Military Channel Still Under Siege

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Even as creditors surrounded Military Channel and more
staffers left, the financially beleaguered niche network was said to be eyeing various
strategies last week ranging from seeking a savior to selling its extensive stock-footage
library.

There was a published report that Military chairman Leonard
Krane was trying to seek funding and perhaps hand over management to The Turner Group (no
relation to Turner Broadcasting System Inc.), a distribution broker that's reportedly
owed $1 million by the channel. But Military and Turner could not be contacted.

Some creditors said they've also heard that Krane is
talking with Discovery Communications Inc. about selling Military's valuable library
of air footage. But a Discovery spokeswoman said last Thursday that its executives
"are not aware of any talks, so those rumors are just rumors."

Selling the library would make sense, according to several
sources familiar with its contents, who estimated its worth at between $2 million and $5
million.

Former Lt. Col. Steve Titunic -- a 25-year Army veteran who
was Military's first president before leaving four years ago, who said he came up
with the concept for the network in the mid-1980s -- called the library "its major
asset, probably worth several million dollars." Its "several thousand
hours" include Department of Defense footage, Titunic added.

For Military to survive, various creditors said, it would
have to pay off its existing debts and pay any future bills upfront. Even then, other
industry sources said, any new owners would be hard-pressed to convince operators to give
the network carriage after all that's happened lately.

National Cable Television Cooperative Inc. senior vice
president Frank Hughes said last Friday that "20 or 30" of its member systems
are owed launch-incentive fees -- "not a ton of money." Even if Military
returned, he added, those systems have already booked other networks.

Military owes more than $1 million on top of the $1 million
said to be due to Turner Group, several sources said. First, "there's a $550,000
federal-tax lien against the company" -- which means "the government goes
first" when and if Military's debts are paid, as one creditor put it.

Then there's $574,000 owed to about 10 creditors,
including headhunter Schmitt Beller & Associates (owed $85,000), researcher Bruskin
Goldring ($20,000), program-production shop Concom ($9,300) and the Cable Yellow Pages
($6,000).

Another $165,000 is being sought by PK Network
Communications, Military's former ad agency. (That sum includes $40,000-plus owed to
Cahners Business Information's Multichannel News and Cablevision and
undisclosed amounts due to Extra Extra and other trade magazines.)

Moreover, Los Angeles-based Pittard Sullivan Inc. -- which
designed Military's logo and on-air graphics -- has filed suit in Louisville, Ky.,
where the network is based, to recover $60,000.

Except for PK and other creditors that filed in Louisville,
most suppliers have decided against going to court because "you can't get blood
from a stone." Instead, they're awaiting Military's bankruptcy.
"We'll become unsecured creditors in the next two months, anyhow," one
predicted.

Military's ranks also are being decimated. After
having halved its staff to roughly 50 last month, the channel was said to have dismissed
another 20 people last week. And separately, four executives quit.

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