TiVo 2011 Annual Report Download - page 30

Table of Contents
use of some television content, increase our costs, and adversely affect our business.
Legislation, laws or regulations that govern the consumer electronics and television industry, the delivery of programming, access to television
signals, and the collection of viewing information from subscriptions could expose us to legal action if we fail to comply and could adversely impact
and/or could require us to change our business.
The delivery of television programming, access to television signals by consumer electronics devices, 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, contraction,
enforcement or interpretation of existing laws or regulations could expose us to additional costs and expenses and could adversely impact or 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. Laws or regulations could be interpreted to prevent or limit access to some or all television signals by certain consumer
electronics devices, or impose limits on the number of copies, the ability to transfer or move copies, or the length of time a consumer may retain copies of
some or all types of television programming. 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 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 or eliminate certain
features or functionality of the TiVo products or services which may adversely affect our business. For example, the FCC could determine that certain of our
products fail to comply with regulations concerning matters such as electrical interference, copy protection, digital tuners, or display of television
programming based on rating systems. The FCC could also impose limits on the number of copies, the ability to transfer or move copies, the length of time a
consumer may retain copies, or the ability to access some or all types of television programming.
Compliance with federal securities laws and regulations is costly.
The federal securities laws and regulations, including the corporate governance and other requirements of the Sarbanes-Oxley Act of 2002 and
subsequent laws impose complex and continually changing regulatory requirements on our operations and reporting. These requirements impose
comprehensive reporting and disclosure requirements, set stricter independence and financial expertise standards for audit committee members, and impose
civil and criminal penalties for companies, their chief executive officers, chief financial officers and directors for securities law violations. These requirements
have increased and will continue 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.
Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial
reporting.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors,
misstatements or misrepresentations. While management continues to review the effectiveness of our disclosure controls and procedures and internal control
over financial reporting, we cannot assure you that our disclosure controls and procedures and internal control over financial reporting will be effective in
accomplishing all control objectives all of the time. For instance, recognizing the significant increase in our investments of cash as a result of our on-going
patent litigation, we have instituted controls to monitor compliance with the Investment Company Act of 1940 (“the 1940 Act”). If we fail to maintain
compliance with the 1940 Act in the future, such noncompliance could have significant adverse impact on our business. Deficiencies, particularly a material
weakness in internal control over financial reporting, which may occur in the future could result in misstatements of our results of operations, restatements of
our financial statements, a decline in our stock price, the delisting of our common stock from the Nasdaq Global Market, or otherwise materially adversely
affect our business, reputation, results of operation, financial condition or liquidity.
We advertise, market, and sell our services directly to consumers; many of these activities are highly
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