Virgin Media 2009 Annual Report Download - page 205

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 14—Related Party Transactions (Continued)
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 by 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.
Under a related agreement, Virgin Enterprises Limited has the right to propose a candidate to fill a
seat on Virgin Media Inc.’s Board of Directors. Pursuant to this right, Virgin Enterprises Limited
proposed Gordon McCallum who was appointed to Virgin Media Inc.’s Board of Directors. During the
years ended December 31, 2009, 2008 and 2007, respectively, we incurred expenses of £9.0 million,
£8.9 million and £8.7 million for charges in respect of brand licensing and promotion of which
£2.3 million and £4.5 million was payable at December 31, 2009 and December 31, 2008, respectively.
Subsequent to the year end, ntl:Telewest Business announced that it would rebrand using the
Virgin trade marks to ‘‘Virgin Media Business.’’ Virgin Media has entered into a trade mark license
with Virgin Enterprises Ltd under which an annual royalty is payable of 0.25% of revenues from our
business division, subject to a minimum payment of £1.5 million.
Virgin Retail Limited
We had previously identified Virgin Retail Limited, an affiliate of Virgin Enterprises Limited, as a
related party to us. We had agreements with Virgin Retail Limited in respect to sales of our
communications services (such as internet, television, fixed line telephone and mobile telephone
services), through the various Virgin Megastores outlets. On September 17, 2007, the Virgin Group sold
its interest in Virgin Megastores and it therefore ceased to be a related party. As part of the
agreement, Virgin Retail Limited passed through proceeds on sales of mobile handsets, vouchers and
other stock items to us. We recognized revenues totaling £6.5 million and incurred expenses of
£2.3 million in connection with this agreement during the period from January 1, 2007 to
September 17, 2007.
Other Virgin Companies
As a licensee of the ‘‘Virgin’’ brand name, we participate in mutually beneficial activities with
other Virgin companies. These arrangements are in the ordinary course of business and believed to be
on arm’s length terms.
UKTV Joint Ventures
Through our wholly owned subsidiary, Flextech Broadband Limited, we own a 50% equity
investment in the UKTV joint venture companies. We have therefore identified the UKTV joint
venture companies as related parties to us. We also carry the UKTV channels in our pay television
packages available to our customers. As at December 31, 2009 and 2008, included in the balance sheet
were amounts related to our share of net assets, loans receivable, redeemable preference shares, and
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