Nippon Television Holdings, Inc.

Terrestrial TV Advertising (Time/Spot) revenue accounts for 47.8% of total net sales and is a core source of revenue, but the market environment is becoming increasingly challenging due to the declining birthrate and aging population, population decline, media diversification, and expansion of the digital advertising market. If advertising revenue contracts significantly and cannot be offset by non-broadcast advertising revenue, it could have a material impact on the survival of the Group. As countermeasures, the Group is working on the launch of Ad Reach Max, enhancing advertising value through improved viewing data infrastructure, and expanding its share of the terrestrial advertising market.

While the SVOD, TVOD, and AVOD video streaming businesses are growth areas, the competitive environment is becoming increasingly severe year by year due to the entry of well-capitalized foreign companies and the consolidation of domestic streaming businesses. If the business does not grow as expected or if the market environment changes significantly, it may become difficult to recover invested capital, which could affect business results and financial condition. The Group operates its SVOD business through the operation of Hulu, and under a content-centric approach, aims to maximize revenue through collaboration with each media platform.

While broadcasting rights fees for sporting events such as the Olympics and the FIFA World Cup continue to escalate, it is becoming increasingly difficult to secure advertising revenue commensurate with the high cost of these broadcasting rights, resulting in worsening profitability. In the video streaming business as well, the bargaining power of content holders has increased, driving up license costs, and if there is an increase in cases where invested capital becomes difficult to recover, this could affect business results and financial condition. As a countermeasure, the Group carefully selects content and aims to maximize revenue through collaboration with various media, including terrestrial TV broadcasting.

While the development of IP (intellectual property) is important for diversifying revenue sources, it often differs from content production premised on TV broadcasting, requiring significant time and cost to build. In addition, costs continue to trend upward due to responses to work-style reform, increased staffing and investment in editing systems to maintain program quality, and securing personnel to respond to SNS, and if technological innovation or labor cost increases exceed expectations, this could affect business results and financial condition. The Group is working on efficiency improvements, including exploring cloud-based editing systems.

TV programs produced by the Group combine numerous copyrights and neighboring rights held by various copyright holders, and multi-use utilization such as internet streaming and overseas expansion often requires separate licensing approvals, which may require significant time and cost for rights clearance. If handled inappropriately, the Group may face requests to halt broadcasting or claims for damages, potentially leading to a significant decrease in revenue or increased litigation costs. As a countermeasure, the Group has established a system to obtain copyright and other licensing approvals in advance, premised on multi-use utilization, when producing new programs.

The Group's TV broadcasting business is regulated by laws such as the Broadcast Act and the Radio Act, and if it no longer meets the standards for a certified broadcast holding company, or if the voting rights ratio held by foreign nationals reaches 20% or more, certification may be revoked. In addition, if a state of violation of the Broadcast Act or Radio Act arises, the broadcasting license or certification may be revoked, which could have a material impact on business results and financial condition. As a countermeasure, the Group has organized an examination department and program review committee to regularly check broadcast programs, working to maintain broadcasting ethics.

In businesses such as video streaming, mail-order sales, and sports clubs, the Group handles customers' personal information, including names, addresses, and bank account information, and the risk of information leakage due to increasingly sophisticated and cunning cyberattacks is rising year by year. If personal information is leaked due to incidents such as unauthorized access, or if compliance with related laws and regulations is insufficient, this could lead to a decline in trust and the occurrence of liability for damages, potentially having a material impact on business results and financial condition. As a countermeasure, the Group thoroughly strengthens information security and raises awareness of personal information protection through employee training.

Under the Medium-Term Management Plan 2025-2027, the Group has set a growth investment budget of ¥100.0 billion and plans strategic investments such as M&A in the content/global domain, wellness domain, and new business domain, but there is a possibility that suitable candidates may not be found, or that transactions may not proceed as expected due to mismatched conditions. If synergy effects cannot be realized after an acquisition due to the departure of key officers or employees, deterioration in relationships with business partners, or changes in the business environment, there is a risk of impairment of goodwill and other assets, which could affect business results and financial condition. As a countermeasure, the Group conducts detailed due diligence in advance and formulates thorough integration plans.

The Wellness Business, centered on Tipness Co., Ltd., faces difficulty in securing stable profitability due to intensifying competition and price competition from new market entrants, as well as delays in the recovery of membership numbers that declined during the COVID-19 pandemic. If membership numbers fail to recover as expected, or if unexpectedly large expenditures become necessary, this could result in a significant decrease in revenue, additional costs from closing unprofitable stores, and impairment risk on fixed assets, potentially affecting business results and financial condition. As a countermeasure, the Group is working on closing unprofitable stores, reviewing its cost structure, and creating new businesses through digitalization.

The book value of the owned real estate at the Shiodome district's "Nippon Television Tower" and the Bancho district combined is ¥207,209 million (total of buildings and structures and land), representing an important asset accounting for 16.2% of the Group's total assets. If profitability and operating cash flow deteriorate significantly in the future due to a severe worsening of the business environment, or if land prices decline significantly, it may become necessary to recognize an impairment loss, which could have a material impact on business results and financial condition. As of the end of the current consolidated fiscal year, no indications of impairment have been recognized, and the Group believes the asset remains recoverable in the future.