Virgin Media 2007 Annual Report Download - page 189

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Related Party Transactions
Virgin Media Inc. and its consolidated subsidiaries
We are a wholly-owned subsidiary of Virgin Media. We charge Virgin Media and our other group
companies for operating costs and selling, general and administrative expenses incurred by us on their
behalf. The following information summarizes our significant related party transactions with Virgin
Media and its group companies (in millions):
Year ended December 31,
2007 2006 2005
Operating costs ........................................... £ 45.1 £ 47.7 £ 47.3
Selling, general and administrative expenses ...................... 59.7 110.2 52.8
£ 104.8 £ 157.9 £ 100.1
The above recharges are recorded in operating costs and selling, general and administrative
expenses and offset the respective costs incurred.
Virgin Enterprises Limited
We have identified Virgin Enterprises Limited as a related party to us. Virgin Entertainment
Investment Holdings Limited became a holder of our common stock as a result of our acquisition of
Virgin Mobile on July 4, 2006. As of December 31, 2007, Virgin Entertainment Investment Holdings
Limited owned 10.5% of Virgin Media Inc.’s common stock (based on SEC filings). Virgin Enterprises
Limited is a wholly owned subsidiary of Virgin Entertainment Investment Holdings Ltd. In addition,
Gordon McCallum is a member of Virgin Media Inc.’s Board of Directors and is a Director at Virgin
Enterprises Limited.
We own and have the right to use registered trademarks, including the exclusive right to use the
‘‘Virgin’’ name and logo in connection with our corporate activities and in connection with the activities
of our consumer and a large part of our content businesses under license from Virgin Enterprises
Limited. This license with Virgin Enterprises Limited is for a 30-year term and exclusive to us within
the U.K. and Ireland. The license entitles us to use the ‘‘Virgin’’ name for the TV, broadband internet,
telephone and mobile phone services we provide to our residential customers, as well as the acquisition
and branding of sports, movies and other premium television content and the sale of certain
communications equipment, such as set top boxes and cable modems. For our content operations, we
are entitled to use the ‘‘Virgin Media Television’’ name for the creation, distribution and management
of our wholly-owned television channels, and to use the ‘‘Virgin’’ name for our recently launched
television channel, Virgin 1. Our license agreement provides for an annual royalty of 0.25% of certain
consumer and content revenues, subject to a minimum annual royalty of £8.7 million, except for
Virgin 1, where we pay an annual royalty of 0.5% of revenues received by Virgin 1, subject to a
minimum of £100,000. As part of the agreement, we have the right to adopt, and have adopted, a
company name for our parent, Virgin Media Inc., over which together with the name ‘‘Virgin Media’’,
we retain worldwide exclusivity. Under a related agreement, Virgin Enterprises Limited has the right to
propose a candidate to fill a seat on Virgin Media Inc.’s Board of Directors. Pursuant to this right,
Virgin Enterprises Limited proposed Gordon McCallum who was appointed to Virgin Media Inc.’s
Board of Directors. During the year ended December 31, 2007 and the period from July 4, 2006 to
December 31, 2006, respectively, we incurred expenses of £8.7 million and £5.8 million for charges in
F-103