Virgin Media 2011 Annual Report Download - page 42

Expenses
The principal components of our operating costs and selling, general and administrative expenses within
each segment include:
Consumer
• payroll and other employee-related costs including outsourcing;
• television programming services and programming costs;
• interconnect costs paid to carriers relating to call termination services;
• marketing and selling costs; and
• purchase costs of mobile handsets and other equipment.
Business
• payroll and other employee-related costs;
• interconnect and circuit costs paid to other telecommunication carriers; and
• marketing and selling costs.
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 Equity Investments
Disposals
On September 30, 2011, we completed the sale to Scripps Network Interactive, Inc. (“Scripps”), of our
interest in the UKTV joint venture with BBC Worldwide Limited. The aggregate consideration was
£349.9 million, which included approximately £98.1 million for Scripps’ acquisition of preferred equity, loan
stock and other debt. After the inclusion of associated fees, this transaction resulted in a loss on disposal of
£7.2 million in the consolidated statement of operations. Other than an insignificant amount of U.S. alternative
minimum tax, no income tax is due as a result of this transaction due to our ability to offset net operating losses
against taxable income.
Factors Affecting Our Business
A number of factors affect the performance of our business, at both a general and segment level.
General
Factors that affect all of the segments in which we operate are as follows:
General Macroeconomic Factors. General macroeconomic factors in the U.K. have an impact on our
business. For example, during an economic slowdown, potential and existing customers may be less willing, or
able to purchase our products or upgrade their services. We may also experience increased churn and higher bad
debt expense.
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