively as “Permitted Debt”:

(1) the incurrence by Quebecor Media of Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of Quebecor Media thereunder) not to exceed an aggregate of $1.75 billion, less the aggregate amount of all Net Proceeds of Asset Sales applied by Quebecor Media since the Issue Date to permanently repay Indebtedness under a Credit Facility (and, in the case of any revolving credit Indebtedness, to effect a corresponding commitment reduction thereunder) pursuant to the covenant described under the caption “— Offers to Repurchase at the Option of Holders — Asset Sales;”

(2) the incurrence by Quebecor Media and its Restricted Subsidiaries of Existing Indebtedness;

(3) the incurrence by Quebecor Media of Indebtedness represented by the initial notes and the C$ Notes issued on the Issue Date and the exchange notes to be issued in exchange for the initial notes and in exchange for any Additional Notes;

(4) the incurrence by Quebecor Media or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of Quebecor Media or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (a) US$200.0 million and (b) 5.0% of Quebecor Media’s Consolidated Net Tangible Assets at any time outstanding;

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(5) the incurrence by Quebecor Media or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness, other than intercompany Indebtedness, that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (2), (3) and (4) of this paragraph;

(6) the incurrence by Quebecor Media or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Quebecor Media and any of its Restricted Subsidiaries; provided, however, that:

(a) if Quebecor Media is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the notes;

(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Quebecor Media or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either Quebecor Media or a Restricted Subsidiary of Quebecor Media will be deemed, in each case, to constitute an incurrence of such Indebtedness by Quebecor Media or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

(7) the issuance by Quebecor Media of Disqualified Stock or the issuance by any of its Restricted Subsidiaries of Preferred Shares solely to or among Quebecor Media and any of its Restricted Subsidiaries; provided, however, that (i) any subsequent issuance or transfer of Equity Interests that results in any such Disqualified Stock or Preferred Shares being held by a Person other than Quebecor Media or a Restricted Subsidiary and (ii) any sale or other transfer of any such Disqualified Stock or Preferred Shares to a Person that is not either Quebecor Media or a Restricted Subsidiary will be deemed, in each case, to constitute an issuance of such Disqualified Stock by Quebecor Media or Preferred Shares by any of its Restricted Subsidiaries, as the case may be, that was not permitted by this clause (7);

(8) the incurrence by Quebecor Media or any Restricted Subsidiary of Hedging Obligations that are incurred in the ordinary course of business of Quebecor Media or such Restricted Subsidiary and not for speculative purposes; provided, however, that, in the case of:

(a) any Interest Rate Agreement, the notional principal amount of such Hedging Obligation does not exceed the principal amount of the Indebtedness to which such Hedging Obligation relates; and

(b) any Currency Exchange Protection Agreement, such Hedging Obligation does not increase the principal amount of Indebtedness of Quebecor Media or such Restricted Subsidiary outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(9) the Guarantee by Quebecor Media or any of its Restricted Subsidiaries of Indebtedness of Quebecor Media or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant;

(10) the incurrence by Quebecor Media or any of its Restricted Subsidiaries of Indebtedness in relation with the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

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(11) the incurrence by Quebecor Media or any of its Restricted Subsidiaries of Indebtedness owed to any Person under or in connection with any worker’s compensation, health, disability, employee benefits or equity compensation plan or property, casualty or liability insurance provided by such Person to Quebecor Media or its Restricted Subsidiaries pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;

(12) the incurrence by Quebecor Media or any of its Restricted Subsidiaries of Indebtedness arising from agreements of Quebecor Media or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price, earn out obligations or other similar obligations, in each case incurred or assumed in connection with a transaction permitted by the indenture;

(13) Non-Recourse Accounts Receivable Entity Indebtedness incurred by any Accounts Receivable Entity in a Qualified Receivables Transaction;

(14) the incurrence by Quebecor Media or any of its Restricted Subsidiaries of Indebtedness, the issuance by Quebecor Media of Disqualified Stock or the issuance by any of Quebecor Media’s Restricted Subsidiaries of Preferred Shares in an aggregate principal amount at any time outstanding not to exceed the greater of (a) US$250.0 million and (b) 6.0% of Quebecor Media’s Consolidated Net Tangible Assets; and

(15) the issuance of Indebtedness, Preferred Shares or Disqualified Stock in connection with a Tax Benefit Transaction.

The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock or Preferred Shares in the form of additional shares of the same class of Disqualified Stock or Preferred Shares (to the extent provided for when the Indebtedness, Disqualified Stock or Preferred Shares on which such interest or dividend is paid was originally issued) will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or Preferred Shares for purposes of this covenant; provided that in each case the amount thereof is for all other purposes included in the Consolidated Interest Expense and Indebtedness of Quebecor Media or its Restricted Subsidiary as accrued.

Quebecor Media will not incur any Indebtedness, including Permitted Debt, that is contractually subordinated in right of payment to any other Indebtedness of Quebecor Media, unless such Indebtedness is also contractually subordinated in right of payment to the notes, on substantially identical terms; provided, however, that no Indebtedness of Quebecor Media shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of Quebecor Media, solely by virtue of collateral or the lack thereof.

Notwithstanding any other provision of this “Incurrence of Indebtedness and Issuance of Preferred Shares” covenant, the maximum amount of Indebtedness that may be incurred pursuant to this covenant will not be deemed to be exceeded, with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies.

For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Shares” covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (15) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, Quebecor Media will be permitted to classify such item of Indebtedness on the date of its incurrence or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which notes are first issued and authenticated under the indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the second paragraph of this covenant.

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Liens

Quebecor Media will not, directly or indirectly, create, incur, assume or suffer to exist or become effective any Lien of any kind on any asset owned at the Issue Date or thereafter acquired, except Permitted Liens, unless Quebecor Media has made or will make effective provision to secure the notes equally and ratably with the obligations of Quebecor Media secured by such Lien for so long as such obligations are secured by such Lien.

Dividend and Other Payment Restrictions Affecting Subsidiaries

Quebecor Media will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Equity Interests to Quebecor Media or any other Restricted Subsidiary, or with respect to any other interest or participation in, or measured by, its profits, or pay any liabilities owed to Quebecor Media or any other Restricted Subsidiary;

(2) make loans or advances, or Guarantee any such loans or advances, to Quebecor Media or any other Restricted Subsidiary; or

(3) transfer any of its properties or assets to Quebecor Media or any other Restricted Subsidiary.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof; provided, however, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such Existing Indebtedness and Credit Facilities, as in effect on the Issue Date; provided, further, however, that if such Existing Indebtedness or Credit Facility could not be amended, modified, restated, renewed, increased, supplemented, refunded, replaced or refinanced on commercially reasonable terms without the inclusion of dividend and other payment restrictions that are materially more restrictive than those contained in such Existing Indebtedness or Credit Facility (as determined in good faith by the Board of Directors of Quebecor Media), Quebecor Media or its Restricted Subsidiary may amend, modify, restate, renew, increase, supplement, refund, replace or refinance such Existing Indebtedness or Credit Facility, provided, that the dividend and other payment restrictions contained therein will not materially impair Quebecor Media’s ability to make payments on the notes (as determined in good faith by the Board of Directors of Quebecor Media);

(2) the indenture and the notes;

(3) applicable law or any applicable rule, regulation or order, or under the terms of any permit or license issued under applicable law or any applicable rule, regulation or order;

(4) any instrument governing Indebtedness or Capital Stock of a Person acquired by Quebecor Media or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred or issued in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided, however, that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred at the time of such acquisition;

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(5) customary non-assignment provisions in leases or other agreements that restrict the assignment of such agreements or rights or non-cash assets thereunder, including, without limitation, customary restrictions imposed on the transfer of intellectual property, in each case entered into in the ordinary course of business;

(6) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (3) of the preceding paragraph;

(7) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition;

(8) Permitted Refinancing Indebtedness; provided, however, that the dividend and other payment restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; provided, further, however, that if such Permitted Refinancing Indebtedness could not be entered into on commercially reasonable terms without the inclusion of dividend and other payment restrictions that are materially more restrictive than those contained in the existing Indebtedness (as determined in good faith by the Board of Directors of Quebecor Media), Quebecor Media or its Restricted Subsidiary may enter into such Permitted Refinancing Indebtedness, provided, that the dividend and other payment restrictions contained therein will not materially impair Quebecor Media’s ability to make payments on the notes (as determined in good faith by the Board of Directors of Quebecor Media);

(9) Liens securing Indebtedness that is permitted to be secured without also securing the notes pursuant to the covenant described under the caption “— Liens” that limit the right of the debtor to dispose of the assets subject to any such Lien;

(10) provisions with respect to the disposition or distribution of assets or property in asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business;

(11) customary provisions in joint venture agreements, shareholders’ agreements and other similar agreements entered into in the ordinary course of business;

(12) customary restrictions imposed by customers under contracts entered into in the ordinary course of business;

(13) Non-Recourse Accounts Receivable Entity Indebtedness or other contractual requirements of an Accounts Receivable Entity in connection with a Qualified Receivables Transaction; provided that such restrictions apply only to such Accounts Receivables Entity or the receivables which are subject to the Qualified Receivables Transaction; and

(14) any Indebtedness or any agreement pursuant to which such Indebtedness was issued if (a) the encumbrance or restriction applies only upon a payment or financial covenant default or event of default contained in such Indebtedness or agreement, (b) such encumbrance or restriction is not materially more disadvantageous to the holders of the notes than is customary in comparable financings (as determined in good faith by the Board of Directors of Quebecor Media) and (c) such encumbrance or restriction will not materially impair Quebecor Media’s ability to make payments on the notes (as determined in good faith by the Board of Directors of Quebecor Media).

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Merger, Consolidation or Sale of Assets

Quebecor Media may not, directly or indirectly, (i) consolidate, merge or amalgamate with or into another Person, whether or not Quebecor Media is the surviving corporation, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Quebecor Media and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless, in either case,

(1) either (a) Quebecor Media is the surviving corporation, or (b) the Person formed by or surviving any such consolidation, merger or amalgamation (if other than Quebecor Media) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state of the United States, the District of Columbia, Canada or any province or territory of Canada;

(2) the Person formed by or surviving any such consolidation, merger or amalgamation (if other than Quebecor Media) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made expressly assumes all the obligations of Quebecor Media under the notes, the indenture and, if applicable, the Registration Rights Agreement, pursuant to agreements reasonably satisfactory to the trustee;

(3) immediately after giving effect to such transaction no Default or Event of Default exists; and

(4) Quebecor Media or the Person formed by or surviving any such consolidation, merger or amalgamation, if other than Quebecor Media, or to which such sale, assignment, transfer, conveyance or other disposition has been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable fiscal quarter, be permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Debt to Cash Flow Ratio test set forth in the first paragraph of the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Shares.”

In addition, Quebecor Media will not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Clause (4) of the preceding paragraph above of this “Merger, Consolidation or Sale of Assets” covenant will not apply to a merger, consolidation or amalgamation, or a sale, assignment, transfer, conveyance or other disposition of assets, between or among Quebecor Media and any of its Restricted Subsidiaries.

Transactions with Affiliates

Quebecor Media will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer, exchange or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate, officer or director of Quebecor Media, each, an Affiliate Transaction, unless:

(1) such Affiliate Transaction is on terms that are no less favorable to Quebecor Media or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by Quebecor Media or such Restricted Subsidiary with an unrelated Person; and

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(2) Quebecor Media delivers to the trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$75.0 million, (a) a resolution of the Board of Directors of Quebecor Media, set forth in an officers’ certificate stating that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors of Quebecor Media; or (b) an opinion as to the fairness to Quebecor Media or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing in the United States or Canada.

The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1) payments pursuant to any employment agreement, collective bargaining agreement, employee benefit plan or other compensation, indemnity, incentive or similar arrangement entered into by Quebecor Media or any of its Restricted Subsidiaries in the ordinary course of business, which represent customary and reasonable consideration (as determined in good faith by the Board of Directors of Quebecor Media);

(2) transactions between or among Quebecor Media and/or its Restricted Subsidiaries;

(3) transactions with a Person that is an Affiliate of Quebecor Media solely because Quebecor Media owns an Equity Interest in such Person, provided such transactions are on terms that are no less favorable to Quebecor Media or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by Quebecor Media or such Restricted Subsidiary with an unrelated Person;

(4) payment of reasonable directors fees to Persons who are not otherwise Affiliates of Quebecor Media;

(5) sales of Equity Interests of Quebecor Media, other than Disqualified Stock or Back-to-Back Securities, to Affiliates of Quebecor Media;

(6) any agreement or arrangement as in effect on the Issue Date or any amendment thereto or any transaction contemplated thereby, including pursuant to any amendment thereto, in any replacement agreement or arrangement thereto so long as any such amendment or replacement agreement or arrangement is not more disadvantageous to Quebecor Media or its Restricted Subsidiaries, as the case may be, in any material respect than the original agreement as in effect on the Issue Date;

(7) Restricted Payments that are permitted by the provisions of the indenture described under the caption “— Restricted Payments;”

(8) Permitted Investments;

(9) transactions effected as part of a Qualified Receivables Transaction; and

(10) any Tax Benefit Transaction.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors of Quebecor Media may designate any Subsidiary to be an Unrestricted Subsidiary if such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

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(2) does not own any Equity Interests of any Restricted Subsidiary of Quebecor Media, or hold any Liens on any property of Quebecor Media or any of its Restricted Subsidiaries;

(3) is not party to any agreement, contract, arrangement or understanding with Quebecor Media or any of its Restricted Subsidiaries unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Quebecor Media or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Quebecor Media;

(4) is a Person with respect to which neither Quebecor Media nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results;

(5) has not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Quebecor Media or any of its Restricted Subsidiaries;

(6) has at least one director on its Board of Directors that is not a director or executive officer of Quebecor Media or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or executive officer of Quebecor Media or any of its Restricted Subsidiaries; and

(7) that designation would not cause a Default or Event of Default.

Any designation of a Subsidiary of Quebecor Media as an Unrestricted Subsidiary shall be evidenced to the trustee by filing with the trustee a certified copy of the resolution of the Board of Directors giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described under the caption “— Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Preferred Shares of such Subsidiary shall be deemed to be issued and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of Quebecor Media as of such date, and, if such Preferred Shares are not permitted to be issued or such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Shares,” Quebecor Media will be in default of such covenant.

If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by Quebecor Media and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will either reduce the amount available for Restricted Payments under the first paragraph of the covenant described above under the caption “— Restricted Payments” or reduce the amount available for future Investments under one or more clauses of the definition of Permitted Investments, as Quebecor Media shall determine. That designation will be permitted only if such Investment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

The Board of Directors of Quebecor Media may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that (i) such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Quebecor Media of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if such Indebtedness is permitted under the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Shares,” calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable Measurement Period; (ii) all outstanding Investments owned by such Unrestricted Subsidiary will be deemed to be made as of the time of such designation and such Investments shall only be permitted if such Investments would be permitted under the covenant described above under the caption “— Restricted Payments;” and (iii) no Default or Event of Default would be in existence immediately following such designation.

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Reports

For so long as any notes are outstanding and Quebecor Media is required to file or furnish reports pursuant to Section 13(a) or 15(d) of the Exchange Act, Quebecor Media shall file with the SEC and furnish to the holders of the notes and the trustee:

(1) within 120 days after the end of each fiscal year, annual reports on Form 20-F or 40-F, as applicable, or any successor form; and

(2) (a) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 10-Q, or any successor form, or (b) within 60 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 6-K, or any successor form, which in each case, regardless of applicable requirements, shall, at a minimum, contain a “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and, with respect to any such reports, a reconciliation to U.S. GAAP if required by applicable SEC rules.

Each such report shall be deemed to be delivered to the holders of the notes and the trustee if Quebecor Media either files (or furnishes, as the case may be) such report with the SEC pursuant to the preceding paragraph through the SEC’s EDGAR filing system (or successor thereto), posts such report on its public website or furnishes such report to the trustee. If Quebecor Media is no longer required to file or furnish such reports with the SEC and no longer does so, Quebecor Media shall instead furnish to the holders of the notes and the trustee:

(1) within 120 days after the end of each fiscal year, annual audited financial statements; and

(2) within 60 days after the end of each of the first three fiscal quarters of each fiscal year, unaudited interim financial statements;

in each case together with a “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which shall be deemed to be delivered to the holders of the notes and the trustee if Quebecor Media furnishes such reports to the trustee or posts them on its public website.

For so long as any notes remain outstanding, Quebecor Media will furnish to the holders of the notes the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Payments for Consent

Quebecor Media will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid and is paid to all holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Accounting Changes

For the purposes of the indenture, any failure to comply with any covenant or agreement under the indenture (other than the covenants described under “— Restricted Payments” and the first paragraph under “— Incurrence of Indebtedness and Issuance of Preferred Shares”) that results solely from a change in GAAP, shall, to the extent that the underlying transactions, items or incurrences (including, without limitation, Liens and items of Indebtedness) (or portions thereof) cannot be reclassified in a manner that results in compliance with the relevant covenant or agreement, be permitted and shall, solely to the extent of the non-compliance, be deemed not to be a failure to comply with such covenant or agreement.

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Events of Default and Remedies

Each of the following is an Event of Default:

(1) default for 30 days in the payment when due of interest on, or with respect to, the notes;

(2) default in payment, when due at Stated Maturity, upon acceleration, redemption, required repurchase or otherwise, of the principal of, or premium, if any, on the notes;

(3) failure by Quebecor Media or any of its Restricted Subsidiaries to comply with the provisions described under the captions “— Offers to Repurchase at the Option of Holders” or “— Covenants — Merger, Consolidation or Sale of Assets;”

(4) failure by Quebecor Media for 90 days after written notice thereof has been given to Quebecor Media by the trustee or to Quebecor Media and the trustee by the holders of at least 25% of the aggregate principal amount of the notes outstanding to comply with the covenants or agreements described under “— Covenants — Reports”;

(5) failure by Quebecor Media or any Restricted Subsidiary for 60 days after written notice thereof has been given to Quebecor Media by the trustee or to Quebecor Media and the trustee by the holders of at least 25% of the aggregate principal amount of the notes outstanding to comply with any of its other covenants or agreements in the indenture;

(6) default under any mortgage, hypothec, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Quebecor Media or any of its Restricted Subsidiaries, or the payment of which is Guaranteed by Quebecor Media or any of its Restricted Subsidiaries, whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default:

(a) is caused by a failure to pay principal of, or interest or premium, if any, on, such Indebtedness when due at the final maturity of such Indebtedness, which is referred to as a Payment Default; or

(b) results in the acceleration of such Indebtedness prior to its Stated Maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates US$25.0 million or more;

(7) failure by Quebecor Media or any of its Restricted Subsidiaries to pay final, non-appealable judgments aggregating in excess of US$25.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;

(8) certain events of bankruptcy or insolvency described in the indenture with respect to Quebecor Media or any of its Significant Subsidiaries that are Restricted Subsidiaries or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary.

In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Quebecor Media, any of its Significant Subsidiaries that are Restricted Subsidiaries, or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately.

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Holders of the notes may not enforce the indenture or the notes except as provided in the indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the notes notice of any continuing Default or Event of Default if and so long as it determines in good faith that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or special interest.

The holders of at least a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may on behalf of the holders of all the notes waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default (i) in the payment of interest or special interest on, or the principal of, the notes and (ii) in respect of a covenant or provision which under the indenture cannot be modified or amended without the consent of the holder of each note affected by such modification or amendment. The holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee. However, the trustee may refuse to follow any direction that conflicts with law or the indenture, that may involve the trustee in personal liability, or that the trustee determines in good faith may be unduly prejudicial to the rights of holders of notes not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from holders of notes. A holder may not pursue any remedy with respect to the indenture and/or the notes unless:

(1) the holder gives the trustee written notice of a continuing Event of Default;

(2) the holders of at least 25% in aggregate principal amount of outstanding notes make a written request to the trustee to pursue the remedy;

(3) such holder or holders offer the trustee indemnity satisfactory to the trustee against any costs, liability or expense;

(4) the trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and

(5) during such 60-day period, the holders of a majority in aggregate principal amount of the outstanding notes do not give the trustee a direction that is inconsistent with the request.

In the case of any Event of Default with respect to the notes occurring by reason of any willful action or inaction taken or not taken by or on behalf of Quebecor Media with the intention of avoiding payment of the premium that Quebecor Media would have had to pay if Quebecor Media then had elected to redeem the notes pursuant to the optional redemption provisions of the indenture, an equivalent premium will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes.

Quebecor Media is required to deliver to the trustee within 120 days after the end of each fiscal year a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, Quebecor Media is required to deliver to the trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Shareholders

No past, present or future director, officer, employee, incorporator or shareholder of Quebecor Media, as such, shall have any liability for any obligations of Quebecor Media under the notes or the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under applicable securities laws.

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Legal Defeasance and Covenant Defeasance

Quebecor Media may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes, which we refer to as Legal Defeasance, except for:

(1) the rights of holders of outstanding notes to receive payments in respect of the principal of, or interest or premium and Additional Amounts and special interest, if any, on such notes when such payments are due solely from the trust referred to below;

(2) Quebecor Media’s obligation with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the trustee and Quebecor Media’s obligations in connection therewith; and

(4) the Legal Defeasance provisions of the indenture.

In addition, Quebecor Media may, at its option and at any time, elect to have the obligations of Quebecor Media released with respect to certain covenants that are described in the which we refer to as Covenant Defeasance, and thereafter any omission to comply with those covenants shall not constitute a Default or Event of Default with respect to the notes issued thereunder. In the event Covenant Defeasance occurs, certain events, not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events with respect to Quebecor Media, described under the caption “— Events of Default and Remedies” will no longer constitute an Event of Default with respect to the notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) Quebecor Media must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient to pay the principal of, or interest and premium and Additional Amounts and special interest, if any, on the outstanding notes on the Stated Maturity or on the applicable date of redemption, as the case may be, and Quebecor Media must specify whether the notes are being defeased to maturity or to a particular date of redemption;

(2) in the case of Legal Defeasance, Quebecor Media shall have delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that (a) Quebecor Media has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred and Quebecor Media shall have delivered to the trustee an opinion of counsel in Canada reasonably acceptable to the trustee confirming that the holders of such outstanding notes will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax purposes as a result of such Legal Defeasance and will be subject to Canadian federal, provincial or territorial income tax (including withholding tax) on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, Quebecor Media shall have delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as

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a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred and Quebecor Media shall have delivered to the trustee an opinion of counsel in Canada reasonably acceptable to the trustee confirming that the holders of such outstanding notes will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax purposes as a result of such Covenant Defeasance and will be subject to Canadian federal, provincial or territorial income tax (including withholding tax) on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and be continuing either (a) on the date of such deposit or (b) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit, other than, in each case, a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit;

(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument to which Quebecor Media or any of its Subsidiaries is a party or by which Quebecor Media or any of its Subsidiaries is bound;

(6) Quebecor Media must have delivered to the trustee an opinion of counsel to the effect that, (a) assuming no intervening bankruptcy of Quebecor Media between the date of deposit and the 91st day following the deposit and assuming that no holder of the notes is an “insider” of Quebecor Media under applicable bankruptcy law, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, and (b) the creation of the defeasance trust does not require registration under the Investment Company Act of 1940;

(7) Quebecor Media must deliver to the trustee an officers’ certificate stating that the deposit was not made by Quebecor Media with the intent of preferring the holders of the notes over the other creditors of Quebecor Media with the intent of defeating, hindering, delaying or defrauding creditors of Quebecor Media or others;

(8) if the notes are to be redeemed prior to their Stated Maturity, Quebecor Media must deliver to the trustee irrevocable instructions to redeem all of the notes on the specified redemption date; and

(9) Quebecor Media must deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, Quebecor Media and the trustee may amend or supplement the indenture or the notes with the consent of the holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the notes), and any existing Default or Event of Default (except a continuing Default or Event of Default (i) in the payment of interest or special interest on, or the principal of, the notes and (ii) in respect of a covenant or provision under which the indenture cannot be modified or amended without the consent of the holder of each note affected by such modification or amendment) or compliance with any provision of the indenture or such notes may be waived with the consent of the holders of at least a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes).

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Without the consent of each holder of notes, an amendment or waiver may not (with respect to any notes held by a non-consenting holder):

(1) reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the Stated Maturity of any note or alter the provisions with respect to the redemption of the notes;

(3) reduce the rate of or change the time for payment of interest, including special interest, if any, on any note;

(4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or special interest, if any, on such notes, except a rescission of acceleration of such notes by the holders of at least a majority in aggregate principal amount of such notes and a waiver of the payment default that resulted from such acceleration;

(5) make any note payable in money other than that stated in the notes;

(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of, or interest or premium or special interest, if any, on the notes, or to institute suit for the enforcement of any payment on or with respect to such holders’ notes;

(7) amend, change or modify the obligation of Quebecor Media to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with the “— Offers to Repurchase at the Option of Holders — Asset Sales” covenant after the obligation to make such Asset Sale Offer has arisen or the obligation of Quebecor Media to make and consummate a Change of Control Offer in the event of a Change of Control Triggering Event in accordance with the “— Offers to Repurchase at the Option of Holders — Change of Control” covenant after such Change of Control Triggering Event has occurred, including, in each case, amending, changing or modifying any definition relating thereto;

(8) except as otherwise permitted under the “— Covenants — Merger, Consolidation and Sale of Assets” covenant, consent to the assignment or transfer by Quebecor Media of any of their rights or obligations under the indenture;

(9) subordinate the notes to any other obligation of Quebecor Media;

(10) amend or modify the provisions described under the caption “— Payment of Additional Amounts;” or

(11) make any change in the preceding amendment and waiver provisions.

Notwithstanding the preceding, without the consent of any holder of notes, Quebecor Media and the trustee may amend or supplement the indenture and the notes:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated notes in addition to or in place of certificated notes;

(3) to provide for the assumption of the obligations of Quebecor Media to holders of notes in the case of a merger, consolidation, or amalgamation or sale of all or substantially all of the assets of Quebecor Media; provided, however, that Quebecor Media delivers to the trustee:

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(a) an opinion of counsel to the effect that holders of the notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such assumption by a successor corporation and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such assumption had not occurred, and

(b) an opinion of counsel in Canada to the effect that holders of the notes will not recognize income, gain or loss for Canadian federal, provincial or territorial tax purposes as a result of such assumption by a successor corporation and will be subject to Canadian federal, provincial or territorial taxes (including withholding taxes) on the same amounts, in the same manner and at the same times as would have been the case if such assumption had not occurred;

(4) to make any change that would provide any additional rights or benefits to the holders of the notes or that does not adversely affect the legal rights under the indenture of any such holder;

(5) provide for the issuance of Additional Notes in accordance with the indenture;

(6) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended; or

(7) to conform the text of the indenture or the notes to any provision of this “Description of Notes” to the extent such provision in this “Description of Notes” was intended to be a verbatim recitation of a provision is such indenture or the notes, as set forth in an Officer’s Certificate.

Satisfaction and Discharge

The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when:

(1) either:

(a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has theretofore been deposited in trust and thereafter repaid to Quebecor Media, have been delivered to the trustee for cancellation; or

(b) all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and Quebecor Media has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders of the notes, cash in U.S. dollars, non-callable U.S. Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation for principal, premium and Additional Amounts and accrued interest to the date of maturity or redemption;

(2) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which Quebecor Media is a party or by which Quebecor Media is bound;

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(3) Quebecor Media has paid or caused to be paid all sums payable by it under the indenture; and

(4) Quebecor Media has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the date of redemption, as the case may be.

In addition, in each case, Quebecor Media must deliver an officers’ certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Concerning the Trustee

If the trustee becomes a creditor of Quebecor Media, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

The holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default shall occur and be continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his or her own affairs. Subject to such provisions, the trustee will not be under an obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless such holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with this request.

Additional Information

Anyone who receives this prospectus may obtain a copy of the indenture without charge by writing to Quebecor Media Inc., 612 St-Jacques Street, Montréal, Québec, Canada H3C 4M8.

Governing Law

The indenture and the notes are governed by and construed in accordance with the laws of the State of New York.

Enforceability of Judgments

Since substantially all of the assets of Quebecor Media are outside the United States, any judgments obtained in the United States against Quebecor Media, including judgments with respect to the payment of principal, premium, interest, special interest, Additional Amounts, Change of Control Payment, offer price, redemption price or other amounts payable under the notes, may not be collectible within the United States. Quebecor Media’s head office is in Québec and its assets are located principally in Québec.

A court of competent jurisdiction in the Province of Quebec will, upon motion, recognize and, where applicable, declare enforceable, a final and conclusive judgment in personam of a federal or state court located in the Borough of Manhattan in the City of New York (the “New York Court”) for a sum certain that is not subject to ordinary remedy under New York law and is not impeachable as void or voidable under the laws of the State of New York (“New York Laws”), with respect to a claim arising out of the indenture or the notes without reconsideration of the merits of the judgment subject to the following: (i) the New York Court rendering such judgment had jurisdiction over the subject matter and the parties, as determined under the laws of the Province of Quebec, over the judgment debtor and the subject matter of the action (although submission by Quebecor Media in the indenture to the non-exclusive jurisdiction of the New York Court will be sufficient for that purpose); (ii) such judgment is final and enforceable in the

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jurisdiction in which it was rendered and is not subject to appeal; (iii) the judgment was not rendered in contravention of the fundamental principles of procedure and the outcome of such judgment is not manifestly inconsistent with public order as understood in international relations, as that term is applied by the courts of the Province of Quebec; (iv) a Quebec court may stay its ruling if there is another action pending in any jurisdiction between the same parties, based on the same facts and having the same object or if there is another subsisting judgment in any jurisdiction meeting the necessary conditions for recognition in the Province of Quebec relating to an action between the same parties, based on the same facts and having the same object; (v) the enforcement of such judgment does not constitute, directly or indirectly, the enforcement of foreign revenue, taxation, expropriatory, penal or other laws of a public nature; (vi) under the Currency Act (Canada), a court of competent jurisdiction in the Province of Quebec may only give judgment in Canadian dollars, and, in enforcing a foreign judgment for a sum of money in foreign currency, a court of competent jurisdiction in the Province of Quebec converts the sum into Canadian currency at the rate of exchange prevailing on the date the judgment became enforceable at the place where it was rendered; (vii) the action or motion based upon or to recognize and enforce the judgment is commenced in the Province of Quebec within the applicable prescription period; (viii) the judgment is not contrary to any order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada) or by the Competition Tribunal under the Competition Act (Canada) in respect of certain judgments defined therein; (ix) the action or motion in the courts of the Province of Quebec on such judgment of the New York Court may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, winding-up, moratorium or other similar laws of general application affecting the enforceability of creditor’s rights; and (x) if the judgment of the New York Court is rendered by default, the plaintiff must prove that the act of procedure initiating the proceedings was duly served on the defendant (in accordance with the laws of the place where such judgment was rendered, i.e., New York Laws), and a court of competent jurisdiction in the Province of Quebec may refuse recognition or enforcement of the judgment if the defendant proves that, owing to the circumstances, it was unable to learn of the act of procedure or it was not given sufficient time to offer its defense.

Quebecor Media has been advised by its counsel, Norton Rose Canada LLP, that they know of no reason under the present laws of the Province of Quebec for avoiding recognition of judgments of a New York Court under the indenture or the notes based upon “public order” as understood in international relations, as such term is applied by a court of competent jurisdiction in the Province of Quebec.

Book-Entry, Delivery and Form

Except as described below, we will initially issue the exchange notes in the form of one or more registered exchange notes in global form without coupons. We will deposit each global note on the date of the closing of this exchange offer with, or on behalf of, DTC in New York, New York, and register the exchange notes in the name of DTC or its nominee, or will leave these notes in the custody of the trustee.

DTC Procedures

For your convenience, we are providing you with a description of the operations and procedures of DTC, the Euroclear System (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. Quebecor Media takes no responsibility for these operations and procedures and urges you to contact the respective system or its participants directly to discuss these matters. DTC has advised us that it is a limited-purpose trust company created to hold securities for its participating organizations and to facilitate the clearance and settlement of transactions in those securities between its participants through electronic book-entry changes in the accounts of these participants. These direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and other organizations. Access to DTC’s system is also indirectly available to other entities that clear through or maintain a direct or indirect custodial relationship with a direct participant. DTC may hold securities beneficially owned by other persons only through its participants and the ownership interests and transfers of ownership interests of these other persons will be recorded only on the records of the participants and not on the records of DTC.

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DTC has also advised us that, in accordance with its procedures, upon deposit of the global notes, it will credit the accounts of the direct participants with an interest in the global notes, and it will maintain records of the ownership interests of these direct participants in the global notes and the transfer of ownership interests by and between direct participants. DTC will not maintain records of the ownership interests of, or the transfer of ownership interests by and between, indirect participants or other owners of beneficial interests in the global notes. Both direct and indirect participants must maintain their own records of ownership interests of, and the transfer of ownership interests by and between, indirect participants and other owners of beneficial interests in the global notes.

Investors in the global notes may hold their interests in the notes directly through DTC if they are direct participants in DTC or indirectly through organizations that are direct participants in DTC. Investors in the global notes may also hold their interests in the notes through Euroclear and Clearstream if they are direct participants in those systems or indirectly through organizations that are participants in those systems. Euroclear and Clearstream will hold omnibus positions in the global notes on behalf of the Euroclear participants and the Clearstream participants, respectively, through customers’ securities accounts in Euroclear’s and Clearstream’s names on the books of their respective depositories. These depositories, in turn, will hold these positions in their names on the books of DTC. All interests in a global note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of those systems. The laws of some states require that some persons take physical delivery in definitive certificated form of the securities that they own. This may limit or curtail the ability to transfer beneficial interests in a global note to these persons. Because DTC can act only on behalf of direct participants, which in turn act on behalf of indirect participants and others, the ability of a person having a beneficial interest in a global note to pledge its interest to persons or entities that are not direct participants in DTC or to otherwise take actions in respect of its interest, may be affected by the lack of physical certificates evidencing the interests.

Except as described below, owners of interests in the global notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or holders of these notes under the indenture for any purpose.

Payments with respect to the principal of and interest on any notes represented by a global note registered in the name of DTC or its nominee on the applicable record date will be payable by the trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the global note representing these notes under the indenture. Under the terms of the indenture, we and the trustee will treat the persons in whose names the notes are registered, including notes represented by global notes, as the owners of the notes for the purpose of receiving payments and for any and all other purposes whatsoever. Payments in respect of the principal and interest on global notes registered in the name of DTC or its nominee will be payable by the trustee to DTC or its nominee as the registered holder under the indenture. Consequently, none of Quebecor Media, the trustee or any agent of Quebecor Media or the trustee has or will have any responsibility or liability for:

(1) any aspect of DTC’s records or any direct or indirect participant’s records relating to or payments made on account of beneficial ownership interests in the global notes or for maintaining, supervising or reviewing any of DTC’s records or any participant’s or indirect participant’s records relating to the beneficial ownership interests in any global note; or

(2) any other matter relating to the actions and practices of DTC or any of its direct or indirect participants.

DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the participants and the indirect participants to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility of the direct or indirect participants and will not be the responsibility of DTC, the trustee or Quebecor Media.

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Neither Quebecor Media nor the trustee will be liable for any delay by DTC or any of its direct or indirect participants in identifying the beneficial owners of the notes, and Quebecor Media and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes, including with respect to the registration and delivery, and the respective principal amounts, of the notes.

Transfers between participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

An owner of beneficial interests in the Global Notes must rely on the procedures of DTC and, if such owner of beneficial interests is not a Participant, on the procedures of the Participant through which it owns its interests, to exercise any rights with respect to the notes. Quebecor Media understands that under existing policies of DTC and industry practices, if Quebecor Media requests any action of owners of beneficial interests in the Global Notes or if any owner of beneficial interests in the Global Notes desires to give any notice or take any action which a registered holder is entitled to give or take with respect to the notes, DTC would authorize the Participant acting on behalf of such owner of beneficial interests to give such notice or to take such action.

Cross-market transfers between the participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of each of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant global note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositaries for Euroclear or Clearstream.

DTC has advised us that it will take any action permitted to be taken by a holder of notes only at the direction of one or more participants to whose account DTC has credited the interests in the global notes and only in respect of such portion of the aggregate principal amount of the notes as to which such participant or participants has or have given such direction. However, if there is an event of default with respect to the notes, DTC reserves the right to exchange the global notes for legended notes in certificated form, and to distribute such notes to its participants.

Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the global notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. None of Quebecor Media or the trustee or any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective direct or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Book-Entry Notes for Certificated Notes

A global note will be exchangeable for definitive notes in registered certificated form, which we refer to as certificated notes, if:

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(1) DTC notifies Quebecor Media that it (a) is unwilling or unable to continue as depositary for the global notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in each case, Quebecor Media fails to appoint a successor depositary within 120 days after the date of such notice;

(2) Quebecor Media, at its option, notifies the trustee in writing that it elects to cause the issuance of the certificated notes, subject to the rules of DTC, which require the consent of each participant; or

(3) there shall have occurred and be continuing a Default or Event of Default with respect to the notes.

In addition, beneficial interests in a global note may be exchanged for certificated notes upon prior written notice given to the trustee by or on behalf of DTC in accordance with the indenture. In all cases, certificated notes delivered in exchange for any global note or beneficial interests in global notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

Exchange of Certificated Notes for Global Notes (Book-Entry)

Initial notes issued in certificated form may be exchanged for beneficial interests in the global note.

Same-Day Settlement and Payment

We expect that the interests in the global notes will be eligible to trade in DTC’s Same-Day Funds Settlement System. As a result, secondary market trading activity in these interests will settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its participants. We expect that secondary trading in any certificated notes will also be settled in immediately available funds. We will make payments in respect of the notes represented by the global notes (including principal, premium, if any, interest and special interest, if any) by wire transfer of immediately available funds to the accounts specified by the holder of the global notes.

We will make all payments of principal, interest and premium and special interest, if any, with respect to certificated notes by wire transfer of immediately available funds to the accounts specified by the holders thereof or, if no such account is specified, by mailing a check to each such holder’s registered address.

Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a global note from a participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised Quebecor Media that cash received in Euroclear or Clearstream as a result of sales of interests in a global note by or through a Euroclear or Clearstream participant to a participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.

Consent to Jurisdiction and Service

The indenture and Registration Rights Agreement provide that Quebecor Media irrevocably appoints CT Corporation System as their respective agent for service of process in any suit, action, or proceeding with respect to the indenture or the notes and for actions brought under U.S. federal or state securities laws brought in any U.S. federal or state court located in the Borough of Manhattan in The City of New York and will submit to the jurisdiction of such courts.

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Definitions

Set forth below are defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“Accounts Receivable Entity” means a Subsidiary of Quebecor Media or any other Person in which Quebecor Media or any of its Restricted Subsidiaries makes an Investment:

(1) that is formed solely for the purpose of, and that engages in no activities other than activities in connection with, financing accounts receivable;

(2) that is designated pursuant to a resolution of the Board of Directors of Quebecor Media as an Accounts Receivable Entity;

(3) no portion of the Indebtedness or any other obligation (contingent or otherwise) of which (a) is at any time Guaranteed by Quebecor Media or any of its Restricted Subsidiaries (excluding Guarantees of obligations (other than any Guarantee of Indebtedness) pursuant to Standard Securitization Undertakings), (b) is at any time recourse to or obligates Quebecor Media or any of its Restricted Subsidiaries in any way, other than pursuant to Standard Securitization Undertakings, or (c) subjects any asset of Quebecor Media or any other Restricted Subsidiary of Quebecor Media, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings (such Indebtedness, “Non-Recourse Accounts Receivable Entity Indebtedness”);

(4) with which neither Quebecor Media nor any of its Restricted Subsidiaries has any material contract, agreement, arrangement or understanding other than contracts, agreements, arrangements and understandings entered into in the ordinary course of business on terms no less favorable to Quebecor Media or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of Quebecor Media in connection with a Qualified Receivables Transaction and fees payable in the ordinary course of business in connection with servicing accounts receivable in connection with such a Qualified Receivables Transaction; and

(5) with respect to which neither Quebecor Media nor any of its Restricted Subsidiaries has any obligation to maintain or preserve the solvency or any balance sheet term, financial condition, level of income or results of operations thereof.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or becomes a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of more than 10% of the Voting Stock of a Person shall be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings.

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“Approved Credit Rating Organization” means any credit rating organization that is either (i) an Approved Credit Rating Organization within the meaning of National Instrument 81-102 — Mutual Funds, or (ii) a “nationally recognized statistical rating organization” registered under the Exchange Act.

“Asset Acquisition” means (a) an Investment by Quebecor Media or any Restricted Subsidiary in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be consolidated or merged with or into Quebecor Media or any Restricted Subsidiary or (b) any acquisition by Quebecor Media or any Restricted Subsidiary of the assets of any Person that constitute substantially all of an operating unit, a division or line of business of such Person or that is otherwise outside of the ordinary course of business.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition, other than in the ordinary course of business, of any assets of Quebecor Media or any of its Restricted Subsidiaries; provided, however, that the sale, conveyance or other disposition of all or substantially all of the assets of Quebecor Media and its Restricted Subsidiaries, taken as a whole, will be governed by the provisions of the indenture described under the caption “— Offers to Repurchase at the Option of Holders — Change of Control” and/or the provisions described under the caption “— Covenants — Merger, Consolidation or Sale of Assets” and not by the provisions of the indenture described under “— Offers to Repurchase at the Option of Holders — Asset Sales;” and

(2) the issuance of Equity Interests of any of Quebecor Media’s Restricted Subsidiaries or the sale by Quebecor Media or any of its Restricted Subsidiaries of Equity Interests in any of its Restricted Subsidiaries.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than US$50.0 million;

(2) a sale, lease, conveyance or other disposition of assets between or among Quebecor Media and its Restricted Subsidiaries;

(3) an issuance of Equity Interests by Quebecor Media or any of its Restricted Subsidiaries to Quebecor Media or another of its Restricted Subsidiaries;

(4) the sale, lease, conveyance or other disposition of equipment, inventory or other assets in the ordinary course of business;

(5) the sale or other disposition of cash or Cash Equivalents;

(6) sales of accounts receivables pursuant to a Qualified Receivables Transaction for the Fair Market Value thereof, including cash in an amount equal to at least 75% of the Fair Market Value thereof;

(7) any transfer of accounts receivable, or a fractional undivided interest therein, by an Accounts Receivable Entity in a Qualified Receivables Transaction;

(8) any Tax Benefit Transaction;

(9) the issuance of Equity Interests of any Public Subsidiary pursuant to any equity compensation plan approved in accordance with the rules and regulations of the primary stock exchange or quotation system on which the Capital Stock of such Public Subsidiary is listed or quoted; provided, however, that the aggregate Fair Market Value for all such issued Equity Interests shall not exceed US$5.0 million in any twelve-month period;

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(10) the issuance of Equity Interests of any of Quebecor Media’s Restricted Subsidiaries; provided, that after such issuance Quebecor Media’s ownership interests in such Restricted Subsidiary, whether directly or through its Restricted Subsidiaries, is at least equal to its ownership interests in such Restricted Subsidiary prior to such issuance;

(11) a Restricted Payment or Permitted Investment that is permitted by the covenant described above under the caption “— Covenants — Restricted Payments”; and

(12) any Asset Swap.

“Asset Swap” means an exchange of assets by Quebecor Media or any of its Restricted Subsidiaries for:

(1) one or more Permitted Businesses;

(2) a controlling equity interest in any Person whose assets consist primarily of one or more Permitted Businesses; provided such Person becomes a Restricted Subsidiary of Quebecor Media; and/or

(3) long-term assets that are used in a Permitted Business in a like-kind exchange or transfer.

“Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.

“Back-to-Back Debt” means any loans made or debt instruments issued as part of a Back-to-Back Transaction and in which each party to such Back-to-Back Transaction, other than a Quebecor Media Entity, executes or has executed a subordination agreement in favor of the holders of the notes in substantially the form attached as an exhibit to the indenture.

“Back-to-Back Preferred Shares” means Preferred Shares issued:

(1) to a Quebecor Media Entity by an Affiliate of Quebecor Media (other than a Quebecor Media Entity) in circumstances where, immediately prior to or after, as the case may be, the issuance of such Preferred Shares, an Affiliate of such Quebecor Media Entity (other than a Quebecor Media Entity) has loaned on an unsecured basis to such Quebecor Media Entity, or an Affiliate of such Quebecor Media Entity (other than a Quebecor Media Entity) has subscribed for Preferred Shares of such Quebecor Media Entity, in an amount equal to, the requisite subscription price for such Preferred Shares;

(2) by a Quebecor Media Entity to one of its Affiliates (other than a Quebecor Media Entity) in circumstances where, immediately prior to or after, as the case may be, the issuance of such Preferred Shares, such Quebecor Media Entity has loaned an amount equal to the proceeds of such issuance to an Affiliate (other than a Quebecor Media Entity) on an unsecured basis; or

(3) by a Quebecor Media Entity to one of its Affiliates (other than a Quebecor Media Entity) in circumstances where, immediately prior to or after, as the case may be, the issuance of such Preferred Shares, such Quebecor Media Entity has used the proceeds of such issuance to subscribe for Preferred Shares issued by an Affiliate (other than a Quebecor Media Entity);

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in each case on terms whereby:

(a) the aggregate redemption amount applicable to the Preferred Shares issued to or by such Quebecor Media Entity is identical:

(i) in the case of (1) above, to the principal amount of the loan made or the aggregate redemption amount of the Preferred Shares subscribed for by such Affiliate;

(ii) in the case of (2) above, to the principal amount of the loan made to such Affiliate; or

(iii) in the case of (3) above, to the aggregate redemption amount of the Preferred Shares issued by such Affiliate;

(b) the dividend payment date applicable to the Preferred Shares issued to or by such Quebecor Media Entity will:

(i) in the case of (1) above, be immediately prior to, or on the same date as, the interest payment date relevant to the loan made or the dividend payment date on the Preferred Shares subscribed for by such Affiliate;

(ii) in the case of (2) above, be immediately after, or on the same date as, the interest payment date relevant to the loan made to such Affiliate; or

(iii) in the case of (3) above, be immediately after, or on the same date as, the dividend payment date on the Preferred Shares issued by such Affiliate;

(c) the amount of dividends provided for on any payment date in the share conditions attaching to the Preferred Shares issued:

(i) to a Quebecor Media Entity in the case of (1) above, will be equal to or in excess of the amount of interest payable in respect of the loan made or the amount of dividends provided for in respect of the Preferred Shares subscribed for by such Affiliate;

(ii) by a Quebecor Media Entity in the case of (2) above, will be less than or equal to the amount of interest payable in respect of the loan made to such Affiliate; or

(iii) by a Quebecor Media Entity in the case of (3) above, will be equal to the amount of dividends in respect of the Preferred Shares issued by such Affiliate;

and provided that, in the case of Preferred Shares issued by a Restricted Subsidiary of Quebecor Media as set forth in clauses (1), (2) and (3) above, each holder of such Preferred Shares under such Back-to-Back Transaction, other than such Restricted Subsidiary, executes or has executed a subordination agreement in favor of the holders of the notes in substantially the form attached as an exhibit to the indenture.

“Back-to-Back Securities” means the Back-to-Back Preferred Shares or the Back-to-Back Debt or both, as the context requires, provided that a Back-to-Back Security issued by any Restricted Subsidiary of Quebecor Media (A) shall provide that (i) such Restricted Subsidiary shall suspend any payment on such Back-to-Back Security until such Restricted Subsidiary receives payment on the corresponding Back-to-Back Security in an amount equal to or exceeding the amount to be paid on the Back-to-Back Security issued by such Restricted Subsidiary and (ii) if the holder of such Back-to-Back Security is paid any amount on or with respect to such Back-to-Back Security by such Restricted Subsidiary, then to the extent such amounts are paid out of proceeds in excess of the corresponding payment received by such Restricted Subsidiary on the corresponding Back-to-Back Security held by it, the holder of such Back-to-Back Security will hold such excess payment in trust for the benefit of such Restricted Subsidiary and will forthwith repay such payment to such Restricted Subsidiary and (B) may provide that, notwithstanding

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clause (A), such Restricted Subsidiary may make payment on such Back-to-Back Security if at the time of payment such Restricted Subsidiary would be permitted to make such payment under the provision of the indenture described under the caption “— Covenants — Restricted Payments;” provided that any payment made pursuant to this clause (B) which is otherwise prohibited under clause (A) would constitute a Restricted Payment.

“Back-to-Back Transactions” means any of the transactions described under the definition of Back-to-Back Preferred Shares.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” shall have corresponding meanings.

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation;

(2) with respect to a partnership, the board of directors or other governing body of the general partner(s) of the partnership; and

(3) with respect to any other Person, the board or committee of such Person serving a similar function.

“C$ Notes” means Quebecor Media’s Canadian dollar denominated notes issued on the Issue Date pursuant to an indenture between Quebecor Media and Computershare Trust Company of Canada.

“Canadian Taxing Authority” means any federal, provincial, territorial or other Canadian government or any authority or agency therein having the power to tax.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

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“Capital Stock Sale Proceeds” means the aggregate net cash proceeds (including cash received when non-cash proceeds have been converted into cash) received by Quebecor Media after January 17, 2006:

(1) as a contribution to the common equity capital or from the issue or sale of Equity Interests of Quebecor Media (other than Disqualified Stock or Back-to-Back Securities); or

(2) from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Quebecor Media that have been converted into or exchanged for such Equity Interests,

other than, in either (1) or (2), Equity Interests (or convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities) sold to a Subsidiary of Quebecor Media.

“Cash Equivalents” means:

(1) United States dollars or Canadian dollars;

(2) investments in securities with maturities of one year or less from the date of acquisition issued or fully Guaranteed by any state, commonwealth, territory or province of the United States of America or Canada, or by any political subdivision or taxing authority thereof, and rated, at the time of acquisition, in the “R-1” category by DBRS (or the equivalent rating issued by any other Approved Credit Rating Organization);

(3) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of US$250.0 million;

(4) repurchase obligations with a term of not more than 60 days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5) commercial paper having, at the time of acquisition, at least a “P-1” rating from Moody’s or at least an “A-1” rating from S&P and in each case maturing within one year after the date of acquisition or with respect to commercial paper in Canada a rating, at the time of acquisition, in the “R-1” category by DBRS (or the equivalent rating issued by any other Approved Credit Rating Organization); and

(6) money market funds at least 90% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition.

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Quebecor Media and its Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than a Permitted Holder or a Related Party of a Permitted Holder;

(2) the adoption of a plan relating to the liquidation or dissolution of Quebecor Media;

(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person, other than a Permitted Holder or a Related Party of a Permitted Holder, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of Quebecor Media, measured by voting power rather than number of shares; or

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(4) during any consecutive two-year period, the first day on which individuals who constituted the Board of Directors of Quebecor Media as of the beginning of such two-year period (together with any new directors who were nominated for election or elected to such Board of Directors with the approval of a majority of the individuals who were members of such Board of Directors, or whose nomination or election was previously so approved at the beginning of such two-year period) cease to constitute a majority of the Board of Directors of Quebecor Media.

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Ratings Event.

“Commodity Price Agreement” means any commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements entered into for the purpose of fixing, hedging or swapping commodity price risk.

“Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus:

(1) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(2) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period, to the extent that any such expense was deducted in computing such Consolidated Net Income; plus

(3) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period to the extent such expense is amortized) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents (i) an accrual of or reserve for cash expenses in any future period or (ii) amortization of a prepaid cash expense that was paid in a prior period to the extent such expense is amortized) of such Person and its Restricted Subsidiaries for such period, to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; plus

(4) solely for the purpose of determining the amount of Indebtedness that may be Incurred under the first paragraph of “Covenants — Incurrence of Indebtedness and Issuance of Preferred Shares,” the amount of income or losses attributable to a non-controlling interest in a non-Wholly Owned Restricted Subsidiary, which was deducted and not added back in calculating Consolidated Net Income of such Person; minus

(5) any interest and other payments made to Persons other than any Quebecor Media Entity in respect of Back-to-Back Securities to the extent such interest and other payments were not deducted in computing such Consolidated Net Income; minus

(6) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP.

“Consolidated Indebtedness” means, with respect to any Person as of any date of determination, without duplication, the total amount of Indebtedness of such Person and its Restricted Subsidiaries,

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including (i) the total amount of Indebtedness of any other Person, to the extent that such Indebtedness has been Guaranteed by the referent Person or one or more of its Restricted Subsidiaries, and (ii) the aggregate liquidation value of all Disqualified Stock of such Person and all Preferred Shares of Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP.

“Consolidated Interest Expense” means, with respect to any Person, for any period, without duplication, the sum of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts, and other fees, and charges incurred in respect of letter of credit or bankers’ acceptance financings), all calculated after taking into account the effect of all Hedging Obligations, (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or any of its Restricted Subsidiaries or secured by a Lien on assets of such Person or any of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon), (iv) the product of (a) all dividend payments on any series of Preferred Shares of such Person or any of its Restricted Subsidiaries, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial, territorial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP, and (v) to the extent not included in clause (iv) above for purposes of GAAP, the product of (a) all dividend payments on any series of Disqualified Stock of such Person or any of its Restricted Subsidiaries, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial, territorial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. Interest and other payments on Back-to-Back Securities will not be included as Consolidated Interest Expense.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided, however, that:

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary (other than an Unrestricted Subsidiary) or that is accounted for by the equity method of accounting shall be included; provided, that the Net Income shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary thereof;

(2) solely for the purpose of determining the amount available for Restricted Payments under clause 3(a) of the first paragraph of “Certain Covenants — Restricted Payments,” the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (unless such approval has been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its equityholders;

(3) the Net Income of any Person acquired during the specified period for any period prior to the date of such acquisition shall be excluded;

(4) the cumulative effect of a change in accounting principles shall be excluded;

(5) the Net Income (or loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the specified Person or one of its Subsidiaries; provided, however, that for purposes of the covenant described under the caption “— Covenants — Restricted Payments,” the Net Income of any Unrestricted Subsidiary will be included to the extent it would otherwise be included under clause (1) of this definition; and

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(6) any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of Quebecor Media or any Restricted Subsidiary shall be excluded, provided that such shares, options or other rights can be redeemed at the option of the holders thereof for Capital Stock of Quebecor Media or Quebecor Media Inc. (other than in each case Disqualified Stock of Quebecor Media).

“Consolidated Net Tangible Assets” means, as of the date of determination, with respect to any Person, on a consolidated basis, the total assets of such Person and its Restricted Subsidiaries after deducting therefrom (a) current liabilities excluding Indebtedness, (b) goodwill, (c) intangible assets, except separately acquired stand-alone intangible assets (such as, without limitation, mobile communication licenses) and internally developed intangible assets (such as, without limitation, software), all as set forth on the most recent consolidated balance sheet of such Person and computed in accordance with GAAP.

“Credit Agreement” means the Credit Agreement, dated as of January 17, 2006, as amended, by and among Quebecor Media Inc., as Borrower, the financial institutions party thereto from time to time, as Lenders, and Bank of America, N.A., as Administrative Agent for the Lenders.

“Credit Facilities” means one or more debt facilities (including, without limitation, the Credit Agreement), commercial paper facilities, or other debt arrangements (including, without limitation, under the indenture), in each case with banks, other institutional lenders or investors, providing for revolving credit loans, term loans, notes, receivables financing (including, to the extent Indebtedness, through the sales of accounts receivables to such lenders or investors or to an Accounts Receivable Entity) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.

“Currency Exchange Protection Agreement” means any foreign exchange contract, currency swap agreement, currency option or other similar agreement or arrangement entered into for the purpose of protecting against fluctuations in currency exchange rates with any commercial bank or other financial institutions having capital and surplus in excess of US$250.0 million at the time the Currency Exchange Protection Agreement is entered into.

“DBRS” means, collectively, DBRS Limited, DBRS, Inc. and DBRS Ratings Limited, or any successor to the rating agency business thereof.

“Debt to Cash Flow Ratio” means, as of any date of determination (the “Determination Date”), the ratio of (a) the Consolidated Indebtedness of Quebecor Media as of such Determination Date to (b) (i) the Consolidated Cash Flow of Quebecor Media’s telecommunications segment as reported in its consolidated financial statements (the “Telecommunications Business”) for the most recently ended fiscal quarter ending immediately prior to such Determination Date for which internal financial statements are available multiplied by four, provided, that if (A) in such fiscal quarter the Consolidated Cash Flow of the Telecommunications Business was reduced by a cash restructuring expense and (B) no similar restructuring expense or other non-recurring cash expense was incurred by the Telecommunications Business in the three fiscal quarters prior to such fiscal quarter, for the purpose of calculating the Consolidated Cash Flow of the Telecommunications Business, such cash restructuring charge shall not be multiplied by four; plus (ii) the Consolidated Cash Flow of Quebecor Media, excluding the Telecommunications Business, for the most recently ended four fiscal quarters ending immediately prior to such Determination Date for which internal financial statements are available (each of the periods referenced to in clauses (i) and (ii), a “Measurement Period”), determined on a pro forma basis after giving effect to all acquisitions or dispositions of assets made by Quebecor Media and its Restricted Subsidiaries from the beginning of the applicable Measurement Period through and including such Determination Date (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of the applicable Measurement Period. For purposes of calculating Consolidated Cash Flow for each Measurement Period immediately prior to the relevant Determination Date, (i) any Person that is a Restricted Subsidiary on the Determination Date (or would become a Restricted Subsidiary on such Determination Date in connection with the transaction that requires the determination of such Consolidated Cash Flow) will be deemed to

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have been a Restricted Subsidiary at all times during the applicable Measurement Period; (ii) any Person that is not a Restricted Subsidiary on such Determination Date (or would cease to be a Restricted Subsidiary on such Determination Date in connection with the transaction that requires the determination of such Consolidated Cash Flow) will be deemed not to have been a Restricted Subsidiary at any time during the applicable Measurement Period; (iii) if Quebecor Media or any of its Restricted Subsidiaries shall have in any manner (x) acquired through an Asset Acquisition or (y) disposed of (including by way of an Asset Sale or the termination or discontinuance of activities constituting such operating business) any operating business during the applicable Measurement Period or after the end of such period and on or prior to such Determination Date, such calculation will be made on a pro forma basis in accordance with GAAP, as if, in the case of an Asset Acquisition, all such transactions (including any related financing transactions) had been consummated on the first day of the applicable Measurement Period, and, in the case of an Asset Sale or termination or discontinuance of activities constituting such operating business, all such transactions (including any related financing transactions) had been consummated prior to the first day of the applicable Measurement Period; (iv) if (A) since the beginning of the applicable Measurement Period, Quebecor Media or any Restricted Subsidiary has incurred any Indebtedness that remains outstanding or has repaid any Indebtedness, or (B) the transaction giving rise to the need to calculate the Debt to Cash Flow Ratio is an incurrence or repayment of Indebtedness, Consolidated Interest Expense for such Measurement Period shall be calculated after giving effect on a pro forma basis to such incurrence or repayment as if such Indebtedness had been incurred or repaid on the first day of such period, provided that, in the event of any such repayment of Indebtedness, Consolidated Cash Flow for such period shall be calculated as if Quebecor Media or such Restricted Subsidiary had not earned any interest income actually earned during such period in respect of the funds used to repay such Indebtedness; and (v) if any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the base interest rate in effect for such floating rate of interest on the Determination Date had been the applicable base interest rate for the entire Measurement Period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of twelve months). For purposes of this definition, any pro forma calculation shall be made in good faith by a responsible financial or accounting officer of Quebecor Media consistent with Article 11 of Regulation S-X of the Securities Act, as such Regulation may be amended.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, (i) Back-to-Back Preferred Shares will not constitute Disqualified Stock and (ii) any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require Quebecor Media to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Quebecor Media may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described under the caption “— Covenants — Restricted Payments.” The term “Disqualified Stock” shall also include any options, warrants or other rights that are convertible into Disqualified Stock or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is 91 days after the date on which the notes mature.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means an offering by Quebecor Media of Equity Interests (other than Disqualified Stock or Back-to-Back Securities) of Quebecor Media however designated and whether voting or non-voting or an equity contribution by a direct or indirect parent company of Quebecor Media.

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“Existing Indebtedness” means Indebtedness of Quebecor Media and its Restricted Subsidiaries in existence on the Issue Date, until such amounts are repaid.

“Fair Market Value” means, with respect to any assets (including securities), the price that could be negotiated in an arm’s-length transaction, for cash, between a willing seller and willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction; provided, however, that if such assets have a Fair Market Value in excess of US$75.0 million, Fair Market Value shall be determined by the Board of Directors of Quebecor Media, as set forth in a resolution, based upon (i) approval by a majority of the disinterested members of the Board of Directors or (ii) an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing in the United States or Canada; provided, further, that no such resolution, approval or opinion shall be required in connection with any Back-to-Back Transaction.

“GAAP” means generally accepted accounting principles, consistently applied, as in effect in Canada from time to time, including, for the avoidance of doubt, IFRS as from its implementation in Canada as of January 1, 2011.

“Guarantee” means, as to any Person, a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness of another Person.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement or Commodity Price Agreement.

“IFRS” means the International Financial Reporting Standards (formerly known as the International Accounting Standards), as set and promoted by the International Accounting Standards Board (formerly known as the International Accounting Standards Committee) and implemented in Canada through the Accounting Recommendations in the Handbook of the Canadian Institute of Chartered Accountants.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

(1) representing principal of and premium, if any, in respect of borrowed money;

(2) representing principal of and premium, if any, evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3) in respect of banker’s acceptances;

(4) representing Capital Lease Obligations of such Person and all Attributable Debt in respect of sale and leaseback transactions entered into by such Person;

(5) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable;

(6) representing the amount of all obligations of such Person with respect to the repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Shares (in each case, valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends); or

(7) representing any Hedging Obligations,

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if and to the extent any of the preceding items (other than letters of credit, Hedging Obligations, Attributable Debt, Disqualified Stock and Preferred Shares) would appear as a liability upon the face of a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock or Preferred Shares which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Shares as if such Disqualified Stock or Preferred Shares were purchased on any date on which Indebtedness shall be required to be determined pursuant to the indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Shares, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Disqualified Stock or Preferred Shares. The term “Indebtedness” will not include Back-to-Back Securities or Standard Securitization Undertakings.

The amount of any Indebtedness described above in clauses (1) through (7) and in the preceding paragraph outstanding as of any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, and shall be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount, and

(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness;

provided, however, that if any Indebtedness denominated in a currency other than Canadian dollars is hedged or swapped through the maturity of such Indebtedness under a Currency Exchange Protection Agreement, the amount of such Indebtedness will be adjusted to the extent of any positive or negative value (to the extent the obligation under such Currency Exchange Protection Agreement is not otherwise included as Indebtedness of such Person) of such Currency Exchange Protection Agreement.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement entered into for the purpose of protecting against fluctuations in interest rates with any commercial bank or other financial institution having capital and surplus in excess of US$250.0 million at the time the Interest Rate Agreement is entered into.

“Investment Grade Status” means a rating of the notes from any two of Moody’s, S&P and DBRS equal to or higher than “Baa3” (or the equivalent) in the case of Moody’s, “BBB–” (or the equivalent) in the case of S&P, and “BBB (low)” (or the equivalent) in the case of DBRS, or, in the event that two or more of the foregoing rating agencies cease to issue ratings in respect of the notes for reasons outside the control of Quebecor Media, the equivalent of such ratings by any other Approved Credit Rating Organizations selected by Quebecor Media to replace one or more of Moody’s, S&P and/or DBRS, as the case may be.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans or other extensions of credit (including Guarantees, but excluding advances to customers or suppliers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of Quebecor Media or its Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business), advances (excluding commission, travel and similar advances to officers and employees made consistent with past practices), capital contributions (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP and include the designation of a Restricted Subsidiary as an Unrestricted Subsidiary. If Quebecor Media or

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any of its Restricted Subsidiaries sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of Quebecor Media such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of Quebecor Media, Quebecor Media shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Investment in such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the third paragraph of the covenant described under the caption “— Covenants — Restricted Payments.” The acquisition by Quebecor Media or any Restricted Subsidiary of Quebecor Media of a Person that holds an Investment in a third Person will be deemed to be an Investment by Quebecor Media or such Restricted Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person in an amount determined as provided in the third paragraph of the covenant described under the caption “— Covenants — Restricted Payments.”

“Issue Date” means October 11, 2012.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, hypothecation, assignment for security or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected or duly published under applicable law, including any conditional sale or capital lease or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of, or agreement to give, any hypothec or any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. Solely for the purposes of determining whether a Lien exists for the purposes of the indenture, a Person shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale or capital lease or other title retention agreement and any lease in the nature thereof (excluding, for the avoidance of doubt, operating leases) and such retention of title by another Person shall constitute a Lien.

“Moody’s” means, collectively, Moody’s Investors Service, Inc. and/or its licensors and affiliates or any successor to the rating agency business thereof.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Shares dividends, excluding, however:

(1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (a) any Asset Sale (without regard to the US$10.0 million limitation set forth in the definition thereof) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

(2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss).

“Net Proceeds” means the aggregate cash proceeds received by Quebecor Media or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (a) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, (b) any relocation expenses incurred as a result of the Asset Sale, (c) taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (d) amounts required to be applied to the repayment of Indebtedness or other liabilities, secured by a Lien on the asset or assets that were the subject of such Asset Sale, or required to be paid as a result of such sale, (e) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP, and (f) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures of Quebecor Media or such Restricted Subsidiary as a result of such Asset Sale.

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“Non-Recourse Debt” means Indebtedness:

(1) as to which neither Quebecor Media nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) other than a pledge of the Equity Interests of an Unrestricted Subsidiary, (b) is directly or indirectly liable as a guarantor or otherwise other than by virtue of a pledge of the Equity Interests of an Unrestricted Subsidiary or (c) constitutes the lender;

(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit, upon notice, lapse of time or both, any holder of any other Indebtedness (other than the notes) of Quebecor Media or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity; and

(3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of Quebecor Media or any of its Restricted Subsidiaries other than as set forth in clause (1).

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Permitted Business” means the businesses conducted by Quebecor Media and its Subsidiaries on the Issue Date, or anything related or ancillary thereto.

“Permitted Holders” means one or more of the following persons or entities:

(1) Quebecor Inc.;

(2) any issue of the late Pierre Péladeau;

(3) any trust having as its sole beneficiaries one or more of the persons or entities listed in clause (2) above, in this clause (3) or in clause (4) below;

(4) any corporation, partnership or other entity controlled, directly or indirectly, by one or more of the persons or entities referred to in clause (2) or (3) above or in this clause (4); and

(5) Caisse de dépôt et placement du Québec, or any corporation, partnership or other entity controlled, directly or indirectly, by Caisse de dépôt et placement du Québec.

“Permitted Investments” means:

(1) any Investment in Quebecor Media or in a Restricted Subsidiary of Quebecor Media;

(2) any Investment in cash or Cash Equivalents;

(3) any Investment by Quebecor Media or any of its Restricted Subsidiaries in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of Quebecor Media;

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Quebecor Media or any of its Restricted Subsidiaries; or

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(c) such Person, which was formed solely for the purpose of acquiring assets of a Permitted Business, is upon acquisition of such assets obligated to convey or otherwise distribute assets to Quebecor Media or any of its Restricted Subsidiaries having a Fair Market Value at least equal to the Investment of Quebecor Media or such Restricted Subsidiary in such Person (net of transaction expenses);

provided, that, in each case, such Person’s primary business is, or the assets acquired by Quebecor Media or any of its Restricted Subsidiaries are used or useful in, a Permitted Business;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described under the caption “— Offers to Repurchase at the Option of Holders — Asset Sales;”

(5) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock or Back-to-Back Securities) of Quebecor Media;

(6) any Investment made in connection with Hedging Obligations entered into in the ordinary course of business of Quebecor Media or any of its Restricted Subsidiaries and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, foreign currency exchange rates or commodity prices, or by reason of fees, indemnifies and compensation payable thereunder;

(7) payroll, travel and similar advances to officers, directors and employees of Quebecor Media and its Restricted Subsidiaries for business-related travel expenses, moving expenses and other similar expenses that are expected at the time of such advances ultimately to be treated as expenses in accordance with GAAP;

(8) any Investment in connection with Back-to-Back Transactions;

(9) any Investment existing on the Issue Date, and any Investment that is an extension, modification, renewal or reinvestment of such existing Investment, provided, that, the Fair Market Value of the new Investment does not exceed the Fair Market Value of the existing Investment at the time it is extended, modified, renewed or reinvested;

(10) any Investment by Quebecor Media or any Restricted Subsidiary of Quebecor Media in an Accounts Receivable Entity or any Investment by an Accounts Receivable Entity in any other Person in connection with a Qualified Receivables Transaction, so long as any Investment in an Accounts Receivable Entity is in the form of a Purchase Money Note or an Equity Interest;

(11) Investments in joint ventures engaged in a Permitted Business not to exceed US$150.0 million.

(12) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made since January 17, 2006 pursuant to this clause (12), not to exceed US$200.0 million in the aggregate outstanding at any one time.

“Permitted Liens” means:

(1) Liens on the assets of Quebecor Media securing Indebtedness and other Obligations of Quebecor Media under Credit Facilities, which Indebtedness was permitted to be incurred pursuant to clause (1) of the second paragraph of the covenant described under the caption “Covenants — Incurrence of Indebtedness and Issuance of Preferred Shares”;

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(2) Liens in favor of Quebecor Media;

(3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated or amalgamated with Quebecor Media, provided that such Liens were in existence prior to the contemplation of such merger, consolidation or amalgamation and do not extend to any assets other than those of the Person merged into or consolidated or amalgamated with Quebecor Media;

(4) Liens on property existing at the time of acquisition thereof by Quebecor Media, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any assets other than such property;

(5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

(6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant described under the caption “— Covenants — Incurrence of Indebtedness and Issuance of Preferred Shares” covering only the assets acquired with such Indebtedness;

(7) Liens existing on the Issue Date;

(8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided, that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;

(9) Liens securing Permitted Refinancing Indebtedness, provided, that any such Lien does not extend to or cover any property, Capital Stock or Indebtedness other than the property, shares or debt securing the Indebtedness so refunded, refinanced or extended;

(10) attachment or judgment Liens not giving rise to a Default or an Event of Default;

(11) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security;

(12) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers’ acceptance, surety and appeal bonds, government contracts, performance and return-of-money bonds and other Liens of a similar nature incurred in the ordinary course of business (including, without limitation, mechanics’, landlords’ or workmen’s compensation Liens and Liens in respect of insurance or benefits and other similar Liens), in each case exclusive of Obligations for the payment of borrowed money;

(13) licenses, permits, reservations, servitudes, easements, rights-of-way and rights in the nature of easements (including, without limiting the generality of the foregoing, licenses, easements, rights-of-way and rights in the nature of easements for railways, sidewalks, public ways, sewers, drains, gas or oil pipelines, steam, gas and water mains or electric light and power, or telephone and telegraph or cable television conduits, poles, wires and cables, reservations, limitations, provisos and conditions expressed in any original grant from any governmental entity or other grant of real or immovable property, or any interest therein) and zoning land use and building restrictions, by-laws, regulations and ordinances of federal, provincial, regional, state, municipal and other governmental authorities in respect of real (immovable) property not interfering, individually or in the aggregate, in any material respect with the use of the affected real (immovable) property for the ordinary conduct of the business of Quebecor Media or any of its Restricted Subsidiaries at such real (immovable) property;

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(14) Liens of franchisors or other regulatory bodies arising in the ordinary course of business;

(15) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof;

(16) Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business, in each case, securing Indebtedness under Hedging Obligations and forward contracts, options, future contracts, future options or similar agreements or arrangements, including mark-to-market transactions designed solely to protect Quebecor Media or any of its Restricted Subsidiaries from fluctuations in interest rates, currencies or the price of commodities;

(17) Liens consisting of any interest or title of licensor in the property subject to a license;

(18) Liens arising from sales or other transfers of accounts receivable which are past due or otherwise doubtful of collection in the ordinary course of business;

(19) Liens on accounts receivable and related assets incurred in connection with a Qualified Receivables Transaction;

(20) Liens on Capital Stock of any Unrestricted Subsidiary;

(21) any extensions, substitutions, replacements or renewals of the foregoing clauses (2) through (20); and

(22) Liens incurred in the ordinary course of business of Quebecor Media with respect to Obligations that do not exceed US$100.0 million at any one time outstanding.

“Permitted Refinancing Indebtedness” means any Indebtedness of Quebecor Media or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of Quebecor Media or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided, however, that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of any reasonably determined premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the notes on terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

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(4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is pari passu in right of payment with the notes, such Permitted Refinancing Indebtedness is pari passu with, or subordinated in right of payment to, the notes; and

(5) such Indebtedness is incurred either by Quebecor Media or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Preferred Shares” means any Capital Stock of a Person, however designated, which entitles the holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person.

“Public Subsidiary” means any of Quebecor Media’s Restricted Subsidiaries that (1) is required to file reports pursuant to the Securities Act (Ontario) and/or is required to file reports pursuant to Section 13 of the Exchange Act and (2) has Capital Stock listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange or the NASDAQ National Market.

“Purchase Money Note” means a promissory note of an Accounts Receivable Entity to Quebecor Media or any of its Restricted Subsidiaries, which note must be repaid from cash available to the Accounts Receivable Entity, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts paid in connection with the purchase of newly generated receivables.

“Qualified Receivables Transaction” means any transaction or series of transactions entered into by Quebecor Media or any of its Restricted Subsidiaries pursuant to which Quebecor Media or such Restricted Subsidiary transfers to an Accounts Receivable Entity (in the case of a transfer by Quebecor Media or any of its Restricted Subsidiaries) or any other Person other than Quebecor Media or any of its Subsidiaries, or grants a security interest in, any accounts receivable (whether now existing or arising in the future) of Quebecor Media or any of its Restricted Subsidiaries, and any assets related thereto, including, without limitation, all collateral securing such accounts receivable, all contracts and all Guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with an accounts receivable financing transaction; provided such transaction is on market terms at the time Quebecor Media or such Restricted Subsidiary enters into such transaction.

“Quebecor Media Entity” means any of Quebecor Media or any of its Restricted Subsidiaries.

“Rating Agency” means (1) each of Moody’s, S&P and DBRS; or (2) in the event that two or more of the foregoing rating agencies cease to issue ratings in respect of the notes for reasons outside the control of Quebecor Media, any other Approved Credit Rating Organization selected by Quebecor Media to replace Moody’s, S&P and/or DBRS.

“Ratings Decline Period” means the period that (1) begins on the earlier of (a) the date of the first public announcement of the occurrence of a Change of Control and (b) the occurrence of a Change of Control and (2) ends 90 days following consummation of such Change of Control; provided, that such period shall be extended for so long as the rating of the notes as noted by the applicable Rating Agency, is under publicly announced consideration for downgrade by the applicable Rating Agency.

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“Ratings Event” means (1) a downgrade by one or more gradations (including gradations within ratings categories as well as between rating categories) or withdrawal of the rating of the notes within the Ratings Decline Period by one or more Rating Agencies (unless the applicable Rating Agency shall have put forth a written statement to the effect that such downgrade is not attributable in whole or in part to the applicable Change of Control) and (2) the notes do not have Investment Grade Status from any Rating Agency.

“Registration Rights Agreement” means the registration rights agreement entered into by and among Quebecor Media and the Initial Purchasers hereunder on the Issue Date.

“Related Party” means:

(1) any controlling shareholder, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Permitted Holder, or

(2) any trust, corporation, partnership or other entity, the beneficiaries, shareholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of any one or more Permitted Holder and/or such other Persons referred to in the immediately preceding clause (1).

“Replacement Assets” means (1) non-current assets that will be used or useful in a Permitted Business; (2) if the Net Proceeds are from the sale of assets of Quebecor Media or any of its Restricted Subsidiaries or the Equity Interests of any of its Restricted Subsidiaries, substantially all the assets of a Permitted Business or a majority of the Voting Stock of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary; or (3) if the Net Proceeds are from the sale of assets or Equity Interests of a Person other than Quebecor Media or any of its Restricted Subsidiaries, the assets of a Permitted Business or the Voting Stock of any Person engaged in a Permitted Business.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“S&P” means, collectively, Standard & Poor’s Financial Services LLC and Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., or any successor to the rating agency business thereof.

“sale and leaseback transaction” means, with respect to any Person, any transaction involving any of the assets or properties of such Person whether now owned or hereafter acquired, whereby such Person sells or transfers such assets or properties and then or thereafter leases such assets or properties or any part thereof or any other assets or properties which such Person intends to use for substantially the same purpose or purposes as the assets or properties sold or transferred.

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by Quebecor Media or any of its Restricted Subsidiaries, which are customary in an accounts receivable securitization transaction.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

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“Subordinated Indebtedness” means any Indebtedness of Quebecor Media or any of its Restricted Subsidiaries (whether outstanding on the Issue Date or thereafter incurred) that is, by its terms, expressly subordinate or junior in right of payment to the notes.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).

“Tax” means any tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and any other liabilities related thereto).

“Tax Benefit Transaction” means, for so long as Quebecor Media is a direct or indirect Subsidiary of Quebecor Inc., any transaction between a Quebecor Media Entity and Quebecor Inc. or any of its Affiliates, the primary purpose of which is to create tax benefits for any Quebecor Media Entity or for Quebecor Inc. or any of its Affiliates; provided, however, that (1) the Quebecor Media Entity involved in the transaction obtains a favorable tax ruling from a competent tax authority or a favorable tax opinion from a nationally recognized Canadian law or accounting firm having a tax practice of national standing as to the tax efficiency of the transaction for such Quebecor Media Entity (except that such ruling or opinion shall not be required in respect of a transaction with substantially similar tax and transactional attributes as a previous Tax Benefit Transaction in respect of which such a tax ruling or opinion was obtained); (2) in respect of any such Tax Benefit Transaction in an amount exceeding Cdn$50.0 million, such transaction has been approved by a majority of the disinterested members of such Board of Directors; (3) such transaction is set forth in writing; and (4) the Consolidated Cash Flow of Quebecor Media is not reduced after giving pro forma effect to the transaction as if the same had occurred at the beginning of the most recently ended full fiscal quarter for which internal financial statements are available; provided, however, that if such transaction shall thereafter cease to satisfy the preceding requirements as a Tax Benefit Transaction, it shall thereafter cease to be a Tax Benefit Transaction for purposes of the indenture and shall be deemed to have been effected as of such date and, if the transaction is not otherwise permitted by the indenture as of such date, Quebecor Media will be in default under the indenture if such transaction does not comply with the preceding requirements or is not otherwise unwound within 45 days of that date.

“Unrestricted Subsidiary” means:

(a) any Subsidiary of Quebecor Media that was designated after January 17, 2006 as an Unrestricted Subsidiary as permitted or required pursuant to the covenant described under the caption “— Covenants — Designation of Restricted and Unrestricted Subsidiaries” and is not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto; and

(c) any Subsidiary of an Unrestricted Subsidiary.

“U.S. Government Securities” means direct obligations of, or obligations Guaranteed by, the United States of America (including any agency or instrumentality thereof) and the payment for which the United States of America pledges its full faith and credit, and which are not callable or redeemable at the issuer’s option.

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“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

“Wholly Owned Restricted Subsidiary” of any specified Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) will at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of certain U.S. federal income tax considerations applicable to the exchange of the initial notes for exchange notes pursuant to the exchange offer by a U.S. Holder (as defined below), but does not purport to be a complete analysis of all potential U.S. federal income tax effects. Holders of the initial notes who are non-U.S. Holders should consult their tax advisors with respect to the U.S. federal income tax consequences to them of exchanging the notes.

This summary is based on the Internal Revenue Code if 1986 as amended (the “Code”), U.S. Treasury regulations promulgated thereunder, Internal Revenue Service (“IRS”) rulings and judicial decisions now in effect or in existence as of the date of this offering memorandum. All of these are subject to change, possibly with retroactive effect, or different interpretations, potentially resulting in U.S. federal income tax consequences different from these discussed below. No ruling has been or will be sought from the IRS, and there can be no assurance that the IRS will not take a different position concerning the tax consequences of the exchange of the notes or that any such position will not be sustained.

This summary does not address all aspects of U.S. federal income taxation that may be relevant to particular U.S. Holders in light of their specific circumstances (for example, U.S. Holders subject to the alternative minimum tax provisions of the Code) or to holders that may be subject to special rules under U.S. federal income tax law, including: dealers in stocks, securities or currencies; persons that use a mark-to-market accounting method; banks and financial institutions; insurance companies; regulated investment companies; real estate investment trusts; tax-exempt organizations; persons holding notes as part of a hedging or conversion transaction or a straddle; persons deemed to sell notes under the constructive sale provisions of the Code; persons who or that are, or may become, subject to the expatriation provisions of the Code; persons whose functional currency is not the U.S. dollar; and individual retirement accounts or other tax-deferred accounts. Any such persons are urged to consult their own tax advisors regarding the tax consequences to them of exchanging the initial notes.

The summary also does not discuss any aspect of state, local or foreign law, or U.S. federal estate and gift tax law or the Medicare tax on unearned income as applicable to U.S. Holders. In addition, this discussion is limited to U.S. Holders that acquire the exchange notes pursuant to the exchange offer. Moreover, the discussion is limited to U.S. Holders who hold the initial notes and the exchange notes as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). Furthermore, this summary assumes that the notes are properly characterized as debt that is not contingent debt for U.S. federal income tax purposes.

For purposes of this summary, “U.S. Holder” means the beneficial holder of a note who or that for U.S. federal income tax purposes is:

• an individual citizen or resident alien of the United States as determined for U.S. federal income tax purposes;

• a corporation or other entity treated as a corporation formed in or under the laws of the United States, any state thereof or the District of Columbia;

• an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust, if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more “U.S. persons” (within the meaning of the Code) have the authority to control all substantial decisions of the trust, or if a valid election is in effect to be treated as a U.S. person.

If a partnership or other entity or arrangement treated as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds the exchange notes, the U.S. federal income tax treatment of a partner (or other owner) generally will depend on the status of the partner (or other owner) and the activities of the entity. Such partner (or other owner) should consult its own tax advisor as to the tax consequences of the entity exchanging the initial notes for exchange notes.

PROSPECTIVE U.S. INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE TAX CONSEQUENCES DESCRIBED BELOW TO THEIR PARTICULAR SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, INCLUDING GIFT AND ESTATE TAX LAWS.

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The Exchange

The exchange of initial notes for exchange notes pursuant to the exchange offer will not constitute a taxable exchange for U.S. federal income tax purposes. Accordingly, a U.S. Holder will not recognize any gain or loss upon the receipt of an exchange note for an initial note, a U.S. Holder’s holding period for an exchange note will include the holding period of the initial note exchanged therefor, and such U.S. Holder’s tax basis in the exchange note will be the same as its tax basis of the initial note immediately before the exchange.

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CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following is, at the date hereof, a summary of the material Canadian federal income tax considerations generally applicable to a purchaser who acquires, as beneficial owner, the exchange notes, including entitlements to all payments thereunder, pursuant to the exchange offer and who at all relevant times, for purposes of the Income Tax Act (Canada) (the “Tax Act”) and the regulations thereunder, deals at arm’s length with, and is not affiliated with, Quebecor Media and holds the exchange notes as capital property (a “Holder”). Generally, the exchange notes will be considered capital property to a Holder provided that the Holder does not use or hold and is not deemed to use or hold the exchange notes in the course of carrying on a business and has not acquired them in a transaction or transactions considered to be an adventure in the nature of trade.

This summary is not applicable to: (a) a Holder that is a “financial institution”, as defined in the Tax Act for purposes of the mark-to-market rules; (b) a Holder that is an “authorized foreign bank”, as defined in the Tax Act; (c) a Holder that is a “registered non-resident insurer”, as defined in the Tax Act; (d) a Holder that is a non-resident insurer carrying on an insurance business in Canada and elsewhere; (e) a Holder, an interest in which would be a “tax shelter investment”, as defined in the Tax Act; (f) a Holder which has made a “functional currency” election under the Tax Act to determine its Canadian tax results in a currency other than Canadian currency; (g) a Holder that is a “specified financial institution”, as defined in the Tax Act or (h) a Holder that has entered into, with respect to the exchange notes, a “derivative forward agreement” as that term is defined in proposed amendments contained in a Notice of Ways and Means Motion that accompanied the Federal Budget tabled by the Minister of Finance (Canada) on March 21, 2013. Any such Holder to which this summary does not apply should consult its own tax advisor with respect to the tax consequences of acquiring, holding and disposing of the exchange notes.

This summary is based on the current provisions of the Tax Act and the regulations thereunder and the current administrative and assessing practices and policies of the Canada Revenue Agency published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act and the regulations thereunder announced by or on behalf of the Minister of Finance of Canada prior to the date hereof (the “Proposed Amendments”) and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurance can be given that the Proposed Amendments will be enacted as proposed or at all. This summary does not otherwise take into account or anticipate any changes in law or any administrative or assessing practice, whether by judicial, governmental, regulatory or legislative decision or action, nor does it take into account provincial, territorial or foreign income tax considerations which may differ from the Canadian federal income tax considerations described herein.

This summary is of a general nature only and is not exhaustive of all Canadian federal income tax considerations that may be relevant to a particular Holder. This summary is not intended to be, and should not be interpreted as, legal or tax advice to any particular Holder, and no representation with respect to the income tax consequences to any particular Holder is made. Accordingly, prospective Holders should consult their own tax advisors with respect to their particular circumstances.

Residents of Canada

The following portion of this summary is generally applicable only to a Holder who, at all relevant times, for purposes of the Tax Act and any applicable tax treaty or convention, is, or is deemed to be resident in Canada (a “Resident Holder”). Certain Resident Holders whose exchange notes might not otherwise qualify as capital property may make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have the exchange notes and every “Canadian security” (as defined in the Tax Act) owned by such Resident Holder in the taxation year of election and all subsequent taxation years deemed to be capital property. Such Resident Holders should consult their own tax advisors with respect to their particular circumstances.

Interest

A Resident Holder that is a corporation, partnership, unit trust or a trust of which a corporation or partnership is a beneficiary will be required to include in computing its income for a taxation year all interest on a exchange note that accrues or is deemed to accrue to such Resident Holder to the end of that taxation year or that becomes receivable or is received by such Resident Holder before the end of that taxation year, to the extent that such interest was not otherwise included in computing the Resident Holder’s income for a preceding taxation year.

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Any other Resident Holder, including individuals and trusts (other than trusts described in the preceding paragraph), will be required to include in computing his or her income for a taxation year all interest on the exchange notes that is received or receivable by such Resident Holder in that taxation year (depending on the method regularly followed by the Resident Holder in computing income) to the extent that such interest was not otherwise included in computing the Resident Holder’s income for a preceding taxation year. If such a Resident Holder has not otherwise included in computing his or her income interest on a exchange note at periodic intervals of not more than one year, such a Resident Holder will also be required to include in computing his or her income, for any taxation year that includes an “anniversary day” (as defined in the Tax Act) of the exchange note, any interest or amount that is considered for the purposes of the Tax Act to be interest on the exchange note which accrues to the Resident Holder to the end of such day, to the extent that such interest was not otherwise included in computing the Resident Holder’s income for the year or a preceding year.

Where a Resident Holder is required to include in computing his or her income interest on a exchange note that accrued in respect of the period prior to his or her date of acquisition by the Resident Holder, the Resident Holder will be entitled to a deduction in computing income of an equivalent amount. The adjusted cost base to the Resident Holder of the exchange note will be reduced by the amount which is so deductible.

Any premium paid by Quebecor Media to a Resident Holder as a result of Quebecor Media’s exercise of its optional redemption right or purchase by it of a exchange note before the maturity thereof will generally be deemed to be interest received at that time by the Resident Holder and will be required to be included in computing the Resident Holder’s income as described above, to the extent that such premium can reasonably be considered to relate to, and does not exceed the value at the time of redemption or purchase of, the interest that would have been paid or payable by Quebecor Media on the exchange notes for a taxation year ending after the redemption or purchase.

Dispositions

On a disposition or a deemed disposition, including a redemption, payment on maturity, repurchase or purchase for cancellation of the exchange notes in whole or in part, a Resident Holder will generally be required to include in computing his or her income for the taxation year in which the disposition occurs all interest that has accrued or is deemed to have accrued on the exchange notes to the date of disposition to the extent that such interest has not otherwise been included in the Resident Holder’s income for that, or a preceding, taxation year.

In general, on a disposition or a deemed disposition of a exchange note, a Resident Holder will realize a capital gain (or a capital loss) equal to the amount, if any, by which the proceeds of disposition, net of any amount included in the Resident Holder’s income as interest and any reasonable costs of disposition, exceed (or are exceeded by) the adjusted cost base of the exchange note to the Resident Holder immediately before the disposition or deemed disposition. Generally, one-half of the amount of any capital gain (a “taxable capital gain”) realized by a Resident Holder must be included in computing such Resident Holder’s income for that taxation year. Subject to and in accordance with the provisions of the Tax Act, one-half of the amount of any capital loss (an “allowable capital loss”) realized by a Resident Holder in a taxation year must be deducted from any taxable capital gains realized by the Resident Holder in that year. Allowable capital losses in excess of taxable capital gains realized in a particular taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any following taxation year against net taxable capital gains realized in any such years to the extent and under the circumstances described in the Tax Act.

Exchange of Initial Notes for Exchange Notes

The exchange of initial notes for exchange notes pursuant to an exchange described under “The Exchange Offer” elsewhere in this prospectus will not constitute a taxable transaction for the purposes of the Tax Act and will not give rise to a capital gain or a capital loss.

Additional Refundable Tax

A Resident Holder that is throughout the relevant taxation year a “Canadian controlled private corporation” (as defined in the Tax Act) may be liable to pay an additional refundable tax on its “aggregate investment income” (as defined in the Tax Act) for the year, which will include interest income and taxable capital gains earned or realized in respect of the exchange notes.

Alternative Minimum Tax

A capital gain realized by an individual or a trust (other than certain specified trusts) may be relevant for purposes of calculating liability for alternative minimum tax.

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Exchange Rates

For the purposes of the Tax Act, each amount relating to a exchange note, including interest, principal amount, proceeds of disposition and adjusted cost base, must be expressed in Canadian dollars. Any amount denominated in a currency other than Canadian dollars must be converted into Canadian dollars, generally at the exchange rate quoted by the Bank of Canada as its noon rate on the date the amount first arose. To the extent the exchange notes are denominated in a currency other than Canadian dollars, Resident Holders may therefore realize additional income, gains or losses by virtue of changes in foreign currency exchanges rates.

Non-Residents of Canada

The following portion of this summary is generally applicable to a Holder who, at all relevant times for purposes of the Tax Act and any applicable income tax treaty or convention, (i) is not, and is not deemed to be, a resident of Canada (and has never been, or been deemed to be, a resident of Canada), (ii) deals at arm’s length with any transferee resident or deemed resident in Canada to whom the Holder disposes of exchange notes, (iii) does not use or hold and is not deemed to use or hold the exchange notes in or in the course of carrying on a business or part of a business in Canada, (iv) does not receive any payment of interest on the exchange notes in respect of a debt or other obligation to pay an amount to a person with whom Quebecor Media does not deal at arm’s length, and (v) is not a, and deals at arm’s length with any, “specified shareholder” of Quebecor Media for purposes of the thin capitalization rules in the Tax Act (a “Non-Resident Holder”). A specified shareholder for these purposes generally includes a person who (either alone or together with persons with whom that person is not dealing at arm’s length for purposes of the Tax Act) owns or has the right to acquire or control or is otherwise deemed to own 25% or more of Quebecor Media’s shares determined on a votes or fair market value basis.

Principal and Interest

No Canadian withholding tax will apply to interest (including any amounts deemed to be interest), principal or premium paid or credited by Quebecor Media on the exchange notes to a Non-Resident Holder, or to the proceeds received by a Non-Resident Holder on a disposition of a exchange note, including a redemption, payment on maturity, repurchase or purchase for cancellation.

No other taxes on income or gains will be payable under the Tax Act by a Non-Resident Holder on interest (including any amounts deemed to be interest), principal or premium or on the proceeds received by such Non-Resident Holder on the disposition of a exchange note including a redemption, payment on maturity, repurchase or purchase for cancellation.

Exchange of Initial Notes for Exchange Notes

The exchange of initial notes for exchange notes pursuant to an exchange described under “The Exchange Offer” elsewhere in this prospectus will not constitute a taxable transaction for the purposes of the Tax Act.

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PLAN OF DISTRIBUTION

Until 90 days after the date of this prospectus, all dealers effecting transactions in the exchange notes, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it (i) has not entered into any arrangement or understanding with the Issuer or an affiliate of the Issuer to distribute such exchange notes and (ii) will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for initial notes only where such initial notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days from the date on which the exchange offer is consummated, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until                     , 2013, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days from the date on which the exchange offer is consummated, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer, other than commissions or concessions of any broker-dealers and will indemnify the holders of the notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

The validity of the exchange notes offered by this prospectus and certain legal matters in connection with the exchange offer will be passed upon for us by Norton Rose Canada LLP, Montréal, Canada. Ropes & Gray LLP, Boston, Massachusetts, will pass upon certain matters of United States tax law.

INDEPENDENT AUDITORS

Ernst & Young LLP has served as our independent registered public accounting firm for the fiscal years ended December 31, 2012, 2011 and 2010. The audited consolidated financial statements for each of the fiscal years in the three-year period ended December 31, 2012 are included in this prospectus.

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WHERE YOU CAN FIND MORE INFORMATION

Currently we furnish or file, as applicable, reports and other information with the SEC as a “foreign private issuer.” Furthermore, the indenture governing the exchange notes offered hereby requires us, subject to certain exceptions (see “Description of Notes”), to make available or file with the SEC annual and quarterly reports and other information. In addition, we have filed with the SEC a registration statement on Form F-4 under the Securities Act relating to the exchange offer that includes important business and financial information about us that is not included in or delivered with this prospectus. As permitted by SEC rules, this prospectus does not contain all of the information included in the registration statement (including its exhibits and schedules). You should read the registration statement (including its exhibits and schedules) for more information about us, the exchange offer and the exchange notes. This prospectus summarizes material provisions of contracts and other documents to which we refer you. Because this prospectus may not contain all the information that you find important, you should review the full text of these documents. We have filed these documents as exhibits to the registration statement.

You may read and copy any materials that we furnish to or file with the SEC at the Public Reference Room of the SEC’s headquarters located at 100 F Street, N.E. Washington, D.C. 20549. You may request copies of any furnished or filed documents, upon payment of a duplicating fee, by writing to the Public Reference Section of the SEC. Please call 1-800-SEC-0330 for further information on the operation of the Public Reference Room. In addition, the registration statement, our Annual Reports on Form 20-F, Current Reports on Form 6-K and amendments to these reports are available free of charge to the public through the website maintained by the SEC at www.sec.gov. Our reports and other information that we have filed or furnished, or may in the future file or furnish, with the SEC or otherwise make available are not incorporated by reference into and do not constitute part of this prospectus.

In addition, you may obtain a copy of the documents to which we refer you in this prospectus without charge upon written or oral request to: Quebecor Media Inc., 612 Saint-Jacques Street, Montreal, Québec, Canada H3C 4M8, Attention: Corporate Secretariat, telephone number (514) 380-1994. To obtain timely delivery, you must request these documents no later than five business days before the expiration date of the exchange offer. Unless extended, the expiration date for the exchange offer is                     , 2013.

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QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2012, 2011 and 2010

Report of Ernst & Young LLP to the Board of Directors and to the Shareholders of Quebecor Media (with respect to Quebecor Media’s consolidated financial statements for the years ended December 31, 2012, 2011 and 2010)	F-2
Consolidated financial statements
Consolidated statements of income	F-3
Consolidated statements of comprehensive income	F-4
Consolidated statements of equity	F-5
Consolidated statements of cash flows	F-6
Consolidated balance sheets	F-8
Segmented information	F-10
Notes to consolidated financial statements	F-14

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and to the shareholders of

Quebecor Media Inc.

We have audited the accompanying consolidated balance sheets of Quebecor Media Inc. and its subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2012. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We were not engaged to perform an audit of the Corporation’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and the significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Quebecor Media Inc. and its subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Montréal, Canada	/s/    Ernst & Young LLP(1)
March 20, 2013

¹  CPA auditor, CA, public accountancy permit no. A104687

F-2

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

	Note		2012			2011			2010
Revenues		2	$	4,351.8		$	4,206.6		$	4,000.1
Employee costs		3		1,057.8			1,011.4			935.3
Purchase of goods and services		3		1,888.7			1,859.0			1,712.9
Amortization				597.7			509.3			396.7
Financial expenses		4		326.4			311.5			300.7
Gain on valuation and translation of financial instruments		5		(198.3	)		(54.6	)		(46.1	)
Restructuring of operations, impairment of assets and other special items		6		29.4			30.2			37.1
Impairment of goodwill and intangible assets		7		201.5			—			—
Loss on debt refinancing		8		67.7			6.6			12.3
Income before income taxes				380.9			533.2			651.2
Income taxes		10		137.0			146.4			162.6
Net income			$	243.9		$	386.8		$	488.6
Net income attributable to:
Shareholders			$	245.7		$	374.0		$	470.3
Non-controlling interests				(1.8	)		12.8			18.3

See accompanying notes to consolidated financial statements.

F-3

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

	Note		2012			2011			2010
Net income			$	243.9		$	386.8		$	488.6
Other comprehensive loss:
(Loss) gain on translation of net investments in foreign operations				(1.4	)		1.6			(2.9	)
Cash flows hedges:
Gain (loss) on valuation of derivative financial instruments				33.1			(9.5	)		43.0
Deferred income taxes				2.9			(2.0	)		(2.7	)
Defined benefit plans:
Actuarial loss and net change in asset limit and in minimum funding liability		28		(36.3	)		(91.0	)		(64.0	)
Deferred income taxes				9.6			24.0			16.9
Reclassification to income:
Other comprehensive (gain) loss related to cash flows hedges		8		(15.3	)		0.8			8.4
Deferred income taxes				0.5			(0.2	)		(2.5	)
				(6.9	)		(76.3	)		(3.8	)
Comprehensive income			$	237.0		$	310.5		$	484.8
Comprehensive income (loss) attributable to:
Shareholders			$	241.6		$	305.9		$	469.0
Non-controlling interests				(4.6	)		4.6			15.8

See accompanying notes to consolidated financial statements.

F-4

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

	Equity attributable to shareholders
	Capital stock (note 21)			Contributed surplus			Deficit			Accumulated other comprehensive (loss) income (note 23)			Equity attributable to non- controlling interests			Total equity
Balance as of January 1, 2010	$	1,752.4		$	3,178.6		$	(2,608.4	)	$	(18.7	)	$	119.4		$	2,423.3
Net income		—			—			470.3			—			18.3			488.6
Other comprehensive (loss) income		—			—			(44.6	)		43.3			(2.5	)		(3.8	)
Acquisition of non-controlling interests		—			(2.0	)		—			—			(1.0	)		(3.0	)
Dividends		—			—			(87.5	)		—			(2.4	)		(89.9	)
Balance as of December 31, 2010		1,752.4			3,176.6			(2,270.2	)		24.6			131.8			2,815.2
Net income		—			—			374.0			—			12.8			386.8
Other comprehensive loss		—			—			(58.8	)		(9.3	)		(8.2	)		(76.3	)
Issuance of shares of a subsidiary		—			—			—			—			1.0			1.0
Dividends		—			—			(100.0	)		—			(1.2	)		(101.2	)
Balance as of December 31, 2011		1,752.4			3,176.6			(2,055.0	)		15.3			136.2			3,025.5
Net income		—			—			245.7			—			(1.8	)		243.9
Other comprehensive (loss) income		—			—			(23.9	)		19.8			(2.8	)		(6.9	)
Acquisition of non-controlling interests		—			(0.3	)		—			—			0.3			—
Reclassification of stated capital (note 21)		3,175.0			(3,175.0	)		—			—			—			—
Repurchase of shares (note 21)		(811.3	)		—			(188.8	)		—			—			(1,000.1	)
Dividends		—			—			(100.0	)		—			(0.5	)		(100.5	)
Balance as of December 31, 2012	$	4,116.1		$	1.3		$	(2,122.0	)	$	35.1		$	131.4		$	2,161.9

See accompanying notes to consolidated financial statements.

F-5

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

	Note	2012			2011			2010
Cash flows related to operating activities
Net income		$	243.9		$	386.8		$	488.6
Adjustments for:
Amortization of property, plant and equipment	13		457.1			388.4			322.9
Amortization of intangible assets	14		140.6			120.9			73.8
Gain on valuation and translation of financial instruments	5		(198.3	)		(54.6	)		(46.1	)
Gain on disposal of assets and businesses	6		(12.9	)		—			(8.7	)
Impairment of assets	6		7.5			1.5			11.9
Impairment of goodwill and intangible assets	7		201.5			—			—
Loss on debt refinancing	8		67.7			6.6			12.3
Amortization of financing costs and long-term debt discount	4		14.3			12.8			12.5
Deferred income taxes	10		80.0			164.1			106.1
Other			6.2			(2.1	)		0.8
			1,007.6			1,024.4			974.1
Net change in non-cash balances related to operating activities			134.7			(142.2	)		(139.3	)
Cash flows provided by operating activities			1,142.3			882.2			834.8
Cash flows related to investing activities
Business acquisitions	9		(2.0	)		(55.7	)		(3.1	)
Business disposals	6		18.7			—			—
Additions to property, plant and equipment	13		(710.6	)		(780.7	)		(689.0	)
Additions to intangible assets	14		(94.9	)		(91.6	)		(95.2	)
Proceeds from disposals of assets			8.4			12.0			53.0
Acquisition of tax deductions from the parent corporation	27		(10.2	)		—			(6.0	)
Net change in temporary investments			—			—			30.0
Other			(1.4	)		(1.7	)		1.7
Cash flows used in investing activities			(792.0	)		(917.7	)		(708.6	)
Cash flows related to financing activities
Net change in bank indebtedness			(4.0	)		(0.9	)		3.9
Net change under revolving facilities			(19.7	)		1.7			2.0
Issuance of long-term debt, net of financing fees	19		2,102.1			685.8			292.7
Repayments of long-term debt	8		(1,202.3	)		(487.1	)		(358.8	)
Settlement of hedging contracts	8		(43.6	)		(160.2	)		(32.4	)
Repurchase of Common Shares	21		(1,000.1	)		—			—
Dividends			(100.0	)		(100.0	)		(87.5	)
Dividends paid to non-controlling interests			(0.5	)		(1.2	)		(2.4	)
Other			0.1			1.0			—
Cash flows used in financing activities			(268.0	)		(60.9	)		(182.5	)
Net change in cash and cash equivalents			82.3			(96.4	)		(56.3	)
Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies			—			0.1			(1.0	)
Cash and cash equivalents at beginning of year			146.4			242.7			300.0
Cash and cash equivalents at end of year		$	228.7		$	146.4		$	242.7

F-6

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

	2012			2011			2010
Additional information on the consolidated statements of cash flows
Cash and cash equivalents consist of:
Cash	$	76.0		$	29.9		$	122.1
Cash equivalents		152.7			116.5			120.6
	$	228.7		$	146.4		$	242.7
Changes in non-cash balances related to operating activities (net of effect of business acquisitions and disposals):
Accounts receivable	$	22.2		$	(13.8	)	$	(72.5	)
Inventories		23.7			(38.1	)		(69.6	)
Accounts payable, accrued charges and provisions		91.2			(18.9	)		(33.0	)
Income taxes		53.0			(51.2	)		15.9
Stock-based compensation		(8.0	)		(14.8	)		9.7
Deferred revenues		(8.6	)		22.9			46.5
Defined benefit plans		(24.0	)		(29.9	)		(20.0	)
Other		(14.8	)		1.6			(16.3	)
	$	134.7		$	(142.2	)	$	(139.3	)
Non-cash investing activities:
Net change in additions to property, plant and equipment and intangible assets financed with accounts payable	$	52.8		$	(26.7	)	$	(16.4	)
Interest and taxes reflected as operating activities:
Cash interest payments	$	301.3		$	309.9		$	285.0
Cash income tax payments (net of refunds)		6.6			30.7			37.0

See accompanying notes to consolidated financial statements.

F-7

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2012 and 2011

(in millions of Canadian dollars)

	Note		2012		2011
Assets
Current assets
Cash and cash equivalents			$	228.7	$	146.4
Accounts receivable		11		578.0		602.6
Income taxes				10.6		29.0
Amounts receivable from parent corporation				11.5		17.4
Inventories		12		255.5		283.6
Prepaid expenses				37.5		30.5
				1,121.8		1,109.5
Non-current assets
Property, plant and equipment		13		3,353.2		3,156.0
Intangible assets		14		956.7		1,041.0
Goodwill		15		3,371.6		3,543.8
Derivative financial instruments		26		35.7		34.9
Deferred income taxes		10		19.7		20.6
Other assets		16		102.1		92.9
				7,839.0		7,889.2
Total assets			$	8,960.8	$	8,998.7

F-8

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

December 31, 2012 and 2011

(in millions of Canadian dollars)

	Note		2012			2011
Liabilities and equity
Current liabilities
Bank indebtedness			$	—		$	4.0
Accounts payable and accrued charges		17		784.9			764.9
Provisions		18		45.9			33.7
Deferred revenue				289.0			295.7
Income taxes				33.9			2.7
Derivative financial instruments		26		28.5			—
Current portion of long-term debt		19		21.3			80.3
				1,203.5			1,181.3
Non-current liabilities
Long-term debt		19		4,407.4			3,617.6
Derivative financial instruments		26		270.1			315.4
Other liabilities		20		327.4			324.2
Deferred income taxes		10		590.5			534.7
				5,595.4			4,791.9
Equity
Capital stock		21		4,116.1			1,752.4
Contributed surplus				1.3			3,176.6
Deficit				(2,122.0	)		(2,055.0	)
Accumulated other comprehensive income		23		35.1			15.3
Equity attributable to shareholders				2,030.5			2,889.3
Non-controlling interests				131.4			136.2
				2,161.9			3,025.5
Commitments and contingencies		18, 24
Guarantees		25
Total liabilities and equity			$	8,960.8		$	8,998.7

See accompanying notes to consolidated financial statements.

On March 13, 2013, the Board of Directors approved the consolidated financial statements for the years ended December 31, 2012, 2011 and 2010.

On behalf of the Board of Directors,

/s/ Pierre Karl Péladeau	/s/ Jean La Couture
Pierre Karl Péladeau, President and Chief Executive Officer	Jean La Couture, Director

F-9

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

SEGMENTED INFORMATION

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

Quebecor Media Inc. (“Quebecor Media” or the “Corporation”) is incorporated under the laws of Québec and is a subsidiary of Quebecor Inc. (“Quebecor” or the “parent corporation”). The Corporation’s head office and registered office is located at 612 rue Saint-Jacques, Montréal (Québec), Canada. The percentages of voting rights and of equity in its major subsidiaries are as follows:

	% voting			% equity
Videotron Ltd.		100.0	%		100.0	%
Sun Media Corporation		100.0	%		100.0	%
Quebecor Media Printing Inc.		100.0	%		100.0	%
TVA Group Inc.		99.9	%		51.4	%
Archambault Group Inc.		100.0	%		100.0	%
Sogides Group Inc.		100.0	%		100.0	%
CEC Publishing Inc.		100.0	%		100.0	%
Nurun Inc.		100.0	%		100.0	%

The Corporation is engaged, through its subsidiaries, in the following industry segments: Telecommunications, News Media, Broadcasting, Leisure and Entertainment, and Interactive Technologies and Communications. The Telecommunications segment offers television distribution, Internet, business solutions, cable and mobile telephony services in Canada, operates in the rental of movies and televisual products through its video-on-demand service and its distribution and rental stores, and operates specialized Internet sites. The News Media segment produces original content in Canada for all of Quebecor Media’s platforms. Its operations include the printing, publishing and distribution of daily newspapers, weekly newspapers and commercial inserts in Canada, the operation of Internet sites in Canada, including French- and English-language portals and specialized sites, and the operation of out-of-home advertising. The Broadcasting segment operates general-interest television networks, specialized television networks, magazine publishing, and movie distribution businesses in Canada. The Leisure and Entertainment segment combines book publishing and distribution, retail sales of CDs, books, DVD and Blu-ray units, musical instruments and magazines in Canada, online sales of downloadable music and books, music streaming service, music production and distribution in Canada and operation of a Quebec Major Junior Hockey League team. The Interactive Technologies and Communications segment offers e-commerce solutions through a combination of strategies, technology integration, IP solutions and creativity on the Internet and is active in Canada, the United States, Europe and Asia.

These segments are managed separately since they all require specific market strategies. The accounting policies of each segment are the same as the accounting policies used for the consolidated financial statements. Segment income includes income from sales to third parties and inter-segment sales. Transactions between segments are measured at exchange amounts between the parties.

F-10

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

SEGMENTED INFORMATION (continued)

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

INDUSTRY SEGMENTS

	Telecommunications		News Media		Broadcasting		Leisure and Entertainment		Interactive Technologies and Communications		Head office and Intersegments			Total
														2012
Revenues	$	2,635.1	$	960.0	$	461.1	$	292.5	$	145.5	$	(142.4	)	$	4,351.8
Employee costs		365.1		345.3		152.3		55.3		89.3		50.5			1,057.8
Purchase of goods and services		1,045.0		499.6		270.7		224.1		46.4		(197.1	)		1,888.7
Operating income 1		1,225.0		115.1		38.1		13.1		9.8		4.2			1,405.3
Amortization															597.7
Financial expenses															326.4
Gain on valuation and translation of financial instruments															(198.3	)
Restructuring of operations, impairment of assets and other special items															29.4
Impairment of goodwill and intangible assets															201.5
Loss on debt refinancing															67.7
Income before income taxes														$	380.9
Additions to property, plant and equipment	$	669.6	$	6.5	$	22.1	$	6.3	$	4.2	$	1.9		$	710.6
Additions to intangible assets		78.3		11.9		3.3		3.6		—		(2.2	)		94.9

F-11

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

SEGMENTED INFORMATION (continued)

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

INDUSTRY SEGMENTS (continued)

	Telecommunications		News Media		Broadcasting		Leisure and Entertainment		Interactive Technologies and Communications		Head office and Intersegments			Total
														2011
Revenues	$	2,430.7	$	1,018.4	$	445.5	$	312.9	$	120.9	$	(121.8	)	$	4,206.6
Employee costs		326.7		363.6		142.7		54.0		78.7		45.7			1,011.4
Purchase of goods and services		1,005.2		504.7		252.3		232.3		34.3		(169.8	)		1,859.0
Operating income 1		1,098.8		150.1		50.5		26.6		7.9		2.3			1,336.2
Amortization															509.3
Financial expenses															311.5
Gain on valuation and translation of financial instruments															(54.6	)
Restructuring of operations, impairment of assets and other special items															30.2
Loss on debt refinancing															6.6
Income before income taxes														$	533.2
Additions to property, plant and equipment	$	725.3	$	13.7	$	30.5	$	6.3	$	4.3	$	0.6		$	780.7
Additions to intangible assets		73.2		10.8		5.8		1.8		—		—			91.6

F-12

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

SEGMENTED INFORMATION (continued)

Years ended December 31, 2012, 2011 and 2010

(in millions of Canadian dollars)

INDUSTRY SEGMENTS (continued)

	Telecommunications		News Media		Broadcasting		Leisure and Entertainment		Interactive Technologies and Communications		Head office and Intersegments			Total
														2010
Revenues	$	2,228.8	$	1,015.0	$	448.2	$	302.5	$	98.0	$	(92.4	)	$	4,000.1
Employee costs		270.0		378.0		135.7		51.3		62.8		37.5			935.3
Purchase of goods and services		911.5		445.6		237.6		223.6		29.2		(134.6	)		1,712.9
Operating income 1		1,047.3		191.4		74.9		27.6		6.0		4.7			1,351.9
Amortization															396.7
Financial expenses															300.7
Gain on valuation and translation of financial instruments															(46.1	)
Restructuring of operations, impairment of assets and other special items															37.1
Loss on debt refinancing															12.3
Income before income taxes														$	651.2
Additions to property, plant and equipment	$	651.4	$	11.4	$	18.5	$	4.2	$	2.6	$	0.9		$	689.0
Additions to intangible assets		71.9		12.0		5.9		5.4		—		—			95.2

¹  The Chief Executive Officer uses operating income as the measure of profit to assess the performance of each segment. Operating income is referred as a non-International Financial Reporting Standards (“IFRS”) measure and is defined as net income before amortization, financial expenses, gain on valuation and translation of financial instruments, restructuring of operations, impairment of assets and other special items, impairment of goodwill and intangible assets, loss on debt refinancing and income taxes.

F-13

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

The consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”).

These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments (note 1(j)) and the liability related to stock-based compensation (note 1(t)), which have been measured at fair value, and are presented in Canadian dollars (“CAN dollars”), which is the currency of the primary economic environment in which the Corporation and its subsidiaries operate (“functional currency”).

Comparative figures for the years ended December 31, 2011 and 2010 have been restated to conform to the presentation adopted for the year ended December 31, 2012.

(b) Consolidation

The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Intercompany transactions and balances are eliminated on consolidation.

A subsidiary is an entity controlled by the Corporation. Control is achieved where the Corporation has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Non-controlling interests in the net assets and results of consolidated subsidiaries are identified separately from the parent’s ownership interest in them. Non-controlling interests in the equity of a subsidiary consist of the amount of non-controlling interests calculated at the date of the original business combination and their share of changes in equity since that date. Changes in non-controlling interests in a subsidiary that do not result in a loss of control by the Corporation are accounted for as equity transactions.

(c) Business combinations

A business combination is accounted for by the acquisition method. The cost of an acquisition is measured at the fair value of the consideration given in exchange for control of the business acquired at the acquisition date. This consideration can be comprised of cash, assets transferred, financial instruments issued, or future contingent payments. The identifiable assets and liabilities of the business acquired are recognized at their fair value at the acquisition date. Results of operations of a business acquired are included in the Corporation’s consolidated financial statements from the date of the business acquisition. Business acquisition and integration costs are expensed as incurred.

Non-controlling interests in an entity acquired are presented in the consolidated balance sheet within equity, separately from the equity attributable to shareholders and are initially measured at fair value.

(d) Foreign currency translation

Financial statements of foreign operations are translated using the rate in effect at the balance sheet date for assets and liabilities, and using the average exchange rates during the period for revenues and expenses. Adjustments arising from foreign currency translation since January 1, 2010 are recorded in other comprehensive income.

Foreign currency transactions are translated to the functional currency by applying the exchange rate prevailing at the date of the transactions. Translation gains and losses on assets and liabilities denominated in a foreign currency are included in financial expenses, or in gain or loss on valuation and translation of financial instruments, unless hedge accounting is used.

F-14

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Revenue recognition

The Corporation recognizes operating revenues when the following criteria are met:

• the amount of revenue can be measured reliably;

• the receipt of economic benefits associated with the transaction is probable;

• the costs incurred or to be incurred in respect of the transaction can be measured reliably;

• the stage of completion can be measured reliably where services have been rendered; and

• significant risks and rewards of ownership, including effective control, have been transferred to the buyer where goods have been sold.

The portion of revenue that is unearned is recorded under “Deferred revenue” when customers are invoiced.

Revenue recognition policies for each of the Corporation’s main segments are as follows:

Telecommunications

The Telecommunications segment provides services under arrangements with multiple deliverables, for which there are two separate accounting units: one for subscriber services (cable television, Internet, cable telephony or mobile telephony, including connection costs and rental of equipment); the other for equipment sales to subscribers. Components of multiple deliverable arrangements are separately accounted for, provided the delivered elements have stand-alone value to the customer and the fair value of any undelivered elements can be objectively and reliably determined. Arrangement consideration is allocated among the separate accounting units based on their relative fair values.

Cable connection revenues are deferred and recognized as revenues over the estimated average period that subscribers are expected to remain connected to the network. The incremental and direct costs related to cable connection costs, in an amount not exceeding the revenue, are deferred and recognized as an operating expense over the same period. The excess of those costs over the related revenues is recognized immediately in income. Operating revenues from cable and other services, such as Internet access, cable and mobile telephony, are recognized when services are rendered. Promotional offers and rebates are accounted for as a reduction in the service revenue to which they relate. Revenues from equipment sales to subscribers and their costs are recognized in income when the equipment is delivered. Promotional offers related to equipment, with the exclusion of mobile devices, are accounted for as a reduction of related equipment sales on delivery while promotional offers related to the sale of mobile devices are accounted for as a reduction of related equipment sales on activation. Operating revenues related to service contracts are recognized in income over the life of the specific contracts on a straight-line basis over the period in which the services are provided.

News Media

Revenues derived from circulation are recognized when the publication is delivered, net of provisions for estimated returns based on the segment’s historical rate of returns. Advertising revenues are also recognized when the publication is delivered. Website advertising is recognized when advertisements are placed on websites. Revenues from the distribution of publications and products are recognized upon delivery, net of provisions for estimated returns.

F-15

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Revenue recognition (continued)

Broadcasting

Revenues derived from the sale of advertising airtime are recognized when the advertisement has been broadcast on television. Revenues derived from subscriptions to specialty television channels are recognized on a monthly basis at the time service is rendered. Circulation revenues derived from publishing activities are recognized when the publication is delivered, net of provisions for estimated returns based on the segment’s historical rate of returns. Revenues from advertising related to publishing activities are also recognized when the publication is delivered. Website advertising is recognized when advertisements are placed on websites.

Revenues derived from the distribution of televisual products and movies and from television program rights are recognized over the broadcasting period or over the viewing period in theatres based on a percentage of revenues generated, when exploitation, exhibition or sale can commence and the license period of the arrangement has begun.

Revenues generated from the distribution of DVD and Blu-ray units are recognized at the time of their delivery, less a provision for estimated returns, or are accounted for based on a percentage of retail sales.

Leisure and Entertainment

Revenues derived from music distribution, book publishing and distribution activities are recognized on delivery of the products, net of provisions for estimated returns based on the segment’s historical rate of returns.

(f) Impairment of assets

For the purposes of assessing impairment, assets are grouped in cash-generating units (“CGUs”), which represent the lowest levels for which there are separately identifiable cash inflows generated by those assets. The Corporation reviews at each balance sheet date whether events or circumstances have occurred to indicate that the carrying amounts of its long-lived assets with finite useful lives may be less than their recoverable amounts. Goodwill, other intangible assets having an indefinite useful life, and intangible assets not yet available for use are tested for impairment on April 1 of each financial year, as well as whenever there is an indication that the carrying amount of the asset, or the CGU to which an asset has been allocated, exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use of the asset or the CGU. Fair value less costs to sell represents the amount an entity could obtain at the valuation date from the asset’s disposal in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. The value in use represents the present value of the future cash flows expected to be derived from the asset or the CGU.

An impairment loss is recognized in the amount by which the carrying amount of an asset or a CGU exceeds its recoverable amount. When the recoverable amount of a CGU to which goodwill has been allocated is lower than the CGU’s carrying amount, the related goodwill is first impaired. Any excess amount of impairment is recognized and attributed to assets in the CGU, prorated to the carrying amount of each asset in the CGU.

An impairment loss recognized in prior periods for long-lived assets with finite useful lives and intangible assets having an indefinite useful life, other than goodwill, can be reversed through the consolidated statement of income to the extent that the resulting carrying value does not exceed the carrying value that would have been the result if no impairment losses had been previously recognized.

F-16

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(g) Barter transactions

In the normal course of operations, the News Media and the Broadcasting segments principally offer advertising in exchange for goods and services. Revenues thus earned and expenses incurred are accounted for on the basis of the fair value of the goods and services provided.

For the year ended December 31, 2012, the Corporation recorded $16.9 million of barter advertising revenues ($15.5 million in 2011 and $15.7 million in 2010).

(h) Income taxes

Current income taxes are recognized with respect to amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

Deferred income taxes are accounted for using the liability method. Under this method, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the consolidated financial statements and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the substantive enactment date. A deferred tax asset is recognized initially when it is probable that future taxable income will be sufficient to use the related tax benefits and may be subsequently reduced, if necessary, to an amount that is more likely than not to be realized. A deferred tax expense or benefit is recognized in other comprehensive income or otherwise directly in equity to the extent that it relates to items that are recognized in other comprehensive income or directly in equity in the same or a different period.

In the course of the Corporation’s operations, there are a number of uncertain tax positions due to the complexity of certain transactions and due to the fact that related tax interpretations and legislation are continually changing. When a tax position is uncertain, the Corporation recognizes an income tax benefit or reduces an income tax liability only when it is probable that the tax benefit will be realized in the future or that the income tax liability is no longer probable.

(i) Leases

Assets under leasing agreements are classified at the inception of the lease as (i) finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the asset to the lessee, or as (ii) operating leases for all other leases. All of the Corporation’s current leases are classified as operating leases.

Operating lease rentals are recognized in the consolidated statement of income on a straight-line basis over the period of the lease. Any lessee incentives are deferred and then recognized evenly over the lease term.

F-17

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(j) Financial instruments

Classification, recognition and measurement

Financial instruments are classified as held for trading, available for sale, held to maturity, loans and receivables, or as other financial liabilities, and measurement in subsequent periods depends on their classification. The Corporation has classified its financial instruments (except derivative financial instruments) as follows:

Held for trading	Loans and receivables	Available for sale	Other liabilities
•   Cash and cash equivalents •   Bank indebtedness	•   Accounts receivable •   Amounts receivable from parent corporation •   Loans and other long-term receivables included in “Other assets”	•   Other portfolio investments included in “Other assets”	•   Accounts payable and accrued charges •   Provisions •   Long-term debt •   Other long-term financial liabilities included in “Other liabilities”

Financial instruments held-for-trading are measured at fair value with changes recognized in income as a gain or loss on valuation and translation of financial instruments. Available-for-sale portfolio investments are measured at fair value or at cost in the case of equity investments that do not have a quoted market price in an active market and where fair value is insufficiently reliable, and changes in fair value are recorded in other comprehensive income. Financial assets classified as loans and receivables and financial liabilities classified as other liabilities are initially measured at fair value and subsequently measured at amortized cost, using the effective interest rate method of amortization. Liabilities recognized as a result of contingent consideration arising from a business acquisition and included in other liabilities, are initially recorded at their acquisition-date fair value and re-measured at fair value in subsequent periods. These changes in fair value are recorded in income as other special items.

Derivative financial instruments and hedge accounting

The Corporation uses various derivative financial instruments to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. The Corporation does not hold or use any derivative financial instruments for speculative purposes. Under hedge accounting, the Corporation documents all hedging relationships between hedging items and hedged items, as well as its strategy for using hedges and its risk management objective. It also designates its derivative financial instruments as either fair value hedges or cash flow hedges when they qualify for hedge accounting. The Corporation assesses the effectiveness of derivative financial instruments when the hedge is put in place and on an ongoing basis.

F-18

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(j) Financial instruments (continued)

Derivative financial instruments and hedge accounting (continued)

The Corporation generally enters into the following types of derivative financial instruments:

• The Corporation uses foreign exchange forward contracts to hedge foreign currency rate exposure on anticipated equipment or inventory purchases in a foreign currency. The Corporation also uses foreign exchange forward contracts in combination with cross-currency interest rate swaps to hedge foreign currency rate exposure on interest and principal payments on long-term debt. These foreign exchange forward contracts are designated as cash flow hedges.

• The Corporation uses cross-currency interest rate swaps to hedge (i) foreign currency rate exposure on interest and principal payments on foreign currency denominated debt, and/or (ii) fair value exposure on certain debt resulting from changes in interest rates. The cross-currency interest rate swaps that set all future interest and principal payments on U.S.-denominated debt in fixed CAN dollars are designated as cash flow hedges. The Corporation’s cross-currency interest rate swaps that set all future interest and principal payments on U.S.-denominated debt in fixed CAN dollars, in addition to converting the interest rate from a fixed rate to a floating rate, or converting a floating rate index to another floating rate index, are designated as fair value hedges.

• The Corporation uses interest rate swaps to manage fair value exposure on certain debt resulting from changes in interest rates. These swap agreements require a periodic exchange of payments without the exchange of the notional principal amount on which the payments are based. These interest rate swaps are designated as fair value hedges when they convert the interest rate from a fixed rate to a floating rate, or as cash flow hedges when they convert the interest rate from a floating rate to a fixed rate.

Under hedge accounting, the Corporation applies the following accounting policies:

• For derivative financial instruments designated as fair value hedges, changes in the fair value of the hedging derivative recorded in income are substantially offset by changes in the fair value of the hedged item to the extent that the hedging relationship is effective. When a fair value hedge is discontinued, the carrying value of the hedged item is no longer adjusted and the cumulative fair value adjustments to the carrying value of the hedged item are amortized to income over the remaining term of the original hedging relationship.

• For derivative financial instruments designated as cash flow hedges, the effective portion of a hedge is reported in other comprehensive income until it is recognized in income during the same period in which the hedged item affects income, while the ineffective portion is immediately recognized in income. When a cash flow hedge is discontinued, the amounts previously recognized in accumulated other comprehensive income are reclassified to income when the variability in the cash flows of the hedged item affects income.

Any change in the fair value of these derivative financial instruments recorded in income is included in gain or loss on valuation and translation of financial instruments. Interest expense on hedged long-term debt is reported at the hedged interest and foreign currency rates.

Derivative financial instruments that do not qualify for hedge accounting, including derivatives that are embedded in financial or non-financial contracts that are not closely related to the host contracts, such as early settlement options on long term-debt, are reported on a fair value basis in the consolidated balance sheets. Any change in the fair value of these derivative financial instruments is recorded in income as a gain or loss on valuation and translation of financial instruments.

Early settlement options are not considered closely related to their debt contract and are accordingly accounted for separately from the debt when the corresponding option exercise price is not approximately equal to the amortized cost of the debt.

F-19

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(k) Financing fees

Financing fees related to long-term debt are capitalized in reduction of long-term debt and amortized using the effective interest rate method.

(l) Tax credits and government assistance

The Corporation has access to several government programs designed to support production and distribution of televisual products and movies, as well as music products, magazine and book publishing in Canada. In addition, the Corporation receives tax credits mainly related to its research and development activities, publishing activities and digital activities. Government financial assistance is accounted for as revenue or as a reduction in related costs, whether capitalized and amortized or expensed, in the year the costs are incurred and when management has reasonable assurance that the conditions of the government programs are met.

(m) Cash and cash equivalents

Cash and cash equivalents include highly liquid investments purchased three months or less from maturity and are recorded at fair value. These highly liquid investments consisted mainly of Bankers’ acceptances and term deposits.

(n) Trade receivables

Trade receivables are stated at their nominal value, less an allowance for doubtful accounts and an allowance for sales returns. The Corporation establishes an allowance for doubtful accounts based on the specific credit risk of its customers and historical trends. Individual trade receivables are written off when management deems them not collectible.

(o) Inventories

Inventories are valued at the lower of cost, determined by the first-in, first-out method or the weighted-average cost method, and net realizable value. Net realizable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. When the circumstances that previously caused inventories to be written down below cost no longer exist, the amount of the write-down is reversed. Work in progress is valued at the prorated billing value of the work completed.

In particular, Broadcasting segment inventories, which primarily are comprised of programs and broadcast and distribution rights, are accounted for as follows:

(i) Programs produced and productions in progress

Programs produced and productions in progress related to broadcasting activities are accounted for at the lesser of cost and net realizable value. Cost includes direct charges for goods and services and the share of labour and general expenses related to each production. The cost of each program is charged to operating expenses when the program is broadcast.

(ii) Broadcast rights

Broadcast rights are essentially contractual rights allowing the limited or unlimited broadcast of televisual products or movies. The Broadcasting segment records the broadcast rights acquired as inventory and the obligations incurred under a license agreement as a liability when the broadcast period begins and all of the following conditions have been met: (a) the cost of each program, movies or series is known or can be reasonably determined; (b) the programs, movies or series have been accepted in accordance with the conditions of the broadcast license agreement; (c) the programs, movies or series are available for first showing or telecast.

Amounts paid for broadcast rights before all of the above conditions are met are recorded as prepaid broadcast rights.

F-20

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(o) Inventories (continued)

(ii) Broadcast rights (continued)

Broadcast rights are classified as short or long term, based on management’s estimate of the broadcast period. These rights are charged to operating expenses when televisual products and movies are broadcast over the contract period, using a method based on future revenues and the estimated number of showings. Broadcast rights payable are classified as current or long-term liabilities based on the payment terms included in the license.

(iii) Distribution rights

Distribution rights include costs to acquire distribution rights for televisual products and movies and other operating costs incurred that generate future economic benefits. The Broadcasting segment records an inventory and a liability for the distribution rights and obligations incurred under a license agreement when (a) the cost of the license is known or can be reasonably estimated, (b) the televisual product and movie has been accepted in accordance with the conditions of the license agreement, and (c) the televisual product or movie is available for distribution.

Amounts paid for distribution rights before all of the above conditions are met are recorded as prepaid distribution rights. Distribution rights are charged to operating expenses using the individual film forecast computation method based on actual revenues realized over total revenues expected.

Estimates of future revenues used to determine net realizable values of inventories related to the distribution or broadcasting of television products and movies, are examined periodically by Broadcasting segment management and revised as necessary. The carrying value of programs produced and productions in progress, broadcast rights and distribution rights is reduced to net realizable value, as necessary, based on this assessment.

(p) Long-term investments

Investments in companies subject to significant influence are accounted for using the equity method. Under the equity method, the share of the results of operations of the associated corporation is recorded in the consolidated statement of income. Carrying values of investments are reduced to estimated fair values if there is objective evidence that the investment is impaired.

(q) Property, plant and equipment

Property, plant and equipment are stated at cost. Cost represents the acquisition costs, net of government grants and investment tax credits, or construction costs, including preparation, installation and testing costs. In the case of projects to construct cable and mobile networks, the cost includes equipment, direct labour and direct overhead costs. Projects under development may also be comprised of advance payments made to suppliers for equipment under construction.

Borrowing costs are also included in the cost of property, plant and equipment when the development of the asset commenced after January 1, 2010. Future expenditures, such as maintenance and repairs, are expensed as incurred.

Amortization is calculated on a straight-line basis over the following estimated useful lives:

Assets	Estimated useful life
Buildings and leasehold improvements		10 to 40 years
Machinery and equipment		3 to 20 years
Telecommunication networks		3 to 20 years

F-21

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(q) Property, plant and equipment (continued)

Amortization methods, residual values, and the useful lives of significant property, plant and equipment are reviewed at each financial year-end. Any change is accounted for prospectively as a change in accounting estimate.

Leasehold improvements are amortized over the shorter of the term of the lease and economic life.

The Corporation does not record any decommissioning obligations in connection with its cable distribution networks. The Corporation expects to renew all of its agreements with utility companies to access their support structures in the future, making the retirement date so far into the future that the present value of the restoration costs is insignificant for these assets. A decommissioning obligation is however recorded for the rental of sites related to the advanced mobile network.

(r) Goodwill and intangible assets

Goodwill

For all business acquisitions entered into since January 1, 2010, goodwill initially arising from a business acquisition is measured and recognized as the excess of the fair value of the consideration paid over the fair value of the recognized identifiable assets acquired and liabilities assumed. When the Corporation acquires less than 100% of the equity interests in the business acquired at the acquisition date, goodwill attributable to the non-controlling interests is also recognized at fair value.

For business acquisitions that occurred prior to January 1, 2010, goodwill represented the excess of the cost of acquisition over the Corporation’s interest in the fair value of the identifiable assets and liabilities of the business acquired at the date of acquisition. No goodwill attributable to non-controlling interests was recognized.

Goodwill is allocated as at the date of a business acquisition to a CGU for purposes of impairment testing (note 1(f)). The allocation is made to the CGU or group of CGUs expected to benefit from the synergies of the business acquisition.

Intangible assets

Broadcasting licenses and mastheads have indefinite useful lives. In particular, given the low cost of renewal of broadcasting licenses, management believes it is economically compelling to renew the licenses and to comply with all rules and conditions attached to those licenses.

Internally generated intangible assets are mainly comprised of internal costs in connection with the development of software to be used internally or for providing services to customers. These costs are capitalized when the development stage of the software application begins and costs incurred prior to that stage are recognized as expenses.

Borrowing costs directly attributable to the acquisition, construction or production of an intangible asset that commenced after January 1, 2010 are also included as part of the cost of that asset during the development phase.

Intangible assets with finite useful lives are amortized over their useful lives using the straight-line method over the following periods:

Assets	Estimated useful life
Advanced mobile services (“AWS”) spectrum licenses1		10 years
Software		3 to 7 years
Customer relationships		3 to 10 years
Non-competition agreements and other		3 to 5 years

¹  The useful life represents the initial term of the licenses issued by Industry Canada.

F-22

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(r) Goodwill and intangible assets (continued)

Intangible assets (continued)

Amortization methods, residual values, and the useful lives of significant intangible assets are reviewed at each financial year-end. Any change is accounted for prospectively as a change in accounting estimate.

(s) Provisions

Provisions are recognized when (i) the Corporation has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation, and when (ii) the amount of the obligation can be reliably estimated. Restructuring costs, comprised primarily of termination benefits, are recognized when a detailed plan for the restructuring exists and a valid expectation has been raised in those affected that the plan will be carried out.

Provisions are reviewed at each balance sheet date and changes in estimates are reflected in the consolidated statement of income in the reporting period in which changes occur.

(t) Stock-based compensation

Stock-based awards to employees that call for settlement in cash or other assets at the option of the employee are accounted for at fair value and classified as a liability. The compensation cost is recognized in expenses over the vesting period. Changes in the fair value of stock-based awards between the grant date and the measurement date result in a change in the liability and compensation cost.

Estimates of the fair value of stock option awards are determined by applying an option-pricing model, taking into account the terms and conditions of the grant. Key assumptions are described in note 22.

(u) Pension plans and postretirement benefits

The Corporation offers defined contribution pension plans and defined benefit pension plans to some of its employees.

(i) Defined contribution pension plans

Under its defined contribution pension plans, the Corporation pays fixed contributions to participating employees’ pension plans and it has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as employee benefits in the consolidated statements of income when the contributions become due.

(ii) Defined benefit pension plans and postretirement plans

Defined benefit pension plan costs are determined using actuarial methods and are accounted for using the projected unit credit method, which incorporates management’s best estimates of future salary levels, other cost escalations, retirement ages of employees, and other actuarial factors. Defined benefit pension costs recognized in the consolidated statements of income, as part of employee costs, include the following:

• cost of pension plan benefits provided in exchange for employee services rendered during the year;

• interest cost of pension plan obligations;

• expected return on pension fund assets;

• recognition of prior service costs on a straight-line basis over the vesting period.

When an event gives rise to both a curtailment and a settlement, the curtailment is accounted for prior to the settlement.

F-23

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(u) Pension plans and postretirement benefits (continued)

(ii) Defined benefit pension plans and postretirement plans (continued)

Actuarial gains and losses are recognized immediately through other comprehensive income and in the deficit. Actuarial gains and losses arise from the difference between the actual rate of return on plan assets for a given period and the expected rate of return on plan assets for that period, experience adjustments on liabilities, or changes in actuarial assumptions used to determine the defined benefit obligation.

The recognition of the net benefit asset is limited under certain circumstances to the amount recoverable, which is primarily based on the extent to which the Corporation can unilaterally reduce future contributions to the plan. In addition, an adjustment to the net benefit asset or the net benefit obligation can be recorded to reflect a minimum funding liability in a certain number of the Corporation’s pension plans. Changes in the net benefit asset limit or in the minimum funding liability are recognized immediately in other comprehensive income and in the deficit.

The Corporation also offers health, life and dental insurance plans to some of its retired employees. The cost of postretirement benefits is determined using an accounting methodology similar to that for defined benefit pension plans. The benefits related to these plans are funded by the Corporation as they become due.

(v) Use of estimates and judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, related amounts of revenues and expenses, and disclosure of contingent assets and liabilities. Although these estimates are based on management’s best judgment and information available at the time of the assessment date, actual results could differ from these estimates.

The following significant areas represent management’s most difficult, subjective or complex estimates:

(i) Fair value of an asset or a CGU

When an impairment test is performed on an asset or a CGU, management estimates the recoverable amount of the asset or CGU based on its fair value less costs to sell or its value in use. These estimates are based on valuation models requiring the use of a number of assumptions such as pre-tax discount rate (WACC) and perpetual growth rate. These assumptions have a significant impact on the results of impairment tests and on the impairment charge, as the case may be, recorded in the consolidated statement of income. A description of key assumptions used in the goodwill impairment tests and a sensitivity analysis of recoverable amounts are presented in note 15.

(ii) Fair value of derivative financial instruments, including embedded derivatives not closely related to the host contract

Derivative financial instrument must be accounted for at their fair value, which is estimated using valuation models based on a number of assumptions such as future cash flows, period-end swap rates, foreign exchange rates, and credit default premium. Also, the fair value of embedded derivatives related to early settlement option on debt is determined with option pricing models using market inputs, including volatility and discount factors. The assumptions used in the valuation models have a significant impact on the gain or loss on valuation and translation of financial instruments recorded in the consolidated statement of income, the gain or loss on valuation of financial instruments recorded in the consolidated statement of comprehensive income, and the carrying value of derivative financial instruments in the consolidated balance sheet. A description of valuation models used and sensitivity analysis on key assumptions are presented in note 26.

F-24

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(v) Use of estimates and judgments (continued)

(iii) Cost and obligation related to pension and postretirement benefit plans

Estimates of costs and obligations related to pension and postretirement benefit obligations are based on a number of assumptions, such as the discount rate, the expected return on the plan’s assets, the rate of increase in compensation, the retirement age of employees, health care costs, and other actuarial factors. These assumptions have a significant impact on employee costs recorded in the consolidated statement of income, the actuarial gain or loss recorded in the consolidated statement of comprehensive income, and on the carrying value of other assets or other liabilities in the consolidated balance sheet. Key assumptions and sensitivity analysis of key assumptions are presented in note 28.

(iv) Provisions

The recognition of provisions requires management to estimate expenditure required to settle a present obligation or to transfer it to third parties at the date of assessment. An assessment of the probable outcomes of legal proceedings or other contingency is also required. A description of the main provisions, including management expectations on the potential effect on the consolidated financial statements of the possible outcomes of legal disputes, is presented in note 18.

The following areas represent management’s most significant judgments, apart from those involving estimates:

(i) Determination of useful life periods for the amortization of assets with finite useful lives

For each class of assets with finite useful lives, management has to determine over which period the Corporation will consume the assets’ future economic benefits. The determination of a useful life period involves judgment and has an impact on the amortization charge recorded in the consolidated statements of income.

(ii) Determination of CGUs for the purpose of impairment test

The determination of CGUs requires judgment when determining the lowest level for which there are separately identifiable cash inflows generated by the group of assets. In identifying assets to group in CGUs, the Corporation considers, among other factors, offering bundled services, sharing telecommunication or broadcasting networks infrastructure, integration of media assets, geographical proximity, similarity on exposure to market risk, and materiality. The determination of CGUs could affect the results of impairment tests and, as the case may be, the impairment charge recorded in the consolidated statement of income.

(iii) Determination if early settlement options are not closely related to their debt contract

Early settlement options are not considered closely related to their debt contract when the corresponding option exercise price is not approximately equal to the amortized cost of the debt. Judgment is required to determine if an option exercise price is not approximately equal to the amortized cost of the debt. This determination may have a significant impact on the amount of gains or losses on valuation and translation of financial instruments recorded in the consolidated statement of income.

(iv) Interpretation of laws and regulations

Interpretation of laws and regulation, including tax regulations, requires judgment from management that could have an impact on the recognition of provisions for legal litigation and income taxes in the consolidated financial statements.

F-25

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(w) Recent accounting pronouncements

Unless otherwise indicated, based on current facts and circumstances, the Corporation does not expect to be materially affected by the application of the following standards.

(i) IFRS 9 – Financial Instruments is required to be applied retrospectively for periods beginning January 1, 2015, with early adoption permitted.

IFRS 9 simplifies the measurement and classification for financial assets by reducing the number of measurement categories and removing complex rule-driven embedded derivative guidance in IAS 39, Financial Instruments: Recognition and Measurement. The new standard also provides for a fair value option in the designation of a non-derivative financial liability and its related classification and measurement.

(ii) IFRS 10 – Consolidated Financial Statements is required to be applied retrospectively for periods beginning January 1, 2013, with early adoption permitted.

IFRS 10 replaces SIC-12 Consolidation – Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements and provides additional guidance regarding the concept of control as the determining factor in whether an entity should be included in the consolidated financial statements of the parent corporation.

(iii) IFRS 11 – Joint Arrangements is required to be applied retrospectively for periods beginning January 1, 2013, with early adoption permitted.

IFRS 11 replaces IAS 31, Interests in Joint Ventures, with guidance that focuses on the rights and obligations of the arrangement, rather than its legal form. It also withdraws the option to proportionately consolidate an entity’s interests in joint ventures. The new standard requires that such interests be recognized using the equity method.

(iv) IFRS 12 – Disclosure of Interests in Other Entities is required to be applied retrospectively for periods beginning January 1, 2013, with early adoption permitted.

IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose entities and other off-balance sheet vehicles.

F-26

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(w) Recent accounting pronouncements (continued)

(v) IAS 19 – Post-employment Benefits (including Pensions) (Amended) is required to be applied retrospectively for periods beginning January 1, 2013.

Amendments to IAS 19 involve, among other changes, the immediate recognition of the re-measurement component in other comprehensive income, thereby removing the accounting option previously available in IAS 19 to recognize or to defer recognition of changes in defined benefit obligations and in the fair value of plan assets directly in the consolidated statement of income. IAS 19 allows amounts recorded in other comprehensive income to be recognized either immediately in deficit or as a separate category within equity. IAS 19 also introduces a net interest approach that replaces the expected return on assets and interest costs on the defined benefit obligation with a single net interest component determined by multiplying the net defined benefit liability or asset by the discount rate used to determine the defined benefit obligation. In addition, all past service costs are required to be recognized in profit or loss when the employee benefit plan is amended and no longer spread over any future service period. The adoption of the amended standard will have the following impacts on years ended December 31:

Consolidated statement of income

Increase (decrease)	2012			2011
Employee costs	$	4.4		$	2.8
Net interest cost on defined benefit plans		12.3			9.8
Income tax expense		(4.5	)		(3.4	)
Net income	$	(12.2	)	$	(9.2	)
Net income attributable to:
Shareholders	$	(11.1	)	$	(8.4	)
Non-controlling interests		(1.1	)		(0.8	)

Consolidated statement of comprehensive income

Increase (decrease)	2012			2011
Net income	$	(12.2	)	$	(9.2	)
Actuarial loss		(18.3	)		(14.2	)
Deferred income taxes related to actuarial loss		4.9			3.8
Comprehensive income	$	1.2		$	1.2
Comprehensive income attributable to:
Shareholders	$	0.7		$	0.7
Non-controlling interests		0.5			0.5

F-27

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

2. REVENUES

The breakdown of revenues between services rendered and product sales is as follows:

	2012		2011		2010
Services rendered	$	3,717.6	$	3,555.3	$	3,322.9
Product sales		634.2		651.3		677.2
	$	4,351.8	$	4,206.6	$	4,000.1

3. EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES

The main components are as follows:

	2012			2011			2010
Employee costs	$	1,181.9		$	1,131.5		$	1,052.2
Less: Employee costs capitalized to property, plant and equipment and intangible assets		(124.1	)		(120.1	)		(116.9	)
		1,057.8			1,011.4			935.3
Purchase of goods and services
Royalties, rights and creation costs		664.6			631.0			598.2
Cost of retail products		302.2			337.8			262.3
Marketing, circulation and distribution expenses		189.6			182.3			180.5
Service and printing contracts		229.9			214.8			202.0
Paper, ink and printing supplies		113.2			112.9			102.6
Other		389.2			380.2			367.3
		1,888.7			1,859.0			1,712.9
	$	2,946.5		$	2,870.4		$	2,648.2

4. FINANCIAL EXPENSES

	2012			2011			2010
Interest on long-term debt	$	311.7		$	303.2		$	284.8
Amortization of financing costs and long-term debt discount		14.3			12.8			12.5
Loss on foreign currency translation on current monetary items		3.2			1.6			3.2
Other		(2.8	)		(6.1	)		0.2
	$	326.4		$	311.5		$	300.7

F-28

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

5. GAIN ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS

	2012			2011			2010
Gain on embedded derivatives and derivative financial instruments for which hedge accounting is not used	$	(197.5	)	$	(55.2	)	$	(41.3	)
Gain on foreign currency translation of financial instruments for which hedge accounting is not used		—			—			(6.9	)
Gain on the ineffective portion of cash flow hedges		(1.1	)		—			—
Loss on the ineffective portion of fair value hedges		0.3			0.6			2.1
	$	(198.3	)	$	(54.6	)	$	(46.1	)

6. RESTRUCTURING OF OPERATIONS, IMPAIRMENT OF ASSETS AND OTHER SPECIAL ITEMS

	2012			2011		2010
Restructuring of operations	$	33.3		$	27.4	$	34.7
Impairment of assets		7.5			1.5		11.9
Gain on disposal of assets and businesses		(12.9	)		—		(8.7	)
Other		1.5			1.3		(0.8	)
	$	29.4		$	30.2	$	37.1

(a) Telecommunications

For the year ended December 31, 2012, Videotron Ltd. (“Videotron”) recorded costs of $0.5 million for the migration of its pre-existing Mobile Virtual Network Operator subscribers to its mobile network ($14.8 million in 2011 and $13.9 million in 2010).

The Telecommunications segment recorded a charge for restructuring costs of $0.6 million in 2011 and 2010. A gain of $3.3 million related to the sale of assets and an impairment charge of $0.2 million were also recorded in 2010.

(b) News Media

In recent years, the News Media segment has implemented various restructuring initiatives to reduce operating costs and, in particular, during the third quarter of 2012, the News Media segment announced the reorganization of its editorial, advertising and industrial operations in Canada. As a result of these initiatives, the News Media segment recorded restructuring costs of $31.8 million in 2012 ($11.0 million in 2011 and $17.9 million in 2010), mainly related to the elimination of positions at several publications.

As part of these restructuring initiatives, an impairment charge of $7.5 million related to tangible and intangible assets was recorded in 2012 ($0.8 million in 2011 and $3.5 million in 2010). Certain assets were also sold in the second quarter of 2010, resulting in a net gain of $4.9 million.

F-29

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

6. RESTRUCTURING OF OPERATIONS, IMPAIRMENT OF ASSETS AND OTHER SPECIAL ITEMS (continued)

(c) Broadcasting

In the second quarter of 2012, the Broadcasting segment disposed of its interests in two specialized channels, The Cave and mysteryTV, for a total cash consideration of $17.9 million, resulting in a gain of $12.9 million. The Broadcasting segment also recorded a charge for restructuring costs of $0.1 million in 2012 ($0.8 million in 2011 and $1.4 million in 2010), a charge for other special items of $0.2 million in 2011 and a gain on disposal of assets of $0.5 million in 2010.

In 2011, the Broadcasting segment recorded an impairment charge on certain equipment and broadcasting rights of $0.7 million ($8.2 million in 2010) related to the termination of the operations of its general-interest television station, Sun TV.

(d) Other segments

In 2012, other segments recorded restructuring costs of $0.9 million ($0.2 million in 2011 and $0.9 million in 2010) and a charge for other special items of $1.5 million (a charge of $1.1 million in 2011 and a gain of $0.8 million in 2010 ).

7. IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS

News Media and Leisure and Entertainment

In October 2012, the Corporation completed its annual review of its three-year strategic plan. Continuing weak economic and market conditions in the newspaper and music industries led the Corporation to perform impairment tests on the News Media and Music CGUs. The Corporation concluded that the recoverable amount based on value in use was less than the carrying amount of both CGUs. Accordingly, a goodwill impairment charge of $145.0 million (without any tax consequences) and an impairment charge of $30.0 million on mastheads and customer relationships were recorded in the News Media segment and a goodwill impairment charge of $12.0 million (without any tax consequences) was recorded in the Leisure and Entertainment segment.

Broadcasting

As a result of new tariffs adopted in 2012 with respect to business contributions for costs related to waste recovery services provided by Québec municipalities, the costs of the magazine publishing activities have been adversely affected. Accordingly, the Corporation reviewed its business plan for these activities and performed an impairment test on the Publishing CGU included in the Broadcasting segment. The Corporation concluded that the recoverable amount based on value in use was less than the carrying amount of the Publishing CGU and a goodwill impairment charge of $14.5 million (without any tax consequences) was recorded during the first quarter of 2012.

F-30

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

8. LOSS ON DEBT REFINANCING

2012

• In March 2012, Videotron redeemed all of its 6.875% Senior Notes due January 2014 in an aggregate principal amount of US$395.0 million for a cash consideration of $394.1 million.

• In March and April 2012, Quebecor Media redeemed US$260.0 million in aggregate principal amount of its 7.75% Senior Notes due March 2016 and settled hedging contracts for a total cash consideration of $304.9 million.

• In November 2012, Quebecor Media redeemed US$320.0 million in aggregate principal amount of its 7.75% Senior Notes due March 2016 for a cash consideration of $327.1 million.

• In December 2012, Quebecor Media prepaid the balance outstanding under its term loan “B” credit facility for a cash consideration of $153.9 million.

These transactions resulted in a total loss of $67.7 million (before income taxes) in 2012, including a gain of $15.3 million previously reported in other comprehensive income.

2011

• On February 15, 2011, Sun Media Corporation redeemed all of its 7.625% Senior Notes in an aggregate principal amount of US$205.0 million and settled its related hedging contracts, representing a total cash consideration of $308.2 million.

• On July 18, 2011, Videotron redeemed US$255.0 million in aggregate principal amount of its issued and outstanding 6.875% Senior Notes due in 2014 and settled its related hedging contracts, representing a total cash consideration of $303.1 million.

These transactions resulted in a total loss of $6.6 million (before income taxes) in 2011, including a loss of $0.8 million previously reported in other comprehensive income.

2010

• On January 14, 2010, Quebecor Media prepaid drawings under its term loan “B” credit facility in an aggregate amount of US$170.0 million and settled a corresponding portion of its hedging contracts, representing a total cash consideration of $206.7 million.

• In May 2010, Osprey Media Publishing Inc. (“Osprey Media”), which is now part of Sun Media Corporation since January 1, 2011, paid the balance on its term credit facility and settled the related hedging contracts, representing a total cash consideration of $116.3 million. On June 30, 2010, Osprey Media’s credit facilities were terminated.

These transactions resulted in a total loss of $12.3 million (before income taxes) in 2010, including a loss of $8.4 million previously reported in other comprehensive income.

F-31

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

9. BUSINESS ACQUISITIONS

2012

• In May 2012, the News Media segment acquired two community publications in the Province of Québec.

2011

• In February 2011, the News Media segment acquired 15 community publications in the Province of Québec. The assets acquired were mainly comprised of goodwill of $28.7 million and intangible assets of $15.7 million.

• In August 2011, the Interactive Technologies and Communications segment acquired a digital agency in the United States for a cash consideration and contingent amounts subject to the achievement of specific targets in the future. The assets acquired were mainly comprised of goodwill of $7.8 million and intangible assets of $11.3 million.

• Other businesses, principally in the Leisure and Entertainment segment, were also acquired by the Corporation during the year ended December 31, 2011.

2010

• In 2010, the Corporation increased its interest in the News Media segment’s distribution network.

The fair value of identifiable assets and liabilities related to business acquisitions in 2011 are summarized as follows:

	2011
Assets acquired
Non-cash current assets	$	2.0
Property, plant and equipment		0.9
Intangible assets		31.4
Goodwill		37.1
		71.4
Liabilities assumed
Non-cash current liabilities		(1.3	)
Deferred income taxes		(3.1	)
		(4.4	)
Net assets acquired at fair value	$	67.0
Consideration
Cash		55.7
Contingent liability		11.3
	$	67.0

The pro forma revenues and net income in 2012 would not be significantly different than actual figures if all business acquisitions had occurred at the beginning of the year.

The amount of goodwill that is deductible for tax purposes is $0.6 million in 2012 ($29.2 million in 2011 and nil in 2010).

F-32

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

10. INCOME TAXES

Income tax expenses are as follows:

	2012		2011			2010
Current	$	57.0	$	(17.7	)	$	56.5
Deferred		80.0		164.1			106.1
	$	137.0	$	146.4		$	162.6

The following table reconciles income taxes at the Corporation’s domestic statutory tax rate of 26.9% in 2012 (28.4% in 2011 and 29.9% in 2010), and income taxes in the consolidated statements of income:

	2012			2011			2010
Income taxes at domestic statutory tax rate	$	102.5		$	151.4		$	194.7
(Reduction) increase resulting from:
Effect of provincial tax rate differences		(0.5	)		(0.4	)		(1.0	)
Effect of non-deductible charges, non-taxable income and differences between current and future tax rates		(4.3	)		(9.1	)		(7.5	)
Change in benefit arising from current and prior year tax losses		(7.3	)		(0.8	)		(10.1	)
Tax consolidation transactions with the parent corporation		(1.5	)		—			(2.7	)
Impairment of goodwill		46.1			—			—
Other		2.0			5.3			(10.8	)
Income taxes	$	137.0		$	146.4		$	162.6

The significant items comprising the Corporation’s net deferred income tax liability and their impact on the deferred income tax expense are as follows:

	Consolidated balance sheets						Consolidated income statements
	2012			2011			2012			2011			2010
Loss carryforwards	$	22.9		$	56.9		$	44.2		$	(33.3	)	$	2.9
Accounts payable, accrued charges, provisions and deferred revenue		8.7			11.5			2.8			7.7			3.0
Defined benefit plans		62.4			58.4			5.6			12.5			0.3
Property, plant and equipment		(412.1	)		(400.6	)		11.5			51.9			54.5
Goodwill, intangible assets and other assets		(108.1	)		(106.3	)		1.8			6.3			18.9
Long-term debt and derivative financial instruments		(48.8	)		(33.9	)		18.3			17.8			15.6
Benefits from a general partnership		(101.4	)		(108.6	)		(7.2	)		108.6			—
Other		5.6			8.5			3.0			(7.4	)		10.9
	$	(570.8	)	$	(514.1	)	$	80.0		$	164.1		$	106.1

F-33

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

10. INCOME TAXES (continued)

Changes in the net deferred income tax liability are as follows:

	Note		2012			2011
Balance as of beginning of the year			$	(514.1	)	$	(369.3	)
Recognized in statement of income				(80.0	)		(164.1	)
Recognized in other comprehensive income				13.0			21.8
Business acquisitions				—			(3.1	)
Acquisition of tax deductions		27		10.2			—
Other				0.1			0.6
Balance as of the end of the year			$	(570.8	)	$	(514.1	)
Deferred income tax asset			$	19.7		$	20.6
Deferred income tax liability				(590.5	)		(534.7	)
			$	(570.8	)	$	(514.1	)

As of December 31, 2012, the Corporation had loss carryforwards for income tax purposes of $63.5 million available to reduce future taxable income, including $42.0 million that will expire between 2026 and 2032, and $21.5 million that can be carried forward indefinitely. Of these losses, an amount of $10.5 million has not been recognized. The Corporation also had capital losses of $883.1 million that can be carried forward indefinitely and applied only against future capital gains, of which $854.4 million were not recognized.

The Corporation has not recognized a deferred income tax liability for the undistributed earnings of its foreign subsidiaries in the current or prior years since the Corporation does not expect to sell or repatriate funds from those investments, in which case the undistributed earnings might become taxable.

There are no income tax consequences attached to the payment of dividends in 2012, 2011 or 2010 by the Corporation to its shareholders.

11. ACCOUNTS RECEIVABLE

	Note			2012		2011
Trade		26	(c)	$	523.1	$	519.6
Other					54.9		83.0
				$	578.0	$	602.6

F-34

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

12. INVENTORIES

	2012		2011
Raw materials and supplies	$	30.1	$	36.1
Work in progress		14.2		23.3
Finished goods		146.5		162.1
Programs, broadcast and distribution rights		64.7		62.1
	$	255.5	$	283.6

Cost of inventories included in purchase of goods and services amounted to $871.0 million in 2012 ($901.2 million in 2011 and $805.7 million in 2010). Write-downs of inventories totalling $6.8 million were recognized in purchase of goods and services in 2012 ($17.6 million in 2011 and $3.3 million in 2010).

13. PROPERTY, PLANT AND EQUIPMENT

For the years ended December 31, 2012 and 2011, changes in the net carrying amount of property, plant and equipment are as follows:

	Land, buildings and leasehold improvements			Machinery and equipment			Telecommunications networks			Projects under development			Total
Cost
Balance as of December 31, 2010	$	420.6		$	945.5		$	3,383.4		$	125.5		$	4,875.0
Additions		25.4			197.4			324.3			233.6			780.7
Net change in additions financed with accounts payable		—			(1.8	)		22.6			4.0			24.8
Reclassification		2.0			33.4			254.8			(290.2	)		—
Retirement, disposals and other		(10.0	)		(76.8	)		(21.4	)		0.1			(108.1	)
Balance as of December 31, 2011		438.0			1,097.7			3,963.7			73.0			5,572.4
Additions		43.6			208.3			389.7			69.0			710.6
Net change in additions financed with accounts payable		0.6			—			(47.4	)		0.5			(46.3	)
Reclassification		1.9			32.1			57.9			(91.9	)		—
Retirement, disposals and other		(7.4	)		(91.5	)		(82.1	)		—			(181.0	)
Balance as of December 31, 2012	$	476.7		$	1,246.6		$	4,281.8		$	50.6		$	6,055.7

F-35

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

13. PROPERTY, PLANT AND EQUIPMENT (continued)

	Land, buildings and leasehold improvements			Machinery and equipment			Telecommunications networks			Projects under development		Total
Accumulated amortization and impairment losses
Balance as of December 31, 2010	$	145.5		$	417.8		$	1,563.8		$	—	$	2,127.1
Amortization		15.8			112.3			260.3			—		388.4
Retirement, disposals and other		(4.9	)		(73.6	)		(20.6	)		—		(99.1	)
Balance as of December 31, 2011		156.4			456.5			1,803.5			—		2,416.4
Amortization		17.1			143.9			296.1			—		457.1
Retirement, disposals and other		(6.1	)		(82.3	)		(82.6	)		—		(171.0	)
Balance as of December 31, 2012	$	167.4		$	518.1		$	2,017.0		$	—	$	2,702.5
Net carrying amount
As of December 31, 2011	$	281.6		$	641.2		$	2,160.2		$	73.0	$	3,156.0
As of December 31, 2012	$	309.3		$	728.5		$	2,264.8		$	50.6	$	3,353.2

F-36

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

14. INTANGIBLE ASSETS

For the years ended December 31, 2012 and 2011, changes in the net carrying amount of intangible assets are as follows:

	AWS spectrum licences		Software			Customer relationships and other		Broadcasting licences			Mastheads		Projects under development			Total
Cost
Balance as of December 31, 2010	$	458.8	$	368.9		$	187.0	$	134.1		$	105.6	$	120.3		$	1,374.7
Additions		—		63.1			3.3		0.1			—		25.1			91.6
Net change in additions financed with accounts payable		—		1.7			—		—			—		0.2			1.9
Reclassification		—		16.2			—		—			—		(16.2	)		—
Business acquisitions		—		0.5			25.7		—			5.2		—			31.4
Retirement, disposals and other		—		(0.1	)		3.7		(30.8	)		—		—			(27.2	)
Balance as of December 31, 2011		458.8		450.3			219.7		103.4			110.8		129.4			1,472.4
Additions		—		61.8			4.6		—			—		28.5			94.9
Net change in additions financed with accounts payable		—		(6.4	)		—		—			—		(0.1	)		(6.5	)
Reclassification		—		34.1			—		—			—		(34.1	)		—
Retirement, disposals and other		—		3.2			0.6		(0.4	)		—		—			3.4
Balance as of December 31, 2012	$	458.8	$	543.0		$	224.9	$	103.0		$	110.8	$	123.7		$	1,564.2

The cost of internally generated intangible assets, mainly composed of software, was $358.4 million as of December 31, 2012 ($297.8 million as of December 31, 2011). For the year ended December 31, 2012, the Corporation recorded additions of internally generated intangible assets of $52.9 million ($58.3 million in 2011 and $60.2 million in 2010).

F-37

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

14. INTANGIBLE ASSETS (continued)

	AWS spectrum licences		Software		Customer relationships and other			Broadcasting licences			Mastheads		Projects under development		Total
Accumulated amortization and impairment losses
Balance as of December 31, 2010	$	14.7	$	165.1	$	78.8		$	31.6		$	48.2	$	—	$	338.4
Amortization		52.4		47.6		20.9			—			—		—		120.9
Retirement, disposals and other		—		0.4		2.5			(30.8	)		—		—		(27.9	)
Balance as of December 31, 2011		67.1		213.1		102.2			0.8			48.2		—		431.4
Amortization		55.6		61.9		23.1			—			—		—		140.6
Impairment		—		—		18.0			—			16.6		—		34.6
Retirement, disposals and other		—		1.2		(0.3	)		—			—		—		0.9
Balance as of December 31, 2012	$	122.7	$	276.2	$	143.0		$	0.8		$	64.8	$	—	$	607.5
Net carrying amount
As of December 31, 2011	$	391.7	$	237.2	$	117.5		$	102.6		$	62.6	$	129.4	$	1,041.0
As of December 31, 2012	$	336.1	$	266.8	$	81.9		$	102.2		$	46.0	$	123.7	$	956.7

The accumulated amortization and impairment losses of internally generated intangible assets, mainly composed of software, was $161.5 million as of December 31, 2012 ($115.2 million as of December 31, 2011). For the year ended December 31, 2012, the Corporation recorded $41.2 million of amortization ($29.3 million in 2011 and $22.9 million in 2010).

The net carrying value of internally generated intangible assets was $196.9 million as of December 31, 2012 ($182.6 million as of December 31, 2011).

Broadcasting licenses are allocated to the Broadcasting group of CGUs and mastheads are allocated to the News Media group of CGUs.

F-38

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

15. GOODWILL

For the years ended December 31, 2012 and 2011, changes in the net carrying amount of goodwill are as follows:

Cost
Balance as of December 31, 2010	$	6,955.3
Business acquisitions		37.1
Other		1.5
Balance as of December 31, 2011		6,993.9
Business acquisitions		0.6
Other		(1.3	)
Balance as of December 31, 2012	$	6,993.2
Accumulated amortization and impairment losses
Balance as of December 31, 2010 and 2011	$	3,450.1
Impairment loss (note 7)		171.5
Balance as of December 31, 2012	$	3,621.6
Net carrying amount
As of December 31, 2011	$	3,543.8
As of December 31, 2012	$	3,371.6

The net carrying amount of goodwill as of December 31, 2012 and 2011 is allocated to the following significant groups of CGUs:

		2012		2011
Industry segment	Group of CGUs
Telecommunications	Telecommunications	$	2,570.3	$	2,570.2
	Specialized websites		19.5		19.5
News Media	News Media		682.6		827.1
Broadcasting	Broadcasting		3.1		3.1
	Publishing		37.3		51.8
Leisure and Entertainment	Book publishing and distribution		16.3		16.3
	Music		8.9		20.9
Interactive Technologies and Communications	Interactive Technologies and Communications		33.6		34.9
Total		$	3,371.6	$	3,543.8

F-39

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

15. GOODWILL (continued)

Recoverable amounts

Recoverable amounts were determined based on value in use with respect to the impairment tests performed. The Corporation uses the discounted cash flow method to estimate value in use, consisting of future cash flows derived primarily from the most recent budget and three-year strategic plan approved by the Corporation’s management and presented to the Board of Directors. These forecasts considered each CGU’s past operating performance and market share as well as economic trends, along with specific and market industry trends and corporate strategies. A range of growth rates is used for cash flows beyond this three-year period. The discount rate used by the Corporation is a pre-tax rate derived from the weighted average cost of capital pertaining to each CGU, which reflects the current market assessment of (i) the time value of money, and (ii) the risk specific to the assets for which the future cash flow estimates have not been risk-adjusted. The perpetual growth rate was determined with regard to the specific markets in which the CGUs participate. The following key assumptions were used to determine recoverable amounts in the most recent impairment tests performed:

	20122						20111
Group of CGUs	Pre-tax discount rate (WACC)			Perpetual growth rate			Pre-tax discount rate (WACC)			Perpetual growth rate
Telecommunications:
Telecommunications3		9.03	%		3.00	%		10.19	%		3.00	%
Specialized websites		17.88			2.00			15.00			3.00
News Media		12.86			0.00			11.24			1.00
Broadcasting:
Broadcasting3		11.27			1.00			11.43			1.00
Publishing		16.26			1.00			15.89			1.00
Leisure and Entertainment:
Book publishing and distribution3		13.97			1.00			14.14			1.00
Music		14.88			0.50			15.00			1.00
Interactive Technologies and Communications		17.05			4.00			15.17			4.00

¹  All tests were performed as of April 1, 2011.

²  All tests were performed as of April 1, 2012, except for the Publishing CGU in the Broadcasting segment, which is as of March 31, 2012 (note 7), and for the News Media CGU and Music CGU which are as of September 30, 2012 (note 7).

³  As allowed by IAS 36, Impairment of assets, recoverable amounts calculated as of January 1, 2010 were used in the 2011 impairment test performed for these groups of CGUs.

F-40

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

15. GOODWILL (continued)

Sensitivity of recoverable amounts

The following table presents, for each principal group of CGUs, the change in the discount rate and in the perpetual growth rate used for the tests performed that would have been required in order for the recoverable amount to equal the carrying value of the CGU as of the most recent impairment tests in 2012:

Group of CGUs1, 2	Incremental increase in pre-tax discount rate (WACC)			Incremental decrease in perpetual growth rate
Telecommunications		4.07	%		4.30	%
Broadcasting		3.41			4.14
Book publishing and distribution		7.23			11.19
Interactive Technologies and Communications		3.87			5.16

¹  No sensitivity tests were performed for the Publishing CGU in the Broadcasting segment, the News Media CGU and the Music CGU in the Leisure and Entertainment segment since impairment charges were recorded as a result of the latest impairment tests on these CGUs (note 7).

²  The recoverable amount of the specialized websites CGU exceeded significantly its carrying value on the latest impairment test and therefore, has a low level of sensitivity to these assumptions.

16. OTHER ASSETS

	2012		2011
Programs, broadcast and distribution rights	$	33.6	$	35.5
Deferred connection costs		38.2		38.7
Other		30.3		18.7
	$	102.1	$	92.9

17. ACCOUNTS PAYABLE AND ACCRUED CHARGES

	2012		2011
Trade and accruals	$	577.6	$	557.0
Salaries and employee benefits		160.6		166.5
Interest payable		33.6		23.6
Stock-based compensation		13.1		17.8
	$	784.9	$	764.9

F-41

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

18. PROVISIONS AND CONTINGENCIES

	Restructuring of operations			Contingencies and legal disputes			Contractual obligations and other			Total
Balance as of December 31, 2011	$	22.7		$	5.8		$	9.8		$	38.3
Net change in income		33.3			(0.1	)		1.7			34.9
Payments		(21.4	)		(0.8	)		(1.7	)		(23.9	)
Other		—			—			0.3			0.3
Balance as of December 31, 2012	$	34.6		$	4.9		$	10.1		$	49.6
Current portion	$	34.2		$	4.9		$	6.8		$	45.9
Non-current portion		0.4			—			3.3			3.7

The recognition of provisions, in terms of both timing and amounts, requires the exercise of judgment based on relevant circumstances and events that can be subject to change over time. Provisions are primarily comprised of the following:

Restructuring of operations

Provisions for restructuring activities primarily cover severance payments related to initiatives to eliminate positions in the News Media segment.

Contingencies and legal disputes

There are a number of legal proceedings against the Corporation and its subsidiaries that are pending. In the opinion of the management of the Corporation and its subsidiaries, the outcome of those proceedings is not expected to have a material adverse effect on the Corporation’s results or on its financial position. Management of the Corporation, after taking legal advice, has established provisions for specific claims or actions considering the facts of each case. The Corporation cannot determine when and if a payment related to these provisions will be made.

F-42

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

19. LONG-TERM DEBT

	Effective interest rate as of December 31, 2012			2012			2011
Quebecor Media
Bank credit facilities (i) (note 8)		—	%	$	—		$	162.6
Other credit facility (ii)		1.75	%		31.9			42.5
Senior Notes (iii) (note 8)		(iii	)		2,303.7			1,544.6
					2,335.6			1,749.7
Videotron (iv)
Bank credit facilities (v)		2.76	%		58.9			69.6
Senior Notes (iii) (note 8)		(iii	)		2,274.1			1,898.4
					2,333.0			1,968.0
Sun Media Corporation
Bank credit facilities		—	%		—			37.4
TVA Group (iv)
Bank credit facilities (vi)		5.54	%		75.0			93.0
Total long-term debt					4,743.6			3,848.1
Change in fair value related to hedged interest rate risk					—			15.5
Adjustments related to embedded derivatives					(254.5	)		(120.0	)
Financing fees, net of amortization					(60.4	)		(45.7	)
					(314.9	)		(150.2	)
					4,428.7			3,697.9
Less current portion					(21.3	)		(80.3	)
				$	4,407.4		$	3,617.6

F-43

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

19. LONG-TERM DEBT (continued)

(i) The bank credit facilities of Quebecor Media are comprised of (a) a US$350.0 million term loan “B” credit facility, fully prepaid in 2012 (the balance was $162.6 million as of December 31, 2011), and (b) a $300.0 million revolving credit facility, bearing interest at Bankers’ acceptance rate, U.S. London Interbanking Offered Rate (“LIBOR”), Canadian prime rate or U.S. prime rate, plus a premium determined by a leverage ratio, and maturing in January 2016. These credit facilities contain covenants such as maintaining certain financial ratios, limiting its ability to incur additional indebtedness and restricting the payment of dividends and other distributions. They are collateralized by liens on all of the movable property and assets of the Corporation (primarily shares of its subsidiaries), now owned or hereafter acquired. As of December 31, 2012, the credit facilities of the Corporation were secured by assets with a carrying value of $4,492.3 million ($3,845.1 million in 2011). As of December 31, 2012 and 2011, no amount was drawn on the revolving credit facility.

(ii) The long-term credit facility with Société Générale (Canada) for the CAN dollar equivalent of €59.4 million, bears interest at Bankers’ acceptance rate, plus a premium, and matures in 2015. The facility is secured by all the property and assets of the Corporation, now owned and hereafter acquired. This facility mostly contains the same covenants as the bank facilities described in (i).

(iii) The Senior Notes are unsecured and contain certain restrictions on the respective issuers, including limitations on their ability to incur additional indebtedness, pay dividends or make other distributions. Some notes are redeemable at the option of the issuer, in whole or in part, at a price based on a make-whole formula during the first five years of the term of the notes and at a decreasing premium thereafter, while the remaining notes are redeemable or at a price based on a make-whole formula at any time prior to maturity. The notes issued by Videotron are guaranteed by specific subsidiaries of Videotron. The following table summarizes the terms of the outstanding Senior Notes as of December 31, 2012:

Principal amount	Annual nominal interest rate			Effective interest rate (after discount or premium at issuance)			Maturity date		Interest payable every 6 months on
Quebecor Media
US$ 380.0		7.750	%		8.810	%		March 15, 2016		June and December 15
US$ 265.0		7.750	%		7.750	%		March 15, 2016		June and December 15
$ 325.01		7.375	%		7.375	%		January 15, 2021		June and December 15
US$ 850.02		5.750	%		5.750	%		January 15, 2023		June and December 15
$ 500.02		6.625	%		6.625	%		January 15, 2023		June and December 15
Videotron
US$ 175.0		6.375	%		6.444	%		December 15, 2015		June and December 15
US$ 715.0		9.125	%		9.366	%		April 15, 2018		June and December 15
$ 300.03		7.125	%		7.125	%		January 15, 2020		June and December 15
$ 300.04		6.875	%		6.875	%		July 15, 2021		June and December 15
US$ 800.05		5.000	%		5.000	%		July 15, 2022		January and July 15

¹  The notes were issued in January 2011 for net proceeds of $319.9 million, net of financing fees of $5.1 million.

²  The notes were issued in October 2012 for net proceeds of $1,314.5 million, net of financing fees of $16.5 million.

³  The notes were issued in January 2010 for net proceeds of $293.9 million, net of financing fees of $6.1 million.

⁴  The notes were issued in July 2011 for net proceeds of $294.8 million, net of financing fees of $5.2 million.

⁵  The notes were issued in March 2012 for net proceeds of $787.6 million, net of financing fees of $11.9 million.

F-44

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

19. LONG-TERM DEBT (continued)

(iv) The debts of these subsidiaries are non-recourse to Quebecor Media.

(v) The bank credit facilities provide for a $575.0 million secured revolving credit facility that matures in July 2016 and a $75.0 million secured export financing facility providing for a term loan that matures in June 2018. The revolving credit facility bears interest at Bankers’ acceptance rate, Canadian prime rate or U.S. prime rate, plus a margin, depending on Videotron’s leverage ratio. Advances under the export financing facility bear interest at Bankers’ acceptance rate and Canadian LIBOR plus a margin. The bank credit facilities are secured by a first ranking hypothec on the universality of all tangible and intangible assets, current and future, of Videotron and its wholly owned subsidiaries. As of December 31, 2012, the bank credit facilities were secured by assets with a carrying value of $6,206.2 million ($5,990.0 million in 2011). The bank credit facilities contain covenants such as maintaining certain financial ratios, limiting its ability to incur additional indebtedness and restricting the payment of dividends and other distributions. As of December 31, 2012 and 2011, no amount was drawn on the revolving credit facility. As of December 31, 2012, $58.9 million ($69.6 million in 2011) was outstanding on the secured export financing facility.

(vi) The bank credit facilities of TVA Group Inc. (“TVA Group”) are comprised of an unsecured revolving credit facility in the amount of $100.0 million, maturing in February 2017, and an unsecured term credit facility in the amount of $75.0 million, maturing in December 2014. TVA Group’s revolving credit facility bears interest at floating rates based on Bankers’ acceptance rate, LIBOR, Canadian prime rate or U.S. prime rate plus a premium determined by a leverage ratio, while the term loan bears interest at a rate of 5.54%, payable every six months on June 15 and December 15. The bank credit facilities contain covenants such as maintaining certain financial ratios, limiting its ability to incur additional indebtedness and restricting the payment of dividends and other distributions. As of December 31, 2012, no amount was drawn on the revolving credit facility ($18.0 million in 2011), and $75.0 million ($75.0 million in 2011) was outstanding on the term credit facility.

On December 31, 2012, the Corporation and its subsidiaries were in compliance with all debt covenants.

Principal repayments of long-term debt over the coming years are as follows:

2013	$	21.3
2014		96.4
2015		195.2
2016		642.4
2017		10.7
2018 and thereafter		3,777.6

F-45

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

20. OTHER LIABILITIES

	Note		2012		2011
Defined benefit plans		28	$	249.4	$	237.3
Deferred revenue				49.5		51.4
Stock-based compensation1		22		5.0		8.3
Other				23.5		27.2
			$	327.4	$	324.2

¹  The current portion of $13.1 million of stock-based compensation is included in accounts payable and accrued charges ($17.8 million in 2011) (note 17).

21. CAPITAL STOCK

(a) Authorized capital stock

An unlimited number of Common Shares, without par value;

An unlimited number of non-voting Cumulative First Preferred Shares, without par value; the number of preferred shares in each series and the related characteristics, rights and privileges are determined by the Board of Directors prior to each issue:

• An unlimited number of Cumulative First Preferred Shares, Series A (“Preferred A Shares”), carrying a 12.5% annual fixed cumulative preferential dividend, redeemable at the option of the holder and retractable at the option of the Corporation;

• An unlimited number of Cumulative First Preferred Shares, Series B (“Preferred B Shares”), carrying a fixed cumulative preferential dividend generally equivalent to the Corporation’s credit facility interest rate, redeemable at the option of the holder and retractable at the option of the Corporation;

• An unlimited number of Cumulative First Preferred Shares, Series C (“Preferred C Shares”), carrying an 11.25% annual fixed cumulative preferential dividend, redeemable at the option of the holder and retractable at the option of the Corporation;

• An unlimited number of Cumulative First Preferred Shares, Series D (“Preferred D Shares”), carrying an 11.0% annual fixed cumulative preferential dividend, redeemable at the option of the holder and retractable at the option of the Corporation;

• An unlimited number of Cumulative First Preferred Shares, Series F (“Preferred F Shares”), carrying a 10.85% annual fixed cumulative preferential dividend, redeemable at the option of the holder and retractable at the option of the Corporation;

• An unlimited number of Cumulative First Preferred Shares, Series G (“Preferred G Shares”), carrying a 10.85% annual fixed cumulative preferential dividend, redeemable at the option of the holder and retractable at the option of the Corporation;

An unlimited number of non-voting Preferred Shares, Series E (“Preferred E Shares”), carrying a non-cumulative dividend subsequent to the holders of Cumulative First Preferred Shares, redeemable at the option of the holder and retractable at the option of the Corporation.

F-46

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

21. CAPITAL STOCK (continued)

(b) Issued and outstanding capital stock

	Common Shares
	Number			Amount
Balance as of December 31, 2010 and 2011		123,602,807		$	1,752.4
Increase of stated capital		—			3,175.0
Redemption		(20,351,307	)		(811.3	)
Balance as of December 31, 2012		103,251,500		$	4,116.1

On September 27, 2012, the Board of Directors approved a special resolution to increase the stated capital of the Corporation’s Common Shares by $3,175.0 million and to reduce the contributed surplus of the Corporation by the same amount.

On October 11, 2012, the Corporation repurchased 20,351,307 of its common shares held by CDP Capital d’Amérique Investissement inc., a subsidiary of Caisse de dépôt et placement du Québec, for an aggregate purchase price of $1.0 billion paid in cash. All repurchased shares were cancelled. Transaction fees of $0.1 million and the excess of $188.7 million of the purchase price over the carrying value of the common shares repurchased were recorded in increase to the deficit.

(c) Cumulative First Preferred Shares

All Cumulative First Preferred Shares are owned by subsidiaries of the Corporation and are eliminated on consolidation. The following Cumulative First Preferred Shares are issued and outstanding:

	Preferred G Shares
	Number		Amount
Balance as of December 31, 2010, 2011 and 2012		1,630,000	$	1,630.0

F-47

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

22. STOCK-BASED COMPENSATION PLANS

(a) Quebecor plans

(i) Stock option plan

Under a stock option plan established by the parent corporation, 6,500,000 of Class B shares of the parent corporation have been set aside for directors, officers, senior employees, and other key employees of the parent corporation and its subsidiaries. The exercise price of each option is equal to the weighted average trading price of the parent corporation’s Class B shares on the Toronto Stock Exchange over the last five trading days immediately preceding the granting of the option. Each option may be exercised during a period not exceeding 10 years from the date granted. Options usually vest as follows: 1/3 after one year, 2/3 after two years, and 100% three years after the original grant. Holders of options under the stock option plan have the choice, when they exercise their options, of acquiring the Class B shares at the corresponding option exercise price, or receiving a cash payment equivalent to the difference between the market value of the underlying shares and the exercise price of the option. The Board of Directors of the parent corporation may, at its discretion, affix different vesting periods at the time of each grant.

The following table gives details on changes to outstanding options for the years ended December 31, 2012 and 2011:

	2012					2011
	Options			Weighted average exercise price		Options			Weighted average exercise price
Balance at beginning of year		356,957		$	26.99		502,381		$	23.38
Granted		49,447			36.86		48,148			35.09
Exercised		(282,662	)		24.90		(193,572	)		19.63
Balance at end of year		123,742		$	35.72		356,957		$	26.99
Vested options at end of year		29,123		$	34.92		185,876		$	27.65

During the year ended December 31, 2012, 282,662 stock options of the Quebecor plan were exercised for a cash consideration of $3.3 million (193,572 stock options for $2.7 million in 2011).

The following table gives summary information on outstanding options as of December 31, 2012:

	Outstanding options						Vested options
Range of exercise price	Number		Weighted average years to maturity		Weighted average exercise price		Number		Weighted average exercise price
$34.72 to 36.86		123,742		8.44	$	35.72		29,123	$	34.92

F-48

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

22. STOCK-BASED COMPENSATION PLANS (continued)

(a) Quebecor plans (continued)

(ii) Mid-term stock-based compensation plan

Under the mid-term stock-based compensation plan, participants are entitled to receive a cash payment at the end of a three-year period, based on the appreciation of the Quebecor Class B share price, and subject to the achievement of certain non-market performance criteria. As of December 31, 2012, 439,287 units awarded to participants in Quebecor Media were outstanding at an average exercise price of $31.97 (288,649 units at an average exercise price of $31.33 in 2011).

(b) Quebecor Media stock option plan

Under a stock option plan established by the Corporation, 6,180,140 Common Shares of the Corporation have been set aside for officers, senior employees, directors, and other key employees of the Corporation and its subsidiaries. Each option may be exercised within a maximum period of 10 years following the date of grant at an exercise price not lower than, as the case may be, the fair market value of the Common Shares of Quebecor Media at the date of grant, as determined by its Board of Directors (if the Common Shares of Quebecor Media are not listed on a stock exchange at the time of the grant), or the five-day weighted average market price ending on the day preceding the date of grant of the Common Shares of the Corporation on the stock exchange(s) where such shares are listed at the time of grant. As long as the Common Shares of Quebecor Media are not listed on a recognized stock exchange, optionees may exercise their vested options during one of the following periods: from March 1 to March 30, from June 1 to June 29, from September 1 to September 29, and from December 1 to December 30. Holders of options under the plan have the choice at the time of exercising their options of receiving an amount in cash (equal to the difference between either the five-day weighted average market price ending on the day preceding the date of exercise of the Common Shares of the Corporation on the stock exchange(s) where such shares are listed at the time of exercise or the fair market value of the Common Shares, as determined by the Corporation’s Board of Directors, and the exercise price of their vested options) or, subject to certain stated conditions, exercise their options to purchase Common Shares of Quebecor Media at the exercise price. Except under specific circumstances, and unless the Compensation Committee decides otherwise, options vest over a five-year period in accordance with one of the following vesting schedules as determined by the Compensation Committee at the time of grant: (i) equally over five years with the first 20% vesting on the first anniversary of the date of the grant; (ii) equally over four years with the first 25% vesting on the second anniversary of the date of grant; and (iii) equally over three years with the first 33 1/3% vesting on the third anniversary of the date of grant. The vesting on 200,000 options is also subject to market-related performance criteria as the achievement of specific targets in regards to the fair value of the Corporation’s shares in the future.

F-49

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

22. STOCK-BASED COMPENSATION PLANS (continued)

(b) Quebecor Media stock option plan (continued)

The following table gives summary information on outstanding options granted as of December 31, 2012 and 2011:

	2012					2011
	Options			Weighted average exercise price		Options			Weighted average exercise price
Balance at beginning of year		2,768,712		$	43.85		3,515,668		$	42.69
Granted		146,000			52.06		114,000			50.18
Exercised		(1,480,355	)		43.44		(695,423	)		38.74
Cancelled		(85,350	)		46.66		(165,533	)		45.15
Balance at end of year		1,349,007		$	45.02		2,768,712		$	43.85
Vested options at end of year		251,266		$	45.36		789,921		$	44.54

During the year ended December 31, 2012, 1,480,355 of the Corporation’s stock options were exercised for a cash consideration of $12.5 million (695,423 stock options for $7.9 million in 2011).

The following table gives summary information on outstanding options as of December 31, 2012:

	Outstanding options						Vested options
Range of exercise price	Number		Weighted average years to maturity		Weighted average exercise price		Number		Weighted average exercise price
$30.47 to 41.05		302,848		6.53	$	36.50		26,348	$	35.93
$44.45 to 46.48		716,818		6.83		46.25		110,577		45.10
$47.29 to 53.40		329,341		7.77		50.15		114,341		47.80
$30.47 to 53.40		1,349,007		6.99	$	45.02		251,266	$	45.36

F-50

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

22. STOCK-BASED COMPENSATION PLANS (continued)

(c) TVA Group stock option plan

Under this stock option plan, 2,200,000 Class B shares of TVA Group have been set aside for senior executives and directors of TVA Group and its subsidiaries. The terms and conditions of options granted are determined by TVA Group’s Compensation Committee. The subscription price of an option cannot be less than the closing price of Class B shares on the Toronto Stock Exchange the day before the option is granted. Options granted prior to January 2006 usually vest equally over a four-year period, with the first 25% vesting on the second anniversary date of the date of grant. Beginning January 2006, and unless the Compensation Committee decides otherwise, options vest over a five-year period in accordance with one of the following vesting schedules as determined by the Compensation Committee at the time of grant: (i) equally over five years with the first 20% vesting on the first anniversary of the date of the grant; (ii) equally over four years with the first 25% vesting on the second anniversary of the date of grant; and (iii) equally over three years with the first 33 1/3% vesting on the third anniversary of the date of grant. The term of an option cannot exceed 10 years. Holders of options under the plan have the choice, at the time of exercising their options, of receiving a cash payment from TVA Group equal to the number of shares corresponding to the options exercised, multiplied by the difference between the market value of the Class B shares and the exercise price of the option or, subject to certain conditions, exercise their options to purchase TVA Group Class B shares at the exercise price. The market value is defined as the average closing market price of the Class B shares for the last five trading days preceding the date on which the option was exercised.

The following table gives details on changes to outstanding options for the years ended December 31, 2012 and 2011:

	2012					2011
	Options			Weighted average exercise price		Options		Weighted average exercise price
Balance at beginning of year		833,610		$	16.35		833,610	$	16.35
Cancelled		(14,189	)		16.84		—		—
Balance at end of year		819,421		$	16.34		833,610	$	16.35
Vested options at end of year		819,421		$	16.34		720,266	$	16.59

The following table gives summary information on outstanding options as of December 31, 2012:

	Outstanding options						Vested options
Range of exercise price	Number		Weighted average years to maturity		Weighted average exercise price		Number		Weighted average exercise price
$14.50 to 16.40		628,412		4.44	$	14.95		628,412		$	14.95
$20.50 to 21.38		191,009		1.87		20.91		191,009			20.91
$14.50 to 21.38		819,421		3.84	$	16.34		819,421		$	16.34

F-51

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

22. STOCK-BASED COMPENSATION PLANS (continued)

(d) Assumptions in estimating the fair value of stock-based awards

The fair value of stock-based awards under the stock option plans of the parent corporation, Quebecor Media and TVA Group was estimated using the Black-Scholes option pricing model. The following weighted-average assumptions were used to estimate the fair value of all outstanding stock options under the stock option plans as of December 31, 2012 and 2011:

December 31, 2012	Quebecor			Quebecor Media			TVA Group
Risk-free interest rate		1.46	%		1.29	%		1.13	%
Dividend yield		0.52	%		1.71	%		—	%
Expected volatility		31.99	%		23.88	%		37.05	%
Expected remaining life		4.5 years			3.0 years			1.4 year
December 31, 2011	Quebecor			Quebecor Media			TVA Group
Risk-free interest rate		1.20	%		1.16	%		1.05	%
Dividend yield		0.57	%		1.66	%		—	%
Expected volatility		34.21	%		29.44	%		36.26	%
Expected remaining life		3.4 years			2.8 years			1.9 year

Except for Quebecor Media, the expected volatility is based on the historical volatility of the underlying share price for a period equivalent to the expected remaining life of the options. Since the Common Shares of Quebecor Media are not publicly traded on a stock exchange, expected volatility is derived from the implied volatility of Quebecor’s stock. The expected remaining life of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate over the expected remaining life of the option is based on the Government of Canada yield curve in effect at the time of the valuation. Dividend yield is based on the current average yield.

(e) Liability of vested options

As of December 31, 2012, the liability for all vested options was $3.1 million as calculated using the intrinsic value ($4.7 million as of December 31, 2011).

(f) Consolidated compensation charge

For the year ended December 31, 2012, a consolidated charge related to all stock-based compensation plans was recorded in the amount of $8.7 million (net reversal of $4.3 million in 2011 and net charge of $15.1 million in 2010).

F-52

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

23. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

	Translation of net investments in foreign operations			Cash flow hedges			Total
Balance as of January 1, 2010	$	—		$	(18.7	)	$	(18.7	)
Other comprehensive (loss) income		(2.9	)		46.2			43.3
Balance as of December 31, 2010		(2.9	)		27.5			24.6
Other comprehensive income (loss)		1.6			(10.9	)		(9.3	)
Balance as of December 31, 2011		(1.3	)		16.6			15.3
Other comprehensive (loss) income		(1.4	)		21.2			19.8
Balance as of December 31, 2012	$	(2.7	)	$	37.8		$	35.1

No significant amount is expected to be reclassified in income over the next 12 months in connection with derivatives designated as cash flow hedges. The balance is expected to reverse over a 10-year period.

24. COMMITMENTS

The Corporation rents premises and equipment under operating leases and has entered into long-term commitments to purchase services, capital equipment, broadcasting rights, and to pay royalties on an out-of-home advertisement contract. Rent payments include an amount of $74.4 million for future payments to the parent company. The operating leases have various terms, escalation clauses, purchase options and renewal rights. The minimum payments for the coming years are as follows:

	Leases		Other commitments
2013	$	61.7		$	93.6
2014 to 2017		149.3			134.4
2018 and thereafter		174.8			90.2

The Corporation and its subsidiaries’ operating lease expenses amounted to $76.4 million in 2012 ($72.5 million in 2011 and $66.7 million in 2010).

F-53

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

25. GUARANTEES

In the normal course of business, the Corporation enters into numerous agreements containing guarantees, including the following:

Operating leases

The Corporation has guaranteed a portion of the residual values of certain assets under operating leases for the benefit of the lessor. Should the Corporation terminate these leases prior to term (or at the end of the lease terms) and should the fair value of the assets be less than the guaranteed residual value, then the Corporation must, under certain conditions, compensate the lessor for a portion of the shortfall. In addition, the Corporation has provided guarantees to the lessor of certain premises leases with expiry dates through 2017. Should the lessee default under the agreement, the Corporation must, under certain conditions, compensate the lessor. As of December 31, 2012, the maximum exposure with respect to these guarantees was $16.8 million and no liability has been recorded in the consolidated balance sheet. The Corporation has not made any payments relating to these guarantees in prior years.

Business and asset disposals

In the sale of all or part of a business or an asset, in addition to possible indemnification relating to failure to perform covenants and breach of representations or warranties, the Corporation may agree to indemnify against claims related to the past conduct of the business. Typically, the term and amount of such indemnification will be limited by the agreement. The nature of these indemnification agreements prevents the Corporation from estimating the maximum potential liability it could be required to pay to guaranteed parties. The Corporation has not accrued any amount in respect of these items in the consolidated balance sheet. The Corporation has not made any payments relating to these guarantees in prior years.

Outsourcing companies and suppliers

In the normal course of its operations, the Corporation enters into contractual agreements with outsourcing companies and suppliers. In some cases, the Corporation agrees to provide indemnifications in the event of legal procedures initiated against them. In other cases, the Corporation provides indemnification to counterparties for damages resulting from the outsourcing companies and suppliers. The nature of the indemnification agreements prevents the Corporation from estimating the maximum potential liability it could be required to pay. No amount has been accrued in the consolidated balance sheet with respect to these indemnifications. The Corporation has not made any payments relating to these guarantees in prior years.

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Corporation’s financial risk management policies have been established in order to identify and analyze the risks faced by the Corporation, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and in the Corporation’s activities.

The Corporation uses a number of financial instruments, mainly cash and cash equivalents, trade receivables, long-term investments, bank indebtedness, trade payables, accrued liabilities, long-term debt and derivative financial instruments. As a result of their use of financial instruments, the Corporation and its subsidiaries are exposed to credit risk, liquidity risk and market risks relating to foreign exchange fluctuations and interest rate fluctuations.

In order to manage its foreign exchange and interest rate risks, the Corporation and its subsidiaries use derivative financial instruments (i) to set in CAN dollars all future payments on debts denominated in U.S. dollars (interest and principal) and certain purchases of inventories and other capital expenditures denominated in a foreign currency, (ii) to achieve a targeted balance of fixed- and floating-rate debts, and (iii) to reverse existing hedging positions through offsetting transactions. The Corporation and its subsidiaries do not intend to settle their derivative financial instruments prior to their maturity as none of these instruments is held or issued for speculative purposes. The Corporation and its subsidiaries designate their derivative financial instruments either as fair value hedges or cash flow hedges when they qualify for hedge accounting.

F-54

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

(a) Description of derivative financial instruments

(i) Foreign exchange forward contracts

Maturity	CAN dollar average exchange rate per one U.S. dollar		Notional amount sold		Notional amount bought
Quebecor Media
20131		0.9871	US$	157.3	$	155.3
20162		1.0154	US$	320.0	$	324.9
Videotron
Less than 1 year		0.9961	$	87.8	US$	88.1
20143		1.0151	US$	395.0	$	401.0

(ii) Cross-currency interest rate swaps

Hedged item	Hedging instrument
	Period covered		Notional amount		Annual interest rate on notional amount in CAN dollars			CAN dollar exchange rate on interest and capital payments per one U.S. dollar
Quebecor Media
7.750% Senior Notes due 2016		2007 to 2016	US$	380.0		7.69	%		1.0001
5.750% Senior Notes due 20232		2007 to 2016	US$	320.0		7.69	%		0.9977
7.750% Senior Notes due 2016		2006 to 2016	US$	265.0		7.39	%		1.1597
5.750% Senior Notes due 2023		2016 to 2023	US$	431.3		7.27	%		0.9792
5.750% Senior Notes due 2023		2012 to 2023	US$	418.7		6.85	%		0.9759
No hedged item1		2009 to 2013	US$	109.8		Bankers’ acceptances 3 months + 2.22	%		1.1625
No hedged item1		2006 to 2013	US$	46.6		6.45	%		1.1625

F-55

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

(a) Description of derivative financial instruments (continued)

(ii) Cross-currency interest rate swaps (continued)

Hedged item	Hedging instrument
	Period covered		Notional amount		Annual interest rate on notional amount in CAN dollars			CAN dollar exchange rate on interest and capital payments per one U.S. dollar
Videotron
5.000% Senior Notes due 20223		2003 to 2014	US$	200.0		Bankers’ acceptances 3 months + 2.73	%		1.3425
5.000% Senior Notes due 20223		2004 to 2014	US$	60.0		Bankers’ acceptances 3 months + 2.80	%		1.2000
5.000% Senior Notes due 20223		2003 to 2014	US$	135.0		7.66	%		1.3425
6.375% Senior Notes due 2015		2005 to 2015	US$	175.0		5.98	%		1.1781
9.125% Senior Notes due 2018		2008 to 2018	US$	455.0		9.65	%		1.0210
9.125% Senior Notes due 2018		2009 to 2018	US$	260.0		9.12	%		1.2965
5.000% Senior Notes due 2022		2014 to 2022	US$	543.1		6.01	%		0.9983
5.000% Senior Notes due 2022		2012 to 2022	US$	256.9		5.81	%		1.0016

¹  These cross-currency interest rate swaps, maturing in January 2013, were used by the Corporation to hedge the foreign currency exposure under its term loan “B” credit facility that was prepaid in full in December 2012 (note 8). In conjunction with the prepayment of the term loan “B” and pending the maturity of these swaps in January 2013, the Corporation has entered into US$157.3 million offsetting foreign exchange forward contracts to reverse its hedging position related to the January 17, 2013 notional exchange.

²  The Corporation initially entered into these cross-currency interest rate swaps to hedge the foreign currency risk exposure under its 7.75% Senior Notes due 2016 redeemed in 2012. These swaps are now used to set in CAN dollars all coupon payments through 2016 on US$431.3 million of notional amount under its 5.75% Senior Notes due 2023 issued on October 11, 2012. In conjunction with the repurposing of these swaps, the Corporation has entered into US$320.0 million offsetting foreign exchange forward contracts to reverse its hedging position related to the March 15, 2016 notional exchange.

³  Videotron initially entered into these cross-currency interest rate swaps to hedge the foreign currency risk exposure under its 6.875% Senior Notes due 2014 redeemed in 2012. These swaps are now used to set in CAN dollars all coupon payments through 2014 on US$543.1 million of notional amount under its 5.00% Senior Notes due 2022 issued on March 14, 2012. In conjunction with the repurposing of these swaps, Videotron has entered into US$395.0 million offsetting foreign exchange forward contracts to reverse its hedging position related to the January 15, 2014 notional exchange.

Certain cross-currency interest rate swaps entered into by the Corporation and its subsidiaries include an option that allows each party to unwind the transaction on a specific date at the then settlement amount.

F-56

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

b) Fair value of financial instruments

The carrying amount of accounts receivable from external or related parties (classified as loans and receivables), accounts payable, accrued charges due to external or related parties, and provisions (classified as other liabilities), approximates their fair value since these items will be realized or paid within one year or are due on demand. Other financial instruments classified as loans and receivables or as available for sale are not significant and their carrying value approximates their fair value.

The fair value of long-term debt is estimated based on quoted market prices when available or on valuation models. When the Corporation uses valuation models, the fair value is estimated using discounted cash flows using year-end market yields or the market value of similar instruments with the same maturity.

In accordance with IFRS 7, Financial Instruments: Disclosures, the Corporation has considered the following fair value hierarchy that reflects the significance of the inputs used in measuring its other financial instruments accounted for at fair value in the consolidated balance sheets:

•     Level 1:	quoted prices (unadjusted) in active markets for identical assets or liabilities;
•     Level 2:	inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
•     Level 3:	inputs that are not based on observable market data (unobservable inputs).

The fair value of cash equivalents and bank indebtedness classified as held for trading and accounted for at their fair value on the consolidated balance sheets, is determined using Level 2 inputs.

The fair value of derivative financial instruments recognized on the consolidated balance sheets is estimated as per the Corporation’s valuation models. These models project future cash flows and discount the future amounts to a present value using the contractual terms of the derivative instrument and factors observable in external markets data, such as period-end swap rates and foreign exchange rates (Level 2 inputs). An adjustment is also included to reflect non-performance risk impacted by the financial and economic environment prevailing at the date of the valuation in the recognized measure of the fair value of the derivative instruments by applying a credit default premium estimated using a combination of observable and unobservable inputs in the market (Level 3 inputs) to the net exposure of the counterparty or the Corporation. Accordingly, financial derivative instruments are classified as Level 3 under the fair value hierarchy.

The fair value of early settlement options recognized as embedded derivatives is determined by option pricing models using Level 2 market inputs, including volatility and discount factors.

F-57

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

(b) Fair value of financial instruments (continued)

The carrying value and fair value of long term debt and derivative financial instruments as of December 31, 2012 and 2011 are as follows:

	2012						2011
Asset (liability)	Carrying value			Fair value			Carrying value			Fair value
Long-term debt1	$	(4,743.6	)	$	(5,007.6	)	$	(3,848.1	)	$	(4,002.2	)
Derivative financial instruments2
Early settlement options		264.9			264.9			138.0			138.0
Interest rate swaps		—			—			(0.9	)		(0.9	)
Foreign exchange forward contracts3		0.1			0.1			3.2			3.2
Cross-currency interest rate swaps3		(263.0	)		(263.0	)		(282.8	)		(282.8	)

¹  The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest risk, embedded derivatives and financing fees.

²  The fair value of derivative financial instruments designated as hedges is a liability position of $168.9 million as of December 31, 2012 ($280.5 million as of December 31, 2011).

³  The value of foreign exchange forward contracts entered into to reverse existing hedging positions is netted from the value of the offset financial instruments.

The following table shows changes to the carrying value and fair value of derivative financial instruments (Level 3) in 2012 and 2011:

	2012			2011
Asset (liability)
Balance as of beginning of year	$	(280.5	)	$	(451.2	)
Loss recognized in the consolidated statement of income1, 2		(10.0	)		(4.2	)
(Loss) gain recognized in other comprehensive income3		(10.2	)		22.7
Settlements		37.8			152.2
Balance as of end of year	$	(262.9	)	$	(280.5	)

¹  Losses were largely related to derivative instruments held as of December 31, 2012 and December 31, 2011.

²  The loss is offset by a gain on valuation and translation of long-term debt of $9.4 million in 2012 ($3.6 million in 2011).

³  The loss is offset by a gain on translation of long-term debt of $43.3 million in 2012 (gain offset by a loss of $32.2 million in 2011).

F-58

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

(b) Fair value of financial instruments (continued)

The estimated sensitivity on income and other comprehensive income, before income tax, of a 100 basis-point variance in the credit default premium used to calculate the fair value of derivative financial instruments as of December 31, 2012, as per the Corporation’s valuation models, is as follows:

Increase (decrease)	Income			Other comprehensive income
Increase of 100 basis points	$	0.1		$	2.0
Decrease of 100 basis points		(0.1	)		(2.0	)

(c) Credit risk management

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial asset fails to meet its contractual obligations.

In the normal course of business, the Corporation continuously monitors the financial condition of its customers and reviews the credit history of each new customer. As of December 31, 2012, no customer balance represented a significant portion of the Corporation’s consolidated trade receivables. The Corporation establishes an allowance for doubtful accounts based on the specific credit risk of its customers and historical trends. The allowance for doubtful accounts amounted to $29.6 million as of December 31, 2012 ($30.4 million as of December 31, 2011). As of December 31, 2012, 9.9% of trade receivables were 90 days past their billing date (7.9% as of December 31, 2011).

The following table shows changes to the allowance for doubtful accounts for the years ended December 31, 2012 and 2011:

	2012			2011
Balance as of beginning of year	$	30.4		$	39.1
Charged to income		35.0			20.0
Utilization		(35.8	)		(28.7	)
Balance as of end of year	$	29.6		$	30.4

The Corporation believes that the diversity of its customer base and its product lines are instrumental in reducing its credit risk, as well as the impact of fluctuations in product-line demand. The Corporation does not believe that it is exposed to an unusual level of customer credit risk.

As a result of their use of derivative financial instruments, the Corporation and its subsidiaries are exposed to the risk of non-performance by a third party. When the Corporation and its subsidiaries enter into derivative contracts, the counterparties (either foreign or Canadian) must have credit ratings at least in accordance with the Corporation’s risk management policy and are subject to concentration limits.

F-59

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

(d) Liquidity risk management

Liquidity risk is the risk that the Corporation and its subsidiaries will not be able to meet their financial obligations as they fall due or the risk that those financial obligations will have to be met at excessive cost. The Corporation and its subsidiaries manage this exposure through staggered debt maturities. The weighted average term of the Corporation’s consolidated debt was approximately 7.1 years as of December 31, 2012 (5.1 years as of December 31, 2011).

The Corporation’s management believes that cash flows and available sources of financing should be sufficient to cover committed cash requirements for capital investments, working capital, interest payments, debt repayments, pension plan contributions, and dividends (or distributions) in the future. The Corporation has access to cash flows generated by its subsidiaries through dividends (or distributions) and cash advances paid by its wholly owned subsidiaries.

As of December 31, 2012, material contractual obligations related to financial instruments included capital repayment and interest on long-term debt and obligations related to derivative instruments, less estimated future receipts on derivative instruments. These obligations and their maturities are as follows:

	Total		Less than 1 year		1-3 year		3-5 years		5 years or more
Accounts payable and accrued charges	$	784.9	$	784.9	$	—	$	—	$	—
Long-term debt1		4,743.6		21.3		291.6		653.1		3,777.6
Interest payments2		2,501.3		314.8		697.3		574.9		914.3
Derivative instruments3		294.4		24.7		143.1		40.9		85.7
Total	$	8,324.2	$	1,145.7	$	1,132.0	$	1,268.9	$	4,777.6

¹  The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest risk, embedded derivatives and financing fees.

²  Estimate of interest to be paid on long-term debt is based on hedged and unhedged interest rates and hedged foreign exchange rates as of December 31, 2012.

³  Estimated future disbursements, net of future receipts, on derivative financial instruments related to foreign exchange hedging.

(e) Market risk

Market risk is the risk that changes in market prices due to foreign exchange rates, interest rates and/or equity prices will affect the value of the Corporation’s financial instruments. The objective of market risk management is to mitigate and control exposures within acceptable parameters while optimizing the return on risk.

Foreign currency risk

Most of the Corporation’s consolidated revenues and expenses, other than interest expense on U.S. dollar-denominated debt, purchases of set-top boxes, handsets and cable modems and certain capital expenditures, are received or denominated in CAN dollars. A large portion of the interest, principal and premium, if any, payable on its debt is payable in U.S. dollars. The Corporation and its subsidiaries have entered into transactions to hedge the foreign currency risk exposure on 100% of their U.S. dollar-denominated debt obligations outstanding as of December 31, 2012, to hedge their exposure on certain purchases of set-top boxes, handsets, cable modems and capital expenditures, and to reverse existing hedging positions through offsetting transactions. Accordingly, the Corporation’s sensitivity to variations in foreign exchange rates is economically limited.

F-60

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

(e) Market risk (continued)

Foreign currency risk (continued)

The following table summarizes the estimated sensitivity on income and other comprehensive income, before income tax, of a variance of $0.10 in the year-end exchange rate of a CAN dollar per one U.S. dollar as of December 31, 2012:

Increase (decrease)	Income			Other comprehensive income
Increase of $0.10
U.S. dollar-denominated accounts payable	$	(0.7	)	$	—
Gain on valuation and translation of financial instruments and derivative financial instruments		1.0			79.6
Decrease of $0.10
U.S. dollar-denominated accounts payable		0.7			—
Gain on valuation and translation of financial instruments and derivative financial instruments		(1.0	)		(79.6	)

Interest rate risk

Some of the Corporation’s and its subsidiaries’ revolving and bank credit facilities bear interest at floating rates based on the following reference rates: (i) Bankers’ acceptance rate, (ii) Canadian LIBOR, (iii) U.S. LIBOR, (iv) Canadian prime rate, and (v) U.S. prime rate. The Senior Notes issued by the Corporation and its subsidiaries bear interest at fixed rates. The Corporation and its subsidiaries have entered into various interest rate and cross-currency interest rate swap agreements in order to manage cash flow and fair value risk exposure due to changes in interest rates. As of December 31, 2012, after taking into account the hedging instruments, long-term debt was comprised of 90.9% fixed-rate debt (84.7% in 2011) and 9.1% floating-rate debt (15.3% in 2011).

The estimated sensitivity on interest payments, of a 100 basis-point variance in the year-end Canadian Bankers’ acceptance rate as of December 31, 2012 is $4.5 million.

The estimated sensitivity on income and other comprehensive income, before income tax, of a 100 basis-point variance in the discount rate used to calculate the fair value of financial instruments as of December 31, 2012, as per the Corporation’s valuation models, is as follows:

Increase (decrease)	Income			Other comprehensive income
Increase of 100 basis points	$	0.1		$	2.0
Decrease of 100 basis points		(0.1	)		(2.0	)

F-61

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

(f) Capital management

The Corporation’s primary objective in managing capital is to maintain an optimal capital base in order to support the capital requirements of its various businesses, including growth opportunities.

In managing its capital structure, the Corporation takes into account the asset characteristics of its subsidiaries and planned requirements for funds, leveraging their individual borrowing capacities in the most efficient manner to achieve the lowest cost of financing. Management of the capital structure involves the issuance of new debt, the repayment of existing debt using cash flows generated by operations, and the level of distributions to shareholders. The Corporation has not significantly changed its strategy regarding the management of its capital structure since the last financial year.

The Corporation’s capital structure is composed of equity, bank indebtedness, long-term debt, net assets and liabilities related to derivative financial instruments, less cash and cash equivalents. The capital structure is as follows:

	2012			2011
Bank indebtedness	$	—		$	4.0
Long-term debt		4,428.7			3,697.9
Derivative financial instruments		262.9			280.5
Cash and cash equivalents		(228.7	)		(146.4	)
Net liabilities		4,462.9			3,836.0
Equity	$	2,161.9		$	3,025.5

The Corporation is not subject to any externally imposed capital requirements other than certain restrictions under the terms of its borrowing agreements, which relate, among other things, to permitted investments, inter-corporation transactions, the declaration and payment of dividends or other distributions.

27. RELATED PARTY TRANSACTIONS

Key management personnel compensation

Key management personnel comprise members of the Board of Directors and key senior management of the Corporation and its main subsidiaries. Their compensation is as follows:

	2012		2011			2010
Salaries and short-term benefits	$	7.7	$	8.0		$	7.6
Post-employment benefits		0.5		0.4			0.3
Share-based compensation		5.3		(0.3	)		10.3
Other long-term benefits		2.2		1.9			1.7
	$	15.7	$	10.0		$	19.9

F-62

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

27. RELATED PARTY TRANSACTIONS (continued)

Operating transactions

During the year ended December 31, 2012, the Corporation and its subsidiaries made purchases and incurred rent charges with the parent corporation and affiliated companies in the amount of $14.4 million ($11.7 million in 2011 and $14.8 million in 2010), which are included in purchase of goods and services. The Corporation and its subsidiaries made sales to an affiliated corporation in the amount of $3.8 million ($3.2 million in 2011 and $3.6 million in 2010). These transactions were concluded on terms equivalent to those that prevail on an arm’s length basis and were accounted for at the consideration agreed between parties.

Management arrangements

The parent corporation has entered into management arrangements with the Corporation. Under these management arrangements, the parent corporation and the Corporation provide management services to each other on a cost-reimbursement basis. The expenses subject to reimbursement include the salaries of the Corporation’s executive officers, who also serve as executive officers of the parent corporation. In 2012, the Corporation received an amount of $1.7 million, which is included as a reduction in employee costs ($2.0 million in 2011 and $2.1 million in 2010), and incurred management fees of $1.1 million ($1.1 million in 2011 and 2010) with the shareholders.

Tax transactions

In 2012, the parent corporation transferred $43.4 million of non-capital losses (none in 2011 and $26.4 million in 2010) to the Corporation and its subsidiaries in exchange for a total cash consideration of $10.2 million (none in 2011 and $6.0 million in 2010). This transaction was concluded on terms equivalent to those that prevail on an arm’s length basis and was accounted for at the consideration agreed between the parties. As a result, the Corporation recorded a reduction of $1.5 million in its income tax expense in 2012 (none in 2011 and $1.5 million in 2010).

F-63

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

28. PENSION PLANS AND POSTRETIREMENT BENEFITS

The Corporation maintains various flat-benefit plans, various final-pay plans with indexation features from zero to 2%, and defined contribution plans. The Corporation’s policy is to maintain its contribution at a level sufficient to cover benefits. The Corporation provides postretirement benefits to eligible retired employees. The costs of these benefits, principally health care, are accounted for during the employee’s active service period.

The following tables show a reconciliation of the changes in the plans’ benefit obligations and the fair value of plan assets for the years ended December 31, 2012 and 2011:

	Pension benefits						Postretirement benefits
	2012			2011			2012			2011
Change in benefit obligations
Benefit obligations at beginning of year	$	906.2		$	823.2		$	54.7		$	47.6
Service costs		35.1			26.5			1.2			0.8
Interest costs		43.9			43.7			2.6			2.1
Plan participants’ contributions		15.9			16.1			—			—
Actuarial loss		50.7			39.7			3.4			11.6
Benefits and settlements paid		(46.6	)		(43.4	)		(1.3	)		(1.0	)
Curtailment gain		—			—			—			(6.4	)
Plan amendments and other		1.3			0.4			—			—
Benefit obligations at end of year	$	1,006.5		$	906.2		$	60.6		$	54.7
	Pension benefits						Postretirement benefits
	2012			2011			2012			2011
Change in plan assets
Fair value of plan assets at beginning of year	$	720.1		$	689.9		$	—		$	—
Actual return on plan assets		68.1			8.0			—			—
Employer contributions		58.1			49.5			1.3			1.0
Plan participants’ contributions		15.9			16.1			—			—
Benefits and settlements paid		(46.6	)		(43.4	)		(1.3	)		(1.0	)
Fair value of plan assets at end of year	$	815.6		$	720.1		$	—		$	—

F-64

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

28. PENSION PLANS AND POSTRETIREMENT BENEFITS (continued)

Plan assets are comprised of:

	2012			2011
Equity securities		56.7	%		55.9	%
Debt securities		39.8			41.9
Other		3.5			2.2
		100.0	%		100.0	%

As of December 31, 2012, plan assets included shares of the parent corporation in the amount of $0.6 million ($0.7 million as of December 31, 2011).

The reconciliation of funded status to the net amount recognized in the consolidated balance sheets is as follows:

	Pension benefits						Postretirement benefits
	2012			2011			2012			2011
Reconciliation of funded status
Unfunded benefit obligations	$	(36.5	)	$	(35.2	)	$	(60.6	)	$	(54.7	)
Funded benefit obligations		(970.0	)		(871.0	)		—			—
Fair value of plan assets		815.6			720.1			—			—
Plan deficit		(190.9	)		(186.2	)		(60.6	)		(54.7	)
Past service costs – unvested portion		2.1			3.6			—			—
Net amount recognized	$	(188.8	)	$	(182.6	)	$	(60.6	)	$	(54.7	)

F-65

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

28. PENSION PLANS AND POSTRETIREMENT BENEFITS (continued)

Components of actuarial gain or loss are as follows:

	Pension benefits						Postretirement benefits
	2012			2011			2012			2011
Difference between expected and actual return on plan assets:
Gain (loss)	$	17.8		$	(41.5	)	$	—		$	—
As a proportion of plan assets		2.2	%		5.8	%		—			—
Experience losses and changes in assumptions on benefit obligations:
Loss	$	(50.7	)	$	(39.7	)	$	(3.4	)	$	(11.6	)
As a proportion of benefit obligations		5.0	%		4.4	%		5.6	%		21.2	%

Components of the net benefit costs are as follows:

	Pension benefits									Postretirement benefits
	2012			2011			2010			2012			2011			2010
Service costs	$	35.1		$	26.5		$	16.9		$	1.2		$	0.8		$	1.0
Interest costs		43.9			43.7			41.8			2.6			2.1			2.4
Expected return on plan assets		(50.3	)		(49.5	)		(44.3	)		—			—			—
Net prior service costs		3.1			1.8			1.6			—			—			—
Special termination benefits, curtailment loss (gain) and other		—			1.4			1.0			(0.2	)		(6.4	)		(0.6	)
Net benefit costs	$	31.8		$	23.9		$	17.0		$	3.6		$	(3.5	)	$	2.8

The expense related to defined contribution pension plans amounted to $14.1 million in 2012 ($13.2 million in 2011 and $11.7 million in 2010).

The expected employer contributions to the Corporation’s defined benefit pension plans and post-retirement benefits plans will be $56.7 million in 2013 (contributions of $59.4 million were paid in 2012).

F-66

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

28. PENSION PLANS AND POSTRETIREMENT BENEFITS (continued)

Assumptions

The expected long-term rate-of-return-on-assets assumption is selected by first identifying the expected range of long-term rates of return for each major asset class. The Corporation’s investment strategy for plan assets takes into account a number of factors, including the time horizon of the pension plans’ obligations and the investment risk. For each of the plans, an allocation range by asset class is developed whereby a mix of equities and fixed-income investments is used to maximize the long-term return of plan assets. Expected long-term rates of return are developed based on long-term historical averages and current expectations of future returns. In addition, consideration is given to the extent active management is employed in each class and to inflation rates. A single expected long-term rate of return on plan assets is then calculated using the weighted average return of each asset class.

The Corporation determines its assumption for the discount rate to be used for purposes of computing annual service and interest costs based on an index of high-quality corporate bond-yield and matched-funding yield curve analysis as of the measurement date.

The actuarial assumptions used in measuring the Corporation’s benefit obligations as of December 31, 2012, 2011 and 2010 and current periodic benefit costs are as follows:

	Pension benefits									Postretirement benefits
	2012			2011			2010			2012			2011			2010
Benefit obligations
Rates as of year-end:
Discount rate		4.40	%		4.75	%		5.25	%		4.40	%		4.75	%		5.25	%
Rate of compensation increase		3.25			3.25			3.25			3.25			3.25			3.25
Current periodic costs
Rates as of preceding year-end:
Discount rate		4.75	%		5.25	%		6.25	%		4.75	%		5.25	%		6.25	%
Expected return on plan assets		7.00			7.00			7.00			—			—			—
Rate of compensation increase		3.25			3.25			3.50			3.25			3.25			3.50

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligations was 7.8% at the end of 2012. These costs, as per the estimate, are expected to decrease gradually over the next 14 years to 5.0% and to remain at that level thereafter.

F-67

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

28. PENSION PLANS AND POSTRETIREMENT BENEFITS (continued)

Sensitivity analysis

A decrease of 25 basis point in the discount rate (at the beginning of the year having an impact on income and at the end of the year having an impact on comprehensive income) and in the expected return on plan assets would have had the following impacts, before income tax, for the year ended December 31, 2012:

	Pension benefits								Postretirement benefits
Increase (decrease)	Obligation in balance sheet		Income			Other comprehensive income			Obligation in balance sheet		Income			Other comprehensive income
Discount rate	$	41.5	$	(2.1	)	$	(41.5	)	$	2.5	$	(0.1	)	$	(2.5	)
Expected return on plan assets		—		(1.8	)		1.8			—		—			—

F-68

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

29. NON-CONSOLIDATED FINANCIAL STATEMENTS OF THE CORPORATION

The Corporation has access to the cash flows generated by its subsidiaries by way of dividends declared by its public subsidiaries and dividends and advances from its private subsidiaries. However, some of the Corporation’s subsidiaries have restrictions, based on contractual debt obligations and corporate solvency tests, regarding the amounts of dividends and advances that can be paid to the Corporation.

The U.S Securities and Exchange Commission requires that the non-consolidated financial statements of the parent corporation be presented when its subsidiaries have restrictions that may limit the amount of cash that can be paid to the parent corporation. These non-consolidated and condensed financial statements, as prepared under IFRS, are shown below.

Non-consolidated condensed statements of income and comprehensive income

	2012			2011			2010
Revenues:
Dividends	$	821.0		$	249.1		$	566.4
Interest		1.1			32.7			14.8
Management fees		58.5			45.3			58.9
Other		43.6			39.0			9.6
		924.2			366.1			649.7
General and administrative expenses		102.9			92.5			68.7
Amortization		6.4			2.3			1.8
Financial expenses		76.2			140.0			120.2
Loss on debt refinancing		69.1			—			10.4
(Gain) loss on valuation and translation of financial instruments		(116.0	)		1.6			(22.7	)
Income before income taxes		785.6			129.7			471.3
Income taxes		16.7			7.1			5.6
Net income		768.9			122.6			465.7
Other comprehensive (loss) income		(3.1	)		(13.2	)		22.5
Comprehensive income	$	765.8		$	109.4		$	488.2

F-69

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

29. NON-CONSOLIDATED FINANCIAL STATEMENTS OF THE CORPORATION (continued)

Non-consolidated and condensed statements of cash flows

	2012			2011			2010
Cash flows related to operations
Net income	$	768.9		$	122.6		$	465.7
Amortization of plant, property and equipment		6.4			2.3			1.8
(Gain) loss on valuation and translation of financial instruments		(116.0	)		1.6			(22.7	)
Amortization of financing costs and long-term debt discount		8.3			8.0			7.1
Loss on debt refinancing		69.1			—			10.4
Deferred income taxes		16.7			7.1			5.6
Other		5.9			—			0.1
Net change in non-cash balances related to operations		(42.7	)		(1.5	)		10.5
Cash flows provided by operations		716.6			140.1			478.5
Cash flows related to investing activities
Net change in investments in subsidiaries		(97.3	)		(32.7	)		(102.4	)
Acquisition of tax deductions from the parent corporation		(10.2	)		—			—
Other		(3.5	)		(6.2	)		(2.4	)
Cash flows used in investing activities		(111.0	)		(38.9	)		(104.8	)
Cash flows related to financing activities
Proceeds from issuance of redeemable preferred shares		—			—			1,300.0
Repurchases of redeemable preferred shares		—			—			(930.0	)
Repayment of long-term debt		(760.1	)		(30.3	)		(244.3	)
Settlement of hedging contracts		(40.0	)		—			(30.9	)
Issuance of long-term debt, net of financing fees		1,313.3			319.9			—
Repurchase of Common Shares		(1,000.1	)		—			—
Dividends		(100.0	)		(100.0	)		(87.5	)
Net change in subordinated loans from subsidiaries		735.0			111.0			(1,128.0	)
Net change in convertible obligations, subordinated loans and notes receivable – subsidiaries		(805.3	)		(437.1	)		715.6
Net change in advances to or from subsidiaries		82.1			40.8			20.2
Cash flows used in financing activities		(575.1	)		(95.7	)		(384.9	)
Net change in cash and cash equivalents		30.5			5.5			(11.2	)
Cash and cash equivalents at beginning of year		13.7			8.2			19.4
Cash and cash equivalents at end of year	$	44.2		$	13.7		$	8.2

F-70

QUEBECOR MEDIA INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years ended December 31, 2012, 2011 and 2010

(tabular amounts in millions of Canadian dollars, except for option data)

29. NON-CONSOLIDATED FINANCIAL STATEMENTS OF THE CORPORATION (continued)

Non-consolidated and condensed balance sheets

	2012		2011
Assets
Current assets	$	105.0	$	61.6
Investments in subsidiaries at cost		4,333.7		3,736.4
Convertible obligations, subordinated loans and notes receivable – subsidiaries		2,799.3		2,493.9
Other assets		53.6		47.1
	$	7,291.6	$	6,339.0
Liabilities and equity
Current liabilities	$	64.4	$	87.5
Long-term debt		2,216.6		1,696.9
Advances from subsidiaries		189.4		107.3
Other liabilities		94.7		121.5
Subordinated loan from subsidiaries		980.0		245.0
Redeemable preferred shares issued to subsidiaries		1,630.0		1,630.0
Equity attributable to shareholders		2,116.5		2,450.8
	$	7,291.6	$	6,339.0

F-71

US$850,000,000

Quebecor Media Inc.

Offer to Exchange All Outstanding

5 ³/₄% Senior Notes due January 15, 2023

Issued on October 11, 2012 for

New 5 ³/₄% Senior Notes due January 15, 2023

P R O S P E C T U S

                    , 2013

No dealer, salesperson or other person is authorized to give any information or

to represent anything not contained in this prospectus. You must not rely on any

unauthorized information or representations.

This prospectus is an offer to exchange only the initial notes for the exchange

notes in accordance with the terms included in this prospectus, but only under

circumstances and in jurisdictions where it is lawful to do so.

Neither the delivery of this prospectus nor any sale made under this prospectus

shall, under any circumstances, create any implication that there has been no

change in the affairs of Quebecor Media since the date of this prospectus.

Until                     , 2013, all dealers that effect transactions in these securities,

whether or not participating in this offering, may be required to deliver a

prospectus. This is in addition to the dealers’ obligation to deliver a prospectus

when acting as underwriters and with respect to their unsold allotments or

subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Officers and Directors.

The following summary is qualified in its entirety by reference to the complete text of the statutes referred to below and the certificates and articles of incorporation and the certificates of formation, all as amended, the bylaws, operating agreements and agreements of limited partnership, all as amended, and any other contractual agreements referred to below in reference to Quebecor Media Inc.

Quebecor Media Inc.

Quebecor Media Inc. is incorporated under the laws of the Province of Québec.

Pursuant to Section 159 of the Business Corporations Act (Québec), a coporation must indemnify a director or officer of the registrant, a former director or officer of the registrant, a mandatary, or any other person who acts or acted at the registrant’s request as a director or officer of another group against all costs, charges and expenses reasonably incurred in the exercise of their functions, including an amount paid to settle an action or satisfy a judgment, or arising from any investigative or other proceeding in which the person is involved if: (i) the person acted with honesty and loyalty in the interest of the registrant or, as the case may be, in the interest of the other group for which the person acted as director or officer or in a similar capacity at the corporation’s request; and (ii) in the case of a proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that his or her conduct was lawful (the immediately preceding clauses (i) and (ii), collectively, the “Indemnification Conditions”). The corporation must also advance moneys to such a person for the costs, charges and expenses of a proceeding referred to in the immediately preceding sentence.

However, pursuant to Section 160 of the Business Corporations Act (Québec), in the event that a court or any other competent authority judges that the Indemnification Conditions are not fulfilled, the corporation may not indemnify the person and the person must repay to the registrant any moneys advanced under that section. Furthermore, the corporation may not indemnify a person referred to in Section 159 of the Business Corporations Act (Québec) if the court determines that the person has committed an intentional or gross fault. In such a case, the person must repay to the registrant any moneys advanced.

Pursuant to Section 161 of the Business Corporations Act (Québec), the registrant may, with the approval of the court, in respect of an action by or on behalf of the corporation or other group referred to in Section 159 of the Business Corporations Act (Québec), against a person referred to in that section, advance the necessary monies to the person or indemnify the person against all costs, charges and expenses reasonably incurred by the person in connection with the action, if the person fulfills the Indemnification Conditions.

Our bylaws provide that, subject to the following, the registrant must indemnify its directors and officers and former directors and officers against all costs, charges and expenses reasonably incurred in the exercise of their functions, including an amount paid to settle an action or satisfy a judgment, or arising from any investigative or other proceeding in which the person is involved if (a) the person acted with honesty and loyalty in the interest of the registrant or, as the case may be, in the interest of the other group for which the person acted as director or officer or in a similar capacity at the registrant’s request; and (b) in the case of a proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that his conduct was lawful. Our bylaws provide that the registrant must also advance monies to such a person for the costs, charges and expenses of a proceeding referred to in the first paragraph. However, in the event that a court or any other competent authority judges that the conditions set out in (a) and (b) above are not fulfilled, or that the person has committed intentional or gross fault, the registrant may not indemnify the person and the person must repay to the corporation any monies advanced.

Our bylaws provide that the registrant must purchase and maintain insurance for the benefit of its directors, officers and other mandataries against any liability they may incur as such or in their capacity as directors, officers or mandataries of another group, if they act or acted in that capacity at the registrant’s request. In this respect, Quebecor Inc., the registrant’s ultimate parent company, carries liability insurance for the benefit of its directors and officers, as well as for the directors and officers of its subsidiaries, including the registrant and certain associated companies, against certain liabilities incurred by them in such capacity. These policies are subject to customary deductibles and exceptions. The premiums in respect of this insurance are entirely paid by Quebecor Inc.

General

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling each of the registrants pursuant to the foregoing provisions, the registrants have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 21. Exhibits and Financial Statements Schedules.

(a) Exhibits

The exhibits to this registration statement are listed in the Exhibit Index to this registration statement, which Exhibit Index is hereby incorporated by reference.

Item 22. Undertakings.

(a) The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and

(4) to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means; and (ii) to arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(d) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Province of Québec, Canada on this day of April, 2013.

QUEBECOR MEDIA INC.
By:	/s/ Jean-François Pruneau
	Name: Jean-François Pruneau
	Title: Chief Financial Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Jean-François Pruneau and Chloé Poirier, and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Registration Statement, and any registration statement relating to the offering covered by this Registration Statement and filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.

Signature	Title	Date
/s/ Pierre Karl Péladeau Pierre Karl Péladeau	Director, President and Chief Executive Officer (Principal Executive Officer)	April 10, 2013
/s/ Jean-François Pruneau Jean-François Pruneau	Chief Financial Officer (Principal Financial Officer)	April 10, 2013
/s/ Denis Sabourin Denis Sabourin	Vice President and Corporate Controller (Principal Accounting Officer)	April 10, 2013
/s/ Serge Gouin Serge Gouin	Director, Chairman of the Board	April 10, 2013

[Signatures – Form F-4]

/s/ Jean La Couture Jean La Couture	Director, Chairman of the Audit Committee	April 10, 2013
/s/ André Delisle André Delisle	Director	April 10, 2013
/s/ A. Michel Lavigne A. Michel Lavigne	Director	April 10, 2013
/s/ Samuel Minzberg Samuel Minzberg	Director	April 10, 2013
/s/ The Right Honourable Brian Mulroney The Right Honourable Brian Mulroney	Director	April 10, 2013
/s/ Normand Provost Normand Provost	Director	April 10, 2013

[Signatures – Form F-4]

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the undersigned has signed this registration statement, solely in the capacity of the duly authorized representative of the registrants in the United States, on the 10th day of April, 2013.

PUGLISI & ASSOCIATES (Authorized U.S. Representative)
By:	/s/ Gregory F. Lavelle
Name:	Gregory F. Lavelle
Title:	Managing Director

EXHIBIT INDEX

1.1	Purchase Agreement, dated October 3, 2012, by and among Quebecor Media Inc., as issuer, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, on behalf of itself and the several initial purchasers.
4.1	Form of 5 3/4% Senior Notes due January 15, 2023 of Quebecor Media Inc. (included as Exhibit A to Exhibit 4.2 below).
4.2	Indenture, dated as of October 11, 2012, by and among Quebecor Media Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 2.10 to Quebecor Media Inc.’s Annual Report on Form 20-F for the fiscal year ended December 31, 2012, which was filed on March 21, 2013, Commission file No. 333-13792).
4.3	Registration Rights Agreement, dated as of October 11, 2012, by and among Quebecor Media Inc., as issuer, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, on behalf of itself and the several initial purchasers.
5.1	Opinion of Norton Rose Canada LLP, counsel to Quebecor Media Inc.
8.1	Opinion of Ropes & Gray LLP, as to certain tax matters.
12.1	Statement of Computation of Ratio of Earnings to Fixed Charges (previously filed as, and incorporated by reference to, Exhibit 7.1 to Quebecor Media’s Annual Report on Form 20-F for the fiscal year ended December 31, 2012, which was filed on March 21, 2013, Commission file No. 333-13792).
21.1	Subsidiaries of Quebecor Media Inc..
23.1	Consent of Ernst & Young LLP.
23.2	Consent of Norton Rose Canada LLP, counsel to Quebecor Media Inc. (included in Exhibit 5.1 above).
23.3	Consent of Ropes & Gray LLP, special U.S. counsel to Quebecor Media Inc. (included in Exhibit 8.1 above).
24.1	Powers of Attorney (included in signature pages of the Registration Statement).
25.1	Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of Wells Fargo Bank, National Association, as trustee, on Form T-1.
99.1	Form of Letter of Transmittal.
99.2	Form of Notice of Guaranteed Delivery.
99.3	Form of Letter to Clients.
99.4	Form of Letter to Brokers.