Twenty-First Century Fox 2014 Annual Report Download - page 32

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assurance of the degree to which these measures will be successful in any given case. Policing unauthorized use of
the Company’s products and services and related intellectual property is often difficult and the steps taken may not
in every case prevent the infringement by unauthorized third parties of the Company’s intellectual property. The
Company seeks to limit that threat through a combination of approaches, including offering legitimate market
alternatives, deploying digital rights management technologies, pursuing legal sanctions for infringement, promoting
appropriate legislative initiatives and international treaties and enhancing public awareness of the meaning and value
of intellectual property and intellectual property laws. Piracy, including in the digital environment, continues to
present a threat to revenues from products and services based on intellectual property.
Third parties may challenge the validity or scope of the Company’s intellectual property from time to time,
and such challenges could result in the limitation or loss of intellectual property rights. Irrespective of their validity,
such claims may result in substantial costs and diversion of resources that could have an adverse effect on the
Company’s operations. Moreover, effective intellectual property protection may be either unavailable or limited in
certain foreign territories. Therefore, the Company engages in efforts to strengthen and update intellectual property
protection around the world, including efforts to ensure the effective enforcement of intellectual property laws and
remedies for infringement.
ITEM 1A. RISK FACTORS
Prospective investors should consider carefully the risk factors set forth below before making an investment in
the Company’s securities.
A Decline in Advertising Expenditures Could Cause the Company’s Revenues and Operating Results to Decline
Significantly in any Given Period or in Specific Markets.
The Company derives substantial revenues from the sale of advertising on or in its television stations,
broadcast and cable networks and direct broadcast satellite services. Expenditures by advertisers tend to be cyclical,
reflecting overall economic conditions, as well as budgeting and buying patterns. A decline in the economic
prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities.
Demand for the Company’s products is also a factor in determining advertising rates. For example, ratings points for
the Company’s television stations and broadcast and cable networks are factors that are weighed when determining
advertising rates, and with respect to the Company’s television stations and broadcast and television networks, when
determining the affiliate rates received by the Company. In addition, newer technologies, including new video
formats, streaming and downloading capabilities via the Internet, video-on-demand, personal video recorders and
other devices and technologies are increasing the number of media and entertainment choices available to audiences.
Some of these devices and technologies allow users to view television or motion pictures from a remote location or
on a time-delayed basis and provide users the ability to fast-forward, rewind, pause and skip programming and
advertisements. These technological developments which are increasing the number of media and entertainment
choices available to audiences could negatively impact not only consumer demand for our content and services but
also could affect the attractiveness of the Company’s offerings to viewers, advertisers and/or distributors. Failure to
effectively anticipate or adapt to emerging technologies or changes in consumer behavior could have an adverse
effect on our business. Further, a decrease in advertising expenditures, reduced demand for the Company’s offerings
or the inability to obtain market ratings that adequately measure demand for the Company’s content on personal
video recorders and mobile devices could lead to a reduction in pricing and advertising spending, which could have
an adverse effect on the Company’s businesses and assets.
The Company is exposed to risks associated with weak domestic and global economic conditions and increased
volatility and disruption in the financial markets.
The Company’s businesses, financial condition and results of operations may be adversely affected by weak
domestic and global economic conditions. Factors that affect economic conditions include the rate of unemployment,
the level of consumer confidence and changes in consumer spending habits. The Company also faces risks,
including currency volatility and the stability of global local economies, associated with the impact of weak
domestic and global economic conditions on advertisers, affiliates, suppliers, wholesale distributors, retailers,
insurers, theater operators and others with which it does business.