<PAGE>
                                                                    EXHIBIT 10.2

                      10.25% SENIOR UNSECURED DISCOUNT NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF THIS NOTE SHALL
BE MADE, AND NO ATTEMPTED TRANSFER SHALL BE EFFECTIVE, UNLESS THE REQUESTED
TRANSFER DOES NOT VIOLATE THE TERMS OF THE ACT OR ANY APPLICABLE STATE
SECURITIES LAW.

Initial Accreted Value: $400,000,000                          New York, New York
Accreted Value at Maturity: $596,634,087              Issue Date: August 5, 2003
Maturity Date: August 5, 2011

         For value received, Crown Media Holdings, Inc., a Delaware corporation
(the "Company"), hereby promises to pay to the order of HC Crown Corp, a
Delaware corporation ("HCC"), (a) the Accreted Value (as defined below) of this
note (the "Note"), plus all accrued and unpaid interest thereon, on the Maturity
Date (as defined in the Purchase Agreement (as defined below)) and (b) interest
on the Accreted Value of this Note on each applicable Interest Payment Date (as
defined below) in accordance with Section 2 hereof.

         This Note is delivered in connection with that certain Note Purchase
Agreement, dated as of August 1, 2003, among the Company, its subsidiaries named
therein and HCC (the "Purchase Agreement") and is issued under and subject to
the terms, provisions and conditions of the Purchase Agreement. Reference is
hereby made to the Purchase Agreement for a full statement of the respective
rights, limitations of rights and duties of the Company and HCC and the terms
under which the Note is issued and delivered. Capitalized terms used in this
Note and not defined herein shall have the meanings set forth in the Purchase
Agreement.

1.       MATURITY DATE; PAYMENT OF ACCRETED VALUE. Subject to Section 6 hereof,
         the Maturity Date of the Note shall be August 5, 2011. On the Maturity
         Date, the Company shall pay to HCC the Accreted Value of the Note, plus
         all accrued and unpaid interest thereon.

2.       INTEREST.

         (a)    Accretion. The Note will accrete at a rate of 10.25% per
                annum, compounded semi-annually, from and including the
                Closing Date to and excluding August 5, 2007. "Accreted Value"
                means, as of any specified date, the amount provided below:

                (i)    if the specified date occurs on one of the following
                       semi-annual accrual dates, the Accreted Value will equal
                       the amount set forth below for such semi-annual accrual
                       date:

<Table>
<Caption>
              Semi-Annual                                Accreted
              Accrual Date                                 Value
-------------------------------------------           ---------------
<S>                                                   <C>
Closing Date...............................           $400,000,000.00
     February 5, 2004......................            420,500,000.00
     August 5, 2004........................            442,050,625.00
</Table>

<PAGE>
<Table>
<S>                                                   <C>
     February 5, 2005......................            464,705,720.00
     August 5, 2005........................            488,521,888.00
     February 5, 2006......................            513,558,634.00
     August 5, 2006........................            539,878,514.00
     February 5, 2007......................            567,547,288.00
     August 5, 2007........................            596,634,087.00
</Table>

                 (ii)    if the specified date occurs between two semi-annual
                         accrual dates, the Accreted Value will equal to the sum
                         of (A) the Accreted Value for the semi-annual accrual
                         date immediately preceding such specified date and (B)
                         an amount equal to the product of (x) the Accreted
                         Value for the immediately following semi-annual accrual
                         date less the Accreted Value for the immediately
                         preceding semi-annual accrual date multiplied by (y) a
                         fraction, the numerator of which is the number of days
                         elapsed from the immediately preceding semi-annual
                         accrual date to and excluding the specified date, using
                         a 360-day year of 12 30-day months, and the denominator
                         of which is 180 (or, if the semi-annual accrual date
                         immediately preceding the specified date is the Closing
                         Date, the denominator of which is the number of days
                         from and including the Closing Date to and excluding
                         the next semi-annual accrual date); or

                 (iii)   if the specified date occurs after August 5, 2007, the
                         Accreted Value will equal $596,634,087, less the
                         Accreted Value of any portion of the Note which has
                         been redeemed pursuant to Section 3 hereof prior to
                         such specified date.

        (b)      Cash Interest. Cash interest on the Accreted Value of the Note
                 will accrue at a rate of 10.25% per annum from and including
                 August 5, 2007 to and including the Maturity Date, and will be
                 paid by the Company to HCC semiannually in arrears on February
                 5 and August 5, commencing February 5, 2008, or if any such
                 day is not a Business Day, the next succeeding Business Day
                 (each an "Interest Payment Date").

        (c)      Default Rate. Notwithstanding anything to the contrary herein,
                 upon the occurrence of and during the continuation of an Event
                 of Default, the Note will accrete or cash interest will
                 accrue, as applicable, at the rate of 12.25% per annum.

        (d)      Miscellaneous. Interest will be computed on the basis of a
                 360-day year of twelve 30-day months. If any provisions of
                 this Note would require the Company to pay interest hereon at
                 a rate exceeding the highest rate allowed by applicable law,
                 the Company shall instead pay interest under this Note at the
                 highest rate permitted by applicable law.

3.       OPTIONAL REDEMPTION. The Company may not redeem the Note prior to
         August 5, 2004. From and after August 5, 2004, the Company may redeem
         all or any part of the Note upon not less than 30 nor more than 60
         days' notice, at a price equal to 100% of the Accreted Value of the
         portion of the Note redeemed, plus accrued and unpaid interest, if any,
         thereon, to the applicable redemption date.

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4.       MANDATORY REDEMPTION. The Company shall not be required to make
         mandatory redemption or sinking fund payments with respect to the Note.

5.       METHOD OF PAYMENT. All payments due hereunder shall be made by wire
         transfer of immediately available funds to an account specified by HCC
         at least two Business Days in advance of the applicable payment date.
         Each such payment shall be in such coin or currency of the United
         States of America as at the time of payment is legal tender for payment
         of public and private debts.

6.       DEFAULTS AND REMEDIES. If an Event of Default occurs and is continuing,
         HCC may declare the Accreted Value of and any accrued and unpaid
         interest on the Note and all other amounts payable hereunder or under
         the Purchase Agreement to be due and payable, whereupon the same shall
         become and be due and payable, without presentment, demand, protest, or
         other notice of any kind, all of which are hereby expressly waived,
         anything in this Note or in the Purchase Agreement to the contrary
         notwithstanding. If an Event of Default under Sections 8.1(d) or 8.1(e)
         of the Purchase Agreement occurs, the Note shall ipso facto become and
         be immediately due and payable in an amount equal to the Accreted Value
         plus any accrued and unpaid interest on the Note without any
         declaration or other act on the part of HCC.

7.       MISCELLANEOUS.

         (a)      Setoffs. All payments under this Note shall be made without
                  any offset, counterclaim or deduction of any kind. Any amount
                  owing by the Company under this Note shall not be reduced in
                  any way by any outstanding obligations of HCC or any of its
                  Affiliates to the Company, whether such obligations are
                  monetary or otherwise.

         (b)      Waiver. No delay or omission to exercise any right, power or
                  remedy accruing to HCC, upon any breach or default of the
                  Company under this Note, shall impair any such right, power or
                  remedy of HCC nor shall it be construed to be a waiver of any
                  such breach or default, or an acquiescence therein, or of any
                  similar breach of default thereafter occurring or any waiver
                  of any other breach or default theretofore or thereafter
                  occurring. The acceptance at any time by HCC of any past-due
                  amount shall not be deemed to be a waiver of the right to
                  require prompt payment when due of any other amounts then or
                  thereafter due and payable. Any waiver, permit, consent or
                  approval of any kind or character on the part of HCC of any
                  breach of default under this Note or any waiver on the part of
                  HCC of any provisions or conditions of this Note, must be in
                  writing and shall be effective only to the extent specifically
                  set forth in such writing. All remedies, either under this
                  Note, or by law or otherwise afforded to HCC shall be
                  cumulative and not alternative.

         (c)      Successors and Assigns. HCC may assign this Note and its
                  rights hereunder to any Person. This Note shall be binding
                  upon and shall inure to the benefit of the parties hereto and
                  their respective successors and permitted assigns. Nothing in
                  this Note shall create or be deemed to create any third party
                  beneficiary rights in any Person not a party to this Note.

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         (d)      Waiver of Presentment. The Company hereby waives presentment,
                  demand, protest, notice of dishonor, diligence and all other
                  notices, any release or discharge arising from any extension
                  of time, discharge of a prior party, release of any or all of
                  any security given from time to time for this Note, or other
                  cause of release or discharge other than actual payment in
                  full hereof.

         (e)      Attorneys Fees. It is expressly agreed that if this Note or
                  the Purchase Agreement is referred to an attorney or if suit
                  is brought to collect or interpret this Note, the Purchase
                  Agreement or any part hereof or thereof or to enforce or
                  protect any rights conferred upon HCC hereby or thereby or any
                  other document evidencing this Note, then the Company promises
                  and agrees to pay all costs, including attorneys' fees,
                  incurred by HCC or any of its Affiliates.

         (f)      Notice. All notices and other communications to be given or
                  made pursuant to this Note shall be made in accordance with
                  Section 10.7 of the Purchase Agreement.

         (g)      Governing Law. This Note and the obligations arising hereunder
                  shall be governed by, and construed and enforced in accordance
                  with, the laws of the State of New York applicable to
                  contracts made and performed in such State, without regard to
                  the principles thereof regarding conflict of laws, and any
                  applicable laws of the United States of America, and shall be
                  construed as if drafted equally by the parties. The Company
                  agrees to submit to personal jurisdiction and to waive any
                  objection as to venue in the federal or New York State courts
                  located in the County of New York, State of New York. Service
                  of process on HCC or the Company in any action arising out of
                  or relating to this Note shall be effective if mailed to such
                  party at the address listed or referenced in Section 10.7 of
                  the Purchase Agreement. The Company waives all right to trial
                  by jury in any action or proceeding to enforce or defend any
                  rights under this Note.

         (h)      Severability. If any paragraph, provision or clause of this
                  Note shall be found or be held to be illegal, invalid or
                  unenforceable, the remainder of this Note shall be valid and
                  enforceable and the parties shall negotiate in good faith a
                  substitute, valid and enforceable provision that most nearly
                  effects the parties' intent in entering into this Note.

         (i)      Section and Other Headings. The section and other headings
                  contained in this Note are for reference purposes only and
                  shall not affect the meaning or interpretation of this Note.

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         IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                             CROWN MEDIA HOLDINGS, INC.

                                             By: /s/ WILLIAM J. ALIBER
                                                 --------------------------
                                             Name: William J. Aliber
                                             Title: Chief Financial Officer

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