iHeartMedia 2005 Annual Report Download - page 21

21
• government policies against businesses owned by foreigners;
• investment restrictions or requirements;
• expropriations of property;
• the potential instability of foreign governments;
• the risk of insurrections;
• risks of renegotiation or modification of existing agreements with governmental authorities;
• foreign exchange restrictions;
• withholding and other taxes on remittances and other payments by subsidiaries; and
• changes in taxation structure.
Exchange Rates May Cause Future Losses in Our International Operations
Because we own assets overseas and derive revenues from our international operations, we may incur currency
translation losses due to changes in the values of foreign currencies and in the value of the U.S. dollar. We cannot
predict the effect of exchange rate fluctuations upon future operating results.
Extensive Government Regulation May Limit Our Broadcasting Operations
The federal government extensively regulates the domestic broadcasting industry, and any changes in the
current regulatory scheme could significantly affect us. Our broadcasting businesses depend upon maintaining
broadcasting licenses issued by the FCC for maximum terms of eight years. Renewals of broadcasting licenses can be
attained only through the FCC's grant of appropriate applications. Although the FCC rarely denies a renewal application,
the FCC could deny future renewal applications resulting in the loss of one or more of our broadcasting licenses.
The federal communications laws limit the number of broadcasting properties we may own in a particular area.
While the Telecommunications Act of 1996 relaxed the FCC's multiple ownership limits, any subsequent modifications
that tighten those limits could make it impossible for us to complete potential acquisitions or require us to divest stations
we have already acquired. Most significantly, in June 2003 the FCC adopted a decision comprehensively modifying its
media ownership rules. The modified rules significantly changed the FCC’s regulations governing radio ownership,
allowed increased ownership of TV stations at the local and national level, and permitted additional cross-ownership of
daily newspapers, television stations and radio stations. Soon after their adoption, however, a federal court issued a stay
preventing the implementation of the modified media ownership rules while it considered appeals of the rules by
numerous parties (including us). In a June 2004 decision, the court upheld the modified rules in certain respects,
remanded them to the FCC for further justification in other respects, and left in place the stay on their implementation.
In September 2004, the court partially lifted its stay on the modified radio ownership rules, putting into effect aspects of
those rules that established a new methodology for defining local radio markets and counting stations within those
markets, limit our ability to transfer intact combinations of stations that do not comply with the new rules, and require us
to terminate within two years (i.e., by September 2006) certain of our agreements whereby we provide programming to
or sell advertising on radio stations we do not own. The modified media ownership rules are subject to various further
FCC and court proceedings and recent and possible future actions by Congress. We cannot predict the ultimate outcome
of the media ownership proceeding or its effect on our ability to acquire broadcast stations in the future, to complete
acquisitions that we have agreed to make, to continue to own and freely transfer groups of stations that we have already
acquired, or to continue our existing agreements to provide programming to or sell advertising on stations we do not
own.
Moreover, the FCC's existing rules in some cases permit a company to own fewer radio stations than allowed
by the Telecommunications Act of 1996 in markets or geographical areas where the company also owns television
stations. These rules could require us to divest radio stations we currently own in markets or areas where we also own
television stations. Our acquisition of television stations in five local markets or areas in our merger with The Ackerley
Group resulted in our owning more radio stations in these markets or areas than is permitted by these rules. The FCC has
given us a temporary period of time to divest the necessary radio and/or television stations to come into compliance with
the rules. We have completed such divestiture with respect to one such market and have requested an extension of time
to complete such divestiture with respect to the other four markets.
Other changes in governmental regulations and policies may have a material impact on us. For example, we
currently provide programming to several television stations we do not own. These programming arrangements are made
through contracts known as local marketing agreements. The FCC's rules and policies regarding television local
marketing agreements will restrict our ability to enter into television local marketing agreements in the future, and may
eventually require us to terminate our programming arrangements under existing local marketing agreements. Moreover,
the FCC has begun a proceeding to adopt rules that will restrict our ability to enter into television joint sales agreements,
by which we sell advertising on television stations we do not own, and may eventually require us to terminate our
existing agreements of this nature. Additionally, the FCC has adopted rules which under certain circumstances subject