iHeartMedia 2001 Annual Report Download - page 22

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22
Congress and the FCC currently have under consideration, and may in the future adopt, new
laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly,
the operation and ownership of our broadcast properties. In addition to the changes and proposed changes
noted above, such matters include, for example, spectrum use fees, political advertising rates, and
potential restrictions on the advertising of certain products such as beer and wine. Other matters that
could affect our broadcast properties include technological innovations and developments generally
affecting competition in the mass communications industry, such as direct broadcast satellite service, the
continued establishment of wireless cable systems and low power television stations, “streaming” of
audio and video programming via the Internet, digital television and radio technologies, the establishment
of a low power FM radio service, and the advent of telephone company participation in the provision of
video programming service.
The foregoing is a brief summary of certain provisions of the Communications Act, the 1996
Act, and specific regulations and policies of the FCC thereunder. This description does not purport to be
comprehensive and reference should be made to the Communications Act, the 1996 Act, the FCC’s rules
and the public notices and rulings of the FCC for further information concerning the nature and extent of
federal regulation of broadcast stations. Proposals for additional or revised regulations and requirements
are pending before and are being considered by Congress and federal regulatory agencies from time to
time. Also, various of the foregoing matters are now, or may become, the subject of court litigation, and
we cannot predict the outcome of any such litigation or its impact on our broadcasting business.
Risk Factors
We Have a Large Amount of Indebtedness
We currently use a significant portion of our operating income for debt service. Our leverage
could make us vulnerable to an increase in interest rates or a downturn in the operating performance of
our radio broadcast, outdoor advertising or live entertainment properties or a decline in general economic
conditions. At December 31, 2001, we had debt outstanding of approximately $9.5 billion and
shareholders’ equity of $29.7 billion. We expect to continue to borrow funds to finance acquisitions of
radio broadcasting, outdoor advertising and live entertainment properties, as well as for other purposes.
Such a large amount of indebtedness could have negative consequences for us, including without
limitation:
• limitations on our ability to obtain financing in the future;
• much of our cash flow will be dedicated to interest obligations and unavailable for other
purposes;
• the high level of indebtedness limits our flexibility to deal with changing economic, business
and competitive conditions; and
• the high level of indebtedness could make us more vulnerable to an increase in interest rates,
a downturn in our operating performance or a decline in general economic conditions.