Virgin Media 2008 Annual Report Download - page 66

Content Segment
The summary combined results of operations of our Content segment for the years ended
December 31, 2008 and 2007 were as follows (in millions):
Year ended
December 31,
2008 2007
Revenue ........................................... £363.6 £348.1
Inter segment revenue ................................. 25.7 24.4
Segment OCF ....................................... (2.3) 12.5
Depreciation, amortization and restructuring and other charges . . . (18.9) (19.4)
Goodwill and intangible asset impairments .................. (54.8) —
Operating loss ....................................... £(76.0) £ (6.9)
Revenue
Our Content segment revenue for the years ended December 31, 2008 and 2007 was as follows (in
millions):
Year ended December 31,
Increase/
2008 2007 (Decrease)
Revenue:
Virgin Media TV ........................... £121.8 £109.5 11.2%
sit-up ................................... 241.8 238.6 1.3%
Total revenue ............................... £363.6 £348.1 4.5%
For the year ended December 31, 2008, Content segment revenue increased by 4.5% to
£363.6 million from £348.1 million for the year ended December 31, 2007. This increase was primarily
due to increased advertising revenue from Virgin Media TV and increased sit-up revenue. Virgin
Media TV revenue increased over the year ended December 31, 2007 due mainly to advertising
revenue growth, partially offset by the loss of revenue from our program rights licensing business which
was disposed of in July 2007. sit-up revenue increased marginally from the year ended December 31,
2007 as a result of increased retail revenue from our television channels in the first six months of 2008,
partially offset by decreased retail revenue in the six months ended December 31, 2008, which we
believe was mainly due to the current downturn in retail consumer spending. On January 6, 2009, sit-up
ceased broadcasting on one of its two Freeview channels following its unsuccessful bid in the auction
process for the renewal of its license. As a result of the loss of this sales channel and the deterioration
in the outlook for the business, management is reviewing the implications on the business model and
considering the appropriate course of action to address these matters.
On November 4, 2008, we signed a new carriage agreement with BSkyB for continued carriage of
our Virgin Media TV channels on its satellite platform, effective from November 13, 2008. The new
agreement provides for an increase in the annual carriage fee from £6.0 million to £30.0 million, plus a
capped performance-based adjustment (allowing for maximum additional payment of up to £6.0 million
and £8.0 million in years one and two, respectively, and up to £7.9 million in the final seven months of
the term). The new carriage agreement expires in June 2011.
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