Virgin Media 2009 Annual Report Download - page 35

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 satellite transmissions could materially adversely affect its operations.
Virgin Media TV currently broadcasts its digital programming content with leased satellite
transponders, the operations of which are beyond the control of Virgin Media TV. Disruption to one of
these satellites would result in disruption to Virgin Media TV’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
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 the Intangibles—Goodwill and Other Topic of the Financial Accounting
Standards Board Accounting Standards Codification, or FASB ASC, 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 the Property, Plant and Equipment Topic of the FASB ASC. On
December 31, 2009, we had goodwill and intangible assets of £2.3 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 former Mobile segment. Any downward revision in the fair value of our goodwill
and intangible assets has a material effect on our reported net income.
We have limited capacity on our cable platform.
Our digital television, analog television, broadband internet and VOD 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 from analogue to digital technology in the U.K.
will increase spectrum efficiency, thereby releasing capacity for new services, our current capacity
limitations may affect our ability to carry new channels as they are developed. As such, our digital
television offering may not be as competitive, which could result in an increase in customer churn and
a decrease in revenue.
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