Virgin Media 2008 Annual Report Download - page 36

On April 3, 2006, we entered into a license agreement with Virgin Enterprises Limited which
provides for us to use the Virgin name and logo in our consumer and content businesses. In connection
with this agreement, Virgin Enterprises Limited had the right to propose a candidate to our
Nominating Subcommittee to fill a single seat on our board. Virgin Enterprises Limited nominated
Mr. Gordon McCallum, a director of Virgin Enterprises Limited, and he was appointed to our board
on September 11, 2006. As a result of Mr. McCallum’s relationship with Virgin Enterprises Limited, if
conflicts between the interests of Virgin Enterprises Limited and the interests of our other stockholders
should arise, this director may not be disinterested.
Disruptions in Virgin Media TV’s or sit-up’s satellite transmissions could materially adversely affect their
respective operations.
Virgin Media TV and sit-up currently broadcast their digital programming content with leased
satellite transponders, the operations of which are beyond the control of Virgin Media TV and sit-up.
Disruption to one of these satellites would result in disruption to Virgin Media TV’s or sit-up’s
programming and, depending upon the nature of that disruption, could result in a loss of revenues, a
loss of customers and/or adverse publicity. In addition, the satellite transponders may fail before the
expiration of Virgin Media TV’s and sit-up’s contractual right to utilize them, which may result in
additional costs as alternative arrangements are made for satellite transmission.
We do not insure the underground portion of our cable network and various pavement-based electronics
associated with our cable network.
We obtain insurance of the type and in the amounts that we believe are customary for similar
companies. Consistent with this practice, we do not insure the underground portion of our cable
network or various pavement-based electronics associated with our cable network. Almost all our cable
network is constructed underground. As a result, any catastrophe that affects our underground cable
network or our pavement-based electronics could prevent us from providing services to our customers
and result in substantial uninsured losses.
We have suffered losses due to asset impairment charges for goodwill and long-lived intangible assets and
could do so again in the future.
In accordance with Financial Accounting Standards Statement No. 142, Goodwill and Other
Intangible Assets, or FAS 142, goodwill and indefinite-lived intangible assets are subject to annual review
for impairment (or more frequently should indications of impairment arise). In addition, other
intangible assets are also reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable, in accordance with Financial
Accounting Standards Statement No. 144, Impairment of Long-Lived Assets, or FAS 144. On
December 31, 2008, we had goodwill and intangible assets of £2.6 billion. A downward revision in the
fair value of a reporting unit or intangible assets could result in an impairment charge being required.
For example, in 2008, we recognized goodwill and intangible asset impairment charges of £362.2 million
with respect to our Mobile segment and £54.8 million with respect to our sit-up reporting unit included
in our Content segment. Any downward revision in the fair value of our goodwill and intangible assets
has a material effect on our reported net earnings.
We have limited capacity on our cable platform.
Our analog television, digital television, broadband internet and video-on-demand services are
transmitted through our core and access networks, which have limited capacity. We have plans in place
to add additional capacity to our core and access networks. Until these plans are implemented, we are
limited in the number of channels that can be transmitted as part of our digital television service and in
our carriage of HD channels. While the planned conversion of the U.K. DTT platform from analogue
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