Home Shopping Network 2015 Annual Report Download - page 12

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Our revenues and profit margin are negatively influenced by economic conditions that impact consumer spending.
If macroeconomic conditions do not continue to improve or if conditions worsen, our business could be adversely affected.
Retailers generally are particularly sensitive to adverse economic and business conditions, in particular to the extent
they result in a loss of consumer confidence, rising unemployment, increased taxes and decreases in consumer spending,
particularly discretionary spending. Our customers anticipate and respond to adverse changes in economic conditions. If
macroeconomic conditions do not continue to improve or if conditions worsen, our business could be adversely affected.
The failure to attract and retain television viewers and secure a suitable programming tier of carriage and channel
placement for the HSN television network programming could result in a decrease in revenue.
We are dependent, in part, upon the continued ability of HSN to compete effectively for television viewers. Effectively
competing for television viewers is dependent, in substantial part, on the ability of HSN to secure placement of the HSN
television networks within a suitable programming tier and to effectively compete against others for the leisure and
entertainment time of consumers. The advent of digital compression technologies and the adoption of digital cable has resulted
in increased channel capacity. In addition, there are now more programming options available to the viewing public in the form
of new television networks and alternative distribution platforms and time-shifted viewing options (e.g., personal video
recorders, video-on-demand, interactive television and streaming video over broadband internet connections as well as
increased access to various media through wireless devices). These have the potential to reduce the viewing of our content.
New technologies have been and will continue to be developed that increase the number of entertainment choices available and
the manners in which they are delivered. Our failure to effectively anticipate or adapt to emerging technologies or changes in
consumer behavior could have an adverse impact on our competitive position, business and results of operations.
A prolonged or permanent inability to broadcast the HSN television networks would result in lost customers and
lost sales.
Our success is dependent upon the continued ability of HSN to transmit the HSN television networks to broadcast and
pay television operators from its satellite uplink facilities, which transmission is subject to the Federal Communications
Commission (“FCC”) compliance. HSN has entered into a satellite transponder agreement to provide for continued carriage of
the HSN television networks on a replacement transponder and/or replacement satellite, as applicable, in the event of a failure
of the transponder and/or satellite. Any such disruption could have a material adverse effect on our competitive position,
business and results of operations.
Interruption and the lack of integration and redundancy in our systems and infrastructures may adversely affect
our ability to broadcast, operate websites, process and fulfill transactions, respond to customer inquiries and generally
maintain cost-efficient operations.
We use the internet, mobile devices, social networking and other online activities to connect with our customers. Our
success depends, in part, on our ability to maintain the integrity of our systems and infrastructures, including websites,
information and related systems, call centers and fulfillment facilities. We may experience occasional system interruptions,
including those caused by system conversions, that make some or all systems or data unavailable or prevent our businesses
from efficiently providing services or fulfilling orders. We also rely on affiliate and third-party computer systems, broadband
and other communications systems and service providers in connection with the provision of services generally, as well as to
facilitate, process and fulfill transactions. Any interruptions, outages or delays in our systems and infrastructures, our
businesses, our affiliates and/or third parties, or deterioration in the performance of these systems and infrastructures, could
impair our ability to provide services, fulfill orders and/or process transactions. Fire, flood, power loss, telecommunications
failure, hurricanes, tornadoes, earthquakes, acts of war or terrorism, acts of God and similar events or disruptions may damage
or interrupt broadcast, computer, broadband or other communications systems and infrastructures at any time. In addition, we
have observed an increase in the number of cyber attacks that include gaining access to digital systems for purposes of
corrupting data or causing operational disruption. Any of these events could cause system interruption, delays and loss of
critical data, and could prevent us from providing services, fulfilling orders and/or processing transactions which could have an
adverse impact on our competitive position, business and results of operations. While we have backup systems for certain
aspects of our operations, these systems are not fully redundant and disaster recovery planning is not sufficient for all
eventualities. In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption.