Virgin Media 2012 Annual Report Download - page 77

F-6
VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Organization and Business
Virgin Media Inc. is a Delaware corporation and is publicly-traded on the NASDAQ Global Select Market in the United
States and the London Stock Exchange in the United Kingdom. We conduct our operations primarily through direct
and indirect wholly owned subsidiaries.
We are a leading entertainment and communications business, being a “quad-play” provider of broadband internet,
television, mobile telephony and fixed line telephony services that offer a variety of entertainment and communications
services to residential and commercial customers throughout the U.K. We are one of the U.K.’s largest providers of
residential broadband internet, pay television and fixed line telephony services by number of customers. We believe
our advanced, deep fiber access network enables us to offer faster and higher quality broadband services than our
digital subscriber line, or DSL, competitors. As a result, we provide our customers with a leading next generation
broadband service and one of the most advanced TV on-demand services available in the U.K. market. As of
December 31, 2012, we provided services to 4.9 million residential cable customers on our network. We are also one
of the U.K.’s largest mobile virtual network operators by number of customers, providing mobile telephony service to
1.7 million contract mobile customers and 1.3 million prepay mobile customers over third party networks.
In addition, we provide a complete portfolio of voice, data and internet solutions to businesses, public sector
organizations and service providers in the U.K. through Virgin Media Business.
Our reporting segments are based on our method of internal reporting and the information used by our chief executive
officer, who is our chief operating decision maker, or CODM, to evaluate segment performance and make capital
allocation decisions. We have two reporting segments, Consumer and Business, as described below:
• Consumer (83.7% of our 2012 revenue): Our Consumer segment includes the distribution of television
programming over our cable network and the provision of broadband and fixed line telephone services to
residential consumers, both on and off our cable network. Our Consumer segment also includes our mobile
telephony and mobile broadband operations, provided over third party mobile networks
• Business (16.3% of our 2012 revenue): Our Business segment includes the voice and data telecommunication
and internet solutions services we provide through our cable network and third party networks to businesses,
public sector organizations and service providers.
On February 5, 2013, we entered in to a Merger Agreement with Liberty Global, Inc., or Liberty Global, and certain of
its direct or indirect wholly owned subsidiaries, or the Merger Subsidiaries, pursuant to which we agreed, through a
series of intermediate steps and transactions, to be acquired by Liberty Global and merge into one of the Merger
Subsidiaries. If consummated, the merger will result in both Liberty Global and Virgin Media becoming directly owned
by a new U.K. public limited company, or the Ultimate Parent, listed on NASDAQ, the common stock of which will in
turn be held by Liberty Global and Virgin Media Shareholders. We will continue to operate under the Virgin Media
brand in the U.K.. Further details of the proposed merger are set out in Note 18 - Subsequent Events.
Note 2—Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles, or GAAP.
On September 30, 2011, we completed the sale to Scripps Network Interactive, Inc. (“Scripps”), of our 50% equity
investment in the UKTV joint venture with BBC Worldwide Limited. After the inclusion of associated fees, this transaction
resulted in a loss on disposal of £7.2 million.
On July 12, 2010, we completed the sale of our television channel business known as Virgin Media TV to BSkyB. Virgin
Media TV’s operations comprised our former Content segment. These consolidated financial statements reflect Virgin
Media TV as discontinued operations.
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