TiVo 2005 Annual Report Download - page 30

Table of Contents
Legislation, laws or regulations that govern the television industry, the delivery of programming and the collection of viewing information
from subscriptions could expose us to legal action if we fail to comply or could require us to change our business.
The delivery of television programming and the collection of viewing information from subscriptions via the TiVo service and a DVR represent a
relatively new category in the television and home entertainment industries. As such, it is difficult to predict what laws or regulations will govern our
business. Changes in the regulatory climate, the enactment of new legislation, or the expansion, enforcement or interpretation of existing laws could expose us
to additional costs and expenses and could require changes to our business. For example, legislation regarding customer privacy or copyright could be enacted
or expanded to apply to the TiVo service, which could adversely affect our business. New or existing copyright laws could be applied to restrict the capture of
television programming, which would adversely affect our business. It is unknown whether existing laws and regulations will apply to the digital video
recorder market. Therefore, it is difficult to anticipate the impact of current or future laws and regulations on our business. We may have significant expenses
associated with staying appraised of local, state, federal, and international legislation and regulation of our business and in presenting TiVo's positions on
proposed laws and regulations.
The Federal Communications Commission, or FCC, has broad jurisdiction over the telecommunications and cable industries. The majority of FCC
regulations, while not directly affecting us, do affect many of the companies upon whom we substantially rely for the marketing and distribution of the DVR
and the TiVo service. As such, the indirect effect of these regulations may adversely affect our business. In addition, the FCC could promulgate new
regulations, or interpret existing regulations in a manner that would cause us to incur significant compliance costs or force us to alter the features or
functionality of the TiVo service.
Legislation, laws or regulations relating to environmental issues, employment matters, and unclaimed property may adversely impact our
business in the future.
It is possible that future proposed environmental regulations on consumer electronic devices, such as DVRs and set-top boxes, may regulate and
increase the production, manufacture, use, and disposal costs incurred by us and our customers. For example future energy regulations could potentially make
it more costly for us to design, manufacture, and sell our DVRs to our customers thus harming the growth of our business.
Additionally, as our business grows and we expand our employed and contracted work force, employment laws and regulations will have an increasing
impact on our ability to manage and grow our work force. Regulations and laws relating to the status of contractors, classification and related benefits for
exempt and non-exempt employees all may adversely impact our business if we are unable to properly manage and comply with federal, state, and local laws.
Furthermore, as part of our regular business activities now, and in the past, we engage in the issuance of gift subscriptions and the marketing of rebate
offers related to sale of our products and services. It is possible that money received by us for the sale of gift subscriptions or related to our past rebates offers
could be subject to state and federal escheat, or unclaimed property, laws in the future. If this were the case, our business could be adversely impacted.
Recently enacted and proposed changes in securities laws and regulations are likely to increase our costs and may affect our ability to be in
compliance with such new corporate governance provisions in the future.
The existing federal securities laws and regulations impose complex and continually changing regulatory requirements on our operations and reporting.
With the enactment of the Sarbanes-Oxley Act of 2002 in July 2002, a significant number of new corporate governance requirements have been adopted.
These new requirements impose comprehensive reporting and disclosure requirements, set stricter independence and financial expertise standards for audit
committee members, and impose increased civil and criminal penalties for companies, their chief executive officers, chief financial officers and directors for
securities law violations. We expect these developments to increase our legal compliance costs, increase the difficulty and expense in obtaining director and
officer liability insurance, and make it harder for us to attract and retain qualified members of our board of directors and/or qualified executive officers. Such
developments could harm our results of operations and divert management's attention from business operations.
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