Home Shopping Network 2008 Annual Report Download - page 15

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The continued or permanent inability to broadcast the HSN television network would result in lost sales
and could result in lost customers.
Our success is dependent upon the continued ability of HSN to transmit the HSN television network to
broadcast and pay television operators from its satellite uplink facilities, which transmission is subject to FCC
compliance. HSN has entered into a long-term satellite transponder lease to provide for continued carriage of the
HSN television network on a replacement transponder and/or replacement satellite, as applicable, in the event of a
failure of the transponder and/or satellite currently carrying the HSN television network. Although we believe that
every reasonable measure is being taken to ensure continued satellite transmission capability, termination or
interruption of satellite transmissions may occur.
HSN is affiliated with a number of low power broadcast television station licensees (the “Low Power
Licensees”) that broadcast programming pursuant to licenses from the FCC. These Low Power Licensees are
subject to regulation by the FCC under the Communications Act of 1934, as amended, which prohibits the operation
of broadcast television stations except in accordance with a license issued by the FCC and empowers the FCC to
issue, revoke, modify and renew broadcast television licenses, approve the transfer of control of any entity holding
such licenses, determine the location of stations, regulate the equipment used by stations, adopt necessary
regulations and impose penalties for related violations. The failure of the Low Power Licensees to comply with the
terms of the broadcast licenses could result in the inability to broadcast the HSN television network on over-the-air
facilities, as well as penalties. The prolonged or permanent interruption of satellite transmission capability or other
inability to transmit the HSN television network for any reason, as well as related costs incurred, would result in lost
sales and could result in lost customers.
We are currently the subject of a consent order issued by the FTC and violation of this consent order
could result in significant civil penalties and an injunction enjoining HSN from engaging in prohibited activities,
among other things.
In October 1996, HSN became subject to a consent order issued by the FTC which terminates on the later
of April 15, 2019, or 20 years from the most recent date that the United States or the FTC files a complaint in federal
court alleging any violation thereunder. Pursuant to this consent order, HSNi (including its subsidiaries and
affiliates) is prohibited from making claims for specified categories of products, including claims that a given
product can cure, treat or prevent any disease or have an effect on the structure or function of the human body,
unless it has competent and reliable scientific evidence to substantiate such claims. Violation of this consent order
may result in the imposition of significant civil penalties for non-compliance and related redress to consumers
and/or the issuance of an injunction enjoining us from engaging in prohibited activities. The FTC periodically
investigates our business and operation on an ongoing basis for purposes of determining its compliance with the
consent order.
Our businesses may be subject to claims for representations made in connection with the sale and
promotion of merchandise or for harm experienced by customers who purchase merchandise from our
businesses.
The manner in which we sell and promote merchandise and related claims and representations made in
connection with these efforts is regulated by federal and state law. Our businesses may be exposed to potential
liability from claims by purchasers or from federal, state and local regulators and law enforcement agencies,
including, but not limited to, for personal injury, wrongful death and damage to personal property relating to
merchandise sold and misrepresentation of merchandise features and benefits. In certain instances, our businesses
have the right to seek indemnification for related liabilities from their vendors and may require such vendors to carry
minimum levels of product liability and errors and omissions insurance. These vendors, however, may be unable to
obtain suitable coverage or maintain this coverage on acceptable terms, or this insurance may provide inadequate
coverage against all potential claims or may not even be available with respect to any particular claim.