Virgin Media 2012 Annual Report Download - page 115

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different U.S. tax consequences. It is impractical to estimate the amount of U.S. tax that would be recognized upon
the reversal of this basis difference because of the uncertainty regarding the manner in which such a transaction and
potential remittance might take place, the availability and complexity of calculating foreign tax credits that may be
available, and the implications of indirect taxes.
Note 12—Related Party Transactions
Virgin Enterprises Limited
We have identified Virgin Enterprises Limited as a related party to us. Virgin Entertainment Investment Holdings Limited
became a holder of our common stock as a result of our acquisition of Virgin Mobile on July 4, 2006. As of December 31,
2012, Virgin Entertainment Investment Holdings Limited beneficially owned 2.5% of our common stock (based on SEC
filings). Virgin Enterprises Limited is a wholly owned subsidiary of Virgin Entertainment Investment Holdings Limited.
In addition, Gordon McCallum is a member of our Board of Directors and is a Director of Virgin Enterprises Limited.
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 Limited under
which an annual royalty is payable of 0.25% of revenues from our business segment, subject to a minimum payment
of £1.5 million.
During the years ended December 31, 2012, 2011 and 2010, respectively, we incurred expenses of £10.2 million, £10.1
million, and £10.1 million for charges in respect of brand licensing and promotion of which £5.1 million, £5.0 million
and £4.7 million was payable at December 31, 2012, 2011 and 2010, 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 owned a 50% equity investment in the UKTV
joint venture companies until September 30, 2011, when the sale of UKTV was completed. We have therefore identified
the UKTV joint venture companies as related parties to us for the period to September 30, 2011. We also carry the
UKTV channels in our pay television packages available to our customers.
We pay UKTV for purchases of television programming rights. During the years ended December 31, 2011 and 2010,
the net expense recognized in respect to these transactions through the consolidated statement of comprehensive
income totaled £24.4 million and £24.8 million, respectively.
During the years ended December 31, 2011 and 2010, we received cash payments from UKTV for loan principal
payments, interest, dividends and consortium tax relief totaling £34.0 million and £34.4 million, respectively.
Table of Contents
VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 11—Income Taxes (continued)