Virgin Media 2010 Annual Report Download - page 31

satellite platform reflects the ongoing risk of Sky migrating attractive basic content to new channels that it is not
contractually obliged to supply to us and then withholding supply or setting uneconomic terms for supply.
Other 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, any loss of programs could negatively affect the quality and
variety of the programming delivered to our customers. In addition, there is the risk that suppliers will become
exclusive providers to other platforms, including BSkyB, which reduces our ability to offer the same or similar
content to our customers. All of these factors 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 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 affected by an economic slowdown as customers reduce their expenditures on
mobile phones and usage or consider a return to lower margin prepaid rather than contract accounts. Current
cable customers may elect to downgrade their packages or move to other less costly providers. New customers
may opt to take out our lower end broadband and TV packages rather than more expensive ones or may opt to
become customers of less costly competitors.
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 a general economic downturn.
See also “—We rely on third-party suppliers and contractors who may let us and our customers down.” 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 have a material adverse effect on our revenues and 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. During the second quarter of 2010, we identified further savings
through the expansion of the program and revised the estimated total costs and extended the completion date
through the end of 2012.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,
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