iesy Repository GmbH - Irish Stock Exchange

We are required to design our digital playout facilities and grant access to such facilities on fair, reasonable and nondiscriminatory
terms, which may adversely affect our competitive position and results of operations.
ish operates its own digital playout facility. According to the current State Broadcasting Treaty, the technology used
must generally grant a diverse (program) offer and providers of digital playout facilities are especially not allowed to unfairly
obstruct or discriminate against program providers through conditional access systems, interfaces, navigators or through their
tariff structure. Any use of such systems or fees for the feed-in of signals must be notified to the competent state media
authority. Moreover, the Telecommunications Act further details the design, licensing and use of conditional access systems.
The technical design of such systems must allow cost-effective use and a complete control of the services distributed via
these systems on a local or regional level. If the owner of intellectual property rights for the conditional access systems
decides to grant licenses to a third party, any third party with a legitimate interest has the right to also receive such license on
the basis of fair, reasonable and non-discriminatory terms. Suppliers and users of conditional access systems must allow all
program providers to use the conditional access systems as far as necessary on the basis of fair, reasonable and nondiscriminatory
terms, provide the necessary information for such use and notify to RegTP any start-up or change of their
offer (including the fees requested for such services). See “Regulation.”
These obligations could require that (i) we use certain technologies for our conditional access systems, interfaces or
navigators, we would not use voluntarily; (ii) we design our conditional access systems, interfaces or navigators in a way we
would not do voluntarily; and (iii) we grant access to our playout facilities to program providers in a way and to an extent we
would not do voluntarily. In addition, these obligations could result in the use of more expensive conditional access systems,
interfaces or navigators and could therefore adversely affect our results of operations.
Analog television and radio distribution may be phased out, which may adversely affect our competitive position and could
result in increased costs or a loss of revenues.
The German federal government and the state governments aim at a general switchover from analog to digital
distribution for all television distribution platforms. In accordance with the Telecommunications Act, RegTP is required to
revoke all allocations of frequencies for terrestrial analog television transmission by 2010, and for analog frequencymodulated
radio transmission by 2015. Even though it is questionable whether the relevant provisions of the
Telecommunications Act are directly applicable to us, as the operation of cable television networks, in principle, does not
require frequency allocations, we may at least be required to further invest in the exchange of some of our headend
equipment as some broadcasters could cease to deliver their signals in analog format. In addition, future legislation or orders
of RegTP or market needs may require us to digitize our entire cable network.
The advent of digitization may promote new technologies that compete with us. For instance, although digital
terrestrial television has not been a strong competitor in the past, the German state media authorities are currently promoting
a switchover from analog to digital terrestrial video broadcast (“DVB-T”). A number of large metropolitan areas have already
been switched over to DVB-T, including the Rhine-Main area in Hesse where broadcasting of an analog TV signal was
already switched off. In Hesse, the rollout of digital terrestrial television began on October 4, 2004 in the Rhine-Main area
and will be extended to northern Hesse towards the end of 2005. However, it seems that most of the private broadcasters will
not participate in the DVB-T roll-out in northern Hesse. In North Rhine-Westphalia, DVB-T was introduced in the region of
Cologne/Bonn on May 24, 2004 and in the Düsseldorf/Ruhr area on November 8, 2004 and the roll out in these regions is
also expected to be completed in the second quarter of 2005. Recent customer developments show that digital terrestrial
television may grow to a new competitive delivery system for television programs. This in turn could adversely affect our
results of operations and financial condition.
In addition, we are dependent upon program providers for the provision of programming, and, as the market moves
towards digital transmission, we may find that we are unable to generate carriage fees for carrying digital programming at
satisfactory levels. See “—Risks Relating to Our Business—We do not have guaranteed access to programs and are
dependent on agreements with third parties for our content and carriage fees, which may adversely affect our business.” This
could adversely affect our results of operations and financial condition.
Risks Relating to Our Indebtedness and Our Structure
Our high leverage and debt service obligations could materially adversely affect our business, financial condition or
results of operations.
We are highly leveraged and have significant debt service obligations. After giving pro forma effect to the
Refinancing, the ish Acquisition and the Financing, as of March 31, 2005, we would have had €1,625.0 million of
indebtedness (excluding €100.0 million of borrowing capacity available under our revolving credit facility), of which
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