Virgin Media 2010 Annual Report Download - page 48

Other
• costs of maintaining our cable network infrastructure and IT systems;
• facility-related costs, such as rent, utilities and rates;
• costs associated with providing customer services; and
• allowances for doubtful accounts.
Disposal of Business Units
Disposals
On June 4, 2010, we announced the sale to BSkyB of our television channel business known as Virgin
Media TV. Virgin Media TV’s operations comprised our former Content segment. We determined that as of
June 30, 2010 the planned sale met the requirements for Virgin Media TV to be reflected as assets and liabilities
held for sale and discontinued operations in both the current and prior periods and, accordingly we adjusted the
consolidated balance sheet as of December 31, 2009 and consolidated statements of operations and cash flows for
the years ended December 31, 2009 and 2008.
We have also entered into a number of agreements providing for the carriage by us of certain of BSkyB’s
standard and high-definition channels along with the former Virgin Media TV channels sold. The agreements in
respect to the sale of Virgin Media TV and the carriage of these channels were negotiated concurrently. We have
determined that these agreements are separate units of account as described by the fair value measurements
guidance issued by the FASB. We have performed a review of the fair value of the services received and the
business disposed of to determine the appropriate values to attribute to each unit of account. As a result,
£33.6 million of the gain on disposal of Virgin Media TV was deferred on the balance sheet and will be treated as
a reduction in operating costs over the contractual terms of the carriage arrangements, which range from 3 to
7 years. During 2010, £2.0 million of this deferred gain was recognized in the consolidated statement of
operations.
The results of operations of Virgin Media TV have been included as discontinued operations in the
consolidated statements of operations through July 12, 2010, which is the date the sale was completed following
approval from regulators in Ireland. On that date, consideration was received totaling £105.0 million. On
September 17, 2010, additional consideration of £55.0 million was received upon full approval of the transaction
by U.K. regulators. The terms of the sale and purchase agreement include certain customary warranties,
guarantees and working capital adjustments which may impact the amount recognized in future periods.
Revenue of the Virgin Media TV business, reported in discontinued operations, for the years ended
December 31, 2010, 2009 and 2008 was £100.1 million, £167.8 million and £147.5 million, respectively. Virgin
Media TV’s pre-tax income, reported within discontinued operations, for the years ended December 31, 2010 and
2009 was £11.9 million and £15.3 million, respectively. Virgin Media TV’s pre-tax loss, reported within
discontinued operations was £26.0 million for the year ended December 31, 2008.
Factors Affecting Our Business
A number of factors affect the performance of our business, at both a general and segment level.
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