Virgin Media 2010 Annual Report Download - page 223

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 14—Related Party Transactions (continued)
We own and have the right to use registered trademarks, including the exclusive right to use the “Virgin”
name and logo in connection with our corporate activities and in connection with the activities of our consumer
business under license from Virgin Enterprises Limited. This license with Virgin Enterprises Limited is for a
30-year term and exclusive to us within the U.K. and Ireland. The license entitles us to use the “Virgin” name for
the TV, broadband internet, 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. Our license agreement provides for an
annual royalty of 0.25% of certain consumer revenues, subject to a minimum annual royalty of £8.5 million. 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 our Board of
Directors. Pursuant to this right, Virgin Enterprises Limited proposed Gordon McCallum who was appointed to
our Board of Directors.
During the first quarter of 2010, 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.
During the years ended December 31, 2010, 2009 and 2008, respectively, we incurred expenses of
£10.1 million, £9.0 million, and £8.9 million for charges in respect of brand licensing and promotion of which
£4.7 million and £2.3 million was payable at December 31, 2010 and 2009, respectively.
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, 2010 and 2009, included in the balance sheet were amounts related to our share of net
assets, loans receivable, redeemable preference shares, and other payables and receivables in respect of the
UKTV joint ventures totaling £359.2 million and £359.9 million, respectively.
We pay UKTV for purchases of television programming rights and receive payments in respect of
advertising and other business support services provided to UKTV. During the years ended December 31, 2010,
2009 and 2008, the net expense recognized in respect to these transactions through the consolidated statement of
operations totaled £24.8 million, £24.3 million and £22.1 million, respectively. These amounts are settled on a
net basis at regular intervals.
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