Virgin Media 2011 Annual Report Download - page 108

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 4—Disposals (continued)
The fair value of Virgin Media TV was determined utilizing the market approach along with other third
party bids we received for the business. The market approach utilized market multiples for similar businesses
along with indicative earnings before interest, tax, depreciation and amortization, or EBITDA, levels for the
business. The fair value of the carriage agreements was estimated utilizing an analysis of the cost of carriage
agreements with other suppliers of content, prices proposed or established by U.K. regulators and audience
viewing data. Along with this, we utilized a discount rate of 9.5%. These fair value measurements utilize
significant unobservable inputs and fall within Level 3 of the fair value hierarchy.
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.
Revenue of the Virgin Media TV business, reported in discontinued operations, for the years ended
December 31, 2010 and 2009 was £100.1 million and £167.8 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.
Intercompany costs related to the carriage of the Virgin Media TV channels by our Consumer segment that
had previously been eliminated for consolidation purposes and now have been recognized in our income from
continuing operations for the years ended December 31, 2010 and 2009 were £14.3 million and £27.3 million,
respectively.
Disposal of sit-up
On April 1, 2009, we completed the disposal of our sit-up reporting unit, which was previously included
within our former Content segment. Revenue of the sit-up business, reported in discontinued operations, for the
year ended December 31, 2009 was £38.9 million. sit-up’s pre-tax loss, reported within discontinued operations,
for the year ended December 31, 2009 was £22.8 million. During the year ended December 31, 2009, 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.
F-19