Virgin Media 2008 Annual Report Download - page 144

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15—Related Party Transactions
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, 2008, Virgin Entertainment Investment Holdings
Limited beneficially owned 10.4% of our common stock (based on SEC filings). Virgin Enterprises
Limited is a wholly owned subsidiary of Virgin Entertainment Investment Holdings Limited. In
addition, Gordon McCallum is a member of our 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 television channel,
Virgin1. 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 Virgin1, where we
pay an annual royalty of 0.5% of revenues received by Virgin1, 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 our Board of Directors. Pursuant to this right, Virgin Enterprises Limited proposed Gordon
McCallum who was appointed to our Board of Directors. During the years ended December 31, 2008
and 2007 and the period from July 4, 2006 to December 31, 2006, respectively, we incurred expenses of
£8.9 million, £8.7 million and £5.8 million for charges in respect of brand licensing and promotion of
which £4.5 million and £4.8 million was payable at December 31, 2008 and December 31, 2007,
respectively.
Virgin Retail Limited
We had previously identified Virgin Retail Limited, an affiliate of Virgin Enterprises Limited, as a
related party to us. We had agreements with Virgin Retail Limited in respect to sales of our
communications services (such as internet, television, fixed line telephone and mobile telephone
services), through the various Virgin Megastores outlets. On September 17, 2007, the Virgin Group sold
its interest in Virgin Megastores and it therefore ceased to be a related party. We incurred expenses of
£2.3 million during the 2007 period to September 2007 and £1.8 million during the period from July 4,
2006 to December 31, 2006, for charges in respect to these stores. As part of the agreement, Virgin
Retail Limited passed through proceeds on sales of mobile handsets, vouchers and other stock items to
us. We recognized revenues totaling £6.5 million during the period from January 1, 2007 to
September 17, 2007 and £5.7 million during the period from July 4, 2006 to December 31, 2006.
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