##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-K/A
 
 (Amendment No. 2)
 
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
  DISCOVERY HOLDING COMPANY
  State of Delaware 
(State or other jurisdiction of 
incorporation or organization)
    
    20-2471174
(I.R.S. Employer Identification No.)
 12300 Liberty Boulevard 
Englewood, Colorado
(Address of principal executive offices)
    
    80112
(Zip Code)
   Title of each class
    
    Name of exchange on which registeredSeries A Common Stock, par value $.01 per share
    
    Nasdaq Global Select MarketSeries B Common Stock, par value $.01 per share
    
    Nasdaq Global Select Market
  þ o
 o þ
 þ o
 þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### Table of Contents



EXPLANATORY NOTE




---



##### 



PART IV.  Item 15.
    Exhibits
    and Financial Statement
    Schedules.      Page No.Discovery Holding Company:Managements Report on Internal Control over
    Financial Reporting


II-26Report of Independent Registered Public
    Accounting Firm


II-27Report of Independent Registered Public
    Accounting Firm


II-28Consolidated Balance Sheets, December 31,
    2007 and 2006


II-29Consolidated Statements of Operations and
    Comprehensive Earnings (Loss), Years ended December 31,
    2007, 2006 and 2005


II-30Consolidated Statements of Cash Flows, Years
    Ended December 31, 2007, 2006 and 2005


II-31Consolidated Statements of Stockholders
    Equity, Years ended December 31, 2007, 2006 and 2005


II-32Notes to Consolidated Financial Statements,
    December 31, 2007, 2006 and 2005


II-33Consent of PricewaterhouseCoopers LLPRule 13a-14(a)/15d-14(a) CertificationRule 13a-14(a)/15d-14(a) CertificationRule 13a-14(a)/15d-14(a) CertificationSection 1350 Certification    Financial Statement Schedules
    (i)
    All schedules have been omitted because they are not applicable,
    not material or the required information is set forth in the
    financial statements or notes thereto.  (ii)
    Separate financial statements for Discovery Communications
    Holding, LLC:  
  Report of Independent Registered Public
    Accounting Firm


IV-3Report of Independent Registered Public
    Accounting Firm


IV-4Consolidated Balance Sheets, December 31,
    2007 and 2006


IV-5Consolidated Statements of Operations, Years
    ended December 31, 2007, 2006 and 2005


IV-6Consolidated Statements of Cash Flows, Years
    ended December 31, 2007, 2006 and 2005


IV-7Consolidated Statements of Changes in
    Members Equity and Stockholders Deficit, Years ended
    December 31, 2007, 2006 and 2005


IV-8Notes to Consolidated Financial Statements


IV-9    Exhibits
  Regulation S-K):
  2  Plan of Acquisition, Reorganization, Arrangement,
    Liquidation or Succession:2.1


Reorganization Agreement among Liberty Media Corporation,
    Discovery Holding Company (DHC) and Ascent Media
    Group, Inc. (incorporated by reference to Exhibit 2.1 to
    DHCs Registration Statement on Form 10, dated
    July 15, 2005 (File
    No. 000-51205)
    (the Form 10)).3  Articles of Incorporation and Bylaws:3.1


Restated Certificate of Incorporation of DHC (incorporated by
    reference to Exhibit 3.1 to the Form 10).3.2


Bylaws of DHC (incorporated by reference to Exhibit 3.2 to
    the Form 10).4  Instruments Defining the Rights of Securities
    Holders, including Indentures:4.1


Specimen Certificate for shares of the Series A common
    stock, par value $.01 per share, of DHC (incorporated by
    reference to Exhibit 4.1 to the Form 10). IV-1




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##### Table of Contents



4.2


Specimen Certificate for shares of the Series B common
    stock, par value $.01 per share, of DHC (incorporated by
    reference to Exhibit 4.2 to the Form 10).4.3


Rights Agreement between DHC and EquiServe Trust Company,
    N.A., as Rights Agent (incorporated by reference to
    Exhibit 4.3 to the Form 10).10  Material Contracts:10.1


Amended and Restated Limited Liability Company Agreement of
    Discovery Communications Holding, LLC, dated as of May 14,
    2007, by and among Advance/Newhouse Programming Partnership, LMC
    Discovery, Inc. and John S. Hendricks.*10.2


Form of Tax Sharing Agreement between Liberty Media Corporation
    and DHC (incorporated by reference to Exhibit 10.6 to the
    Form 10).10.3


Discovery Holding Company 2005 Incentive Plan (As Amended and
    Restated Effective August 15, 2007) (incorporated by
    reference to Exhibit 10.1 to the Quarterly Report on
    Form 10-Q
    of Discovery Holding Company for the quarter ended
    September 30, 2007 (File
    No. 000-51205)
    as filed on November 7, 2007).10.4


Discovery Holding Company 2005 Non-Employee Director Incentive
    Plan (As Amended and Restated Effective August 15, 2007)
    (incorporated by reference to Exhibit 10.2 to the Quarterly
    Report on
    Form 10-Q
    of Discovery Holding Company for the quarter ended
    September 30, 2007 (File
    No. 000-51205)
    as filed on November 7, 2007).10.5


Discovery Holding Company Transitional Stock Adjustment Plan (As
    Amended and Restated Effective August 15, 2007)
    (incorporated by reference to Exhibit 10.3 to the Quarterly
    Report on
    Form 10-Q
    of Discovery Holding Company for the quarter ended
    September 30, 2007 (File
    No. 000-51205)
    as filed on November 7, 2007).10.6


Agreement between DHC and John C. Malone (incorporated by
    reference to Exhibit 10.10 to the Form 10).10.7


Agreement, dated June 24, 2005, between Discovery and DHC
    (incorporated by reference to Exhibit 10.11 to the
    Form 10).10.8


Indemnification Agreement, dated as of June 24, 2005,
    between Cox and DHC (incorporated by reference to
    Exhibit 10.12 to the Form 10).10.9


Indemnification Agreement, dated as of June 24, 2005,
    between NewChannels and DHC (incorporated by reference to
    Exhibit 10.13 to the Form 10).10.10


Form of Indemnification Agreement with Directors and Executive
    Officers (incorporated by reference to Exhibit 10.14 to the
    Form 10).21  Subsidiaries of Discovery Holding Company.*23.1


Consent of KPMG LLP.*23.2


Consent of PricewaterhouseCoopers LLP, filed herewith.31.1


Rule 13a-14(a)/15d 
    14(a) Certification, filed herewith.31.2


Rule 13a-14(a)/15d 
    14(a) Certification, filed herewith.31.3


Rule 13a-14(a)/15d 
    14(a) Certification, filed herewith.32  Section 1350 Certification, filed herewith.  
 
 
   *
    Filed with DHCs Annual Report on
    Form 10-K
    for the year ended December 31, 2007 on February 15,
    2008. 
 IV-2




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Report
    of Independent Registered Public Accounting Firm  To the Board
    of Directors and Stockholders of
      
   
   IV-3




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##### Table of Contents



Report
    of Independent Registered Public Accounting Firm  To the Board
    of Directors and Members of
    
   
   IV-4




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Consolidated
    Balance Sheets
  Successor



PredecessorCompany



CompanyDecember 31, 2007



December 31, 2006in thousands, except share dataASSETSCurrent assetsCash and cash equivalents

$
44,951



$
52,263Accounts receivable, less allowances of $22,419 and $25,175


741,745




657,552Inventories


10,293




35,716Deferred income taxes


103,723




76,156Content rights, net


79,162




64,395Other current assets


97,359




84,554Total current assets


1,077,233




970,636Property and equipment, net


397,430




424,041Content rights, net, less current portion


1,048,193




1,253,553Deferred launch incentives


242,655




207,032Goodwill


4,870,187




365,266Intangibles, net


181,656




107,673Investments in and advances to unconsolidated affiliates


100,724




15,564Other assets


42,352




32,788TOTAL ASSETS

$
7,960,430



$
3,376,553LIABILITIES AND MEMBERS EQUITY/STOCKHOLDERS
    DEFICITCurrent liabilitiesAccounts payable and accrued liabilities

$
267,818



$
316,804Accrued payroll and employee benefits


183,823




122,431Launch incentives payable


1,544




17,978Content rights payable


56,334




57,694Current portion of long-term incentive plan liabilities


141,562




43,274Current portion of long-term debt


32,006




7,546Income taxes payable


23,629




55,264Unearned revenue


78,155




68,339Other current liabilities


65,624




45,194Total current liabilities


850,495




734,524Long-term debt, less current portion


4,109,085




2,633,237Derivative financial instruments, less current portion


49,110




8,282Launch incentives payable, less current portion


6,114




10,791Long-term incentive plan liabilities, less current portion







41,186Content rights payable, less current portion


2,459




3,846Deferred income taxes


10,619




46,289Other liabilities


175,565




64,861Total liabilities


5,203,447




3,543,016Mandatorily redeemable interests in subsidiaries


48,721




94,825Commitments and contingenciesMembers Equity/Stockholders deficitClass A common stock; $.01 par value; zero shares
    authorized, issued or outstanding at December 31, 2007;
    100,000 shares authorized, 51,119 shares issued, less
    719 shares of treasury stock at December 31, 2006







1Class B common stock; $.01 par value; zero shares
    authorized, issued or outstanding at December 31, 2007;
    60,000 shares authorized, 50,615 shares issued and
    held in treasury stock at December 31, 2006







Additional paid-in capital







21,093Members equity (51,119 member units issued, less 13,319
    repurchased and retired)


2,533,694




Retained earnings (deficit)


184,712




(306,135
)Accumulated other comprehensive (loss) income


(10,144
)



23,753Total members equity/stockholders deficit


2,708,262




(261,288
)TOTAL LIABILITIES AND MEMBERS EQUITY/STOCKHOLDERS
    DEFICIT

$
7,960,430



$
3,376,553    IV-5




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Consolidated
    Statements of Operations
  SuccessorCompany



Predecessor CompanyMay 15, 2007



January 1, 2007


Year Ended


Year Endedthrough



through


December 31,


December 31,December 31, 2007



May 14, 2007


2006


2005in thousandsOPERATING REVENUEAdvertising

$
874,894



$
470,139


$
1,243,500


$
1,187,823Distribution


930,386




547,093



1,434,901



1,198,686Other


222,626




82,195



205,270



157,849Total operating revenue


2,027,906




1,099,427



2,883,671



2,544,358OPERATING EXPENSESCost of revenue, exclusive of depreciation and amortization
    shown below


799,716




373,191



1,032,789



907,664Selling, general and administrative


823,918




486,129



1,143,349



978,415Depreciation and amortization


82,807




73,943



122,037



112,653Gain from disposition of business


(134,671
)











Total operating expenses


1,571,770




933,263



2,298,175



1,998,732INCOME FROM OPERATIONS


456,136




166,164



585,496



545,626OTHER INCOME (EXPENSE)Interest, net


(180,157
)



(68,600
)


(194,255
)


(184,585
)Realized and unrealized (losses) gains from non-hedged
    derivative instruments, net


(10,986
)



2,350



22,558



22,499Minority interests in consolidated subsidiaries


(7,133
)



(1,133
)


(2,451
)


(43,696
)Equity in earnings of unconsolidated affiliates


5,093




3,529



7,060



4,660Other, net


(448
)



(335
)


1,467



9,111Total other expense, net


(193,631
)



(64,189
)


(165,621
)


(192,011
)INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES


262,505




101,975



419,875



353,615Income tax expense


25,303




52,163



190,381



173,427INCOME FROM CONTINUING OPERATIONS


237,202




49,812



229,494



180,188DISCONTINUED OPERATIONSLoss from discontinued operations, net of income tax benefit


(52,490
)



(12,533
)


(22,318
)


(20,568
)LOSS FROM DISCONTINUED OPERATIONS


(52,490
)



(12,533
)


(22,318
)


(20,568
)NET INCOME

$
184,712



$
37,279


$
207,176


$
159,620    IV-6




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Consolidated
    Statements of Cash Flows
  SuccessorCompany



Predecessor CompanyMay 15, 2007



January 1, 2007


Year Ended


Year Endedthrough



through


December 31,


December 31,December 31, 2007



May 14, 2007


2006


2005in thousandsOPERATING ACTIVITIESNet income

$
184,712



$
37,279


$
207,176


$
159,620Adjustments to reconcile net income to cash provided by (used
    in) operations:Depreciation and amortization


111,208




77,186



133,634



123,209Amortization of deferred launch incentives and representation
    rights


58,425




37,158



77,778



83,411Provision (reversal) for losses on accounts receivable


(2
)



1,855



3,691



12,217Expenses arising from long-term incentive plans


78,527




62,850



39,233



49,465Equity in earnings of unconsolidated affiliates


(5,093
)



(3,529
)


(7,060
)


(4,660
)Deferred income taxes


(70,978
)



10,511



108,903



109,383Realized and unrealized gains on derivative financial
    instruments, net


10,986




(2,350
)


(22,558
)


(22,499
)Gain from disposition of business


(134,671
)











Non-cash minority interest charges


7,133




1,133



2,451



43,696Gain on sale of investments











(1,467
)


(12,793
)Other non-cash (income) charges


1,733




(4,263
)


2,447



9,675Changes in assets and liabilities, net of business
    combinations and dispositions:Accounts receivable


(45,808
)



(29,507
)


(84,598
)


(37,207
)Inventories


21,666




4,805



(4,560
)


1,853Other assets


27,682




(23,872
)


(7,434
)


(18,748
)Content rights, net of payables


110,811




(2,689
)


(84,377
)


(108,155
)Accounts payable and accrued liabilities


119,769




(93,260
)


73,646



47,913Representation rights











93,233



(6,000
)Deferred launch incentives


(25,623
)



(197,624
)


(49,386
)


(35,731
)Long-term incentive plan liabilities


(76,315
)



(7,773
)


(841
)


(325,756
)Cash provided by (used in) operations


374,162




(132,090
)


479,911



68,893INVESTING ACTIVITIESAcquisition of property and equipment


(55,965
)



(24,588
)


(90,138
)


(99,684
)Business combinations, net of cash acquired


(306,094
)







(194,905
)


(400
)Purchase of intangibles















(583
)Investments in and advances to unconsolidated affiliates















(363
)Redemption of interests in subsidiaries







(44,000
)


(180,000
)


(92,874
)Proceeds from sale of investments











1,467



14,664Cash used in investing activities


(362,059
)



(68,588
)


(463,576
)


(179,240
)FINANCING ACTIVITIESProceeds from issuance of long-term debt


1,286,362




211,277



316,813



1,785,955Principal payments of long-term debt


(11,742
)



(2,356
)


(307,030
)


(1,697,068
)Deferred financing fees


(4,690
)



(16
)


(1,144
)


(4,810
)Repurchase of members interest


(1,284,544
)











Contributions from minority shareholders















603Other financing


(17,590
)



(2,473
)


(9,963
)


32,153Cash (used in) provided by financing activities


(32,204
)



206,432



(1,324
)


116,833Effect of exchange rate changes on cash and cash equivalents


2,658




4,377



2,761



3,723CHANGE IN CASH AND CASH EQUIVALENTS


(17,443
)



10,131



17,772



10,209Cash and cash equivalents, beginning of period


62,394




52,263



34,491



24,282CASH AND CASH EQUIVALENTS, END OF PERIOD

$
44,951



$
62,394


$
52,263


$
34,491    IV-7




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Consolidated
    Statements of Changes in Members Equity and
    Stockholders Deficit
  Accumulated OtherComprehensive Income (Loss)UnrealizedAdditional











GainPaid-in








Unrealized


(Loss)Class A


Capital/


Retained


Foreign


Gain


fromCommon Stock


Members


Earnings


Currency


(Loss) on


HedgingAt Par


Redeemable


Equity


(Deficit)


Translation


Investment


Activities


TOTALin thousandsPredecessor Company:Balance, December 31, 2004

$
1


$



$
21,093


$
(672,931
)

$
22,732


$
1,179


$



$
(627,926
)Comprehensive incomeNet income














159,620Foreign currency translation, net of tax of $9.6 million


















(16,017
)Unrealized loss on investments, net of tax of $0.1 million






















(101
)Unamortized gain on cash flow hedge, net of tax of
    $1.3 million


























2,066Total comprehensive income






























145,568Balance, December 31, 2005

$
1


$



$
21,093


$
(513,311
)

$
6,715


$
1,078


$
2,066


$
(482,358
)Comprehensive incomeNet income













$
207,176Foreign currency translation, net of tax of $8.8 million

















$
14,458Unrealized loss on investments, net of tax of $0.2 million





















$
(355
)Amortization of gain on cash flow hedge, net of tax of
    $0.1 million

























$
(209
)Total comprehensive income





























$
221,070Balance, December 31, 2006

$
1


$



$
21,093


$
(306,135
)

$
21,173


$
723


$
1,857


$
(261,288
)Comprehensive incomeNet income for the period January 1, 2007 through
    May 14, 2007














37,279Foreign currency translation, net of tax of $4.7 million


















7,691Unrealized gain on investments, net of tax of $0.9 million






















1,552Amortization of gain on cash flow hedge


























(77
)Cumulative effect for the adoption of FIN 48














(5,011
)Total comprehensive income






























41,434Balance, May 14, 2007

$
1


$



$
21,093


$
(273,867
)

$
28,864


$
2,275


$
1,780


$
(219,854
)Successor Company:Formation of Successor CompanyPushdown of investor basis










4,392,804



















4,392,804Comprehensive incomeNet income for the period May 15, 2007 through
    December 31, 2007














184,712Foreign currency translation, net of tax of $4.4 million


















7,354Unrealized gain on investments, net of tax of $1.8 million






















3,011Changes from hedging activities, net of tax of $12.2 million


























(20,509
)Total comprehensive income






























174,568Repurchase of members interest










(1,859,110
)


















(1,859,110
)Balance, December 31, 2007









$
2,533,694


$
184,712


$
7,354


$
3,011


$
(20,509
)

$
2,708,262    IV-8




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to Consolidated Financial Statements
  1.  Basis
    of Presentation and Description of Business
  Basis
    of Presentation
    non-amortizable
    Description
    of Business
    2.  Summary
    of Significant Accounting Policies
  Principles
    of Consolidation
   IV-9




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Use
    of Estimates
    Recent
    Accounting Pronouncements
         IV-10




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Revenue
    Recognition
  e-commerce
  E-commerce point-of-sale
  Advertising
    Costs
    Cash
    and Cash Equivalents
    Derivative
    Financial Instruments
    Inventories
    Content
    Rights
   IV-11




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Property
    and Equipment
    Capitalized
    Software Costs
    Recoverability
    of Long-Lived Assets, Goodwill, and Intangible
    Assets
   IV-12




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Deferred
    Launch Incentives
    Foreign
    Currency Translation
    Long-term
    Incentive Plans
      mark-to-market
 IV-13




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Mandatorily
    Redeemable Interest in Subsidiaries
    Minority
    Interest
    Treasury
    Stock
    Discontinued
    Operations
    Income
    Taxes
   IV-14




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      3.
    Supplemental
    Disclosures to Consolidated Statements of Cash Flows  Successor


PredecessorMay 15


January 1through


throughDecember 31,


May 14,2007


2007

2006

2005in thousandsCash paid for acquisitions:Fair value of assets acquired

$
419,154



$



$
223,293


$
400Fair value of liabilities Assumed


(113,060
)







(28,388
)


Cash paid for acquisitions, net of cash acquired

$
306,094



$



$
194,905


$
400Cash paid for interest

$
179,669



$
77,849


$
196,195


$
171,151Cash paid for income taxes

$
58,323



$
16,554


$
70,215


$
27,678   4.
    Business
    Combinations    12-24 months.
 IV-15




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
          HSW, Animal Planet andAsset (Liability)

Treehugger, Combinedin thousandsCurrent assets and content

$
22,399Investment in HSWi stock


79,375Other tangible assets


1,313Finite-lived intangibles (including brand names, customer lists
    and trademarks)


119,421Goodwill


196,646Liabilities assumed


(14,753
)Deferred taxes


(44,585
)Estimated redemption liability to HSW shareholders


(53,722
)Cash paid, net of cash acquired

$
306,094   free-to-air free-to-air
   IV-16




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      
    Petfinder.com, a facilitator of pet adoptions and
    PetsIncredible, a producer and distributor of pet-training
    videos. During 2007, the former owners earned payment of certain
    contingent consideration in connection with this acquisition,
    resulting in the addition of $11.0 million in goodwill.
    Clearvue and SVE, Inc., a provider of curriculum-oriented media
    educational products.
    Academy123, Inc., a provider of on-line supplemental,
    educational content focusing largely on mathematics and
    sciences. In May 2007, Discovery recorded an asset impairment of
    $20.6 million, including $11.5 million of goodwill,
    for goodwill and intangible assets established during 2006
    related to Academy 123, Inc. The business had not been
    integrated into the education reporting unit, and management
    decided to scale back its education business to consumers.
    Thinklink, Inc., a provider of formative assessment testing
    services to schools servicing students in grades K through 12.      DMAX, Antenna andOther Acquisitions,Asset (Liability)

Combinedin thousandsCurrent assets and content

$
40,365Other tangible assets


7,765Finite-lived intangible assets


73,378Goodwill


101,785Liabilities assumed


(28,388
)Cash paid, net of cash acquired

$
194,905   5.
    Discontinued
    Operations  e-commerce e-commerce,
 IV-17




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Successor


PredecessorMay 15 through


January 1 throughDecember 31, 2007


May 14, 2007

2006

2005in thousandsRevenue

$
30,491



$
27,362


$
129,317


$
127,396Loss from discontinued operations before income taxes

$
(81,115
)


$
(18,312
)

$
(35,911
)

$
(31,652
)Loss from discontinued operations, net of tax

$
(52,490
)


$
(12,533
)

$
(22,318
)

$
(20,568
)       December 31,Successor



Predecessor2007



2006in thousandsCurrent assets

$




$
38,106Total assets

$




$
67,707Current liabilities

$
(6,349
)


$
(29,961
)Total liabilities

$
(6,349
)


$
(39,339
)  IV-18




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  6.
    Content
    Rights  December 31,Successor



PredecessorContent Rights

2007



2006in thousandsProduced content rightsCompleted

$
1,346,985



$
1,476,830In process


195,025




161,942Co-produced content rightsCompleted


499,127




681,105In process


53,984




86,359Licensed content rightsAcquired


209,082




213,691Prepaid


21,690




10,386Content rights, at cost


2,325,893




2,630,313Accumulated amortization


(1,198,538
)



(1,312,365
)Content rights, net


1,127,355




1,317,948Current portion, licensed content rights


(79,162
)



(64,395
)Non-current portion

$
1,048,193



$
1,253,553      IV-19




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  7.
    Property
    and Equipment  December 31,Successor



PredecessorProperty and Equipment

2007



2006in thousandsEquipment and software

$
478,616



$
411,583Land


28,781




28,781Buildings


154,227




153,737Furniture, fixtures, leasehold improvements and other


151,417




217,884Assets in progress


14,471




11,833Property and equipment, at cost


827,512




823,818Accumulated depreciation and amortization


(430,082
)



(399,777
)Property and equipment, net

$
397,430



$
424,041     8.
    Sale of
    Equity Investments    9.  Goodwill
    and Intangible Assets
  December 31,Successor



PredecessorGoodwill and Intangible Assets

2007



2006in thousandsGoodwill

$
4,870,187



$
365,266Trademarks, net of accumulated amortization of $2,272 and $1,905

$
62,193



$
12,322Customer lists, net of accumulated amortization of $76,919 and
    $136,049


67,282




26,500Other, net of accumulated amortization of $77,026 and $55,355


52,181




68,851Intangibles, net

$
181,656



$
107,673  IV-20




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Reconciliation of net carrying amount of goodwill

in thousandsBalance at January 1, 2007 (Predecessor)

$
365,266Impairment (Predecessor) (Note 4)


(11,478
)Translation (Predecessor)


2,047Push down of investor basis (Successor) (Note 1)


4,591,581Disposals (Successor) (Note 1)


(280,838
)Acquisitions (Successor) (Note 4)


198,109Translation (Successor)


5,500Balance at December 31, 2007 (Successor)

$
4,870,187        IV-21




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  10.  Investments
    AccountingAffiliates:

MethodJoint Ventures with the BBC:JV Programs LLC (JVP)

ConsolidatedJoint Venture Network LLC (JVN)

ConsolidatedAnimal Planet Europe

ConsolidatedAnimal Planet Latin America

ConsolidatedPeople & Arts Latin America

ConsolidatedAnimal Planet Asia

ConsolidatedAnimal Planet Japan

ConsolidatedAnimal Planet Canada

EquityOther Ventures:Animal Planet United States (see Note 12)

ConsolidatedDiscovery Canada

EquityDiscovery Japan

EquityDiscovery Health Canada

EquityDiscovery Kids Canada

EquityDiscovery Civilization Canada

EquityHSWi (See Note 4)

Equity   Joint
    Ventures with the BBC
      Other
    Ventures
   IV-22




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  11.
    Debt  December 31,Successor



PredecessorDebt

2007



2006in thousands$1,000,000.0 Term Loan A due quarterly December 2008 to October
    2010

$
1,000,000



$
1,000,000$1,555,000.0 Revolving Loan, due October 2010


337,500




249,500260,000.0 Revolving Loan, due April 2009


94,174




187,828$1,500,000.0 Term Loan B due quarterly September 2007 to May 2014


1,492,500




8.06% Senior Notes, semi-annual interest, due March 2008


180,000




180,0007.45% Senior Notes, semi-annual interest, due September 2009


55,000




55,0008.37% Senior Notes, semi-annual interest, due March 2011


220,000




220,0008.13% Senior Notes, semi-annual interest, due September 2012


235,000




235,000Floating Rate Senior Notes, semi-annual interest, due December
    2012


90,000




90,0006.01% Senior Notes, semi-annual interest, due December 2015


390,000




390,000£10,000.0 Uncommitted Facility, due August 2008


8,785




Obligations under capital leases


37,172




32,355Other notes payable


960




1,100Subtotal


4,141,091




2,640,783Current portion


(32,006
)



(7,546
)Total long-term debt

$
4,109,085



$
2,633,237   1 2
     IV-23




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
            12.
    Mandatorily
    Redeemable Interests in Subsidiaries  December 31,Successor



PredecessorMandatorily Redeemable Interests in Subsidiaries

2007



2006in thousandsAnimal Planet LP

$




$
48,950People & Arts Latin America and Animal Planet Channel
    Group


48,721




45,875Mandatorily redeemable interests in subsidiaries

$
48,721



$
94,825   Animal
    Planet LP
    People &
    Arts Latin America and Animal Planet Channel Group
   IV-24




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
      13.
    Commitments
    and Contingencies  Year ending December 31,Future Minimum Payments

Leases


Content


Other


Totalin thousands2008

$
80,691


$
269,175


$
106,187


$
456,0532009


65,991



66,616



85,546



218,1532010


56,518



41,287



71,246



169,0512011


41,360



40,176



23,852



105,3882012


35,417



40,667



4,148



80,232Thereafter


133,741



41,469



400



175,610Total

$
413,718


$
499,390


$
291,379


$
1,204,487        IV-25




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    14.
    Employee
    Savings Plans    15.
    Long-term
    Incentive Plans           IV-26




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Successor


PredecessorMay 15 -


January 1 -Weighted Average Assumptions

December 31, 2007


May 14, 2007

2006

2005Risk-free interest rate


3.20
%



4.72
%


4.78
%


4.36
%Expected term (years)


1.48




3.87



3.86



4.75Expected volatility


27.93
%



23.78
%


27.06
%


30.36
%Dividend yield


0
%



0
%


0
%


0
%       Successor



PredecessorMay 15 -



January 1 -December 31, 2007



May 14, 2007


2006


2005Weighted






Weighted





Weighted





WeightedAverage






Average





Average





AverageExercise






Exercise





Exercise





ExerciseUnits


Price



Units


Price


Units


Price


Units


PriceOutstanding at Beginning of period


26.7


$
16.01




26.3


$
15.00



24.2


$
14.82






$
Units exchanged



























7.8



12.77Units granted


6.4



29.65




7.8



18.66



3.5



16.36



16.4



15.81Units exercised


(1.1
)


15.69




(2.3
)


14.01



(0.1
)


13.12







Units redeemed/cancelled


(5.2
)


15.29




(5.1
)


15.82



(1.3
)


15.43







Outstanding at end of period


26.8



19.42




26.7



16.01



26.3



15.00



24.2



14.82Vested at Period-end


6.6


$
13.97




6.5


$
13.84



8.5


$
13.78



1.6


$
11.22    IV-27




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
  16.
    Income
    Taxes    Successor



PredecessorMay 15 -



January 1 -Income From Continuing Operations

December 31,



May 14,Before Taxes

2007



2007


2006


2005Domestic

$
254,772



$
86,601


$
444,504


$
358,065Foreign


7,733




15,374



(24,629
)


(4,450
)Income from continuing operations before taxes

$
262,505



$
101,975


$
419,875


$
353,615     Successor



PredecessorMay 15 -



January 1 -December 31,



May 14,Income Tax Expense

2007



2007


2006


2005in thousandsCurrentFederal

$
52,346



$
20,526


$
4,591


$
(1,479
)State


7,079




5,064



5,695



(3,205
)Foreign


28,185




16,634



59,879



57,644Total current income tax provision


87,610




42,224



70,165



52,960DeferredFederal


(65,091
)



4,618



114,986



106,182State


9,879




9,023



3,707



16,298Foreign


1,989




3,395



(3,637
)


(3,851
)Total deferred income tax (benefit) expense


(53,223
)



17,036



115,056



118,629Change in valuation allowance


(9,084
)



(7,097
)


5,160



1,838Total income tax expense

$
25,303



$
52,163


$
190,381


$
173,427  IV-28




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31Successor



Predecessor2007



2006Deferred Income Tax Assets and Liabilities

Current


Non-current



Current


Non-currentin thousandsAssetsLoss carryforwards

$
21,851


$
21,145



$
19,855


$
27,712Compensation


58,762



9,489




30,981



15,563Accrued expenses


11,161



13,232




12,088



14,981Reserves and allowances


8,613








10,938



Tax credits















8,574Derivative financial instruments






6,992








3,141Investments






13,337








10,445Depreciation






16,169








Intangibles






68,293








104,078Uncertain tax positions






28,089








Other


4,769



17,024




4,301



20,897105,156



193,770




78,163



205,391Valuation allowance






(10,250
)







(26,552
)Total deferred income tax assets


105,156



183,520




78,163



178,839LiabilitiesDepreciation















(6,164
)Content rights and deferred launch incentives






(156,654
)







(200,732
)Foreign currency translation






(5,744
)







(12,936
)Unrealized gains on investments






(24,970
)







(861
)Other


(1,433
)


(6,771
)



(2,007
)


(4,435
)Total deferred income tax liabilities


(1,433
)


(194,139
)



(2,007
)


(225,128
)Deferred income tax assets (liabilities), net

$
103,723


$
(10,619
)


$
76,156


$
(46,289
)  IV-29




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Successor


PredecessorMay 15 -


January 1 -

Year Ended December 31,Reconciliation of Effective Tax Rate from Continuing
    Operations

December 31, 2007


May 14, 2007

2006

2005Federal statutory rate


35.0
%



35.0
%


35.0
%


35.0
%Increase (decrease) in tax rate arising from:State income taxes, net of Federal benefit


2.4




1.9



1.5



3.2Foreign income taxes, net of Federal benefit


7.5




12.8



7.7



9.7Non-taxable gain


(17.9
)











Travel deferred tax liabilities


(20.4
)











Change in US reserve


3.3












Non-deductible goodwill write-off







3.9







Domestic production deduction


(1.1
)



(1.8
)






Other


0.8




(0.6
)


1.1



1.1Effective income tax rate


9.6
%



51.2
%


45.3
%


49.0
%           non-U.S. tax
  non-U.S. tax and/or
     IV-30




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Reconciliation of Unrecognized Tax BenefitsBalance at January 1, 2007 (Predecessor)

$
91,375Reductions for tax positions of prior years (Predecessor)


(412
)Additions based on tax positions related to the current year
    (Successor)


11,650Additions for tax positions of prior years (Successor)


16,830Reductions for tax positions of prior years (Successor)


(28,674
)Settlements (Successor)


(2,035
)Balance at December 31, 2007 (Successor)

$
88,734     and/or and/or
    17.
    Financial
    Instruments       IV-31




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Fair
    Value of Financial Instruments
          Credit
    Concentrations
      18.
    Related
    Party Transactions   IV-32




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##### Table of Contents



DISCOVERY
    COMMUNICATIONS HOLDING, LLC
  Notes to
    Consolidated Financial
    Statements  (Continued)
   IV-33




---



##### Table of Contents



SIGNATURES
      By
    /s/  John
    C. Malone   Chief Executive Officer
 
   
    
 Signature

Title

Date/s/  John
    C. MaloneJohn
    C. Malone

Chairman of the Board, Director and Chief Executive Officer

June 2, 2008/s/  Robert
    R. BennettRobert
    R. Bennett

Director and President

June 2, 2008/s/  Paul
    A. GouldPaul
    A. Gould

Director

June 2, 2008/s/  M.
    LaVoy RobisonM.
    LaVoy Robison

Director

June 2, 2008/s/  J.
    David WargoJ.
    David Wargo

Director

June 2, 2008/s/  David
    J.A. FlowersDavid
    J.A. Flowers

Senior Vice President and Treasurer (Principal Financial Officer)

June 2, 2008/s/  Christopher
    W. SheanChristopher
    W. Shean

Senior Vice President and Controller (Principal Accounting
    Officer)

June 2, 2008  
 IV-34




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##### Table of Contents



EXHIBIT INDEX
  Regulation S-K):
  
 2  Plan of Acquisition, Reorganization, Arrangement,
    Liquidation or Succession:2.1


Reorganization Agreement among Liberty Media Corporation,
    Discovery Holding Company (DHC) and Ascent Media
    Group, Inc. (incorporated by reference to Exhibit 2.1 to
    DHCs Registration Statement on Form 10, dated
    July 15, 2005 (File
    No. 000-51205)
    (the Form 10)).3  Articles of Incorporation and Bylaws:3.1


Restated Certificate of Incorporation of DHC (incorporated by
    reference to Exhibit 3.1 to the Form 10).3.2


Bylaws of DHC (incorporated by reference to Exhibit 3.2 to
    the Form 10).4  Instruments Defining the Rights of Securities
    Holders, including Indentures:4.1


Specimen Certificate for shares of the Series A common
    stock, par value $.01 per share, of DHC (incorporated by
    reference to Exhibit 4.1 to the Form 10).4.2


Specimen Certificate for shares of the Series B common
    stock, par value $.01 per share, of DHC (incorporated by
    reference to Exhibit 4.2 to the Form 10).4.3


Rights Agreement between DHC and EquiServe Trust Company,
    N.A., as Rights Agent (incorporated by reference to
    Exhibit 4.3 to the Form 10).10  Material Contracts:10.1


Amended and Restated Limited Liability Company Agreement of
    Discovery Communications Holding, LLC, dated as of May 14,
    2007, by and among Advance/Newhouse Programming Partnership, LMC
    Discovery, Inc. and John S. Hendricks.*10.2


Form of Tax Sharing Agreement between Liberty Media Corporation
    and DHC (incorporated by reference to Exhibit 10.6 to the
    Form 10).10.3


Discovery Holding Company 2005 Incentive Plan (As Amended and
    Restated Effective August 15, 2007) (incorporated by
    reference to Exhibit 10.1 to the Quarterly Report on
    Form 10-Q
    of Discovery Holding Company for the quarter ended
    September 30, 2007 (File
    No. 000-51205)
    as filed on November 7, 2007).10.4


Discovery Holding Company 2005 Non-Employee Director Incentive
    Plan (As Amended and Restated Effective August 15, 2007)
    (incorporated by reference to Exhibit 10.2 to the Quarterly
    Report on
    Form 10-Q
    of Discovery Holding Company for the quarter ended
    September 30, 2007 (File
    No. 000-51205)
    as filed on November 7, 2007).10.5


Discovery Holding Company Transitional Stock Adjustment Plan (As
    Amended and Restated Effective August 15, 2007)
    (incorporated by reference to Exhibit 10.3 to the Quarterly
    Report on
    Form 10-Q
    of Discovery Holding Company for the quarter ended
    September 30, 2007 (File
    No. 000-51205)
    as filed on November 7, 2007).10.6


Agreement between DHC and John C. Malone (incorporated by
    reference to Exhibit 10.10 to the Form 10).10.7


Agreement, dated June 24, 2005, between Discovery and DHC
    (incorporated by reference to Exhibit 10.11 to the
    Form 10).10.8


Indemnification Agreement, dated as of June 24, 2005,
    between Cox and DHC (incorporated by reference to
    Exhibit 10.12 to the Form 10).10.9


Indemnification Agreement, dated as of June 24, 2005,
    between NewChannels and DHC (incorporated by reference to
    Exhibit 10.13 to the Form 10).10.10


Form of Indemnification Agreement with Directors and Executive
    Officers (incorporated by reference to Exhibit 10.14 to the
    Form 10).




---



##### Table of Contents



21  Subsidiaries of Discovery Holding Company.*23.1


Consent of KPMG LLP.*23.2


Consent of PricewaterhouseCoopers LLP, filed herewith.31.1


Rule 13a-14(a)/15d 
    14(a) Certification, filed herewith.31.2


Rule 13a-14(a)/15d 
    14(a) Certification, filed herewith.31.3


Rule 13a-14(a)/15d 
    14(a) Certification, filed herewith.32  Section 1350 Certification, filed herewith.  
 
 
   *
    Filed with DHCs Annual Report on
    Form 10-K
    for the year ended December 31, 2007 on February 15,
    2008.