iHeartMedia 2012 Annual Report Download - page 21

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under various state and local laws, including zoning ordinances, permit enforcement, condemnation and amortization. Similar risks
also arise in certain of our international jurisdictions. 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. Although amortization
is prohibited along all controlled roads and generally prohibited along non-controlled roads, amortization has 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, courts in New York City upheld local municipal enforcement efforts to restrict advertising on arterial roadways and require
registration of billboard structures, requiring us to remove certain existing advertising displays. In addition, we are appealing a recent
California court ruling in favor of a competitor who challenged the validity of our digital display permits in the City of Los Angeles,
in which the court ruled that our permits should be invalidated and our digital displays removed. 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
international 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.
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 U.S. in the future, including alcohol products. Most European Union countries, among
other nations, also have banned outdoor advertisements for tobacco products and regulate alcohol advertising. Regulations vary
across the countries in which we conduct business. Any significant reduction in alcohol-related advertising or advertising of other
products 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.
Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations
As the owner or operator of various real properties and facilities, especially in our outdoor advertising operations, we must
comply with various foreign, federal, state and local environmental, health, safety and land use laws and regulations. We and our
properties are subject to such laws and regulations relating to the use, storage, disposal, emission and release of hazardous and non-
hazardous substances and employee health and safety as well as zoning restrictions. Historically, we have not incurred significant
expenditures to comply with these laws. However, additional laws which may be passed in the future, or a finding of a violation of or
liability under existing laws, could require us to make significant expenditures and otherwise limit or restrict some of our operations.
Doing business in foreign countries exposes us to certain risks not found when doing business in the United States
Doing business in foreign countries carries with it certain risks that are not found when doing business in the United States.
These risks could result in losses against which we are not insured. Examples of these risks include: