iHeartMedia 2011 Annual Report Download - page 21

legislation affecting our media and entertainment business will be adopted. Such legislation could have a material impact on our
operations and financial results. Finally, various regulatory matters relating to our media and entertainment business are now, or may
become, the subject of court litigation, and we cannot predict the outcome of any such litigation or its impact on our business.
Government regulation of outdoor advertising may restrict our outdoor advertising operations
U.S. Federal, state and local regulations have a significant impact on the outdoor advertising industry and our business.
One of the seminal laws is the HBA, which regulates outdoor advertising on Federal-Aid Primary, Interstate and National Highway
Systems’ roads in the United States. The HBA regulates the size and location of billboards, mandates a state compliance program,
requires the development of state standards, promotes the expeditious removal of illegal signs and requires just compensation for
takings. Construction, repair, maintenance, lighting, upgrading, height, size, spacing, the location and permitting of billboards and the
use of new technologies for changing displays, such as digital displays, are regulated by federal, state and local governments. From
time to time, states and municipalities have prohibited or significantly limited the construction of new outdoor advertising structures.
Changes in laws and regulations affecting outdoor advertising at any level of government, including laws of the foreign jurisdictions
in which we operate, could have a significant financial impact on us by requiring us to make significant expenditures or otherwise
limiting or restricting some of our operations. Due to such regulations, it has become increasingly difficult to develop new outdoor
advertising locations.
From time to time, certain state and local governments and third parties have attempted to force the removal of our displays
under various state and local laws, including zoning ordinances, permit enforcement, condemnation and amortization. Amortization is
the attempted forced removal of legal non-conforming billboards (billboards which conformed with applicable laws and regulations
when built, but which do not conform to current laws and regulations) or the commercial advertising placed on such billboards after a
period of years. Pursuant to this concept, the governmental body asserts that just compensation is earned by continued operation of
the billboard over time. Amortization is prohibited along all controlled roads and generally prohibited along non-controlled roads.
Amortization has, however, been upheld along non-controlled roads in limited instances where provided by state and local law. Other
regulations limit our ability to rebuild, replace, repair, maintain and upgrade non-conforming displays. In addition, from time to time
third parties or local governments assert that we own or operate displays that either are not properly permitted or otherwise are not in
strict compliance with applicable law. For example, court rulings have upheld regulations in the City of New York that have impacted
our displays in certain areas within the city. Such regulations and allegations have not had a material impact on our results of
operations to date, but if we are increasingly unable to resolve such allegations or obtain acceptable arrangements in circumstances in
which our displays are subject to removal, modification or amortization, or if there occurs an increase in such regulations or their
enforcement, our operating results could suffer.
A number of state and local governments have implemented or initiated taxes, fees and registration requirements in an
effort to decrease or restrict the number of outdoor signs and/or to raise revenue. From time to time, legislation also has been
introduced in foreign jurisdictions attempting to impose taxes on revenue from outdoor advertising or for the right to use outdoor
advertising assets. In addition, a number of jurisdictions, including the City of Los Angeles, have implemented legislation or
interpreted existing legislation to restrict or prohibit the installation of new digital billboards. While these measures have not had a
material impact on our business and financial results to date, we expect these efforts to continue. The increased imposition of these
measures, and our inability to overcome any such measures, could reduce our operating income if those outcomes require removal or
restrictions on the use of preexisting displays. In addition, if we are unable to pass on the cost of these items to our clients, our
operating income could be adversely affected.
International regulation of the outdoor advertising industry can vary by municipality, region and country, but generally
limits the size, placement, nature and density of out-of-home displays. Other regulations limit the subject matter and language of out-
of-home displays. 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, revenue, international
client base and overall financial condition.
A
dditional 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 U.S. in the future, including alcohol products. Most
18