Virgin Media 2009 Annual Report Download - page 31

In addition to BSkyB, our significant programming suppliers include the BBC, ITV, Channel 4,
UKTV, Five, Viacom Inc., ESPN, Discovery Communications Inc. and Turner, a division of Time
Warner Inc. Our dependence on these suppliers for television programming could have a material
adverse effect on our ability to provide attractive programming at a reasonable cost. In addition, the
loss of programs could negatively affect the quality and variety of the programming delivered to our
customers, which could have a material adverse effect on our business and increase customer churn.
We may be adversely affected by a general deterioration in economic conditions.
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 has been 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
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 services may 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 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, 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 are subject to currency and interest rate risks.
We are subject to currency exchange rate risks because substantially all of our revenues and
operating expenses are paid in U.K. pounds sterling, but we pay interest and principal obligations with
respect to a portion of our indebtedness in U.S. dollars and euros. To the extent that the pound
sterling declines in value against the U.S. dollar and the euro, the effective cost of servicing our U.S.
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