Washington Post 2011 Annual Report Download - page 49

consequences of diverting the attention of senior management from existing operations; the possibility that an acquired
business does not meet or exceed the financial projections that supported the purchase price; and the possible failure
of the due diligence process to identify significant business risks or undisclosed liabilities associated with the acquired
business. A failure to effectively manage growth and integrate acquired businesses could have a material adverse effect
on Kaplan’s operating results.
• Difficulties of Managing Foreign Operations
Kaplan has operations and investments in a growing number of foreign countries, including Canada, Mexico, the U.K.,
Ireland, France, Israel, Australia, New Zealand, Singapore, India and China. Operating in foreign countries presents a
number of inherent risks, including the difficulties of complying with unfamiliar laws and regulations, effectively managing
and staffing foreign operations, successfully navigating local customs and practices, preparing for potential political and
economic instability and adapting to currency exchange rate fluctuations. Failure to effectively manage these risks could
have a material adverse effect on Kaplan’s operating results.
• Changes in International Regulatory and Physical Environments Could Negatively Affect International Student
Enrollments
A substantial portion of Kaplan International’s revenue comes from programs that prepare international students to study
and travel to English-speaking countries, principally the U.S., the U.K., Australia and Singapore. Kaplan International’s
ability to enroll students in these programs is directly dependent on its ability to comply with complex regulatory
environments. A recent example of this is the immigration regulatory changes in the U.K., which impose recruitment quotas
and stringent progress criteria as requirements for the maintenance of certain overseas student recruitment licenses. Any
significant changes to the regulatory environment or a natural disaster or pandemic in either the students’ countries of
origin or the countries to which they desire to travel or study could negatively affect Kaplan’s ability to attract and retain
such students, which could negatively impact Kaplan’s operating results.
• Changing Preferences of Readers or Viewers Away From Traditional Media Outlets
The rates that the Company’s print publishing and television broadcasting businesses can charge for advertising are
directly related to the number of readers and viewers of its publications and broadcasts. There is tremendous competition
for readers and viewers from other media. The Company’s publishing and television broadcasting businesses will be
adversely affected to the extent that individuals decide to obtain news, entertainment, classified listings and local
shopping information from Internet-based or other media to the exclusion of the Company’s digital media offerings, print
publications and broadcasts.
• Changing Perceptions About the Effectiveness of Publishing and Television Broadcasting in Delivering Advertising
Historically, newspaper publishing and television broadcasting have been viewed as cost-effective methods of delivering
various forms of advertising. There can be no guarantee that this historical perception will guide future decisions by
advertisers. To the extent that advertisers shift advertising expenditures to other media outlets, the profitability of the
Company’s publishing and television broadcasting businesses will suffer.
• Increased Competition Resulting From Technological Innovations in News, Information and Video Programming
Distribution Systems
The development of DBS systems has significantly increased the competition faced by the Company’s cable television
systems. In addition, the continuing growth and technological expansion of Internet-based services has increased
competitive pressure on the Company’s media businesses. The development and deployment of new technologies have
the potential to negatively and dramatically affect the Company’s businesses in ways that cannot now be reliably
predicted and that may have a material adverse effect on the Company’s operating results.
• Changes in the Nature and Extent of Government Regulations in the Case of Television Broadcasting, Cable
Television and VoIP Services
The Company’s television broadcasting and cable television businesses operate in highly regulated environments. The
Company’s VoIP services business also is subject to a growing degree of regulation. Complying with applicable
regulations has significantly increased, and may continue to increase, the costs and has reduced the revenues of these
businesses. Changes in regulations have the potential to further negatively impact those businesses, not only by increasing
compliance costs and reducing revenues through restrictions on certain types of advertising, limitations on pricing flexibility
or other means, but also by possibly creating more favorable regulatory environments for the providers of competing
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