Virgin Media 2008 Annual Report Download - page 27

moves have traditionally occurred and students leave their accommodation between school years. In
addition, our Content segment includes Virgin Media TV, which has a seasonally higher programming
spend in the fourth quarter, and sit-up’s home shopping channels, which earn potentially higher
revenues in the fourth quarter, reflecting the Christmas holiday period, which is common in the retail
industry. In our Mobile segment, fourth quarter customer acquisition and retention costs generally
increase due to the important Christmas period and Mobile average revenue per unit, or ARPU,
generally decreases in the first quarter of each year due to the fewer number of days in February and
lower usage after the Christmas period.
Research and Development
Our research and development activities involve the analysis of technological developments
affecting our cable television, telephone and telecommunications business, the evaluation of existing
services and sales and marketing techniques and the development of new services and techniques.
Patents, Trademarks, Copyrights and Licenses
We do not have any material patents or copyrights nor do we believe that patents play a material
role in our business. We own or have the right to use registered trademarks, which in some cases are,
and in others may be, of material importance to our business, 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 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 television, 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 with respect to 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.
Employees
As of December 31, 2008, we had 14,609 employees, of whom 13,380 were permanent and 1,229
were temporary or contract. Approximately 1,200 Service Operations, Network Operations, Design &
Civils and Business Field Operations employees are covered by recognition agreements with the
Communication Workers Union, or CWU, and the Broadcasting, Entertainment, Cinematograph and
Theatre Union, or BECTU. These agreements are terminable by either the Union or us with three
months’ written notice. Except for these arrangements, no other employees are covered by collective
bargaining agreements. We believe that our relationship with the CWU, BECTU and our employees is
generally good.
Our strategy is to become an employer of choice within our U.K. marketplace and to ensure we
deploy and retain a highly productive workforce. We have implemented a number of initiatives to
promote a well trained, motivated and engaged workforce. We provide quality induction and job
training, together with ongoing skills development, to all of our employees. We also continue to invest
in the development of our mid- to senior- level management team. In addition, in 2008 we
implemented a consistent performance management process across the organization, which sets clear
annual objectives (related to both business and personal development), established incentive-based
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