Virgin Media 2008 Annual Report Download - page 145

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15—Related Party Transactions (Continued)
Other Virgin Companies
As a licensee of the ‘‘Virgin’’ brand name, we participate in mutually beneficial activities with
other Virgin companies. These arrangements are in the ordinary course of business and believed to be
on arm’s length terms.
UKTV Joint Ventures
Through our wholly owned subsidiary, Flextech Broadband Limited, we own a 50% equity
investment in the UKTV joint venture companies. We have therefore identified the UKTV joint
venture companies as related parties to us. We also carry the UKTV channels in our pay television
packages available to our customers.
As at December 31, 2008 and 2007, included in the balance sheet were amounts related to our
share of net assets, loans receivable, redeemable preference shares, and other payables and receivables
in respect of the UKTV joint ventures totaling £353.5 million and £367.7 million, respectively.
We pay UKTV for purchases of television programming rights and receive payments in respect of
advertising and other business support services provided to UKTV. During the years ended
December 31, 2008 and 2007 and the period from March 3, 2006 to December 31, 2006, the net
expense recognized in respect to these transactions through the consolidated statement of operations
totaled £22.1 million, £21.4 million and £16.9 million, respectively. These amounts are settled on a net
basis at regular intervals.
During the years ended December 31, 2008 and 2007 and the period from March 3, 2006 to
December 31, 2006, we received cash payments from UKTV for loan principal payments, interest,
dividends and consortium tax relief totaling £46.7 million, £38.3 million and £31.6 million, respectively.
Note 16—Shareholders’ Equity
Authorized Share Capital
Our authorized share capital for issuance consists of one billion shares of common stock,
300.0 million shares of Class B redeemable common stock and five million shares of preferred stock
with a par value of $0.01 each. As at December 31, 2008, there were 328.1 million shares of common
stock outstanding, and no Class B redeemable common stock or preferred stock outstanding. The
common stock is voting with rights to dividends as declared by the Board of Directors.
In connection with the reverse acquisition of Telewest, each share of our common stock issued and
outstanding immediately prior to the effective time of the acquisition was converted into the right to
receive 2.5 shares of the new parent entity’s common stock. On March 3, 2006, we issued 212,931,048
shares of common stock for this purpose. For accounting purposes, the acquisition of Telewest has been
treated as a reverse acquisition. Accordingly, the 212,931,048 shares issued to acquire Virgin Media
Holdings have been treated as outstanding from January 1, 2006 (as adjusted for historical issuances
and repurchases during the period from January 1, 2006 to March 3, 2006). In addition, on March 3,
2006, each share of Telewest’s common stock issued and outstanding immediately prior to the
acquisition was converted into 0.2875 shares of the new parent entity’s common stock (and redeemable
stock that was redeemed). These 70,728,375 shares of new common stock have been treated as issued
on the acquisition date.
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