Twenty-First Century Fox 2014 Annual Report Download - page 35

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threat of content piracy and direct broadcast satellite programming signal theft; however, policing unauthorized use
of the Company’s products and services and related intellectual property is often difficult and the steps taken by the
Company may not in every case prevent the infringement by unauthorized third parties. Developments in
technology, including digital copying, file compressing and the growing penetration of high-bandwidth Internet
connections, increase the threat of content piracy by making it easier to duplicate and widely distribute high-quality
pirated material. In addition, developments in software or devices that circumvent encryption technology and the
falling prices of devices incorporating such technologies increase the threat of unauthorized use and distribution of
direct broadcast satellite programming signals and the proliferation of user-generated content sites and live and
stored video streaming sites, which deliver unauthorized copies of copyrighted content, including those emanating
from other countries in various languages, may adversely impact the Company’s businesses. The proliferation of
unauthorized distribution and use of the Company’s content could have an adverse effect on the Company’s
businesses and profitability because it reduces the revenue that the Company could potentially receive from the
legitimate sale and distribution of its products and services.
The Company has taken, and will continue to take, a variety of actions to combat piracy and signal theft, both
individually and, in some instances, together with industry associations. However, protection of the Company’s
intellectual property rights is dependent on the scope and duration of the Company’s rights as defined by applicable
laws in the United States and abroad and the manner in which those laws are construed. If those laws are drafted or
interpreted in ways that limit the extent or duration of the Company’s rights, or if existing laws are changed, the
Company’s ability to generate revenue from intellectual property may decrease, or the cost of obtaining and
enforcing our rights may increase. There can be no assurance that the Company’s efforts to enforce its rights and
protect its products, services and intellectual property will be successful in preventing content piracy or signal theft.
Further, while piracy and technology tools continue to escalate, if any U.S. or international laws intended to combat
piracy and protect intellectual property are repealed or weakened or not adequately enforced, or if the legal system
fails to evolve and adapt to new technologies that facilitate piracy, we may be unable to effectively protect our rights
and the value of our intellectual property may be negatively impacted and our costs of enforcing our rights could
increase.
The Company Must Respond to Changes in Consumer Behavior as a Result of New Technologies in Order to
Remain Competitive.
Technology, particularly digital technology used in the entertainment industry, continues to evolve rapidly,
leading to alternative methods for the delivery and storage of digital content. These technological advancements
have driven changes in consumer behavior and have empowered consumers to seek more control over when, where
and how they consume digital content. Content owners are increasingly delivering their content directly to
consumers over the Internet, often without charge, and innovations in distribution platforms have enabled consumers
to view such Internet-delivered content on televisions and portable devices. There is a risk that the Company’s
responses to these changes and strategies to remain competitive, including distribution of its content on a “pay”
basis, may not be adopted by consumers. In addition, enhanced Internet capabilities and other new media may
reduce television viewership, the demand for DVDs and Blu-rays and the desire to see motion pictures in theaters,
which could negatively affect the Company’s revenues. The Company’s failure to protect and exploit the value of its
content, while responding to and developing new technology and business models to take advantage of
advancements in technology and the latest consumer preferences, could have a significant adverse effect on the
Company’s businesses, asset values and results of operations.
Labor Disputes May Have an Adverse Effect on the Company’s Business.
In a variety of the Company’s businesses, the Company and its partners engage the services of writers,
directors, actors and other talent, trade employees and others who are subject to collective bargaining agreements,
including employees of the Company’s film and television studio operations. If the Company or its partners are
unable to renew expiring collective bargaining agreements, it is possible that the affected unions could take action in
the form of strikes or work stoppages. Such actions, as well as higher costs in connection with these collective
bargaining agreements or a significant labor dispute, could have an adverse effect on the Company’s business by
causing delays in production or by reducing profit margins.