Washington Post 2014 Annual Report Download - page 45

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 Could Negatively Affect Kaplan’s Business
Kaplan has operations and investments in a growing number of foreign countries, including Australia, Canada, China,
Colombia, France, Germany, India, Ireland, Mexico, New Zealand, Nigeria, Singapore, the U.K. and Venezuela.
Kaplan also conducts business in the Middle East. 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. In addition, as of February
2015, the UKVI in the U.K. is undertaking a review of its Tier 4 sponsor guidance. The final version of this guidance could
materially negatively impact the Kaplan businesses that hold a Tier 4 sponsor license. 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.
• Failure to Comply With Regulations Applicable to International Operations Could Negatively Impact Kaplan’s
Business
Kaplan is subject to a wide range of regulations relating to its international operations. These include domestic laws such
as the U.S. Foreign Corrupt Practices Act, as well as the local regulatory schemes of the countries in which Kaplan
operates. Compliance with these regulations requires utmost vigilance. Failure to comply can result in the imposition of
significant penalties or revocation of Kaplan’s authority to operate in the applicable jurisdiction, each of which could
have a material adverse effect on Kaplan’s operating results.
• Changing Perceptions About the Effectiveness of Television Broadcasting in Delivering Advertising
Historically, television broadcasting has been viewed as a cost-effective method 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 away from television to other media outlets, the profitability of the Company’s
television broadcasting business 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 systems.
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 significantly 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 of Television Broadcasting, Cable and VoIP Services
The Company’s television broadcasting and cable 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 services. More generally, all of
the Company’s businesses could have their profitability or their competitive positions adversely affected by significant
changes in applicable regulations.
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