The Company faces a number of risks and uncertainties which, in many cases, also represent opportunities for its businesses. Additional risks and uncertainties, not presently known to the Company, or that the Company does not currently anticipate will be material, may impair the Company's business operations. If any such risks materialize, the Company's business, financial condition and operating results could be materially adversely affected.

REGULATED ENVIRONMENT
The Company's Television and Radio broadcasting undertakings are regulated by the CRTC. While this regulated framework provides some stability to the operating environment, it could also change at any time. The impact on Television and Radio operations of any possible changes to broadcast policy and regulations or changes in the interpretation of existing regulations by courts or regulators cannot be determined.

Astral's Television and Radio operations rely upon licenses granted under the Copyright Act (Canada) in order to make use of the music components of the programming distributed by these undertakings. Under these licenses, Astral is required to pay royalties established by the Copyright Board of Canada. The various levels of royalties payable by the Company are subject to change, and any amendments could result in Astral's broadcasting undertakings being required to pay additional royalties under these licenses.

The Company's Outdoor Advertising business is also subject to various government regulations which establish the rights, terms and conditions under which it is entitled to erect its advertising structures. Changes to such regulations may inhibit the Company's ability to keep existing structures or build new ones on specific sites in the future.

Management consistently monitors the regulatory environment to identify risks and opportunities resulting from any changes.

NEW TECHNOLOGIES
Technologies are constantly changing and may have an impact on the Company's operating environment. Recent technological changes include:

• The deployment of video-on-demand ("VOD") services by cable companies which creates additional competition for the Company's pay-per-view services but also promotes the rollout of digital set-top boxes that stimulate the growth of the Company's pay-TV subscriber base and demand for its SVOD offerings.
• The deployment of personal video recorders ("PVRs") which could influence the Company's ability to generate advertising revenues as viewers are provided with the opportunity to ignore advertising aired on its television networks.
• HDTV, while slow to evolve, is now on an accelerated growth curve. This will require the Company's networks to offer an increasing share of their programming in HD format to satisfy the needs of its audiences.
• Emerging Internet video, which has seen significant growth over the past year. While web video in some form or other has existed for years, the market is now seeing the evolution of advertising-based business models for web video.
• Internet Protocol TV ("IPTV") rollout in the Ontario and Québec markets is expected in the coming year. It is too early to determine how services from Bell and Telus will fare against incumbent cable operators. As traditional cable and telecommunications operators battle to deliver "bandwidth" into the home, Astral will continue to support all platforms and negotiate expanded rights to exploit the opportunities these new platforms offer.
• Although it is still too early to determine its impact, the emergence of subscriber-based satellite and digital radio services can promote the change of audience listening habits while providing a growth opportunity to the industry.

The Company has generally shown itself to be a leader in its businesses rather than reacting to developments by others and it attempts to distinguish itself from its competitors by leveraging new technologies. Consequently, a significant portion of its capital expenditures is aimed at constantly improving the Company's technological capabilities and infrastructures.

CUSTOMERS AND DISTRIBUTORS
The Television group is dependent on broadcasting distribution undertakings ("BDUs") (including cable, satellite services ("DTH") and multichannnel multipoint distribution systems ("MMDS")) for distribution of its television services. There could be a negative impact on revenues if distribution affiliation agreements with BDUs were not renewed on terms and conditions similar to those currently in effect. Affiliation agreements with BDUs have multi-year terms that expire at various points in time. The Company maintains strong relationships with all its distributors and is confident it can renew its agreements on mutually satisfactory terms and conditions, as has been the case historically.

The majority of the subscriber base for the Company's Television networks is reached through a small number of very significant customers, mainly the BDUs. There is always a risk that the loss of an important relationship would have a significant impact on any particular business unit. To alleviate this risk, the Company enters into long-term contracts with its customers. Furthermore, the Company has developed a broad selection of popular pay and specialty networks that deliver quality programming. Astral's networks have thus become key and highly demanded components of the offerings of all BDUs in the markets they serve.

REVENUES
Subscription revenues are dependent on the number of subscribers and the wholesale rate billed by the Company to BDUs for carriage of the individual networks. The extent to which the Company's subscriber bases will grow is uncertain and is dependent upon the ability of BDUs to deploy and expand their digital technologies, their marketing efforts and the packaging of their networks' offerings, as well as upon the willingness of subscribers to adopt and pay for the services. By consistently providing a high quality program offering that caters to the needs of its various audiences, the Company is confident in its ability to increase its subscriber bases in the future.

Advertising revenues are subject to fluctuations as a result of changes in the economic environment, the marketplace, new technologies and viewership levels. The Company's business units constantly monitor changes in their respective markets and operating environments and adapt their sales strategies and content offerings in order to minimize any adverse effect that the changes may cause.

The Company's television broadcast signals are subject to theft and as a result, potential revenue loss. An increase in the number of illegal receivers in Canadian homes could have an adverse effect on the Company's existing revenues and inhibit its capacity to grow. Legal, regulatory, promotional as well as technical measures have been taken, in partnership with BDUs and other industry players, in order to fight signal theft. The Company believes these steps will continue to curtail signal theft and minimize any possible erosion of its subscriber bases.

COMPETITION
The CRTC from time to time issues new licences for a variety of services. Competitive licences granted to other licensees increase the competition for viewers, listeners, programming and advertising dollars.

In May 2006, the CRTC released its decision to license a competitive national general interest pay-TV service in the English market. However, the CRTC did not grant the new service access on an analog basis, nor did it allow for a change in the existing exclusivity-based contractual arrangements with program suppliers. In addition, the CRTC did not grant a competitive licence in the francophone market, stating that the French pay-TV market is too small to sustain competition.

Although a number of new digital specialty television network licences were launched in recent years, the Company has been able to limit the impact of the competition by delivering strong programming and strengthening its brands. New radio licences are granted from time to time in the Company's markets but the Company plans to compete with a similar strategy of providing high quality content and strong brands. The Company also seeks opportunities to obtain new licences and expand its business.

The Company also faces the emergence of new indirect and unregulated competitors (mobile TV, IPTV, satellite radio, cell phone radio, IPods, and other Internet content). It is not expected that these competitors will have a significant impact on the Company's services over the next few years.

Quality programming is a key factor driving the success of the Company's television and radio services. Increasing competition for popular quality programming can cause prohibitive cost increases that may prevent the Company from renewing supply agreements for specific popular programs or contracts for on-air personalities. The Company maintains strong relationships with studios, producers and performers and constantly monitors its markets and audiences to clearly define their needs in order to maintain the overall quality of its program offerings and deliver content that sustains the popularity of its services.

ECONOMIC CONDITIONS
The Company's revenues and operating results are and will continue to be influenced by prevailing general economic conditions. In the event of a general economic downturn or a recession, purchasers of the Company's advertising inventories may reduce their advertising budgets. In such cases, there can be no assurance that the Company's operating results, prospects and financial condition would not be adversely affected. This risk is mitigated by the fact that approximately 60% of the Company's revenues are subscriber-based. These are significantly more stable in an uncertain economic environment.