##### Table of Contents





UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form
    10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    000-51205
  DISCOVERY HOLDING
    COMPANY
 (Exact name of Registrant as
    specified in its charter)
  State of Delaware

20-2471174(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)12300 Liberty BoulevardEnglewood, Colorado

80112(Address of principal executive
    offices)

(Zip Code)   Registrants telephone number, including area code:
 (720) 875-4000
   þ o
  12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
    Series A
    common stock 268,091,082 shares; and
    Series B common stock 13,138,236 shares.




---





TABLE OF CONTENTS  Item 2.Managements Discussion and Analysis of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART II -- OTHER INFORMATIONItem 1. Legal ProceedingsItem 6. ExhibitsCertification of John C. MaloneCertification of David J.A. FlowersCertification of Christopher W. SheanCertification pursuant to Section 906    Table of Contents   DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Condensed
    Consolidated Balance Sheets
 (unaudited)
  March 31,


December 31,2008


2007amounts in thousandsASSETSCurrent assets:Cash and cash equivalents

$
222,577



209,449Trade receivables, net


172,624



144,342Prepaid expenses


15,324



14,815Other current assets


3,752



3,101Total current assets


414,277



371,707Investments in marketable securities






23,545Investment in Discovery Communications Holding, LLC
    (Discovery) (note 6)


3,330,030



3,271,553Property and equipment, net


262,744



269,742Goodwill (note 5)


1,909,823



1,909,823Other assets, net


18,964



19,382Total assets

$
5,935,838



5,865,752LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
48,555



26,298Accrued payroll and related liabilities


22,839



26,127Other accrued liabilities


42,536



42,761Deferred revenue


23,472



24,951Total current liabilities


137,402



120,137Deferred income tax liabilities


1,252,033



1,228,942Other liabilities


21,830



22,352Total liabilities


1,411,265



1,371,431Commitments and contingencies (note 8)Stockholders equity:Preferred stock, $.01 par value. Authorized
    50,000,000 shares; no shares issued






Series A common stock, $.01 par value. Authorized
    600,000,000 shares; issued and outstanding
    269,180,104 shares at March 31, 2008 and
    269,159,928 shares at December 31, 2007


2,692



2,691Series B common stock, $.01 par value. Authorized
    50,000,000 shares; issued and outstanding
    11,869,696 shares at March 31, 2008 and
    December 31, 2007


119



119Series C common stock, $.01 par value. Authorized
    600,000,000 shares; no shares issued






Additional paid-in capital


5,728,701



5,728,213Accumulated deficit


(1,219,492
)


(1,253,483
)Accumulated other comprehensive earnings


12,553



16,781Total stockholders equity


4,524,573



4,494,321Total liabilities and stockholders equity

$
5,935,838



5,865,752    I-1




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Condensed
    Consolidated Statements of Operations and Comprehensive
    Earnings
 (unaudited)
  Three Months EndedMarch 31,2008


2007amounts in thousands, except per share amountsNet revenue

$
189,305



173,882Operating expenses:Cost of services


138,060



121,542Selling, general, and administrative, including stock-based
    compensation (notes 3 and 9)


41,155



38,004Restructuring and other charges


1,257



Gain on sale of operating assets


(78
)


(34
)Depreciation and amortization


16,540



15,571196,934



175,083Operating loss


(7,629
)


(1,201
)Other income:Share of earnings of Discovery (note 6)


66,402



21,557Other income, net


1,684



9,29768,086



30,854Earnings before income taxes


60,457



29,653Income tax expense


(26,466
)


(9,189
)Net earnings


33,991



20,464Other comprehensive earnings (loss), net of taxes:Foreign currency translation adjustments


4,009



1,354Unrealized holding gains (losses) arising during the period


(8,237
)


456Other comprehensive earnings (loss)


(4,228
)


1,810Comprehensive earnings

$
29,763



22,274Basic and diluted earnings per common share 
    Series A and Series B (note 4)

$
.12



.07    I-2




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Condensed
    Consolidated Statements of Cash Flows
 (unaudited)
  Three Months EndedMarch 31,2008


2007amounts in thousandsCash flows from operating activities:Net earnings

$
33,991



20,464Adjustments to reconcile net earnings to net cash provided by
    (used in) operating activities:Depreciation and amortization


16,540



15,571Stock-based compensation


(116
)


966Share of earnings of Discovery


(66,402
)


(21,557
)Gain on lease buyout






(6,992
)Deferred income tax expense


25,754



8,508Other non-cash credits, net


(502
)


(487
)Changes in assets and liabilities, net of acquisitions:Trade receivables


(28,048
)


(1,082
)Prepaid expenses and other current assets


(1,157
)


(1,197
)Payables and other liabilities


17,769



(11,629
)Net cash provided by (used in) operating activities


(2,171
)


2,565Cash flows from investing activities:Capital expenditures


(8,552
)


(13,407
)Cash proceeds from lease buyout






7,138Net sales (purchases) of marketable securities


23,545



(665
)Other investing activities, net


145



90Net cash provided by (used in) investing activities


15,138



(6,844
)Cash flows from financing activities:Net cash from option exercises


329



Other financing activities, net


(168
)


(19
)Net cash provided (used) by financing activities


161



(19
)Net increase (decrease) in cash and cash equivalents


13,128



(4,298
)Cash and cash equivalents at beginning of period


209,449



154,775Cash and cash equivalents at end of period

$
222,577



150,477    I-3




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
    Condensed Consolidated Statement of Stockholders Equity
    Three months ended March 31, 2008
    (unaudited)
  AccumulatedAdditional





Other


TotalPreferred


Common stock


Paid-in


Accumulated


Comprehensive


StockholdersStock


Series A


Series B


Series C


Capital


Deficit


Earnings


Equityamounts in thousandsBalance at January 1, 2008

$




2,691



119







5,728,213



(1,253,483
)


16,781



4,494,321Net earnings






















33,991







33,991Other comprehensive loss


























(4,228
)


(4,228
)Stock compensation


















160











160Stock option exercises






1











328











329Balance at March 31, 2008

$




2,692



119







5,728,701



(1,219,492
)


12,553



4,524,573    I-4




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
    Notes to Condensed Consolidated Financial Statements
    March 31, 2008
    (unaudited)
  (1)
    Basis of
    Presentation  2 3
        Form 10-K,
   I-5




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
  (2)
    Newhouse
    Transaction and Ascent Spin Off    
    DHC will spin-off to its shareholders a wholly-owned subsidiary
    holding substantially all of DHCs cash, AccentHealth and
    Ascent Media, except for those businesses of Ascent Media that
    provide sound, music, mixing, sound effects and other related
    services (the Ascent Media Spin Off);
    Immediately following the Ascent Media Spin Off, DHC will
    combine with a new holding company (New DHC),
    and DHCs existing shareholders will receive shares of
    common stock of New DHC;
    As part of this transaction, Advance/Newhouse will contribute
    its interests in Discovery and Animal Planet to New DHC in
    exchange for preferred stock of New DHC that, immediately after
    the closing of the transactions, will be convertible at any time
    into shares initially representing one-third of the outstanding
    shares of common stock of New DHC on an as-converted basis. The
    preferred stock held by Advance/Newhouse will entitle it to
    elect three members to New DHCs board of directors
    and to exercise approval rights with respect to the taking of
    specified actions by New DHC and Discovery.    Bulletin 85-5,
  (3)
    Stock
    Options and Other Long-Term Incentive Compensation  Stock
    Options
   I-6




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
    Weighted



WeightedAverage



AverageDHC

Exercise

DHC

ExerciseSeries A

Price

Series B

PriceOutstanding


1,132,036


$
15.31



2,996,525


$
18.87Exercisable


908,002


$
15.45



2,936,525


$
18.93     2006
    Ascent Media Long-Term Incentive Plan
    (4)
    Earnings
    Per Common Share  Series A and
    Series B    (5)
    Goodwill    March 31,


December 31,2008


2007amounts in thousandsGoodwillCreative Services group

$
106,599



106,599Network Services group


32,224



32,224Discovery


1,771,000



1,771,000Total goodwill

$
1,909,823



1,909,823    I-7




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
    Fair Value
    Measurements Goodwill and Other Intangible
    Assets Accounting
    for the Impairment or Disposal of Long-Lived Assets
  (6)
    Investment
    in Discovery      2 3 1 3
    2 3
   I-8




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
        Consolidated
    Balance Sheets
  March 31,


December 31,2008


2007amounts in thousandsCash and cash equivalents

$
68,654



44,951Other current assets


1,021,658



1,032,282Property and equipment, net


379,125



397,430Goodwill and intangible assets


5,041,554



5,051,843Programming rights, long term


1,045,593



1,048,193Other assets


364,753



385,731Total assets

$
7,921,337



7,960,430Current liabilities

$
681,805



850,495Long term debt


4,088,607



4,109,085Other liabilities


300,610



243,867Mandatorily redeemable equity in subsidiaries


48,721



48,721Members equity


2,801,594



2,708,262Total liabilities and members equity

$
7,921,337



7,960,430  I-9




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
  Consolidated
    Statements of Operations
  Three Months EndedMarch 31,2008


2007amounts in thousandsRevenue

$
794,578



710,198Cost of revenue


(230,435
)


(243,523
)Selling, general and administrative


(278,211
)


(276,247
)Restructuring and other charges






(10,999
)Equity-based compensation


35,857



(11,721
)Depreciation and amortization


(37,720
)


(32,433
)Operating income


284,069



135,275Interest expense, net


(68,720
)


(44,558
)Other income (expense), net


(22,590
)


2,407Income tax expense


(87,541
)


(41,710
)Earnings from continuing operations


105,218



51,414Loss from discontinued operations, net of income tax






(8,300
)Net earnings

$
105,218



43,114     (7)
    Income
    Taxes  Accounting for Uncertainty in Income Taxes, an
    interpretation of FASB Statement No. 109
       I-10




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
  (8)
    Commitments
    and Contingencies        (9)
    Related
    Party Transactions      (10)
    Information
    About Operating Segments       I-11




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
          Consolidated Reportable SegmentsCreative


Network








EquityServices


Services


Corporate


Consolidated


affiliate-group


group(1)


and other


Total


Discoveryamounts in thousandsThree months ended March 31, 2008Revenue from external customers

$
91,782



97,523







189,305



794,578Operating cash flow (deficit)

$
3,817



17,170



(10,948
)


10,039



285,932Capital expenditures

$
3,753



3,728



1,071



8,552



13,955Total assets

$
375,690



265,268



5,294,880



5,935,838



7,921,337Three months ended March 31, 2007Revenue from external customers

$
110,712



63,170







173,882



710,198Operating cash flow (deficit)

$
14,284



8,288



(7,210
)


15,362



190,428Capital expenditures

$
6,132



5,587



1,688



13,407



13,407     (1)
    
    Included in network services group revenue is broadcast services
    revenue of $42,588,000 and $37,415,000 and systems integration
    revenue of $54,935,000 and $25,755,000 for the three months
    ended March 31, 2008 and 2007, respectively. I-12




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
     Three Months EndedMarch 31,2008


2007amounts in thousandsConsolidated segment operating cash flow

$
10,039



15,362Stock-based compensation


116



(966
)Depreciation and amortization


(16,540
)


(15,571
)Share of earnings of Discovery


66,402



21,557Other, net


440



9,271Earnings before income taxes

$
60,457



29,653     Three Months EndedMarch 31,2008


2007amounts in thousandsRevenueUnited States

$
150,172



137,212United Kingdom


33,042



30,140Other countries


6,091



6,530$
189,305



173,882   March 31,


December 31,2008


2007amounts in thousandsProperty and equipment, netUnited States

$
175,515



178,299United Kingdom


65,661



68,548Other countries


21,568



22,895$
262,744



269,742  I-13




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results Of
    Operations  Form 10-Q
  
    general economic and business conditions and industry trends
    including the timing of, and spending on, feature film,
    television and television commercial production;
    spending on domestic and foreign television advertising and
    spending on domestic and foreign first-run and existing content
    libraries;
    the regulatory and competitive environment of the industries in
    which we, and the entities in which we have interests, operate;
    continued consolidation of the broadband distribution and movie
    studio industries;
    uncertainties inherent in the development of new business lines
    and business strategies;
    integration of acquired operations;
    uncertainties associated with product and service development
    and market acceptance, including the development and provision
    of programming for new television and telecommunications
    technologies;
    changes in the distribution and viewing of television
    programming, including the expanded deployment of personal video
    recorders, video on demand and IP television and their impact on
    television advertising revenue;
    rapid technological changes;
    future financial performance, including availability, terms and
    deployment of capital;
    fluctuations in foreign currency exchange rates and political
    unrest in international markets;
    the ability of suppliers and vendors to deliver products,
    equipment, software and services;
    the outcome of any pending or threatened litigation;
    availability of qualified personnel;
    the possibility of an industry-wide strike or other job action
    affecting a major entertainment industry union, or the duration
    of any existing strike or job action;
    changes in, or failure or inability to comply with, government
    regulations, including, without limitation, regulations of the
    Federal Communications Commission, and adverse outcomes from
    regulatory proceedings;
    changes in the nature of key strategic relationships with
    partners and joint venturers;
    competitor responses to our products and services, and the
    products and services of the entities in which we have
    interests; and
    threatened terrorists attacks and ongoing military action in the
    Middle East and other parts of the world.  Form 10-K,
 I-14




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##### Table of Contents



Form 10-K,
  Overview
  2 3
  Ascent
    Media
  and/or
  2007-2008
      Discovery
   I-15




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##### Table of Contents



2 3 1 3
  Newhouse
    Transaction and Ascent Spin Off
    
    We will spin-off to our shareholders a wholly-owned subsidiary
    holding substantially all of DHCs cash, AccentHealth and
    Ascent Media, except for those businesses of Ascent Media that
    provide sound, music, mixing, sound effects and other related
    services (the Ascent Media Spin Off);
    Immediately following the Ascent Media Spin Off, we will combine
    with a new holding company (New DHC), and our
    existing shareholders will receive shares of common stock of New
    DHC;
    As part of this transaction, Advance/Newhouse will contribute
    its interests in Discovery and Animal Planet to New DHC in
    exchange for preferred stock of New DHC that, immediately after
    the closing of the transactions, will be convertible at any time
    into shares initially representing one-third of the outstanding
    shares of common stock of New DHC on an as-converted basis. The
    preferred stock held by Advance/Newhouse will entitle it to
    elect three members to New DHCs board of directors and to
    exercise approval rights with respect to the taking of specified
    actions by New DHC and Discovery.    Bulletin 85-5,
 I-16




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##### Table of Contents



Operating
    Cash Flow
    Results
    of Operations
       I-17




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##### Table of Contents



Three Months EndedMarch 31,2008


2007amounts in thousandsSegment RevenueCreative Services group

$
91,782



110,712Network Services group


97,523



63,170Corporate and other






$
189,305



173,882Segment Operating Cash FlowCreative Services group

$
3,817



14,284Network Services group


17,170



8,288Corporate and other


(10,948
)


(7,210
)$
10,039



15,362   Revenue.
    Cost of Services.
  Selling, General and Administrative.
 I-18




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##### Table of Contents



Restructuring Charges.
  Depreciation and Amortization.
  Stock-Based Compensation.
    Share of Earnings of Discovery. 2 3 2 3
      Other Income.
  Income Taxes.
   I-19




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##### Table of Contents



Net Earnings (Loss).
  Liquidity
    and Capital Resources
      Discovery
  2 3
    Consolidated
    Results
   I-20




---



##### Table of Contents



Consolidated
    Results of Discovery
  Three Months EndedMarch 31,2008


2007amounts in thousandsRevenue:Advertising

$
304,129



289,769Distribution


402,683



369,879Other


87,766



50,550Total revenue


794,578



710,198Expenses:Cost of revenue


(230,435
)


(243,523
)Selling, general and administrative (SG&A)
    expense


(278,211
)


(276,247
)Operating cash flow


285,932



190,428Restructuring charges






(10,999
)Benefit (expense) arising from long-term incentive plans


35,857



(11,721
)Depreciation and amortization


(37,720
)


(32,433
)Operating income


284,069



135,275Other income (expense):Interest expense, net


(68,720
)


(44,558
)Unrealized gains (losses) from derivative instruments, net


(16,095
)


1,065Minority interests in consolidated subsidiaries


(6,806
)


(707
)Other


311



2,049Income from continuing operations before income taxes


192,759



93,124Income tax expense


(87,541
)


(41,710
)Income from continuing operations


105,218



51,414Loss from discontinued operations, net of income taxes






(8,300
)Net income

$
105,218



43,114   Revenue.
 I-21




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##### Table of Contents



Cost of revenue.
  SG&A expenses.
  Expenses arising from long-term incentive
    plans.
  Restructuring charges.
  Depreciation and amortization.
  Other
    Income and Expense
  Interest expense.
 I-22




---



##### Table of Contents



Unrealized gains from derivative instruments,
    net.
  Minority interests in consolidated
    subsidiaries.
  Other.
  Income taxes.
  Loss from discontinued operations.
  Three Months EndedMarch 31,2007Revenue

$
17,628Operating cash flow

$
(10,631
)Loss from discontinued operations before income taxes

$
(13,384
)Loss from discontinued operations, net of tax

$
(8,300
)   Net earnings.
  Operating
    Division Results
   I-23




---



##### Table of Contents



Discovery
    Consolidated
  Three Months EndedMarch 31,2008


2007amounts in thousandsRevenueU.S. networks

$
490,837



476,762International networks


266,885



216,647Commerce and education


24,510



23,131Corporate and eliminations


12,346



(6,342
)Total revenue

$
794,578



710,198Operating Cash FlowU.S. networks

$
247,492



209,914International networks


69,307



27,415Commerce and education


44



(3,485
)Corporate and eliminations


(30,911
)


(43,416
)Total operating cash flow

$
285,932



190,428Operating cash flow margin


36
%


27
%   U.S.
    Networks
  Three Months EndedMarch 31,2008


2007amounts in thousandsRevenueAdvertising

$
238,792



234,611Distribution


223,996



225,905Other


28,049



16,246Total revenue


490,837



476,762Cost of revenue


(124,965
)


(152,843
)SG&A expenses


(118,380
)


(114,005
)Operating cash flow

$
247,492



209,914Operating cash flow margin


50
%


44
%    I-24




---



##### Table of Contents



U.S.
    Networks without Travel Channel
  Three Months EndedMarch 31,2008


2007amounts in thousandsRevenueAdvertising

$
238,792



208,972Distribution


223,996



211,338Other


28,049



15,544Total revenue


490,837



435,854Cost of revenue


(124,965
)


(134,524
)SG&A expenses


(118,380
)


(101,079
)Operating cash flow

$
247,492



200,251Operating cash flow margin


50
%


46
%     Revenue.
  Cost of revenue.
  SG&A expenses.
  Digital Media Business.
 I-25




---



##### Table of Contents



International
    Networks
  Three Months EndedMarch 31,2008


2007amounts in thousandsRevenueAdvertising

$
65,295



55,067Distribution


178,687



143,974Other


22,903



17,606Total revenue


266,885



216,647Cost of revenue


(102,049
)


(95,345
)SG&A expenses


(95,529
)


(93,887
)Operating cash flow

$
69,307



27,415Operating cash flow margin


26
%


13
%   Revenue.
  Cost of revenue.
  SG&A expenses.
   I-26




---



##### Table of Contents



Commerce
    and Education
  Three Months EndedMarch 31,2008


2007amounts in thousandsRevenue

$
24,510



23,131Cost of revenue


(12,336
)


(12,560
)SG&A expenses


(12,130
)


(14,056
)Operating Cash Flow

$
44



(3,485
)Operating cash flow margin


0
%


(15
)%   Revenue.
  Cost of revenue.
  SG&A expenses.
  Corporate
    Liquidity
    and Capital Resources
         I-27




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##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk  Foreign
    Currency Risk
   
  Item 4.
    Controls
    and Procedures  Rules 13a-15 15d-15,
   I-28




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY
 
  PART II 
    OTHER INFORMATION
 
  Item 1.
    Legal
    Proceedings  Form 10-K,
 
  Item 6.
    Exhibits  (a) Exhibits
  31
.1

Rule 13a-14(a)/15d-14(a)
    Certification*31
.2

Rule 13a-14(a)/15d-14(a)
    Certification*31
.3

Rule 13a-14(a)/15d-14(a)
    Certification*32


Section 1350 Certification**     *
    
    Filed herewith.**
    
    Furnished herewith. II-1




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##### Table of Contents



SIGNATURES
    DISCOVERY HOLDING COMPANYDate: May 8, 2008

By:

/s/  John
    C. MaloneJohn
    C. Malone
    Chief Executive OfficerDate: May 8, 2008

By:

/s/  David
    J.A. FlowersDavid
    J.A. Flowers
    Senior Vice President and Treasurer
    (Principal Financial Officer)Date: May 8, 2008

By:

/s/  Christopher
    W. SheanChristopher
    W. Shean
    Senior Vice President and Controller
    (Principal Accounting Officer)  II-2




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##### Table of Contents



EXHIBIT INDEX
  Regulation S-K):
  31
.1

Rule 13a-14(a)/15d-14(a)
    Certification*31
.2

Rule 13a-14(a)/15d-14(a)
    Certification*31
.3

Rule 13a-14(a)/15d-14(a)
    Certification*32


Section 1350 Certification**     *
    
    Filed herewith.**
    
    Furnished herewith.