iHeartMedia 2005 Annual Report Download - page 23

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Legislation has from time to time been introduced in state and local jurisdictions attempting to impose taxes on
revenues of outdoor advertising companies. Several jurisdictions have already imposed such taxes as a percentage of
our gross receipts of outdoor advertising revenues in that jurisdiction. While these taxes have not had a material impact
on our business and financial results to date, we expect states to continue to try to impose such taxes as a way of
increasing revenues. The increased imposition of these taxes and our inability to pass on the cost of these taxes to our
clients could negatively affect our operating income.
In addition, we are unable to predict what additional regulations may be imposed on outdoor advertising in the
future. Legislation that would regulate the content of billboard advertisements and implement additional billboard
restrictions has been introduced in Congress from time to time in the past.
International regulation of the outdoor advertising industry varies by region and country, but generally limits
the size, placement, nature and density of out-of-home displays. Significant international regulations include the Law of
December 29, 1979 in France, the Town and Country Planning (Control of Advertisements) Regulations 1992 in the
United Kingdom, and Règlement Régional Urbain de l’agglomération bruxelloise in Belgium. These laws define issues
such as the extent to which advertisements can be erected in rural areas, the hours during which illuminated signs may
be lit and whether the consent of local authorities is required to place a sign in certain communities. Other regulations
limit the subject matter and language of out-of-home displays. For instance, the United States and most European Union
countries, among other nations, have banned outdoor advertisements for tobacco products. Our failure to comply with
these or any future international regulations could have an adverse impact on the effectiveness of our displays or their
attractiveness to clients as an advertising medium and may require us to make significant expenditures to ensure
compliance. As a result, we may experience a significant impact on our operations, revenues, international client base
and overall financial condition.
Additional restrictions on outdoor advertising of tobacco, alcohol and other products may further restrict the
categories of clients that can advertise using our products
Out-of-court settlements between the major U.S. tobacco companies and all 50 states, the District of Columbia,
the Commonwealth of Puerto Rico and four other U.S. territories include a ban on the outdoor advertising of tobacco
products. Other products and services may be targeted in the future, including alcohol products. 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 revenues from such advertisements and an 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:
• certain of our acquisitions may prove unprofitable and fail to generate anticipated cash flows;
• to successfully manage our large portfolio of broadcasting, outdoor advertising and other properties, we
may need to:
¾ 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, and
¾ 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.
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.