TV TOKYO Holdings Corporation

Advertising revenue from Terrestrial & BS Broadcasting accounts for approximately 60% of total net sales, but is on a gradual decline due to low growth stemming from the declining birthrate and aging population, media diversification, and the expansion of internet advertising. If advertising revenue contracts significantly due to macroeconomic trends in the Japanese economy or deterioration in the advertising market, this could have a material impact on business results and financial position. The Company aims to improve revenue by strengthening its marketing functions and developing new sales approaches.

The decline in real-time broadcast viewership ratings is accelerating faster than expected due to the spread of subscription-based and free ad-supported video streaming services and the growth of foreign-affiliated video streaming services. As competition for users' discretionary time intensifies, unexpected changes in viewing trends could impact business results and financial position. The Company is working to create content that enhances brand image centered on television broadcasting.

The animation business is an important pillar of earnings, and the Company actively pursues overseas licensing expansion; however, rising geopolitical tensions in China, Russia, the Middle East, and elsewhere are increasing the risk of tariff hikes, import/export restrictions, and tightened economic sanctions. If production and sales cannot proceed as planned due to changes in the legal systems or content industry policies of destination countries, this could have a material impact on business results and financial position. The Company seeks to minimize risk by strengthening communication with local business partners and diversifying its regions of expansion.

Cyberattack methods are becoming increasingly sophisticated, and a large-scale system outage caused by ransomware or similar attacks could make it difficult to continue broadcasting operations and could give rise to the risk of leakage of personal information or confidential information. If such incidents occur, they could lead to higher countermeasure costs and a decline in social credibility, potentially having a material impact on business results and financial position. The Company has implemented measures such as establishing a Cybersecurity Promotion Council, formulating a BCP, revising its ransomware response manual as needed, and conducting cyberattack response drills.

Multifaceted deployment of video content requires obtaining permission from copyright holders and others, which may involve considerable time and expense for rights clearance; if rights holders' understanding cannot be obtained, this could lead to reduced revenue and increased litigation costs. Additionally, with the spread of generative AI, a new risk has emerged where AI-generated content may infringe on third-party copyrights. The Company established an

The television broadcasting business is subject to legal regulations such as the Broadcast Act and the Radio Act, and if it ceases to meet license requirements, its license renewal could be revoked. Additionally, if it ceases to meet the criteria for a certified broadcast holding company, the certification could be revoked, making it impossible to maintain the current business structure of holding multiple broadcasting stations as subsidiaries. As of the end of the current consolidated fiscal year, there are no facts that would suggest license revocation or other dispositions are anticipated.

Under the Broadcast Act, if the total voting rights held directly or indirectly by foreign nationals and others reaches one-fifth or more, the certification of the certified broadcast holding company will be revoked. For this reason, the Company may refuse to record or register shares acquired by foreign nationals and others in the shareholder registry; however, as of the end of the current consolidated fiscal year, the situation requiring public notice (voting rights ratio exceeding 15%) does not apply. If the ratio of foreign investor ownership continues to rise, this could affect share liquidity and investor relations.

The Company plans and implements capital investments such as the renewal of core broadcasting systems and the development of systems for the video streaming business; however, if technological innovation causes invested systems to become obsolete and require additional investment, or if profits commensurate with the investment plan cannot be secured, this could impact business results and financial position. The Company has established a system in which investment decisions are made following deliberation by the Group Capital Investment Committee and resolution by the Board of Directors.

The Company actively pursues capital and business alliances and M&A aimed at strengthening its growth capabilities; however, contingent liabilities or unrecognized liabilities that could not be identified during due diligence may come to light after the fact. If the target company's business development does not proceed as planned due to changes in the business environment or other factors, impairment risk could arise, potentially impacting business results and financial position. The Company has established a system in which investment decisions are made following deliberation by the Investment Committee and resolution by the Board of Directors.

Compliance risks that must be addressed are wide-ranging, including broadcast accidents, scandals, inappropriate broadcasts, personal information incidents, and insider trading; if a violation occurs, it could lead to a decline in social credibility and impact business results. The Company has implemented measures such as the development of and training on the "TV TOKYO Group Code of Conduct" and various regulations, the establishment of the "Content Review Office" in August 2024, and human rights due diligence based on the "Human Rights Policy" formulated in November 2023.