Virgin Media 2009 Annual Report Download - page 183

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6—Goodwill and Intangible Assets (Continued)
We performed our annual impairment review of our Content reporting unit as at June 30, 2009. As
a result of this review we concluded that no impairment charge was required as at June 30, 2009.
We performed our annual impairment review of our Consumer and Business reporting units as at
October 1, 2009. As a result of this review we concluded that no impairment charge was required as at
October 1, 2009. During the fourth quarter of 2009, we entered into a license agreement with Virgin
Enterprises Limited for use of the ‘‘Virgin’’ name for our Business reporting unit. As a result of the
decision to rebrand this reporting unit, we recognized an impairment charge of £4.7 million in respect
to the Telewest trademark which we discontinued using from February 10, 2010.
As at June 30, 2008, we performed our annual impairment review of the goodwill recognized in
the Virgin Media TV and former Mobile reporting units. The fair value of these reporting units were
determined through the use of a combination of both the market and income valuation approaches to
calculate fair value. We concluded that the fair value of the Virgin Media TV reporting unit exceeded
its carrying value, while the Mobile reporting unit fair value was less than its carrying value.
The market approach valuations in respect of the Mobile reporting unit had declined from the
prior year primarily as a result of declining market multiples of comparable companies. The income
approach valuations in respect of the Mobile reporting unit declined as a result of a combination of an
increased discount rate, a reduced terminal value multiple and reduced long term cash flow estimates.
As a result, we extended our review to include the valuation of the Mobile reporting unit’s individual
assets and liabilities and recognized a goodwill impairment charge of £362.2 million in the year ended
December 31, 2008.
As at December 31, 2008, we performed our annual impairment review of the goodwill recognized
in our former Cable reporting unit and concluded that no impairment charge was necessary.
Subsequent to the year end, management performed an exercise to reallocate goodwill and
reorganization value intangible assets that had been previously recognized in the former Cable and
Mobile reporting units to our Consumer and Business reporting units. As a result of this review,
goodwill and reorganization value intangible assets totaling £1,825.2 million and £207.3 million were
allocated to the Consumer and Business reporting units, respectively. We also performed an interim
impairment review of the goodwill related to the former Mobile reporting unit as at January 1, 2009
and concluded that the goodwill was not impaired. The revised amounts will be tested for impairment
on an annual basis on October 1 of each year.
Note 7—Investments
Through our wholly owned subsidiary, Flextech Broadband Limited, we own a 50% equity
investment in the UKTV joint venture companies and a 49.9% equity investment in the Setanta Sports
News channel. These investments are accounted for under the equity method at December 31, 2009.
The UKTV joint venture companies operate a portfolio of channels under the UKTV brand. This
equity investment was acquired as part of the acquisition of Telewest on March 3, 2006. In accordance
with the joint venture agreements between Flextech Broadband Limited and BBC Worldwide, we are
required to recognize 100% of any losses for those companies which represent UKTV. The Setanta
Sports News channel was incorporated on November 29, 2007 and we have recognized our proportion
of its losses from that date. Setanta Sports News ceased broadcasting in June 2009 when Setanta Sports
Limited entered administration.
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