##### 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
    June 30, 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) 875-5400
   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 268,065,037 shares; and
    Series B common stock 13,196,436 shares.




---





TABLE OF CONTENTS  Condensed Consolidated Balance SheetsCondensed Consolidated Statements of Operations and Comprehensive EarningsCondensed Consolidated Statements of Cash FlowsCondensed Consolidated Statement of Stockholders Equity Six months ended June 30, 2008Notes to Condensed Consolidated Financial Statements June 30, 2008Item 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. ExhibitsSIGNATURESEXHIBIT INDEXRule 13a-14(a)/15d-14(a) CertificationRule 13a-14(a)/15d-14(a) CertificationRule 13a-14(a)/15d-14(a) CertificationSection 1350 Certification    Table of Contents   DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Condensed Consolidated Balance Sheets
 (unaudited)
  June 30,


December 31,2008


2007amounts in thousandsASSETSCurrent assets:Cash and cash equivalents

$
226,007



209,449Trade receivables, net


178,205



144,342Prepaid expenses


13,910



14,815Other current assets


3,956



3,101Total current assets


422,078



371,707Investments in marketable securities






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


3,414,968



3,271,553Property and equipment, net


255,963



269,742Goodwill (note 5)


1,909,823



1,909,823Other assets, net


16,546



19,382Total assets

$
6,019,378



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

$
42,390



26,298Accrued payroll and related liabilities


27,127



26,127Other accrued liabilities


42,713



42,761Deferred revenue


22,602



24,951Total current liabilities


134,832



120,137Deferred income tax liabilities


1,285,504



1,228,942Other liabilities


21,675



22,352Total liabilities


1,442,011



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
    268,059,637 shares at June 30, 2008 and
    269,159,928 shares at December 31, 2007


2,680



2,691Series B common stock, $.01 par value. Authorized
    50,000,000 shares; issued and outstanding
    13,198,236 shares at June 30, 2008 and
    11,869,696 shares at December 31, 2007


132



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






Additional paid-in capital


5,729,206



5,728,213Accumulated deficit


(1,173,613
)


(1,253,483
)Accumulated other comprehensive earnings


18,962



16,781Total stockholders equity


4,577,367



4,494,321Total liabilities and stockholders equity

$
6,019,378



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 Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007amounts in thousands,except per shareamountsNet revenue (note 9)

$
194,477



177,220



383,782



351,102Operating expenses:Cost of services


137,912



125,185



275,972



246,727Selling, general, and administrative, including stock-based
    compensation (notes 3 and 9)


38,817



37,757



79,972



75,761Restructuring and other charges


156







1,413



Loss (gain) on sale of operating assets, net


258



(208
)


180



(242
)Depreciation and amortization


16,761



17,415



33,301



32,986193,904



180,149



390,838



355,232Operating income (loss)


573



(2,929
)


(7,056
)


(4,130
)Other income:Share of earnings of Discovery (note 6)


74,802



125,797



141,204



147,354Other income, net


731



2,318



2,415



11,61575,533



128,115



143,619



158,969Earnings before income taxes


76,106



125,186



136,563



154,839Income tax expense


(30,227
)


(50,969
)


(56,693
)


(60,158
)Net earnings


45,879



74,217



79,870



94,681Other comprehensive earnings (loss), net of taxes:Foreign currency translation adjustments


(231
)


3,349



3,778



4,703Unrealized holding gains (losses) arising during the period


6,640



1,700



(1,597
)


2,156Other comprehensive earnings


6,409



5,049



2,181



6,859Comprehensive earnings

$
52,288



79,266



82,051



101,540Basic and diluted earnings per common share 
    Series A and Series B (note 4)

$
.16



.26



.28



.34    I-2




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Condensed Consolidated Statements of Cash Flows
 (unaudited)
  Six Months EndedJune 30,2008


2007amounts in thousandsCash flows from operating activities:Net earnings

$
79,870



94,681Adjustments to reconcile net earnings to net cash provided by
    operating activities:Depreciation and amortization


33,301



32,986Stock-based compensation


332



1,308Share of earnings of Discovery


(141,204
)


(147,354
)Gain on lease buyout






(6,992
)Deferred income tax expense


55,198



58,660Other non-cash credits, net


(543
)


(776
)Changes in assets and liabilities:Trade receivables


(33,367
)


7,244Prepaid expenses and other current assets


379



(1,839
)Payables and other liabilities


15,420



(2,539
)Net cash provided by operating activities


9,386



35,379Cash flows from investing activities:Capital expenditures


(18,194
)


(25,093
)Cash proceeds from lease buyout






7,138Net sales (purchases) of marketable securities


23,545



(1,671
)Other investing activities, net


1,782



366Net cash provided by (used in) investing activities


7,133



(19,260
)Cash flows from financing activities:Net cash from option exercises


379



4,083Other financing activities, net


(340
)


(314
)Net cash provided by financing activities


39



3,769Net increase in cash and cash equivalents


16,558



19,888Cash and cash equivalents at beginning of period


209,449



154,775Cash and cash equivalents at end of period

$
226,007



174,663    I-3




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES

    Condensed Consolidated Statement of Stockholders Equity
    Six months ended June 30, 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






















79,870







79,870Other comprehensive earnings


























2,181



2,181Stock compensation


















616











616Stock option exercises






(11
)


13







377











379Balance at June 30, 2008

$




2,680



132







5,729,206



(1,173,613
)


18,962



4,577,367    I-4




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES

    Notes to Condensed Consolidated Financial Statements
    June 30, 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
    post-production audio services under brand names such as Sound
    One POP Sound, Soundelux and Todd A-O (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


1,108,201


$
15.33



1,667,985


$
19.06Exercisable


891,787


$
15.48



1,667,985


$
19.06     2006
    Ascent Media Long-Term Incentive Plan
    (4)
    Earnings
    Per Common Share  Series A and
    Series B    (5)
    Goodwill    June 30,


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
  June 30,


December 31,2008


2007amounts in thousandsCash and cash equivalents

$
82,016



44,951Other current assets


1,056,225



1,032,282Property and equipment, net


409,082



397,430Goodwill and intangible assets


5,019,993



5,051,843Programming rights, long term


1,106,804



1,048,193Other assets


331,170



385,731Total assets

$
8,005,290



7,960,430Current liabilities

$
698,471



850,495Long term debt


4,047,898



4,109,085Other liabilities


275,585



243,867Mandatorily redeemable equity in subsidiaries


48,721



48,721Members equity


2,934,615



2,708,262Total liabilities and members equity

$
8,005,290



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
  Six Months EndedJune 30,2008


2007amounts in thousandsRevenue

$
1,658,210



1,496,606Cost of revenue


(473,274
)


(494,772
)Selling, general and administrative


(583,849
)


(546,922
)Restructuring and other charges


(3,919
)


(12,286
)Equity-based compensation


(17,431
)


(85,012
)Depreciation and amortization


(77,909
)


(64,802
)Asset impairment






(26,174
)Gain on sale of operating assets






134,671Operating income


501,828



401,309Interest expense, net


(134,918
)


(107,147
)Other income (expense), net


(3,707
)


8,895Income tax expense


(140,167
)


(39,732
)Earnings from continuing operations


223,036



263,325Loss from discontinued operations, net of income tax






(32,974
)Net earnings

$
223,036



230,351     (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








Consolidated


affiliate-group


group(1)


Total


Other(2)


Total


Discoveryamounts in thousandsSix months ended June 30, 2008Revenue from external customers

$
193,713



190,069



383,782







383,782



1,658,210Adjusted OIBDA

$
14,366



33,185



47,551



(19,252
)


28,299



601,087Capital expenditures

$
9,522



6,381



15,903



2,291



18,194



24,053Total assets

$
374,193



267,245



641,438



5,377,940



6,019,378



8,005,290Six months ended June 30, 2007Revenue from external customers

$
216,442



134,660



351,102







351,102



1,496,606Adjusted OIBDA

$
25,481



19,101



44,582



(14,504
)


30,078



454,912Capital expenditures

$
13,425



8,467



21,892



3,201



25,093



36,635     (1)
    
    Included in network services group revenue is broadcast services
    revenue of $83,676,000 and $75,806,000 and systems integration
    revenue of $106,393,000 and $58,854,000 for the six months ended
    June 30, 2008 and 2007, respectively.(2)
    
    Amounts shown in other provide a reconciliation of total
    reportable segments to the Companys consolidated total.
    Included in other is (i) SG&A expenses and capital
    expenditures incurred at a corporate level and (ii) assets
    held at a corporate level mainly comprised of cash and
    investment in Discovery, including enterprise  level
    goodwill allocated to Discovery.  I-12




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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








Consolidated


affiliate-group


group(1)


Total


Other(2)


Total


Discoveryamounts in thousandsThree months ended June 30, 2008Revenue from external customers

$
101,929



92,548



194,477







194,477



863,632Adjusted OIBDA

$
10,546



16,016



26,562



(8,302
)


18,260



315,155Capital expenditures

$
5,769



2,653



8,422



1,220



9,642



10,098Three months ended June 30, 2007Revenue from external customers

$
105,730



71,490



177,220







177,220



786,408Adjusted OIBDA

$
11,198



10,813



22,011



(7,295
)


14,716



264,484Capital expenditures

$
7,292



2,880



10,172



1,514



11,686



23,228     (1)
    
    Included in network services group revenue is broadcast services
    revenue of $41,091,000 and $38,391,000 and systems integration
    revenue of $51,457,000 and $33,099,000 for the three months
    ended June 30, 2008 and 2007, respectively.(2)
    
    Amounts shown in other provide a reconciliation of total
    reportable segments to the Companys consolidated total.
    Included in other is (i) SG&A expenses and capital
    expenditures incurred at a corporate level and (ii) assets
    held at a corporate level mainly comprised of cash and
    investment in Discovery, including enterprise  level
    goodwill allocated to Discovery.    Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007amounts in thousandsConsolidated segment adjusted OIBDA

$
26,562



22,011



47,551



44,582Corporate selling, general and administrative expenses


(8,302
)


(7,295
)


(19,252
)


(14,504
)Stock-based compensation


(448
)


(342
)


(332
)


(1,308
)Restructuring and other charges


(156
)






(1,413
)


Depreciation and amortization


(16,761
)


(17,415
)


(33,301
)


(32,986
)Share of earnings of Discovery


74,802



125,797



141,204



147,354Other, net


409



2,430



2,106



11,701Earnings before income taxes

$
76,106



125,186



136,563



154,839  I-13




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##### Table of Contents



DISCOVERY
    HOLDING COMPANY AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
    Six Months EndedJune 30,2008


2007amounts in thousandsRevenueUnited States

$
298,841



278,674United Kingdom


72,667



59,834Other countries


12,274



12,594$
383,782



351,102   June 30,


December 31,2008


2007amounts in thousandsProperty and equipment, netUnited States

$
172,181



178,299United Kingdom


63,584



68,548Other countries


20,198



22,895$
255,963



269,742  I-14




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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-15




---



##### Table of Contents



Form 10-K,
  Overview
  2 3
  Ascent
    Media
  and/or
  2007-2008
  and/or
  Discovery
     I-16




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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
    post-production audio services under brand names such as Sound
    One, POP Sound, Soundelux and Todd A-O (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,
  Adjusted
    OIBDA
   I-17




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##### Table of Contents



Results
    of Operations
        Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007dollar amounts in thousandsSegment RevenueCreative Services group

$
101,929



105,730



193,713



216,442Network Services group

$
92,548



71,490



190,069



134,660Segment Adjusted OIBDACreative Services group

$
10,546



11,198



14,366



25,481Network Services group

$
16,016



10,813



33,185



19,101Segment Adjusted OIBDA as a percentage of RevenueCreative Services group


10.3
%


10.6
%


7.4
%


11.8
%Network Services group


17.3
%


15.1
%


17.5
%


14.2
%   Revenue.
 I-18




---



##### Table of Contents



Cost of Services.
  Selling, General and Administrative.
  Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007amounts in thousandsSG&A

$
38,305



37,319



79,511



74,297Stock-based compensation


448



342



332



1,308Accretion expense on asset retirement obligations


64



96



129



156Total SG&A

$
38,817



37,757



79,972



75,761    I-19




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##### Table of Contents



Adjusted OIBDA.
    Restructuring Charges.
  Depreciation and Amortization.
  Stock-Based Compensation.
  Share of Earnings of Discovery. 2 3 2 3
     I-20




---



##### Table of Contents



Other Income.
  Income Taxes.
    Net Earnings.
  Liquidity
    and Capital Resources
        Discovery
  2 3
 I-21




---



##### Table of Contents



Consolidated
    Results of Discovery
     I-22




---



##### Table of Contents



Consolidated
    Results of Discovery
  Six Months EndedJune 30,2008


2007amounts in thousandsRevenue:Advertising

$
681,700



647,166Distribution


819,685



732,518Other


156,825



116,922Total revenue


1,658,210



1,496,606Expenses:Cost of revenue


(473,274
)


(494,772
)Selling, general and administrative (SG&A)
    expense


(583,849
)


(546,922
)Restructuring charges


(3,919
)


(12,286
)Expense arising from long-term incentive plans


(17,431
)


(85,012
)Depreciation and amortization


(77,909
)


(64,802
)Asset impairment






(26,174
)Gain on sale of operating assets






134,671Operating income


501,828



401,309Other income (expense):Interest expense, net


(134,918
)


(107,147
)Unrealized gains (losses) from derivative instruments, net


2,174



4,948Minority interests in consolidated subsidiaries


(8,041
)


(1,394
)Other


2,160



5,341Income from continuing operations before income taxes


363,203



303,057Income tax expense


(140,167
)


(39,732
)Income from continuing operations


223,036



263,325Loss from discontinued operations, net of income taxes






(32,974
)Net income

$
223,036



230,351   Revenue.
     I-23




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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.
 I-24




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##### Table of Contents



Asset impairment.
  Gain on sale of operating assets.
  Other
    Income and Expense
  Interest expense.
  Unrealized gains from derivative instruments,
    net.
  Minority interests in consolidated
    subsidiaries.
  Other.
  Income taxes.
  Loss from discontinued operations.
  Six Months EndedJune 30,2007Revenue

$
43,173Loss from discontinued operations before income taxes

$
(57,587
)Loss from discontinued operations, net of tax

$
(32,974
)   Net earnings.
  Discoverys
    Operating Division Results
   I-25




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##### Table of Contents



U.S.
    Networks
  Six Months EndedJune 30,2008


2007amounts in thousandsRevenueAdvertising

$
526,862



512,107Distribution


459,576



440,652Other


53,449



40,082Total revenue

$
1,039,887



992,841Cost of revenue

$
(261,317
)


(312,638
)SG&A expenses

$
(246,034
)


(224,860
)     U.S.
    Networks without Travel Channel
  Six Months EndedJune 30,2008


2007amounts in thousandsRevenueAdvertising

$
526,862



472,173Distribution


459,576



418,228Other


53,449



39,072Total revenue

$
1,039,887



929,473Cost of revenue

$
(261,317
)


(285,142
)SG&A expenses

$
(246,034
)


(204,632
)     Revenue.
   I-26




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##### Table of Contents



Cost of revenue.
  SG&A expenses.
  Digital Media Business.
  International
    Networks
  Six Months EndedJune 30,2008


2007amounts in thousandsRevenueAdvertising

$
154,754



134,886Distribution


360,109



291,866Other


53,276



38,209Total revenue

$
568,139



464,961Cost of revenue

$
(211,976
)


(189,283
)SG&A expenses

$
(200,046
)


(191,979
)  I-27




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##### Table of Contents



Revenue.
  Cost of revenue.
  SG&A expenses.
    Commerce
    and Education
  Six Months Ended June 30,2008


2007amounts in thousandsRevenue

$
44,951



55,990Cost of revenue

$
(22,546
)


(26,280
)SG&A expenses

$
(25,818
)


(25,978
)   Revenue. e-commerce
  Cost of revenue.
  SG&A expenses.
 I-28




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##### Table of Contents



Corporate
  Six Months Ended June 30,2008


2007amounts in thousandsRevenue

$
5,233



(17,186
)Expenses

$
(89,386
)


(70,677
)     Discoverys
    Liquidity and Capital Resources
             I-29




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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-30




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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
  2
.1

Transaction Agreement, dated June 4, 2008, by and among
    Discovery Holding Company, Discovery Communications, Inc., DHC
    Merger Sub, Inc., Advance/Newhouse Programming Partnership, and
    with respect to Section 5.14 only Advance Publications,
    Inc., and Newhouse Broadcasting Corporation (incorporated by
    reference to Exhibit 2.1 to the Registration Statement on
    Form S-4
    of Discovery Communications, Inc. (File
    No. 333-151586)
    as filed with the Securities and Exchange Commission on
    June 11, 2008 (the DCI
    S-4).2
.2

Agreement and Plan of Merger, dated June 4, 2008, by and
    among Discovery Holding Company, Discovery Communications, Inc.,
    and DHC Merger Sub, Inc. (incorporated by reference to
    Exhibit 2.2 to the DCI
    S-4).2
.3

Reorganization Agreement, dated as of June 4, 2008, by and
    among Discovery Holding Company, Discovery Communications, Inc.,
    Ascent Media Corporation, Ascent Media Group, LLC and Ascent
    Media Creative Sound Services, Inc. (incorporated by reference
    to Exhibit 2.3 to the DCI
    S-4).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: August 11, 2008

By:

/s/  John
    C. MaloneJohn
    C. Malone
    Chief Executive OfficerDate: August 11, 2008

By:

/s/  David
    J.A. FlowersDavid
    J.A. Flowers
    Senior Vice President and Treasurer
    (Principal Financial Officer)Date: August 11, 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):
  2
.1

Transaction Agreement, dated June 4, 2008, by and among
    Discovery Holding Company, Discovery Communications, Inc., DHC
    Merger Sub, Inc., Advance/Newhouse Programming Partnership, and
    with respect to Section 5.14 only Advance Publications,
    Inc., and Newhouse Broadcasting Corporation (incorporated by
    reference to Exhibit 2.1 to the Registration Statement on
    Form S-4
    of Discovery Communications, Inc. (File
    No. 333-151586)
    as filed with the Securities and Exchange Commission on
    June 11, 2008 (the DCI
    S-4).2
.2

Agreement and Plan of Merger, dated June 4, 2008, by and
    among Discovery Holding Company, Discovery Communications, Inc.,
    and DHC Merger Sub, Inc. (incorporated by reference to
    Exhibit 2.2 to the DCI
    S-4).2
.3

Reorganization Agreement, dated as of June 4, 2008, by and
    among Discovery Holding Company, Discovery Communications, Inc.,
    Ascent Media Corporation, Ascent Media Group, LLC and Ascent
    Media Creative Sound Services, Inc. (incorporated by reference
    to Exhibit 2.3 to the DCI
    S-4).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.