Virgin Media 2008 Annual Report Download - page 204

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 14—Related Party Transactions (Continued)
behalf. The following information summarizes our significant related party transactions with Virgin
Media and its group companies (in millions):
Year ended December 31,
2008 2007 2006
Operating costs ................................ £48.6 £ 45.1 £ 47.7
Selling, general and administrative expenses ............ 46.8 59.7 110.2
£95.4 £104.8 £157.9
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 Virgin Media Inc’s common stock as a result of its
acquisition of Virgin Mobile on July 4, 2006. As of December 31, 2008, Virgin Entertainment
Investment Holdings Limited beneficially owned 10.4% of Virgin Media Inc.’s 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 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 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 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
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.
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