iHeartMedia 2001 Annual Report Download - page 27

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Our Acquisition Strategy Could Pose Risks
We intend to grow through the acquisition of media-related assets and other assets or businesses
that we believe will assist our customers in marketing their products and services. Our acquisition
strategy involves numerous risks, including:
• certain of our acquisitions may prove unprofitable and fail to generate anticipated cash
flows;
• to successfully manage a rapidly expanding and significantly larger portfolio of broadcasting,
outdoor advertising, entertainment and other properties, we may need to:
¾ recruit additional senior management as we cannot be assured that senior management of
acquired companies will continue to work for us and, in this highly competitive labor
market, we cannot be certain that any of our recruiting efforts will succeed, and
¾ expand corporate infrastructure to facilitate the integration of our operations with those
of acquired properties, because failure to do so may cause us to lose the benefits of any
expansion that we decide to undertake by leading to disruptions in our ongoing
businesses or by distracting our management;
• entry into markets and geographic areas where we have limited or no experience;
• we may encounter difficulties in the integration of operations and systems;
• our management’s attention may be diverted from other business concerns; and
• we may lose key employees of acquired companies or stations.
We frequently evaluate strategic opportunities both within and outside our existing lines of
business. We expect from time to time to pursue additional acquisitions and may decide to dispose of
certain businesses. These acquisitions or dispositions could be material.
Capital Requirements Necessary to Implement Our Acquisition Strategy Could Pose Risks
We face stiff competition from other broadcasting, outdoor advertising and live entertainment
companies for acquisition opportunities. If the prices sought by sellers of these companies continue to
rise, we may find fewer acceptable acquisition opportunities. In addition, the purchase price of possible
acquisitions could require additional debt or equity financing on our part. Since the terms and availability
of this financing depends to a large degree upon general economic conditions and third parties over
which we have no control, we can give no assurance that we will obtain the needed financing or that we
will obtain such financing on attractive terms. In addition, our ability to obtain financing depends on a
number of other factors, many of which are also beyond our control, such as interest rates and national
and local business conditions. If the cost of obtaining needed financing is too high or the terms of such
financing are otherwise unacceptable in relation to the acquisition opportunity we are presented with, we
may decide to forego that opportunity. Additional indebtedness could increase our leverage and make us
more vulnerable to economic downturns and may limit our ability to withstand competitive pressures.
Additional equity financing could result in dilution to our shareholders.