Virgin Media 2008 Annual Report Download - page 30

We may be unable to implement our operational restructuring plan successfully and realize the anticipated
benefits, and this could negatively affect our financial performance.
During the fourth quarter of 2008, we commenced the implementation of a restructuring plan
aimed at driving further improvements in our operational performance and eliminating inefficiencies in
order to create a fully-integrated, customer-focused organization. The restructuring process could cause
an interruption of, or loss of, momentum in the activities of one or more of our businesses and the loss
of key personnel. The diversion of management’s attention and any delays or difficulties incurred in
connection with the restructuring activity could result in the disruption of our ongoing businesses or
inconsistencies in our standards, controls, product offerings, level of customer service, procedures and
policies that could negatively affect our ability to maintain relationships with customers, suppliers,
employees and others with whom we have business dealings. The implementation of the plan will
involve the incurrence of substantial operating and capital expenditures to achieve long term savings,
including employee termination costs, lease and contract exit costs, purchases of fixed assets and other
related expenses. Additional unanticipated costs may also be incurred. Although we expect that the
elimination of costs, as well as the realization of efficiencies and other benefits related to the
implementation of the plan, will offset the restructuring-related costs over time, this net benefit
expected may not be achieved in the near term, or at all.
We may be adversely affected by a general deterioration in economic conditions, including the recent downturn
in the financial markets.
Our ability to grow or maintain our business may be adversely affected by weakening global or
domestic economic conditions, wavering consumer confidence, unemployment, tight credit and
insurance markets, declines in global and domestic stock markets and other factors adversely affecting
the global and domestic economy. In particular, the risks associated with certain segments of our
business become more acute in periods of a slowing economy or recession. In our Content segment, a
slowing economy could be accompanied by a decrease in advertising on our channels. Generally,
expenditures by advertisers are sensitive to economic conditions and tend to decline in recessionary
periods and other periods of uncertainty. In addition, unfavorable events in the economy, including a
further deterioration in the credit and equity markets, could significantly affect consumer and business
demand for our products, as consumers may delay purchasing decisions or reduce or reallocate their
discretionary funds. Our Mobile segment may also be similarly affected by an economic slowdown as
customers reduce their expenditures on mobile phones and usage. We are also exposed to risks
associated with the potential financial instability of our customers, suppliers, distributors and other
third parties, many of whom may be adversely affected by the general economic downturn. Suppliers
may also be more cautious in supplying goods to us and may request additional credit enhancements or
more restrictive payment terms. While the impact of an economic slowdown on our business is difficult
to predict, it could result in a decline in revenue and a decrease in our cash flows.
We are licensed to use the Virgin name and logo but do not own it.
In February 2007, we rebranded certain areas of our business as Virgin Media and renamed our
corporate parent Virgin Media Inc. under a 30-year license agreement with Virgin Enterprises Limited
to use the Virgin name and logo. The use of the Virgin Media name and brand carries various risks,
including the following:
• we will be substantially reliant on the general goodwill of consumers towards the Virgin brand.
Consequently, adverse publicity in relation to the Virgin Group or its principals, particularly
Sir Richard Branson, who is closely associated with the brand, or in relation to another Virgin
name licensee, could have a material adverse effect on our business;
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