Virgin Media 2010 Annual Report Download - page 199

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 4—Disposals (continued)
related to the carriage of the sit-up channels recognized in our former Consumer segment that had previously
been eliminated for consolidation purposes was £0.6 million and £2.7 million for the years ended December 31,
2009 and 2008, respectively.
In accordance with the sale agreement, part of the consideration included a loan note from the purchasers.
On April 1, 2009, we entered into a five-year carriage agreement with sit-up for continued distribution of the
three sit-up channels on our television platform. In general, the agreements governing the loan note and exchange
of services between us and sit-up are for specified periods at commercial rates. Following the sale, our
continuing involvement with sit-up was limited to the loan note and carriage agreement and is therefore not
considered significant. The loan note was repaid during the year ended December 31, 2009.
As at December 31, 2008, we performed an interim goodwill impairment review of our sit-up reporting unit.
In September 2008, we received notification that one of our two licenses to broadcast over Freeview digital
terrestrial television would not be renewed. Along with this, the downturn in the economy had reduced the level
of retail sales. As a result, management concluded that indicators existed that suggested it was more likely than
not that the fair value of this reporting unit was less than its carrying value.
The fair value of the sit-up reporting unit, which was determined through the use of a combination of both
the market and income approaches to calculate fair value, was found to be less than the carrying value. The
market and income approaches declined from the goodwill impairment test we performed as at June 30, 2008 as a
result of reduced long term cash flow estimates. As a result, we extended our review to include the valuation of
the reporting unit’s individual assets and liabilities and recognized a goodwill impairment charge of
£39.9 million. During the year ended December 31, 2008, we impaired intangible assets relating to our sit-up
reporting unit totaling £14.9 million. Subsequent to the year end, in accordance with the provisions of the
Property, Plant, and Equipment Topic of the FASB ASC, we wrote down the assets held for sale to fair value
based upon the agreed purchase consideration. This resulted in a £19.0 million impairment charge, which was
recognized in the loss from discontinued operations for the year ended December 31, 2009.
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