Virgin Media 2008 Annual Report Download - page 2

Dear Stockholder,
2008 has been a year of significant achievement for our company against the backdrop of a global economic
slowdown. Our hard working and dedicated employees have delivered on our key goals of exploiting our network,
enriching our superior product line and driving solid financial performance. Our new leadership team has struck the
right balance between managing to our strategic advantage and successful operational execution.
Our strategy has been to leverage our superior network to exploit growing consumer demand for data-rich
information and entertainment services how, where and when our customers want. We have established a leading
position in next generation broadband, enhanced by the launch of our superfast 50Mb service in December.
As convergence gathers pace, regulators and policy-makers from across the political spectrum are increasingly
focusing on how the U.K. can harness the power of next generation technology and create a dynamic digital
economy. The next generation capabilities of Virgin Media’s network mean we are uniquely positioned to lead and
shape this debate.
We are also redefining the mid-market TV experience with our advanced video-on-demand services. We are the
only TV platform to carry BBC iPlayer, and this along with an expanded range of content from other providers has
helped grow the number of on-demand programs viewed by our customers by over 60% during 2008 to more than
500 million. We are continuing to leverage our mobile offering by marketing to our cable customers. During the year
we launched an exciting mobile broadband product and introduced new data pricing to capture growth in this area.
We believe that the strong popularity of the Virgin brand and our industry leading products helped drive record
levels of broadband, TV and contract mobile customers. The depth of our product offerings is also reflected in our
triple-play penetration which reached 56% as customers take an increasing number of products from us. A major
priority in 2008 was to reduce customer churn where we achieved tremendous success. We believe that this is largely
a result of our improving satisfaction across customer touch points such as installation, call handling, billing and
provisioning, as well as further enhancing the quality and reliability of our products. In our Content division, we
increased our market share of advertising revenue, despite a decrease in the overall television advertising market.
Additionally, in November 2008, we successfully settled a dispute with the U.K.’s principal satellite TV operator and
secured a materially better carriage agreement for our channels as well as carriage of its channels on our platform on
similar terms. In our Business division, our focus on growing retail data services to medium and large companies and
public sector organizations is yielding results as retail data revenue is now greater than retail voice revenue.
In April 2008, we raised $1 billion through a convertible note offering and used the proceeds to prepay a
portion of our senior bank loans. This was followed by the successful amendment to the terms of our senior bank
loans in November which, subject to a further payment of £187 million by August 2009, will extend the maturity of
a significant proportion of these loans. This gives us increased flexibility and financial stability in today’s very tough
credit environment and showed the faith the financial markets have in our strategic plan.
Also in November, we commenced a restructuring plan to create a fully-integrated, customer-focused
organization. We believe we are on track to deliver our targeted annual savings of over £120m by the end of 2012.
Our strong Virgin brand values and respect for each individual in the company will continue to drive our
dedication to the highest principles of corporate and social responsibility going forward. Specifically, our focus is
on instilling the kind of “digital confidence” our customers need to get the best out of our services. This means
providing clarity and leadership around a series of complex – and sometimes controversial – questions related to the
respective rights and responsibilities of service providers and consumers in the digital world.
In summary, 2008 has been a transformational year for us. We believe that we have created a strong business
with a stable foundation. In 2009, we intend to continue to build on this base and to deliver stockholder value and a
range of superior services to our customers.
James F. Mooney Neil Berkett
Chairman Chief Executive Officer
April 29, 2009