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As filed with the Securities and Exchange Commission on January 28, 2008.

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Current Media, LLC
to be converted as described herein to
a corporation named

Current Media, Inc.
(Exact name of Registrant as specified in its charter)

Delaware		4841		26-1763473
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

118 King Street
San Francisco, California 94107
(415) 995-8200
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

Joel Hyatt
Chief Executive Officer
Current Media, Inc.
118 King Street
San Francisco, California 94107
(415) 995-8200
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Robert V. Gunderson, Jr., Esq.
Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
(650) 321-2400

Martin A. Wellington, Esq.
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, California 94025
(650) 752-2000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Proposed maximum aggregate offering price(1)(2)	Amount of registration fee


Class A common stock, $0.001 par value per share	$100,000,000.00	$3,930.00

(1): Includes offering price of shares issuable upon exercise of the underwriters' over-allotment option.
(2): Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) of the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Subject to completion, dated January 28, 2008

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Prospectus

shares

Class A common stock

This is an initial public offering of shares of Class A common stock by Current Media, Inc. Current is selling shares of Class A common stock. The estimated initial offering price is between $ and $ per share.

We will apply to list our Class A common stock on the Nasdaq Global Market under the symbol CRTM.


		Per share		Total

Initial public offering price	$		$
Underwriting discounts and commissions	$		$
Proceeds to Current, before expenses	$		$

We have granted the underwriters an option for a period of 30 days to purchase up to additional shares of Class A common stock.

Investing in our Class A common stock involves a high degree of risk. See "Risk factors" beginning on page 10.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

JPMorgan		Lehman Brothers
*Sole bookrunner*		*Joint lead manager*

Pacific Crest Securities

, 2008

Table of contents

		Page
Prospectus summary		1
Risk factors		10
Forward-looking statements and industry data		30
Use of proceeds		32
Dividend policy		33
Capitalization		34
Dilution		37
Selected consolidated financial data		39
Management's discussion and analysis of financial condition and results of operations		42
Business		68
Management		85
Related party transactions		101
Principal stockholders		104
Description of capital stock		107
Material U.S. federal tax consequences for non-U.S. holders		113
Shares eligible for future sale		115
Underwriting		118
Legal matters		122
Experts		122
Where you can find more information		122
Index to consolidated financial statements		F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by or on behalf of us. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Class A common stock.

No action is being taken in any jurisdiction outside the United States to permit a public offering of the Class A common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to that jurisdiction.

Until , 2008, all dealers that buy, sell or trade in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Prospectus summary

The following summary should be read together with the more detailed information and consolidated financial statements, financial statement schedule and notes to our consolidated financial statements appearing elsewhere in this prospectus. This summary highlights what we believe is the most important information about us and this offering. Before you decide to invest in our Class A common stock, you should read the entire prospectus carefully, including the risk factors. We will convert from a limited liability company to a corporation immediately prior to the closing of this offering. Unless the context otherwise requires, (i) this prospectus gives effect to the conversion as of December 31, 2007 and (ii) references to "Current," "Current Media," "we," "us" and "our" refer to Current Media, LLC, a Delaware limited liability company, and its subsidiaries before the conversion and Current Media, Inc., a Delaware corporation, and its subsidiaries after the conversion.

Current Media overview

Current is a global participatory media company with the goal of democratizing media by engaging, informing and enriching our young adult audience and encouraging their participation across platforms. We operate a television network, Current TV, and a website, Current.com, that distribute viewer-created content as well as internally developed and acquired content that is relevant to the lives of young adults. We believe the combination of our television and Internet platforms creates an immersive and interactive viewer experience for our growing global audience, where the audience participates in both the creation and selection of the content it engages with on both Current TV and Current.com.

Our Emmy-award winning network, Current TV, was launched in August 2005 and is among the fastest growing networks in the history of cable television in terms of subscriber household distribution. Cable television is one of the largest and most established media segments, and Current TV is one of the leading cable networks that provides news, information and lifestyle entertainment to young adults in their own voice and from their own perspective. We utilize an innovative workflow that allows us to cost effectively create, acquire and program short-form video segments focused on topics relevant to young adults, with close to one-third of our content coming from our viewers. Leveraging this programming platform, we have pioneered innovative ways for blue-chip advertisers to reach and engage with our young adult audience, an audience that is highly sought after and, we believe, increasingly elusive in traditional media outlets.

Our primary sources of revenue are affiliate fees and advertising. Affiliate fees are derived from long-term distribution agreements with cable, satellite and telecommunications operators who pay us a monthly fee for each subscriber household that receives Current TV. In the United States, our affiliate customers include DirecTV, Comcast, EchoStar, Time Warner and AT&T. In the United Kingdom and Ireland, our affiliate customers include British Sky Broadcasting, or BSkyB, and Virgin Media. In the Spring of 2008, we expect to launch in Italy on Sky Italia. Advertising revenue is derived from advertisers who pay for sponsorships and spot advertisements. Selected advertising customers include Toyota, T-Mobile, Johnson & Johnson, General Electric, Geico and L'Oreal.

Current TV was launched in August 2005 in approximately 19 million subscriber households in the United States and is now available in approximately 51 million subscriber households in the

United States, the United Kingdom and Ireland. In 2006 and 2007, we recorded revenue of $37.9 million and $63.8 million, respectively. As we have strategically invested in our business, our operating expenses have also increased. Our operating losses were $4.8 million in 2006 and $6.1 million in 2007.

Industry background

The ways in which young adults consume media and engage with news, information and lifestyle content are undergoing profound changes. We believe the dynamic preferences and consumption patterns of young adults are not being adequately addressed by traditional media outlets. At the same time, technology is transforming the way media is created, expanding the universe of content creators, altering the cost structure of content production and distribution, and enabling delivery across multiple platforms. The packaging and programming of content is also evolving, enabling new means of distribution capable of rapidly adapting to changing consumer preferences. As the way young adults engage with news, information and lifestyle content changes, it presents new challenges to networks and advertisers who target the 18-34 year-old audience demographic. These challenges include:

•: Evolution in the media preferences and consumption patterns of young adults. Young adults want to engage with programming related to news, information and lifestyle, but their consumption patterns have evolved faster than traditional television programming, leaving their needs underserved.
•: Changes in media programming and production. Digital media tools enable scalable production with relatively low overhead, open systems and small teams, which has changed the way content can be processed, organized and delivered.
•: Evolution in content creation. Changes in the means and cost structure of content production and distribution have significantly expanded the universe of potential content creators. As a result, programming can be a conversation between viewers and a network, offering freedom from one-way communication and resulting in unprecedented engagement and participation.
•: Changes in advertising models that drive the media industry. Advertisers devote the largest portion of their media spending to television. However, the traditional TV advertising model is becoming less effective with young adults, who are changing their viewing patterns and often skipping traditional 30-second commercials.

Market opportunity

We believe there is a significant gap between what is being delivered by traditional sources of TV and what is demanded by young adults. Young adults need and want news and information about what is going on in their world; however, they have not had a news and information source on TV that speaks to them. Young adults increasingly are turning to other platforms, especially the Internet, for news and information.

who target them for a media platform that engages 18-34 year-olds in their own voices and from their own perspectives, and whose content is defined by what is most important in their lives: from pop culture to politics, careers to relationships.

We believe a participatory media platform that unleashes the creativity of young adults by allowing them to contribute to the creation and selection of the content they consume provides a compelling way to capture this opportunity. User-generated content and participation in programming selection form a connection between the audience and a network that is not possible using one-way communication.

Current's pioneering approach

Current was founded with the goal of cost-effectively engaging young adults with news, entertainment and lifestyle programming centered around what is going on in their world. We recognized that to reach young adults it was necessary to reach them via television, where they spend a lot of time and where there is a proven business model, as well as on the Internet, a medium where they are also very active. To do this, we launched a television channel, Current TV, and more recently a website, Current.com. The two serve as distinct consumer destinations, but they are also symbiotic and form a combined platform with which Current engages its audience. Key aspects of our solution include:

•: Current's new network model. Our focus on user-generated content provides a unique connection with our young adult audience. We engage young adults by telling stories in their voices and from their perspectives. We have redefined the scope of "news" for young adults, and broadened our programming to include an array of subjects that are important to our audience.
•: Current's programming. Current has developed a programming model built on several unique content offerings, all designed to reflect the tastes and lifestyles of our target 18-34 year-old audience. Our programming is presented in short segments that we call "pods," which are typically 2-10 minutes in length, rather than traditional half-hour or hour-long programming blocks.
•: Current's innovative advertising solution. Our advertising model is designed to appeal to the lifestyles, tastes and needs of young adults. A key solution that we provide advertisers is the ability to let our young adult viewers create commercials that we then air on Current TV. In addition to these viewer created ad messages, or VCAMs, we offer other attractive sponsorship solutions, in which advertisements are integrated with and embedded into our content, providing advertisers a marketing forum that is free from ad-skipping.
•: Current's all digital broadcast facility. Our TV broadcast facilities are built on an open IP architecture as opposed to traditional broadcast television legacy systems. Unlike high-cost production facilities at traditional cable networks, we have deployed a new, all-digital infrastructure that allows us to produce, acquire and distribute high quality content at a low cost.
•: Current.com. Current.com serves several purposes: it is a news, information and entertainment source for young adults online; it is a real-time connection to programming on Current TV; and it is a platform for collaborative media production. At its core, Current.com is a social news feed that, like Current TV, is generated in large part by our

audience and curated by us. Current.com is integrally linked to Current TV, enabling an innovative two-screen experience.

Current's strengths

We believe Current has significant competitive strengths, which include the following:

•: distribution with leading cable, satellite and telecommunications operators in the United States and internationally;
•: significant traction among our target audience;
•: new advertising models for engaging viewers and blue-chip advertisers;
•: high-quality content;
•: pioneer and leader in user-generated content with the demonstrated ability to cost-effectively develop, produce and acquire innovative programming;
•: global archive of short-form digital content;
•: experienced team;
•: strong brand; and
•: state-of-the-art infrastructure.

Current's growth strategy

Our objective is to become the preeminent global media source for young adults across major communications platforms. We seek to accomplish this goal by focusing on the following key strategic areas:

•: expanding our distribution in the United States;
•: developing and expanding our advertising business;
•: growing our international footprint;
•: building traffic on and monetizing Current.com;
•: expanding to additional platforms;
•: continuing to pursue strategic relationships with innovative, pioneering brands; and
•: pursuing strategic acquisitions.

Risks affecting us

We are subject to a number of risks that you should be aware of before you buy our Class A common stock. These risks are discussed in "Risk factors."

Corporate information and conversion

We were formed as a limited liability company in Delaware in September 2002 named INdTV, LLC. Prior to May 2004, we devoted substantially all of our efforts to business planning, product development, recruiting management and raising capital. On May 4, 2004, we purchased Newsworld International, or NWI, a traditional cable and satellite network. This

acquisition enabled us to gain access to cable and satellite distribution as an independent network. In connection with our acquisition of NWI, we changed our name to INdTV Holdings, LLC and concurrently formed a wholly owned subsidiary INdTV, LLC, a Delaware limited liability company, and transferred all of our operations to INdTV, LLC. Since that time, we have had no operations because all operations are conducted by our subsidiaries. On April 4, 2005, we changed the name of INdTV Holdings, LLC to Current Media, LLC and INdTV, LLC to Current TV, LLC. On August 1, 2005, we terminated NWI's existing programming and launched Current TV in the United States.

Prior to the completion of this offering, we will convert from a limited liability company to a Delaware corporation and change our name to Current Media, Inc., which we refer to as the "Conversion." In the Conversion, each of our limited liability company interests currently denominated as Series A convertible preferred shares and non-voting common shares will be converted into shares of our Class A common stock, and each of our limited liability company interests currently denominated as voting common shares will be converted into shares of our Class B common stock. Upon completion of the Conversion, but prior to the completion of the offering contemplated by this prospectus, we will have outstanding shares of Class A common stock and shares of Class B common stock, assuming an initial public offering price of $ per share. The Class B common stock is identical to the Class A common stock, except that the Class B common stock has ten votes per share and the Class A common stock has one vote per share. After this offering, all of our Class B common stock will be held by our founders, Al Gore and Joel Hyatt, and their families. Unless otherwise noted in this prospectus, we refer to the ownership interests of the limited liability company as "shares," and the capital stock of the corporation as "stock"; provided, however, that all references to "shares" or "stock" in the consolidated financial statements and notes thereto refer to the ownership interests of the limited liability company. Unless otherwise noted in this prospectus, all references to "common stock" refer to our Class A common stock and Class B common stock.

The Series A convertible preferred shares of the limited liability company will be converted into that number of shares of Class A common stock having an aggregate value, measured at the public offering price, equal to the unreturned capital, which amount is $75.0 million, plus the unpaid preferred return, which represents an 8% return per annum, compounded annually, on the unreturned capital since the date of issuance of the Series A convertible preferred shares, or $22.7 million as of December 31, 2007. For purposes of this prospectus, we have assumed that the unreturned capital and the unpaid preferred return described in the preceding sentence convert into Class A common stock of the corporation at the assumed initial public offering price of $ per share, the mid-point of the range reflected on the cover page of this prospectus. Thereafter, the Series A convertible preferred shares, the non-voting common shares and the voting common shares of the limited liability company will receive their pro rata interest (based on share interests held in the limited liability company) of the remaining equity securities of the corporation before the completion of the public offering contemplated by this prospectus. Assuming the Conversion occurred on December 31, 2007, (i) the Series A convertible preferred shares of the limited liability company would be converted into an aggregate of shares of Class A common stock of the corporation, (ii) the non-voting common shares of the limited liability company would be converted into an aggregate of shares of Class A common stock of the corporation, and (iii) the voting common shares of the limited liability company would be converted into an aggregate of shares of Class B common stock of the corporation, assuming an initial public offering price of $

per share, the mid-point of the range reflected on the cover page of this prospectus. Unless otherwise noted in this prospectus, all numbers of outstanding shares of Class A common stock or Class B common stock disclosed in this prospectus assume the foregoing conversion rates. Any increase or decrease in the assumed initial public offering price will decrease or increase, as applicable, the number of shares of Class A common stock issuable upon conversion of the Series A convertible preferred shares and increase or decrease, as applicable, the number of shares of Class A common stock and Class B common stock issuable upon conversion of the non-voting common shares and voting common shares, respectively.

Our principal executive offices are located at 118 King Street, San Francisco, California 94025. Our telephone number is (415) 995-8200. Our website address is www.current.com. Information contained on or accessible through our website is not incorporated by reference into this prospectus, and you should not consider information contained on or accessible through our website to be part of this prospectus or in deciding whether to purchase our Class A common stock.

Trademarks

"Current" and the Current logo are trademarks of Current. Other Current trademarks used in this prospectus include "VC²" and "VCAM." This prospectus contains additional trade names, trademarks and service marks of ours and of other companies.

The offering

Class A common stock offered by Current		shares
Over-allotment option		shares
Class A common stock to be outstanding after this offering		shares
Class B common stock to be outstanding after this offering		shares
Total common stock to be outstanding after this offering		shares
Use of proceeds		We intend to use the net proceeds from this offering to repay all of our outstanding indebtedness and accrued interest, which was $36.5 million at December 31, 2007. We intend to use the remaining net proceeds of this offering for working capital and general corporate purposes. See "Use of proceeds."
Proposed symbol on the NASDAQ Global Market		CRTM

The number of shares of our Class A common stock to be outstanding after this offering is based on shares of our Class A common stock outstanding as of December 31, 2007. The number of shares of our Class B common stock to be outstanding after this offering is based on shares of our Class B common stock outstanding as of December 31, 2007. The number of shares of Class A common stock outstanding prior to this offering includes shares held by employees that are unvested and subject to vesting based on continued service and shares held by a distributor that are subject to forfeiture depending on the achievement of future performance objectives. The number of shares of Class A common stock outstanding prior to this offering excludes up to shares that may be earned by a distributor based on the achievement of future performance objectives.

Unless otherwise indicated, this prospectus reflects and assumes the following:

•: the Conversion had occurred on December 31, 2007;
•: the filing of our restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior to the closing of this offering; and
•: no exercise of the underwriters' over-allotment option.

Summary consolidated financial information

The following summary consolidated financial data should be read together with our consolidated financial statements, financial statement schedule, notes to our consolidated financial statements and "Management's discussion and analysis of financial condition and results of operations" appearing elsewhere in this prospectus. The summary consolidated financial data for 2005, 2006 and 2007 and at December 31, 2007 are derived from our audited consolidated financial statements, which are included elsewhere in this prospectus. The pro forma balance sheet data are unaudited and reflect the balance sheet data at December 31, 2007, as adjusted to give effect to the conversion of all outstanding shares in the limited liability company into stock of the corporation and to account for income taxes as if we were a tax paying entity since our inception. The pro forma as adjusted balance sheet data are unaudited and reflect the balance sheet data at December 31, 2007 after giving effect to the adjustments described above and as adjusted for the sale by us of shares of our Class A common stock in this offering at an assumed initial offering price to the public of $ per share, after deducting the estimated underwriting discounts, commissions and offering expenses payable by us and the application of the net proceeds of this offering as set forth in "Use of proceeds." The pro forma net loss per common share, basic and diluted data are unaudited and give effect to the conversion of all outstanding shares in the limited liability company into stock of the corporation, include adjustments to eliminate the accumulated preferred return and account for income taxes as if we were a tax-paying entity since our inception for the periods indicated pursuant to the Conversion. See "Prospectus summary—Corporate information and conversion."

On May 4, 2004, we acquired Newsworld International, or NWI, from Vivendi Universal, and we continued to air NWI's programming until we launched Current TV on August 1, 2005. NWI is a predecessor to Current. However, because our programming changed so dramatically with the launch of Current TV, we effectively began to operate a new business. As a result, we do not believe that our results of operations before August 1, 2005 are comparable to our results of operations after August 1, 2005.

		Year ended December 31,

(in thousands, except per share data)		2005			2006			2007

Consolidated statements of operations data:
Revenue:
	Affiliate (net of non-cash reduction to revenue of $116, $523 and $1,413 in 2005, 2006 and 2007, respectively)(1)	$	23,362		$	29,904		$	53,849
	Advertising		1,014			7,979			9,916

Total revenue			24,376			37,883			63,765
Operating expenses:
	Programming and production(2)		17,532			21,985			31,382
	Sales and marketing(2)		6,995			6,224			15,040
	Product development(2)		3,555			3,602			6,529
	General and administrative(2)		5,238			6,403			10,879
	Depreciation and amortization		2,971			4,460			6,022

Total operating expenses			36,291			42,674			69,852

Loss from operations			(11,915	)		(4,791	)		(6,087	)
Interest expense			(2,726	)		(3,445	)		(4,077	)
Other income			388			598			496

Loss before provision for income taxes			(14,253	)		(7,638	)		(9,668	)
Provision for income taxes			—			—			(192	)
Net loss		$	(14,253	)	$	(7,638	)	$	(9,860	)

	Preferred return		(5,553	)		(6,706	)		(7,234	)

Net loss attributable to common shareholders		$	(19,806	)	$	(14,344	)	$	(17,094	)

Net loss per common share, basic and diluted		$	(2.84	)	$	(1.34	)	$	(1.40	)
Shares used in computing net loss per common share, basic and diluted			6,980			10,666			12,214
Pro forma income tax expense (unaudited)(3)								$	(1,701	)
Pro forma net loss (unaudited)(3)								$	(11,561	)
Pro forma net loss per common share, basic and diluted (unaudited)(3)								$	(0.59	)
Shares used in computing pro forma net loss per common share, basic and diluted (unaudited)(3)									19,714

December 31, 2007 (in thousands)	Actual			Pro forma(3)


Consolidated balance sheet data:
Cash and cash equivalents	$	2,231		$	2,231
Working capital (deficit)		(26,122	)		(26,518	)
Total assets		98,435			98,435
Current and long-term debt		36,109			36,109
Series A convertible preferred shares		74,259			—
Members' deficit		(20,792	)		N/A
Stockholders' equity		N/A			47,934

(1): Affiliate revenue is recorded net of stock-based compensation to certain of our distributors, which is accounted for as a reduction to revenue. See note 3 to our consolidated financial statements.
(2): Effective January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payments, which had no material impact on the consolidated financial statements. The consolidated statement of operations data above includes stock-based compensation to employees and directors as follows:

	Year ended December 31,

(in thousands)	2005		2006		2007

Programming and production	$	54	$	177	$	272
Sales and marketing		54		374		89
Product development		25		141		228
General and administrative		85		168		425

(3): Refer to notes 3 and 14 to our consolidated financial statements for a description of how we compute pro forma income tax expense, pro forma net loss, pro forma net loss per common share, basic and diluted and pro forma balance sheet items.
(4): Each $1.00 increase or decrease in the assumed initial public offering price per share would increase or decrease, as applicable, our pro forma as adjusted cash and cash equivalents, working capital, total assets and stockholders' equity by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and offering expenses payable by us.

Risk factors

Before you decide to invest in our Class A common stock, you should consider carefully the risks described below, together with the other information contained in this prospectus. We believe the risks described below are the risks that are material to us as of the date of this prospectus. If any of the following risks comes to fruition, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our Class A common stock could decline, and you may lose all or part of your investment.

Risks related to our business and industry

Our limited operating history makes it difficult to evaluate our future prospects.

We were founded in September 2002 and have a limited operating history. We launched Current TV in the United States in August 2005 and in the United Kingdom and Ireland in March 2007, and we launched Current.com in October 2007. We operate in an industry dominated by large and established companies. Our limited operating history makes evaluation of our future prospects very difficult. We will encounter risks and difficulties frequently encountered by companies with limited operating histories. If we are not successful in addressing these risks, our business, operating results and financial condition will be seriously harmed.

We have a history of losses since launching Current TV. We expect to continue to incur losses in the future, and we may not achieve or sustain profitability.

We have a history of losses since launching Current TV. We experienced net losses of $14.3 million, $7.6 million and $9.9 million in 2005, 2006 and 2007, respectively. As of December 31, 2007, we had an accumulated deficit of $31.9 million. These losses and accumulated deficit were due to the substantial investments we made to establish and grow our business, including the acquisition of NWI and the development of Current TV and Current.com. We expect to continue to incur net losses in the future. In particular, we expect our costs and expenses to continue to increase as we implement initiatives to continue to grow our business. We also expect to incur additional general and administrative expenses associated with being a public company. In addition, in the quarter that we complete this offering we expect to incur a one-time, non-cash charge to operations to record a deferred tax liability for financial accounting purposes in connection with our conversion into a corporation, the amount of which would have been approximately $5.5 million at December 31, 2007. If our revenue does not increase to offset these expected increases in costs and expenses, we will not be able to achieve or sustain profitability. You should not consider our revenue growth in recent periods as indicative of our future performance. Accordingly, we cannot assure you that we will be able to achieve or maintain profitability in the future.

We may experience significant fluctuations in our operating results due to a number of factors, which make our future operating results difficult to predict and could cause our operating results to fall below expectations.

Our operating results may fluctuate significantly due to a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future

performance. If our operating results fall below the expectations of investors or securities analysts or below the guidance, if any, we provide to the market, the price of our Class A common stock could decline very substantially.

Factors that may affect our operating results include:

•: changes in the level of our advertising revenue due to the loss of major advertisers, reductions in advertisers' budgets and delays in sales resulting from our failure to complete sales during advertisers' annual purchasing cycles or other factors;
•: changes in our advertising rates as a result of low TV ratings, limited acceptance of our advertising model, increased competition, adverse economic conditions or other factors;
•: our ability to enter into new distribution agreements that would result in the delivery of our programming to additional subscriber households in the United States and internationally;
•: our loss of any distribution agreement or the failure of our existing distributors to maintain or increase the number of their subscriber households;
•: changes in our affiliate revenue as a result of declines in the number of subscriber households, the loss of distributors or the impact of variable accounting for equity awards to distributors;
•: our ability to attract and retain viewers of Current TV and users of Current.com;
•: changes in the costs we incur to support user-generated content and changes in the cost of acquiring content from third parties;
•: our ability to develop, produce and broadcast in a timely manner new programming content that attracts our audience;
•: our ability to hire, train and retain key personnel;
•: the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure;
•: the timing and success of new media offerings by our competitors and any significant changes in the competitive dynamics of our market, including new entrants or substantial discounting of advertising;
•: network outages or security breaches;
•: the timing of expenses related to any acquisitions and potential future charges for the impairment of goodwill resulting from such acquisitions; and
•: general economic conditions that adversely affect advertising rates, the level of advertising or the number of subscriber households of existing and any future distributors.

Because we have granted equity awards to certain of our distributors that are subject to vesting, revenue from these distributors is subject to variable accounting. As a result, increases in our stock price can materially and adversely affect revenue in future periods.

Due to our limited operating history, we do not have an established system or extensive experience forecasting our future revenue, and we may be unsuccessful in doing so. Our

operating expenses are based on our expectations of future revenue and are largely fixed in the short term. As such, any shortfall in revenue in a future period would directly and adversely affect our operating results.

Discrete events can have a significant impact on our revenue. Accordingly, quarterly revenue results may not be a meaningful indicator of future results.

Discrete events can have a significant impact on our revenue. Many advertisers purchase advertising on an annual basis. Accordingly, the level of our advertising sales during any annual sales cycle will significantly impact our future advertising revenue, regardless of the level of advertising before the annual sales cycle. In addition, our level of affiliate revenue will be significantly impacted by entering new or terminating existing distribution agreements, regardless of the level of affiliate revenue before any such change. Accordingly, revenue during any particular quarter may not be a good indicator of revenue in future quarters.

Our success depends on the popularity of our content offerings with our young adult audience. If we fail to engage young adults with our programming, our advertising revenue will not grow as anticipated, and could decline, and our ability to add new distributors would be adversely affected.

Young adults are demanding consumers of content and are subject to rapid and unpredictable changes in their interests and preferences. In addition, our programming competes with other entertainment offerings and activities, including fictional content offerings such as movies and large portions of traditional TV programming, the Internet and video games. If our programming does not engage young adults, advertising revenue will not grow as anticipated, and could decline, and our ability to add new distributors would be adversely affected.

We have an unproven media model that may not be successful.

We have developed an innovative but unproven media model. Our TV network differs from traditional TV networks in several important respects. These include:

•: focusing on news and other non-fiction entertainment targeted at young adults;
•: promoting viewer participation;
•: utilizing a short-form video segment format in lieu of traditional television shows; and
•: providing innovative advertising models, such as viewer-created advertisements, programming sponsorships and longer ads.

Our website also differs from existing websites in several important respects. These include:

•: interacting with our TV network to provide a participatory "two-screen" experience;
•: enabling user-generated content and participation, as compared to traditional "top-down" news and information websites such as CNN.com, NewYorkTimes.com and Yahoo!; and
•: providing programming assistance and editorial oversight, as compared to other social news sources, such as del.icio.us and digg.com.

Our media model is in the early stages of development and may not achieve broad acceptance by users and advertisers. For example, our TV advertising revenue per subscriber household is

below the industry average, and our website was only recently launched and has not generated significant revenue to date. Although our TV network and website have achieved early success in attracting viewers, advertisers and industry awards, the media industry is undergoing rapid change and there is no assurance that these early successes will be lasting.

If we are unable to increase our advertising revenue, our financial results and ability to grow our business will be adversely affected.

We generated approximately 16% of our revenue in 2007 from advertising fees, and our business model contemplates that over the longer term the majority of our revenue growth will be derived from advertising. Our advertising model includes viewer-created advertising, advertiser alignment with specific pods or content categories and cross-platform advertising on television and the Internet. Because our approach to advertising is new and unproven, we face considerable challenges in convincing advertisers to allocate their advertising budgets to our network. Although we have a number of highly regarded advertisers, they have committed only a small fraction of their advertising budgets to us and do not have long-term commitments to advertise on our network or website. We have not yet achieved widespread adoption of our advertising model by advertisers. In addition, we have a relatively new advertising sales team, including a new head of sales, and we believe we need to hire additional qualified sales personnel to achieve our advertising sales objectives. If our sales team fails to sell advertising on Current TV and Current.com, our revenue and operating results will be adversely affected.

We face challenges related to our advertising model and stage of growth. These include:

•: possible advertiser concerns with viewer-created content or viewer-created advertising;
•: our inability to identify, attract and retain qualified sales and marketing personnel; and
•: potential limitations on our ability to compete with significantly larger organizations.

In addition, we face several industry-wide challenges to increasing our advertising revenue. These include:

•: the increasing deployment and use of digital video recording devices, allowing audiences to skip advertising;
•: new metering and rating processes that measure viewership of advertisements as well as programming; and
•: consolidation within the advertising industry that shifts leverage to large advertisers and buying groups.

We have agreements with some advertisers that effectively prevent us from selling advertising to their competitors. If we enter into additional advertising agreements with similar restrictions, our ability to grow advertising revenue may be limited unless we receive appropriate compensation for granting these restrictions. If we are unable to increase advertising revenue for any reason, our business, operating results and financial condition would be adversely affected.

Our advertising revenue and business could be substantially harmed if we receive low TV ratings.

We currently are not rated for viewership by Nielsen Media Services in the United States or by other media rating agencies outside the United States. In the future, we expect to obtain such ratings. Historically, new television networks have received negligible ratings in the first several years in which they are rated. If we become rated and receive negligible ratings, advertisers may be less interested in sponsoring our content or paying rates consistent with our expectations, and our business, operating results and financial condition could be adversely affected.

Our advertising sales cycles are long and unpredictable, and our sales efforts require considerable time and expense and may not be successful. Many advertisers purchase advertising on an annual basis, which can delay our ability to generate advertising revenue.

Many of our advertisers undertake a significant evaluation process that can result in a lengthy sales cycle, in some cases over 12 months. We spend substantial time and expense in our sales efforts without any assurance that our efforts will generate any sales. In addition, advertising decisions are frequently influenced by budget constraints, multiple approvals and unplanned administrative, processing and other delays. Moreover, because many advertisers purchase advertising on an annual basis, our ability to sell them advertising will be delayed by a year if we do not generate sales from them during a particular annual advertising sales cycle. If sales expected from a specific advertiser are not realized or are delayed, our business, operating results and financial condition would be adversely affected.

If we are unable to increase the number of subscriber households that receive our programming, we may be unable to increase our revenue as anticipated.

We generated approximately 84% of our revenue in 2007 from affiliate fees paid to us by cable, satellite and telecommunications operators, which we refer to as distributors. Our agreements are long term, with remaining terms ranging from approximately three to nine years, and provide for payment to us based on the number of subscriber households that receive Current TV. Seven of our distribution agreements account for substantially all of our subscriber households and affiliate fees. The loss of any existing distribution agreement or a significant number of subscriber households by our distributors would adversely affect affiliate revenue, and could adversely affect advertising revenue. Growth of our affiliate fees depends upon:

•: increasing the number of subscriber households by entering into new distribution agreements;
•: increasing the number of subscriber households under existing agreements; and
•: renewing existing and any new distribution agreements.

Entering into new distribution agreements is difficult and time-consuming, and there is no assurance that we will be able to enter into new, or renew existing, distribution agreements on acceptable terms, or at all, or that such agreements will not be terminated. Failure to deliver our programming to additional subscriber households would adversely affect our ability to increase affiliate fees and advertising revenue.

If we are unable to obtain viewer-created content and other third-party content at low cost, our business may be harmed and our gross margins may be adversely affected.

Nearly one-third of our programming is viewer-created content, which is our least expensive form of programming. If we are unable to obtain sufficient high-quality, viewer-created content, we would be forced to use more internally developed content or acquired content from sources other than our viewers. Even though the cost of our internally developed and non-viewer generated acquired content is generally less than that of traditional TV networks, our programming costs would increase if a larger portion of our programming were internally developed or acquired from third parties other than our viewers. Our programming costs would also increase if we are unable to continue to internally develop and acquire content for a lower cost than traditional TV networks. Any increase in programming costs would adversely affect our operating margins.

Current.com was only recently launched and is at an early stage of development. We have not generated significant revenue from Current.com.

In October 2007, we launched Current.com. We believe that Current.com will complement our TV network by extending our content offerings online, expanding the pool of potential content contributions to the TV network, helping build brand awareness, creating a second revenue-generating media platform and permitting a "two-screen" viewing experience. We expect that advertising revenue will constitute a significant portion of the revenue to be generated by Current.com. To date we have realized very limited revenue from Current.com, and there can be no assurance that we will realize significant revenue or any other benefits from our website. Even if we initially attract advertisers to Current.com, they may decide not to advertise on our website if their objectives are not met, or if we do not deliver their advertisements in an appropriate and effective manner. In addition, we have incurred and expect to continue to incur significant costs and have devoted and expect to continue to devote significant resources to develop and enhance our website. If we do not realize a sufficient return on this investment, our business, operating results and financial condition will be adversely affected.

If we are unable to retain key executives and other personnel, particularly our founders, Al Gore and Joel Hyatt, our growth could be inhibited and our business harmed.

Our success is critically dependent on the expertise and continued service of our founders, Al Gore and Joel Hyatt. Our founders have been instrumental in the development of our business, including in securing distribution and advertising agreements, and the loss of the services of either Mr. Gore or Mr. Hyatt would have a material adverse effect on our ability to grow our business or maintain important commercial relationships. In particular, if Mr. Gore were no longer actively involved in our business or no longer to hold a substantial ownership stake in us, our relationships with key distributors and our business could be materially and adversely affected. Mr. Gore has a number of other commitments that limit the amount of time he can devote to our business. In addition, neither Mr. Gore nor Mr. Hyatt have any agreement to remain employed by us or to maintain ownership of our stock beyond the lock-up period in connection with this offering. Our success also depends on the continued service of our senior management team, and on our ability to retain existing personnel and hire additional personnel. If we fail to attract, retain or hire the necessary personnel, or if we lose the services of our key executives, we may be unable to implement our business plan or keep pace with developing trends in our industry, and our business, operating results and financial condition

would be adversely affected. There is no assurance that any employee will remain with us. Our competitors may be successful in recruiting and hiring members of our executive management team or other key employees and it may be difficult for us to find suitable replacements on a timely basis. Some members of our management team, including our founders, are vested in all or a substantial portion of their shares of our capital stock, and therefore retention of these employees may be difficult in the highly competitive market and geography in which we operate our business. We do not carry key person life insurance on any of our personnel. The loss of any member of our senior management team, particularly our founders, for any reason, or their failure to devote sufficient time to us could seriously harm our business.

We are subject to the risks of doing business outside the United States.

A key element of our growth strategy is to expand our international operations and provide our content offerings on a worldwide basis. Although our business has been designed to facilitate international expansion on a cost-effective basis, to date our TV network operates abroad only in the United Kingdom and Ireland. In connection with the launch of our programming in new markets, we incur significant capital expenditures and increases in operating expenses in advance of going live with our network and generating affiliate revenue. In addition, we have historically not actively pursued international advertising sales, and international advertising revenue to date has not been significant. We do not expect to generate advertising revenue in new markets until we have achieved market acceptance, and we generally expect advertising revenue, measured on a per subscriber household basis, will be lower in markets outside of the United States. As such, we expect that each launch of our programming in a new market will adversely affect our margins, at least for the short term. Our inexperience in operating our business outside of the United States increases the risk that any international expansion efforts that we may undertake will not be successful. In particular:

•: we have very limited experience identifying and producing content designed to appeal to young adults in countries other than the United States;
•: we may be unsuccessful in securing distribution agreements in countries outside the United States on favorable per subscriber household rates, if at all; and
•: the programming and advertising models we have adopted in the United States may prove unsuccessful in attracting audiences and advertisers in other countries.

In addition, conducting international operations subjects us to new risks that we have not generally faced in the United States. These include:

•: fluctuations in currency exchange rates;
•: unexpected changes in foreign regulatory requirements;
•: longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
•: regulatory or contractual limitations on our ability to distribute our programming in certain international markets;
•: difficulties and costs associated with managing and staffing international operations;
•: failure to renew distribution agreements, which generally have shorter terms than distribution agreements in the United States;

•: potentially adverse tax consequences, including restrictions on the repatriation of earnings;
•: the burdens of complying with a wide variety of international laws and different technical, certification and legal standards, including local programming, advertising, censorship and other regulations;
•: political, social and economic instability abroad, terrorist attacks and security concerns in general, including the impact of any such events on our employees or independent consultants working outside the United States;
•: reduced or varied protection of intellectual property rights in some countries; and
•: new and different sources of competition.

Any of these risks could negatively affect our international business and, consequently, our overall business, operating results and financial condition.

Our distribution agreements contain "most favored nation" provisions that may inhibit our ability to acquire new distributors or result in lower fees per subscriber household or other adverse terms under existing agreements. In addition, our distribution agreements contain performance obligations and operating restrictions, and our business could be harmed if we fail to comply with them.

Our existing distribution agreements contain "most favored nation" or "MFN" clauses, which are common in the cable television industry. These clauses typically provide that, in the event we enter into an agreement with another distributor with a lower net effective rate per subscriber household or otherwise on more favorable terms, these more favorable terms must be offered to the distributor holding the MFN right, subject to certain exceptions. As such, MFN clauses may inhibit our ability to enter into new distribution agreements without adversely affecting the terms of our existing distribution agreements. In addition, MFN clauses are often complex and require subjective interpretation. In the future, we may enter into distribution agreements with different rate structures than our current agreements, which could add further complexity and subjectivity to comparisons of net effective rates. We could be subject to disputes with our distributors over the interpretation or application of MFN clauses, the outcome of which could materially and adversely affect the terms of our distribution agreements and our business, operating results and financial condition. Further, as is customary, our distribution agreements contain numerous performance obligations and operating restrictions. For example, these agreements contain programming requirements and restrictions on content and, in some cases, on distribution of that content. Any failure to comply with these requirements and conditions in any distribution agreement could potentially result in reductions in subscriber fees or termination of the agreement, any of which could materially and adversely affect our business, operating results and financial condition.

Competition could reduce our revenue and prevent us from achieving or maintaining profitability.

We face significant competition in both the cable television and online markets in which we operate. Current TV competes with other television networks that target young adults. These networks include Comedy Central, Fuse, G4, MTV, Spike TV and other major cable networks that are owned by large media conglomerates, such as Comcast, Disney, Time Warner and Viacom. Current.com faces competition from companies that are consumer destination

websites, such as AOL, Google, MSN and Yahoo!, online video aggregators, such as Hulu and YouTube, and news and social network platforms, such as del.icio.us, digg.com, Facebook and MySpace.

We believe that the principal competitive factors affecting Current TV and Current.com include the following:

•: ability to attract and retain the young adult audience;
•: quality and reliability of programming;
•: the number of subscriber households that receive Current TV and its placement on distributors' service tiers;
•: ability to engage seamlessly with audiences across multiple platforms;
•: relevance of content;
•: quality and breadth of content library;
•: brand recognition and reputation;
•: relationships with new and innovative content creators and producers; and
•: services for, and relationships with, advertisers.

Some of our current or future competitors have significantly greater financial, technical, marketing and other resources than we do, enjoy greater name recognition than we do or may have more experience or advantages than we have in the markets in which we compete. For example, companies such as Viacom and Yahoo! may have competitive advantages over us because of their greater size and resources. If we are unable to compete effectively, we could suffer reductions in our viewing audience, declines in advertising revenue, additional obstacles to entering into new distribution agreements, loss of content providers and other harmful effects, any of which would adversely affect our business, operating results and financial condition.

If we fail to develop and maintain brand awareness, our business would suffer.

We believe that developing and maintaining brand awareness in a cost-effective manner is critical to achieving increased viewership of our programming, generating higher advertising revenue and entering into new distribution agreements that expand the number of subscriber households we reach. Our brand promotion activities may not achieve any of these objectives, and even if they do, any resulting increase in revenue may not offset the expense we incur in building our brand. If we fail to promote and maintain our brand, our business, operating results and financial condition would be adversely affected.

We have experienced growth in recent periods. If we fail to manage our growth effectively, we may be unable to execute our business plan or address competitive challenges adequately.

We have substantially expanded our overall business, headcount and operations in recent periods, which has placed, and will continue to place, a significant strain on our management and our administrative, operational and financial infrastructure. We will need to continue to improve our operational, financial and management controls and our reporting systems and

procedures. If we fail to do so effectively, our business, operating results and financial condition would be adversely affected.

Our success depends on key relationships with content partners.

Obtaining content from third parties is important to our business. For example, we obtain news feeds from Reuters and music from EMI. These content relationships are subject to a number of risks, including:

•: the ability of our partners to terminate the relationships with little or no advance notice;
•: the risk of increased costs in order to maintain the relationships;
•: the potential that we are, or could be perceived as, a competitive threat by our partners; and
•: limitations on our ability to use information, content, tools or distribution rights provided by our partners.

If we were unable to obtain content from existing content partners or other third parties, or if the terms upon which we obtain such content are less favorable to us in the future, our business, operating results and financial condition could be adversely affected.

We may expand through acquisitions, which may divert our management's attention and result in unexpected operating difficulties, increased costs and dilution to our stockholders.

We may acquire complementary businesses, distribution rights, content and other assets. An acquisition may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties in integrating acquisitions, especially if the key personnel of the acquired assets choose not to work for us, and we may have difficulty retaining advertisers and distributors due to changes in management and ownership. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for ongoing development of our business. We also may be required to use a substantial amount of our cash, issue equity securities or incur or assume indebtedness to complete an acquisition, which could deplete our cash reserves, dilute our existing stockholders and adversely affect the market price of our common stock. If we incur debt to pay for any acquisition, such indebtedness may include covenants that restrict our operations and would result in additional interest expense that would adversely affect our operating results. We cannot assure you that the anticipated benefits of any acquisition would be realized or that we would not be exposed to unknown liabilities. In addition, acquisitions may negatively impact our results of operations and financial condition because we may incur additional expenses relating to one time charges, writedowns or tax-related expenses.

Our business will suffer if our systems or networks fail, become unavailable or perform poorly.

Our ability to operate Current TV and Current.com depends on the continued operation of our information systems and networks. As we grow our business, we will need more computing power. This expansion will be expensive and complex. If we do not implement this expansion successfully, or if we experience inefficiencies and operational failures during the implementation, our users' experience could be adversely affected. In addition, our distributor agreements require us to maintain our television network on the air, and if we fail to do so we

could be in breach of these contracts. Failure of our systems or networks would adversely affect our business, operating results and financial condition.

If our third-party suppliers fail to provide us with network infrastructure services on a timely basis, our costs could increase and our operations and growth could be hindered.

We rely on third parties to supply key network infrastructure services, including uplink, playback, transmission and satellite services, which are available only from limited sources. We have occasionally experienced delays and other problems in receiving communications equipment, services and facilities and may, in the future, be unable to obtain such services, equipment or facilities on the scale and within the time frames required by us on terms we find acceptable, or at all. If we are unable to obtain, or if we experience a delay in the delivery of, such services, we may be forced to incur significant unanticipated expenses to secure alternative suppliers or adjust our operations, which could materially and adversely affect our business, operating results and financial condition.

Security breaches could impair our TV network and website.

Our TV network and website infrastructure is subject to risks of security breaches and viruses that could impair or shut down our TV network and website. Any interruption of our service offerings could seriously harm our business, operating results and financial condition.

Our TV network and website may be interrupted and we may incur significant losses in the event of an earthquake or other catastrophic event.

Key portions of our production, broadcast and data storage platform for our TV network and the facilities for operating our website are located in Northern and Southern California, regions known for seismic activity. A significant earthquake or other catastrophic event in either of these regions could interrupt all or a portion of the services offered on our TV network or website, perhaps for an extended period of time, and result in significant losses, particularly if we are required to replace significant portions of our facilities or relocate to other sites. As a result, any such event could seriously harm our business, operating results and financial condition.

New distribution technologies may fundamentally change the way programming is distributed and our inability to adapt to them may adversely affect our business.

The advent of digital technology is likely to accelerate the convergence of broadcast, telecommunications, Internet and other media and could result in material changes in the economics, regulations, intellectual property usage and technical platforms on which our business relies. These changes could fundamentally affect the scale, source and volatility of our current and anticipated revenue streams and cost structures, and may require us to significantly change our operations. There is a significant risk that our business and prospects will be harmed by these changes or that we will not identify or adapt to them as quickly as our competitors do. If we fail to adapt, our business, operating results and financial condition may be materially and adversely affected.

We will continue to have to adapt to technological change. We may not be successful or may have to incur significant expenditures to adapt to technological change.

The media industry has been, and is likely to continue to be, subject to rapid and significant technological change. We expect that new technologies will emerge that may be superior to,

or may not be compatible with, some of our existing technologies, and may require us to make significant expenditures to remain competitive. Our future success will depend, in part, on our ability to anticipate and adapt to technological changes in a cost-effective manner and to offer, on a timely basis, services that meet customer demands and evolving industry standards. For example, we may incur significant expenditures if we decide to transition to high-definition broadcasting in the future. In addition, we rely in part on third parties for the development of, and access to, communications and network technology. As a result, we may be unable to obtain access to new technology on a timely basis, in a cost-effective manner or on satisfactory terms. If we fail to adapt successfully to any technological change or obsolescence, or fail to obtain access to important technologies or incur significant expenditures in adapting to technological change, our business, operating results and financial condition could be materially and adversely affected.

The expansion of digital distribution in our markets may increase competition for viewers, ratings and related advertising revenue.

The increased capacity of digital distribution platforms, including the introduction of digital terrestrial television, could reduce the number of subscribers for cable and satellite TV or lower barriers to entry for competing channels, and as a result adversely impact our anticipated operating results and market position. A greater number of channels would increase competition for distributors, viewers and advertisers, which could affect our ability to attract advertising and new distribution at desired pricing levels, if at all, and could therefore hinder or prevent our growth.

If a recession were to occur, it would likely materially and adversely affect our business.

Many economists are now predicting that the United States and, possibly, the global economy, may enter into a recession as a result of the credit crisis and a variety of other factors. If a recession were to occur, cable, satellite and telecommunications distributors would likely experience a decline in the number of subscriber households, and advertisers would likely decrease their advertising spending on television and other media channels. As a result, if a recession were to occur, it would likely have a material adverse effect upon our business, operating results and financial condition.

Applicable government regulations could harm our business.

The scope of communications regulations to which we or our distributors are subject varies from country to country. Typically, video programming regulation in each of the countries in which we or our distributors operate or plan to operate requires that domestic broadcasters and platform providers secure certain licenses from the domestic communications authority. Additionally, most nations have communications legislation and regulations that set standards regarding program content and the content and scheduling of television advertisements. Most nations also have legislation and regulations that provide that a certain portion of programming carried by broadcasters or multi-channel video programming distributors be produced domestically and to some degree be sourced from domestic production companies that are independent of the distributor. Some jurisdictions in which we plan to operate have strict censorship of content, and prohibited content may vary substantially over time.

These regulations could harm our business by impacting us or our distributors. For example, the Communications Act of 1934 (the "Communications Act"), includes provisions that preclude

cable operators affiliated with video programmers from favoring their programmers over competitors and effectively preclude such programmers from selling their programming exclusively to cable operators. We are currently subject to these so-called program access rules because some of our affiliates own equity interests in our company. As a result, our flexibility to negotiate the most favorable terms available for our content may be limited.

In most countries, communications regulations are generally subject to periodic and ongoing governmental review and legislative initiatives that may affect the nature of programming we are able to offer and the means by which it is distributed. For example, the U.S. Federal Communications Commission, or FCC, is considering expansion of the exclusivity ban on programmers affiliated with cable operators to programmers affiliated with satellite networks. Any such restrictions, if adopted, could adversely affect our ability to negotiate with satellite programming distributors should we become subject to any such rules. In addition, some policymakers maintain that cable and satellite operators should be required to offer programming to subscribers on a network-by-network, or á la carte, basis or to provide "family friendly" program tiers. The unbundling or tiering of program services could result in reduced subscriber households and advertising revenues and increased marketing expenses. The timing, scope or outcome of these reviews and initiatives could be unfavorable to us, and any changes to current communications legislation or regulations could require adjustments to our operations.

The laws relating to the liability of providers of online services are currently unsettled both within the U.S. and abroad. Claims against other companies with online businesses similar to ours have been threatened and filed under both U.S. and foreign law for defamation, libel, invasion of privacy and other data protection, tort, unlawful activity, copyright or trademark infringement or other theories based on ads posted on a website and content generated by a website's users. Compliance with these laws is complex and may impose significant additional costs on us and restrictions on our business. Any failure to comply with these laws could subject us to significant liability.

Piracy of our intellectual property and other content, including digital and Internet piracy, may decrease revenue received from the exploitation of our content and adversely affect our business and profitability.

The success of our business depends in part on our ability to defend the intellectual property rights to our content. Piracy of television programming and video content as well as other intellectual property is prevalent in many parts of the world. In addition, digital technology facilitates the creation, transmission and sharing of high quality unauthorized copies of video and other content. The proliferation of unauthorized copies and piracy of our content may have a material and adverse effect on our business, operating results and financial condition.

Alleged infringement of the intellectual property of others may cause third parties to sue us or could harm our reputation with advertisers and other partners.

There is considerable patent, copyright and other intellectual property development activity in the media industry. Our success depends upon our not infringing the intellectual property or equivalent rights of others in the United States or abroad. Our competitors, as well as a number of other entities and individuals, may own or claim to own intellectual property or equivalent rights relating to our business. From time to time, third parties may claim that we are infringing their intellectual property or equivalent rights, and we may be found to be

infringing such rights. For example, we have been sued in the past and may be sued in the future by third parties, alleging that our use of the name "Current" infringes their trademarks, and seeking to enjoin us from using the name "Current" and to recover unspecified monetary damages. Although we have not received an adverse outcome to date, we could in the future incur significant defense costs, be required to stop using the name "Current," pay significant damages and suffer diversion of the attention of our senior management from the operations of our business. In addition, we may be unaware of the intellectual property rights of others, such as patent or trade secret rights, that may cover some or all of our technology or business methods. We have also been asked and from time to time may be asked in the future by content owners to stop the display or hosting of copyrighted materials on Current.com pursuant to the Digital Millennium Copyright Act. In addition, content providers may claim that we are contributorily or vicariously liable for the use of our technology or website to infringe the content providers' copyrights. Third parties may file trademark and other claims against us for use or misuse of their intellectual property in advertising on our website or television programs. We have responded and will continue to promptly respond to Digital Millennium Copyright Act takedown notices or complaints alleging that we are providing unauthorized access to copyrighted content. Nevertheless, we cannot guarantee that infringing content will not exist on our website, or in listings on links from our website, or that we will be able to resolve any disputes that may arise with content providers or users regarding such infringing content. Furthermore, compliance with the Digital Millennium Copyright Act limits monetary damages but does not limit equitable remedies such as injunctions.

Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from providing content or utilizing technology methods, require that we comply with other unfavorable terms, or hurt our reputation with advertisers, distributors and other partners. Any of these outcomes could seriously harm our business. Even if we were to prevail, any litigation regarding intellectual property could be costly and time-consuming, divert the attention of our management and key personnel from our business operations and materially and adversely affect our business, operating results and financial condition.

If we fail to maintain effective internal controls, our ability to produce timely and accurate financial statements could be impaired, which could adversely affect our operating results, our ability to operate our business and investors' views of us.

Ensuring that we have internal financial and accounting controls and procedures adequate to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, for the year ending December 31, 2009, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance-related issues. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or significant deficiencies in internal controls, which could adversely affect

our ability to produce accurate and timely financial statements, investor perceptions of us and our stock price.

Furthermore, implementing any appropriate changes to our internal controls over financial reporting may entail substantial costs in order to modify our existing accounting systems, take a significant period of time to complete and distract our officers, directors and employees from the operation of our business. These changes, however, may not be effective in maintaining the adequacy of our internal controls over financial reporting, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and materially and adversely affect our business, operating results and financial condition.

We have restated our consolidated statement of cash flows for 2005. The restatement relates to the classification of a restricted cash deposit of $1.0 million from operating activities to investing activities. We have also restated our consolidated balance sheet at December 31, 2006 to correct the balance sheet presentation of unvested share-based compensation provided to our distributors, which was previously presented as a non-current asset in affiliate agreements, with the corresponding amount in common stock. Although we do not believe that the restatements were the result of a material weakness in our internal controls at December 31, 2007, the restatements are evidence of a significant deficiency in internal controls, and we can provide no assurance that we will not discover accounting errors in the future or that any such errors will not be the result of a material weakness or significant deficiency in our internal controls.

We will incur significantly increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance efforts.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the Securities and Exchange Commission, or SEC, and The NASDAQ Stock Market impose additional requirements on public companies, including enhanced corporate governance practices. For example, the listing requirements for the NASDAQ Global Market provide that listed companies satisfy certain corporate governance requirements relating to independent directors, audit committees, distribution of annual and interim reports, stockholder meetings, stockholder approvals, solicitation of proxies, conflicts of interest, stockholder voting rights and codes of business conduct. Our management and other personnel will need to devote a substantial amount of time to these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors and board committees or as executive officers.

We may require additional capital to support our business growth, and this capital may not be available on acceptable terms, or at all.

We intend to continue to make investments to support our business growth and may require additional funds for this investment or to respond to business challenges. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have

rights, preferences and privileges superior to those of our Class A common stock. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our financial condition would be adversely affected and our ability to continue to support our business and to respond to business challenges may be significantly limited.

We may not have sufficient capital resources to pay off our existing debt obligations if we do not complete this offering before they come due in May 2008.

We have a history of substantial losses and negative cash flows from operations. We have significant debt obligations that come due on May 4, 2008. We plan to repay this indebtedness, which was $36.5 million at December 31, 2007, with a portion of the net proceeds from this offering. On January 24, 2008, we entered into a secured credit facility with JPMorgan Chase Bank, N.A., an affiliate of one of the underwriters of this offering, to refinance this indebtedness if we do not complete this offering before the indebtedness comes due. However, our ability to borrow under this credit facility is subject to numerous conditions, including the absence of a material adverse change in our business and compliance with affirmative and negative covenants. In particular, our indebtedness must not exceed $43.0 million at the time we borrow under the facility and we must comply with cumulative quarterly and annual requirements on earnings before interest, taxes, depreciation, amortization, stock-based compensation and extraordinary items and capital expenditures. If we fail to comply with these covenants or experience a material adverse change before completing this offering, we may not be able to access this credit facility to pay off our indebtedness or for working capital purposes and may not be able to meet our business objectives. If any of these events were to occur, our financial condition, cash flows and operating results would be adversely affected. We can provide no assurance that material adverse changes will not occur or as to whether we will comply with these required covenants.

Risks related to this offering and ownership of our Class A common stock

There has been no prior market for our Class A common stock, the trading price of our Class A common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your shares at or above the initial public offering price.

There has been no public market for our Class A common stock prior to this offering. The initial public offering price for our Class A common stock will be determined through negotiations between the underwriters and us and may vary from the market price of our Class A common stock following this offering. If you purchase shares of our Class A common stock in this offering, you may not be able to resell those shares at or above the initial public offering price. Although our Class A common stock will be quoted on the NASDAQ Global Market, an active or liquid market in our Class A common stock may not develop upon completion of this offering or, if it does develop, may not be sustainable. If a liquid trading market fails to develop or be sustained, you could lose all or part of your investment.

The trading prices of the securities of media companies have been and are expected to continue to be highly volatile. The market price of our Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

•: actual or anticipated fluctuations in our operating results;
•: any financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
•: our failure to meet the financial estimates of securities analysts who follow us, changes in the financial estimates of such analysts or the failure of those analysts to initiate or maintain coverage of our stock;
•: rating downgrades by any securities analysts who follow our company;
•: announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;
•: the public's response to our press releases or other public announcements, including our filings with the SEC;
•: market conditions or trends in our industry or the economy as a whole;
•: the loss of key personnel;
•: lawsuits threatened or filed against us;
•: future sales of our common stock by our founders, other executive officers, directors and significant stockholders;
•: price and volume fluctuations in the overall stock market;
•: changes in the operating performance and stock market valuations of other media companies generally; and
•: other events or factors described elsewhere in this section.

In addition, the stock markets have experienced significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many media companies. Stock prices of many media companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted litigation following a decline in stock price. If we were to become involved in such litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, operating results and financial condition.

Future sales of shares by existing stockholders, or the perception that such sales may occur, could cause our stock price to decline, even if our business is doing well.

If our existing stockholders, particularly our founders, investors, directors and executive officers sell substantial amounts of our Class A common stock in the public market, or are perceived by the public market as intending to sell, the trading price of our Class A common stock could decline. Based on shares outstanding as of December 31, 2007, upon completion of this

offering, we will have outstanding shares of Class A common stock and shares of Class B common stock. Of these shares, only the shares of Class A common stock sold in this offering will be freely tradable, without restriction, in the public market. Shares of our Class B common stock will automatically convert into shares of Class A common stock upon sale into the public market. Our founders, other officers, directors, and the holders of substantially all of our Class B and Class A common stock have entered into contractual lock-up agreements with the underwriters pursuant to which they have agreed not to sell or otherwise transfer any of their common stock or securities convertible into or exchangeable for shares of common stock for a period through the date approximately 180 days after the date of the final prospectus for this offering, which date may be extended in certain circumstances.

After the contractual lock-up agreements pertaining to this offering expire, and including shares of Class A common stock issuable upon conversion of Class B common stock, up to an additional shares of Class A common stock will be eligible for sale in the public market, of which are held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act and, in certain cases, various vesting agreements.

Some of our existing stockholders have demand and piggyback rights to require us to register with the SEC up to shares of our Class A common stock, including Class A common stock issuable upon conversion of our Class B common stock, subject to expiration of the contractual lock-up agreements. If we register these shares of common stock, the stockholders would be able to sell those shares freely in the public market.

After this offering, we intend to register shares of our Class A common stock that we have issued or may issue under our equity plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to any vesting or contractual lock-up agreements.

If any of these additional shares described above are sold, or if it is perceived that they will be sold, in the public market, the trading price of our Class A common stock could decline. For additional information, see "Shares eligible for future sale."

If securities analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Class A common stock will depend in part on the research that securities analysts publish about us or our business. We do not currently have, and may never obtain, research coverage by securities analysts. If no securities analysts commence coverage of our company, the trading price for our stock would likely suffer. In the event we obtain securities analyst coverage, if one or more of the analysts who covers us downgrades our stock or publishes unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

The concentration of our capital stock ownership and voting rights will limit your ability to influence corporate matters.

After this offering, our Class B common stock will have ten votes per share and our Class A common stock, which is the stock we are selling in this offering, will have one vote per share. Our founders and their families will together own all of our Class B common stock, representing approximately % of our outstanding Class A and Class B common stock and approximately % of the voting power of our outstanding Class A and Class B common stock after the offering. Holders of shares of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law. As a result and except in very limited circumstances required by law, our founders and their families, acting together, will have the ability to control the outcome of all matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets, and to control management and the affairs of our company. This concentrated control will limit your ability to influence corporate matters. The fact that holders of our Class B common stock will effectively control us may adversely affect the market price of Class A common stock. For information regarding the ownership of our outstanding stock see "Principal stockholders."

As a new investor, you will experience immediate and substantial dilution as a result of this offering and future equity issuances.

The initial public offering price per share is substantially higher than the pro forma net tangible book value per share of our Class A common stock outstanding prior to this offering. As a result, investors purchasing Class A common stock in this offering will experience immediate dilution of $ per share, based on an assumed initial public offering price of $ per share, which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus. This dilution is due in large part to the fact that our existing stockholders obtained their stock for substantially less than the initial public offering price. For additional information, see "Dilution."

Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our Class A common stock.

The anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders. For more information, see "Description of capital stock—Anti-takeover effects of Delaware law and our certificate of incorporation and bylaws."

In addition, our certificate of incorporation and bylaws may discourage, delay or prevent a change in our management or a strategic transaction that stockholders may consider favorable. Our certificate of incorporation and bylaws, which will be in effect immediately prior to the closing of this offering:

•: authorize Class B common stock with ten votes per share, all of which will be held by our founders and their families;

•: authorize the issuance of "blank check" preferred stock that could be issued by our board of directors without stockholder approval to thwart a takeover attempt;
•: provide that directors may only be removed from office for cause and only upon a majority stockholder vote;
•: provide that vacancies on the board of directors, including newly created directorships, may be filled by a majority vote of directors then in office;
•: limit who may call special meetings of stockholders;
•: prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders;
•: require a supermajority stockholder vote to approve a change of control transaction;
•: require a supermajority stockholder vote to effect certain amendments to our certificate of incorporation and bylaws; and
•: require advance notification of stockholder nominations and proposals.

For more information regarding these and other provisions, see "Description of capital stock—Anti-takeover effects of Delaware law and our certificate of incorporation and bylaws."

Our management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that enhance our operating results or increase the value of your investment.

Our management will have broad discretion over the use of the net proceeds from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Our management might not apply these proceeds in ways that enhance our operating results or increase the value of your investment. We expect to use the net proceeds from this offering to pay off all of our outstanding indebtedness and accrued interest, which was $36.5 million at December 31, 2007, and for general corporate purposes, including working capital and capital expenditures. You will not have the opportunity to influence our decisions on how to use the net proceeds from this offering.

We do not expect to pay dividends in the foreseeable future.

We have never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our Class A common stock.

Forward-looking statements
and industry data

This prospectus includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would" and "could" and similar words or phrases identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•: anticipated trends and challenges in our business and the market in which we operate;
•: our ability to anticipate market needs or develop new programming to meet those needs;
•: expected adoption of our website;
•: our ability to compete in our industry and innovation by our competitors;
•: the loss of key personnel;
•: our ability to enter into new affiliate distribution relationships or to expand existing relationships;
•: the ability of our distributors to expand their subscriber base;
•: our ability to increase advertising or advertising rates on our network or website;
•: our future operating expenses and results;
•: our ability to manage expansion into international markets;
•: our expectations regarding the use of proceeds from this offering;
•: our ability to manage growth;
•: our ability to identify and manage any potential acquisitions successfully; and
•: our need to obtain additional funding and our ability to obtain funding in the future on acceptable terms.

All forward-looking statements involve risks, assumptions and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from expected results. See "Risk factors" for a more complete discussion of these risks, assumptions and uncertainties and for other risks and uncertainties. These risks, assumptions and uncertainties are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur. We undertake no obligation to update publicly or revise any

forward-looking statements after the date of this prospectus, whether as a result of new information, future events or otherwise, except as required by law.

We obtained the industry, market and competitive position data throughout this prospectus from our own internal estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. In addition, while we believe our internal company research is reliable, this research has not been verified by any independent source.

Use of proceeds

We estimate that our net proceeds from the sale of the Class A common stock that we are offering will be approximately $ , assuming an initial public offering price of $ per share, which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and offering expenses. If the underwriters' option to purchase additional shares in this offering is exercised in full, we estimate that our net proceeds will be approximately $ . Each $1.00 increase or decrease in the assumed initial public offering price would increase or decrease, as applicable, the net proceeds to us by approximately $ million, assuming the number of shares offered by us as set forth on the cover of this prospectus remains the same and after deducting estimated underwriting discounts and commissions and offering expenses.

We intend to use a portion of the net proceeds from this offering to repay in full the principal and accrued interest on an outstanding loan from Dylan Holdings, Inc., which amounted to $30.4 million as of December 31, 2007. The loan is in the form of a senior purchase money note, has an interest rate of 9.25% and matures in May 2008. We issued this note in May 2004 as part of the purchase price for our acquisition of the NWI television network.

We intend to use a portion of the net proceeds from this offering to repay in full the principal and accrued interest on our outstanding promissory notes, which amounted to $6.1 million at December 31, 2007. We entered into a note purchase agreement in September 2006 with a consortium of lenders pursuant to which we issued the revolving promissory notes. All of these lenders are currently equity investors in our company. Under the terms of these notes, we borrowed $5.0 million and have made no payments. These notes bear interest at a rate of 15% for the first year and 18% thereafter, which compounds quarterly. In accordance with the terms of these notes, interest is added to the principal through May 4, 2008, at which time the unpaid principal and interest become payable in full.

We intend to use a portion of the net proceeds from this offering to repay in full the principal and accrued interest on an outstanding note payable to Oracle Credit Corporation, which amounted to $64,000 at December 31, 2007. We entered into this note payable in May 2006 in connection with the purchase of software and support. The note bears interest at the rate of 9.83%. Under the terms of the note, interest is added to the principal balance. The note requires annual payments of $36,000 on the first day of September of each year until 2009, at which time the final payment of $36,000 is due.

We intend to use the remaining net proceeds from this offering for working capital and other general corporate purposes, including to finance our anticipated growth and fund capital expenditures. Additionally, we may choose to expand our existing business through acquisitions of other complementary businesses, products, services or technologies, although we have no agreement or understanding with respect to any such acquisitions at this time.

The amount and timing of our actual expenditures will depend on numerous factors, including the cash used or generated in our operations. Except for the repayment of indebtedness described above, we cannot estimate the amount of net proceeds that we receive in this offering that will be used for any of the purposes described above. Accordingly, our management will have broad discretion in the application of the balance of the net proceeds

to us, and investors will be relying on the judgment of management in applying these proceeds.

Pending use of the net proceeds from this offering, we intend to invest the net proceeds in short-term, investment grade, interest-bearing securities.

Dividend policy

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2007:

•: on an actual basis;
•: on a pro forma basis giving effect to (i) the conversion of all outstanding Series A convertible preferred shares of the limited liability company into an aggregate of 7,500,000 shares of Class A common stock of the corporation; (ii) the conversion of all outstanding non-voting common shares of the limited liability company into an aggregate of 6,062,000 shares of Class A common stock of the corporation; (iii) the conversion of all outstanding voting common shares of the limited liability company into an aggregate of 7,250,000 shares of Class B common stock of the corporation; (iv) accounting for income taxes as if we were a tax paying entity since our inception; and (v) the filing of our restated certificate of incorporation immediately prior to the closing of this offering; and
•: on a pro forma as adjusted basis giving effect to the adjustments described above and the receipt of the estimated net proceeds, after payment of the estimated underwriting discounts and commissions and offering expenses, from the sale of shares of Class A common stock offered in this offering at an assumed initial public offering price of $ , which is the midpoint of the range of the initial public offering price listed on the cover page of this prospectus, and the application of the net proceeds of this offering as described in "Use of proceeds."

These numbers reflect the conversion of interests in the limited liability company in a manner consistent with the consolidated financial statements, which disregard the payment of Class A common stock in satisfaction of the unreturned capital plus the unpaid preferred return to the holders of Series A convertible preferred shares of the limited liability company. Please refer to "Prospectus summary—Corporate information and conversion" and "—The offering" for the conversion rates of interests in the limited liability company into stock of the corporation and the actual number of shares of capital stock of the corporation that we expect to be outstanding after the completion of the Conversion.

You should read this table in conjunction with "Prospectus summary—Corporate information and conversion," "Management's discussion and analysis of financial condition and results of operations" and our consolidated financial statements and related notes contained elsewhere in this prospectus.

December 31, 2007 (in thousands, except per share data)		Actual			Pro forma			Pro forma as adjusted(1)


Cash and cash equivalents		$	2,231		$	2,231		$

Current and long-term debt			36,109			36,109
Series A convertible preferred shares: 7,500 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma or pro forma as adjusted; liquidation preference of $97,663, actual; liquidation preference of zero, pro forma and pro forma as adjusted			74,259			—	(2)

Members' deficit/stockholders' equity:
	Voting common shares: 7,250 shares issued and outstanding, actual; no shares issued or outstanding, pro forma or pro forma as adjusted		100			—	(2)
	Non-voting common shares: 6,062 shares issued and outstanding, actual; no shares issued or outstanding, pro forma or pro forma as adjusted		7,246			—	(2)
	Preferred stock, $0.001 par value: no shares authorized, issued or outstanding, actual; 20,000 shares authorized, no shares issued or outstanding, pro forma or pro forma as adjusted		—			—
	Class A common stock, $0.001 par value: no shares authorized, issued or outstanding, actual; 200,000 shares authorized, 13,562 shares issued and outstanding, pro forma, assuming a conversion rate for the Series A convertible preferred shares of one-to-one into Class A common stock; 200,000 shares authorized, shares issued and outstanding, pro forma as adjusted, assuming a conversion rate for the Series A convertible preferred shares of one-to-one into Class A common stock		—			14	(2)
	Class B common stock, $0.001 par value: no shares authorized, issued or outstanding, actual; 10,000 shares authorized, 7,250 shares issued and outstanding, pro forma and pro forma as adjusted		—			7	(2)
	Additional paid in capital		3,771			85,355	(2)
	Accumulated deficit		(31,909	)		(37,442	)(3)

Total members deficit/stockholders' equity			(20,792	)		47,934

Total capitalization		$	89,576		$	84,043		$

(1): Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, respectively, the amount of our pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $ million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and offering expenses. Any increase or decrease in the assumed initial pubic offering price per share will decrease or increase, as applicable, the number of shares of

Class A common stock of the corporation issuable upon conversion of the Series A convertible preferred shares of the limited liability company and increase or decrease, as applicable, the number of shares of Class A common stock and Class B common stock of the corporation issuable upon conversion of the non-voting common shares and voting common shares of the limited liability company.

(2): Represents the conversion of the aggregate value of the Series A convertible preferred shares, voting and non-voting common shares less the aggregate par value of the Class A and Class B common stock.
(3): Reflects the effect of recording deferred tax liabilities upon conversion to a corporation.

The table above excludes (i) 799,871 non-voting common shares of the limited liability company and, on a pro forma as adjusted basis, shares of our Class A common stock of the corporation held by a distributor that are subject to vesting depending on the achievement of future performance objectives and (ii) up to 741,432 non-voting common shares of the limited liability company and, on a pro forma as adjusted basis, shares of our Class A common stock of the corporation that may be earned by a distributor based on the achievement of future performance objectives, in each case as of December 31, 2007. These shares are not included in members' deficit or stockholders' equity pursuant to United States generally accepted accounting principles.

Dilution

If you invest in our Class A common stock, you will experience immediate dilution to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma as adjusted net tangible book value per share of our Class A common stock immediately after this offering. For purposes of this discussion, we treat our Class A common stock and Class B common stock as if they were a single class. Pro forma net tangible book value per share represents the amount of our total tangible assets (total assets less intangible assets) less total liabilities, divided by the number of shares of common stock outstanding at December 31, 2007, after giving effect to the conversion of all outstanding Series A convertible preferred shares, non-voting common shares and voting common shares of the limited liability company into an aggregate of shares of common stock of the corporation, all of which will occur immediately prior to the completion of the offering. Changes in the assumed initial public offering price per share will not affect the aggregate number of shares of common stock outstanding prior to this offering. See "Prospectus summary—Corporate information and conversion."

Our pro forma net tangible book value was $ million, or $ per share of common stock outstanding at December 31, 2007. Assuming the sale by us of shares of Class A common stock offered in this offering at an assumed initial public offering price of $ per share, the mid-point of the range reflected on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and offering expenses and the application of net proceeds of this offering as described in "Use of proceeds," our pro forma as adjusted net tangible book value at December 31, 2007, would have been $ million, or $ per share of common stock. This represents an immediate increase in pro forma net tangible book value of $ per share of common stock to our existing stockholders and an immediate dilution of $ per share to the new investors purchasing shares of Class A common stock in this offering. The following table illustrates this per share dilution:


Assumed initial public offering price per share of Class A common stock		$
Pro forma net tangible book value per share as of December 31, 2007	$
Increase in pro forma net tangible book value per share attributable to investors participating in this offering
Pro forma as adjusted net tangible book value per share after this offering
Dilution per share to investors participating in this offering		$

A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, as applicable, our pro forma as adjusted net tangible book value as of December 31, 2007 by approximately $ million, the pro forma as adjusted net tangible book value per share after this offering by $ and the dilution in pro forma as adjusted net tangible book value to new investors in this offering by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and offering expenses payable by us and the application of net proceeds of this offering as described in "Use of proceeds."

The following table sets forth on a pro forma as adjusted basis, at December 31, 2007, the number of shares of common stock purchased or to be purchased from us, the total consideration paid or to be paid and the average price per share paid or to be paid by existing holders of common stock and by the new investors purchasing Class A common stock in this offering, before deducting estimated underwriting discounts and offering expenses payable by us:

	Shares purchased		Total consideration

	Shares purchased		Total consideration		Average price per share
	Number	Percent	Amount	Percent	Average price per share

Existing stockholders before this offering		%	$	%	$
Investors participating in this offering		%		%

Total		100%	$	100%	$

A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, as applicable, total consideration paid to us by investors participating in this offering by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The discussion and tables above assume no exercise of the underwriters' over-allotment option. If the underwriters' over-allotment option is exercised in full, the number of shares of common stock held by investors participating in this offering will be increased to , or % of the total number of shares of common stock to be outstanding after this offering, and the percentage of the total shares outstanding held by existing stockholders will be reduced to % of the total number of shares of common stock to be outstanding after this offering.

The discussion and tables above are based on the number of shares of common stock outstanding at December 31, 2007, as if the Conversion had occurred on that date. The discussion and tables above include (i) shares of our Class A common stock held by our employees and directors that are issued and outstanding but that are subject to a lapsing right of forfeiture and (ii) shares of our Class A common stock held by a distributor that are subject to forfeiture depending on the achievement of future performance conditions, in each case as of December 31, 2007. The discussion and tables above exclude up to shares of our Class A common stock as of December 31, 2007 that may be earned by a distributor based on the achievement of future performance conditions. See "Prospectus summary—Corporate information and conversion."

Selected consolidated financial data

The following selected consolidated financial data should be read together with our consolidated financial statements, financial statement schedule, notes to our consolidated financial statements and "Management's discussion and analysis of financial condition and results of operations" appearing elsewhere in this prospectus. The selected consolidated statement of operations data for 2005, 2006 and 2007, and the selected consolidated balance sheet data as of December 31, 2006 (as restated) and 2007, are derived from our audited consolidated financial statements, which are included elsewhere in this prospectus. The selected consolidated statement of operations data for 2004, and the selected consolidated balance sheet data as of December 31, 2004 and 2005, are derived from our audited consolidated financial statements, which are not included in this prospectus. The selected consolidated statement of operations data for 2003, and the selected consolidated balance sheet data as of December 31, 2003, are derived from our unaudited consolidated financial statements, which are not included in this prospectus. The pro forma net loss per common share, basic and diluted, data are unaudited and give effect to the conversion into Class A common stock of all outstanding Series A convertible preferred shares and non-voting common shares of the limited liability company, the conversion into Class B common stock of all outstanding voting common shares of the limited liability company and adjustments to eliminate the accumulated preferred return and account for income taxes as if we were a tax-paying entity since our inception for the periods indicated pursuant to the Conversion. See "Prospectus summary—Corporate information and conversion.

On May 4, 2004, we acquired NWI from Vivendi, and thereafter we continued to air NWI's programming until we launched Current TV on August 1, 2005. NWI is a predecessor to Current. However, because our programming changed so dramatically with the launch of Current TV, we effectively began to operate a new business. As a result, we do not believe that our results of operations before August 1, 2005 are comparable to our results of operations after August 1, 2005. Furthermore, we do not believe that the financial information for our predecessor prior to the acquisition on May 4, 2004 is meaningful. Accordingly, we have not included statement of operations data for our predecessor for 2003 or the period from January 1, 2004 to May 3, 2004, or balance sheet data for our predecessor as of December 31, 2003, in our selected consolidated financial data below.

		Year ended December 31,

(in thousands, except per share data)		2003(1)			2004(1)			2005			2006			2007

Consolidated statements of operations data:
Revenue:
	Affiliate (net of non-cash reduction to revenue of $0, $116, $523 and $1,413 in 2004, 2005, 2006 and 2007, respectively)(2)	$	—		$	14,000		$	23,362		$	29,904		$	53,849
	Advertising		—			407			1,014			7,979			9,916

Total revenue			—			14,407			24,376			37,883			63,765
Operating expenses:
	Programming and production(3)		—			8,667			17,532			21,985			31,382
	Sales and marketing(3)		—			393			6,995			6,224			15,040
	Product development(3)		—			415			3,555			3,602			6,529
	General and administrative(3)		444			1,727			5,238			6,403			10,879
	Depreciation and amortization		—			1,321			2,971			4,460			6,022

Total operating expenses			444			12,524			36,291			42,674			69,852

Income (loss) from operations			(444	)		1,883			(11,915	)		(4,791	)		(6,087	)
Interest expense			—			(1,544	)		(2,726	)		(3,445	)		(4,077	)
Other income			—			121			388			598			496

Income (loss) before provision for income taxes			(444	)		460			(14,253	)		(7,638	)		(9,668	)
Provision for income taxes			—			—			—			—			(192	)

Net income (loss)		$	(444	)	$	460		$	(14,253	)	$	(7,638	)	$	(9,860	)

	Preferred return								(5,553	)		(6,706	)		(7,234	)

Net loss attributable to common shareholders								$	(19,806	)	$	(14,344	)	$	(17,094	)

Net loss per common share, basic and diluted								$	(2.84	)	$	(1.34	)	$	(1.40	)
Shares used in computing net loss per common share, basic and diluted									6,980			10,666			12,214
Pro forma income tax expense (unaudited)(4)														$	(1,701	)
Pro forma net loss (unaudited)(4)														$	(11,561	)
Pro forma net loss per common share, basic and diluted (unaudited)(4)														$	(0.59	)
Shares used in computing pro forma net loss per common share, basic and diluted (unaudited)(4)															19,714

	December 31,

	2003(1)			2004(1)		2005			2006			2007
(in thousands)									(as restated)

Consolidated balance sheet data:
Cash and cash equivalents	$	7		$	12,634	$	15,966		$	12,018		$	2,231
Working capital (deficit)		(6	)		16,644		17,687			17,014			(26,122	)
Total assets		7			87,518		99,721			101,186			98,435
Current and long-term debt		—			26,544		29,056			35,261			36,109
Series A convertible preferred shares		—			59,259		74,259			74,259			74,259
Members' equity (deficit)		(6	)		909		(10,817	)		(15,738	)		(20,792	)

(1): On May 4, 2004, we acquired NWI and commenced principal operations. Prior to May 4, 2004, we devoted substantially all of our efforts to business planning, product development, recruiting management and raising capital.
(2): Affiliate revenue is recorded net of stock-based compensation to certain of our distributors, which is accounted for as a reduction to revenue. See note 3 to our consolidated financial statements.

(3): Effective January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payments, which had no material impact on the consolidated financial statements. The consolidated statement of operations data above includes stock-based compensation to employees and directors as follows:

	Year ended December 31,

(in thousands)	2003(1)		2004(1)		2005		2006		2007

Programming and production	$	—	$	—	$	54	$	177	$	272
Sales and marketing		—		—		54		374		89
Product development		—		243		25		141		228
General and administrative		—		—		85		168		425

(4): Refer to notes 3 and 14 of the notes to our consolidated financial statements for a description of how we compute pro forma income tax expense, pro forma net loss, pro forma net loss per common share, basic and diluted and pro forma balance sheet items.

Management's discussion and analysis of
financial condition and results of operations

You should read the following discussion and analysis of our financial condition and results of our operations in conjunction with our consolidated financial statements, financial statement schedule and the notes to our consolidated financial statements included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations, which involve risks and uncertainties. Our actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in "Risk factors" and elsewhere in this prospectus. We are on a calendar year end.

Overview

We were formed as a limited liability company in September 2002. Prior to May 2004, we devoted substantially all of our efforts to business planning, product development, recruiting management and raising capital. On May 4, 2004, we purchased NWI from Vivendi Universal, or Vivendi, for $70.9 million. NWI was a traditional cable and satellite network that had approximately 17 million subscriber households in the United States at the time of the acquisition. Prior to the NWI acquisition, NWI had affiliate distribution agreements with DirecTV, Time Warner and Comcast (for carriage to a very small percentage of Comcast's total subscriber base). As a result of the NWI acquisition, we acquired these affiliate distribution agreements. We also acquired several outsourcing agreements, which included a contract with the Canadian Broadcasting Corporation, or CBC, to provide all programming. No tangible assets were acquired. The NWI acquisition enabled us to gain access to cable and satellite distribution as an independent network. At the time of the NWI acquisition, we intended to re-launch the television channel, change the content and bring programming operations in-house. We accounted for the acquisition of NWI as a purchase of a business. We valued the acquired intangible assets, consisting of affiliate distribution arrangements, at $13.7 million and are amortizing them over their estimated useful lives of seven years. We recorded the excess of the purchase price over the value of the acquired intangible assets, or $57.2 million, as goodwill.

On August 1, 2005, we terminated the NWI programming and a majority of the acquired outsourcing agreements and launched Current TV in the United States. Because the nature and content of our television programming changed so significantly with the launch of Current TV and we effectively began to operate a new business, we believe that our results of operations before August 1, 2005 are not comparable to our results of operations after August 1, 2005.

Since launching Current TV, we have extended and expanded our existing affiliate distribution agreements, added new affiliate distribution agreements, and pioneered new ways to create,

program and distribute content. We launched our network in the United Kingdom and Ireland in March 2007, and we have an agreement to launch our network in Italy in the Spring of 2008.

In October 2007, we launched Current.com, our website that is both a social news source and a platform for multi-media conversation around global news, current events, lifestyles, culture and other topics relevant to young adults. Additionally, Current.com serves as an online studio for our audience to create, upload and evaluate user-generated content for Current TV.

As of December 31, 2007, Current TV was available in approximately 51 million subscriber households in the United States, the United Kingdom and Ireland. In 2006 and 2007, we recorded revenue of $37.9 million and $63.8 million, respectively. As we have strategically invested in our business, our operating expenses have also increased. Our operating losses were $4.8 million in 2006 and $6.1 million in 2007.

Sources of revenue

We derive our revenue from affiliate fees and advertising. Affiliate fees are derived from long-term distribution agreements with cable, satellite and telecommunications operators who pay us a monthly fee for each subscriber household that receives our television programming. In the United States, our affiliate customers include DirecTV, Comcast, EchoStar, Time Warner and AT&T. In the United Kingdom and Ireland, our affiliate customers include BSkyB and Virgin Media. In the Spring of 2008, we expect to launch in Italy on Sky Italia. In 2005, each of DirecTV and Time Warner accounted for more than 10% of our total revenue. In 2006, each of Comcast, DirecTV and Time Warner accounted for more than 10% of our total revenue. In 2007, each of Comcast, DirecTV, EchoStar and Time Warner accounted for more than 10% of our total revenue.

We have provided certain of our distributors with performance incentives in the form of equity awards. We amortize the value of the equity awards as a reduction to affiliate fee revenue. Because some distributor equity awards are subject to vesting, increases in our stock price can materially and adversely affect affiliate fee revenue in future periods. See "—Critical accounting policies and estimates—Revenue recognition."

Advertising revenue is derived from advertisers who pay for advertising sponsorships and spot advertisements on Current TV. In the future, we also expect to generate advertising revenue from Current.com.

We sell advertising sponsorships to national advertisers. Sponsorships are designed to address a customer's entire need for a specific brand, product or advertising campaign for an extended period of time. Our sponsorship advertising agreements are generally one year in length, but we also offer shorter-term sponsorship packages. Sponsorships include various services, such as viewer-created advertising campaigns, sponsorship of television content, online integration with our website, exclusivity, and short-form and long-form spots. We only began selling sponsorships in 2006.

Spot advertisements include short-form spots that are 30 seconds in length and long-form spots of up to three minutes in length. Short-form spots may air in isolation or in a commercial break with other short-form spots. Orders for the sales of television spots may contain a

combination of short-form and long-form spots and are usually for a duration of less than 90 days. We have sold spot advertisements since we acquired NWI in May 2004.

In 2007, sponsorships and spot advertisements accounted for 13% and 3% of our total revenue, respectively. Selected advertising customers include Toyota, T-Mobile, Johnson & Johnson, General Electric, Geico and L'Oreal.

Expenses

Our expenses consist of programming and production, sales and marketing, product development, general and administrative, and depreciation and amortization. We allocate overhead costs, which include rent and occupancy costs, employee benefits, information technology and other costs, to each of our expense line items, except depreciation and amortization, as appropriate. Each of our expense line items, other than depreciation and amortization, includes employee-related stock-based compensation expense.

Programming and production

Programming and production includes expenses related to programming, production and distribution of our content on Current TV and Current.com. Programming costs are primarily compensation and related expenses for programming the television network and website, as well as content license fees for third party sourced material that is aired on Current TV and Current.com. Production costs include compensation and related expenses for production operations. We have production studios in San Francisco, Los Angeles and London. A large majority of our programming and production expenses are discretionary. We expect that, in the future, programming and production expenses will increase in absolute dollars as we expand our content offerings, launch our network in new countries and add anticipated additional platforms.

Sales and marketing

Sales expenses primarily consist of compensation and related expenses for advertising sales personnel and travel and entertainment costs. Marketing expenses include compensation and related expenses for marketing personnel, brand building programs, online traffic building efforts and corporate communications. We expect that, in the future, sales and marketing expenses will increase in absolute dollars as we hire additional sales and marketing personnel, continue to focus on attracting audiences to our television network and website and spend additional resources on brand awareness programs.

Product development

Product development expenses include compensation and related expenses, other than those capitalized, for technology, software and infrastructure development. We expect that, in the future, product development expenses will increase in absolute dollars as we hire additional personnel and expand our services to additional media distribution platforms in the U.S. and internationally.

General and administrative

General and administrative expenses primarily consist of compensation and related expenses for our executive, finance, human resources and legal personnel. General and administrative expenses also include third-party professional services fees, principally accounting and legal,

and other general corporate expenses. We expect that, in the future, general and administrative expenses will increase in absolute dollars as we invest in infrastructure to support future growth of our operations and incur additional costs associated with being a public company.

Depreciation and amortization

In May 2004, we acquired NWI for $70.9 million, including intangible assets consisting of affiliate distribution arrangements valued at $13.7 million. We are amortizing the acquired affiliate distribution arrangements over their estimated useful lives of seven years on a straight-line basis. As a result, we expect to incur quarterly amortization expense of $486,000 through the second quarter of 2011, assuming no future impairment. We also make capital additions to our equipment and facilities as our operations grow, which will result in increases to depreciation expense.

Trends and developments

Revenue

Our revenue growth depends on our ability to enter into new affiliate distribution agreements, as well as subscriber household growth in our existing affiliate relationships. Our revenue growth also depends on our ability to increase the number of advertisers and advertising spending on Current TV and Current.com. Our ability to grow will be affected by our ability to increase viewership on Current TV and traffic to Current.com.

In 2007, 13% of our revenue was generated outside the United States, compared to none in 2006. We intend to increase our subscriber households and advertisers outside the United States by expanding our operations abroad. For example, we expect to launch in Italy on Sky Italia in the Spring of 2008. In connection with such expansion, we expect to incur additional operating expenses and capital expenditures, some of which will be incurred prior to launching services in a new market. In addition, securing advertising revenue in new markets likely will not be possible until after we have established our programming in these markets. As such, we expect that launches in new markets will generally have a near-term adverse effect on our margins. Our ability to expand internationally on a profitable basis will be dependant on our entering into new affiliate distribution agreements and successfully expanding our advertising business, as well as controlling our programming and operating expenses.

Taxes

Since we have operated as a limited liability company since inception, any U.S. federal or state income tax liability or benefit has passed through to our members. As a result, we have not recorded any income tax expense or benefits in our consolidated statements of operations or tax assets or any liabilities on our consolidated balance sheets relating to our operations in the United States. In connection with the Conversion, we expect to incur a one-time, non-cash charge to operations to record a deferred tax liability for financial accounting purposes in the quarter in which we complete this offering, the amount of which would have been $5.5 million had we completed the offering at December 31, 2007.

Critical accounting policies and estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States. These accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of our consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. We believe that these estimates and judgments were reasonable based upon information available to us at the time that these estimates and judgments were made. To the extent that there are material differences between these estimates and actual results, our consolidated financial statements could be adversely affected.

We believe the following to be critical accounting policies because they are important to the portrayal of our financial condition or results of operations and they require critical management estimates and judgments about matters that are uncertain:

•: revenue recognition;
•: capitalized programming costs;
•: stock based compensation;
•: goodwill and intangible assets;
•: impairment of long-lived assets; and
•: taxes.

For a summary of our significant accounting policies, including the critical accounting policies discussed below, see the accompanying notes to consolidated financial statements included elsewhere in this prospectus.

Revenue recognition

We derive our revenue from affiliate fees and from advertising. We recognize revenue in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104). In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

Affiliate fees

Affiliate fees represent payments received from our distributors for the right to provide our programming to their customers. Distributors pay us a fixed amount per month for each subscriber household receiving our programming. Affiliate fees are recognized monthly in the period the service is rendered, provided no significant obligations remain. Our distributors report actual subscriber data within a reasonable time frame following the end of each month, which allows us to make reliable estimates of revenue and therefore to recognize revenue during the reporting period in which the fees are earned. Determination of the appropriate amount of affiliate revenue involves judgments and estimates of subscriber levels that we believe are reasonable, but it is possible that actual results may differ from our estimates. When we receive distributor reports for an accounting period after the end of that period, we record any differences between estimated revenue and actual revenue in the subsequent reporting period when we determine actual amounts. Historically, estimated affiliate revenue has differed on average less than 1% from the actual affiliate revenue for a given period, which we deemed to be immaterial.

We have provided certain of our distributors with performance incentives in the form of equity awards. Certain of these equity awards are fully vested, while others are subject to vesting based upon the number of subscriber households to which our distributors deliver our programming in the future.

For those awards that are vested, we record the fair value of the equity awards as an asset on our balance sheet at the later of grant date or date of vesting. We then amortize the asset over the remaining term of the agreement as a reduction to affiliate fee revenue. As of December 31, 2007, we had $5.9 million recorded on our balance sheet as "Affiliate agreements," which reflects the unamortized balance of the vested equity awards issued to our distributors.

For those awards that are subject to vesting, we re-measure the fair value of the equity grants at the end of each reporting period by estimating the lowest aggregate fair value of such grants based upon the number of subscriber households provided by the distributor at the reporting period end date. We record a decrease or increase to revenue each period based on the cumulative effect of amortizing the re-measured fair value of the equity awards for prior periods. The fair value of unvested equity grants is used to determine the amount of amortization to record each period; however, in accordance with Emerging Issues Task Force, or EITF, Abstract Topic No. D-90, Grantor Balance Sheet Presentation of Unvested, Forfeitable Equity Instruments Granted to a Nonemployee (EITF Topic D-90), the unamortized amounts are not reflected on our balance sheet. The unamortized fair value of unvested equity grants as of December 31, 2007 was $4.0 million.

We estimate the fair value of our equity awards for purposes of grants to distributors using an option-based model approach after estimating the enterprise value of our company. This methodology and key assumptions and estimates that underlie it are discussed in "Stock-based compensation" below.

In 2006 and 2007, we recorded reductions to revenue of $523,000 and $1.4 million, respectively, as a result of vested and unvested equity awards granted to our distributors. As a result of the variable accounting for unvested equity awards to distributors, increases in our stock price would increase stock-based compensation to distributors and therefore could have a material adverse effect on our affiliate revenue.

Advertising revenue

Advertising revenue is derived from advertising sponsorships and from spot advertising on Current TV.

We consider sponsorships to be a single unit of accounting. Our management considered a number of factors in making this determination, including the following:

•: sponsorships are designed to address the customer's entire need for a specific brand, product or advertising campaign;
•: customer billings are not milestone based, or attributable to individual deliverables; rather, they are periodic, generally monthly over the sponsorship term; and
•: customers are not entitled to refunds if there are changes to any of the individual tasks included within the sponsorship agreements.

Accordingly, we recognize revenue from advertising sponsorships under SAB 104 on a proportional performance basis over the sponsorship period.

Spot advertising, regardless of whether short-form or long-form, is currently sold for a fixed price per spot for each individual sales order. We also consider spot advertising orders to be a single unit of accounting and use the proportional performance basis under SAB 104 to record revenue.

A significant portion of our advertising revenue is derived from sales through advertising agencies. In accordance with EITF Issue No. 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent, we recognize all advertising revenue net of any agency commissions. We have evaluated our sales arrangements with advertising agencies and have determined that we are not the principal when selling our spot advertising or advertising sponsorships to the end advertiser. Key indicators that we evaluated in reaching this determination included:

•: advertisers generally directly contract with their agencies, which have most of the service interaction with us and are generally viewed as the primary obligor;
•: agencies are directly responsible for billing and collecting fees from their advertisers, including the resolution of billing disputes, and remitting fees to us on a net basis;
•: agencies bear the credit risk of the end customer; and
•: agencies can set the advertising prices with their advertisers, and we receive a fixed amount from the agency.

Capitalized programming costs

We account for the cost of our commissioned and original programming in accordance with SOP 00-2, Accounting by Producers or Distributors of Films (SOP 00-2), and the cost of our licensed programming in accordance with SFAS No. 63, Financial Reporting by Broadcasters (SFAS 63).

Under SOP 00-2, we capitalize commissioned and original programming, which consists primarily of viewer-created content and internally developed programming, if it has an estimated useful life of 3 months or greater. We amortize capitalized commissioned and original programming on a straight-line basis over the estimated useful life of the programming, which is typically fifteen months. As we receive comparable revenue for each airing of a commissioned or original program, we have determined that the benefit received from such programming is consistent over its useful life, resulting in our selection of a straight-line amortization policy. We classify commissioned and original programming as non-current in accordance with SOP 00-2, regardless of the portion estimated to be used within twelve months. At December 31, 2007, we had approximately $891,000 of capitalized commissioned and original programming costs included in other assets on our consolidated balance sheet. SOP 00-2 requires management's judgment as it relates to the period of amortizing the associated programming asset. Overestimating or underestimating the useful lives of the capitalized programming or the period we are recognizing the associated benefit, could result in an understatement or overstatement of amortization expense.

Under SFAS 63, we capitalize licensed programming, consisting primarily of commercially produced programming, and amortize it based on the terms of the license. If the license allows

for an unlimited number of airings of a program with similar characteristics, we amortize it on a straight-line basis over the period of the license. If the license is for a specific number of airings, we amortize it over the number of allowed airings on a straight-line basis. We record the value of licensed programming on our balance sheet at the lower of unamortized cost or estimated net realizable value on a program-by-program, series or package basis. We classify licensed programming as current or non-current based on the date of estimated usage, with the portion estimated to be used within 12 months classified as current. The corresponding payment liability for the license, if any, is classified as current or non-current based on the payment terms, with the portion of the liability that is payable within 12 months classified as current. As of December 31, 2007, we had capitalized licensed programming costs of approximately $321,000, recorded at unamortized cost, of which approximately $197,000 is included in prepaid expenses and other current assets and $124,000 is included in other assets on our consolidated balance sheet. Given the low cost and short life cycle of our licensed programming, related estimates and judgments do not have a significant impact on the net realizable value of this asset or the related amortization expense.

Stock-based compensation

Explanatory note. The stock numbers and share price information in this Stock-based compensation section currently reflect shares held in, and the price paid for shares of, the limited liability company. We will revise the stock numbers and share price information to reflect shares held in, and the price paid for shares of, the corporation in a future filing when we include the conversion rates of limited liability company interests to corporation interests.

Since our inception, we have issued restricted stock for purposes of equity compensation for selected employees and directors. As discussed above, we have also granted common stock to certain of our distributors. We have never granted stock options.

Effective January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payments (SFAS 123(R)), which requires us to measure and recognize compensation expense for restricted stock granted to employees based on its estimated fair value and to recognize the expense in the financial statements over the requisite service period. There was no material impact on our consolidated financial statements resulting from the adoption of SFAS 123(R), because the recognition of compensation expense for grants of restricted stock under the previous guidance of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, is the same as the recognition of such expense under SFAS 123(R), with the exception of forfeitures, which, when incorporated, were de minimis.

We account for common stock grants to non-employees, including distributors, in accordance with the provisions of EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services (EITF 96-18). Pursuant to EITF 96-18, the expense associated with common stock grants to distributors is accounted for as a reduction to affiliate revenue with a corresponding increase to additional paid-in capital.

We estimate the fair value of our common stock for purposes of grants to employees and non-employees using an option model-based approach after estimating the enterprise value of our company. This option pricing model method of allocating enterprise value among common shares and preferred shares views each class of stock as a call option on all or part of our

enterprise value. The value of the call option represents the upside value attributable to the preferred and common stockholders, allocated based on their relative ownership as of the valuation date and after payment of the liquidation preferences of our preferred shares.

We use the Black-Scholes valuation model to value the call option of our common stock. The Black-Scholes valuation model requires the input of highly subjective assumptions, including the risk-free interest rate, expected life of the grant in the case of grants subject to vesting contingencies, volatility and dividend yield. In addition, we estimate the number of common stock grants subject to vesting contingencies that will not vest.

We used the following weighted average assumptions for purposes of estimating the fair value of common stock grants using the Black-Scholes method for the periods indicated:

	Year ended December 31,

	2005		2006		2007

Risk-free interest rate	4.45	%	4.64	%	4.24	%
Expected life	2.0 years		2.6 years		1.5 years
Volatility	35.00	%	37.75	%	40.00	%
Expected dividend yield	None		None		None

The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our restricted stock awards. The expected life of common stock grants subject to vesting contingencies is based on management's estimate of the time remaining until we achieve a liquidity event. We do not have a history of market prices of our common stock as we are not a public company, and as such we estimate volatility in accordance with Staff Accounting Bulletin No. 107 using historical volatilities of similar public entities. The dividend yield assumption is based on our history and expectation of paying no dividends. For common stock grants to employees, stock-based compensation expense is based on shares expected to vest over the service period and has been reduced for estimated forfeitures in accordance with the provisions of SFAS 123(R). SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.

Because our shares are not publicly traded, we have periodically evaluated the assumptions used to value our common stock awards, often in connection with significant stock grants. If factors change and we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded in the past. Higher volatility and longer expected lives result in an increase in stock-based compensation expense determined at the date of grant. In addition, quarterly changes in the estimated forfeiture rates can have a significant effect on reported stock-based compensation expense for employees, as the cumulative effect of adjusting the rate for all expense amortizations for prior periods is recognized in the period the forfeiture estimate is changed. For example, if a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will increase stock-based compensation expense in the period in which we make the change in estimate. These adjustments can have a significant impact on our operating expenses. In addition, future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional equity awards to employees or we assume unvested equity awards in connection with acquisitions.

Determinations of common stock fair value by contemporaneous and retrospective valuations. Given the absence of an active market for our common stock, we were required to estimate the fair value of our common stock at the time of each common stock grant for purposes of calculating our stock-based compensation. We considered numerous objective and subjective factors in determining the value of our non-voting common shares at each restricted stock grant date, including:

•: prices for our preferred shares that we had sold to outside investors in arms-length transactions, and the rights, preferences and privileges of our preferred shares and our common shares;
•: contemporaneous valuations prepared periodically beginning in May 2004;
•: our actual financial condition and results of operations during the relevant period;
•: the development status of our television network and website, including the number of subscriber households receiving our programming and the number of advertising sponsorships we had secured;
•: forecasts of our financial results and market conditions affecting the media industry;
•: the hiring of key personnel;
•: the fact that the restricted stock grants involved illiquid, non-voting securities in a private company; and
•: the likelihood of achieving a liquidity event for our stockholders, such as an initial public offering or sale of the company, given prevailing market conditions at the time of grant.

We relied on contemporaneous valuations using the income approach and the market approach to estimate our aggregate enterprise value. For valuations prior to November 2007, we assigned a 100% weighting to the valuation determined using the income approach given the level of development of our business and our estimated lack of proximity to a liquidity event, such as an initial public offering. Beginning in November 2007, we assigned a 75% weighting and 25% weighting to the valuations determined using the income approach and market approach, respectively, taking into account developments in our business and the increased likelihood of a liquidity event. The income approach focuses on the income-producing capability of a business. The income approach estimates value based on the expectation of future cash flows that a company will generate. These cash flows are discounted to the present using a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation and risks associated with the particular investment. The selected discount rate is generally based on rates of return available from alternative investments of type, quality and risk similar to our common stock. We prepared a financial forecast in connection with each contemporaneous valuation for purposes of the income approach. The financial forecasts were based on assumed revenue growth rates and expenses that took into account our past experience and our future expectations. The risks associated with achieving these forecasts were assessed in selecting the appropriate discount rates. The market approach estimates our aggregate enterprise value by applying market multiples of publicly-traded companies in the same or similar lines of business to our results and projected results.

In order to reflect the lack of a recognized market for non-publicly traded securities and the fact that a non-controlling equity interest may not be readily transferable, we further adjusted the value of our non-voting common shares for lack of marketability.

During the period from January 1, 2007 to the present, we relied upon contemporaneous valuations as of January 29, 2007, September 30, 2007 and November 16, 2007.

We used the January 29, 2007 contemporaneous valuation to determine the fair value of our common stock as of January 8, 2007 and February 21, 2007. The valuation indicated a fair value of $3.02 per share and assumed a 10% adjustment for lack of marketability. The valuation also assumed a 26% discount rate in connection with valuing domestic operations and a 34% discount rate in connection with valuing international operations. This valuation also reflects aggregate preferred stock unreturned capital and unpaid preferred return of an aggregate of $90.4 million at December 31, 2006. The valuation represents an increase of 35% in the estimated value of our common stock from our valuation as of November 20, 2006, primarily as a result of our entry into a new distribution agreement with EchoStar in the United States that would contribute additional affiliate revenue in the future. In addition, in December 2006 we hired our President, Marketing. At December 31, 2006, we had cash and cash equivalents of $12.0 million.

In connection with the preparation of our financial statements in anticipation of a potential initial public offering and due to the increase in value between our January 29 and September 30, 2007 contemporaneous valuations, we estimated the fair value of our common stock as of April 1, 2007 to determine the fair value of our common stock as of April 10, May 1, and May 15, 2007. The estimated fair value on April 1 was the average of our January 29 and September 30, 2007 contemporaneous valuations. The estimated fair value of $5.10 per share represents an increase of 69% from the estimated value of our common stock as of January 29, 2007. This increase reflects the continuing development of our business, including our entry into a new distribution agreement with Virgin Media and the launch of Current TV in the United Kingdom and Ireland in March 2007. In May 2007, we hired our new President, Advertising Sales, made continuing progress towards launching Current.com and had increasing confidence about our future prospects. In addition, our revenue grew from $12.6 million in the fourth quarter of 2006 to $13.9 million in the first quarter of 2007 and $16.8 million in the second quarter of 2007. At March 31, 2007, we had cash and cash equivalents of $9.9 million.

We used the September 30, 2007 contemporaneous valuation to determine the fair value of our common stock as of July 23 and July 27, 2007. The valuation indicated a fair value of $7.18 per share and assumed a 10% adjustment for lack of marketability. The valuation also assumed a 24% discount rate in connection with valuing domestic operations and a 27% discount rate in connection with valuing international operations. This valuation reflects aggregate preferred stock unreturned capital and unpaid preferred return of $95.8 million at September 30, 2007. The estimated fair value of $7.18 reflects an increase of 41% from our estimated valuation used for our April and May grants. This increase also reflected continued progress in our business, including the pending launch of Current.com. At September 30, 2007, we had cash and cash equivalents of $8.2 million.

We used the November 16, 2007 contemporaneous valuation to determine the fair value of our common stock as of October 25, 2007. The valuation indicated a fair value of $11.46 per share

and assumed no adjustment for lack of marketability, as we had engaged investment banks for our initial public offering. The valuation was weighted 75% using the income approach, with an assumed 22% discount rate in connection with valuing domestic operations and 25% discount rate in connection with valuing international operations, and 25% using the market approach, which reflects improving prospects for a liquidity event. This valuation also reflects aggregate preferred stock unreturned capital and unpaid preferred return of $96.4 million at October 31, 2007. The valuation represents a 60% increase in the estimated fair value of our common stock from our September 30, 2007 valuation. This increase reflects the successful launch of Current.com, which we believe both enhances the programming on Current TV through our two-screen application and establishes the basis for our Internet advertising model, the recent hiring of our chief financial officer and increasing confidence about our future prospects as a result of these developments. At October 31, 2007, we had cash and cash equivalents of $7.3 million. In addition, the November 2007 evaluation took account of our expected signing of a distribution agreement with Sky Italia, which would result in additional new subscriber households upon launch in Italy in the spring of 2008.

The foregoing valuation calculations are dependent upon a number of forecasts and projections which are inherently uncertain. If we had made different assumptions and estimates, the valuations prepared could have been materially different.

Restricted stock grants to employees. We made the following restricted stock grants to employees since January 1, 2007:

Grant date	Number of shares subject to restrictions granted	Common stock fair value


January 8, 2007	75,000	$	3.02
February 21, 2007	90,000		3.02
April 10, 2007	17,500		5.10
May 1, 2007	8,000		5.10
May 15, 2007	105,000		5.10
July 23, 2007	75,000		7.18
July 27, 2007	8,000		7.18
October 25, 2007	190,000		11.46

Each grant was to a single individual, including grants to members of our executive management team on January 8, May 15, July 23 and October 25, 2007, a grant to a member of our board of directors on July 27, 2007 and grants to employees on the other dates. Each grant was an initial grant, except for the grants on May 15, 2007 and July 23, 2007. which were follow-on grants to executive officers who had previously vested in their original grants.

The weighted average fair value of restricted stock grants to employees and directors during the years ended December 31, 2005, 2006 and 2007 was $1.44, $1.88 and $6.93 per share, respectively.

We recognize employee and director stock-based compensation as expense with a corresponding increase to additional paid-in capital, utilizing the straight-line attribution method. During 2005, 2006 and 2007, we recognized compensation expense totaling $218,000, $860,000 and $1.0 million, respectively, relating to the issuance of restricted stock to employees and members of our board of directors.

At December 31, 2007, we had unrecognized employee and director stock-based compensation of $3.5 million, which will be recognized over three years. Based on restricted stock awards to employees and directors and outstanding as of December 31, 2007, we expect to recognize approximately $1.5 million in stock-based compensation in 2008. To the extent we grant additional equity compensation awards in the future, the amounts of future stock-based compensation will be higher.

Aggregate intrinsic values of restricted stock. At an assumed initial public offering price of $ per share, which is the midpoint of the range on the cover page of this prospectus, the aggregate intrinsic values of outstanding vested and unvested restricted stock grants to employees and directors as of December 31, 2007 would be $ million and $ million, respectively. Although it is possible that the completion of this offering will add value to the shares of our common stock because they will have increased liquidity and marketability, the amount of any additional value cannot be estimated with precision or certainty.

Goodwill and intangible assets

In connection with any acquisition, we record as goodwill the excess of the acquisition purchase price over the fair value of the net tangible and identifiable intangible assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), we do not amortize goodwill, but perform an annual impairment review of our goodwill during our fourth quarter, or more frequently if indicators of potential impairment arise. Following the criteria of SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, and SFAS 142, we have determined that we have a single operating segment and reporting unit and consequently evaluate goodwill for impairment based on an evaluation of the fair value of our company as a whole. Significant judgments required to estimate the fair value of the company include estimating future cash flows and determining appropriate discount rates, growth rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value of the company, which could trigger impairment. At December 31, 2007, we had $57.2 million of goodwill, which was recorded in connection with our acquisition of NWI.

We record acquired intangible assets at their respective estimated fair values at the date of acquisition. In connection with our acquisition of NWI, we recorded intangible assets totaling $13.7 million, consisting of the value of acquired affiliate distribution arrangements. We are amortizing this amount using the straight-line method over seven years, which we have determined is the estimated useful life of the arrangements. At December 31, 2007, the value of these arrangements, net of accumulated amortization, was $6.5 million, and we expect to amortize $1.9 million in 2008.

Impairment of long-lived assets

We evaluate the recoverability of our long-lived assets, including acquired intangible assets and property and equipment, in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. We review long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. We measure recoverability of the asset by comparison of its carrying amount to the future undiscounted cash flows we expect the asset to generate. If we consider the asset to be impaired, we measure the amount of any impairment as the difference between the carrying

amount and the fair value of the impaired asset. We observed no impairment indicators through December 31, 2007.

We evaluate the remaining useful lives of intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to the remaining estimated amortization period. We observed no useful life indicators warranting a change to estimated amortization periods through December 31, 2007.

The application of impairment tests requires significant judgments and estimates, including the forecast of future operating results. Changes in the judgments and estimates could materially affect the application of these tests and trigger significant impairment charges that adversely effect our operating results.

Taxes

Since inception, Current Media, LLC, Current TV, LLC and Current International, LLC have been limited liability companies that pass through income and losses to their members. As a result, these entities have not been subject to any U.S. federal or state income taxes, and therefore the related tax consequences are reported at the individual member level and have not been reported within our consolidated financial statements. Accordingly, any tax benefits available from our net operating losses generated prior to the Conversion have also been passed through to our members and will not be available to us. These entities may have been subject to minimum state taxes in certain states that may assess capital taxes or taxes based on gross receipts. After the Conversion, we will be subject to U.S. federal and state income taxes and will be required to provide for income taxes in accordance with Statement of Financial Accounting Standard No. 109, Accounting for Income Taxes (SFAS 109).

In late 2006 we commenced operations in Europe. As a result, we are subject to income taxes in foreign jurisdictions and are required to provide for income taxes, in accordance with SFAS 109. Although our foreign operations are subject to foreign income taxes and we are liable to pay for these income taxes to the foreign jurisdictions, any related available foreign income tax credits, prior to the conversion, have also been passed through to our members and will not be available to us.

For 2007, our foreign operations had net income before taxes of $434,000. As a result, we recorded a current taxes payable of $204,000 and income tax expense of $192,000. For 2006, our foreign operations generated an insignificant net operating loss carry-forward and therefore we did not record any tax benefit for this net operating loss. We did not have any foreign operations in 2005.

Income tax accounting related to the Conversion

We have prepared and provided pro forma disclosures in our consolidated statements of operations and consolidated balance sheets as if we were taxable as a corporation since inception. The pro forma income tax expense was $1.7 million in 2007, and the pro forma deferred tax liability on our balance sheet at December 31, 2007 was $5.5 million. Upon our conversion into a corporation in connection with the completion of this offering, we will record a non-cash charge to operations equal to the amount of the pro forma deferred tax liability at such time, and that amount will be recorded as a deferred tax liability on the balance sheet of the corporation.

Pro forma deferred income taxes reflect the net tax effects of temporary differences between the pro forma carrying amounts of our tax assets and liabilities calculated for financial reporting purposes and the amounts that would have been calculated for our income tax returns in accordance with tax regulations and the net pro forma tax effects of operating loss and tax credit carryforwards if we had been a taxable entity.

The ultimate realization of deferred tax assets depends on the generation of sufficient taxable income of the appropriate character and in the appropriate taxing jurisdictions during the future periods in which the related temporary differences become deductible. We determined the valuation allowance on our pro forma deferred tax assets in accordance with the provisions of SFAS 109, which require weight of both positive and negative evidence in order to ascertain whether it is more likely than not that the pro forma deferred tax assets would be realized. We evaluated all significant available positive and negative evidence, including the existence of cumulative net losses, benefits that could be realized from available tax strategies and forecasts of future taxable income, in determining the need for a valuation allowance on our pro forma deferred tax assets. After applying the evaluation guidance of SFAS 109, we determined that it was necessary to record a valuation allowance against substantially all of our pro forma net deferred tax assets.

Our pro forma gross, tax effected, deferred tax assets were approximately $21.0 million as of December 31, 2007. We also would record a full valuation allowance on pro forma net deferred tax assets of approximately $19.5 million, which represents essentially all of our pro forma gross deferred tax assets, as we do not believe it is more likely than not that the pro forma deferred tax assets would have been realized. These pro forma deferred tax assets consist mainly of pro forma net operating losses of $16.9 million. Our pro forma net deferred tax liabilities were $5.5 million as of December 31, 2007, consisting primarily of our differences in the carrying amount of goodwill for financial reporting purposes compared to the pro forma income tax basis. Goodwill is not amortizable for financial reporting purposes, as its life is indefinite, but is deductible for income tax purposes, generating this temporary difference in carrying value. The pro forma tax expense for 2007 consists primarily of $1.5 million for a pro forma deferred tax liability related to the 2007 tax goodwill amortization and $204,000 for actual income taxes payable in a foreign jurisdiction.

At December 31, 2007, on a pro forma and pre-tax basis we would have U.S. net operating loss carry-forwards of approximately $38.8 million, state and local net operating loss carry-forwards of approximately $35.7 million, foreign net operating loss carry-forwards of $73,000 and foreign tax credit carry-forwards of $204,000. Only the foreign net operating loss carry-forwards would be available to us subsequent to converting to a corporation, since the other losses previously incurred and the foreign tax credits were passed through to the members of the limited liability company.

Results of operations

We acquired NWI on May 4, 2004. From that time until July 31, 2005, we continued to air NWI's programming, which was provided to us through an outsourcing agreement with the CBC. With the launch of Current TV on August 1, 2005, we began airing Current TV's programming, which was very different than NWI's offering. Because the nature and content on our television network changed so significantly with the launch of Current TV, and we effectively began to operate a new business, we believe that our operating results from January 1, 2005 to July 31, 2005 are not readily comparable to our operating results since August 1, 2005.

The following table sets forth selected consolidated statements of operations data as a percentage of revenue for each of the periods indicated.

		Year ended December 31,

		2005		2006		2007

Consolidated statement of operations data:
Revenue:
	Affiliate	96	%	79	%	84	%
	Advertising	4		21		16

Total revenue		100		100		100
Operating expenses:
	Programming and production	72		58		49
	Sales and marketing	29		16		24
	Product development	15		10		10
	General and administrative	21		17		17
	Depreciation and amortization	12		12		9

Total other operating expenses		149		113		109

Loss from operations		(49	)	(13	)	(10	)
Interest expense		(11	)	(9	)	(6	)
Other income		2		2		1

Loss before provision for income taxes		(58	)	(20	)	(15	)
Provision for income taxes		—		—		—
Net loss		(58	)%	(20	)%	(15	)%

Revenue

	Year ended December 31,

(in thousands)	2005		2006		2007

Affiliate	$	23,362	$	29,904	$	53,849
Advertising		1,014		7,979		9,916

Total revenue	$	24,376	$	37,883	$	63,765

2007 compared to 2006. Revenue in 2007 increased $25.9 million, or 68%, compared with 2006. The increase was primarily due to a $23.9 million increase in affiliate fees in 2007. A significant portion of this increase was attributable to our launch of new affiliate subscription

services with EchoStar in the United States in January 2007 and both BSkyB and Virgin Media in the United Kingdom and Ireland in March 2007. We also experienced an increase in fees from existing affiliates as a result of the growth in the number of their subscriber households for which they pay us a fee. Advertising revenue in 2007 increased $1.9 million, or 24%, compared with 2006, as we signed new advertisers and renewed the majority of our existing clients, many to larger contracts. In 2007, revenue from outside the United States represented 13% of revenue as compared to none in 2006.

2006 compared to 2005. Revenue in 2006 increased $13.5 million, or 55%, compared with 2005. The increase was due to a $7.0 million increase in advertising fees, along with a $6.5 million increase in revenue from affiliate subscription fees. The increase in advertising revenue in 2006 was largely due to our introduction of sponsorships for national advertisers in 2006, which contributed $6.2 million in advertising revenue in 2006. A significant portion of the increase in affiliate subscription fees in 2006 was due to additional fees from Comcast, as we moved to a different tier in Comcast's service offerings in March 2006, which increased the number of subscriber households that receive our television programming. In 2006 and 2005, there was no revenue from customers located outside the United States.

Programming and production expenses

		Year ended December 31,

(in thousands)		2005			2006			2007

Programming and production		$	17,532		$	21,985		$	31,382
	% of revenue		72	%		58	%		49	%

2007 compared to 2006. Programming and production expenses in 2007 increased $9.4 million, or 43%, compared with 2006. The increase in programming and production expenses in 2007 was due to a $5.5 million increase in compensation and related expenses resulting from an increase in programming and production headcount to 253 at December 31, 2007, from 169 at December 31, 2006, and a $2.6 million increase in allocated overhead costs.

2006 compared to 2005. Programming and production expenses in 2006 increased $4.5 million, or 25%, compared with 2005. The increase in programming and production expenses was due to an $8.8 million increase in compensation and related expenses resulting from an increase in programming and production headcount to 169 at December 31, 2006, from 100 at December 31, 2005. A significant portion of the increased headcount was added in the second half of 2005 in connection with the launch of Current TV. Costs associated with music, video and news rights increased $947,000 due to having a full year of our own programming in 2006, compared to a partial year in 2005. The increase in programming and production was partially offset by the elimination of CBC third-party programming costs of $6.0 million as we transitioned to our own programming in August 2005.

Sales and marketing expenses

		Year ended December 31,

(in thousands)		2005			2006			2007

Sales and marketing		$	6,995		$	6,224		$	15,040
	% of revenue		29	%		16	%		24	%

2007 compared to 2006. Sales and marketing expenses in 2007 increased $8.8 million, or 142%, compared with 2006. The increase was primarily due to marketing expenses of $6.4 million related to our first television brand and online advertising campaigns, which we began in the fourth quarter of 2007, as well as marketing outreach efforts to our targeted audience. We also experienced an increase of $2.2 million in compensation and related expenses in the 2007 period, as we hired senior marketing and advertising sales executives, began building out our marketing team and repositioning our advertising sales team. Total sales and marketing headcount increased to 32 at December 31, 2007, from 22 at December 31, 2006.

2006 compared to 2005. Sales and marketing expenses in 2006 decreased $771,000, or 11%, compared with 2005. The decrease was primarily the result of a $3.3 million decrease in spending on marketing, partially offset by higher advertising sales expenses of $1.5 million. Marketing expense decreased in 2006 in part due to the significant expenses incurred in 2005 associated with the launch of Current TV in August 2005. The higher advertising sales expenses included increased compensation and related expenses, as we brought our advertising sales efforts in-house for the full year of 2006, compared with a partial year in 2005. Total sales and marketing headcount increased to 22 at December 31, 2006, from 20 at December 31, 2005. Stock-based compensation expense included in sales and marketing expenses was $374,000 in 2006, which was primarily due to a one-time expense related to modification of an employee stock grant in connection with termination of employment with us.

Product development expenses

		Year ended December 31,

(in thousands)		2005			2006			2007

Product development		$	3,555		$	3,602		$	6,529
	% of revenue		15	%		10	%		10	%

2007 compared to 2006. Product development expenses in 2007 increased $2.9 million, or 81%, compared with 2006. Approximately $1.9 million of this increase was attributable to increased compensation and related expenses, other than those capitalized, for technology, software and infrastructure development, related in part to design and development work on Current.com, which debuted in October 2007. Product development expenses also included a $454,000 increase in allocated overhead costs. Total product development headcount increased to 75 at December 31, 2007, from 43 at December 31, 2006.

2006 compared to 2005. Product development expenses in 2006 increased $47,000, or 1%, compared with 2005.

General and administrative expenses

		Year ended December 31,

(in thousands)		2005			2006			2007

General and administrative		$	5,238		$	6,403		$	10,879
	% of revenue		21	%		17	%		17	%

2007 compared to 2006. General and administrative expenses in 2007 increased $4.5 million, or 70%, compared with 2006. The increase was primarily due to increased compensation and related expenses of $2.8 million and increased third-party professional services costs of $813,000 in anticipation of becoming a public company. General and administrative headcount increased to 31 at December 31, 2007, from 20 at December 31, 2006.

2006 compared to 2005. General and administrative expenses in 2006 increased $1.2 million, or 22%, compared with 2005, primarily due to increased compensation and related expenses of $1.5 million, partially offset by a decrease in third-party professional services costs of $251,000 related to the favorable settlement of trademark litigation in 2006. General and administrative headcount increased to 20 at December 31, 2006, from 19 at December 31, 2005.

Depreciation and amortization expenses

		Year ended December 31,

(in thousands)		2005			2006			2007

Depreciation and amortization		$	2,971		$	4,460		$	6,022
	% of revenue		12	%		12	%		9	%

2007 compared to 2006. Depreciation and amortization expenses increased by $1.6 million, or 35%, in 2007, compared with 2006. The increase was due to capital additions of computer equipment, computer software and broadcast equipment in 2007.

2006 compared to 2005. Depreciation and amortization expenses increased by $1.5 million, or 50%, in 2006, compared with 2005. The increase was due to capital additions of computer equipment, computer software and broadcast equipment in 2006.

Interest expense

	Year ended December 31,

(in thousands)	2005		2006		2007

Interest expense	$	2,726	$	3,445	$	4,077

2007 compared to 2006. Interest expense in 2007 increased $632,000, or 18%, compared with 2006. The increase was due to our incurring $5.0 million in additional debt in September 2006, and thus 2007 reflects a full year of interest expense.

2006 compared to 2005. Interest expense in 2006 increased $719,000, or 26%, due to our incurring $5.0 million in additional debt in September 2006 and the first full year of interest expense on capitalized broadcast equipment leases.

Other income

	Year ended December 31,

(in thousands)	2005		2006		2007

Other income	$	388	$	598	$	496

2007 compared to 2006. Other income is comprised primarily of interest income on our cash balances. Other income in 2007 decreased $102,000, or 17%, compared with 2006, primarily as a result of lower invested cash balances.

2006 compared to 2005. Other income in 2006 increased $210,000, or 54%, compared with 2005, largely because of higher interest rates in 2006 compared to 2005.

Restatements

We have restated our consolidated statement of cash flows for 2005. The restatement relates to the classification of a restricted cash deposit of $1.0 million from operating activities to investing activities. The deposit is currently placed with a financial institution for the benefit of the lessor under an equipment lease agreement. The effect of this restatement does not have any impact on our consolidated statement of operations for 2005 or on our consolidated balance sheet at December 31, 2005.

We have also restated our consolidated balance sheet at December 31, 2006. The restatement corrects the balance sheet presentation of $1.6 million of unvested share-based compensation provided to our distributors, which was previously presented as a non-current asset in affiliate agreements with the corresponding amount in common stock. In accordance with EITF Topic D-90, we have restated our presentation to appropriately offset these amounts so that unvested share-based compensation provided to our distributors is no longer presented on the face of the balance sheet as a non-current asset and as a component of common stock. The effect of this restatement does not have any impact on our consolidated statement of operations and consolidated statement of cash flows for 2006.

The effects of the restatements are reflected in our consolidated financial statements and accompanying notes included herein.

Liquidity and capital resources

We have incurred substantial losses and negative cash flows since inception. We have financed our operations through sales of preferred shares and the incurrence of debt. In 2004, we financed the $70.9 million acquisition of NWI from Vivendi through the issuance of $60.0 million of our Series A convertible preferred shares and the incurrence of $25.0 million in debt. In 2005, we issued an additional $15.0 million of Series A convertible preferred shares, and in 2006 we incurred an additional $5.1 million in debt. In the three years ended December 31, 2007, we used $15.7 million in operations. As of December 31, 2007, we had cash and cash equivalents of $2.2 million.

We expect to use the net proceeds of this offering to repay all of our outstanding indebtedness and accrued interest, which was approximately $36.5 million at December 31, 2007. We believe the balance of the net proceeds after paying outstanding indebtedness and accrued interest, together with our cash and cash equivalents, will be sufficient to fund our operations and satisfy our financial obligations for the foreseeable future. In the future, we may acquire complementary businesses, content or distribution arrangements from third parties, and we may decide to raise additional capital through future debt or equity financings to the extent we believe necessary to successfully complete these acquisitions. However, additional financing may not be available to us on favorable terms, if at all, at the time we

make such determinations, which could have a material adverse affect on our ability to maintain or improve our liquidity and cash position in the future.

Indebtedness

Dylan note. In May 2004, we entered into a $25.0 million note payable with Dylan Holdings, an affiliated entity of NBC Universal, in conjunction with the purchase of NWI. We refer to the note as the Dylan Note. The Dylan Note bears interest at a rate of 9.25%, which compounds semi-annually. In accordance with the terms of the Dylan Note, interest was added to the principal through May 4, 2006. We added $2.5 million and $900,000 of interest to the principal during 2005 and 2006, respectively. Under the terms of the Dylan Note, since May 4, 2006, we have paid interest on the unpaid principal in cash semi-annually. As of December 31, 2007, the unpaid principal under the Dylan Note totaled $30.0 million, which is due in full on May 4, 2008.

Substantially all of the assets of our subsidiary, Current TV, LLC, are pledged as collateral to secure the Dylan Note. Under the terms of the Dylan Note, we are limited in our ability to merge or consolidate our subsidiaries and are also limited in the types of transactions that can be entered into between Current TV, LLC and us, including restrictions on the type and amount of payments between Current TV, LLC and us. Furthermore, Current TV, LLC is limited in its ability to dispose of assets and may not, with limited exceptions, create or incur liens with respect to any asset owned or acquired. In the event of default, Dylan has the right to require payment of the principal and accrued interest.

Revolving note. In September 2006, we entered into a revolving note payable with a consortium of lenders, which we refer to as the Revolving Note and the Lenders, respectively. All of the Lenders are also existing stockholders. Under the terms of the Revolving Note, we may borrow up to $15.0 million in increments of $5.0 million at any time prior to May 4, 2008. We may repay amounts due under the Revolving Note in integral multiples of $1.0 million. Any amounts repaid under the Revolving Note are available for borrowing. The Revolving Note bears interest at a rate of 15% for the first year and 18% thereafter, which compounds quarterly. In accordance with the terms of the Revolving Note, interest is added to the principal through May 4, 2008, at which time the unpaid principal and interest are payable in full. As of December 31, 2007, we had borrowed $5.0 million and had accrued interest of $1.1 million, and had made no payments. We incurred $170,000 of costs relating to the issuance of the Revolving Note, which is deferred and is being recognized over the life of the loan as an adjustment of yield.

The payment of all amounts due under the Revolving Note are guaranteed by Current International, LLC and by all of our future formed or acquired subsidiaries. Current TV, LLC is not subject to the guarantee as long as the Dylan Note remains outstanding, but immediately becomes subject to the guarantee should the Dylan Note be discharged. We have pledged our ownership interest in Current TV, LLC and Current International, LLC as collateral. Under the terms of the Revolving Note, we are limited in our ability to merge or consolidate our subsidiaries and in the types of transactions that may occur between Current TV, LLC, Current International, LLC and us, including restrictions on the type and amount of payments between Current TV, LLC, Current International, LLC and us. Furthermore, we are limited in our ability to dispose of assets and may not, with limited exceptions, create or incur liens with respect to any asset owned or acquired. In the event of default under the Revolving Note, the interest rate on

the unpaid principal amount increases to 20% and the Lenders have the right to require payment of the principal and accrued interest.

We expect to borrow approximately $5.0 million under the Revolving Note before completing this offering, which we believe is the maximum amount we can borrow without violating the negative covenant in our 2008 credit facility discussed below. As a result of this anticipated borrowing, we expect to have approximately $43.0 million of indebtedness outstanding on May 4, 2008 when indebtedness under the Dylan Note and the Revolving Note become due.

2008 credit facility. In January 2008, we entered into a $50.0 million senior secured credit facility with JPMorgan Chase Bank, N.A. We requested that JPMorgan Chase Bank provide the credit facility in light of our selection of one of its affiliates to act as an underwriter in connection with this offering. If we have not completed this offering on or before May 4, 2008, we plan to borrow under the credit facility to repay indebtedness under the Dylan Note and Revolving Note when that indebtedness becomes due. Under this credit facility, $40.0 million is available under a term loan that is to be used solely to pay off our indebtedness described above. Amounts under the term loan must be taken in a single draw on or after May 2, 2008 but no later than May 5, 2008, and any unused amounts expire on May 5, 2008. Any amounts repaid under the term loan may not be reborrowed. The remaining $10.0 million is available under a revolving loan that may be used anytime on or after the date on which the term loan is made for general corporate purposes and in an amount up to $3.0 million to pay off the indebtedness described above to the extent such indebtedness is not paid off with the proceeds of the term loan. Amounts repaid under the revolving loan may be reborrowed. The interest rates under the term and revolving loans are, at our option, either LIBOR, adjusted for statutory reserve requirements, plus 5%, or 4% plus the higher of either JPMorgan Chase Bank's Prime Rate or the Federal Funds Effective Rate plus 0.5%. The interest rate increases by 1% 180 days after the date upon which the term loan under the credit facility is drawn. This credit facility expires and all amounts are due and payable on the earlier of May 4, 2009 or the closing of this offering. Substantially all of our assets are pledged as collateral under this credit facility. In the event of default, the interest rate increases by 2% and all amounts borrowed under the credit facility become immediately due and payable. Our ability to draw the credit facility is subject to numerous conditions, including the absence of a material adverse change in our business and compliance with affirmative and negative covenants. Management expects that the Company will comply with these covenants and have access to the credit facility.

Cash flows

	Year ended December 31,

	2005			2006			2007
(in thousands)	(as restated)

Net cash used in operating activities	$	(7,098	)	$	(4,706	)	$	(3,912	)
Net cash used in investing activities		(4,233	)		(3,321	)		(4,869	)
Net cash provided by (used in) financing activities		14,663			4,079			(1,024	)

Our cash flows from operating activities in any period have been significantly influenced by the number of cable and satellite providers distributing our programming, the number and size of new affiliate and advertising contracts and the timing of payments by our distributors and

advertisers. Our largest source of operating cash flows is cash collections from our distributors and advertisers.

Our primary uses of cash in operating activities are for personnel-related expenditures, marketing expenses and facilities lease payments. Our cash flows from operating activities in any period will continue to be significantly affected by the extent to which we add and renew agreements with affiliates and advertisers, collect receivables and increase spending as a result of personnel and programming expense increases to grow our business.

In 2007, we used $3.9 million of net cash in operating activities. In 2007, we incurred a net loss of $9.9 million, an increase in accounts receivable of $4.0 million, an increase in other assets of $1.3 million, a decrease in accounts payable of $1.0 million and an increase in prepaid expenses and other current assets of $535,000. These amounts were partially offset by depreciation of property and equipment of $4.1 million, stock-based compensation of $2.4 million, an increase in accrued liabilities of $2.1 million, amortization of intangible assets of $1.9 million, amortization of programming of $1.0 million, deferred interest expense of $876,000 and an increase in deferred revenue of $460,000.

In 2006, we used $4.7 million of net cash in operating activities. In 2006, we incurred a net loss of $7.6 million, an increase in accounts receivable of $3.9 million, a decrease in deferred revenue of $860,000, an increase in prepaid expenses and other current assets of $689,000 and an increase in other assets of $478,000. These amounts were partially offset by depreciation expense of $2.5 million, amortization of intangibles of $1.9 million, stock-based compensation of $1.4 million, an increase in accrued liabilities of $1.1 million, deferred interest expense of $1.1 million, and an increase in accounts payable of $581,000.

In 2005 (as restated), we used $7.1 million of net cash in operating activities. In 2005, we incurred a net loss of $14.3 million, an increase in accounts receivable of $1.0 million and an increase in prepaid expenses and other current assets of $715,000. These amounts were partially offset by deferred interest expense of $2.5 million, amortization of intangibles of $2.0 million, an increase in accrued liabilities of $1.2 million, depreciation expense of $938,000, an increase in accounts payable of $922,000, and an increase in deferred revenue of $860,000.

Investing activities

Since acquiring NWI in 2004, our primary investing activities have been capital expenditures for computer equipment, computer software and broadcast equipment. In 2005, 2006 and 2007, we used $3.2 million, $3.3 million and $4.9 million, respectively, for capital expenditures. In addition, in 2005, we used $1.0 million for a capital lease deposit.

Financing activities

Our primary financing activities have been our issuances of preferred stock, issuances of notes payable and lease financing associated with our capital expenditures.

In 2007, we used $1.0 million in financing activities, primarily related to repayments of lease financings incurred in 2005.

In 2006, we generated $4.1 million of net cash from financing activities. This cash was provided by our issuance of $5.1 million in notes payable, partially offset by lease repayments of $844,000.

In 2005, we generated $14.7 million of net cash from financing activities. This cash was provided primarily by our sale of $15.0 million of Series A convertible preferred shares, partially offset by lease repayments of $337,000.

Contractual obligations

The following table summarizes our contractual obligations as of December 31, 2007:

	Payment due by period

(in thousands)	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total

Dylan Note	$	29,956	$	—	$	—	$	—	$	29,956
Operating leases		1,463		2,370		2,014		1,762		7,609
Other commitments(1)		2,985		3,290		—		—		6,275
Revolving Note		6,088		—		—		—		6,088
Capital leases		1,167		157		—		—		1,324
Other notes payable		36		36		—		—		72

(1): See note 8 to our consolidated financial statements included elsewhere in this prospectus.

Off-balance sheet arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes, nor do we have any undisclosed material transactions or commitments involving related persons or entities.

Recent accounting pronouncements

In July 2006, the Financial Accounting Standards Board, or FASB, issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting for interim periods and disclosures for uncertain tax positions. We adopted FIN 48 in the first quarter of 2007 with no impact on our consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements, but does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The adoption of SFAS 157 is not expected to have a material effect on our financial position or results of operations.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits entities to choose to measure many financial

instruments and certain other items at fair value. The objective of SFAS 159 is to provide entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and may not be applied retroactively unless the entity chooses early adoption. We did not early adopt SFAS 159. The adoption of SFAS 159 is not expected to have a material effect on our financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations (SFAS 141(R)). The objective of SFAS 141(R) is to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. SFAS 141(R) requires an acquiror to recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. It also requires the acquiror to recognize and measure the goodwill acquired in a business combination or a gain from a bargain purchase. SFAS 141(R) is effective for financial statements issued for the fiscal years beginning on or after December 15, 2008. The adoption of SFAS 141(R) is not expected to have a material effect on our financial position and results of operations.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (SFAS 160). The objective of SFAS 160 is to improve the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 also changes the way the consolidated income statement is presented, establishes a single method of accounting for changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation, requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated and expanded disclosures in the consolidated financial statements that clearly identify and distinguish between the interests of the parent's owners and the interest of the noncontrolling owners of a subsidiary. SFAS 160 is effective for financial statements issued for the fiscal years beginning on or after December 15, 2008. The adoption of SFAS 160 is not expected to have a material effect on our financial position and results of operations.

Quantitative and qualitative disclosures about market risk

Foreign currency risk

To date, the foreign currency exchange rate effect on our results of operations and financial condition has been minimal. However, as we expand our international operations, the effects of foreign currency exchange rates could increase.

Operations outside the United States primarily consist of our U.K.-based operations. To date, these operations have been fully funded and supported by our U.S. business and incur certain operating expenses in U.S. dollars. Accordingly, we have determined that the functional currency of our U.K. operations is the U.S. dollar. To the extent our U.K. operations grow and become self-sustaining, we will re-assess the appropriateness of its functional currency.

We account for the economic effects of exchange rates for our international operations in accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency

Translation (SFAS 52). As we do not have any significant operations outside the U.S. with local functional currencies, all changes in exchanges rates as described below are recorded in our results of operations, and we do not have any cumulative translation gains or losses recorded in the balance sheet.

We re-measure all foreign-currency denominated monetary assets and liabilities using the current exchange rate at the end of the period, and measure all foreign currency transactions using the average exchange rate for the month. We had minimal transactions in foreign currencies for 2006 and did not have any foreign currency transactions in or prior to 2005. In 2007, we reported foreign exchange gains of $15,000.

We do not enter into derivative financial instruments for speculative or trading purposes.

Interest rate sensitivity

We had unrestricted cash and cash equivalents totaling $16.0 million, $12.0 million and $2.2 million at December 31, 2005, 2006 and 2007, respectively. A majority of these amounts were invested in money market funds. These unrestricted cash and cash equivalents were held for working capital purposes. We do not enter into investments for trading or speculative purposes. We do not believe that we have any material exposure to changes in the fair value of these cash equivalents as a result of changes in interest rates. Declines in interest rates, however, will reduce future investment income.

Business

Current Media overview

Current is a global, participatory media company with the goal of democratizing media by engaging, informing and enriching our young adult audience and encouraging their participation across platforms. We operate a television network, Current TV, and a website, Current.com, that distribute viewer-created content as well as internally developed and acquired content that is relevant to the lives of young adults. We believe the combination of our television and Internet platforms creates an immersive and interactive viewer experience for our growing global audience.

Our Emmy-award winning network, Current TV, was launched in August 2005 and is among the fastest growing networks in the history of cable television in terms of subscriber household distribution. Cable television is one of the largest and most established media segments, and Current TV is one of the leading cable networks that provides news, information and lifestyle entertainment to young adults in their own voice and from their own perspective. We utilize an innovative workflow that allows us to cost effectively create, acquire and program short-form video segments focused on topics relevant to young adults, with close to one-third of our content coming from our viewers. Leveraging this programming platform, we have pioneered innovative ways for blue-chip advertisers to reach and engage with our young adult audience, an audience that is highly sought-after and, we believe, increasingly elusive in traditional media outlets.

Our recently launched website, Current.com, is both a social news source and a platform for multi-media conversation around global news, current events, lifestyles, culture and other topics relevant to young adults. Additionally, our website serves as an online studio for our audience to create, upload and evaluate user-generated content for Current TV. We believe we have developed a platform that gives our audience a new kind of media experience, where the audience participates in both the creation and selection of the content it engages with on both Current TV and Current.com.

Our primary sources of revenue are affiliate fees and advertising. Affiliate fees are derived from long-term distribution agreements with cable, satellite and telecommunications operators who pay us a monthly fee for each subscriber household that receives Current TV. In the United States, our affiliate customers include DirecTV, Comcast, EchoStar, TimeWarner and AT&T. In the United Kingdom and Ireland, our affiliate customers include British Sky Broadcasting, or BSkyB, and Virgin Media. In the Spring of 2008, we expect to launch in Italy on Sky Italia. Advertising revenue is derived from advertisers who pay for sponsorships and spot advertisements. Selected advertising customers include Toyota, T-Mobile, Johnson & Johnson, General Electric, Geico and L'Oreal.

Current TV was launched in August 2005 in approximately 19 million subscriber households in the United States and is now available in approximately 51 million subscriber households in the United States, the United Kingdom and Ireland. In 2006 and 2007, we recorded revenue of $37.9 million and $63.8 million, respectively. As we have strategically invested in our business, our operating expenses have also increased. Our operating losses were $4.8 million in 2006 and $6.1 million in 2007.

Industry background

Evolution in the media preferences and consumption patterns of young adults

Today's young adults are often described as the "choice generation." They grew up in a digital world using the Internet as a primary source of news and information, communicating on mobile phones and playing video games. They have been presented with a broad range of choices about brands and products, and how and when to consume the things they want. They are sophisticated consumers, especially when it comes to information. Today's young adults prefer content that reflects their lifestyles and fits into their schedules and is packaged to their preferences and available across multiple media platforms. We believe that they also prefer content providers that are responsive and respectful, and allow them to participate in real time with their programming preferences.

Today's young adults assemble a broad view of the world from a large number of sources. They are not looking for a single oracle to analyze and interpret news and current events, as Walter Cronkite once did for a previous generation. They grew up being encouraged to analyze and debate, to influence and interact.

Although young adults are increasingly skeptical of top-down news and information, the television platform remains the dominant medium for the consumption of content, with young adults spending more and more time watching television. According to a Millennial Strategy Program survey conducted by Frank N. Magid & Associates, forty percent of young adults watch two to four hours of TV a day on average. However, young adults are not watching television news. According to data from Nielsen Media Research, only 0.8%, 0.7% and 1.0% of 18-34 year olds were reached by ABC World News Tonight, CBS Evening News and NBC Nightly News, respectively, during the average 30-minute evening telecast in the third quarter of 2007. Also, only 1.5% of 18-34 year olds were reached by CNN during the average 24-hour day in the third quarter of 2007. Young adults increasingly turn to other distribution platforms, such as the Internet, to meet their needs for the information they seek.

We believe that the reason young adults do not engage with TV for nonfiction content is that the format in which TV delivers this content has not evolved to meet their preferences and needs. In fact, TV news programming has experienced limited innovation in the last two decades. The majority of television news programs are still telling their audiences what is happening in the world, as well as what to think about it. Both the content and the format of broadcast and cable network news appeal to an older generation, and often do not resonate with young adults. According to data from Nielsen Media Research, in the third quarter of

2007, the median age for broadcast evening news viewers and the median age for CNN viewers were both greater than 59 years old. Young adults want to engage with programming related to news, information and lifestyle, but their consumption patterns have evolved faster than traditional television, leaving their needs underserved.

Changes in media programming and production

Evolution in media is linked to advances in technology. The printing press fundamentally changed the accessibility and economics of information. Radio and television brought media into the industrial era. The Internet is opening up media and enabling consumers to have more access to a much greater array of information. Today, technology is allowing consumers to participate in the creation of content and providing a means of delivering that content to mass audiences. One example of the power of an active, collaborative community is Wikipedia, a user-generated online encyclopedia, which is the 6th most trafficked site on the Internet, attracting more than 226.1 million unique visitors worldwide, according to December 2007 data from comScore Media Metrix.

Although the television platform attracts large audiences, legacy infrastructure inhibits traditional television networks from evolving along with advances in technology. Most TV networks are burdened with massive infrastructure investments, big budgets and big studios. These legacy systems are generally not suited for a workflow where digital content is dynamically managed and repurposed across multiple platforms. In addition, traditional TV news networks are often culturally ill-suited to react to the rapidly changing media environment and demands of young adults.

Digital media tools enable efficient and cost-effective content creation, programming and distribution. These tools provide for scalable production, with relatively low overhead, open systems and small teams, changing the way content is processed, organized and delivered. Advances in technology create flexibility to distribute content across multiple platforms, including television, the Internet and mobile devices.

Evolution in content creation

Changes in the means and cost structure of content production and distribution have significantly expanded the universe of potential content creators. Technological innovations have enabled creative young adults to produce broadcast quality video with a low-cost handheld camera and a free software package on their laptops. These new tools have opened the way to interactivity and collaboration. As a result, programming can be a conversation between viewers and a network, offering freedom from one-way communication and resulting in unprecedented engagement and participation.

Changes in advertising models that drive the media industry

Although Internet advertising has grown more rapidly than TV advertising in recent years, advertisers devote the largest portion of their media spending to television. According to third-party research, global advertiser spending on the Internet grew at a 35.1% compound annual growth rate between 2004 and 2007, whereas global advertiser spending on TV only grew at a 4.7% compound annual growth rate in the same period. According to third-party research, we believe the 2007 global advertiser spending on the Internet to be approximately $41 billion, compared to an estimated global advertiser spending on TV of approximately $160 billion. Despite the importance of TV advertising, the traditional TV advertising model is becoming less

effective. People in general, and young adults in particular, are changing their viewing patterns and often skip traditional 30-second commercials.

Innovations are needed in the traditional TV advertising format that will offer new ways for advertisers to connect with audiences. Because TV advertising is less effective, advertisers are beginning to look beyond traditional reach and frequency targets and are increasingly looking to audience engagement as a better predictor of marketing success. Advertisers are seeking additional platforms and using digital technologies to target more effectively in an attempt to develop deeper relationships with consumers.

Market opportunity

As a result, there is a large market opportunity to develop an integrated media platform capable of cost-effectively engaging young adults around news, information and lifestyle entertainment, and to build a brand premised on communicating what is going on in the lives of this young-adult generation. There is demand from both young adults and the advertisers who target them for a media platform that engages 18-34 year-olds in their own voices and from their own perspectives, and whose content is defined by what is most important in their lives: from pop culture to politics, careers to relationships.

Multi-platform media company

Strategically, a successful cable and satellite TV network provides a strong foundation for a global, multi-platform media company. It is a scarce and valuable asset that can provide recurring and stable revenue streams from affiliate fees. Advertisers recognize that television is still the most influential platform for shaping public opinions and influencing purchasing decisions. Other platforms, such as the Internet and mobile devices, complement programming on television by providing other ways to connect users to new forms of content. The Internet also offers unique opportunities for young adults to connect and collaborate, serving as a platform for participation, social filtering and discussion around relevant news, information and entertainment. Television networks that learn how to leverage the Internet and other new media platforms to enhance content creation, programming and consumption will be able to more effectively engage today's young adult audience.

Need for a robust workflow solution

To take advantage of technological innovations and respond to audience demands for participation and multi-platform distribution, media companies require new and flexible

infrastructure and workflows that allow for quick and cost-effective production, editing and repurposing of content. However, traditional media companies have significant investments in legacy systems and are reluctant to discard those systems. Building a flexible infrastructure that cost-effectively serves the needs of this young adult audience offers a significant advantage in today's dynamic media industry.

Opportunity to deliver a young adult demographic to advertisers

Participatory media offers advertisers an innovative solution to the increasingly difficult challenge of reaching young adults, whose viewership habits are changing and who often avoid watching commercials. Digital video recorders have disengaged consumers from advertisements, and advertisers must change and adapt in order to win back the attention of consumers on TV. Consequently, advertisers are looking to integrate their brands into content that engages young adults, and would like TV ads to be more like programming, so audiences are less likely to skip them.

Advertisers also seek solutions to address the increasing number of consumers who are moving towards the Internet and mobile devices to view content. They would like to extend their brand campaigns to have multiple touch points with young adults across each of these platforms. A multi-platform media company can provide integrated advertising packages that address this need.

Current's pioneering approach

Current has pioneered new ways to create, program and distribute content. In the process, we have redefined the TV news and information network model and engaged the 18-34 year-old demographic by providing programming that is relevant and unique to young adults, expressed in their voice. User-generated content and user-driven programming are at the core of our programming strategy, and foster a sense of community and participation among our audience. In addition, we have developed an innovative workflow system that allows us to maximize efficiency and flexibility at the same time that it provides low-cost, high-quality programming.

Current's new network model

Our focus on user-generated content provides a unique connection with our young adult audience. We engage young adults by telling stories in their voices and from their perspectives. We filter those stories through the lens of on-the-ground experience. We have redefined the scope of "news" to include topics that are important to young adults. While we cover all "traditional" subjects, such as national and international events, politics, business, technology and entertainment, we also cover topics such as sex and relationships, spirituality, careers, video games, culture and more. Current's programming follows a simple guideline: whatever is going

on in the lives of our viewers should be visible on Current and should be presented in their voice and from their point of view.

Structurally, we do not organize our channel in predictable half-hour or hour-long programming blocks. Instead our programming is presented in short segments that we call "pods," which are typically 2-10 minutes in length. We juxtapose traditional journalism stories with light cultural pieces around the clock. By breaking free of the traditional scheduling grid, we provide an experience that is more varied and surprising than traditional TV.

Current's programming

Current has developed a programming model built on several unique content offerings, all designed to reflect the tastes and lifestyles of our target 18-34 year-old audience.

Viewer-Created Content. The foundation of Current's programming strategy is Viewer-Created Content, or VC². We collaborate with our audience in the creation of a significant amount of our content. Everything on Current TV is open for viewer participation including pods, promotions and ads. We bolster our VC² strategy by providing sophisticated online tools and training for content creators that enable aspiring filmmakers to improve their skills.

Internally produced and acquired content. We complement VC² with high quality content produced in-house, as well as cost-effectively acquired programming. Current's innovations in production result in a significantly lower programming cost structure than that of the traditional television industry. Our featured programming includes:

•: "Vanguard Journalism," which explores global issues and themes with a guerilla-style approach to journalism, as young reporters are deployed around the world to provide real-life impressions of significant events;
•: "Citizen Journalism," which features aspiring journalists reporting on local events in their hometowns;
•: "Supernews," our animated political satire;
•: "Google Current," our daily news updates produced in partnership with Google;
•: "InfoMania," our daily news-comedy;
•: "The Daily Fix," our music video blog, or vlog; and
•: "Radar," our daily reports that track noteworthy events and new music releases.

Current's innovative advertising solution

As with our programming model, our advertising model is designed to appeal to the lifestyles, tastes and needs of young adults. We provide advertisers with a number of innovative advertising solutions through advertising sponsorships. These solutions include viewer-created ad messages, or VCAMs, sponsorship of television content, online integration with our website, exclusivity and short-form and long-form spots. Through these solutions, we seek to offer advertisers a marketing forum that is free from ad-skipping.

A key solution that we provide advertisers is the ability to let our young adult viewers create commercials that we then air on Current TV. These VCAMs are often compelling to our

audience, and research shows that viewers prefer VCAMs nine to one over expensive traditional commercials.

Current's all digital broadcast facility

Our TV broadcast facilities are built on an open IP architecture as opposed to traditional broadcast television legacy systems. Unlike high-cost production facilities at traditional cable networks, we have deployed a new, all-digital infrastructure that allows us to produce, acquire and distribute high quality content at a low cost. We archive and can access all of our short-form content on-demand and make that content easily accessible both internally to our production and scheduling teams and externally through new products and service applications.

Our innovative structure and all-digital systems required a new approach to content management. We have an entirely file-based workflow, with media being channeled from sources as disparate as satellite feeds and web uploaders. Media flows into a distributed production infrastructure where producers and editors coordinate across continents to deliver media to the web and TV. We have large volumes of content to track, in part because we program in short-form pods, rather than standard 30 and 60 minute shows. To suit our needs, we built our own digital content management system.

Current.com

Current.com serves several purposes: it is a news, information and entertainment source for young adults online; it is a real-time connection to programming on Current TV; and it is a platform for collaborative media production. At its core, Current.com is a social news feed that, like Current TV, is generated in large part by our audience and curated by us. We have built tools to help users aggregate interesting stories and videos from around the web, organize them according to thousands of topics, share them with their friends and with the world and even get them aired on Current TV.

At Current.com, we have also built a pioneering two-screen application that connects our Internet users, in real-time, to Current TV. They can see what pod is currently playing, shuffle forward and back in time, join rich-media conversations around Current content and make a contribution themselves. The two-screen application connects our website and TV network, and gives our TV viewers a reason to visit Current.com and our online users a reason to tune in to Current TV.

Current's strengths

We believe Current has significant competitive strengths, which include the following:

Distribution with leading cable, satellite and telecommunications operators in the United States and internationally. At a time when securing new distribution as a cable network is very difficult, we have grown rapidly and are one of the fastest growing cable TV networks in industry history in terms of subscriber household growth. Current TV currently reaches approximately 51 million subscriber households in the United States, the United Kingdom and Ireland. We have long-term agreements with the five largest pay TV distributors in the world, and with the majority of the largest cable TV providers in our regions, providing a stable and secure revenue stream.

Significant traction among our target audience. According to spring 2007 data from Simmons Market Research Bureau, Inc., Current indexes highest in concentration of viewers 25-34 years old among all cable networks, and sixth for adults aged 18-34. A custom study conducted by OTX in the spring of 2007 indicates that viewers of Current TV watch an average of 7.5 hours per week of our programming and that 46% of viewers watch Current TV for 30 minutes or more at a time. This demonstrates our success in providing content that engages our target market and in offering a media solution for this elusive audience.

New advertising models for engaging viewers and blue-chip advertisers. Our innovative marketing program provides a compelling advertising solution to major advertisers, including Toyota, T-Mobile, Johnson & Johnson, General Electric, Geico and L'Oreal. We have had a strong track record of renewal from our sponsors and many sponsors have increased their advertising spending with us since the launch of Current TV in August 2005. These advertisers buy sponsorships, which contain a range of solutions such as VCAMs and isolated creative brand messages.

High quality content. Our programming is compelling to our audience and has been recognized by the industry through the awards we have won. Notably, we received the 2007 Emmy Award for Outstanding Creative Achievement in Interactive Television, and we are the youngest TV network to achieve recognition for creative excellence by the Academy of Television Arts and Sciences. We were also recognized in 2007 for having the best website of any television network, for which we received a Webby Award.

Pioneer and leader in user-generated content with the demonstrated ability to cost-effectively develop, produce and acquire innovative programming. One of our greatest strengths is our demonstrated ability to innovate in the TV network model. We have set ourselves apart from our cable network peers through our focus on user-generated content, both as a programming tool and as an advertising solution, and our ability to produce high quality, low-cost programming. In comparison to other cable networks, our cost of programming is substantially lower.

Global archive of short-form digital content. Current is establishing a growing archive of short-form video content that is fully digital, available for use on any platform, and representative of our young adult audience's broad interests. Our archive can be used by Current TV programmers to cover the news and information agenda of the day, and to support new products and services in the future. The pods can be bundled into a unique video-on-demand offering, as they are for Time Warner Cable in Los Angeles, or for specialized TV environments, as they are for Virgin America's in-flight entertainment system. The Current archive also supports the premium content offering on Current.com.

Experienced team. We have an experienced team with entrepreneurial, media and Internet backgrounds. Our team understands how to program to and with the 18-34 year-old demographic. We also have expertise in broadcast infrastructure and how to build a digital workflow that is operationally efficient and leverages the latest IT architecture. Finally, our team has built a corporate culture that fosters innovation and focuses on communicating to and with young adults.

Strong brand. We believe the Current brand is increasingly being recognized as the source for high quality user-generated and other innovative content that keeps young adults informed as to what is going on in their world, in their own voice and from their perspective.

State-of-the-art infrastructure. Without the burden of legacy systems, we have leveraged new technologies, bypassing traditional broadcast systems and built a state-of-the-art, lower-cost and more flexible production and broadcast model.

Current's growth strategy

Our objective is to become the preeminent global media source for young adults across major communications platforms. We seek to accomplish this goal by focusing on the following key strategic areas:

Expand our distribution in the United States. Our network has rapidly grown to cover approximately 41 million subscriber households in the United States through the leading cable, satellite and telecommunications TV providers. We intend to continue to expand our television distribution by entering into new distribution agreements with additional cable and telecommunications operators and by benefiting from the growth of our existing distributors.

Develop and expand our advertising business. We have developed a strong base of advertisers who have come to Current TV because of our compelling content, attractive viewer demographics, engaged audience and innovative advertising solutions. We intend to continue to invest in and grow our advertising solutions. We are at the very early stages of implementing our advertising strategy. We are not yet close to industry averages for advertising revenue, and, therefore, we believe we have significant opportunities to increase sell-through and rates.

Grow our international footprint. Current's programming model has been designed to capture significant synergies through international expansion. Since Current was created for the first truly global generation, our content is international in nature. Each channel launched in a new country can utilize the content in Current's ever-growing archive, thereby significantly reducing our programming costs. Moreover, each new country launched adds its content into the global archive, thereby improving the quality of programming for Current's channels in every other country. We plan to continue to launch in additional international markets, starting with Italy, which is targeted to launch in Spring 2008.

Build traffic on and monetize Current.com. We intend to continue to add features to Current.com that will enhance the consumer experience, attract new users and encourage our existing user base to come back more frequently and stay on the site longer. We intend to increase advertising levels on our website.

Expand to additional platforms. We intend to develop new products, services and programming to reinforce our brand in order to deliver content to our young adult audience on the devices on which they consume media, both now and in the future. With each of our new media products and each new market we enter, we plan to reinforce our brand and leverage our programming strategy.

Continue to pursue strategic relationships with innovative, pioneering brands. We have a number of strategic relationships with partners such as Google, Lonely Planet, Reuters and EMI

that enhance our content. We intend to build on our existing base of partnerships with compelling additions spanning Internet destinations, special events and other cultural phenomena that engage young people and augment the Current brand.

Pursue strategic acquisitions. We expect to expand our reach and footprint through the launch of new services. As opportunities arise, we will consider potential complementary business acquisitions that extend the reach of our web platform, enhance our content or technology toolset and are consistent with our culture and mission.

Current's media platforms and programming

Unique and engaging programming

Viewer-Created Content (VC²) (approximately 30% of our programming). The core of Current's programming is VC². We believe that the best way to reflect the lives of our audience is to invite them to create a portion of the programming themselves. We have developed a comprehensive online platform with video upload and sharing technology, a community-feedback and voting system, a strong incentive program, legal and technical production resources, libraries of high quality music and video footage and a free, comprehensive online training program. We have invested heavily in our community and collaborate with them throughout the content creation process.