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 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-34177

DISCOVERY COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		35-2333914 (I.R.S. Employer Identification No.)
One Discovery Place
Silver Spring, Maryland		20910
(Address of principal executive offices)		(Zip Code)

(240) 662-2000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     Total number of shares outstanding of each class of the Registrant’s common stock as of October 26, 2009:

Series A Common Stock, $0.01 par value		135,154,668
Series B Common Stock, $0.01 par value		6,598,161
Series C Common Stock, $0.01 par value		141,711,292

 

 

DISCOVERY COMMUNICATIONS, INC.
INDEX TO FORM 10-Q

		Page
PART I. FINANCIAL INFORMATION			3
ITEM 1. Financial Statements.			3
Condensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008			3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and 2008			4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008			5
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2009 and 2008			6
Notes to Condensed Consolidated Financial Statements			7
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition.			42
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.			65
ITEM 4. Controls and Procedures.			66
PART II. OTHER INFORMATION			67
ITEM 1. Legal Proceedings.			67
ITEM 1A. Risk Factors.			67
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.			67
ITEM 3. Defaults Upon Senior Securities.			67
ITEM 4. Submission of Matters to a Vote of Security Holders.			67
ITEM 5. Other Information.			67
ITEM 6. Exhibits.			68
SIGNATURES			69

PART I. FINANCIAL INFORMATION

ITEM 1.		Financial Statements.

DISCOVERY COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in millions, except par value)

		September 30,				December 31,
		2009				2008
						(recast)
ASSETS
Current assets:
Cash and cash equivalents		$	401			$	100
Receivables, net of allowances of $16 and $16, respectively			775				780
Content rights, net			76				73
Prepaid expenses and other current assets			165				156
Total current assets			1,417				1,109
Noncurrent content rights, net			1,225				1,163
Property and equipment, net			417				395
Goodwill			6,438				6,891
Intangible assets, net			654				716
Other noncurrent assets			590				210
Total assets		$	10,741			$	10,484
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS IN SUBSIDIARIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	394			$	421
Current portion of long-term debt			39				458
Other current liabilities			329				191
Total current liabilities			762				1,070
Long-term debt			3,472				3,331
Other noncurrent liabilities			416				473
Total liabilities			4,650				4,874
Commitments and contingencies (Note 18)
Redeemable non-controlling interests in subsidiaries			49				49
Equity:
Series A preferred stock, $0.01 par value; authorized 75 shares; issued and outstanding 71 shares at September 30, 2009 and 70 shares at December 31, 2008			1				1
Series C preferred stock, $0.01 par value; authorized 75 shares; issued and outstanding 71 shares at September 30, 2009 and 70 shares at December 31, 2008			1				1
Series A common stock, $0.01 par value; authorized 1,700 shares; issued and outstanding 135 shares at September 30, 2009 and 134 shares at December 31, 2008			1				1
Series B common stock, $0.01 par value; authorized 100 shares; issued and outstanding 7 shares at September 30, 2009 and December 31, 2008			—				—
Series C common stock, $0.01 par value; authorized 2,000 shares; issued and outstanding 142 shares at September 30, 2009 and 141 shares at December 31, 2008			2				2
Additional paid-in capital			6,589				6,545
Accumulated deficit			(531	)			(936	)
Accumulated other comprehensive loss			(35	)			(78	)
Equity attributable to Discovery Communications, Inc.			6,028				5,536
Equity attributable to non-controlling interests			14				25
Total equity			6,042				5,561
Total liabilities, redeemable non-controlling interests in subsidiaries and equity		$	10,741			$	10,484

The accompanying notes are an integral part of these condensed consolidated financial statements.

DISCOVERY COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except per share amounts)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
						(recast)								(recast)
Revenues:
Distribution		$	426			$	419			$	1,277			$	1,239
Advertising			341				332				1,010				1,014
Other			87				94				265				286
Total revenues			854				845				2,552				2,539
Costs of revenues, excluding depreciation and amortization listed below			257				262				767				758
Selling, general and administrative			338				224				929				845
Depreciation and amortization			40				50				118				146
Restructuring and impairment charges			4				13				47				17
Gain on business disposition			—				—				(252	)			—
			639				549				1,609				1,766
Operating income			215				296				943				773
Interest expense, net			(66	)			(61	)			(183	)			(196	)
Other non-operating income (expense), net			6				(8	)			34				(4	)
Income from continuing operations before income taxes			155				227				794				573
Provision for income taxes			(54	)			(93	)			(391	)			(285	)
Income from continuing operations, net of taxes			101				134				403				288
Income from discontinued operations, net of taxes			—				40				—				42
Net income			101				174				403				330
Less net (income) loss attributable to non-controlling interests			—				(40	)			2				(119	)
Net income attributable to Discovery Communications, Inc.			101				134				405				211
Stock dividends to preferred interests			(6	)			—				(8	)			—
Net income available to Discovery Communications, Inc. stockholders		$	95			$	134			$	397			$	211
Amounts available to Discovery Communications, Inc. stockholders:
Income from continuing operations, net of taxes		$	95			$	94			$	397			$	169
Income from discontinued operations, net of taxes			—				40				—				42
Net income		$	95			$	134			$	397			$	211
Income per share from continuing operations available to Discovery Communications, Inc. stockholders, basic and diluted		$	0.22			$	0.31			$	0.94			$	0.59
Income per share from discontinued operations available to Discovery Communications, Inc. stockholders, basic and diluted			—				0.13				—				0.15
Net income per share available to Discovery Communications, Inc. stockholders, basic and diluted		$	0.22			$	0.44			$	0.94			$	0.74
Weighted average number of shares outstanding:
Basic			424				302				423				287
Diluted			427				302				424				287

The accompanying notes are an integral part of these condensed consolidated financial statements.

DISCOVERY COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in millions)

		Nine Months Ended
		September 30,
		2009				2008
						(recast)
Operating Activities
Net income		$	403			$	330
Adjustments to reconcile net income to cash provided by operating activities:
Share-based compensation expense (benefit)			196				(47	)
Depreciation and amortization			118				195
Asset impairments			26				—
Gains on business dispositions			(252	)			(67	)
Gains on asset dispositions			—				(9	)
Gain on sale of securities			(13	)			—
Deferred income taxes			(33	)			122
Other noncash expenses, net			26				62
Changes in operating assets and liabilities, net of discontinued operations:
Receivables, net			—				(29	)
Accounts payable and accrued liabilities			(21	)			(18	)
Other, net			(92	)			(116	)
Cash provided by operating activities			358				423
Investing Activities
Purchases of property and equipment			(43	)			(84	)
Net cash acquired from Newhouse Transaction			—				45
Business acquisitions, net of cash acquired			—				(8	)
Proceeds from asset dispositions			—				13
Proceeds from business dispositions			300				126
Proceeds from sales of securities			22				24
Cash provided by investing activities			279				116
Financing Activities
Ascent Media Corporation spin-off			—				(356	)
Net repayments of revolver loans			(315	)			(89	)
Borrowings from long-term debt, net of discount and issuance costs			970				—
Principal repayments of long-term debt			(1,007	)			(191	)
Principal repayments of capital lease obligations			(7	)			(12	)
Cash distribution to non-controlling interest			(9	)			—
Proceeds from stock option exercises			26				—
Other financing activities, net			(1	)			(10	)
Cash used in financing activities			(343	)			(658	)
Effect of exchange rate changes on cash and cash equivalents			7				2
Change in cash and cash equivalents			301				(117	)
Cash and cash equivalents of continuing operations, beginning of period			100				8
Cash and cash equivalents of discontinued operations, beginning of period			—				201
Cash and cash equivalents, end of period		$	401			$	92

The accompanying notes are an integral part of these condensed consolidated financial statements.

DISCOVERY COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited; in millions)

		Three Months Ended												Nine Months Ended
		September 30, 2009												September 30, 2009
		Discovery				Non-controlling								Discovery				Non-controlling
		Communications, Inc.				Interests				Total Equity				Communications, Inc.				Interests				Total Equity
Balance as of beginning of period		$	5,903			$	15			$	5,918			$	5,536			$	25			$	5,561
Comprehensive income (loss):
Net income (loss)			101				—				101				405				(2	)			403
Other comprehensive (loss) income:
Foreign currency translation adjustments, net			(5	)			—				(5	)			24				—				24
Unrealized (losses) gains on securities and derivative instruments, net			(5	)			—				(5	)			19				—				19
Total comprehensive income (loss)			91				—				91				448				(2	)			446
Stock dividends declared to preferred interests			(6	)			—				(6	)			(8	)			—				(8	)
Stock dividends paid to preferred interests			7				—				7				7				—				7
Cash distribution to non-controlling interest			—				(1	)			(1	)			—				(9	)			(9	)
Share-based compensation			7				—				7				19				—				19
Issuance of common stock in connection with share-based plans and other			26				—				26				26				—				26
Balance as of end of period		$	6,028			$	14			$	6,042			$	6,028			$	14			$	6,042

		Three Months Ended												Nine Months Ended
		September 30, 2008												September 30, 2008
		Discovery				Non-controlling								Discovery				Non-controlling
		Communications, Inc.				Interests				Total Equity				Communications, Inc.				Interests				Total Equity
		(recast)				(recast)				(recast)				(recast)				(recast)				(recast)
Balance as of beginning of period		$	4,576			$	88			$	4,664			$	4,495			$	9			$	4,504
Comprehensive income:
Net income			134				40				174				211				119				330
Other comprehensive (loss) income:
Foreign currency translation adjustments, net			(14	)			—				(14	)			(10	)			—				(10	)
Unrealized gains on securities and derivative instruments, net			2				—				2				1				—				1
Total comprehensive income			122				40				162				202				119				321
Share-based compensation			2				—				2				3				—				3
Ascent Media Corporation spin-off			(708	)			—				(708	)			(708	)			—				(708	)
Issuance of preferred stock			210				(112	)			98				210				(112	)			98
Reversal of deferred tax liability related to DHC’s investment in DCH			1,317				—				1,317				1,317				—				1,317
Balance as of end of period		$	5,519			$	16			$	5,535			$	5,519			$	16			$	5,535

The accompanying notes are an integral part of these condensed consolidated financial statements.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

     Discovery Communications, Inc. (“Discovery” or the “Company”) is a leading global media and entertainment company that provides original and purchased programming across multiple distribution platforms in the United States (U.S.) and approximately 170 other countries, with over 100 television networks offering customized programming in 35 languages. Discovery also develops and sells consumer and educational products and services as well as media sound services in the U.S. and internationally. In addition, the Company owns and operates a diversified portfolio of website properties and other digital services. The Company manages and reports its operations in three segments: U.S. Networks, consisting principally of domestic cable and satellite television network programming, web brands, and other digital services; International Networks, consisting principally of international cable and satellite television network programming; and Commerce, Education, and Other, consisting principally of e-commerce, catalog, sound production, and domestic licensing businesses. Financial information for Discovery’s reportable segments is disclosed in Note 19.

     Discovery was formed in connection with Discovery Holding Company (“DHC”) and Advance/Newhouse Programming Partnership (“Advance/Newhouse”) combining their respective ownership interests in Discovery Communications Holding, LLC (“DCH”) and exchanging those interests with and into Discovery, which was consummated on September 17, 2008 (the “Newhouse Transaction”). Prior to the Newhouse Transaction, DCH was a stand-alone private company, which was owned approximately 66 ²/₃% by DHC and 33 ¹/₃% by Advance/Newhouse. The Newhouse Transaction was completed as follows:

	•		On September 17, 2008, DHC completed the spin-off to its shareholders of Ascent Media Corporation (“AMC”), a subsidiary holding the cash and businesses of DHC, except for certain businesses that provide sound, music, mixing, sound effects, and other related services (“Creative Sound Services” or “CSS”) (the “AMC spin-off”). Such businesses remain with the Company following the completion of the Newhouse Transaction. The AMC spin-off was effected as a distribution by DHC to holders of its Series A and Series B common stock. In connection with the AMC spin-off, each holder of DHC Series A common stock received 0.05 of a share of AMC Series A common stock and each holder of DHC Series B common stock received 0.05 of a share of AMC Series B common stock. The AMC spin-off did not involve the payment of any consideration by the holders of DHC common stock and was structured as a tax free transaction under Sections 368(a) and 355 of the Internal Revenue Code of 1986, as amended. There was no gain or loss related to the spin-off. Subsequent to the AMC spin-off, the companies no longer have any ownership interests in each other and operate independently.
	•		On September 17, 2008, immediately following the AMC spin-off, DHC merged with a transitory merger subsidiary of Discovery, with DHC continuing as the surviving entity and as a wholly-owned subsidiary of Discovery. In connection with the merger, each share of DHC Series A common stock was converted into the right to receive 0.50 of a share of Discovery Series A common stock and 0.50 of a share of Discovery Series C common stock. Similarly, each share of DHC Series B common stock was converted into the right to receive 0.50 of a share of Discovery Series B common stock and 0.50 of a share of Discovery Series C common stock.
	•		On September 17, 2008, immediately following the exchange of shares between Discovery and DHC, Advance/Newhouse contributed its ownership interests in DCH and Animal Planet to Discovery in exchange for Discovery Series A and Series C convertible preferred stock. The preferred stock is convertible at any time into Discovery common stock representing 33 1/3% of the Discovery common stock issued in connection with the Newhouse Transaction, subject to certain anti-dilution adjustments.

     As a result of the Newhouse Transaction, DHC and DCH became wholly-owned subsidiaries of Discovery, with Discovery becoming the successor reporting entity to DHC.

Changes in Basis of Presentation — Recast

     As described more fully in Note 2, certain of the 2008 financial information has been recast to reflect the adoption of the statement issued by the Financial Accounting Standards Board (“FASB”) on non-controlling interests in consolidated financial statements.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Basis of Presentation

Newhouse Transaction and AMC Spin-off

     In accordance with FASB Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), these condensed consolidated financial statements and notes present the Newhouse Transaction as though it was consummated on January 1, 2008. Accordingly, Discovery’s condensed consolidated financial statements and notes include the gross combined financial results of both DHC and DCH since January 1, 2008, as permitted under U.S. generally accepted accounting principles (“GAAP”).

     Prior to the Newhouse Transaction, DHC accounted for its ownership interest in DCH using the equity method. Accordingly, DHC presented its portion of DCH’s earnings in a separate account in its Statements of Operations. Because the Newhouse Transaction is presented as of January 1, 2008, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 include the gross combined revenues and expenses of both DHC and DCH and do not present the portion of DCH’s earnings previously recorded in DHC’s Statements of Operations as equity investee income during the period January 1, 2008 through September 30, 2008. Additionally, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 present a portion of DCH’s earnings as being allocated to Advance/Newhouse for the period January 1, 2008 through September 30, 2008 in a separate account titled Net (income) loss attributable to non-controlling interests.

     Pursuant to FASB ASC Topic 805, Business Combinations (“ASC 805”), Discovery accounted for the Newhouse Transaction as a non-substantive merger. Accordingly, the assets and liabilities of DCH and DHC were accounted for at the investors’ historical bases prior to the Newhouse Transaction.

     As a result of the AMC spin-off, the results of operations of AMC are presented as Income from discontinued operations, net of taxes in the Condensed Consolidated Statements of Operations, for the three and nine months ended September 30, 2008. Cash flows from AMC have not been segregated as discontinued operations in the Condensed Consolidated Statements of Cash Flows. Summarized financial information for AMC for the three and nine months ended September 30, 2008 is presented in Note 4.

Unaudited Interim Financial Statements

     The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The condensed consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the financial position, the results of operations, and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. The year-end condensed balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

     The condensed consolidated financial statements should be read in conjunction with the Company’s revised audited consolidated financial statements and notes thereto as of and for the three years ended December 31, 2008, included in Discovery Communications, Inc.’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (“SEC”) on June 16, 2009.

Use of Estimates

     The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Management continually re-evaluates its estimates, judgments, and assumptions and management’s assessments could change. Actual results may differ from those estimates, judgments, and assumptions and could have a material impact on the consolidated financial statements.

     Significant estimates, judgments, and assumptions inherent in the preparation of the consolidated financial statements include consolidation of variable interest entities, accounting for business acquisitions, dispositions, allowances for doubtful accounts, content rights, asset impairments, redeemable interests in subsidiaries, estimating fair value, revenue recognition, depreciation and amortization, share-based compensation, income taxes, and contingencies.

Consolidation and Accounting for Investments

     The condensed consolidated financial statements include the accounts of Discovery, all majority-owned subsidiaries in which a controlling interest is maintained, and variable interest entities (“VIE”) for which the Company is the primary beneficiary. Controlling interest is determined by majority ownership interest and the ability to unilaterally direct or cause the direction of management and policies of an entity after considering any third-party participatory rights. The Company applies the guidelines set forth in ASC 810 in evaluating whether it has interests in VIEs and in determining whether to consolidate any such entities. All significant inter-company accounts and transactions between consolidated companies have been eliminated in consolidation.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     The Company’s foreign subsidiaries’ assets and liabilities are translated at exchange rates in effect at the balance sheet date, while results of operations are translated at average exchange rates for the respective periods. The resulting asset and liability translation adjustments are included as a separate component of Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets. Inter-company accounts of a trading nature are revalued at exchange rates in effect at each month-end and are included as part of operating income in the Condensed Consolidated Statements of Operations.

     Investments in entities of 20% to 50%, without a controlling interest, and other investments over which the Company has the ability to exercise significant influence but not control are accounted for using the equity method. Investments in entities of less than 20% over which the Company has no significant influence are accounted for at fair value or using the cost method.

Reclassifications

     Certain reclassifications have been made to the prior year information to conform to the September 30, 2009 presentation.

Subsequent Events

     The Company has evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q on November 3, 2009. No material subsequent events have occurred since September 30, 2009 that should be recorded or disclosed in the condensed consolidated financial statements.

2. RECENTLY ISSUED ACCOUNTING AND REPORTING PRONOUNCEMENTS

Accounting and Reporting Pronouncements Adopted

The Hierarchy of Generally Accepted Accounting Principles

     In June 2009, the FASB issued a statement that establishes the FASB Accounting Standards Codification (“Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. The statement modified the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. All guidance contained in the Codification carries an equal level of authority. The provisions of this statement allow for rules and interpretive releases of the SEC under authority of federal securities laws to also serve as sources of authoritative GAAP for SEC registrants. The provisions became effective for Discovery on September 30, 2009. The only impact to the Company’s consolidated financial statements was to revise references to accounting pronouncements from those of the precodification standards to the references used in the codified hierarchy of GAAP.

Fair Value Measurements

     In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, Measuring Liabilities at Fair Value (“ASU 2009-05”), which amends the guidance for measuring the fair value of liabilities included in FASB ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”). The update reinforces that fair value of a liability is the price that would be paid to transfer the liability in an orderly transaction between market participants at the measurement date. Additionally, the update clarifies how the price of an identical or similar debt security that is traded or the price of the liability when it is traded as an asset should be considered in estimating the fair value of the issuer’s liability and that the reporting entity must consider its own credit risk in measuring the liability’s fair value. Effective September 30, 2009, the Company adopted the provisions of ASU 2009-05 for all liabilities measured at fair value, which are being applied prospectively. The adoption of ASU 2009-05 resulted in changing the priority level of inputs used to measure the fair value of liabilities associated with the Company’s deferred compensation plan from Level 2 to Level 1 within the fair value hierarchy in ASC 820. However, this ASU did not change the Company’s valuation techniques or impact the amounts or classifications recorded in the Company’s condensed consolidated financial statements.

     In September 2006, the FASB issued a statement which establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and expands the required disclosures about fair value measurement. The provisions of the statement related to financial assets and liabilities as well as nonfinancial assets and liabilities carried at fair value on a recurring basis were adopted prospectively on January 1, 2008 and did not have a material impact on the Company’s consolidated financial statements. In February 2008, the FASB delayed the effective date of this statement for non-recurring measurements of non-financial assets and liabilities to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. Effective January 1, 2009, the Company adopted the provisions of this statement for non-financial assets and liabilities measured at fair value on a non-recurring basis, which are being applied prospectively. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements. The relevant disclosures required by ASC 820 are included in Note 5.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Subsequent Events

     In May 2009, the FASB issued a statement which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The provisions of this statement, located within FASB ASC Topic 855, Subsequent Events (“ASC 855”), require disclosure of the date through which an entity has evaluated subsequent events, which for Discovery is the date the financial statements were issued. Effective June 30, 2009, the Company adopted the provisions of this new statement, which are being applied prospectively. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements. The relevant disclosures required by this new statement are included in Note 1.

Interim Disclosures about Fair Value of Financial Instruments

     In April 2009, the FASB issued a statement which requires disclosures about the fair value of financial instruments in interim financial statements in addition to annual financial statements. Effective June 30, 2009, the Company adopted the interim disclosure requirements of the statement, which are being applied prospectively. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements. The relevant disclosures required by FASB ASC Topic 825, Financial Instruments (“ASC 825”), are included in various notes to the consolidated financial statements.

Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities

     In June 2008, the FASB issued a statement on determining whether instruments granted in share-based payment transactions are participating securities. The provisions of the statement, found under FASB ASC Topic 260, Earnings Per Share (“ASC 260”), became effective for the Company on January 1, 2009. The statement provides that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. Because such awards are considered participating securities, the issuing entity is required to apply the two-class method of computing basic and diluted earnings per share retrospectively to all prior period earnings per share computations. The adoption of the statement did not impact the Company’s computation of earnings per share for the periods presented.

Determination of the Useful Life of Intangible Assets

     In April 2008, the FASB issued a statement which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. Effective January 1, 2009, the Company adopted the provisions of this statement, found under FASB ASC Topic 350, Intangibles- Goodwill and Other (“ASC 350”), which are being applied prospectively to intangible assets acquired on or subsequent to the effective date. The Company’s policy is to expense costs incurred to renew or extend the contractual terms of its intangible assets. The adoption of the statement did not impact the Company’s consolidated financial statements.

Disclosures about Derivative Investments and Hedging Activities

     In March 2008, the FASB issued a statement which requires entities to include information in interim and annual financial statements about how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Effective January 1, 2009, the Company adopted the provisions of this statement, found under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”), which are being applied prospectively. The adoption of the statement did not have a material impact on the Company’s consolidated financial statements. The relevant disclosures required by the statement are included in Note 9.

Non-controlling Interests

     In December 2007, the FASB issued a statement which establishes accounting and reporting standards for the non-controlling interest in a subsidiary, commonly referred to as minority interest. Among other matters, this statement requires that non-controlling interests be reported within the equity section of the balance sheet and that the amounts of consolidated net income or loss and consolidated comprehensive income or loss attributable to the parent company and the non-controlling interests are clearly presented separately in the consolidated financial statements. Also, pursuant to this statement, where appropriate, losses will be allocated to non-controlling interests even when that allocation may result in a deficit balance. Effective January 1, 2009, the Company adopted the provisions of this statement, found under ASC 810, which are being applied prospectively, except for the presentation and disclosure requirements, which are being applied retrospectively to all periods presented. Upon adoption of this statement, non-controlling interests of $25 million as of December 31, 2008 have been reclassified from Other noncurrent liabilities to Equity attributable to non-controlling interests in the equity section of the Condensed Consolidated Balance Sheets. Additionally, $40 million and $119 million previously recorded as Minority interests, net of tax for the three and nine months ended September 30, 2008 have been reclassified to Net (income) loss attributable to non-controlling interests and excluded from the caption Net income in the Condensed Consolidated Statements of Operations. The computation of earnings per share for all prior periods is not impacted.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Business Combinations

     In December 2007, the FASB issued a statement on business combinations that requires, among other matters, companies expense business acquisition transaction costs; record an asset for in-process research and development; record at fair value amounts for contingencies, including contingent consideration, as of the purchase date with subsequent adjustments recognized in operating results; recognize decreases in valuation allowances on acquired deferred tax assets in operating results, which are considered to be subsequent changes in consideration and are recorded as decreases in goodwill; and measure at fair value any non-controlling interest in the acquired entity. Effective January 1, 2009, the Company adopted the provisions of this statement, FASB ASC Topic 805, Business Combinations (“ASC 805”), which are being applied prospectively to new business combinations consummated on or subsequent to the effective date. While this statement applies to new business acquisitions consummated on or subsequent to the effective date, the amendments to the guidance on accounting for income taxes with respect to deferred tax valuation allowances and liabilities for income tax uncertainties, applies to changes in deferred tax valuation allowances and liabilities for income tax uncertainties recognized in prior business acquisitions. In April 2009, the FASB issued a position which amends and clarifies the accounting, recording and measurement of certain contingent assets acquired and liabilities assumed in a business combination. The provisions of this position, also located within ASC 805, were effective immediately and required to be applied retrospectively to business combinations that occurred on or after January 1, 2009. The initial adoption of the statement and position, effective January 1, 2009, did not impact the Company’s consolidated financial statements. Generally, the impact of ASC 805 will depend on future acquisitions.

Accounting for Collaborative Arrangements

     In December 2007, the Emerging Issues Task Force (“EITF”) issued a statement which defines collaborative arrangements and establishes accounting and reporting requirements for transactions between participants in the arrangement and third parties. A collaborative arrangement is defined as a contractual arrangement that involves a joint operating activity, such as an agreement to co-produce and distribute programming with another media company. Effective January 1, 2009, the Company adopted the provisions of this statement, found under FASB ASC Topic 808, Collaborative Arrangements (“ASC 808”) which are being applied retrospectively to all periods presented for all collaborative arrangements as of the effective date. The adoption of the statement did not have a material impact on the Company’s consolidated financial statements. The relevant disclosures required by ASC 808 are included in Note 6.

Accounting and Reporting Pronouncements Not Yet Adopted

Revenue Recognition for Multiple-Element Revenue Arrangements

     In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”), which revises the existing multiple-element revenue arrangements guidance included in FASB ASC Topic 605, Revenue Recognition (“ASC 605”). The revised guidance changes the determination of when the individual deliverables included in a multiple-element revenue arrangement may be treated as separate units of accounting, modifies the manner in which the transaction consideration is allocated across the separately identified deliverables, and expands the disclosures required for multiple-element revenue arrangements. ASU 2009-13 will be effective for Discovery on January 1, 2011, and may be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially modified after the adoption date. The Company is currently evaluating the impact that ASU 2009-13 will have on its consolidated financial statements.

Consolidation of Variable Interest Entities

     In June 2009, the FASB issued a statement which revises the existing accounting guidance for interests in a VIE included in ASC 810. Among other matters, the statement requires a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE; amends the consideration of related party relationships in the determination of the primary beneficiary of a VIE; amends certain guidance for determining whether an entity is a VIE, which may change an entity’s assessment of which entities with which it is involved are VIEs; requires continuous assessments of whether an entity is the primary beneficiary of a VIE; and requires enhanced disclosures about an entity’s involvement with a VIE. In general, the disclosure requirements are consistent with the provisions by the FASB on transfers of financial assets and interests in variable interest entities. The provisions of this statement will be effective for Discovery on January 1, 2010, and will be applied retrospectively to all periods presented. The adoption of this statement will result in the Company no longer consolidating the Oprah Winfrey Network and Animal Planet Japan joint ventures effective January 1, 2010. The Company continues to evaluate the impact of deconsolidating the Oprah Winfrey Network and Animal Planet Japan joint ventures and whether the provisions of this statement will further impact its consolidated financial statements.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

3. VARIABLE INTEREST ENTITIES

     Discovery holds investments in multiple ventures, most of which were determined to be variable interest entities. The following table provides a list of investments in variable interest entities as of September 30, 2009 and the method of accounting.

		Percentage of				Accounting
		Ownership				Method
Ventures with the British Broadcasting Corporation:
JV Programs, LLC			50	%		Consolidated
Joint Venture Network, LLC (“JVN”)			50	%		Consolidated
Animal Planet Europe			50	%		Consolidated
Animal Planet Latin America			50	%		Consolidated
People+Arts Latin America			50	%		Consolidated
Animal Planet Asia			50	%		Consolidated
Animal Planet Japan			33	%		Consolidated
Other ventures:
Oprah Winfrey Network			50	%		Consolidated
DHJV Company LLC (“Hasbro — Discovery Joint Venture”)			50	%		Equity Method

     For consolidated ventures, $2 million of net losses generated by the ventures was allocated to other venture partners during the nine months ended September 30, 2009. Approximately $9 million of net income generated by the consolidated ventures was allocated to other venture partners during the nine months ended September 30, 2008. Amounts allocated to other venture partners are recorded in Net (income) loss attributable to non-controlling interests in the Condensed Consolidated Statements of Operations.

Ventures with the British Broadcasting Corporation

     The Company and the British Broadcasting Corporation (“BBC”) formed several cable and satellite television network ventures, other than JVN, to produce and acquire factual-based content. The JVN venture was formed to provide debt funding to the other ventures. In addition to its own funding requirements, Discovery has assumed the BBC’s funding requirements, giving the Company preferential cash distribution for these joint ventures. The equity interests of the ventures owned by the BBC are reported as non-controlling interests. No cumulative operating losses generated by the ventures were allocated to the BBC’s non-controlling interests. In accordance with the venture arrangement, no losses can be allocated to the BBC in excess of distributable cash to the BBC for each joint venture.

     Pursuant to the venture agreements, the BBC has the right to require the Company to purchase the BBC’s interests in the People+Arts Latin America venture and the Animal Planet ventures if certain conditions are not met. Additional information regarding the BBC’s put right is disclosed in Note 10.

Oprah Winfrey Network

     Discovery formed a 50-50 joint venture with Oprah Winfrey and Harpo, Inc. (“Harpo”) to rebrand Discovery Health Channel as OWN: The Oprah Winfrey Network (“OWN Network”), which was consummated on July 23, 2008. Pursuant to the arrangement, Discovery will contribute its interest in the Discovery Health Channel and certain DiscoveryHealth.com content and Harpo will contribute the Oprah.com website (which will serve as the platform for the venture website) and certain Oprah.com content. Discovery and Harpo are required to make these contributions on the launch date unless it is mutually agreed that certain contributions will be made prior to the launch date for the benefit of the venture. The equity interests of the OWN Network owned by Harpo are reported as non-controlling interests.

     Pursuant to the venture agreement, Discovery is committed to loan up to $100 million to the venture through September 30, 2011 to fund operations, of which $27 million has been funded through September 30, 2009. To the extent funding the joint venture in excess of $100 million is necessary, the Company may provide additional funds through a member loan or require the venture to seek third party financing. Discovery expects to recoup the entire amount contributed in future periods provided that the joint venture is profitable and has sufficient funds to repay the Company. The parties are currently discussing a number of matters regarding the OWN Network, including digital strategy, the programming and development pipeline, and timing of the launch of the network.

     Pursuant to the venture agreement, Harpo has the right to require the Company to purchase its interest in the OWN Network

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

venture if certain conditions are not met. Additional information regarding Harpo’s put right is disclosed in Note 10.

Hasbro-Discovery Joint Venture

     On May 22, 2009, Discovery and Hasbro, Inc. (“Hasbro”) formed a 50-50 joint venture that will operate a television network and website dedicated to children’s and family entertainment and educational programming. Hasbro acquired a 50% ownership interest in the joint venture, which will hold the assets related to the Discovery Kids Network (“Discovery Kids”) in the U.S., for which Discovery received consideration of $300 million and a tax receivables agreement collectible over 20 years valued at $57 million. Upon purchase of its ownership interest, Hasbro received a step-up in tax basis for its portion of the joint venture assets. To the extent Hasbro has the ability to amortize this tax basis, it is contractually obligated to share the tax benefit as part of purchase consideration. As part of the transaction, Discovery provided Hasbro a guarantee of performance valued at less than $1 million. The maximum remaining exposure to loss under this guarantee of performance is below $265 million. The Company believes the likelihood is remote that this performance guarantee could have a material adverse impact on the Company.

     Hasbro and Discovery have equal representation on the joint venture’s board of directors that oversees a management team responsible for programming, scheduling, and operations. Programming for the joint venture will include animation, game shows, and live-action series and specials. The television network and online presence also will include content from Discovery Kids’ existing library. Discovery provides certain advertising sales services, distribution, origination, and other operational requirements for the joint venture, while Hasbro provides studio-produced programming and merchandising for intellectual property associated with the network. Hasbro is providing the joint venture a $125 million licensing revenue guarantee, which is expected to be earned over the licensing term.

     Beginning May 22, 2009, Discovery ceased to consolidate the gross operating results of Discovery Kids. However, as Discovery continues to be involved in the operations of the joint venture, the Company has not presented the financial position, results of operations, and cash flows of Discovery Kids recorded through May 21, 2009 as discontinued operations. The Company’s interest in the joint venture is accounted for using the equity method of accounting, which was initially valued at $357 million. Accordingly, the Company’s consolidated results of operations include the gross operating results of Discovery Kids through May 21, 2009, whereas for subsequent periods Discovery records only its proportionate share of the joint venture’s net operating results.

     In connection with the formation of the joint venture, the Company recognized a gain of $252 million, which included $127 million as a result of “stepping up” its basis for the 50% retained interest in Discovery Kids and $125 million for the sale of 50% of its ownership interest to Hasbro.

4. DISCONTINUED OPERATIONS

     In September 2008, as part of the Newhouse Transaction, DHC completed the spin-off to its shareholders of AMC, a subsidiary holding the cash and businesses of DHC, except for certain businesses that provide sound, music, mixing, sound effects and other related services. The AMC spin-off did not involve the payment of any consideration by the holders of DHC common stock and was structured as a tax free transaction under Sections 368(a) and 355 of the Internal Revenue Code of 1986, as amended. There was no gain or loss related to the spin-off. Subsequent to the AMC spin-off, the companies no longer have any ownership interests in each other and operate independently.

     In September 2008, prior to the Newhouse Transaction, DHC sold its ownership interests in Ascent Media Systems & Technology Services, LLC (“AMSTS”) and Ascent Media CANS (DBA “AccentHealth”) AccentHealth for approximately $7 million and $119 million, respectively, in cash. The sale of these companies resulted in pre-tax gains of $3 million for AMSTS and $64 million for AccentHealth. AMSTS and AccentHealth were components of the AMC business. It was determined that AMSTS and AccentHealth were non-core assets, and the sale of these companies was consistent with DHC’s strategy to divest non-core assets. The Company has no continuing involvement in the operations of AMSTS or AccentHealth.

     In September 2008, prior to the Newhouse Transaction, DHC disposed of certain buildings and equipment for approximately $13 million in cash. DHC recognized a pre-tax gain of approximately $9 million in connection with the asset disposals. The disposed assets were part of the AMC business.

     As there is no continuing involvement in the operations of AMC, AMSTS, or AccentHealth, their results of operations and the gains from the business and asset dispositions are presented as Income from discontinued operations, net of taxes in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008. Cash flows from these entities have not been segregated as discontinued operations in the Condensed Consolidated Statements of Cash Flows.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     The following table presents summary financial information for discontinued operations for the three and nine months ended September 30, 2008 (amounts in millions, except per share data):

		Three Months Ended				Nine Months Ended
		September 30, 2008				September 30, 2008
Revenues		$	134			$	482
Loss from the operations of discontinued operations before income taxes		$	(8	)		$	(6	)
Loss from the operations of discontinued operations, net of taxes		$	(7	)		$	(5	)
Gains on dispositions, net of taxes		$	47			$	47
Income from discontinued operations, net of taxes		$	40			$	42
Income per share from discontinued operations available to Discovery Communications, Inc. stockholders, basic and diluted		$	0.13			$	0.15
Weighted average number of shares outstanding, basic and diluted			302				287

     No interest expense was allocated to discontinued operations as there was no debt specifically attributable to discontinued operations or that was required to be repaid following the dispositions.

5. FAIR VALUE MEASUREMENTS

     In accordance with ASC 820, a fair value measurement is determined based on the assumptions that a market participant would use in pricing an asset or liability. ASC 820 also established a three-tiered hierarchy that draws a distinction between market participant assumptions based on: (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2), and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3).

Assets and Liabilities Measured at Fair Value on a Recurring Basis

     The following tables present information about assets and liabilities measured at fair value on a recurring basis (in millions).

						Fair Value Measurements
						as of September 30, 2009 Using:
						Quoted Market				Significant
						Prices in Active				Other				Significant
						Markets for				Observable				Unobservable
		Total Fair Value as of				Identical Assets				Inputs				Inputs
		September 30, 2009				(Level 1)				(Level 2)				(Level 3)
Assets:
Trading securities		$	32			$	32			$	—			$	—
Derivatives (Note 9)			6				—				6				—
Liabilities:
Derivatives (Note 9)			(63	)			—				(63	)			—
Deferred compensation plan			(32	)			(32	)			—				—
HSW International, Inc. liability			(4	)			—				(4	)			—
Redeemable non-controlling interests in subsidiaries (Note 10)			(49	)			—				—				(49	)
		$	(110	)		$	—			$	(61	)		$	(49	)

     As disclosed in Note 2, the adoption of ASU 2009-05 resulted in changing the priority level of inputs used to measure the fair value of liabilities associated with the Company’s deferred compensation plan from Level 2 to Level 1 within the fair value hierarchy in ASC 820 as of September 30, 2009. However, this ASU did not change the Company’s valuation techniques or impact the amounts or classifications recorded in the Company’s consolidated financial statements.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

						Fair Value Measurements
						as of December 31, 2008 Using:
						Quoted Market				Significant
						Prices in Active				Other				Significant
						Markets for				Observable				Unobservable
		Total Fair Value as of				Identical Assets				Inputs				Inputs
		December 31, 2008				(Level 1)				(Level 2)				(Level 3)
Assets:
Trading securities		$	36			$	36			$	—			$	—
Available-for-sale securities			15				15				—				—
Liabilities:
Derivatives			(112	)			—				(112	)			—
Deferred compensation plan			(36	)			—				(36	)			—
HSW International, Inc. liability			(7	)			—				(7	)			—
Redeemable non-controlling interests in subsidiaries			(49	)			—				—				(49	)
		$	(153	)		$	51			$	(155	)		$	(49	)

     For assets that are measured using quoted prices in active markets, the total fair value is the published market price per unit in active markets multiplied by the number of units held without consideration of transaction costs.

     The fair value of derivative instruments, which consist of interest rate and foreign currency hedges, is determined using the published market price of similar instruments with similar maturities and characteristics, interest rate yield curves, and measures of interest rate volatility, adjusted for any terms specific to the asset or liability and nonperformance risk. Additional information regarding derivative instruments is available in Note 9.

     The fair value of the deferred compensation plan liability is determined based on the fair value of the related investments elected by employees.

     The Company currently owns approximately 23 million shares (or 43%) of HSW International, Inc. (“HSWI”). The investment is accounted for using the equity method. The Company has agreed to either: (i) distribute approximately 18 million of the HSWI shares to the former shareholders of HowStuffWorks.com, Inc. (“HSW”), or (ii) sell approximately 18 million HSW shares and distribute substantially all proceeds in excess of $0.37 per share to the former shareholders of HSW. Through September 2008, the fair value of the Company’s liability to the former HSW shareholders was determined using a discounted cash flow (“DCF”) analysis. In October 2008, the Company began using a Black-Scholes option pricing model to value the liability.

     The fair value of the redeemable non-controlling interests in subsidiaries is an estimated negotiated value considering the exercise of the BBC put right and an estimate of the proceeds from a hypothetical sale of interests in certain ventures and a distribution of the proceeds to the venture partners based on various rights and preferences. Additional information regarding the redeemable non-controlling interests in subsidiaries is disclosed in Note 10.

     The following table reconciles the beginning and ending balances of Level 3 measurements and identifies the net income the Company recorded (in millions).

		Three Months Ended				Three Months Ended
		September 30, 2009				September 30, 2008
		Redeemable								Redeemable
		Non-controlling								Non-controlling
		Interests in				HSWI				Interests in
		Subsidiaries				Liability				Subsidiaries
Beginning balance		$	(49	)		$	(43	)		$	(49	)
Total gains (losses):
Included in net income			—				8				—
Included in other comprehensive income			—				—				—
Purchases, sales, issuances, settlements, net			—				—				—
Transfers (in) and/or out of Level 3			—				—				—
Ending balance		$	(49	)		$	(35	)		$	(49	)

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

		Nine Months Ended				Nine Months Ended
		September 30, 2009				September 30, 2008
		Redeemable								Redeemable
		Non-controlling								Non-controlling
		Interests in				HSWI				Interests in
		Subsidiaries				Liability				Subsidiaries
Beginning balance		$	(49	)		$	(54	)		$	(49	)
Total gains (losses):
Included in net income			—				19				—
Included in other comprehensive income			—				—				—
Purchases, sales, issuances, settlements, net			—				—				—
Transfers (in) and/or out of Level 3			—				—				—
Ending balance		$	(49	)		$	(35	)		$	(49	)

     Gains recognized for liabilities valued using significant unobservable inputs were reported as a component of Other non-operating income (expense), net in the Condensed Consolidated Statements of Operations.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

     The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, property and equipment, and equity method investments, are not required to be carried at fair value on a recurring basis but are subject to fair value adjustments only in certain circumstances. If certain triggering events occur such that a non-financial instrument is required to be evaluated for impairment, a resulting asset impairment would require that the non-financial instrument be recorded at the lower of historical cost or its fair value.

     In June 2009 certain intangible assets and capitalized software costs with carrying values of $40 million and $7 million, respectively, were written down to fair values of $17 million and $4 million, respectively, resulting in pretax charges totaling $26 million. A fair value measurement was required due to a decline in expected future operating results. The fair values were determined by the application of a DCF model and market based approach, which used Level 3 inputs. Cash flows were determined based on Company estimates of future operating results and discounted using an internal rate of return consistent with that used by the Company to evaluate cash flows of other assets of a similar nature. The market approach relied on public information related to certain financial measures. Additional information regarding the fair value measurements is disclosed in Note 7.

6. CONTENT RIGHTS

     The following table presents a summary of the components of content rights (in millions).

		September 30,				December 31,
		2009				2008
Produced content rights:
Completed		$	1,753			$	1,420
In-production			219				270
Co-produced content rights:
Completed			424				462
In-production			81				63
Licensed content rights:
Acquired			279				218
Prepaid			15				17
Content rights, at cost			2,771				2,450
Accumulated amortization			(1,470	)			(1,214	)
Content rights, net			1,301				1,236
Less: Current portion			76				73
Noncurrent portion		$	1,225			$	1,163

     For the three and nine months ended September 30, 2009, the Company recorded amortization expense related to content rights of

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

$179 million and $518 million, respectively. Amortization expense related to content rights was $178 million and $495 million for the three and nine months ended September 30, 2008, respectively. Amortization expense was recorded as a component of Costs of revenues in the Condensed Consolidated Statements of Operations. Amortization expense for the three and nine months ended September 30, 2009 included charges of $19 million and $45 million, respectively, related to the decision not to proceed with certain completed and in-process content at the Company’s U.S. Networks and International Networks segments. Amortization expense for the three and nine months ended September 30, 2008 included charges of $25 million and $40 million, respectively, related to the decision not to proceed with certain completed and in-process content at the Company’s U.S. Networks and International Networks segments. The charges were the result of management evaluating the Company’s programming portfolio assets and concluding that certain programming was no longer aligned with the Company’s strategy and would no longer be aired.

     The Company enters into collaborative co-produced content right arrangements (“co-productions”) whereby it obtains certain editorial and distribution rights to content assets in return for funding production costs. The Company’s level of involvement in co-productions ranges from review of the initial production plan to detailed editorial oversight through each stage of the production process. As the Company shares in the variable risks and rewards of content creation, these co-productions are within the scope of ASC 808.

     The Company capitalizes the net cost of co-productions and amortizes them in accordance with its content amortization policy. The Company’s policy is to record cash receipts for distribution, advertising and royalty revenue that result from the use of co-produced content as gross revenue in accordance with FASB ASC Topic 605, Revenue Recognition (“ASC 605”) as it relates to reporting revenue gross as a principal versus net as an agent. The Company generally does not allocate revenue to specific content rights, and there were no royalty revenues or expenses associated with co-production partners during the three and nine month periods ended September 30, 2009 and 2008. For the three and nine month periods ended September 30, 2009, participation costs of $29 million and $88 million were capitalized as part of co-production content, which included payments of $6 million and $20 million to a co-production partner that is consolidated. Participation costs of $27 million and $66 million were capitalized as a component of co-production content for the three and nine month periods ended September 30, 2008, respectively, which include payments of $7 million and $11 million to a consolidated co-production partner.

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill

     The following table presents a summary of the Company’s goodwill by reportable segment (in millions).

										Commerce,
		U. S.				International				Education,
		Networks				Networks				and Other				Total
Balance as of December 31, 2008		$	5,569			$	1,273			$	49			$	6,891
Disposition			(437	)			—				—				(437	)
Purchase accounting adjustment			(18	)			—				—				(18	)
Foreign currency translation adjustments			—				2				—				2
Balance as of September 30, 2009		$	5,114			$	1,275			$	49			$	6,438

     Goodwill decreased $453 million during the nine months ended September 30, 2009. The decrease was primarily attributable to the Discovery Kids disposition and an adjustment to the purchase price for the acquisition of HSW.

     As disclosed in Note 3, in May 2009 Discovery and Hasbro formed a joint venture that will operate a television network and website to deliver children’s and family entertainment and educational programming. In connection with the formation of the joint venture, the Company transferred Discovery Kids to the venture, which was previously a component of the Other U.S. Networks reporting unit. For its contribution, the Company received a 50% ownership interest in the joint venture and Hasbro acquired the remaining 50% ownership interest for $357 million. It was determined that Discovery Kids met the definition of a business under ASC 805 and, therefore, the Company allocated $437 million of the Other U.S. Networks reporting unit goodwill to Discovery Kids pursuant to ASC 350. The allocation of goodwill was based on the relative fair values of Discovery Kids and the portion of the Other U.S. Networks reporting unit that was retained.

     During the nine months ended September 30, 2009, the Company reversed a deferred tax liability for losses incurred for other than temporary declines during 2008 in the value of the equity investment in HSWI, which resulted in an $18 million reduction of goodwill.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Intangible Assets

     The following table presents a list of the gross carrying value of the Company’s intangible assets and related accumulated amortization by major category (in millions, except years).

		Weighted Average				September 30, 2009												December 31, 2008
		Amortization Period								Accumulated												Accumulated
		(Years)				Gross				Amortization				Net				Gross				Amortization				Net
Intangible assets subject to amortization:
Trademarks			6			$	33			$	(15	)		$	18			$	55			$	(23	)		$	32
Customer lists			25				528				(62	)			466				611				(107	)			504
Other			5				4				(2	)			2				36				(24	)			12
Total							565				(79	)			486				702				(154	)			548
Intangible assets not subject to amortization:
Trademarks							168				—				168				168				—				168
Total						$	733			$	(79	)		$	654			$	870			$	(154	)		$	716

     Intangible assets, net decreased $62 million during the nine months ended September 30, 2009 due primarily to amortization expense and noncash impairment charges. Excluding impairment charges, amortization expense related to intangible assets was $11 million and $20 million during the three months ended September 30, 2009 and 2008, respectively. During the nine months ended September 30, 2009 and 2008, amortization expense related to intangible assets, excluding impairment charges, was $39 million and $66 million, respectively.

     The following table presents the Company’s estimate of its aggregate annual amortization expense for intangible assets subject to amortization for the remainder of 2009 and each of the succeeding four years based on the amount of intangible assets as of September 30, 2009 (in millions).

		October 1, 2009 —
		December 31, 2009				2010				2011				2012				2013				Thereafter
Amortization expense		$	10			$	41			$	31			$	28			$	26			$	350

     The amount and timing of the estimated expenses in the above table may vary due to future acquisitions, dispositions, or impairments.

Impairments

     As disclosed in Note 3, Discovery sold a 50% interest in Discovery Kids, which was determined to be a business under ASC 805. As a result, the Company was required to allocate goodwill to Discovery Kids based on the relative fair values of Discovery Kids and the remaining portion of the Other U.S. Networks reporting unit. Additionally, the Company tested goodwill and long lived assets, including definite lived intangible assets, for impairment under ASC 350 and ASC 360, respectively, for the remaining portion of the Other U.S. Networks reporting unit as of June 30, 2009.

     The Company used the purchase consideration provided by Hasbro to determine the fair value of Discovery Kids. In determining the fair value of the portion of the reporting unit remaining, the Company used a DCF model and market based approach. The significant assumptions used in the DCF models to determine the fair value of the remaining components of the Other U.S. Networks reporting unit were generally consistent with those used during 2008, except that the expected cash flows of certain components declined causing long-term growth rates to increase slightly. The market approach relied on public information and involved the exercise of judgment in identifying the relevant comparable company market multiples. The Company multiplied certain financial measures of the Other U.S. Networks reporting unit by the market multiples identified in determining the estimated fair value. Based on a decline in expected future operating performance and market multiples for certain asset groups of the Other U.S. Networks reporting unit, the carrying values of certain definite lived intangible assets and capitalized software exceeded their fair values. Accordingly, the Company recorded impairment charges of $17 million and $3 million related to certain definite lived intangible assets and capitalized software, respectively, of the Other U.S. Networks reporting unit. Despite the decline in fair value of the definite lived intangible assets and capitalized software for certain asset groups, the overall fair value of the Other U.S. Networks reporting unit exceeded its carrying amount and, therefore, goodwill of the reporting unit was not impaired.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     In addition to the above tests, it was determined that the expected future operating performance for one of the asset groups in the Europe (excluding the United Kingdom), Middle East and Africa (“EMEA”) reporting unit was lower than expected. As a result, the Company tested long lived assets, including definite lived intangible assets, for impairment. The Company used a DCF model to estimate fair value. The DCF model utilized projected financial results, which were generally below those used during 2008. Based on the decline in expected future operating performance, it was determined that the carrying value of certain definite lived intangible assets exceeded their fair values. Accordingly, the Company recorded an impairment charge of $6 million at the EMEA reporting unit. Despite the decline in fair value of the definite lived intangible assets, the overall fair value of the EMEA reporting unit exceeded its carrying amount and, therefore, goodwill of the reporting unit was not impaired.

     Except for the interim impairment tests discussed above, no other interim impairment analyses of the Company’s goodwill or intangible assets have been required in 2009.

8. DEBT

     The following table presents the components of the Company’s outstanding debt by instrument type (in millions).

		September 30,				December 31,
		2009				2008
$1.6 billion Revolving Credit Facility, due October 2010		$	—			$	315
$1.0 billion Term Loan A, due quarterly December 2008 to October 2010			—				938
$1.5 billion Term Loan B, due quarterly September 2007 to May 2014			1,466				1,478
$500 million Term Loan C, due quarterly June 2009 to May 2014			498				—
7.45% Senior Notes, semi-annual interest, due September 2009			—				55
8.37% Senior Notes, semi-annual interest, due March 2011			220				220
8.13% Senior Notes, semi-annual interest, due September 2012			235				235
Floating Rate Senior Notes, semi-annual interest, due December 2012 (1.99% at September 30, 2009 and 3.3% at December 31, 2008)			90				90
6.01% Senior Notes, semi-annual interest, due December 2015			390				390
5.625% Senior Notes, semi-annual interest, due August 2019			500				—
Other notes payable			1				1
Capital lease obligations			125				67
Total long-term debt			3,525				3,789
Unamortized discount			(14	)			—
Long-term debt, net			3,511				3,789
Less: Current portion			39				458
Noncurrent portion		$	3,472			$	3,331

Term Loans

     On May 14, 2009, Discovery Communications Holding, LLC (“DCH”), a wholly-owned subsidiary of the Company, entered into Amendment No. 1 (the “Amendment”) to its Credit, Pledge and Security Agreement dated as of May 14, 2007 with Bank of America, N.A. (as administrative agent and a lender) and the other lenders named therein (“Term Loan B”). The Amendment revises Term Loan B to permit any indebtedness otherwise permitted to be incurred by any restricted subsidiary, as defined in Term Loan B, or DCH to contain restrictions similar to provisions in DCH’s and its subsidiaries’ existing credit facility and privately placed notes, subject to certain conditions. These provisions include restrictions on limitations on guarantees, liens and restricted payments. Term Loan B was further amended in order to eliminate DCH’s obligation to give existing lenders ten business days to commit to any additional term facility.

     On May 14, 2009, DCH entered into Credit Agreement Supplement No. 1 (“Term Loan C”) to its Term Loan B with Bank of America N.A. (as administrative agent and lender). Pursuant to Term Loan C, DCH incurred $500 million of indebtedness, which matures on May 14, 2014. DCH received net proceeds of $478 million from the borrowing after deducting issuance expenses of $12 million recorded as a discount and $10 million of expenses recorded as deferred financing costs. DCH used the net proceeds of the borrowing to repay $163 million and $315 million of indebtedness outstanding under DCL’s Term Loan A and the revolving credit facility, respectively.

     The Term Loan C indebtedness is repayable in equal quarterly installments of $1.25 million beginning June 30, 2009 through

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

March 31, 2014, with the balance due on the maturity date. Term Loan C bears interest at an initial rate of LIBOR plus an applicable margin of 3.25%, with a LIBOR floor of 2.00%, which was 5.25% at September 30, 2009. From May 14, 2009 through September 30, 2009, the weighted average effective interest rate for Term Loan C was 6.03%.

     Term Loan C contains customary representations and warranties, events of default, affirmative covenants and negative covenants (which impose restrictions and limitations on, among other things, dividends, investments, additional indebtedness, asset sales and capital expenditures) and a total leverage ratio financial maintenance covenant, each of which are identical to Term Loan B. DCH is permitted to prepay Term Loan C in whole or in part at any time at its option with prior notice with no prepayment penalty.

     The events of default under Term Loan C are identical to those under Term Loan B. Discovery’s $1.5 billion Term Loan B and $500 million Term Loan C are each secured by the assets of DCH, excluding assets held by DCH’s subsidiaries.

Senior Notes

     On August 19, 2009, Discovery Communications, LLC (“DCL”), a wholly-owned subsidiary of the Company, issued $500 million aggregate principal amount of 5.625% Senior Notes maturing on August 15, 2019 (the “August 2019 Notes”). The August 2019 Notes were issued in an underwritten public offering at a price of 99.428% of the principal amount. DCL received net proceeds of $492 million from the offering after deducting the issuance discount of $3 million and issuance expenses of $5 million recorded as deferred financing costs. DCL used the net proceeds of the offering to repay $428 million of indebtedness outstanding under its Term Loan A, prior to final maturity on October 31, 2010. The remaining proceeds will be used for general corporate purposes.

     DCL may, at its option, redeem some or all of the August 2019 Notes at any time by paying a make-whole premium, plus accrued and unpaid interest, if any, to the date of repurchase. Interest on the August 2019 Notes is payable on August 15 and February 15 of each year, beginning on February 15, 2010. The August 2019 Notes are unsecured and rank equally in right of payment with all of DCL’s other unsecured senior indebtedness. The August 2019 Notes are fully and unconditionally guaranteed on an unsecured and unsubordinated basis by Discovery.

     The August 2019 Notes were issued pursuant to an indenture and a supplemental indenture, dated as of August 19, 2009, among DCL, Discovery and U.S. Bank National Association, as trustee. The indenture and supplemental indenture contain certain covenants and events of default and other customary provisions.

Debt Payments

     The following table presents a summary of scheduled and estimated debt payments, excluding capital lease obligations and other notes payable, for the remainder of 2009 and each of the succeeding four years based on the amount of debt outstanding as of September 30, 2009 (in millions).

		October 1, 2009 —
		December 31, 2009				2010				2011				2012				2013				Thereafter
Long-term debt payments		$	5			$	20			$	240			$	345			$	20			$	2,769

Covenants

     The term loans, revolving loan, and senior notes contain covenants that require the Company to meet certain financial ratios and place restrictions on the payment of dividends, sale of assets, borrowing level, mergers, and purchases of capital stock, assets, and investments. The Company was compliant with all debt covenants as of September 30, 2009 and December 31, 2008.

Fair Value of Debt

     The fair value of the Company’s borrowings was $3.6 billion and $3.4 billion at September 30, 2009 and December 31, 2008, respectively, which was estimated based on current market rates and credit pricing for similar debt types and maturities.

9. DERIVATIVE FINANCIAL INSTRUMENTS

     The Company uses derivative financial instruments principally to modify its exposure to market risks from changes in interest rates. The Company does not hold or enter into financial instruments for speculative trading purposes.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     The Company’s interest expense is exposed to movements in short-term interest rates. Derivative instruments, including both fixed to variable and variable to fixed interest rate swaps, are used to modify this exposure. The majority of the Company’s debt is variable rate and the Company uses derivatives to effectively fix the amount of interest paid. The variable to fixed interest rate instruments are based on the three-month LIBOR rate and have a total notional amount of $2.2 billion and a weighted average interest rate of 4.68% at September 30, 2009. The fixed to variable interest rate agreements have a total notional amount of $50 million and a weighted average interest rate of 4.67% at September 30, 2009. In addition, the Company has forward starting variable to fixed interest rate instruments with a total notional amount of $860 million and a weighted average interest rate of 2.60% at September 30, 2009, of which a notional amount of $560 million will become effective in December 2009 and a notional amount of $300 million will become effective in June 2010.

     During the nine months ended September 30, 2009, the Company has entered into forward starting interest rate swaps with a total notional amount of $300 million, starting June 30, 2010 and maturing on March 31, 2014. The swaps have a weighted average fixed pay rate of 2.90%, and the Company is required to make payments at the three-month LIBOR rate. During the nine months ended September 30, 2009, the Company has terminated interest rate swaps with a total notional amount of $75 million and a net fair value in a loss position of $1 million.

     Of the Company’s total notional amount of $3.1 billion in interest rate derivatives, a notional amount of $2.3 billion of these derivative instruments are highly effective cash flow hedges as of September 30, 2009. The change in the fair value of derivatives designated as hedging instruments is reported as a component of Accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets. Should any portion of these instruments become ineffective due to a restructuring in the Company’s debt, the cumulative fair value, which is currently a net loss of $35 million, would be reclassified from Accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets to Other non-operating income (expense), net on the Condensed Consolidated Statements of Operations. In addition, subsequent monthly changes in fair value would be reported as a component of Other non-operating income (expense), net on the Condensed Consolidated Statements of Operations. The Company does not expect material hedge ineffectiveness in the next twelve months. The remaining $810 million in interest rate derivatives have not been designated for hedge accounting under ASC 815. The change in the fair value of derivatives not designated as hedging instruments is reported as a component of Other non-operating income (expense), net on the Condensed Consolidated Statements of Operations. The Company presents all derivative fair values on a gross basis on the Condensed Consolidated Balance Sheets.

     The foreign exchange instruments used to hedge foreign currency fluctuations for the Company’s non-U.S. operations are spot, forward, and option contracts. Additionally, the Company enters into non-designated forward contracts to hedge non-dollar denominated cash flows and foreign currency balances. At September 30, 2009, the notional amount of foreign exchange derivative contracts was $1 million. These derivative instruments have not been designated for hedge accounting under ASC 815.

     The following tables present the notional amount and fair value of the Company’s derivatives as of September 30, 2009 (in millions).

				Asset Derivatives
		Balance Sheet Location		Notional				Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts		Other noncurrent assets		$	610			$	3
Derivatives not designated as hedging instruments:
Interest rate contracts		Other noncurrent assets			50				3
Total asset derivatives				$	660			$	6

				Liability Derivatives
		Balance Sheet Location		Notional				Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts		Other current liabilities		$	1,460			$	38
Interest rate contracts		Other noncurrent liabilities			250				—
Total					1,710				38
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Other current liabilities			1				—
Interest rate contracts		Other current liabilities			385				5
Interest rate contracts		Other noncurrent liabilities			375				20
Total					761				25
Total liability derivatives				$	2,471			$	63

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

     The following table presents the impact of derivative instruments on the Condensed Consolidated Statement of Operations for the Company’s derivatives in cash flow hedging relationships, all of which are interest rate contracts, for the three and nine months ended September 30, 2009 (in millions).

		Three Months Ended				Nine Months Ended
		September 30, 2009				September 30, 2009
Amount recognized in Other comprehensive (loss) income, gross of tax		$	(22	)		$	(5	)
Amount reclassified from Accumulated other comprehensive loss into Interest expense, net		$	(15	)		$	(40	)
Amount excluded from effectiveness testing and recorded as Other non-operating income (expense), net		$	(1	)		$	(1	)

     Gain (loss) from changes in fair values of derivatives that are not designated as hedges are recognized as a component of Other non-operating income (expense), net. The following table presents the impact of derivative instruments not designated as hedging instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2009 (in millions).

		Three Months Ended				Nine Months Ended
		September 30, 2009				September 30, 2009
Interest rate contracts		$	5			$	14
Foreign exchange contracts			—				—
Total		$	5			$	14

Credit-Risk Related Contingencies

     Certain of the Company’s derivative instruments contain credit-risk related contingent features, such as requirements that the Company comply with its credit agreements and cross-default provisions under which the Company will be in default upon the occurrence of certain cross-default events, such as failure to make payments when due in respect to any indebtedness exceeding certain threshold amounts. If the Company were to trigger any of these provisions, the derivative contracts would be in default and the counterparties could request immediate settlement on all of their outstanding derivative contracts with the Company. As of September 30, 2009, the aggregate fair value of all derivative instruments with credit-risk related contingent features that are in a liability position was $63 million.

10. REDEEMABLE NON-CONTROLLING INTERESTS IN SUBSIDIARIES

People+Arts Latin America and Animal Planet Channel Group

     As disclosed in Note 3, Discovery and the BBC have formed several cable and satellite television network joint ventures to develop and distribute programming content. Under certain terms outlined in the contract, the BBC has the right every three years, commencing December 31, 2002, to put to the Company its interests in (i) People+Arts Latin America, and/or (ii) certain Animal Planet channels outside of the U.S. (the “Channel Groups”), in each case for a value determined by a specified formula. In January 2009, the BBC requested that a determination be made whether such conditions have occurred with respect to both Channel Groups as of December 31, 2008. The contractual redemption value is based upon the exercise of the BBC put right and an estimate of the proceeds from a hypothetical sale of the Channel Groups and a distribution of the proceeds to the venture partners based on various rights and preferences. As the Company has funded all operations from inception of the ventures through December 31, 2008, the Company believes that it has accumulated rights and preferences in excess of the fair market value of the Channel Groups. However, due to the complexities of the redemption formula, the Company has accrued the non-controlling redeemable interests to an estimated negotiated value of $49 million as of both September 30, 2009 and December 31, 2008. Changes in the assumptions used to estimate the redemption value could materially impact current estimates. The Company recorded no accretion to the redemption value during the three and nine months ended September 30, 2009 and 2008.

     The Company and the BBC are currently discussing potential revisions to all of their contractual relationships, including the ownership interests in the Channel Groups. While there can be no assurance that these or other negotiations would result in an definitive agreement, the Company expects that the cost of a negotiated acquisition of the BBC’s interests in the Channel Groups could substantially exceed the value of the put right described above.

DISCOVERY COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

OWN Network

     As disclosed in Note 3, Discovery and Harpo formed a venture to rebrand Discovery Health Channel as OWN: The Oprah Winfrey Network. Pursuant to the venture agreement, Discovery provided a put right to Harpo which is exercisable on four separate put exercise dates within 12.5 years of the venture’s formation date. The put arrangement provides Harpo with the right to require Discovery to purchase its 50% ownership interest at fair market value up to a maximum put amount. The maximum put amount ranges between $100 million on the first put exercise date up to $400 million on the fourth put exercise date. As of September 30, 2009, no amounts have been recorded for this put right as the Company has not yet contributed its interest in Discovery Health Channel and Harpo has not yet contributed the Oprah.com website to the OWN Network venture.

11. OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the tax effects related to each component of Other comprehensive income (loss) (in millions).

		Three Months Ended												Three Months Ended
		September 30, 2009												September 30, 2008
		Before-tax								Net-of-tax				Before-tax				Tax Benefit				Net-of-tax
		Amount				Tax Benefit				Amount				Amount				(Expense)				Amount
Foreign currency translation adjustments		$	(7	)		$	2			$	(5	)		$	(23	)		$	9			$	(14	)
Unrealized (losses) gains on securities and derivative instruments, net			(7	)			2				(5	)			5				(3	)			2
Other comprehensive (loss) income		$	(14	)		$	4			$	(10	)		$	(18	)		$	6			$	(12	)

		Nine Months Ended												Nine Months Ended
		September 30, 2009												September 30, 2008
		Before-tax								Net-of-tax				Before-tax				Tax Benefit				Net-of-tax
		Amount				Tax Benefit				Amount				Amount				(Expense)				Amount
Foreign currency translation adjustments		$	38			$	(14	)		$	24			$	(17	)		$	7			$	(10	)
Unrealized gains (losses) on securities and derivative instruments, net			30				(11	)			19				3				(2	)			1
Other comprehensive income (loss)		$	68			$	(25	)		$	43			$	(14	)		$	5			$	(9	)