CITYMEDIA GROUP INC. 12 TORSTAR 2004 CityMedia Group publishes award-winning newspapers along with specialty publications and a directory that, together with the Toronto Star and Metroland, position Torstar as the leading publisher in the Golden Horseshoe. Our combination of dailies, weeklies and commercial printing in a single geographic cluster represents a new growth opportunity for Torstar. CityMedia Group has grown from four daily newspapers in southwestern Ontario, to 23 publications primarily in Hamilton, Kitchener, Waterloo, Cambridge and Guelph. The publications include three daily newspapers in growing Ontario markets, 10 weekly newspapers, nine specialty publications and an annual directory . We also operate three printing plants. Dailies include The Hamilton Spectator The Record (Kitchener, Cambridge and Waterloo) and the Guelph Mercury. CityMedia’s strategy in 2004 was to grow our newspaper business and improve margins. This was achieved in the year with operating profits up 32 per cent including the effect of acquisitions and up 20 per cent excluding the results of acquisitions. At the same time, CityMedia’s EBITDA margin of 18.5 per cent improved by more than two percentage points over last year.  Other highlights include: • The Hamilton Spectator earned a National Newspaper Award (NNA) in 2004 for a series entitled Poison about a man believed to be Hamilton’s worst serial killer. We received a total of four NNA nominations last year, three for The Spectator and one for the Guelph Mercury. CityMedia dailies also won 12 Ontario Newspaper Awards and our weeklies earned four Canadian Community Newspaper Awards. • In May, The Record achieved a contract settlement with its unionized employees that includes commission-based variable pay for sales representatives. All CityMedia properties now have commission-based pay that is aligned with company goals. The Record also sold its main location and moved its offices to a new address in downtown Kitchener improving the work environment for staff. • The Hamilton Spectator completed an $8 million colour installation on two of its presses last summer, on schedule and on budget. This investment significantly increases colour capacity and helps to increase colour advertising revenues. • Independent research completed by The Hamilton Spectator showed a positive readership trend in the desired demographic groups of women and baby boomers following innovative content and design changes at the paper in late 2003.  • The Hamilton Spectator was selected as the first Canadian newspaper and only the fourth newspaper in North America to participate in the Learning Newsroom project funded by the Knight Foundation. Under the program, The Hamilton Spectator qualifies for training resources covering several key learning areas including innovation and communications. • Realizing financial results that exceeded expectations following the acquisition of weekly newspaper and printing assets in 2003. The favourable results were from cost reductions and product improvements made during the year. • Our acquisition of two weekly newspapers – the Grand River Sachem in Caledonia and the Glanbrook Gazette in Hamilton. We also grew with the addition of the renamed Hamilton Spectator Gold Book directory which was added when Metroland purchased four Gold Book directories and the 701.com website. (26) !MILTON SPECMgOR ae eS | N he some selor =f 4