iHeartMedia 2006 Annual Report Download - page 25

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• unfavorable economic conditions, both general and relative to the radio broadcasting, outdoor advertising
and all related media industries, which may cause companies to reduce their expenditures on advertising;
• unfavorable shifts in population and other demographics which may cause us to lose advertising customers
as people migrate to markets where we have a smaller presence, or which may cause advertisers to be
willing to pay less in advertising fees if the general population shifts into a less desirable age or
geographical demographic from an advertising perspective;
• an increased level of competition for advertising dollars, which may lead to lower advertising rates as we
attempt to retain customers or which may cause us to lose customers to our competitors who offer lower
rates that we are unable or unwilling to match;
• unfavorable fluctuations in operating costs which we may be unwilling or unable to pass through to our
customers;
• technological changes and innovations that we are unable to adopt or are late in adopting that offer more
attractive advertising, listening or viewing alternatives than what we currently offer, which may lead to a
loss of advertising customers or to lower advertising rates;
• unfavorable changes in labor conditions which may require us to spend more to retain and attract key
employees; and
• changes in governmental regulations and policies and actions of federal regulatory bodies which could
restrict the advertising media which we employ or restrict some or all of our customers that operate in
regulated areas from using certain advertising media, or from advertising at all.
New Technologies May Affect Our Broadcasting Operations
Our broadcasting businesses face increasing competition from new broadcast technologies, such as broadband
wireless and satellite television and radio, and new consumer products, such as portable digital audio players and
personal digital video recorders. These new technologies and alternative media platforms compete with our radio and
television stations for audience share and advertising revenue, and in the case of some products, allow listeners and
viewers to avoid traditional commercial advertisements. The FCC has also approved new technologies for use in the
radio broadcasting industry, including the terrestrial delivery of digital audio broadcasting, which significantly enhances
the sound quality of radio broadcasts. In the television broadcasting industry, the FCC has established standards and a
timetable for the implementation of digital television broadcasting in the U.S. We have substantially completed the
implementation of our digital television broadcasting. We have currently converted approximately 350 of our radio
stations to digital broadcasting. We are unable to predict the effect such technologies and related services and products
will have on our broadcasting operations, but the capital expenditures necessary to implement such technologies could
be substantial and other companies employing such technologies could compete with our businesses.
We May be Adversely Affected by a General Deterioration in Economic Conditions
The risks associated with our businesses become more acute in periods of a slowing economy or recession,
which may be accompanied by a decrease in advertising. A decline in the level of business activity of our advertisers
could have an adverse effect on our revenues and profit margins. During the most recent economic slowdown in the
United States, many advertisers reduced their advertising expenditures. The impact of slowdowns on our business is
difficult to predict, but they may result in reductions in purchases of advertising.
We May Be Adversely Affected by the Occurrence of Extraordinary Events, Such as Terrorist Attacks
The occurrence of extraordinary events, such as terrorist attacks, intentional or unintentional mass casualty
incidents or similar events may substantially decrease the use of and demand for advertising, which may decrease our
revenues or expose us to substantial liability. The September 11, 2001 terrorist attacks, for example, caused a
nationwide disruption of commercial activities. As a result of the expanded news coverage following the attacks and
subsequent military actions, we experienced a loss in advertising revenues and increased incremental operating
expenses. The occurrence of future terrorist attacks, military actions by the United States, contagious disease outbreaks
or similar events cannot be predicted, and their occurrence can be expected to further negatively affect the economies of
the United States and other foreign countries where we do business generally, specifically the market for advertising.
Caution Concerning Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements
made by us or on our behalf. Except for the historical information, this report contains various forward-looking
statements which represent our expectations or beliefs concerning future events, including the future levels of cash flow
from operations. Management believes that all statements that express expectations and projections with respect to
future matters, including the success of our Merger Agreement and the planned sale of radio and television assets; our