Virgin Media 2007 Annual Report Download - page 23

Mobile Segment
Virgin Mobile faces direct competition from mobile network operators and other mobile virtual
network operators. Its key competitors are the other major mobile communication providers in the
U.K., including O2, Vodafone, Orange, T-Mobile and 3. In addition, a number of smaller players have
emerged including BT Mobile, Carphone Warehouse, Tesco Mobile and ASDA.
In the broader telephony market, Virgin Mobile competes indirectly with many fixed line
telephone operators and resellers, and internet telephony providers in the U.K., including BT. See
‘‘Competition—Cable Segment’’ for more information on these competitors.
Content Segment
Virgin Media TV supplies basic television programming to the U.K. multi-channel television
market and generates revenues largely on advertising and subscription revenues from that television
programming.
Virgin Media TV’s television programming competes with other broadcasters and may lose
audience share, as a result of which its advertising revenues may decrease. Market and economic
factors apart from individual channel performance may also adversely influence subscription and
advertising revenues or carriage of the channels. Virgin Media TV’s primary customer other than
Virgin Media itself is BSkyB, which has used its dominance in the pay TV market to substantially
reduce carriage subscription payments made to Virgin Media.
Virgin Media TV competes for program rights with broadcasters transmitting similar channels. As
a result of this and competition for a limited number of well-known program rights, the price of these
program rights is increasing and could increase further, thereby limiting Virgin Media TV’s ability to
purchase that programming for transmission on its channels or adversely affecting the profitability of its
channels. UKTV, Virgin Media’s joint venture with the BBC, could be affected by similar factors,
although this is less likely due to a ‘first look’ program agreement with the BBC.
Virgin Media TV’s advertising sales department competes with the sales departments of BSkyB,
ITV1 and Channel 4.
sit-up sells a wide range of products, including electronics, jewelry, clothing and home furnishings
through its innovative retail shopping channels. Consequently, it competes with a large variety of
retailers in the U.K. market. In common with other retailers, the business experiences a seasonal peak
in the fourth quarter of the year and is affected by general consumer confidence and purchasing trends.
sit-up also competes with other shopping and auction-based channels. Because the majority of its
sales are initiated from television broadcasts, sit-up also competes with other television channels for
audiences. The future performance of the business may be affected by any changes in television viewing
habits.
Government Regulation
Regulation in the European Union (EU)
The European Parliament and Commission regulate our principal business activities through
Directives and various other regulatory instruments.
In particular, in February 2002, the European Commission adopted a package of new Directives
which, together, set out a new framework for the regulation of electronic communications networks and
services throughout the EU. This new framework consisted of four Directives, namely:
• Directive 2002/21 on a common regulatory framework for electronic communications networks
and services (the Framework Directive);
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