iHeartMedia 2004 Annual Report Download - page 25

Changes in Restrictions on Outdoor Tobacco and Alcohol Advertising May Pose Risks
Out-of-court settlements between the major U.S. tobacco companies and all 50 states include a ban on the outdoor advertising of tobacco
products. State and local governments continue to initiate proposals designed to limit outdoor advertising of alcohol. Other products and
services may be targeted in the future. Legislation regulating tobacco and alcohol advertising has also been introduced in a number of
European countries in which we conduct business, and could have a similar impact. Any significant reduction in alcohol related advertising due
to content-related restrictions could cause a reduction in our direct revenue from such advertisements and a simultaneous increase in the
available space on the existing inventory of billboards in the outdoor advertising industry.
Future Acquisitions Could Pose Risks
We may acquire media-related assets and other assets or businesses that we believe will assist our customers in marketing their products and
services. Our acquisition strategy involves numerous risks, including:
We frequently evaluate strategic opportunities both within and outside our existing lines of business. We expect from time to time to pursue
additional acquisitions and may decide to dispose of certain businesses. These acquisitions or dispositions could be material.
Capital Requirements Necessary to Implement Acquisitions Could Pose Risks
We face stiff competition from other broadcasting, outdoor advertising and live entertainment companies for acquisition opportunities. If
the prices sought by sellers of these companies continue to rise, we may find fewer acceptable acquisition opportunities. In addition, the
purchase price of possible acquisitions could require additional debt or equity financing on our part. Since the terms and availability of this
financing depend to a large degree upon general economic conditions and third parties over which we have no control, we can give no
assurance that we will obtain the needed financing or that we will obtain such financing on attractive terms. In addition, our ability to obtain
financing depends on a number of other factors, many of which are also beyond our control, such as interest rates and national and local
business conditions. If the cost of obtaining needed financing is too high or the terms of such financing are otherwise unacceptable in relation
to the acquisition opportunity we are presented with, we may decide to forego that opportunity. Additional indebtedness could increase our
leverage and make us more vulnerable to economic downturns and may limit our ability to withstand competitive pressures. Additional equity
financing could result in dilution to our shareholders.
We Face Intense Competition in the Broadcasting, Outdoor Advertising and Live Entertainment Industries
Our business segments are in highly competitive industries, and we may not be able to maintain or increase our current audience ratings and
advertising and sales revenues. Our radio stations and outdoor advertising properties compete for audiences and advertising revenues with
other radio stations and outdoor advertising companies, as well as with other media, such as newspapers, magazines, television, direct mail,
satellite radio and
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• certain of our acquisitions may prove unprofitable and fail to generate anticipated cash flows;
• to successfully manage our large portfolio of broadcasting, outdoor advertising, entertainment and other properties, we may need to:
recruit additional senior management as we cannot be assured that senior management of acquired companies will continue
to work for us and, in this highly competitive labor market, we cannot be certain that any of our recruiting efforts will
succeed, an
d
expand corporate infrastructure to facilitate the integration of our operations with those of acquired properties, because
failure to do so may cause us to lose the benefits of any expansion that we decide to undertake by leading to disruptions in
our ongoing businesses or by distracting our management;
• entry into markets and geographic areas where we have limited or no experience;
• we may encounter difficulties in the integration of operations and systems;
• our management’s attention may be diverted from other business concerns; and
• we may lose key employees of acquired companies or stations.