SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
                                        
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                        
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994  COMMISSION FILE NUMBER 1-9553

                                   VIACOM INC.
             (Exact Name Of Registrant As Specified In Its Charter)

                Delaware                                04-2949533
    (State Or Other Jurisdiction Of                  (I.R.S. Employer
    Incorporation Or Organization)                   Identification No.)

    1515 Broadway, New York, NY                           10036
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)            (ZIP CODE)

    Registrant's telephone number, including area code  (212)258-6000

           Securities Registered Pursuant to Section 12(B) of the Act:

 Title Of Each Class                  Name Of Each Exchange On Which Registered

Class A Common Stock, $0.01 par value               American Stock Exchange
Class B Common Stock, $0.01 par value               American Stock Exchange
Warrants Expiring on July 7, 1997                   American Stock Exchange
Warrants Expiring on July 7, 1999                   American Stock Exchange
Contingent Value Rights                             American Stock Exchange
Variable Common Rights                              American Stock Exchange
8% Exchangeable Subordinated Debentures due 2006    American Stock Exchange
6.625% Senior Notes due 1998                        New York Stock Exchange
                                        
           Securities Registered Pursuant To Section 12(G) of the Act:
                                      None
                                (Title Of Class)
                                        
   Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 
during the preceding 12 months (or for such shorter period that the registrant 
was required to file such reports) and (2) has been subject to such filing 
requirements for the past 90 days.
Yes X  No

   Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. /X/

   As of March 27, 1995, 74,684,715 shares of Viacom Inc. Class A Common Stock,
$0.01 par value ("Class A Common Stock"), and 284,965,503 shares of Viacom Inc.
Class B Common Stock, $0.01 par value ("Class B Common Stock"), were 
outstanding.  The aggregate market value of the shares of Class A Common Stock 
(based upon the closing price of $45.50 per share as reported by the American 
Stock Exchange on that date) held by non-affiliates was approximately 
$1,273,335,609 and the aggregate market value of the shares of the Class B
Common Stock (based upon the closing price of $44.875 per share as reported 
by the American Stock Exchange on that date) held by non-affiliates was 
approximately $10,300,917,362.

                       DOCUMENTS INCORPORATED BY REFERENCE
The Definitive Proxy of the Registrant for the 1995 Annual Meeting of
Shareholders (Part III to the extent described herein).


<PAGE>

                                     Part I


Item 1.  Business.

Background

           Viacom Inc. (together with its subsidiaries and divisions, unless the
context  otherwise  requires, the "Company") is a diversified entertainment  and
publishing   company  with  operations  in  five  segments:  (i)  Networks   and
Broadcasting,  (ii)  Entertainment,  (iii) Video  and  Music/Theme  Parks,  (iv)
Publishing,  and  (v) Cable Television.  Through the Networks  and  Broadcasting
segment, the Company  operates  MTV:   MUSIC   TELEVISION (R), SHOWTIME (R),
NICKELODEON(R)/NICK  AT NITE (R) and VH1 MUSIC FIRST (TM), among other program  
services, and 12 broadcast television and 12 radio stations.  Through the  
Entertainment segment, which includes PARAMOUNT PICTURES (TM) and the Company's 
approximately  77%- owned  subsidiary  Spelling Entertainment Group Inc., the 
Company  produces  and distributes theatrical motion pictures and television 
programming.  Through  the Video  and Music/Theme Parks segment, which includes 
the BLOCKBUSTER(R) family  of businesses and PARAMOUNT PARKS (TM), the Company
is the leading  worldwide  owner, operator  and franchisor of videocassette 
rental and sales stores and a  leading owner  and  operator of music stores in 
the U.S.  In addition,  PARAMOUNT  PARKS owns and operates five theme parks 
located in the U.S. and Canada.  Through  the Publishing  segment, which 
includes SIMON & SCHUSTER(R), MACMILLAN PUBLISHING USA(TM) and PRENTICE HALL(R),
the Company publishes and distributes educational, consumer, business,  
technical and professional books, and audio-video software  products.
Through  the  Cable  Television segment, the Company operates  cable  television
systems serving approximately 1.1 million customers.

           The  Company  was organized in Delaware in 1986 for  the  purpose  of
acquiring  Viacom  International Inc. ("Viacom International").   On  March  11,
1994,  the  Company  acquired  a  majority of outstanding  shares  of  Paramount
Communications  Inc. ("Paramount Communications") by tender offer;  on  July  7,
1994,  Paramount Communications became a wholly owned subsidiary of the Company,
and,  on  January  3,  1995, Paramount Communications  was  merged  into  Viacom
International.   On  September 29, 1994, Blockbuster  Entertainment  Corporation
merged  with  and into the Company (the "Blockbuster Merger").  On  January  20,
1995,  the  Company agreed to sell its cable television systems to a partnership
of which Mitgo Corp., a company wholly owned by Frank Washington, is the general
partner,   for  approximately  $2.3  billion,  subject  to  certain  conditions,
including   receipt  of  a  tax  certificate  from  the  Federal  Communications
Commission  ("FCC") and the availability of certain federal tax consequences  of
the sale advantageous to the Company.  The U.S. House of Representatives and the
U.S.  Senate  have  each  approved a similar version of legislation  that  would
eliminate   such  tax  consequences.  The  House  of  Representatives  has  also
approved a compromise version of the bill, which is  awaiting  Senate  approval.
The Company has announced that it will not proceed with the  agreed  transaction
in the event that  such  tax  consequences  are  unavailable. (see  "Business --
Regulation"). The Company has  also  announced  that  it  is  considering  other
options with respect to the disposition of its cable systems and that it intends
to proceed with such disposition.  On March 10, 1995, the Company  sold  Madison
Square Garden Corporation for closing proceeds of approximately $1.009  billion,
representing  the  sale  price  of  approximately  $1.075   billion,   less   an
approximately  $66  million  working  capital  adjustment.   The  net  after-tax
proceeds of the sale were used to repay indebtedness.

          As of March 1, 1995, National Amusements, Inc. ("NAI"), a closely held
corporation that owns and operates more than 900 movie screens in the  U.S.  and
the  U.K., owned approximately 61% of the Company's voting Class A Common  Stock
("Class  A  Common  Stock"), and approximately 26% of the Company's  outstanding
Class  A  Common  Stock  and non-voting Class B Common Stock  ("Class  B  Common
Stock")  on  a  combined basis.  NAI is not subject to the informational  filing
requirements  of  the Securities Exchange Act of 1934, as  amended.   Sumner  M.
Redstone,  the controlling shareholder of NAI, is the Chairman of the  Board  of
the Company.

           The  Company's  principal offices are located at 1515  Broadway,  New
York,  New  York  10036  (telephone 212/258-6000).  At December  31,  1994,  the
Company  and its affiliated companies employed approximately 70,000  people,  of
which approximately 30,700 were full-time salaried employees.

                                     I-1


<PAGE>


Business

Networks and Broadcasting

           Networks.   The  Company, through MTV Networks ("MTVN"), operates 
three advertiser-supported  basic cable television program services  in  the  
U.S.:  MTV: MUSIC  TELEVISION(R) ("MTV") (including the U.S feed of MTV 
LATINO(TM)), VH1 MUSIC  FIRST(TM) ("VH1")  and  NICKELODEON(R)/NICK AT 
NITE(R). The Company also operates three  premium subscription  services  in  
the  U.S.:  SHOWTIME(R), THE MOVIE CHANNEL(TM) and FLIX(TM). Additionally, the 
Company participates as a  joint  venture  partner  in  four additional  
advertiser-supported basic cable program services in the U.S.: USA NETWORK(TM) 
and the SCI-FI CHANNEL(TM) (both of which are operated by USA Networks), COMEDY
CENTRAL(TM), and ALL NEWS CHANNEL(TM).  Internationally, the Company owns and 
operates  MTV EUROPE(TM), MTV LATINO(TM), VH-1(TM) in the U.K. and VH-1(TM) in 
Germany, and participates  as  a joint venture partner in NICKELODEON U.K.  
The Company plans to launch MTV ASIA(TM)  in the   second  quarter  of  1995,  
NICKELODEON  AUSTRALIA(TM),  a premium subscription television service, also in 
1995, and VH-1(TM) in Latin America in 1996.  The  Company has also entered into
a joint venture agreement for the development and launch  of MTV  SOUTH  
AFRICA(TM) in 1996, and has entered into a joint venture with  Ravensburger 
Film  &  TV  GmbH, which has received a license to launch NICKELODEON(TM) in  
Germany.
The Company also packages satellite-delivered program services for distribution
to home satellite dish owners in the U.S. through SHOWTIME SATELLITE 
NETWORKS(TM).

           MTV  Networks.  Each of MTV, MTV EUROPE, MTV LATINO, 
NICKELODEON/NICK AT  NITE and VH1 (including VH-1 in the U.K.) is a 
24-hours-a-day, seven-days-a- week  program  service  transmitted  via 
satellite  for  distribution  by  cable television operators and other 
distributors.

           MTV  targets  young adult viewers from the ages  of  12  to  34  with
programming  that  consists primarily of music videos and  concerts,  music  and
general  lifestyle  information,  comedy and  dramatic  series,  news  specials,
interviews,  documentaries and other youth-oriented programming.   Additionally,
international MTV program services are regionally customized to suit  the local
tastes   of  their  young  adult  viewers  by  the  inclusion  of  local  music,
programming, language content and on-air personalities.

           MTV  has expanded its business opportunities based on its programming
to  include,  among other enterprises, an MTV line of home videos,  merchandise,
interactive  products and books, and electronic retailing  programs.   MTV  also
pursues broadcast network and first-run syndication television opportunities and
motion picture development and production through its MTV Productions operation.

           MTV  was  licensed  to  approximately  54.2  million  domestic  cable
subscribers  at December 31, 1994 (based on subscriber counts provided  by  each
cable system).  According to the December 1994 sample reports issued by the A.C.
Nielsen  Company (the "Nielsen Report"), MTV reached approximately 58.7  million
domestic subscriber households.

           MTV  EUROPE is designed to communicate with Europe's youth  in  their
language  by  providing a high percentage of European-sourced youth programming,
including music videos, and focusing on fashion, movies, news, trends and social
issues.   MTV EUROPE is distributed via cable systems, direct-to-home  satellite
transmission  and  terrestrial  re-broadcast of the  satellite  transmission  in
Europe  and  certain countries in the former Soviet Union and the  Middle  East.
According  to  Pan  European Television Audience Research,  MTV  EUROPE  reached
approximately 59.1 million subscribers at December 31, 1994.

           MTV  LATINO, launched in October 1993, reaches subscribers to  cable,
multichannel,  multidistribution systems ("MMDS") and satellite  master  antenna
television   systems   ("SMATV")  and  direct-to-home   satellite   viewers   in
approximately  20  countries in Latin America and in the U.S.   MTV  LATINO  was
distributed to approximately 4.8 million subscribers at December 31, 1994 (based
on subscriber counts provided by each distributor of the service).

           MTV  ASIA, which is expected to launch in the second quarter of 1995,
will  reach subscribers throughout Asia via cable, terrestrial MMDS,  SMATV  and
direct-to-home  satellite  dishes.   MTV  ASIA  will  consist  of  two  separate
satellite feeds, one primarily in Mandarin, the other primarily in English.

                                     I-2

<PAGE>

            MTVN  has  licensing  arrangements  covering  the  distribution   of
regionally-specific program services in Brazil and Japan.   MTVN  also  licenses
worldwide MTV programs, merchandise and format rights.

           NICKELODEON combines acquired and originally produced programs  in  a
pro-social, non-violent format comprising two distinct program units tailored to
age-specific demographic audiences.  NICKELODEON, targeted to audiences  ages  2
to  14 (which includes NICK JR., a program block designed for 2 to 5 year olds),
features  live-action,  animation and original kid game  shows.   NICK  AT  NITE
primarily attracts an audience ages 18 to 49 and offers "Classic TV(TM)" shows 
from various  eras, including THE DICK VAN DYKE SHOW, THE MARY TYLER MOORE  
SHOW and TAXI.   At  December  31, 1994, NICKELODEON was licensed to  
approximately  55.6 million  cable  subscribers and NICK AT NITE was licensed 
to approximately  55.2 million  cable  subscribers (based on subscriber counts 
provided by  each  cable system for each program unit).  According to the 
Nielsen Report, NICKELODEON and NICK AT NITE each reached approximately 60.9 
million subscriber households. In 1994,  NICKELODEON expanded its brand and 
character licensing  programs  in  the U.S.   and   international  markets  
by  entering  into  merchandise  agreements throughout  the world and by 
producing audio and video product in the  U.S.  and Canada for distribution 
under its agreement with Sony Music Entertainment,  Inc. ("Sony   Music").   
Additionally,  NICKELODEON  has  commenced  publication   of NICKELODEON  
books  with  Simon & Schuster and has  introduced  "The  Big  Help" campaign  
to  encourage volunteerism among young people and "U to  U",  a  fully 
interactive television program.

           NICKELODEON in the U.K. is a joint venture of the Company and British
Sky  Broadcasting Limited and is a 12-hours-a-day, seven-days-a-week  satellite-
delivered  children's  programming service which includes  original  programming
produced by NICKELODEON and the joint venture.

           VH1  presents  music videos, long-form music-based  series,  original
concerts, music-based news segments, fashion, comedy and promotions and  targets
an  audience from the ages of 25 to 44.  On October 17, 1994, VH1 was relaunched
as  VH1  MUSIC  FIRST  in the U.S.  At December 31, 1994, VH1  was  licensed  to
approximately  47.2  million  domestic cable subscribers  (based  on  subscriber
counts  provided  by each cable system).  According to the Nielsen  Report,  VH1
reached approximately 49.8 million domestic subscriber households.  VH-1 in  the
U.K.  was  launched  in September 1994 and is distributed to  approximately  3.1
million  viewers  in  the U.K. and Ireland via cable systems and  direct-to-home
satellite  transmission  as  of December 31, 1994 (based  on  subscriber  counts
provided  by each distributor of the service).  VH-1 in Germany was launched  in
March 1995.  The Company has announced plans to launch VH-1 in Latin America  in
1996.

           MTVN,  in  exchange  for  cash and advertising  time  or  promotional
consideration  only,  licenses from record companies the availability  of  music
videos  for  exhibition on MTV and on MTVN's other basic  cable  networks.   The
agreements generally provide that the videos are available for debut by MTVN and
that  certain  videos are subject to exclusive exhibition periods  on  MTV.   In
October  1994,  MTVN  entered into a music video licensing agreement  with  Sony
Music which licenses to MTVN international exhibition rights in key territories.
MTVN's ability to continue to obtain music videos on favorable terms is material
to MTVN.  (See "Business -- Competition")

           MTVN derives revenues principally from two sources:  the sale of time
on  its  own  networks to advertisers and the license of the services  to  cable
television operators and other distributors.  The sale of MTVN advertising  time
is  affected  by  viewer demographics, viewer ratings and market conditions  for
advertising  time.  Adverse changes in general market conditions for advertising
may  affect  MTVN's revenues.  MTVN also derives revenues from the license  fees
paid by cable operators and other distributors which deliver programming by non-
cable  technologies.  In 1994, MTVN derived approximately 59%  of  its  revenues
from music programming and approximately 41% of its revenues from children's and
other programming.

           Showtime Networks Inc.  Showtime Networks Inc. ("SNI") operates three
24-hours-a-day,   seven-days-a-week   commercial-free,   premium    subscription
services:   SHOWTIME,  offering theatrically released  feature  films,  dramatic
series,  comedy specials, boxing events, and original movies; THE MOVIE CHANNEL,
offering  feature  films and related programming including film  festivals;  and
FLIX,  an  added-value premium subscription service featuring movies,  primarily
from  the 1960s, 70s and 80s.  SHOWTIME, THE MOVIE CHANNEL and FLIX are  offered
to   cable   television  operators  and  other  distributors  under  affiliation
agreements which for SHOWTIME and THE MOVIE CHANNEL are generally for a term  of
three  to five years, and in each case are distributed to the systems they serve
by means of domestic communications satellites.  SHOWTIME, THE MOVIE CHANNEL and
FLIX  are  also offered to distributors for subscription by home satellite  dish
owners,  including United States Satellite Broadcasting Inc.,  a  subsidiary  of
Hubbard  Broadcasting,  Inc., which uses high-powered Ku-Band  direct  broadcast
satellite  technology.  At December 31, 1994, SHOWTIME, THE  MOVIE  CHANNEL  and
FLIX,  in  the  aggregate,  had  approximately  13.5  million  cable  and  other
subscribers  in approximately 8,800 cable systems as well as other  distribution
systems  in  50 states and certain U.S. territories.  In January 1995,  SNI  and
Robert  Redford  announced  plans to launch, in late  1995,  the  Sundance  Film
Channel,  designed  to  be  a commercial-free 24-hours-a-day,  seven-days-a-week
premium  subscription service featuring independent and foreign  language  films
and documentaries.

                                     I-3


<PAGE>

           SNI  also provides special events, such as sports events, and feature
films to licensees on a pay-per-view basis through its operation of SET PAY  PER
VIEW.   For  example, SNI recently  announced an  exclusive multi-year agreement
among  former heavyweight  champion Mike Tyson,  Don King Productions, Inc., SNI
and  SET PAY PER VIEW for  the pay-per-view  marketing and  exhibition of all of
Mike Tyson's  fights over  three years. SNI,  through  its subsidiary,  Showtime
Satellite  Networks  Inc.,  packages for  distribution  to  home  satellite dish
owners the  Company's  wholly  owned program services as well as COMEDY CENTRAL,
USA NETWORK, the SCI-FI CHANNEL, and certain third-party program services.

          In order to exhibit theatrical motion pictures on premium subscription
television,  SNI enters into commitments to acquire rights, with an emphasis  on
acquiring  exclusive rights for SHOWTIME and THE MOVIE CHANNEL,  from  major  or
independent  motion picture producers and other distributors.  SNI's  exhibition
rights  always  cover the U.S. and may, on a contract-by-contract  basis,  cover
additional  territories.   Theatrical motion pictures  are  generally  exhibited
first  on SHOWTIME and THE MOVIE CHANNEL after an initial period for theatrical,
home  video and pay-per-view exhibition and before the period has commenced  for
standard  broadcast television and basic cable television exhibition.   Many  of
the  motion  pictures  which appear on FLIX have been previously  available  for
standard broadcast and other exhibitions.

           SNI also arranges for the development, production and, in many cases,
distribution of original programs and motion pictures.  These original  programs
and  motion  pictures  premiere on SHOWTIME and certain of such  programming  is
exploited in various media worldwide.

           The cost of acquiring premium television rights to programming is the
principal  expense  of  SNI.   At  December 31, 1994,  in  addition  to  program
acquisition commitments reflected in the Company's financial statements, SNI had
commitments  to acquire programming rights at an aggregate cost of approximately
$1.9  billion,  most of which is payable over the next seven years  as  part  of
SNI's  normal  programming expenditures.  These commitments are contingent  upon
delivery  of motion pictures which are not yet available for premium  television
exhibition and, in many cases, have not yet been produced.

          Joint Ventures.  USA Networks, a joint venture of the Company and MCA,
Inc.  ("MCA"), operates two national advertiser-supported basic cable television
networks: USA NETWORK, a general entertainment and sports channel, and the  SCI-
FI  CHANNEL, a science fiction channel.  COMEDY CENTRAL, a joint venture of  the
Company,  through  MTVN, and Home Box Office ("HBO"), is an advertiser-supported
basic cable television comedy service.  ALL NEWS CHANNEL, a joint venture  of  a
subsidiary  of the Company and Conus Communications Company Limited Partnership,
a  limited  partnership whose managing general partner is Hubbard  Broadcasting,
Inc., consists of national  and international news, weather, sports and business
news. Each of USA NETWORK, the SCI-FI CHANNEL, COMEDY CENTRAL and ALL NEWS
CHANNEL is a 24-hours-a-day, seven-days-a-week service.

           Broadcasting.   The Company owns and operates 12 television  stations
and 12 radio stations.  All  of the television and radio stations operate
pursuant to the Communications Act  of 1934,  as  amended (the "Communications
Act"), and licenses granted by the  FCC, which  are  renewable  every five
years in the case of television  stations  and every seven years in the case
of radio stations.

           The  Company's  strategy has been to acquire  independent  television
stations  in  the top 20 U.S. markets to the extent advantageous in  conjunction
with  the  Company's  formation  of the United Paramount  Network  ("UPN")  (See
"Business  --  Entertainment").  The Company acquired WSBK-TV,  serving  Boston,
Massachusetts, on March 7, 1995 and has entered into agreements to acquire WGBS-
TV, serving Philadelphia, Pennsylvania and WBFS-TV, serving Miami, Florida.  The
Company  sold  WLFL-TV, serving Raleigh/Durham, North Carolina, on  January  17,
1995  and  has  entered  into agreements to sell WTXF-TV, serving  Philadelphia,
Pennsylvania  and  KRRT-TV, serving San Antonio, Texas.  The  table  below  sets
forth  a  list of the 12 television properties owned and operated by the Company
at March 31, 1995.

                                     I-4


<PAGE>


<TABLE><CAPTION>

Station and Metropolitan Area Served                      Network Affiliation and Expiration
                                              Type        Date of Affiliation Agreement
--------------------------------------------------------------------------------------------
<S>                                           <C>         <C>
WTXF-TV *                                                 
Philadelphia, PA                              VHF         Fox/contingent upon sale*

WSBK-TV                                                   
Boston, MA                                    UHF         UPN/January 16, 1998

WDCA-TV                                                   
Washington, DC                                VHF         UPN/January 16, 1998

KTXA-TV                                                   
Dallas, TX                                    VHF         UPN/January 16, 1998

WKBD-TV                                                   
Detroit, MI                                   VHF         UPN/January 16, 1998

KTXH-TV                                                   
Houston, TX                                   VHF         UPN/January 16, 1998

KMOV-TV                                                   
St. Louis, MO                                 VHF         CBS/December 31, 1996

KRRT-TV *                                                 
San Antonio, TX                               VHF         UPN/January 16, 1998

WVIT-TV                                                   
Hartford-New Haven-New Britain-Waterbury,                 
CT                                            UHF         NBC/July 2, 1995

WNYT-TV                                                   
Albany-Troy-Schenectady, NY                   VHF         NBC/September 28, 1995

WHEC-TV                                                   
Rochester, NY                                 VHF         NBC/August 13, 1996

KSLA-TV                                                   
Shreveport, LA                                VHF         CBS/June 30, 1995
</TABLE>


*The Company has entered into agreements to sell these television stations.


           The Company owns and operates the following 12 radio stations:  WLTW-
FM,  serving  New  York,  New York (Adult Contemporary),  KYSR-FM  and  KXEZ-FM,
each serving Los Angeles, California (Adult Contemporary), WLIT-FM, serving
Chicago, Illinois  (Adult  Contemporary),  WLTI-FM,  serving  Detroit,  Michigan
(Adult Contemporary),  WMZQ-AM/FM (Country), WJZW-FM (Jazz) and WCPT-AM  (CNN
Headline News),  each  serving  Washington,  D.C.,  KBSG-AM/FM,  serving
Tacoma/Seattle, Washington  (Oldies), and KNDD-FM, serving Seattle, Washington
(New  Rock/AOR). The Company has undertaken to divest two stations in the
Washington, D.C. market as  a  result  of  multiple  ownership issues arising
from  the  acquisition  of Paramount Communications (See "Business
-- Regulation").  On March 22, 1995, the Company sold KSOL-FM,  serving San
Francisco, California, and KYLZ-FM, serving Santa Cruz/San Jose, California.

                                     I-5


<PAGE>

Entertainment

           The  Entertainment segment's principal businesses are the  production
and  distribution of motion pictures and television programming as well as movie
theater operations and new media and interactive services.

           Theatrical Motion Pictures. Through PARAMOUNT PICTURES(TM), the 
Company produces, finances and distributes feature motion pictures.  Motion 
pictures are produced  by PARAMOUNT PICTURES, produced by independent 
producers and  financed in whole or in part by PARAMOUNT PICTURES, or produced 
by others and acquired by PARAMOUNT  PICTURES.  Each picture is a separate and 
distinct product  with  its financial  success  dependent upon many factors, 
among  which  cost  and  public response are of fundamental importance.  
Feature motion pictures are produced or acquired  for distribution, normally 
for exhibition in U.S. and foreign theaters followed   by   videocassettes  
and  discs,  pay-per-view  television,   premium subscription  television,  
network  television,  and basic cable television  and syndicated television 
exploitation.  During 1994, PARAMOUNT PICTURES released 16 feature  motion  
pictures, including FORREST GUMP, winner of six Academy  Awards including 
"Best Picture", STAR TREK:  GENERATIONS, NOBODY'S FOOL, and CLEAR  AND
PRESENT  DANGER.   PARAMOUNT PICTURES plans to release approximately  16  to  18
films  in  1995.   In  seeking  to maximize PARAMOUNT  PICTURES'  output,  while
decreasing  its financial exposure, the Company has entered into  agreements  to
distribute  films produced and/or financed by other parties.  For  example,  
entities associated with the Company have agreements with companies with which
Michael Douglas and Steven Reuther are associated, for the production and/or 
financing of 12 films over four years.  PARAMOUNT PICTURES also has an 
agreement with Lakeshore Entertainment Corporation ("Lakeshore") for the  
distribution by PARAMOUNT PICTURES of 15 films to be produced by  Lakeshore
over five years.  In addition, PARAMOUNT PICTURES entered into an agreement with
Columbia  Pictures for PARAMOUNT PICTURES' upcoming feature film THE  INDIAN  IN
THE  CUPBOARD, which will be co-financed by the studios and for which they  will
divide distribution rights and revenues.

           PARAMOUNT  PICTURES  distributes its motion pictures  for  theatrical
release  outside  the  U.S.  and  Canada through United  International  Pictures
("UIP"),  a company  owned by entities associated with the Company, MGM and MCA.
PARAMOUNT PICTURES distributes its motion pictures on videocassette and disc  in
the  U.S.  and  Canada  through Paramount Home Video and outside  the  U.S.  and
Canada,  through  Cinema International B.V., a joint venture  of  entities
associated with the Company and MCA. PARAMOUNT PICTURES has an exclusive premium
subscription television agreement with HBO for exhibition of PARAMOUNT PICTURES'
new  releases  on domestic premium subscription television, which  includes  new
PARAMOUNT PICTURES motion pictures released theatrically through December  1997.
PARAMOUNT PICTURES also distributes its motion pictures for premium subscription
television  release  outside the U.S. and Canada through  UIP  and  is  a  joint
venture  partner  in  HBO Pacific Partners C.V., Latin American  Pay  Television
Service, VOF, Telecine Programacao de Filmes Ltda., and Pay-TV Movies Australia,
which  are premium television services in Asia, Spanish-speaking Latin  America,
Brazil and Australia, respectively.  PARAMOUNT PICTURES also licenses its motion
pictures   to   home  and  hotel/motel  pay-per-view,  airlines,   schools   and
universities.  UIP and United Cinemas International ("UCI", as described  below)
are  the  subject  of various governmental inquiries by the  Commission  of  the
European  Community  ("EC") and Monopolies and Mergers Commission  of  the  U.K.
Such  inquiries are not expected to have a material effect on the  Company  (See
"Business  --  Competition").   Most  motion pictures  are also licensed for 
exhibition on television, including basic  cable television, with fees generally
collected in installments.

           All  of  the above license fees for television exhibition  (including
international  and domestic premium television and basic cable  television)  are
recorded  as  revenue  in  the  year  that the  films  are  available  for  such
exhibition,  which,  among other reasons, may cause substantial  fluctuation  in
PARAMOUNT  PICTURES' operating results.  At December 31, 1994, the  unrecognized
revenues  attributable  to  such  licensing of completed  films  from  PARAMOUNT
PICTURES'  license  agreements  were approximately  $574.7  million.   PARAMOUNT
PICTURES has over 900 motion pictures in its library.

           Television Production and Syndication.  The Company also produces and
distributes  series,  miniseries, specials and  made-for-television  movies  for
network television, first-run syndication, premium subscription and basic  cable
television, videocassettes and video discs, and live television programming.  As
a  result of the Blockbuster Merger, the Company acquired approximately  77%  of
Spelling   Entertainment  Group  Inc.  ("Spelling"),  which  includes   Spelling
Television, Republic Pictures and Worldvision Enterprises ("Worldvision").

                                     I-6


<PAGE>

           The  Company's current network programming includes FRASIER,  WINGS,
THE MOMMIES, THE MARSHAL, SISTER, SISTER, DIAGNOSIS: MURDER and
MATLOCK,  and  through  Spelling,  BEVERLY  HILLS,  90210  and  MELROSE   PLACE.
Generally,  a network will license a specified number of episodes for exhibition
on  the  network in the U.S. during the license period.  All other  distribution
rights,  including foreign and off-network syndication rights, are  retained  by
the  Company.  The episodic license fee is normally less than the Company's  and
Spelling's respective costs of producing each series episode; however,  in  many
cases,  the Company has been successful in obtaining international sales through
its  and  Spelling's  respective  syndication  operations.   Foreign  sales  are
generally  concurrent with U.S. network runs.  Generally, a series must  have  a
network run of at least four years to be successfully sold in syndication.

           The Company produces television programming for first-run syndication
which programs are sold directly to television stations in the U.S. on a market-
by-market  basis.   The  Company sells its programs to television  stations  for
cash, advertising time or a combination of both.  Where a product is licensed in
exchange for advertising time, through what are known as "barter agreements",  a
broadcaster  agrees to give the Company a specified amount of advertising  time,
which  the  Company  subsequently  sells.  The  Company's  first-run  syndicated
programming  includes  such shows as STAR TREK: DEEP SPACE  NINE,  ENTERTAINMENT
TONIGHT,  HARD COPY, SIGHTINGS, THE MAURY POVICH SHOW, THE MONTEL WILLIAMS  SHOW
and THE JON STEWART SHOW.  PARAMOUNT PICTURES recently entered into an agreement
with  Procter & Gamble Productions, Inc. ("P&G") pursuant to which P&G will  co-
finance  certain  network  and  first-run  syndicated  programming  produced  by
PARAMOUNT PICTURES during the term of the agreement.

           The  Company  produces  original programming,  including  STAR  TREK:
VOYAGER,  PLATYPUS MAN, PIGSTY and THE WATCHER, for  UPN.   UPN launched on 
January 16, 1995  in  more  than  95  U.S. television markets and currently 
provides to its affiliates four hours per  week of  primetime programming.  
UPN is currently 100% owned by subsidiaries  of  BHC Communications, Inc. 
("BHC"), an affiliate of Chris Craft Industries, Inc.   The Company  has  an  
option  exercisable through January 15,  1997  to  acquire  an interest in 
UPN equal to that of BHC and its subsidiaries for a price equivalent
to  approximately one-half of BHC's aggregated cash contributions to UPN through
the exercise date, plus market-based interest.

           The  Company  distributes  or syndicates television  series,  feature
films,  made-for-television  movies,  miniseries  and  specials  for  television
exhibition  in  domestic  and/or  international  broadcast,  cable   and   other
marketplaces.  Feature film and television properties distributed by the Company
are  produced  by  the Company and/or Spelling or acquired from  third  parties.
Third  party agreements for the acquisition of distribution rights are generally
long-term  and  exclusive  in  nature; such agreements  frequently  guarantee  a
minimum  recoupable advance payment to such third parties and generally  provide
for  periodic  payment  to such third parties based on the  amount  of  revenues
derived from distribution activities after deduction of the Company's percentage
distribution  fee,  recoupment of distribution expenses and  recoupment  of  any
advance payments. The Company and Worldvision together control the rights  to
distribute substantially all of the pre-1971 libraries of CBS, NBC and ABC.

          The receipt and recognition of revenues for license fees for completed
television programming in syndication and on basic cable is similar to  that  of
feature  films exhibited on television and, consequently, operating results  are
subject  to  substantial  fluctuation.  At December 31, 1994,  the  unrecognized
revenues   attributable   to   television  program   license   agreements   were
approximately $486.4 million.

          Theatrical Exhibition.  The Company's movie theater operations consist
primarily of Famous Players in Canada, UCI and Films Paramount in Europe, and
Cinamerica  in the Western U.S.  Famous Players operates 465 screens in 109 
theaters throughout Canada.   UCI,  a 50%-owned joint venture of entities 
associated with the Company and MCA, operates 247 screens  in  26 theaters  
in the U.K. and Ireland, 51 screens in four theaters in Germany,  nine screens  
in one theater in Austria and 81 screens in 25 theaters in Spain.   UCI also  
manages  in six countries, 31 screens in 17 theaters which  are  owned  by 
Cinema  International  Corporation, a joint venture with MCA.   Films  
Paramount operates seven screens in one theater in France.  Cinamerica, a 
50%-owned  joint venture  of entities associated with the Company and Time 
Warner Inc., includes Mann and Festival Theaters and operates 349 screens in 
65 theaters in California,  Colorado, Arizona and Alaska.

                                     I-7


<PAGE>

           New  Media  and  Interactive Services.  Viacom Interactive  Media  is
comprised of Viacom New Media and Viacom Interactive Services.  Viacom New Media
develops, produces, publishes, markets and distributes interactive software on a
wide variety of platforms.  Viacom New Media derives its content from brands and
franchises  developed by Viacom's business units, including PARAMOUNT  PICTURES,
MTV  Networks  and Paramount Television, and also secures outside  licenses  and
acquisitions.  In 1994, Viacom New Media released 12 titles, some of which  were
released  for  multiple platforms; the titles represent 16 stock  keeping  units
("sku's").   In  1995,  Viacom  New Media expects  to  release  12  new  titles,
representing  29  sku's.   Viacom  Interactive Services  collaborates  with  the
Company's  various  business  units  to develop  their  respective  on-line  and
interactive television environments.  The Company, through Spelling,  also  owns
90%  of Virgin Interactive Entertainment Ltd. ("Virgin"), a leading video game 
producer with a library of more than 100 titles which distributes video games in
approximately 30 countries. In 1994, Virgin released 54 titles, some of which 
were released for multiple platforms; the titles represent 90 sku's. In 1995,
Virgin expects to release 71 new titles, representing 130 sku's.


Video and Music/Theme Parks

           The Company operates in the home video retailing and rental business,
music  retailing  business,  and theme parks business  through  its  Blockbuster
Entertainment Group ("Blockbuster").

           Home  Video  Retailing.  Blockbuster is the leading worldwide  owner,
operator  and franchisor of videocassette rental and sales stores.   BLOCKBUSTER
VIDEO (R) stores range  in size from approximately 3,800 square  feet to 11,500
square  feet, and generally carry a comprehensive selection of 7,000  to  13,000
prerecorded videocassettes, consisting of more than 5,000 titles.

           At  December 31, 1994, there were 4,069 video stores in Blockbuster's
system,  of  which  3,067 were Blockbuster-owned and 1,002 were franchise-owned.
Blockbuster-owned  video  stores  at  December  31,  1994  included  711  stores
operating under the "Ritz" and "Blockbuster Video Express" trade names in 
Europe. At December  31, 1994,  the  BLOCKBUSTER VIDEO system operated in all 
50 states and  13  foreign countries.   The Company expects to add approximately
650 stores  systemwide  in 1995. Also in 1995, the  Company  entered  into 
franchise agreements pursuant to  which  BLOCKBUSTER VIDEO  stores  will be 
opened in Columbia, Peru and Thailand,  and  the  Company formed  a  joint  
venture  with Burda, one of Germany's largest  publishers,  to develop 
BLOCKBUSTER VIDEO stores in Germany.  During the first quarter of  1995, 132 
small video stores operating under the "Ritz" trade name in the U.K. were 
closed in connection with the Company's conversion of "Ritz" stores to
"Blockbuster Video Express" stores.

          The Company's home video business may be affected by a variety of
factors, including but not limited to, general economic trends, acquisitions
made by the Company, additional and existing competition, marketing programs, 
weather, special or unusual events, variations in the number of store 
openings, the quality of new release titles available for rental and sale, 
and similar factors that may affect retailers in general. As compared to other 
months of the year, revenue from BLOCKBUSTER VIDEO stores in the U.S. has been,
and the Company believes will continue to be, subject to decline during the 
months of April and May, due in part to the change to Daylight Savings Time, 
and during the months of September, October and November, due in part to the 
start of school and the introduction of new television programs.

          Music Retailing.  Through music stores operating under the 
"Blockbuster Music" trade name, Blockbuster is among the largest specialty 
retailers of prerecorded music in the United States. At December 31, 1994, 
Blockbuster owned and operated 542 music stores in 34 states.  These music 
stores range in size from 900 to 24,600 square feet and generally carry a 
comprehensive selection of 25,000 to 135,000 compact discs and audio cassettes 
consisting of up to 60,000 titles.

          The Company's music business may be affected by a variety of
factors, including but not limited to, general economic trends and conditions
in the music industry, including the quality of new titles and artists, existing
and additional competition, changes in technology, and similar factors that
may affect retailers in general. The Company's music business is seasonal, with
higher than average monthly revenue experienced during the Thanksgiving and
Christmas seasons, and lower than average monthly revenue experienced in
September and October.

           Theme Parks.  The Company, through PARAMOUNT PARKS (TM), owns and 
operates five regional theme parks in the U.S. and Canada: Paramount's 
Carowinds, in Charlotte, North  Carolina; Paramount's  Great America, in  Santa
Clara, California; Paramount's Kings Dominion located near Richmond,  Virginia;
Paramount's  Kings Island located near Cincinnati, Ohio; and Paramount  Canada's
Wonderland located near Toronto, Ontario.  Substantially all of the theme parks'
operating  income  is generated from May through September.  In  December  1994,
PARAMOUNT  PARKS and Hilton Hotels Corporation agreed to launch STAR  TREK:  THE
EXPERIENCE,  a futuristic-themed, interactive environment within the  Las  Vegas
Hilton which is expected to open in late 1996.

           Other  Entertainment.   At  December  31,  1994,  the  Company  owned
approximately  49.6%  of the outstanding common stock of  Discovery  Zone,  Inc.
("Discovery  Zone") (approximately 36.7% on a fully diluted  basis).   Discovery
Zone  owns,  operates and franchises large indoor recreational spaces  known  as
FunCenters,  and  operates  Leaps and Bounds indoor  entertainment  and  fitness
facilities.   Blockbuster is also a partner in a joint  venture  with  Discovery

                                     I-8


<PAGE>

Zone  to  develop up to 10 FunCenters in the U.K.  The Company accounts for  its
interest  in Discovery Zone as an equity interest.  Through joint ventures  with
Sony  Music  and  PACE  Entertainment Corporation, the  Company  operates  seven
amphitheaters  in  the U.S., with plans to open an eighth amphitheater  in  mid-
1995.   Through PARAMOUNT PARKS, the Company owns five additional amphitheaters.
Through   PARAMOUNT   PARKS,  the  Company  owns  and  operates BLOCK PARTY (TM)
entertainment centers in Indianapolis, Indiana and Albuquerque, New Mexico, each
of  which  were  opened in January 1995.  The Company also owns an approximately
35% interest in Catapult Entertainment, Inc., a company which has established  a
service enabling multiple video game players to compete against one another from
different  locations in "real time" by modem without requiring  modification  to
either hardware or software.


Publishing

           The  Company,  principally through Simon &  Schuster  and  affiliated
companies,  publishes and distributes hardcover and paperback books, educational
textbooks,  supplemental  educational materials  and  multimedia  products,  and
provides  information and reference services for business and  professions.   In
February 1994, Simon & Schuster completed the acquisition of the U.S. publishing
assets  of  Macmillan, Inc. for approximately $553 million.  Simon &  Schuster's
well-known  imprints  include SIMON & SCHUSTER, THE FREE  PRESS,  POCKET  BOOKS,
MACMILLAN  PUBLISHING USA, PRENTICE HALL, SCRIBNER, SILVER BURDETT  GINN,  ALLYN
AND  BACON,  COMPUTER CURRICULUM CORPORATION and EDUCATIONAL  MANAGEMENT  GROUP,
among others.  Simon & Schuster distributes its books directly and through third
parties on a retail and wholesale basis.

           Educational Publishing.  The Elementary, Secondary, Higher  Education
and  Educational Technology divisions publish elementary, secondary and  college
textbooks   and   related   materials,  computer-based   educational   products,
audiovisual products and vocational and technical materials under such  imprints
as  PRENTICE  HALL, SILVER BURDETT GINN and ALLYN AND BACON, among  others.   In
February  1995,  Simon  &  Schuster acquired all of  the  outstanding  stock  of
Educational  Management  Group Inc., an interactive  telecommunications  company
that  develops  and  distributes  customized instructional  materials  and  live
interactive  television services to schools and reaches more  than  one  million
students  in 3,500 schools.  Computer Curriculum Corporation delivers multimedia
coursework  to more than 1.5 million students in approximately 8,000 schools  in
six  countries.  The educational marketplace is subject to seasonal fluctuations
in  its  business  which  correlate to the traditional school  year.   Sales  to
elementary  and secondary schools are dependent, in part, on the  "adoption"  or
selection  of instructional materials by designated state agencies.   22  states
and  some localities limit the textbooks that may be purchased with state  funds
to those books that have been approved by the adoption authority.

           Consumer Publishing.  The Consumer division publishes and distributes
hardcover, trade paperback and mass market books under imprints including  SIMON
&  SCHUSTER,  POCKET  BOOKS, SCRIBNER, THE FREE PRESS, SIMON  &  SCHUSTER  TRADE
PAPERBACK,  which includes FIRESIDE, TOUCHSTONE, SCRIBNER PAPERBACK FICTION  and
SIMON  &  SCHUSTER LIBROS AGUILAR ESPANOL as well as SIMON & SCHUSTER CHILDREN'S
PUBLISHING, which includes ALADDIN PAPERBACKS, ATHENEUM BOOKS FOR YOUNG READERS,
LITTLE SIMON, MARGARET K. McELDERRY BOOKS, and SIMON & SCHUSTER BOOKS FOR  YOUNG
READERS.   In  1994, the Consumer division announced the formation  of  Simon  &
Schuster  New  Media,  combining Simon & Schuster  Audio,  the  world's  largest
publisher  of  audio books, with the newly created Simon & Schuster Interactive,
which  has  15  CD-ROM titles scheduled for publication in 1995.   The  consumer
marketplace is subject to increased periods of demand in the summer  months  and
during the end-of-year holiday season.

           Business, Training and Healthcare Publishing.  Through a wide variety
of  imprints,  Simon & Schuster publishes a full range of business, professional
training,   and  medical  healthcare  information  products,  including   books,
newsletters,  journals,  seminars,  videos,  loose-leaf  series  and  multimedia
programs.  Operating units include The New York Institute of Finance, Appleton &
Lange, Jossey-Bass, The Bureau of Business Practice, and Prentice Hall Direct.

          Reference Publishing - Macmillan Publishing USA.  Macmillan Publishing
USA,   the   umbrella  identity  of  Simon  &  Schuster's  reference  publishing
operations, is the industry leader in computer book publishing and a  leader  in
home/library  reference  publishing.   The  unit's  imprints  include  MACMILLAN

                                     I-9


<PAGE>

COMPUTER  PUBLISHING USA (QUE, SAMS, HAYDEN BOOKS, NEW RIDERS PUBLISHING,  BRADY
GAMES), MACMILLAN GENERAL REFERENCE  USA (ARCO, BETTY CROCKER, BURPEE, FROMMER'S
TRAVEL  GUIDES, HARRAP'S  BILINGUAL  DICTIONARIES,  HOWELL  BOOK  HOUSE,  
MONARCH NOTES, J.K. LASSER, THE  PLACES RATED  ALMANAC,  THE UNOFFICIAL GUIDES,
WEBSTER'S NEW WORLD), MACMILLAN  LIBRARY REFERENCE  USA  (CHARLES  SCRIBNER'S 
SONS, G.K. HALL, MACMILLAN  REFERENCE  USA) and  MACMILLAN  DIGITAL USA, which 
publishes  computer  books  and reference content in electronic formats.

           International.   The International Group publishes approximately  650
titles each year, primarily in the areas of academic, computer, English language
training,  and professional publishing in 10 languages and 34 countries  outside
North   America.    The   International  Group  also   maintains   co-publishing
partnerships  in  14 countries, such as Japan (Toppan and Impress)  and  Hungary
(Novotrade),  whose  operations  include distribution  of  U.S.  product,  local
language  translation and adaptation of U.S. product, and indigenous publishing.
In  January  1995, the Company acquired German computer book publisher  Markt  &
Technik,  enhancing the Company's position as the world's largest computer  book
publisher and providing greater opportunities for expansion into other  European
markets, particularly Eastern Europe.


Cable Television

           Cable  Operations.  At December 31, 1994, the Company, through Viacom
Cable  Television ("Viacom Cable"), was approximately the 12th largest  multiple
cable  television  system  operator in the U.S. with approximately  1.1  million
subscribers.   On  January  20,  1995, the Company  agreed  to  sell  its  cable
television systems to a partnership of which Mitgo Corp., a company wholly owned
by  African  American businessman Frank Washington, is the general partner,  for
approximately $2.3 billion, subject to certain conditions, including receipt  of
a  tax  certificate  from the FCC and the availability of  certain  federal  tax
consequences  of  the  sale  advantageous to the Company.   The  U.S.  House  of
Representatives  and  the  U.S.  Senate  have  approved  a  similar  version  of
legislation  that  would  eliminate   such   tax  consequences.   The  House  of
Representatives has also  approved  a  compromise  version of the bill, which is
awaiting Senate approval.  The Company has announced that it  will  not  proceed
with the agreed transaction  in  the  event  that  such  tax   consequences  are
unavailable (see "Business -- Regulation").  The Company has also announced that
it is considering other options with respect to  the  disposition  of its  cable
systems and that it intends to proceed  with such  disposition.  Viacom  Cable's
systems are operated  pursuant  to  non-exclusive franchises  granted  by  local
governing authorities.

          In most of its systems, Viacom Cable offers two tiers of primary (i.e,
non-premium) service:  "Limited Service", which consists generally of local  and
distant  broadcast stations and all public, educational and governmental ("PEG")
channels  required  by  local franchise authorities; and  the  "Satellite  Value
Package",  which  provides  additional  channels  of  satellite-delivered  cable
networks.   Monthly  service  fees  for these  two  levels  of  primary  service
constitute the major source of the systems' revenue.  In addition, Viacom  Cable
has  introduced a third tier of non-premium service which qualifies  as  a  non-
regulated "new product tier" under the Cable Television Consumer Protection  and
Competition  Act  of  1992 (the "1992 Cable Act") in its  Nashville,  Tennessee,
Pittsburg, California, Puget Sound South and most of its Puget Sound  North  and
Central  systems.   Each  such  tier consists of five  channels  of  advertiser-
supported cable networks.

           The  monthly service fees for Limited Service and the Satellite Value
Package  are  regulated under the 1992 Cable Act (See "Business -- Regulation").
The Company offers customers the Company's own basic program services (including
joint venture program services) as well as third-party services.  None of Viacom
Cable's  systems is presently exempt from rate regulation under the  1992  Cable
Act.   The  new  product  tiers mentioned above are not rate  regulated  at  the
present  time,  but the FCC has reserved the right to reopen the issue  of  rate
regulation for new product tiers in the future.

           Viacom  Cable offers premium cable television programming,  including
the Company's premium subscription television services, to its customers for  an
additional  monthly fee of up to $11.95 per premium service.   At  December  31,
1994,   the  Company's  cable  television  systems  had  approximately   875,000
subscriptions to premium cable television program services.

                                     I-10


<PAGE>
           Viacom  Cable  also derives revenues from the lease of certain  fiber
optic  capacity  in three of its markets to partnerships engaged in  competitive
access  telephone services and in all of its markets from advertising sales  and
sharing of revenues from sales of products on home shopping services offered  by
Viacom Cable to its customers.

           Cable operators require substantial capital expenditures to construct
systems  and  significant annual expenditures to maintain,  rebuild  and  expand
systems.   System construction and operation and quality of equipment used  must
conform  with federal, state and local electrical and safety codes  and  certain
regulations  of  the  FCC.  Viacom Cable, like many other  cable  operators,  is
analyzing  potential business applications for its broadband network,  including
interactive  video,  video  on  demand,  data  services  and  telephony.   These
applications,  either individually or in combination, may require  technological
changes  such  as  fiber  optics and digital compression.   Although  management
believes  the  equipment  used  in the cable operations  is  in  good  operating
condition,  except  for ordinary wear and tear, the Company invests  significant
amounts each year to upgrade, rebuild and expand its cable systems.  During  the
last five years, Viacom Cable's capital expenditures were as follows:  1990: $46
million; 1991: $45 million; 1992: $55 million; 1993: $79 million; and 1994: $100
million.  The Company expects that Viacom Cable's capital expenditures  in  1995
will  be  approximately  $135  million.  A substantial  amount  of  the  capital
expenditures  for 1995 will be reimbursed by the buyer if the proposed  sale  of
Viacom Cable is consummated.

           Viacom  Cable  has constructed a fiber optic cable system  in  Castro
Valley,  California to provide more channels with significantly  better  picture
quality, and to accommodate testing of new services including an interactive on-
screen programming guide known as StarSight (in which consolidated affiliates of
the  Company currently have an approximately 25% equity interest on  a  combined
basis),  other  interactive  programs with Viacom Interactive  Media,  video-on-
demand  services, multiplexed services, and advanced interactive video and  data
services.


<TABLE><CAPTION>
                                                      Viacom Cable
                                                 As of December 31, 1994
___________________________________________________________________________________________________________________________________
                                    Approximate    Approximate
                                    Homes in       Home         Number of                                              Miles of
                                    Franchise      Passed by    Primary       Primary         Premium   Premium        Cable
                                    Area(1)        Cable(2)     Customers(3)  Penetration(4)  Units(5)  Penetration(6) Distribution
                                    _________      __________   ___________   ______________  ________  ______________ ____________
<S>                                 <C>            <C>          <C>           <C>             <C>       <C>            <C>  
Bay Area Region
  Marin(7)                           81,000          77,700        62,400         80%          35,500         57%          645
  Sonoma(7)                          46,000          45,300        35,800         79%          20,100         56%          533
  Napa                               33,000          32,300        23,400         72%          14,100         60%          319
  East Bay/Castro Valley(7)          86,000          87,000        72,900         84%          65,500         90%          681
  Pittsburg/Pinole(7)                73,000          72,700        53,900         74%          49,800         92%          565
  San Francisco                     355,000         337,400       170,200         50%         130,400         77%          711
                                    -------         -------       -------         ---         -------         ---        -----
     Total Bay Area Region          674,000         652,400       418,600         64%         315,400         75%        3,454

Ore-Cal Region
  Redding(7)                         57,000          54,900        35,400         64%          20,700         58%          654
  Oroville                           43,000          39,500        25,400         64%          11,000         43%          488
  Salem                              76,000          74,100        45,000         61%          28,400         63%          613
                                     ------          ------        ------         ---          ------         ---          ---
     Total Ore-Cal Region           176,000         168,500       105,800         63%          60,100         57%        1,755

Puget Sound Region(7)               628,000         609,500       425,900         70%         312,000         73%        6,278

Midwest Region
  Nashville(7)                      271,000         233,200       135,900         58%         129,500         95%        2,286
  Dayton(7)                          98,000          94,100        52,900         56%          58,200        110%          634
                                    -------         -------       -------         ---         -------        ----        -----
     Total Midwest Region           369,000         327,300       188,800         58%         187,700         99%        2,920
Total Viacom Cable                1,847,000       1,757,700     1,139,100         65%         875,200         77%       14,407
_________________
(1)  Homes in franchise area represents Viacom Cable's estimate based upon local sources such as city directories, chambers of
     commerce, public utilities, public officials and house counts.
(2)  Homes are deemed "passed by cable" if such homes can be connected without any further extension of the transmission lines.
(3)  Represents the number of homes connected, rather than the number of television outlets connected within such homes.
(4)  Represents primary customers as a percentage of homes passed by cable.
(5)  The premium unit count is based on the total number of premium services subscribed to by primary customers.
(6)  Represents premium units as a percentage of primary customers.
(7)  Other cable television companies have franchises and serve parts of these areas in which the Company has franchises.
</TABLE>


Intellectual Property

           It  is  the  Company's practice to maintain U.S.  and  foreign  legal
protection for its theatrical and television product, software, publications and
its  other original and acquired works.  The following logos and trademarks  are
among  those strongly identified with the product lines they represent  and  are
significant  assets  of  the  Company:  VIACOM (R),  the BLOCKBUSTER (R) family 
of  marks, MACMILLAN (R), MTV:   MUSIC TELEVISION (R), NICK  AT  NITE  (R), 
NICKELODEON (R), the  PARAMOUNT (R) family  of  marks,  POCKET BOOKS (TM), 
SIMON & SCHUSTER (R), SHOWTIME (R) and  VH1  MUSIC FIRST (TM).

COMPETITION

Networks

          MTVN.  MTVN services are in competition for available channel space on
existing  cable systems and for fees from cable operators and alternative  media
distributors, with other cable program services, and nationally distributed  and
local  independent  television  stations.  MTVN also  competes  for  advertising
revenue  with  other cable and broadcast television programmers, and  radio  and
print  media.  For basic cable television programmers, such as MTVN, advertising
revenues  derived by each programming service depend on the number of households
subscribing to the service through local cable operators and other distributors.
                                     I-11


<PAGE>
           At December  31,  1994, there were 31  principal  cable  program
services  and  superstations,  each  with over  10  million  subscribers,  under
contract  with A.C. Nielsen Company, including MTV, VH1, NICKELODEON  (including
NICKELODEON  and  NICK  AT NITE program segments), USA NETWORK  and  the  SCI-FI
CHANNEL.  The Nielsen Report ranked USA NETWORK fourth, NICKELODEON/NICK AT NITE
seventh,  MTV  twelfth,  VH1 sixteenth and the SCI-FI CHANNEL  twenty-sixth,  in
terms of subscriber households.

            Certain major record companies have announced plans to launch music-
based  program services in the U.S. and internationally. Major worldwide  record
companies have attempted to license their music videos to MTV EUROPE only  on  a
collective basis, the lawfulness of which is being challenged by MTV EUROPE (See
"Item 3. Legal Proceedings").

           SNI.   Competition  among  premium  subscription  television  program
services  is  primarily dependent on:  (1) the acquisition and packaging  of  an
adequate  number  of  recently released quality motion  pictures;  and  (2)  the
offering  of  prices, marketing and advertising support and other incentives  to
cable  operators and other distributors so as to favorably position and  package
SNI's  premium subscription television program services to subscribers.  HBO  is
the  dominant company in the premium subscription television category,  offering
two  premium  subscription  television program services,  the  HBO  service  and
Cinemax.  SNI is second to HBO with a significantly smaller share of the premium
subscription  television category.  In addition, in February 1994, Encore  Media
Corp.  (an  affiliate of Tele-Communications, Inc.) launched Starz!,  a  premium
subscription  television  program  service featuring  recently  released  motion
pictures, in competition with SNI's premium program services.

           General.   The  Company's antitrust suit against Tele-Communications,
Inc.,  et  al.,  which  is  pending in the Southern District  of  New  York,  is
currently  suspended  pending  satisfaction of  certain  conditions,  which,  if
satisfied,  would  lead  to  settlement of the  action.   (See  "Item  3.  Legal
Proceedings")

           The potential exists that one or more telephone companies ("telcos"),
either  individually  or  in groups, will enter the  business  of  creating  and
distributing program services, both inside and outside their respective  service
areas (See "Cable Television -- Video Dialtone Regulations" below).  The Company
cannot predict the impact that telco entry into those businesses may have on the
Company's program services.

Broadcasting

           The  principal  methods of competition in the  television  and  radio
broadcasting field are the development of audience interest through  programming
and  promotions.  Unlike broadcast station owners which seek network affiliates,
the Company's strategy has been to seek to acquire independent stations each  of
which will be primarily affiliated with UPN.  At this time, UPN has very limited
programming and, to the extent that the Company acquires independent affiliates,
there  will  be  a  need  for those stations to acquire additional  programming.
Television  and radio stations also compete for advertising revenues with  other
stations  in  their  respective coverage areas and with  all  other  advertising
media.   They  also compete with various other forms of leisure time activities,
such  as cable television systems and audio players and video recorders.   These
competing  services, which may provide improved signal reception  and  offer  an
increased  home  entertainment  selection,  have  been  in  a  period  of  rapid
development and expansion.  Technological advances and regulatory policies  will
have  an  impact  upon  the  future competitive  broadcasting  environment.   In
particular, recent FCC liberalization of its radio station ownership limits will
allow for increased group ownership of stations.  However, the Company is unable
to  predict what impact these rule changes will have on its businesses in  their
markets.  ("See Business -- Regulation")

           Direct broadcast satellite ("DBS") distribution of programs commenced
in  1994.   Additionally,  the  FCC has issued  rules  which  may  significantly
increase  the  number  of  multipoint distribution service  systems  (i.e.,  the
distribution  of  video  services on microwave frequencies  which  can  only  be
received by special microwave antennas).  The FCC has also authorized video uses
of  certain frequencies which have not traditionally been used or permitted  for
commercial video services and has issued rules which will increase the number of
FM  and  AM  stations.   The FCC is also considering authorizing  digital  audio
broadcasts,  which could ultimately permit increased radio competition by
satellite  delivery  of audio stations directly to the home  (or  to  cars)  and
result  in  an  increased  spectrum being used for  digital  delivery  of  radio
signals,  and  it  has  authorized and is in the process of licensing  low-power
television  stations ("LPTV stations") that may serve various  communities  with
coverage  areas  smaller  than  those served  by  full  conventional  television
stations.  Because of their coverage limitations, LPTV stations may be allocated
to  communities which cannot accommodate a full-power television station because
of technical requirements.
                                     I-12


<PAGE>

Entertainment

           The  Company's  entertainment businesses compete with  all  forms  of
entertainment.   The  Company competes intensely with other  major  studios  and
independent film producers in the production and distribution of motion pictures
and  video  cassettes.  Similarly, as a producer and distributor  of  television
programs,  the Company competes with other studios and independent producers  in
the licensing of television programs to both networks and independent television
stations.   PARAMOUNT PICTURES' competitive position primarily  depends  on  the
quality  of  the product produced, public response and cost.  The  Company  also
competes to obtain creative talents and story properties which are essential  to
the  success of all of the Company's entertainment businesses.  UIP and UCI  are
the  subject of various governmental inquiries by the EC and the Monopolies  and
Mergers  Commission  of  the U.K.  Such inquiries are not  expected  to  have  a
material effect on the Company's businesses.

           In addition to the competitive factors applicable to all areas of the
entertainment  industry, the marketplace for interactive entertainment  is  also
characterized by the rapid evolution of distribution technologies.

Video

           The  home  video retail business is highly competitive.  The  Company
believes  that  the  principal competitive factors in  the  business  are  title
selection, number of copies of titles available, the quality of customer service
and,  to  a  lesser extent, pricing.  The Company believes that it has generally
addressed  the  selection and service demands of consumers more adequately  than
most of its competitors.

          The Company and its franchise owners compete with video retail stores,
as  well  as  supermarkets, drug stores, convenience stores, book  stores,  mass
merchandisers and others.  The Company believes that the success of its business
depends  in  part  on its large and attractive Company-owned and franchise-owned
BLOCKBUSTER  VIDEO stores offering a wider selection of titles  and  larger  and
more  accessible inventory than its competitors, in addition to more  convenient
store  locations,  faster  and  more efficient  computerized  check-in/check-out
procedures, extended operating hours, effective customer service and competitive
pricing.

            The  Company's  business  is  also  dependent  on  the  pricing   of
videocassettes  by  distributors  since such  pricing  significantly  influences
whether a title is marketed by retailers primarily for rental or sale (or "sell-
thru")  to consumers.  Since the Company has a larger share of the rental market
than  the sell-thru market and since its margins are generally higher for rental
product than for sell-thru market, an increase in the number of sell-thru titles
may have an adverse impact on the Company's business.

           In addition to competing with other home video retailers, the Company
and  its  franchise  owners compete with all other forms  of  entertainment  and
recreational  activities including, but not limited to, movie theaters,  network
television and other events, such as sporting events.  The Company also competes
with  cable television, which includes pay-per-view television.  Currently, pay-
per-view  television  provides less viewing flexibility  to  the  consumer  than
videocassettes,  and  the  more  popular  movies  are  generally  available   on
videocassette   prior   to  appearing  on  pay-per-view  television.    However,
technological advances could result in greater viewing flexibility for  pay-per-
view  or  in  other methods of electronic delivery, and such developments  could
have an adverse impact on the Company and its franchise owners' businesses.

           Several  consumer product companies have recently announced plans  to
introduce a new product to exhibit prerecorded filmed entertainment products  on
television.   The  product, the digital video disc player, is  to  be  based  on
digital technology and would permit a film that is recorded in digital format on
a  compact  disc  to  be  exhibited  on a standard  television  set.   This  new
technology  is  said  to  offer significant benefits to  consumers  by  enabling
distributors   to   produce   a  lower  cost,  higher   quality   product   than
videocassettes.  The Company is unable to determine at this time whether and, if
so,  when,  this new format will be introduced into the marketplace, whether  it
will  gain  significant  consumer acceptance generally or  among  the  Company's
customers.  As a result, the Company is unable to determine the impact this  new
format will have on the Company's business.

                                     I-13


<PAGE>

Music

           The  retail sale of prerecorded music and related products is  highly
competitive  among numerous chain and department stores, discount  stores,  mail
order  clubs  and specialty music stores.  Some mail order clubs are  affiliated
with  major  manufacturers  of  prerecorded  music  and  may  have  advantageous
marketing  arrangements with their affiliates.  As music stores generally  serve
individual  or local markets, competition is fragmented and varies substantially
from one location or geographic area to another.  The Company believes that  its
ability to compete successfully in the music retailing business depends  on  its
ability  to  secure  and  maintain attractive and convenient  locations,  manage
merchandise  efficiently,  offer  broad merchandise  selections  at  competitive
prices and provide effective service to its customers.

          The retailing of certain prerecorded music products has changed during
the  past  year.  A large number of mass merchandisers have begun  to  sell  new
releases at or, in certain cases, below cost in order to attract customers  into
their  stores  and  generate sales of other products.  In an attempt  to  remain
competitive, the Company has reduced the price at which it sells these products,
resulting  in  lower  revenue.   The Company believes  that  this  practice  may
continue for a period of time as mass merchandisers continue to open stores  and
build their customer base.

Theme Parks

           The  Company's  theme parks compete with other theme parks  in  their
respective   geographic  regions  as  well  as  with  other  forms  of   leisure
entertainment.  The profitability of the leisure-time industry is influenced  by
various   factors  which  are  not  directly  controllable,  such  as   economic
conditions, amount of available leisure time, oil and transportation prices  and
weather  patterns.  The Company believes that its intellectual  properties  will
enhance  existing attractions and facilitate the development of new  attractions
to encourage visitors to PARAMOUNT PARKS.

Publishing

          Competition in the elementary, secondary and higher education textbook
and  the  trade  and paperback book fields is intense, with a number  of  strong
competitors.   In addition, the acquisition of publication rights  to  important
book  titles is highly competitive and the Company competes with numerous  other
book publishers.  In the field of elementary and secondary school textbooks,  22
states  and some local jurisdictions limit the textbooks that may be  bought  by
school  systems  with  state funds to those books that  have  been  approved  by
adoption or listing.  In the higher education textbook field, new books  compete
with  used  books.   In addition, book piracy affects sales in  certain  foreign
markets.   A  large  portion of annual sales of educational  textbooks  is  made
during the June to September period.  In certain areas of publishing, books  are
usually  sold  on  a  fully-returnable basis resulting  in  significant  product
returns  to publishers.  In the field of information services to businesses  and
professionals,  there  are  numerous  organizations  that  provide   competitive
materials and services.

Cable Television

            The  Company's  cable  systems  operate  pursuant  to  non-exclusive
franchises  granted by local governing authorities (either municipal or  county)
and   compete  for  viewers  with  other  distribution  systems  which   deliver
programming  by  microwave transmission (MDS or MMDS) and SMATV or  directly  to
subscribers  via either "TVRO" or DBS technology.  The strength  of  competition
depends  upon  the  reliability, programming and  pricing  of  such  alternative
distribution   systems.   Digital  compression  may  allow  cable   systems   to
significantly  increase the number of channels of programming they  deliver  and
thereby  help  cable  systems  meet competition from  these  other  distribution
systems.

           The  Company views the future success of the cable business as  being
dependent  on supplying additional programming and new services to its customers
and increasing primary and premium subscriber penetrations.

                                     I-14

<PAGE>
           As  the Company's cable television systems are franchised on  a  non-
exclusive basis, other cable operators have been franchised and may continue  to
apply for franchises in certain areas served by the Company's cable systems.  In
addition,  the  1992  Cable Act prohibits a franchisor from  granting  exclusive
franchises  and  from  unreasonably refusing  to  award  additional  competitive
franchises.

           The  entry  of telcos into the cable television business may  provide
additional  competition  to  the cable industry.  Current  prohibitions  against
telcos  engaging  in  the cable television business within their  local  service
areas  have been held by some courts to be unconstitutional and, although  these
decisions are being appealed, the FCC, on March 17, 1995, issued a public notice
announcing  that  it  will no longer enforce its cross-ownership  rules  in  the
Fourth  and  Ninth  Circuits.   A  significant number  of  the  Company's  cable
franchise  areas  are in the Ninth Circuit.  In addition, the  FCC  has  adopted
video dialtone ("VDT") regulations which allow delivery of video  programming
over  telephone lines without the requirement to obtain a franchise and the  FCC
has  proposed  substantial  revisions  to such  regulations  (See  "Business  --
Regulation").  The Company is a general partner in three partnerships  providing
commercial  competitive access services which link business  customers  to  long
distance  carriers  via private networks owned by the cable  television  company
partners  and leased to the partnerships.  These interests will be sold  if  the
proposed sale of the Company's cable systems is consummated.

REGULATION

           The  Company's networks, broadcasting, entertainment, video and music
distribution,  publishing,  and  cable  television  businesses  are  subject  to
regulation  by  federal,  state  and  local governmental  authorities,  and  its
broadcast  television,  production  and  distribution  operations  are  affected
thereby.   The  rules,  regulations, policies  and  procedures  affecting  these
businesses are constantly subject to change.  The descriptions which follow  are
summaries  and  should be read in conjunction with the texts  of  the  statutes,
rules  and  regulations described herein.  The descriptions do  not  purport  to
describe  all present and proposed federal, state and local statutes, rules  and
regulations affecting the Company's businesses.

Intellectual Property

           The  Company conducts many of its businesses through the control  and
exploitation  of the numerous copyrights and trademarks underlying its  products
and  licenses; therefore, domestic and international laws affecting intellectual
property  have  significant importance to the Company.   Congress  is  currently
considering  revisions  to  the Copyright Act of  1976  (the  "Copyright  Act"),
including  extension of the protection term by 20 years, and the creation  of  a
performance  right for digital performances of sound recordings.   Congress  may
also  consider legislation to update the Copyright Act to take into account  new
technological   developments  relating  to  the  distribution   of   copyrighted
materials.

           COMPULSORY  COPYRIGHT.  Cable television systems are subject  to  the
Copyright  Act  which  provides a compulsory license  for  carriage  of  distant
broadcast  signals  at  prescribed rates (the proceeds  are  divided  among  the
various  copyright  holders  of the programs contained  in  such  signals).   No
license  fee  is  payable to any program copyright holder for retransmission  of
broadcast  signals  which are "local" to the communities  served  by  the  cable
system (see "Regulation -- Cable Television").

           The  Copyright  Act  also provides a similar compulsory  license  for
satellite  services.   Legislation adopted in the 104th  Congress  extended  the
satellite  compulsory  license for five years, raised the  fees  paid  to  carry
broadcast  signals, and, beginning in 1996, requires the fees to be set  through
negotiations  and  binding arbitration rather than by law, taking  into  account
fair  market  value.   The  law  also  includes  a  provision  eliminating   the
requirement  that  cable  operators pay compulsory  license  fees  for  stations
located  more  than  35  miles  away  but within  the  same  "Area  of  Dominant
Influence".

           FIRST SALE DOCTRINE.  The "First Sale" provision of the Copyright Act
provides that the owner of a legitimate copy of a copyrighted work may  rent  or
otherwise  use or dispose of that copy in such a manner as the owner  sees  fit.
The  First Sale doctrine does not apply to sound recordings or computer software
(other  than software made for a limited purpose computer, such as a video  game
platform), for which the Copyright Act vests a rental right (i.e., the right  to
control  the  rental  of  the  copy) in the copyright  holder.   The  repeal  or
limitation of the First Sale doctrine (or conversely, the creation of  a  rental
right)  for audiovisual works or for computer software made for limited  purpose
computers  would  have an adverse impact on the Company's home  video  business;
however, no such legislation is pending in Congress at the present time.

                                     I-15


<PAGE>

Networks and Broadcasting

Networks

           MODIFICATION  OF FINAL JUDGMENT.  The Modification of Final  Judgment
(the "MFJ") is the consent decree pursuant to which AT&T was reorganized and was
required  to divest its local telephone service monopolies.  As a result,  seven
regional  holding companies ("RHCs") were formed (including NYNEX) comprised  of
operating companies within their regions (Bell Operating Companies, or  "BOCs").
In  addition, that portion of the continental United States served by  the  BOCs
was  divided  into  geographical areas termed Local Access and  Transport  Areas
("LATAs").   The  MFJ  restricts the RHCs, the BOCs and  their  affiliates  from
engaging  in  inter-LATA  telecommunications  services  and  from  manufacturing
telecommunications products.  As a result of NYNEX's investment in the  Company,
the  Company  could  arguably  be considered an affiliate  of  an  RHC  for  MFJ
purposes.   As  a  result, the Company transferred certain of its  Networks  and
Broadcasting  and other operations and properties to an affiliated entity  which
will  be consolidated into the Company for financial reporting purposes. Neither
the  transfer nor the operations of the affiliate as an entity separate from the
Company will have a material effect on the financial condition or the results of
operations  of the Company.  Should the MFJ restrictions be modified or  waived,
the  affiliate intends to retransfer such assets and operations to the  Company.
In  March  1995,  a    U.S. District Court ruled that Bell Atlantic  Corporation
("Bell  Atlantic"),  which is a BOC and therefore is subject  to  the  MFJ,  may
deliver  movies and television programming via satellite nationally, and cleared
the  way for Bell Atlantic to buy radio and television stations, as well  as  to
own cable systems outside its service area.

          1992 CABLE ACT.  (See "Cable Television" below)


Broadcasting

           Television and radio broadcasting are subject to the jurisdiction  of
the FCC pursuant to the Communications Act.

           THE COMMUNICATIONS ACT.  The Communications Act authorizes the FCC to
issue,  renew,  revoke  or  modify broadcast licenses;  to  regulate  the  radio
frequency, operating power and location of stations; to approve the transmitting
equipment  used by stations; to adopt rules and regulations necessary  to  carry
out  the  provisions of the Communications Act; and to impose certain  penalties
for violations of the Communications Act and the FCC's regulations governing the
day-to-day operations of television and radio stations.

           BROADCAST LICENSES.  Broadcast station licenses (both television  and
radio) are ordinarily granted for the maximum allowable period of five years  in
the  case  of television and seven years in the case of radio, and are renewable
for  additional five-year or seven-year periods upon application  and  approval.
Such  licenses  may  be  revoked  by  the FCC  for  serious  violations  of  its
regulations.   Petitions to deny renewal of a license or competing  applications
may  be  filed for the frequency used by a renewal applicant.  If a petition  to
deny  is filed, the FCC will determine whether renewal is in the public interest
based upon presentations made by the licensee and the petitioner.  On March  23,
1995,  the  Senate  Committee on Commerce, Science and  Transportation  approved
legislation  (the  "Commerce Committee Bill") which, among other  things,  would
lengthen  television  and radio station license terms  to  10  years  and  relax
ownership  restrictions with respect to aliens to the extent U.S.  ownership  of
broadcast  stations is permitted in the alien's home country.  It is  impossible
at  this time to predict whether the Commerce Committee Bill will become law  or
what form it will take.

           The licenses for the Company's television stations expire as follows:
WDCA-TV on October 1, 1996; KSLA-TV on June 1, 1997; WKBD-TV on October 1, 1997;
KMOV-TV  on February 1, 1998; each of KRRT-TV, KTXA-TV and KTXH-TV on August  1,
1998;  each of WVIT-TV and WSBK-TV on April 1, 1999; each of WNYT-TV and WHEC-TV
on  June 1, 1999; and WTXF-TV on August 1, 1999.  The Company's licenses for its
radio  stations expire as follows:  WMZQ- AM/FM, WCPT-AM and WJZW-FM on  October
1,  1995;  WLTI-FM on October 1, 1996; WLIT-FM on December 1, 1996; KYSR-FM  and
KXEZ-FM on December 1, 1997; each of KBSG-AM/FM and KNDD-FM on February 1, 1998;
and  WLTW-FM on June 1, 1998.  The Company will apply for renewal of and expects
that the licenses which expire in 1995 will be renewed.

                                     I-16


<PAGE>

           The  Communications Act prohibits the assignment of a license or  the
transfer  of  control  of  a license without prior approval  of  the  FCC.   The
Communications Act also provides that no license may be held by a corporation if
(1) any officer or director is an alien or (2) more than 20% of the voting stock
is  owned  of record or voted by aliens or is subject to control by aliens.   In
addition, no corporation may hold the voting stock of another corporation owning
broadcast  licenses  if  any  of  the  officers  or  directors  of  such  parent
corporation  are  aliens or more than 25% of the voting  stock  of  such  parent
corporation  is owned of record or voted by aliens or is subject to  control  by
aliens,  unless  specific FCC authorization is obtained.  The FCC  is  currently
reviewing  these regulations and legislation, such as the Commerce Committee
Bill, has been introduced  to  relax  the foreign  ownership  restrictions.   
The  outcome  of  the  FCC  review  and  the legislative proposal is uncertain.

           MUST  CARRY/RETRANSMISSION  CONSENT.  The  1992  Cable  Act  contains
provisions  which  grant  certain "Must Carry" rights  to  commercial  broadcast
television  stations that are "local" to communities served by a  cable  system,
including  the right to elect either to require a cable operator  to  carry  the
station pursuant to the Must Carry provisions of the Act or to require that  the
cable operator secure the station's "Retransmission Consent" on a negotiated 
basis before  the  station can be carried (i.e., retransmitted) on the  cable  
system. (See "Cable Television" below)

            RESTRICTIONS   ON  BROADCAST  ADVERTISING.   In  past  Congressional
sessions,  committees of Congress examined proposals for legislation that  would
eliminate  or  severely  restrict advertising of beer and  wine  either  through
direct  restrictions  on  content or through elimination  or  reduction  of  the
deductibility  of expenses for such advertising under federal  tax  laws.   Such
proposals  generated  substantial opposition, but it is  possible  that  similar
proposals  will be reintroduced in Congress.  The elimination of  all  beer  and
wine  advertising would have an adverse effect on the revenues of the  Company's
television and radio stations.

           OWNERSHIP  LIMITATIONS.  The FCC has placed limits on the  number  of
radio  and  television  stations in which one entity can  own  an  "attributable
interest".   The  Company currently owns radio stations  below  those  ownership
limits and owns the maximum  permitted number of television stations.  The FCC 
has adopted a  number of  rules designed to prevent monopoly or undue 
concentration of control of  the media of mass communications.  In 1994, 
FCC regulations which permitted a single entity to have an "attributable" 
ownership or management interest in up to 18 AM and  18  FM  stations  
nationwide were increased to 20 AM and  20  FM  stations, including  
multiple  AM and/or FM stations licensed to serve  the  same  market.
Minority-controlled broadcasters can own an additional three  AM  and  three  FM
stations.   The  limit on the number of such multiple stations in  a  particular
market which a single entity may own or control depends upon the total number of
AM  and/or  FM stations in that market; provided that, at the time of  purchase,
the combined audience share of such multiple stations does not exceed 25%.  With
respect  to  television, the FCC's rules limit the maximum  number  of  stations
nationwide  in  which  one  entity  can  have  an  "attributable"  ownership  or
management  interest, to that number which serves up to 25% of  U.S.  television
households, provided, however, that (except in limited circumstances) the  total
number  of stations will not exceed 12.  The FCC also permits radio stations  to
broker  the  programming and sales inventories of their stations to other  radio
stations  within  the  same area, subject to various restrictions,  so  long  as
ultimate  operational  control and ownership is retained and  exercised  by  the
licensee.  Such brokerage agreements function, as a practical matter, to  effect
a  consolidation of competitive radio broadcast stations within a market in much
the  same  manner  as  multiple ownership of radio  facilities  by  one  entity.
Similar brokerage agreements among television stations are being implemented  in
a  smaller  number  of  markets than in radio and are not  now  subject  to  any
explicit FCC regulations.

                                     I-17


<PAGE>

           The  FCC's  ownership limitations also prohibit a single entity  from
owning  multiple "same service" (e.g., TV, AM or FM) stations licensed to  serve
different  markets  if  the  broadcast signals of such  stations  overlap  to  a
specified  measurable  degree.  The maximum number of  commonly  owned  stations
serving  neighboring  markets whose signals can overlap  is  the  same  as  that
maximum number of commonly owned stations which an entity can own or control  in
a single market.  Additional ownership prohibitions preclude common ownership in
the same market of (i) television stations and cable systems; (ii) television or
radio  stations  and  newspapers of general circulation;  and  (iii)  radio  and
television stations.  Radio-television cross-ownership prohibitions are  subject
to  waiver by the FCC on a case-by-case basis.  The Company operates two AM  and
two  FM  stations  as  well  as a television station  serving  Washington,  D.C.
Ownership  of  the  television  station (WDCA) was  obtained  when  the  Company
acquired  majority ownership of Paramount Communications on March 11, 1994.   
Pursuant  to  the FCC's  order consenting to the transfer of control of the 
broadcast licenses  of Paramount Communications  to the Company, the Company 
has undertaken to dispose of one  AM  and one  FM radio station serving 
Washington, D.C. no later than September 11, 1995. The FCC's previous 
prohibition on a national television network's (ABC, CBS, and NBC) owning 
or operating cable systems has been repealed but with certain limits as  to  
the  number of homes which network-owned cable systems  can  pass  on  a
national and local basis.

           The  FCC  is currently reviewing the broadcast ownership regulations,
and  the Commerce Committee Bill proposes to increase the audience share ceiling
from  25%  to  35%.  The extent to which these regulations will be  repealed  or
modified is uncertain.


           HDTV.   In  1993,  the FCC adopted a technological standard  for  the
transmission  of  high  definition television ("HDTV"), an  advanced  television
system  which  enhances picture and sound quality, as well as  the  methods  and
timetable  for  implementation of an HDTV transmission standard by broadcasters.
The  means  by  which  that transmission standard will be  implemented  and  the
development of technologies such as digital compression  will  have an  economic
and competitive impact on broadcasting and cable operations.  The Company cannot
predict  the  effect of implementation of these technologies on its  operations.
The  FCC  has stated its intention not to disadvantage broadcasters  and  it  is
expected that any HDTV standard which is ultimately adopted will be fashioned so
as to accommodate the needs of broadcasters vis-a-vis competitive video delivery
technologies.  The FCC has already determined that TV stations will be given  up
to  six  years to implement HDTV from commencement of the transition period  and
that stations which do not convert to the HDTV standard will lose their licenses
to  broadcast at the end of a proposed 15-year period from commencement  of  the
transition  period.  The cost of converting to HDTV will  not  have  a  material
effect  on  the  Company.   Broadcasters have asked Congress  and  the  FCC  for
permission  to  use  broadcast stations' respective  forthcoming  HDTV  spectrum
assignments for some non-broadcasting purposes, such as advanced paging and data
delivery.   The  Commerce  Committee Bill includes some  expanded  spectrum  use
authority, provided that broadcasters compensate the FCC.

Entertainment

           The Company's first-run, network and other production operations  and
its  distribution of off-network, first-run and other programs in  domestic  and
foreign  syndication  are  not  directly  regulated  by  legislation.   However,
existing  and proposed rules and regulations of the FCC applicable to  broadcast
networks,  individual  broadcast stations and cable could affect  the  Company's
Entertainment businesses.

           FINANCIAL INTEREST AND SYNDICATION RULES.  The financial interest and
syndication rules ("finsyn rules") were adopted by the FCC in 1970.  These rules
significantly  limited  the role of broadcast television networks  in  broadcast
television  program  syndication.   The financial  interest  rule  prohibited  a
network  from  acquiring a financial or proprietary right  or  interest  in  the
exhibition  (other than its own broadcast network exhibition),  distribution  or
other  commercial  use  in connection with the broadcasting  of  any  television
program of which it is not the sole producer.  The syndication rule prohibited a
network from syndicating programming domestically to television stations for 
non-network exhibition and precluded a network  from  reserving  any  rights  to
participate  in  income  derived  from domestic broadcast  syndication  or  from
foreign broadcast syndication where the network was not the sole producer.   For
the purposes of these rules, a broadcast network was defined as any entity which
offers an interconnected program service on a regular basis for 15 or more hours
per week to at least 25 affiliated television stations in 10 or more states.

                                     I-18


<PAGE>

           In  1993, the FCC modified the finsyn rules effective as of  June  5,
1993, although ABC, CBS, and NBC could not commence operating under the modified
finsyn rules until November 10, 1993 when the antitrust consent decrees to which
they are subject were modified to eliminate certain restrictions by an order  of
the  U.S.  District Court for the Central District of California.  The  modified
rules  will expire in November 1995, absent an affirmative FCC action  retaining
or  further  modifying  them.  The FCC is to initiate  a  final  review  of  the
modified  rules  six  months prior to their November 1995  expiration  date  and
proponents  of  their continuation have the burden of proving  that  the  public
interest  requires their continued retention.  The Company is unable to  predict
what action the FCC will take when it reviews the rule.  Elimination of the rule
may  have  an  adverse affect on the Company's distribution  and  production  of
network prime time programming.

          PRIME TIME ACCESS RULE.  The Prime Time Access Rule ("PTAR") prohibits
network affiliates in the top 50 markets (designated by the FCC based on  survey
data)  from exhibiting network or off-network programming during more than three
out of the four prime time hours, with certain limited exceptions.  The Decision
provided  that  first-run programming produced by a network will  be  considered
network programming for this purpose.

           In  October  1994, the FCC began a review on whether PTAR  should  be
modified,  repealed, or retained.  Certain programmers have sought repeal  while
others  are  seeking modification to permit only the exhibition  of  off-network
programming.

           The  Company  strongly supports PTAR and has launched  an  aggressive
campaign, along with other parties, to retain PTAR intact.  The Company believes
that  PTAR  will play an important role in helping emerging networks,  including
UPN,  and enables independent producers and television stations to compete  with
the  networks.   Modification or elimination of PTAR could affect the  Company's
first-run and other distribution activities and hamper the development of UPN.

           ANTITRUST.  The Company, through PARAMOUNT PICTURES, is subject to  a
consent  decree, entered in 1948, which contains restrictions on certain  motion
picture trade practices in the United States.

           EUROPEAN UNION DIRECTIVE.  In October 1989, the European Union ("EU",
then the EC and sometimes referred to as the EC) directed each of the 12 
European Community member countries to adopt broadcast quota regulations based 
on its  guidelines  by October  3,  1991. The EU is currently considering 
amendments to its  Television Without Frontiers directive.  In March 1995, the 
Executive Commision of  the  EU approved  revisions  to  the directive, which 
will increase  the  discrimination against  non-European programming; however, 
at this time, it  is  impossible  to predict  what changes will be adopted by 
the EU, or to predict their  impact  on the  Company's  theatrical 
distribution and television  syndication  businesses. Each  of MTV EUROPE, 
NICKELODEON U.K. and VH-1 in the U.K are in compliance with the  EU  broadcast 
quotas and the Company does not believe that these businesses would be 
affected by the adoption of such proposals.

Video and Music Distribution

            FRANCHISING.   Certain  states,  the  United  States  Federal  Trade
Commission  and certain foreign jurisdictions require a franchisor  to  transmit
specified  disclosure statements to potential owners before issuing a franchise.
Additionally,  some states and foreign jurisdictions require the  franchisor  to
register  its franchise before its issuance.  The Company believes the  offering
circulars used to market its franchises comply with the Federal Trade Commission
guidelines  and all applicable laws of states in the United States  and  foreign
jurisdictions regulating the offering and issuance of franchises.  The Company's
home  video  and  music retailing businesses, other than the franchising  aspect
thereof,  are  not  generally subject to any government  regulation  other  than
customary laws and local zoning and permit requirements.

                                     I-19


<PAGE>
Cable Television

Federal Regulation

           1992  CABLE  ACT.   On October 5, 1992, Congress  enacted  the  Cable
Television  Consumer  Protection and Competition Act of 1992  (the  "1992  Cable
Act"),  substantially  amending  the  regulatory  framework  under  which  cable
television systems have operated since the Communications Act was amended by the
Cable  Communications Policy Act of 1984 (the "1984 Act").  The FCC, through its
rules and regulations, began implementing the requirements of the 1992 Cable Act
in 1993.  The following is a summary of certain significant issues:

                 Rate Regulation.  Rate regulations adopted in April 1993 by the
FCC (the "April 1993 Regulations") established a "benchmark" formula used to set
a  cable  operator's  "initial  permitted rate" for  regulated  tiers  of  cable
service.   Cable  systems  whose rates exceeded the  applicable  benchmark  were
required  to  reduce their rates either to the benchmark or by  10%  from  those
charged  on September 30, 1992, whichever reduction was less.  These regulations
also established the prices that an operator may charge for subscriber equipment
and  installation services, based on the operator's actual cost plus  an  11.25%
return.

                 On  February  22, 1994, the FCC adopted additional  rules  (the
"February 1994 Regulations") that:
(1)  replaced  the  April 1993 Regulations' 10% rollback provision  with  a  17%
reduction of regulated tier rates; (2) adopted interim standards governing 
"cost-of  service" proceedings pursuant to which a cable operator may attempt to
prove that its costs of providing regulated service justify initial permitted
rates that are higher than those produced under the benchmark approach; and  (3)
established  a regulatory scheme to adjust initial permitted rates on  a  going-
forward  basis  for  certain  "external"  cost  increases  exceeding  inflation,
providing  (among other things) a pass-through of and 7.5% mark-up for increases
in  an  operator's  programming expenses.  The February  1994  Regulations  also
adopted  an  elaborate  multi-factor  test for  determining  whether  collective
offerings  of "a la carte" channels (which channels may be sold individually  on
an  unregulated basis) are to be treated as regulated tiers.  The February  1994
Regulations  govern  rates in effect as of May 15, 1994, while  the  April  1993
Regulations remain applicable to rates that were in effect between September  1,
1993 and May 14, 1994.

                 On November 10, 1994, the FCC adopted new "going forward" rules
("November 1994 Regulations") that increased the mark-up for channels  added  to
regulated  tiers  (other than the basic tier), established a  more  permissively
regulated new product tier ("NPT"), and otherwise tightened FCC regulation  of
collective offerings of a la carte channels.  These new rules allow operators to
pass  through to subscribers the costs, plus a 20-cent per channel mark-up,  for
channels  newly  added to regulated tiers (other than the basic tier).   Through
1996, however, operators are subject to an aggregate cap of $1.50 (no more  than
$1.20 of which may be mark-up) on the amount that they may increase their retail
rates  for cable program service tier rates due to channel additions.  In  1997,
operators will be entitled to an additional 20-cent per channel mark-up and will
no  longer  be subject to a license fee cap.  The FCC also established  NPTs  to
provide  operators broad pricing and packaging flexibility so long as  operators
preserve  the fundamental nature of their preexisting regulated tiers.   At  the
same  time,  the FCC reversed its policy with respect to collective a  la  carte
offerings (that do not qualify for unregulated NPT treatment) and generally held
that  such collective offerings would be treated as regulated tiers (other  than
NPTs).   In  addition, the FCC proposed to eliminate the current 7.5 %  operator
mark-up  on  increases in a program service's license fees.  The Company,  along
with other cable industry interests, has opposed this proposal.

                 Several parties, including the Company and other cable industry
interests,  have  continued  to  challenge other  elements  of  the  FCC's  rate
regulations.  The Commerce Committee Bill would eliminate rate regulation of (i)
all regulated tiers (other than the basic tier) except for those cable operators
whose  rates  substantially  exceed the national average,  and  (ii)  all  cable
systems which are subject to telco video competition.  The Company is unable  to
predict  the  timing  or outcome of any such pending reconsideration  petitions,
judicial appeals or proposed legislation.

                                     I-20


<PAGE>
                  The  implementation  of  the  April  1993  and  February  1994
Regulations has had a negative effect on the Cable Television segment's revenues
and  earnings from operations.  The reduction in revenues in 1994 was  partially
offset  by customer growth and subsequent permitted rate increases.  On a  going
forward  basis,  the November 1994 Regulations will mitigate a  portion  of  the
adverse  impact  of  any reduction in revenues of the Cable Television  segment,
although  the  Company  cannot  predict  the  effect  of  these  rules  or   any
reconsideration proceedings regarding these rules on the license fees  paid  to,
or the penetration of, program services such as those owned by the Company.  For
example, in those systems that have been rebuilt to expand channel capacity, one
or  two  programming services added subsequent to the February 1994  Regulations
have supported rate increases for the Satellite Value Package tier; in addition,
Viacom Cable has launched five channel NPTs in various systems (see "Business --
Cable Television -- Cable Operations").  Further, Viacom Cable has made cost-of-
service filings in two systems.  While the Company cannot predict the outcome of
these  filings, it believes that both cost-of-service proceedings justify  rates
in  excess of those calculated using the April 1993 Regulations and the February
1994 Regulations.

           Vertical  Integration.   Certain pricing and other  restrictions  are
imposed  on  vertically integrated cable programmers (such as the Company)  with
respect to their dealings with multichannel distributors of programming, such as
cable  systems, SMATV systems, MMDS operators and TVRO and DBS distributors  (as
defined  in "Business--Competition-- Cable Television").  The FCC's implementing
regulations governing access by multichannel distributors to the programming  of
vertically  integrated cable programmers limit the extent to which a  vertically
integrated  cable  programmer can differentiate in pricing or  other  terms  and
conditions   of   carriage   between   and  among   multichannel   distributors.
Multichannel distributors may file a complaint with the FCC if they believe that
a   vertically  integrated  cable  programmer  has  not  complied   with   these
regulations.   To date, no complaints have been filed against the Company.   The
FCC's  implementing  regulations also limit the number of channels  on  a  cable
system  which  may be used to carry the programming of such system's  affiliated
(vertically integrated) cable programmers.  These regulations provide  generally
that  no  more  than 40% of such a system's channels can be used  to  carry  the
programming  of  the  system's  affiliated  cable  programmers.   These  channel
occupancy limits apply only up to 75 channels of a given system.  The  FCC  also
considered whether limits should be placed on a multichannel distributor's right
to  participate in the production or creation of programming, and concluded that
no such limits are appropriate at this time.  The FCC's implementing regulations
regarding  channel  occupancy  limits  are  subject  to  pending  petitions  for
reconsideration at the FCC.

           Must  Carry/Retransmission Consent.  Commercial  television  stations
which  are "local" to communities served by a cable system can elect to  require
either  Must Carry or Retransmission Consent.  In addition, a cable  system  may
not  carry  any commercial non-satellite-delivered television station  which  is
"distant"  to  communities served by such system or any  radio  station  without
obtaining  the  consent of such station for such retransmission;  however,  such
television and radio stations do not have Must Carry rights.  Such stations  may
require  payment in consideration for Retransmission Consent.  The  Company  has
negotiated  retransmission rights for a number of commercial stations  which  it
carries.   Some of these agreements are on an interim basis and may be  canceled
by  the stations.  The Company carries other stations pursuant to their exercise
of  their Must Carry rights.  Local non-commercial television stations have Must
Carry  rights, but may not elect Retransmission Consent.  The Must  Carry  Rules
were  challenged by cable program services and cable system operators.  In April
1993,  a District of Columbia three-judge court upheld the rules against a First
Amendment attack.  In June 1994, the U.S. Supreme Court held that the rules were
content-neutral  rather  than unconstitutional, vacating  the  District  Court's
decision and remanding the case back to the District Court for determination  of
the  impact  of  such  rules on the broadcast and cable industries.   The  rules
remain  in  effect pending the decision of the District Court on  remand.   (See
"Broadcasting" above)

           Buy  Through to Premium Services.  Pursuant to the 1992 Cable Act,  a
cable  system may not require subscribers to purchase any tier of service  other
than  the  basic  service  tier in order to obtain other  tiers  of  service  or
services offered by the cable operator on a per channel (e.g., premium services)
or  pay-per-view  basis.  A cable system which is not now fully addressable  and
which  cannot utilize other means to facilitate access to all of its programming
will  have  up  to  10  years to fully comply with this  provision  through  the
implementation  of  fully addressable technology.  The Company's  cable  systems
have already begun to implement compliance.

           Among  other  things, the 1992 Cable Act and the  FCC's  implementing
regulations  also:   (i) with certain exceptions, require a  three-year  holding
period  before  the  resale  of  cable systems; (ii)  provide  that  franchising
authorities cannot unreasonably refuse to grant competing franchises (all of the
Company's  current  franchises are non-exclusive); (iii) require  that  the  FCC
study the cost and benefits of issuing regulations with respect to compatibility
between  cable system equipment and consumer electronics such as VCRs and  issue
such  regulations as may be appropriate; and (iv) facilitate the manner in which
third parties can lease channel capacity from cable systems and provide that the
maximum rates which a cable system can charge for leased channel capacity may be
set  by  the  FCC.   Pursuant to the 1992 Cable Act,  the  FCC  adopted  minimum
customer  service  standards and also determined the circumstances  under  which
local franchising authorities may impose higher standards.

                                     I-21


<PAGE>
           Lawsuits have been filed challenging various provisions of  the  1992
Cable  Act  including  the provisions relating to rate regulation,  Must  Carry,
Retransmission Consent, the pricing and other restrictions imposed on vertically
integrated  cable  programmers with respect to their dealings with  multichannel
programming  distributors, and the mandated availability of cable  channels  for
leased access and PEG programming.  If enacted, the Commerce Committee Bill  may
affect the status of such lawsuits.

           VIDEO  DIALTONE REGULATIONS.  A series of recent U.S. district  court
decisions  in  Alabama,  the  District  of Columbia,  Illinois,  Washington  and
Virginia  have  declared unconstitutional and have enjoined  the  Communications
Act's  ban on the direct provision of video programming by a telco in its  local
service area.  The U.S. Court of Appeals for the Fourth and Ninth Circuits  have
affirmed  the district court rulings brought before them on appeal.  Even  prior
to these court rulings, the FCC had reinterpreted this statutory ban in its 1992
"video dialtone"  decision, authorizing a broadened role for telco participation
in  video  distribution. The VDT policy is being challenged in  court  by  cable
interests  as violating the Communications Act.  It is also being challenged  by
telephone interests as not being liberal enough.  The policy permits in-service-
area  delivery  of  video  programming by a telco and exempts  telcos  from  the
Communications  Act's franchising requirements so long as their  facilities  are
capable of two-way video and are used for transmission of video programming on a
common  carrier  basis, i.e., use of the facilities must  be  available  to  all
programmers  and  program packagers on a non-discriminatory,  first-come  first-
served basis.  Telcos are also permitted to provide to facilities users 
additional "enhanced" services such as video gateways, video processing 
services,  customer premises equipment and billing and collection.  These can 
be provided on a  non-common  carrier  basis. In January 1995, in response  to
the  court  rulings discussed   above striking down the underlying statutory 
ban, the FCC  issued  a Notice  of  Proposed Rulemaking seeking to craft rules 
to govern telco provision of  video  programming  directly to subscribers.  
The FCC's  pending  proceeding addresses  the extent to which regulations 
applicable to common carriers  and/or regulations  applicable  to cable 
operators should govern  telcos  that  provide video  programming directly to 
subscribers over their own VDT systems.  The  FCC has  already  approved 
several VDT construction applications for  market  trials and/or  limited 
commercial deployment and has granted, in part, the first tariff filed to 
govern the rates and terms of a VDT offering.  In response to the court rulings 
noted above, the FCC's more recent VDT authorizations have also allowed
telcos  to  serve  as  program packagers on their VDT platforms.   The  Commerce
Committee  Bill  also contemplates a relatively permissive framework  for  telco
entry  into cable.  It is expected that bills will be formally introduced  later
this year.  At present, state and/or local laws do not prohibit cable television
companies  from engaging in certain kinds of telephony business in many  states.
The  Commerce  Committee Bill proposes to generally eliminate  state  and  local
entry   barriers  which  currently  either  prohibit  or  restrict  an  entity's
(including  a  cable  operator's) capacity to offer telecommunications  services
(including  telephone  exchange  service) in  competition  with  telcos  and  to
interconnect on a non-discriminatory basis with telcos and utilize certain telco
facilities  in  order to provide service in competition with a telco  after  the
date  of  enactment of such legislation.  The Company cannot predict the outcome
or  impact  of  these  legislative and regulatory efforts although  the  Company
anticipates  that  its  program  services  could  benefit  from  the   increased
distribution  opportunities afforded by broadened telco entry into  multichannel
video  distribution.  If the pending legislation does not become  law,  and  the
various  appellate  courts uphold the unconstitutionality of the  Communications
Act's  restrictions  on telco video programming, the telcos  have  stated  their
intention to immediately enter the video programming business.

           FCC MINORITY TAX CERTIFICATE  On January 20, 1995, the Company agreed
to  sell  its cable television systems to a partnership which is minority-owned.
Under the minority-ownership tax deferral rules adopted by the FCC in 1978,  the
Company  is entitled to receive a tax certificate pursuant to which the  Company
would be able to defer capital gains tax on the gain from the sale, provided the
Company  reinvests the net proceeds of the sale in qualifying  media  properties
within  two  years of closing or reduces its tax basis in existing assets.   The
U.S.  House of Representatives and the U.S. Senate have each approved a  similar
version of legislation that would eliminate such tax consequences retroactive to
January 17, 1995.  The Company's current agreement to sell its cable systems  is
contingent upon receipt of the FCC tax certificate.

                                     I-22


<PAGE>

State and Local Regulation.

            State  and local regulation of cable is exercised primarily  through
the  franchising process under which a company enters into a franchise agreement
with  the  appropriate franchising authority and agrees to abide  by  applicable
ordinances.  The 1992 Cable Act permits the FCC to broaden the regulatory powers
of  the  state and local franchising authorities, particularly in the  areas  of
rate  regulation  and  customer  service standards.   (See  "Cable  Television--
Federal Regulation" above)

           Under  the 1984 Act, franchising authorities may control only  cable-
related  equipment and facilities requirements and may not require the  carriage
of  specific  program  services.  However, federal law (as  implemented  by  FCC
regulations)  mandates  the  carriage  of  both  commercial  and  non-commercial
television  broadcast stations "local" to the area in which a  cable  system  is
located. (see "Cable Television -- Must Carry/Retransmission Consent" above)

           The  1984  Act,  as amended, guarantees cable operators  due  process
rights  in  franchise renewal proceedings and provides that franchises  will  be
renewed unless the cable operator fails to meet one or more enumerated statutory
criteria.   The  Company's current franchises expire on  various  dates  through
2017.   During  the  five-year period 1995 through 1999,  franchises  having  an
aggregate  of  approximately 369,420 customers (at  December  31,  1994)    will
expire unless renewed.  The Company expects its franchises to be renewed.


I
tem 2.  Properties

           The  Company  maintains its world headquarters at 1515 Broadway,  New
York, New York, where it rents approximately one million square feet for 
executive offices  and certain of its operating divisions.  The lease runs to  
2010,  with four  renewal  options for five years each.  The lease also grants 
the  Company options  for  additional  space  and a right  of  first  
negotiation  for  other available space in the building.  The Company also 
leases approximately  484,000 square  feet  of office space at 1633 Broadway, 
New York, New York, which  lease runs  to  2010,  and approximately 237,000 
square feet of office space  at  1230 Avenue  of  the  Americas, New York, New 
York, which lease runs to  2009,  which leases  contain  options  to renew, 
among other terms.   The  Company  owns  the PARAMOUNT PICTURES studio at 5555 
Melrose Avenue, Los Angeles, California, which consists  of  approximately  
63 acres containing sound  stages,  administrative, technical  and  dressing  
room  structures, screening  theatres,  machinery  and equipment  facilities,  
plus  a  back lot and  parking  lot.   PARAMOUNT  PARKS' operations  in  
the U.S. include approximately 1,640 acres owned and  295  acres leased  
and in Canada include approximately 200 acres owned and 97 acres leased.
The  Company owns the Blockbuster Entertainment Group headquarters at 200  South
Andrews  Avenue,  Fort  Lauderdale, Florida,  which  consists  of  approximately
148,000  square  feet  of office space and regional and district  offices.   The
BLOCKBUSTER retail and distribution operations consist of approximately 55 owned
properties, aggregating approximately 361,000 square feet, and approximately 
2,833 leased locations, aggregating approximately 19.4 million square feet.
Facilities  within the Publishing segment (other than executive offices at 1230 
Avenue of the  Americas described above) include approximately 7,653,000 square
feet of space, of  which approximately  5,070,000 square feet are leased.  
The facilities  are  used  for warehouse,  distribution  and  administrative 
functions.   The  Company's  cable television  systems  include  a  combination
of owned  and  leased  premises  in California,  Ohio,  Oregon, Tennessee and 
Washington  (the  location  of  Viacom Cable's franchises) and each system's 
electronic distribution equipment.

          The Company also owns and leases office, studio and warehouse space in
various  cities in the U.S., Canada and several countries around the  world  for
its  businesses.  The Company considers its properties adequate for its  present
needs.   The Company also owns approximately 1,770 acres of undeveloped land  in
Southeast Florida.

                                     I-23


<PAGE>


Item 3.  Legal Proceedings

          On August 18, 1994, the District Court in and for Dallas County, Texas
entered  a  judgment  in  favor  of  the plaintiffs  in  the  action  Howell  v.
Blockbuster Entertainment Corporation et al. (Cause No. 91-10193-M, now  pending
on  appeal  before  the Dallas Court of Appeals as Cause No. 05-94-01823).   The
defendants include Blockbuster Entertainment Corporation ("BEC"), which has been
merged  into  the Company, and Video Superstores Master Limited  Partnership,  a
dissolved limited partnership that was indirectly controlled by BEC at the  time
of  its dissolution.  The judgment is based upon plaintiffs' claims of breach of
fiduciary  duty, fraud, conspiracy, breach of contract and tortious interference
with  contract  and  claims under Texas partnership law in connection  with  the
defendants'  treatment, and ultimate acquisition, of plaintiff's interest  in  a
limited  partnership which owned three Blockbuster stores.   The  court  entered
judgment  against  all  defendants, jointly  and  severally  in  the  amount  of
$10,884,003  as  compensatory damages, $3,791,172 as pre-judgment  interest  and
attorneys'  fees  in  the amount of $175,000.  In addition,  the  Court  entered
judgment  totaling  $108,840,030 for exemplary  damages  and  ordered  that  the
plaintiffs  recover post-judgment interest at the rate of 10% per annum  on  all
amounts awarded from the date of judgment until paid.  The Company believes that
substantial  grounds exist for the vacation of the judgment or  its  substantial
reduction and is vigorously prosecuting an appeal.

           On  September  27,  1994,  an  action captioned  Murphy,  et  al.  v.
Blockbuster Entertainment Corporation, et al. (Cause No. 94-10051-M)  was  filed
in the District Court in and for Dallas County, Texas by plaintiffs representing
the  two  other  limited  partners of the plaintiff  in  the  Howell  litigation
described above.  Plaintiffs assert the same basic causes of action as in Howell
and  have claimed they are entitled to actual damages in excess of $240  million
and  punitive damages in excess of $1 billion.  The Company believes that it has
substantial defenses to these claims, including, among others, that  the  claims
are  barred  by the statute of limitations and by releases entered into  by  the
plaintiffs,  and  intends  to vigorously defend the claims.   Discovery  in  the
Murphy  action has been stayed pending the outcome of the appeal in  the  Howell
action.

           Stockholder  Litigation.  Four putative class actions were  filed  by
alleged  Spelling  shareholders in November 1994.  By Order dated  February  15,
1995,  the  four  actions  were consolidated under the caption  In  re  Spelling
Shareholder  Litigation,  Master File 94-8764 (AH), Circuit  Court,  Palm  Beach
County, Florida.  Defendants in all actions include Spelling, the Company and
the members of the Board of Directors of Spelling.   All complaints  alleged
that  the Company intends to  acquire  the  23%  shares  of Spelling  it does
not currently hold for inadequate consideration and in  breach of  the
defendants' fiduciary duties.  Two of the actions also alleged that  the
acquisition of the Company's 77% interest in Spelling was done improperly so  as
to  avoid  payment of a control premium to the shareholders.  Plaintiffs  sought
declaratory  and injunctive relief preventing the alleged acquisition  plan  and
damages.  The Company believes that plaintiffs' allegations are speculative  and
without merit and intends to defend the claims vigorously.   The plaintiffs have
been directed to serve a single consolidated class action complaint to supersede
all existing complaints and to move for class certification on or before May 18,
l995.

          Antitrust Matters.  On September 23, 1993, the Company filed an action
in the United States District Court for the Southern District of New York styled
Viacom  International Inc. v. Tele-Communications, Inc. et al., Case No. 93  Civ
6658.   The  complaint  (as amended on November 9, 1993) alleges  violations  of
Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act, Section 12 of
the  Cable Act, and New York's Donnelly Act, and tortious interference,  against
all  defendants,  and  a  breach of contract claim against  certain  defendants,
including  Tele-Communications, Inc. ("TCI").  The  claims  for  relief  in  the
complaint  are  based in significant part on allegations that  defendants  exert
monopoly   power  in  the  U.S.  cable  industry  through  their  control   over
approximately  one in four of all cable households in the U.S.  In  addition  to
other   relief,   the  Company  seeks  injunctive  relief  against   defendants'
anticompetitive  conduct  and damages in an amount to be  determined  at  trial,
including trebled damages and attorneys' fees.

                On   January  20,  1995,  the  Company  announced  that  it  had
provisionally  agreed  to  settle this action, subject  to  certain  conditions,
including, among other things, the effectiveness of a new affiliation  agreement
covering  TCI's  long-term carriage of SHOWTIME and THE MOVIE  CHANNEL  and  the
consummation  of  the  sale  of  the Company's  cable  television  systems  (See
"Business  --  Cable  Television").  The action is currently  suspended  pending
satisfaction of certain conditions which, if satisfied, would lead to settlement
of the action.

                                     I-24


<PAGE>

           MTV  EUROPE is engaged in a number of related litigations  in  Europe
contesting  the  legality  of certain joint licensing activities  by  the  major
worldwide  record  companies (See "Business -- Competition  --  Networks").   In
1992,  MTV EUROPE initiated a proceeding before the EC, seeking the dissolution,
under  Articles 85 and 86 of the Treaty of Rome, of the record companies'  joint
licensing  organizations -- Video Performance Limited ("VPL") and  International
Federation  of Phonogram and Videogram Producers ("IFPI") -- through  which  the
record  companies  exclusively license rights to exhibit music  video  clips  on
television  in  Europe  and elsewhere.  In 1994, the EC issued  a  Statement  of
Objections  which stated that the collective licensing negotiations of  VPL  and
IFPI,   and  their  major  record  company  members,  constituted  an   unlawful
restriction  of trade under Article 85, and reserved its right to address  abuse
of monopoly power under Article 86.  The VPL/IFPI and major labels were afforded
an  opportunity to respond at a hearing in June 1994, and it is anticipated that
in 1995 the EC will issue a decision or take steps toward alternative resolution
of  these  issues.   MTV EUROPE has been licensed to continue to  exhibit  music
video clips during the EC proceeding under an EC-assisted interim agreement with
VPL and IFPI, which expires in July 1995.

           In  December 1993, MTV EUROPE commenced a separate proceeding  before
the EC, challenging the operation of Viva, a German language music service owned
by  four  of  the  five  major record companies, as an example of illegal cartel
activity.

           In  a  separate  U.K.  high  court  action,  MTV  EUROPE  is  seeking
reimbursement of license fees paid to VPL and IFPI and/or damages on the grounds
that  these  fees  were  unlawfully extracted by the  record  companies'  cartel
organizations.

           Certain subsidiaries of the Company from time to time receive  claims
from  federal  and  state environmental regulatory agencies and  other  entities
asserting  that  they are or may be liable for environmental cleanup  costs  and
related  damages arising out of  former operations.  While the outcome of  these
claims  cannot  be predicted with certainty, on the basis of its experience  and
the information currently available to it, the Company does not believe that the
claims  it  has  received will have a material adverse effect on  its  financial
condition  or results of operations (See "Item 6. Selected Financial  Data"  and
"Item  7.  Management's  Discussion and Analysis of Results  of  Operations  and
Financial Condition.").

          The Company and various of its subsidiaries are parties to certain
other legal proceedings.  However, in the opinion of counsel, these proceedings
are not likely to result in judgments that will have a material adverse effect
on its financial condition or results of operations.

Financial Information About Industry Segments

           The  contribution  to revenues and earnings from operations  of  each
industry  segment  and  the identifiable assets attributable  to  each  industry
segment  for each of the last three years ending December 31, are set  forth  in
Note  12  to  the  Consolidated Financial Statements  of  the  Company  included
elsewhere herein.

Financial Information About Foreign and Domestic Operations

           Financial information relating to foreign and domestic operations for
each of the last three years ending December 31, is set forth in Notes 11 and 12
to  the  Consolidated  Financial Statements of the  Company  included  elsewhere
herein.

                                     I-25

<PAGE>

Executive Officers of the Company

    Set forth below is certain information concerning the current executive 
officers of the Company, which information is hereby included in Part I of 
this report.


<TABLE><CAPTION>

Name                                            Age                         Title
----                                            ---                         -----
<S>                                             <C>             <C>
Sumner M. Redstone                              71              Chairman of the Board of Directors
H. Wayne Huizenga                               57              Vice Chairman of the Board of Directors; Chairman,
                                                                Blockbuster Entertainment Group
Frank J. Biondi, Jr.                            50              President, Chief Executive Officer and Director
Philippe P. Dauman                              41              Executive Vice President, General Counsel,
                                                                Chief Administrative Officer and Secretary
                                                                and Director
Thomas E. Dooley                                38              Executive Vice President -- Finance,
                                                                Corporate Development and Communications
Vaughn A. Clarke                                41              Senior Vice President, Treasurer
Carl D. Folta                                   37              Senior Vice President, Corporate Relations
Michael D. Fricklas                             35              Senior Vice President, Deputy General Counsel
Susan Gordon*                                   41              Vice President, Controller and
                                                                Chief Accounting Officer
Rudolph L. Hertlein                             54              Senior Vice President
Edward D. Horowitz                              47              Senior Vice President, Technology of the Company;
                                                                Chairman, Chief Executive Officer of Viacom Interactive Media
Kevin C. Lavan**                                42              Senior Vice President, Controller and
                                                                Chief Accounting Officer
Henry J. Leingang                               45              Senior Vice President, Chief Information Officer
William A. Roskin                               52              Senior Vice President, Human Resources and Administration
George S. Smith, Jr.                            46              Senior Vice President, Chief Financial Officer
Mark M. Weinstein                               52              Senior Vice President, Government Affairs

</TABLE>


*    effective April 1, 1995
**  through March 31, 1995

           None of the executive officers of the Company  is related to any 
other executive officer or director by blood, marriage or adoption except that 
Brent D. Redstone and Shari Redstone,  Directors  of  the  Company,  are  the  
son   and daughter, respectively, of Sumner M. Redstone.

                                     I-26


<PAGE>

           Mr.  Redstone has been a Director of the  Company
since  1986  and  Chairman of the  Board  since  1987.   Mr.
Redstone has served as President, Chief Executive Officer of
NAI  since  July  1967,  and  continues  to  serve  in  such
capacity; he has also served as the Chairman of the Board of
NAI  since 1986.  Mr. Redstone became a Director of Spelling
in  1994.   He served as the first Chairman of the Board  of
the National Association of Theater Owners, and is currently
a  member  of the  Executive Committee of that organization.
During the Carter Administration, Mr. Redstone was appointed
a  member of the Presidential Advisory Committee on the Arts
for  the John F. Kennedy Center for the Performing Arts and,
in  1984,  he  was  appointed  a  Director  of  the  Kennedy
Presidential  Library Foundation.  Since 1982, Mr.  Redstone
has  been  a member of the faculty of Boston University  Law
School, where he has lectured in entertainment law,  and  in
1994,  he  accepted a proposal from Harvard  Law  School  to
lecture,  as well as a Visiting Professorship from  Brandeis
University.   In 1944, Mr. Redstone graduated  from  Harvard
University  and,  in 1947, received an L.L.B.  from  Harvard
University School of Law.  Upon graduation, he served as Law
Secretary with the United States Court of Appeals, and  then
as  a  Special  Assistant  to  the  United  States  Attorney
General.

           Mr.  Huizenga has been Vice Chairman of the Board
since  September  1994 and a Director of the  Company  since
October 1993.  He served as Chairman of the Board and  Chief
Executive  Officer  of  Blockbuster  from  April   1987   to
September   1994,  having  been  elected   a   director   of
Blockbuster in February 1987.  Mr. Huizenga also  served  as
President of Blockbuster from April 1987 to June  1988.   He
is  Chairman  of  the Board of Spelling and  a  Director  of
Discovery Zone.  From May 1984 to present, Mr. Huizenga  has
been  an  investor  in  other businesses  and  is  the  sole
stockholder and Chairman of the Board of Huizenga  Holdings,
Inc., a holding and management company with various business
interests.  In connection with these business interests, Mr.
Huizenga  has  been actively involved in strategic  planning
for  and executive management of these businesses.  He  also
has   a  majority  ownership  interest  in  Florida  Marlins
Baseball,  Ltd.,  a Major League Baseball sports  franchise,
and owns  the Florida Panthers Hockey Club, Ltd., a National
Hockey League sports franchise, the Miami  Dolphins, Ltd., a
National Football League sports franchise,  and  Joe  Robbie
Stadium in South Florida.

           Mr.  Biondi  has been President, Chief  Executive
Officer  and a Director of the Company since July 1987.   He
became  a Director of Spelling in 1994.  From November  1986
to  July  1987,  Mr.  Biondi was Chairman,  Chief  Executive
Officer  of  Coca-Cola Television and, from 1985,  Executive
Vice  President of the Entertainment Business Sector of  The
Coca-Cola Company.  Mr. Biondi joined HBO in 1978  and  held
various  positions there until his appointment as President,
Chief Executive Officer in 1983.  In 1984, he was elected to
the  additional position of Chairman and continued to  serve
in such capacities until October 1984.

           Mr.  Dauman  has been a Director of  the  Company
since  1987.   In March 1994, he was elected Executive  Vice
President, General Counsel, Chief Administrative Officer and
Secretary of the Company.  From February 1993 to March 1994,
he  served  as  Senior Vice President, General  Counsel  and
Secretary of the Company.  Prior to that, Mr. Dauman  was  a
partner in the law firm of Shearman & Sterling in New  York,
which  he  joined in 1978.  Mr. Dauman became a Director  of
National Amusements, Inc. in 1992 and a Director of Spelling
in 1994.

           Mr.  Dooley has been an executive officer of  the
Company  since January 1987.  In March 1994, he was  elected
Executive  Vice President -- Finance, Corporate  Development
and  Communications of the Company.  From July 1992 to March
1994,  Mr. Dooley served as Senior Vice President, Corporate
Development of the Company.  From August 1993 to March 1994,
he  also served as President, Interactive Television.  Prior
to  that,  he  served as Vice President,  Treasurer  of  the
Company  since  1987.  In December 1990, he was  named  Vice
President, Finance of the Company.  Mr. Dooley joined Viacom
International Inc. in 1980 in the corporate finance area and
has  held  various positions in the corporate and divisional
finance areas.

           Mr.  Clarke  was  elected Senior Vice  President,
Treasurer  of  the Company in July 1994, having  joined  the
Company  as Vice President, Treasurer in April 1993.   Prior
to  that,  he spent 12 years at Gannett Co., Inc., where  he
held   various  management  positions,  most   recently   as
Assistant Treasurer.

                                     I-27


<PAGE>

           Mr.  Folta  was  elected Senior  Vice  President,
Corporate Relations of the Company in November 1994.   Prior
to that, he served as Vice President, Corporate Relations of
the  Company  from April 1994 to November 1994.   From  1984
until  joining  the Company in April 1994,  Mr.  Folta  held
various  Corporate  Communications positions  at  Paramount,
serving   most   recently  as  Senior  Director,   Corporate
Communications.

           Mr.  Fricklas was elected Senior Vice  President,
Deputy  General Counsel of the Company in March 1994.   From
June 1993 to March 1994, he served as Vice President, Deputy
General   Counsel  of  the  Company.   He  served  as   Vice
President, General Counsel and Secretary of Minorco (U.S.A.)
Inc.  from 1990 to 1993. Prior to that, Mr. Fricklas was  an
attorney  in private practice at the law firm of Shearman  &
Sterling.

           Ms. Gordon was elected Vice President, Controller
and Chief Accounting Officer effective April 1, 1995.  Prior
to that, she served as Vice President, Internal Audit of the
Company since October 1986.  From June 1985 to October 1986,
Ms. Gordon served as Controller of Viacom Broadcasting.  She
joined the Company in 1981 and held various positions in the
corporate finance area.


           Mr. Hertlein was elected Senior Vice President of
the  Company  in  July 1994.  Prior to that,  he  served  as
Senior  Vice  President  and Controller  of  Paramount  from
September  1993  to July 1994 and as Senior Vice  President,
Internal  Audit  and  Special  Projects  of  Paramount  from
September 1992 to September 1993 and, before that,  as  Vice
President, Internal Audit and Special Projects of Paramount.

           Mr. Horowitz has been an executive officer of the
Company  since  April 1989.  In March 1994, he  was  elected
Senior  Vice  President,  Technology  of  the  Company   and
Chairman,  Chief  Executive Officer  of  Viacom  Interactive
Media.  Prior to that, he served as Senior Vice President of
the Company from April 1989 and as Chairman, Chief Executive
Officer of Viacom Broadcasting from July 1992 to March 1994.
From 1974 to April 1989, Mr. Horowitz held various positions
with HBO, most recently as Senior Vice President, Technology
and  Operations.  Mr. Horowitz held several other management
positions with HBO, including Senior Vice President, Network
Operations  and New Business Development and Vice President,
Affiliate Sales.

           Mr.  Lavan has been an executive officer  of  the
Company  since December 1987.  In July 1994, he was  elected
Senior  Vice  President,  Controller  and  Chief  Accounting
Officer  and  will serve in such capacity  until  March  31,
1995.  Prior to that he served as Vice President, Controller
and  Chief Accounting Officer since May 1989, having  served
as Controller, Chief Accounting Officer since December 1987.
In  December 1990, he assumed the added responsibilities  of
oversight  of Company tax matters.  From 1991  to  1992,  he
also  served  as  Senior Vice President and Chief  Financial
Officer of Viacom Pictures.  Mr. Lavan joined the Company in
1984 as Assistant Controller of the Company.  Mr. Lavan will
become  Chief  Financial Officer of MTV  Networks  effective
April 1, 1995.

           Mr.  Leingang was elected Senior Vice  President,
Chief  Information Officer in May 1993.  Prior to  that,  he
served  as  Vice President, Chief Information  Officer  upon
joining  the  Company  in  1990.   Mr.  Leingang  was   Vice
President, Information Services of the Trian Group (formerly
Triangle Industries) from 1984 to 1990.  From 1982 to  1984,
he  served  as  Corporate Director, MIS,  and  Manager,  MIS
Planning  and Control for Interpace Corporation.   Prior  to
that  he  held positions with Touche Ross & Company, McGraw-
Hill Book Company and General Electric Credit Corp.

                                     I-28


<PAGE>

           Mr.  Roskin has been an executive officer of  the
Company  since  April  1988 when he became  Vice  President,
Human  Resources  and Administration.   In  July  1992,  Mr.
Roskin  was  elected Senior Vice President, Human  Resources
and  Administration of the Company.  From May 1986 to  April
1988,  he  was  Senior Vice President,  Human  Resources  at
Coleco  Industries, Inc.  From 1976 to 1986, he held various
executive positions at Warner Communications, Inc.,  serving
most  recently  as  Vice  President,  Industrial  and  Labor
Relations.

           Mr.  Smith has been an executive officer  of  the
Company  since  May 1985. In November 1987, he  was  elected
Senior  Vice  President,  Chief  Financial  Officer  of  the
Company  and  he continues to serve in such capacities.   In
May  1985,  Mr. Smith was elected Vice President, Controller
and,  in October 1987, he was elected Vice President,  Chief
Financial Officer of the Company.  From 1983 until May 1985,
he  served as Vice President, Finance and Administration  of
the  Viacom Broadcasting and from 1981 until 1983, he served
as Controller of Viacom Radio.  Mr. Smith joined the Company
in  1977 in the Corporate Treasurer's office and until  1981
served in various financial planning capacities.

          Mr. Weinstein has been an executive officer of the
Company  since  January  1986.  In  February  1993,  he  was
elected  Senior  Vice President, Government Affairs  of  the
Company.  Prior to that, Mr. Weinstein served as Senior Vice
President,  General  Counsel and Secretary  of  the  Company
since the fall of 1987.  In January 1986, Mr. Weinstein  was
appointed  Vice President, General Counsel of  the  Company.
From  1976  through 1985, he was Deputy General  Counsel  of
Warner   Communications  Inc.  and  in  1980   became   Vice
President.   Previously, Mr. Weinstein was  an  attorney  in
private  practice at the law firm of Paul,  Weiss,  Rifkind,
Wharton & Garrison.


                                     I-29



<PAGE>


PART II


Item 5. Market for Viacom Inc.'s Common Equity and Related Security Holder
            Matters.


Viacom Inc. voting Class A Common Stock and Viacom Inc. non-
voting Class B Common Stock are listed and traded on the
American Stock Exchange ("AMEX") under the symbols "VIA" and
"VIA B", respectively.

The following table sets forth, for the calendar period
indicated, the per share range of high and low sales prices
for Viacom Inc.'s Class A Common Stock and Class B Common
Stock, as reported on the AMEX Composite Tape.


<TABLE><CAPTION>
                                                                  Viacom Class A                       Viacom Class B
                                                                   Common Stock                         Common Stock
                                                            -----------------------               ----------------------
                                                            High             Low                  High             Low
                                                            ----             ---                  ----             ---
<S>                                                      <C>                <C>                <C>                <C>
1994
  1st quarter                                            $49 3/4            $28 1/2            $45                 $23 3/4
  2nd quarter                                             34 1/4             24 1/2             32 1/2              21 3/4
  3rd quarter                                             41 3/4             33 7/8             39 3/4              30 1/4
  4th quarter                                             42 1/8             38                 41                  37 1/8

1993
  1st quarter                                            $46 1/2            $37 1/2            $44 1/8             $35 1/4
  2nd quarter                                             52 5/8             37 1/8             49 1/2              36
  3rd quarter                                             67 1/2             50 1/2             61 1/4              45 3/4
  4th quarter                                             66 1/2             47                 60 1/2              40 3/8
</TABLE>


Viacom Inc. has not declared cash dividends on its common
equity and has no present intention of so doing.

As of March 27, 1995 there were approximately 14,878
holders of Viacom Inc. Class A Common Stock, and 25,738
holders of Viacom Inc. Class B Common Stock.


                                      II-1

<PAGE>


Item 6. Selected Financial Data.


VIACOM INC. AND SUBSIDIARIES
(Millions of dollars, except per share amounts)


<TABLE><CAPTION>

                                                                    Year Ended December 31,
                                            -------------------------------------------------------------------
                                                1994           1993            1992          1991        1990
                                                ----           ----            ----          ----        ----
<S>                                         <C>            <C>             <C>           <C>          <C>     
Revenues                                    $  7,363.2     $  2,004.9      $  1,864.7    $  1,711.6   $ 1,599.6
Earnings from continuing operations
     before depreciation and amortization   $  1,074.0     $    538.1      $    492.7    $    445.1   $   361.2
Depreciation and amortization               $    465.7     $    153.1      $    144.8    $    132.9   $   137.4
Earnings from continuing operations         $    608.3     $    385.0      $    347.9    $    312.2   $   223.8
Earnings (loss) before extraordinary losses
     and cumulative effect of change in
     accounting principle                   $    110.0     $    169.5      $     66.1    $    (46.6)  $   (89.8)
Net earnings (loss)                         $     89.6     $    171.0      $     49.0    $    (49.7)  $   (89.8)
Net earnings (loss) attributable
     to common stock                        $     14.6     $    158.2      $     49.0    $    (49.7)  $   (89.8)
Primary and fully diluted net earnings
     (loss) per common share:  
     Earnings (loss) from continuing
        operations before extraordinary
        losses and cumulative effect of
        change in accounting principle      $      .25     $     1.30      $      .55    $     (.41)  $    (.84)
     Net earnings (loss)                    $      .07     $     1.31      $      .41    $     (.44)  $    (.84)

At year end:
     Total assets                           $ 28,273.7     $  6,416.9      $  4,317.1    $  4,188.4   $ 4,027.9
     Long-term debt, net of current
          portion                           $ 10,402.4     $  2,440.0      $  2,397.0    $  2,320.9   $ 2,537.3
     Shareholders' equity                   $ 11,791.6     $  2,718.1      $    756.5    $    699.5   $   366.2
                                                            
</TABLE>


See Notes to Consolidated Financial Statements for information on
transactions and accounting classifications which have affected the
comparability of the periods presented above.  Viacom Inc. has not
declared cash dividends on its common equity for any of the periods
presented above.

                                     II-2


<PAGE>


Item 7.  Management's Discussion and Analysis of Results of Operations and
         Financial Condition.

General

Management's discussion and analysis of the combined results of operations
and financial condition of Viacom Inc. (the "Company") should be read in
conjunction with the Consolidated Financial Statements and related Notes.
Descriptions of all documents incorporated by reference herein or included
as exhibits hereto are qualified in their entirety by reference to the
full text of such documents so incorporated or included.

During 1994, the Company made two significant acquisitions of large and
diversified businesses.  Where appropriate the Company has merged, or is
in the process of merging, the operations of previously existing and
acquired businesses.  Comparisons of results of operations have been
significantly affected by such acquisitions and merging of operations.
On March 11, 1994, the Company acquired a majority of the outstanding
shares of Paramount Communications Inc. ("Paramount Communications") by
tender offer; on July 7, 1994, Paramount Communications became a wholly
owned subsidiary of the Company (the "Paramount Merger"); and on January
3, 1995, Paramount Communications was merged into Viacom International.
On September 29, 1994, Blockbuster Entertainment Corporation
("Blockbuster") merged with and into the Company (the "Blockbuster
Merger").  Paramount Communications' and Blockbuster's results of
operations are included as of March 1, 1994 and October 1, 1994,
respectively.

The Company's consolidated statements of operations reflect five operating
segments:

Networks and Broadcasting - Basic Cable and Premium Television Networks,
                            Television and Radio Stations.

Entertainment - Production and distribution of motion pictures and
                television programming as well as movie theater operations, 
                and new media and interactive services.

Video and Music/Theme Parks - Home Video and Music Retailing, and Theme
                              Parks.

Publishing - Educational; Consumer; Business, Training and Health Care;
             Reference; and International Groups.

Cable Television - Cable Television Systems.  (See Note 3 of Notes to
                   Consolidated Financial Statements.)

The following tables set forth revenues, earnings from continuing
operations before depreciation and amortization ("EBITDA"), depreciation
and amortization, earnings (loss) from continuing operations, equity in
pre-tax earnings (loss) of affiliated companies and earnings (loss) from
continuing operations plus equity in pre-tax earnings (loss) by business
segment for the periods indicated.  Prior period presentations have been
reclassified to conform to the current presentation.

                                     II-3


<PAGE>

        Business Segment Information
        ----------------------------


<TABLE><CAPTION>
                                                                                          Earnings      Equity in       Earnings
                                                                                        (loss) from      pre-tax      (loss) from
                                                                        Depreciation    continuing    earnings (loss)  continuing
                                                                            and         operations    of affiliated    operations
                                          Revenues     EBITDA (a)      amortization    (as reported)     companies     plus equity
                                          --------     --------        ------------    -------------     ---------     -----------
        Year ended                                                      (Millions of dollars)
        December 31, 1994 (b)
        ---------------------
        <S>                              <C>            <C>             <C>               <C>              <C>          <C>
        Networks and Broadcasting        $ 1,855.1      $ 453.3          $ 96.2           $ 357.1          $ 18.2       $ 375.3
        Entertainment                      2,285.2          6.0            94.4             (88.4)            9.5         (78.9)
        Video and Music/
          Theme Parks                      1,070.4        289.9            90.4             199.5              .7         200.2
        Publishing                         1,786.4        296.9           103.0             193.9              --         193.9
        Cable Television                     406.2        155.2            76.4              78.8              --          78.8
        Corporate                               --       (127.3)            5.3            (132.6)             --        (132.6)
        Intercompany                         (40.1)          --              --                --              --            --
                                         ----------     --------         -------          --------         ------       --------

                  Totals                 $ 7,363.2      $1,074.0         $ 465.7           $608.3          $ 28.4       $ 636.7
                                         ==========     ========         =======          ========         ======       ========

        Year ended
        December 31, 1993
        ----------------

        Networks and Broadcasting        $ 1,403.0      $  382.6         $  68.2          $ 314.4          $(2.1)       $ 312.3
        Entertainment                        209.1          42.0             9.5             32.5           (1.0)          31.5
        Cable Television                     416.0         181.7            71.5            110.2             --          110.2
        Corporate                               --         (68.2)            3.9            (72.1)            --          (72.1)
        Intercompany                         (23.2)           --              --               --             --             --
                                         ----------     --------         -------          --------         ------       --------
                  Totals                 $ 2,004.9      $  538.1         $ 153.1          $ 385.0          $(3.1)       $ 381.9
                                         ==========     ========         =======          ========         ======       ========

        Year ended
        December 31, 1992
        -----------------

        Networks and Broadcasting        $ 1,227.7      $  303.8         $  66.3          $ 237.5          $(6.9)       $ 230.6
        Entertainment                        248.3          66.5             6.8             59.7             --           59.7
        Cable Television                     411.1         190.5            68.5            122.0             --          122.0
        Corporate                               --         (68.1)            3.2            (71.3)            --          (71.3)
        Intercompany                         (22.4)           --              --               --             --             --
                                         ----------     --------         -------          --------         ------       --------
                   Totals                $ 1,864.7      $  492.7         $ 144.8          $ 347.9          $(6.9)       $ 341.0
                                         ==========     ========         =======          ========         ======       ========
</TABLE>


        (a) Earnings from continuing operations before depreciation 
            and amortization.

        (b) Paramount Communications' and Blockbuster's results of 
            operations are included as of  March 1, 1994 and October
            1, 1994, respectively.

                                          II-4

<PAGE>


Results of Operations
---------------------

1994 versus 1993
----------------

Revenues increased to $7.36 billion for 1994 from $2.0 billion for 1993 (or 
267%). EBITDA increased to $1.07 billion for 1994 from $538.1 million for 1993
(or 100%). Earnings from continuing operations increased to $608.3 million for 
1994 from $385.0 million for 1993 (or 58%).  The foregoing increases in 
results of operations are principally attributable to the acquisitions of 
Paramount Communications and Blockbuster, partially offset by the 
merger-related charges described below.

EBITDA and earnings from continuing operations for 1994 include merger-related
charges, reflecting the integration of the Company's pre-merger businesses with
similar Paramount units, and related management and strategic changes.  Such
amounts relate principally to adjustments of programming assets based upon new
management strategies and additional programming sources resulting from the
Paramount Merger and, with respect to Corporate, the combination of the 
employees of the Company and Paramount Communications.


<TABLE><CAPTION>

                                                                                                  EBITDA prior
                                                                                                      to
                                                EBITDA         Merger-Related Charges       Merger-Related Charges
                                                ------         ----------------------       ----------------------
                                                                        (Millions of dollars)
<S>                                           <C>                   <C>                           <C>
Networks and Broadcasting                     $  453.3              $  90.7                       $  544.0
Entertainment                                      6.0                224.0                          230.0
Video and Music/Theme Parks                      289.9                  --                           289.9
Publishing                                       296.9                  --                           296.9
Cable Television                                 155.2                  --                           155.2
Corporate                                       (127.3)                17.4                         (109.9)
                                              --------             --------                       --------
                                              $1,074.0               $332.1                       $1,406.1
                                              --------             --------                       --------
                                              --------             --------                       --------
</TABLE>


While many in the financial community consider EBITDA to be an important 
measure of comparative operating performance, it should be considered in 
addition to, but not as a substitute for or superior to, earnings from 
operations, net income, cash flow and other measures of financial performance.

The comparability of results of operations for 1994 and 1993 has been affected 
by (i) the Paramount Merger, (ii) the Blockbuster Merger, and (iii) the 
merger-related charges all of which are non-recurring charges.  The following 
discussion of results of operations is exclusive of merger-related charges and 
includes an analysis of changes in EBITDA, which does not reflect the effect 
of significant amounts of amortization of goodwill related to the Paramount 
Merger, the Blockbuster Merger and other business combinations accounted for 
by the purchase method of accounting.


                                     II-5


<PAGE>

Networks and Broadcasting

The constituents of Networks and Broadcasting are MTV Networks ("MTVN"),
Showtime Networks Inc. ("SNI"), television stations and radio stations.
Revenues increased to $1.86 billion for 1994 from $1.40 billion for 1993 (or
32%).  EBITDA increased to $544.0 million for 1994 from $382.6 million for 1993
(or 42%).  Earnings from operations increased to $447.8 million for 1994 from
$314.4 million for 1993 (or 42%).  The increase in revenues, EBITDA and earnings
from operations resulted from increased advertising revenues of MTVN, modest
increases in operating results of SNI and the Company's previously existing
television and radio stations, and the acquisition of the Paramount television
stations.  MTVN revenues of $852.2 million, EBITDA of $326.8 million and
earnings from operations of $284.5 million increased 26%, 20% and 19%,
respectively.  The increase in MTVN's revenues was principally attributable to
increased advertising revenues due to rate increases.  The increase in MTVN's
EBITDA was driven by increased advertising revenues partially offset by
increased operating costs, as well as aggregate losses of $15.0 million
associated with the development of MTV Latino, Nickelodeon Magazine and VH-1
U.K.  The Paramount television stations reported revenues of $210.4 million,
EBITDA of $83.1 million and earnings from operations of $65.8 million for the
period subsequent to their acquisition.

Entertainment

The primary constituents of Entertainment are Paramount Pictures, Spelling
Entertainment Group ("Spelling"), which was acquired as part of the Blockbuster
Merger, and the former Viacom Entertainment.  Revenues increased to $2.29
billion in 1994 from $209.1 million in 1993.  EBITDA increased to $230.0 million
for 1994 from $42.0 million for 1993.  Earnings from operations increased to
$135.6 million in 1994 from $32.5 million in 1993.  The increase in revenues,
EBITDA and earnings from operations resulted primarily from the acquisitions of
Paramount Pictures and Spelling.  Theatrical feature film and television
programming results reflect revenues of $1.9 billion, EBITDA of $227.8 million
and earnings from operations of $157.7 million.  The Entertainment segment's
earnings from operations were partially offset by Viacom Interactive Media's
loss from operations of $28.6 million, including start-up costs associated with
the development of new businesses.  Results of operations primarily reflect
theatrical feature film revenues, including the domestic and foreign box office
success of FORREST GUMP and CLEAR AND PRESENT DANGER, as well as television
programming revenues including network and syndication sales.  Earnings from
operations benefited from a lower cost base and efficiencies associated with the
Paramount Merger.

Video and Music/Theme Parks

The constituents of Video and Music/Theme Parks are Blockbuster Video and Music,
and Paramount Parks.  Revenues, EBITDA and earnings from operations were $1.07
billion, $289.9 million and $199.5 million, respectively.  Video and Music
revenues, EBITDA and earnings from operations were $735.7 million, $220.3
million and $167.8 million, respectively, reflecting results of operations
beginning October 1, 1994 and the continued expansion of video and music stores.
Theme Parks revenues, EBITDA and earnings from operations were $334.7 million,
$69.6 million and $31.7 million, respectively, reflecting the full 1994
operating season (May through September) of the theme parks.

                                     II-6


<PAGE>

Publishing

Publishing represents Simon & Schuster which includes imprints such as Simon &
Schuster, Pocket Books, Prentice Hall and Macmillan Publishing USA.  Publishing
revenues, EBITDA and earnings from operations were $1.79 billion, $296.9
million and $193.9 million, respectively, subsequent to its acquisition in
March 1994.  Results of operations reflect the Simon & Schuster's Higher
Education, Consumer and International groups, and the U.S. publishing assets 
of Macmillan, Inc. 

Cable Television

Cable Television revenues decreased to $406.2 million for 1994 from $416.0
million for 1993 (or 2%), primarily attributable to a decrease in primary
revenues.  EBITDA decreased to $155.2 million for 1994 from $181.7 million for
1993 (or 15%).  Earnings from operations decreased to $78.8 million for 1994
from $110.2 million for 1993 (or 28%).  The results reflect a 10% decrease in
average rates for primary services, partially offset by a 3% increase in average
primary customers.  Total revenue per primary customer per month decreased 5% to
$30.30 for 1994 from $32.03 for 1993.  The revenue variances reflect the effect
of the FCC rate regulations pursuant to the 1992 Cable Act governing rates in
effect as of September 1, 1993 and as of May 15, 1994.  The decrease in EBITDA
and earnings from operations principally reflect the decreased revenues
attributable to the above rate regulations and increased operating, general and
administrative expenses.

As of December 31, 1994, Viacom Cable served approximately 1,139,000 primary
customers subscribing to approximately 875,000 premium units, representing an
increase of 4% and 22%, respectively, since December 31, 1993.

Corporate Expenses

Corporate expenses including depreciation increased 60% to $115.2 million in
1994 from $72.1 million in 1993 reflecting overall increased expenses
attributable to the mergers.

Other Income and Expense Information

Interest Expense
Net interest expense of $494.1 million for 1994 compared to $145.0 million
for 1993 reflects increased bank borrowing, the issuance of the 8%
exchangeable subordinated debentures and debt acquired as part of the
Mergers.  The Company had approximately $10.4 billion and $2.5 billion
principal amount of debt outstanding as of December 31, 1994 and December 31,
1993 at weighted average interest rates of 7.5% and 5.3%, respectively.  (See
Note 5 of Notes to Consolidated Financial Statements.)

Other Items, Net
For 1994, "Other items, net" primarily reflects the pre-tax gain of $267.4
million, which resulted from the sale of the Company's one-third partnership
interest in Lifetime for $317.6 million in April 1994.  Proceeds from the sale
were used to reduce outstanding debt.

                                     II-7


<PAGE>
For 1993, "Other items, net" reflects the pre-tax gain of approximately $55
million from the sale of the stock of the Wisconsin cable system, a pre-tax gain
of $17.4 million in the aggregate from sales of a portion of an investment held
at cost, partially offset by an increase of $9.1 million to previously
established non-operating litigation reserves and other items.

Provision for Income Taxes
The provision for income taxes represents federal, state and foreign income
taxes on earnings before income taxes.

The annual effective tax rates of 74% for 1994 and 43% for 1993 were both
adversely affected by amortization of acquisition costs which are not deductible
for tax purposes.  The 1993 effective tax rate was favorably affected as a
result of reductions of certain prior year tax reserves of $22.0 million.  The
reductions were based on management's view concerning the outcome of several tax
issues based upon the progress of federal, state and local audits.

During the first quarter of 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" on a prospective
basis and recognized an increase in earnings of $10.4 million in 1993 as the
cumulative effect of a change in accounting principle.

Equity in Earnings (Loss) of Affiliates
"Equity in earnings (loss) of affiliated companies, net of tax" was $18.6
million for 1994 as compared to a loss of $2.5 million for 1993, primarily
reflecting the inclusion of the net earnings of affiliated companies that were
acquired as part of the Mergers, improved operating results of Comedy Central,
partially offset by the absence of Lifetime's earnings due to the sale of the
Company's one-third partnership interest.  (See Note 1 of Notes to Consolidated
Financial Statements.)

Minority Interest
Minority interest primarily represents the minority ownership of Paramount
Communications' outstanding common stock, for the period March through June
1994, and the 23% minority ownership of Spelling's common stock for fourth
quarter 1994.

Discontinued Operations
Discontinued operations reflect the results of operations of Madison Square 
Garden Corporation ("MSG"), which was sold March 10, 1995.  The Company 
acquired MSG during March 1994 as part of the Paramount Merger.  (See Note 3 
of Notes to Consolidated Financial Statements.)

Extraordinary Losses
During 1994, the Company refinanced its existing credit facilities and therefore
recognized an after-tax extraordinary loss from the extinguishment of debt of
$20.4 million, net of a tax benefit of $11.9 million.

On July 15, 1993, Viacom International redeemed all of the $298 million
principal amount outstanding of the 11.80% Senior Subordinated Notes at a
redemption price equal to 103.37% of the principal amount plus accrued interest
to July 15, 1993.  Viacom International recognized an after-tax extraordinary
loss of $8.9 million, net of a tax benefit of $6.1 million. Viacom International
borrowed the funds necessary for the redemption under bank credit agreements
existing at the time.

                                     II-8


<PAGE>

1993 versus 1992
----------------

Revenues increased to $2.0 billion in 1993 from $1.9 billion in 1992 (or 8%).
EBITDA increased to $538.1 million for 1993 from $492.7 million for 1992 (or
9%).  Earnings from continuing operations increased to $385.0 million in 1993
from $347.9 million in 1992 (or 11%).  Explanations of variances in revenues,
EBITDA and earnings from continuing operations for each segment follow.

The comparability of results of operations for 1993 and 1992 has been affected
by (i) the change in estimate of copyright royalty revenues during 1992 in the
Entertainment segment and (ii) the sale of the Wisconsin cable television
system, effective January 1, 1993.  (See "Entertainment" and "Cable Television"
for additional information.)

Networks and Broadcasting

Revenues increased to $1.40 billion for 1993 from $1.23 billion for 1992 (or
14%).  EBITDA increased to $382.6 million for 1993 from $303.8 million for 1992
(or 26%).  Earnings from operations increased to $314.4 million from $237.5
million (or 32%).  The increase in revenues and earnings from operations
resulted primarily from increased advertising sales of MTVN.  MTVN revenues of
$677.9 million, EBITDA of $272.7 million, and earnings from operations of $239.7
million increased 27%, 33% and 39%, respectively.  The increase in MTVN's
advertising revenues was principally attributable to rate increases.  The
increase in MTVN's EBITDA reflects the increased revenues, partially offset by
increased programming and marketing expenses at each of the networks and other
costs of operating the networks, including start-up losses of MTV Latino and
Nickelodeon Magazine aggregating $6.5 million.  The increase in programming and
marketing expenses at each of the networks (including animated programming on
Nickelodeon and MTV) was to a large extent responsible for the Company's ability
to increase advertising rates.  Revenues of the television stations, radio
stations and SNI each increased modestly.  EBITDA and earnings from operations
of the television stations and radio stations increased, and SNI's EBITDA and
earnings from operations were constant.

Entertainment

Entertainment revenues decreased to $209.1 million for 1993 from $248.3 million
for 1992 (or 16%).  EBITDA decreased to $42.0 million for 1993 from $66.5
million for 1992 (or 37%).  Earnings from operations decreased to $32.5 million
for 1993 from $59.7 million for 1992 (or 46%).  The revenue variance was
principally due to lower syndication revenues, lower copyright revenues
resulting from a change in estimate which increased revenue by approximately $10
million in 1992, and decreased network production revenues.  Lower sales to the
broadcast, cable and other market places reflect lower syndication revenues for
The Cosby Show and softness in the syndication market place due to a decrease in
the number of independent broadcast television stations because of new network
affiliations.  Revenues from the domestic broadcast syndication of The Cosby
Show were approximately 12% and 18% of Entertainment revenues during 1993 and
1992, respectively.  The decrease was due to the ending of the first domestic
syndication cycle of The Cosby Show during the third quarter of 1993.  Network
license fees were lower because fewer shows were produced for network
television; however, the decrease did not have a significant impact on
Entertainment EBITDA.  The EBITDA variance reflects the decreased revenues and
$6.1 million of start-up losses associated with Viacom New Media.

                                     II-9


<PAGE>

Cable Television

Cable Television revenues increased to $416.0 million in 1993 from $411.1
million in 1992 (or 1%).  EBITDA decreased to $181.7 million for 1993 from
$190.5 million for 1992 (or 5%).  Earnings from operations decreased to $110.2
million in 1993 from $122.0 million in 1992 (or 10%).

On a comparable basis with the 1992 results (excluding the Wisconsin cable
system, which was sold effective January 1, 1993), Cable Television revenues
increased to $416.0 million in 1993 from $393.6 million in 1992 (or 6%); EBITDA
decreased to $181.7 million in 1993 from $182.5 million in 1992; and earnings
from operations decreased to $110.2 million for 1993 from $117.6 million for
1992 (or 6%).  The results reflect a 4% increase in average rates for primary
services and a 2% increase in average primary customers.  Total revenue per
primary customer per month increased 3% to $32.03 in 1993 from $31.04 in 1992.
The decrease in EBITDA reflects increased operating expenses (which included 
non-recurring costs associated with the implementation of FCC rate regulations)
partially offset by increased revenues.

As of December 31, 1993, the Company operated systems serving approximately
1,094,000 primary customers subscribing to approximately 718,000 premium units.
Excluding the Wisconsin cable system customers in 1992, primary customers and
premium units increased 2% and decreased 5%, respectively, since December 31,
1992.  Including the Wisconsin cable system customers in 1993, primary
customers and premium units decreased 2% and 9%, respectively, since December
31, 1992.

Corporate Expenses

Corporate expenses increased to $72.1 million in 1993 from $71.3 million in 1992
(or 1%), reflecting increased overall expenses offset by decreased compensation
expense associated with the Long-Term Incentive Plans (the "Plans"), which 
consist of the Long-Term Incentive Plan ("LTIP") and the Long-Term Management 
Incentive Plan ("LTMIP").  The Plans provide for grants of phantom shares and 
stock options. The value of phantom shares issued under the Plans is determined
by reference to the fair market value of Viacom Class A Common Stock and 
Viacom Class B Common Stock (collectively, "Common Stock").  The Plans also 
provide for subsequent cash payments with respect to such phantom shares based 
on appreciated value, subject to certain limits, and vesting requirements.  As 
a result of the fluctuation in the market value of its Common Stock, the 
Company recorded compensation expense associated with the Plans of $3.9 
million in 1993 and $8.2 million in 1992. During December 1992, a significant 
portion of the liability associated with the LTIP was satisfied by the cash 
payment of $68.6 million and the issuance of 177,897 shares of Viacom Class B 
Common Stock valued at $6.9 million.

                                     II-10


<PAGE>
Other Income and Expense Information

Interest Expense, Net
Net interest expense decreased to $145.0 million in 1993 from $194.1 million in
1992 (or 25%), reflecting improvements made to the capital structure (as
described below) and reduced interest rates, including rates associated with the
credit agreement.  The Company had approximately $2.5 billion principal amount
of debt outstanding as of December 31, 1993 and December 31, 1992 at weighted
average interest rates of 5.3% and 6.5%, respectively.  On July 15, 1993, the
Company redeemed all $298 million principal amount outstanding of 11.80% Senior
Subordinated Notes ("11.80% Notes").  During 1992, the following changes to the
capital structure were made: a) on March 4, 1992, the Company issued $150
million principal amount of 9.125% Senior Subordinated Notes due 1999;  b) on
March 10, 1992, the Company redeemed all $193 million of the outstanding 11.5%
Senior Subordinated Extendible Reset Notes ("11.5% Reset Notes") due 1998;  c)
on May 28, 1992, the Company issued $100 million principal amount of 8.75%
Senior Subordinated Reset Notes due 2001; and d) on June 18, 1992, the Company
redeemed all $356.5 million of the outstanding 14.75% Senior Subordinated
Discount Debentures ("Discount Debentures") due 2002.

Other Items, Net
The settlement of the Time Warner antitrust lawsuit resulted in various business
arrangements, which have a positive effect on the Company currently and are
expected to continue to have a favorable effect on a prospective basis.  "Other
items, net" reflects a gain of $35 million recorded in the third quarter of 
1992; representing payments received in the third quarter of 1992 relating to 
certain aspects of the settlement of the lawsuit, net of the Company's 1992 
legal expenses related to this lawsuit.  "Other items, net" also reflects a 
reserve for litigation of $33 million during the second quarter of 1992 
related to a summary judgment against the Company in a dispute with CBS Inc. 
arising under the 1970 agreement associated with the spin-off of Viacom 
International Inc. by CBS Inc. On July 30, 1993, the Company settled all 
disputes arising under that litigation.

Income Taxes
The provision for income taxes represents federal, state and foreign income 
taxes on earnings before income taxes.

The annual effective tax rates of 43% for 1993 and 54.5% for 1992 were adversely
affected by amortization of acquisition costs which are not deductible for tax
purposes.  The 1993 and 1992 effective tax rates were favorably affected as a
result of reductions of certain prior year tax reserves of $22.0 million and 
$20.0 million, respectively.  The reductions were based on management's view 
concerning the outcome of several tax issues based upon the progress of 
federal, state and local audits.

Equity in Earnings (Loss) of Affiliates
"Equity in earnings (loss) of affiliated companies, net of tax" decreased 46% to
$2.5 million in 1993 from $4.7 million in 1992, primarily reflecting improved
operating results at Lifetime and Comedy Central, partially offset by net losses
on equity investments made in 1993.

                                     II-11


<PAGE>
Extraordinary Losses
On June 18, 1992, the Company redeemed all of the $356.5 million principal 
amount outstanding of the Discount Debentures at a redemption price equal to 
105% of the principal amount plus accrued interest to June 18, 1992.  On March 
10, 1992, the Company redeemed all of the $193 million principal amount 
outstanding of its 11.50% Reset Notes at a redemption price equal to 101% of 
the principal amount plus accrued interest to the redemption date.  The 
Company recognized an extraordinary loss of $17.1 million, net of a tax 
benefit of $11.3 million.  The Company borrowed the funds necessary for each 
of these redemptions under its bank credit facilities existing in the 
respective periods.

Acquisitions
------------

On March 11, 1994, the Company acquired a majority of the shares of Paramount
Communications' common stock outstanding at a price of $107 per share in cash.
On July 7, 1994, Paramount Communications became a wholly owned subsidiary of 
the Company. The total cost to acquire Paramount Communications of $9.9 
billion was financed through $3.7 billion of borrowing from banks, $3.1 
billion of cash and $3.1 billion of securities.  (See Note 2 of Notes to 
Consolidated Financial Statements.)  Such cash was obtained through 
the issuance of $1.8 billion of Preferred Stock (of which $600 million 
and $1.2 billion were issued to Blockbuster and NYNEX Corporation, respectively)
and $1.25 billion of Viacom Class B Common Stock to Blockbuster.  The 
securities issued to Blockbuster were canceled upon consummation of the 
Blockbuster Merger.

On September 29, 1994, Blockbuster was merged with and into the Company.  The
total cost to acquire Blockbuster of $7.6 billion was financed through the
issuance of equity securities to Blockbuster shareholders.  (See Note 2 of Notes
to Consolidated Financial Statements.)


Liquidity and Capital Resources
-------------------------------

The Company expects to fund its anticipated cash requirements (including the
anticipated cash requirements of its capital expenditures, joint ventures,
commitments and payments of principal, interest and dividends on its outstanding
indebtedness and preferred stock) with internally generated funds and from 
various external sources, which may include the Company's existing Credit 
Agreements, co-financing arrangements by the Company's various divisions, 
additional financings and the sale of non-strategic assets as opportunities 
may arise.

The Company's scheduled maturities of long-term debt, through December 31, 1999
assuming full utilization of the credit agreements (after giving effect to the
reduction in commitments resulting from the sale of MSG), are $1.9 billion 
(1996), $163 million (1997), $1.0 billion (1998) and $1.5 billion (1999). 
(See Note 5 of Notes to Consolidated Financial Statements.)  The Company's 
Preferred Stock dividend requirement is $60 million per year.

The Company's joint ventures are expected to require estimated net cash
contributions of approximately $20 million to $40 million in 1995.  Planned
capital expenditures, including information systems costs, are approximately 
$600 million to $700 million in 1995.  Capital expenditures are primarily 
related to capital additions for new and existing video and music stores and 
theme parks, and additional construction and equipment upgrades for the 
Company's existing cable franchises.

                                     II-12


<PAGE>

The Company was in compliance with all debt covenants and had satisfied all
financial ratios and tests as of December 31, 1994 under its Credit Agreement 
and the Company expects to remain in compliance and satisfy all such financial 
ratios and tests during 1995.

Debt as a percentage of total capitalization of the Company was 47% at 
December 31, 1994 and 48% at December 31, 1993.

See Note 2 of Notes to Consolidated Financial Statements for a description of 
the Company's commitments related to the contingent value rights and variable 
common rights.  See Note 10 of Notes to Consolidated Financial Statements for 
a description of the Company's future minimum lease commitments.

The commitments of the Company for program license fees, which are not
reflected in the balance sheet as of December 31, 1994 and are estimated to
aggregate approximately $2.0 billion, principally reflect commitments under
SNI's exclusive arrangements with several motion picture companies.  This
estimate is based upon a number of factors.  A majority of such fees are
payable over several years, as part of normal programming expenditures of SNI.
These commitments are contingent upon delivery of motion pictures which are not
yet available for premium television exhibition and, in many cases, have not
yet been produced.

There are various lawsuits and claims pending against the Company.  Management
believes that any ultimate liability resulting from those actions or claims
will not have a material adverse effect on the Company's results of operations
or financial position.

Certain subsidiaries and affiliates of the Company from time to time receive
claims from Federal and state environmental regulatory agencies and other
entities asserting that they are or may be liable for environmental cleanup
costs and related damages, principally relating to discontinued operations
conducted by its former mining and manufacturing businesses (acquired as part of
the mergers).  The Company has recorded a liability at approximately the mid-
point of its estimated range of environmental exposure.  Such liability was not
reduced by potential insurance recoveries and reflects management's estimate of
cost sharing at multiparty sites.  The estimated range of the potential
liability was calculated based upon currently available facts, existing
technology and presently enacted laws and regulations.  On the basis of its
experience and the information currently available to it, the Company believes
that the claims it has received will not have a material adverse effect on its
results of operations or financial position.

Net cash flow from operating activities increased 130% to $339.2 million in 1994
from $147.6 million for 1993 principally due to the inclusion of Paramount
Communications' and Blockbuster's results of operations since the effective time
of the respective mergers and increased earnings from operations of Viacom's 
pre-merger businesses, prior to merger-related charges.  Net cash expenditures
from investing activities of $6.3 billion for 1994, principally reflect the 
acquisition of the majority of the shares of Paramount Communications and 
capital expenditures, partially offset by proceeds from the sale of the 
Company's one-third partnership in Lifetime.  Net cash expenditures from 
investing activities of $128.4 million for 1993 principally reflect capital 
expenditures, acquisitions, an additional investment in StarSight Telecast, 
Inc. and advances to Comedy Central, partially offset by proceeds from the 
sale of the Wisconsin cable system, proceeds related to the radio station swap 
and proceeds from the sale of an investment held at cost.  Financing activities 
reflect borrowings and repayment of debt under the credit agreements during 
each period presented; the issuance of Viacom Class B Common Stock to 
Blockbuster during 1994 and the redemption of the 11.80% Notes and the 
issuance of the Preferred Stock during 1993.

                                     II-13


<PAGE>


I
tem 8.  Financial Statements and Supplementary Data.


REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of 
Viacom Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Viacom Inc.
and its subsidiaries at December 31, 1994 and 1993, and the results of their 
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the management of Viacom 
Inc.; our responsibility is to express an opinion on these financial statements
based on our audits.  We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and 
perform the audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatement.  An audit includes examining, on 
a test basis, evidence supporting the amounts and disclosures in the financial 
statements, assessing the accounting principles used and significant estimates 
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

1177 Avenue of the Americas
New York, New York   10036
February 10, 1995


                                     II-14


<PAGE>
MANAGEMENT'S STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING

Management has prepared and is responsible for the consolidated financial
statements and related notes of Viacom Inc.  They have been prepared in
accordance with generally accepted accounting principles and necessarily 
include amounts based on judgments and estimates by management.  All financial
information in this annual report is consistent with the consolidated financial
statements.

The Company maintains internal accounting control systems and related policies
and procedures designed to provide reasonable assurance that assets are
safeguarded, that transactions are executed in accordance with management's
authorization and properly recorded, and that accounting records may be relied
upon for the preparation of consolidated financial statements and other
financial information.  The design, monitoring, and revision of internal
accounting control systems involve, among other things, management's judgment
with respect to the relative cost and expected benefits of specific control
measures.  The Company also maintains an internal auditing function which
evaluates and reports on the adequacy and effectiveness of internal accounting
controls, policies and procedures.

Viacom Inc.'s consolidated financial statements have been audited by Price
Waterhouse LLP, independent accountants, who have expressed their opinion 
with respect to the presentation of these statements.

The Audit Committee of the Board of Directors, which is comprised solely of
directors who are not employees of the Company, meets periodically with the
independent accountants, with our internal auditors, as well as with management,
to review accounting, auditing, internal accounting controls and financial
reporting matters.  The Audit Committee is also responsible for recommending to
the Board of Directors the independent accounting firm to be retained for the
coming year, subject to stockholder approval.  The independent accountants and
the internal auditors have full and free access to the Audit Committee with and
without management's presence.

                                                  VIACOM INC.


                                   By:    /s/Frank J. Biondi, Jr.
                                          -----------------------------------
                                             Frank J. Biondi, Jr.
                                             President, Chief Executive Officer


                                   By:     /s/George S. Smith, Jr.
                                          -----------------------------------
                                              George S. Smith, Jr.
                                              Senior Vice President,
                                              Chief Financial Officer


                                   By:      /s/ Kevin C. Lavan
                                          -----------------------------------
                                                Kevin C. Lavan
                                                Senior Vice President, 
                                                Controller and Chief 
                                                Accounting Officer

                                     II-15


<PAGE>


                           VIACOM INC. AND SUBSIDIARIES 
                       CONSOLIDATED STATEMENTS OF OPERATIONS 
                      --------------------------------------
                     (In millions, except per share amounts)

<TABLE><CAPTION>
                                                                                           Year Ended December 31,
                                                                                   --------------------------------------
                                                                                   1994              1993            1992
                                                                                   ----              ----            ----
          <S>                                                                  <C>               <C>             <C>   
          Revenues                                                             $ 7,363.2         $ 2,004.9       $ 1,864.7
            Expenses:
            Operating                                                            4,401.0             877.6           854.0
            Selling, general and administrative                                  1,888.2             589.2           518.0
            Depreciation and amortization                                          465.7             153.1           144.8
                                                                               ---------         ---------       ---------
               Total expenses                                                    6,754.9           1,619.9         1,516.8
                                                                               ---------         ---------       ---------
            Earnings from continuing operations                                    608.3             385.0           347.9

            Other income (expense):
            Interest expense, net                                                 (494.1)           (145.0)         (194.1)
            Other items, net (See Note 14)                                         262.5              61.8             1.8
                                                                               ---------         ---------       ---------
            Earnings from continuing operations before income taxes                376.7             301.8           155.6

            Provision for income taxes                                             279.7             129.8            84.8
            Equity in earnings (loss) of affiliated companies, net of tax           18.6              (2.5)           (4.7)
            Minority interest                                                       14.9                --              --
                                                                               ---------         ---------       ---------
            Net earnings from continuing operations                                130.5             169.5            66.1
            Loss from discontinued operations, net of tax (See Note 3)             (20.5)               --              --
                                                                               ---------         ---------       ---------
            Earnings before extraordinary losses and
              cumulative effect of change in accounting principle                  110.0             169.5            66.1
            Extraordinary losses, net of tax (See Note 5)                          (20.4)             (8.9)          (17.1)
            Cumulative effect of change in accounting principle                       --              10.4              --
                                                                               ---------         ---------       ---------

           Net earnings                                                             89.6             171.0            49.0

           Cumulative convertible preferred stock dividend requirement              75.0              12.8              --
                                                                               ---------         ---------       ---------

           Net earnings attributable to common stock                           $    14.6           $ 158.2       $    49.0
                                                                               =========         =========       =========

          Primary and fully diluted net earnings per common share:
               Net earnings from continuing operations                         $     .25           $  1.30       $     .55
               Loss from discontinued operations, net of tax                        (.09)               --              --
               Extraordinary losses, net of tax                                     (.09)             (.07)           (.14)
               Cumulative effect of change in accounting principle                    --               .08              --
                                                                               ---------         ---------       ---------
               Net earnings                                                    $     .07           $  1.31       $     .41
                                                                               =========         =========       =========

          Weighted average number of common shares and common share
              equivalents:
          Primary                                                                  220.0             120.6           120.2
          Fully diluted                                                            220.4             120.6           120.2

                                          See notes to consolidated financial statements.

</TABLE>


                                          II-16



<PAGE>

                         VIACOM INC. AND SUBSIDIARIES 
                         CONSOLIDATED BALANCE SHEETS 
                                (In millions)
                         ----------------------------

<TABLE><CAPTION>

                                                                                                  December 31,
                                                                                         ---------------------------
                                                                                         1994                   1993
                                                                                         ----                   ----
      Assets
      <S>                                                                              <C>                     <C> 
      Current Assets:
        Cash and cash equivalents   . . . . . . . . . . . . . . . . . . . . . . .      $ 597.7                 $1,882.4
        Receivables, less allowances of $75.8 and $33.9   . . . . . . . . . . . .      1,638.8                    351.8
        Inventory (See Note 4)  . . . . . . . . . . . . . . . . . . . . . . . . .        830.9                       --
        Theatrical and television inventory (See Note 4)  . . . . . . . . . . . .        986.9                    356.5
        Other current assets  . . . . . . . . . . . . . . . . . . . . . . . . . .        503.5                     95.7
        Net assets of discontinued operations (See Note 3)  . . . . . . . . . . .        697.4                       --
                                                                                       -------                  -------

              Total current assets  . . . . . . . . . . . . . . . . . . . . . . .      5,255.2                  2,686.4

      Property and Equipment:
          Land  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        470.3                     16.5
          Buildings   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        798.8                     41.6
          Cable television systems  . . . . . . . . . . . . . . . . . . . . . . .        465.4                    414.9
          Equipment and other   . . . . . . . . . . . . . . . . . . . . . . . . .      1,365.1                    428.4
                                                                                       -------                    -----
                                                                                       3,099.6                    901.4
          Less accumulated depreciation   . . . . . . . . . . . . . . . . . . . .        516.5                    347.2
                                                                                       -------                    -----

        Net property and equipment  . . . . . . . . . . . . . . . . . . . . . . .      2,583.1                    554.2
                                                                                       -------                    -----

      Inventory (See Note 4)  . . . . . . . . . . . . . . . . . . . . . . . . . .      1,944.5                    789.5
      Intangibles, at amortized cost  . . . . . . . . . . . . . . . . . . . . . .     16,111.7                  2,180.6

      Other assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2,379.2                    206.2
                                                                                     ---------                 --------
                                                                                     $28,273.7                 $6,416.9
                                                                                     ---------                 --------
                                                                                     ---------                 --------

                            See notes to consolidated financial statements.

</TABLE>


                                                   II-17


<PAGE>

                            VIACOM INC. AND SUBSIDIARIES 
                             CONSOLIDATED BALANCE SHEETS 
                             ----------------------------
                       (In millions, except per share amounts)

<TABLE><CAPTION>

                                                                                                        December 31,
                                                                                                  --------------------
                                                                                                  1994            1993
                                                                                                  ----            ----
        <S>                                                                                    <C>              <C>
        Liabilities and Shareholders' Equity

        Current Liabilities:
              Accounts payable  . . . . . . . . . . . . . . . . . . . . . . .                  $  770.9         $  96.6
              Accrued interest  . . . . . . . . . . . . . . . . . . . . . . .                     234.9            20.7
              Accrued compensation  . . . . . . . . . . . . . . . . . . . . .                     340.6            52.5
              Deferred income, current  . . . . . . . . . . . . . . . . . . .                     250.9            50.9
              Merger consideration payable  . . . . . . . . . . . . . . . . .                     261.7             --
              Other accrued expenses  . . . . . . . . . . . . . . . . . . . .                   1,436.8           200.4
              Participants' share, residuals and royalties payable  . . . . .                     630.0           139.1
              Program rights, current   . . . . . . . . . . . . . . . . . . .                     184.4           198.0
              Current portion of long-term debt   . . . . . . . . . . . . . .                      21.0            58.5
                                                                                               --------         -------
                   Total current liabilities    . . . . . . . . . . . . . . .                   4,131.2           816.7
                                                                                               --------         -------

        Long-term debt (See Note 5)   . . . . . . . . . . . . . . . . . . . .                  10,402.4         2,440.0
        Other liabilities   . . . . . . . . . . . . . . . . . . . . . . . . .                   1,948.5           442.1

        Commitments and contingencies (See Note 10)

        Shareholders' Equity:
         Preferred Stock, par value $.01 per share; 200.0 shares
              authorized; 24.0 (1994) and 48.0 (1993) shares issued and
              outstanding   . . . . . . . . . . . . . . . . . . . . . . . . .                   1,200.0         1,800.0
         Class A Common Stock, par value $.01 per share; 200.0 shares
              authorized; 74.6 (1994) and 53.4 (1993) shares issued and
              outstanding   . . . . . . . . . . . . . . . . . . . . . . . . .                       0.7             0.5
         Class B Common Stock, par value $.01 per share; 1,000.0 shares
              authorized; 284.1 (1994) and 67.3 (1993) shares issued and
              outstanding   . . . . . . . . . . . . . . . . . . . . . . . . .                       2.8             0.7
         Additional paid-in capital   . . . . . . . . . . . . . . . . . . . .                  10,579.5           920.9
         Retained earnings (accumulated deficit)  . . . . . . . . . . . . . .                      10.6            (4.0)
         Cumulative translation adjustments   . . . . . . . . . . . . . . . .                      (2.0)             --
                                                                                               --------         -------
         Total shareholders' equity   . . . . . . . . . . . . . . . . . . . .                  11,791.6         2,718.1
                                                                                               --------         -------

                                                                                              $28,273.7        $6,416.9
                                                                                              =========        ========

</TABLE>

                                See notes to consolidated financial statements.

                                                        II-18



<PAGE>




<TABLE><CAPTION>
                                                VIACOM INC. AND SUBSIDIARIES 
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS 
                                         --------------------------------------
                                                      (In millions)
                                                                                       Year Ended December 31,
                                                                            ----------------------------------------
                                                                             1994            1993              1992
                                                                             ----            ----              ----
<S>                                                                         <C>             <C>                <C>
Operating Activities:
    Net earnings  . . . . . . . . . . . . . . . . . . . . . . . . . .       $89.6           $171.0              49.0
    Adjustments to reconcile net earnings to net cash flow from
      operating activities:
    Merger -related charges (See Note 2)  . . . . . . . . . . . . . .       332.1               --                --
    Depreciation and amortization   . . . . . . . . . . . . . . . . .       465.7            153.1             144.8
    Reserve for litigation (See Note 14)  . . . . . . . . . . . . . .          --               --              33.0
    Gain on sale of Lifetime, net of tax (See Note 14)  . . . . . . .      (164.4)              --                --
    Gain on the sale of cable system, net of tax (See Note 14)  . . .          --            (45.9)               --
    Extraordinary losses, net of tax. (See Note 5)  . . . . . . . . .        20.4              8.9              17.1
    Increase (decrease) in accounts payable and accrued expenses  . .       164.7            (17.2)             53.4
    Increase in receivables   . . . . . . . . . . . . . . . . . . . .      (152.6)           (31.9)            (49.8)
    Increase in inventory and related liabilities, net  . . . . . . .      (557.0)          (137.5)           (138.6)
    Increase in income taxes payable and deferred income taxes, net          28.8             82.9              22.5
    Increase (decrease) in deferred income  . . . . . . . . . . . . .         9.8             (9.0)             22.9
    Increase in prepublication costs, net   . . . . . . . . . . . . .       (47.0)              --                --
    Decrease in prepaid expenses  . . . . . . . . . . . . . . . . . .       110.1               --                --
    Payment of LTIP liability   . . . . . . . . . . . . . . . . . . .          --             (3.6)            (68.6)
    Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . . .        39.0            (23.2)             16.3
                                                                        ---------         --------          --------
Net cash flow from operating activities   . . . . . . . . . . . . . .       339.2            147.6             102.0
                                                                        ---------         --------          --------

  Investing activities:
  Capital expenditures    . . . . . . . . . . . . . . . . . . . . . .      (364.9)          (135.0)           (110.2)
  Investments in and advances to affiliated companies   . . . . . . .       (51.3)           (21.6)            (23.7)
  Distribution from affiliated companies    . . . . . . . . . . . . .        37.7             13.4               9.4
  Proceeds from dispositions    . . . . . . . . . . . . . . . . . . .       317.6            144.7              20.0
  Acquisitions, net of cash acquired    . . . . . . . . . . . . . . .    (6,254.6)           (82.2)               --
  Proceeds from sale of short-term investments    . . . . . . . . . .       156.2               --                --
  Payments for purchase of short-term investments   . . . . . . . . .      (102.2)              --                --
  Deposits on transponders    . . . . . . . . . . . . . . . . . . . .        (1.1)           (49.9)             (9.7)
  Other, net    . . . . . . . . . . . . . . . . . . . . . . . . . . .       (36.1)             2.2              (2.6)
                                                                        ---------         --------          --------
  Net cash flow from investing activities   . . . . . . . . . . . . .    (6,298.7)          (128.4)           (116.8)
                                                                        ---------         --------          --------

  Financing activities:
  Short-term borrowings from banks under credit facilities, net   . .     3,560.0            334.3                --
  Borrowings from banks under credit facilities   . . . . . . . . . .          --               --           8,344.0
  Repayments to banks under credit facilities   . . . . . . . . . . .       (13.9)              --          (7,968.5)
  Proceeds from the issuance of notes   . . . . . . . . . . . . . . .          --               --             250.0
  Redemption of notes and debentures    . . . . . . . . . . . . . . .          --           (298.0)           (549.5)
  Proceeds from the issuance of Class B Common Stock    . . . . . . .     1,250.0              --                 --
  Payment of Preferred Stock dividends    . . . . . . . . . . . . . .       (72.7)             --                 --
  Proceeds from the issuance of Preferred Stock   . . . . . . . . . .          --          1,800.0                --
  Payment of deferred financing costs   . . . . . . . . . . . . . . .       (87.1)           (18.1)            (22.7)
  Other, net    . . . . . . . . . . . . . . . . . . . . . . . . . . .        38.5             (3.4)            (18.8)
                                                                        ---------         --------          --------
  Net cash flow from financing activities     . . . . . . . . . . . .     4,674.8          1,814.8              34.5
                                                                        ---------         --------          --------
  Net increase (decrease) in cash and cash equivalents    . . . . . .    (1,284.7)         1,834.0              19.7
  Cash and cash equivalents at beginning of year    . . . . . . . . .     1,882.4             48.4              28.7
                                                                        ---------         --------          --------
  Cash and cash equivalents at end of year    . . . . . . . . . . . .    $  597.7         $1,882.4            $ 48.4
                                                                        =========         ========          ========

                                 See notes to consolidated financial statements.
</TABLE>

                                                         II-19

<PAGE>

                            VIACOM INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EOUITY
                                   (In millions)


<TABLE><CAPTION>

                                                                Year ended December 31,
                                          -----------------------------------------------------------------------
                                                1994                    1993                        1992
                                          -----------------       ------------------        ---------------------
                                          Shares    Amounts       Shares     Amounts        Shares        Amounts
                                          ------    -------       ------     -------        ------        -------
<S>                                       <C>      <C>            <C>       <C>             <C>          <C>
Preferred Stock
---------------
Balance, beginning of year ...........     48.0    $ 1,800.0         --     $     --           --        $    --
Issuance of Series A and Series B
Preferred Stock ......................       --          --         48.0      1,800.0          --             --
Cancellation of Series A Preferred        (24.0)      (600.0)        --            --          --             --
                                        -------    ---------     -------    ---------       -----        -------
Balance, end of year ..................    24.0    $ 1,200.0        48.0    $ 1,800.0          --        $    --
                                        -------    ---------     -------    ---------       -----        -------
                                        -------    ---------     -------    ---------       -----        -------
Class A Common Stock
--------------------
Balance, beginning of year ............    53.4    $      .5        53.4    $      .5        53.4        $    .5
Exercise of stock options .............      .2           --          --           --          --             --
Blockbuster Merger Consideration ......    21.0           .2          --           --          --             --
                                        -------    ---------     -------    ---------       -----        -------
Balance, end of year ..................    74.6    $      .7        53.4    $      .5        53.4        $    .5
                                        -------    ---------     -------    ---------       -----        -------
                                        -------    ---------     -------    ---------       -----        -------
Class B Common Stock
--------------------
Balance, beginning of year ............    67.3    $      .7        67.1    $      .7        66.9        $    .7
Exercise of stock options .............     1.2           --          .2           --          .2             --
Paramount Merger Consideration ........    56.7           .5          --           --          --             --
Blockbuster Merger Consideration ......   158.9          1.6          --           --          --             --
Issuance of Class B Common Stock ......    22.7           .2          --           --          --             --
Cancellation of Class B Common Stock...   (22.7)         (.2)         --           --          --             --
                                        -------    ---------     -------    ---------       -----        -------
Balance, end of year ..................   284.1    $     2.8        67.3    $      .7        67.1        $    .7
                                        -------    ---------     -------    ---------       -----        -------
                                        -------    ---------     -------    ---------       -----        -------
Additional Paid-In Capital
--------------------------
Balance, beginning of year ............            $   920.9                $    917.5                   $ 909.4
Exercise of stock options, net of tax
   benefit ............................                 65.8                       3.4                       1.2
Paramount Merger Consideration ........              2,190.9                        --                        --
Blockbuster Merger Consideration ......              7,412.1                        --                        --
Issuance of Class B Common Stock ......              1,250.0                        --                       6.9
Cancellation of Class B Common Stock ..             (1,250.0)                       --                        --
Expenses associated with stock
     issuances ........................                (10.2)                       --                        --
                                                   ---------                -----------                  -------
Balance, end of year ..................            $10.579.5                $     920.9                  $ 917.5
                                                   ---------                -----------                  -------
                                                   ---------                -----------                  -------

Retained Earnings (Accumulated Deficit)
---------------------------------------
Balance, beginning of year ............            $    (4.0)               $    (162.2)                 $(211.2)
Net earnings ..........................                 89.6                      171.0                     49.0
Preferred stock dividend requirements .                (75.0)                     (12.8)                      --
                                                   ---------                -----------                  -------
Balance, end of year ..................            $    10.6                $      (4.0)                 $(162.2)
                                                   ---------                -----------                  -------
                                                   ---------                -----------                  -------
Cumulative Translation Adiustments
----------------------------------
Balance, beginning of year ............                   --                         --                       --
Translation adjustments ...............            $    (2.0)               $        --                  $    --
                                                   ---------                -----------                  -------
Balance, end of year ..................            $    (2.0)               $        --                  $    --
                                                   ---------                -----------                  -------
                                                   ---------                -----------                  -------
Total Shareholders' Equity ............            $11,791.6                $   2,718.1                   $ 756.5
                                                   ---------                -----------                  -------
                                                   ---------                -----------                  -------
</TABLE>

                          See notes to consolidated financial statements.

                                    II-20



<PAGE>
                          VIACOM INC. AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

1) SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation - The Company is a diversified entertainment and
publishing company with operations in five segments: (i) Networks and
Broadcasting, (ii) Entertainment, (iii) Video and Music/Theme Parks, (iv)
Publishing and (v) Cable Television.  Paramount Communications Inc.
("Paramount Communications") and Blockbuster Entertainment Corporation
("Blockbuster") results of operations are included in the Company's
consolidated results of operations effective March 1, 1994 and
October 1, 1994, respectively.  (See Note 2).

Certain amounts reported on the balance sheet and statements of cash flows for
prior years have been reclassified to conform with the current presentation.

Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and all investments of more than 50% in subsidiaries and
other entities. Investments in affiliated companies over which the Company has a
significant influence or ownership of more than 20% but less than or equal to 
50% are accounted for under the equity method.  All significant intercompany
transactions have been eliminated.  Investments of 20% or less are accounted for
under the cost method.  In 1993, the fiscal year end for certain foreign
operations was changed from October 31 to December 31.

Cash Equivalents - Cash equivalents are defined as short-term (3 months or less)
highly liquid investments.

Inventories - Publishing related inventories are generally determined using the
lower of cost (first-in, first-out method) or net realizable value.  Prerecorded
music and videocassette inventories costs are determined using the moving 
weighted average method, the use of which approximates the first-in, first-out 
basis. Videocassette rental inventory is recorded at cost and amortized over 
its estimated economic life with no provision for salvage value.  Videocassettes
which are considered base stock are amortized over 36 months on a straight-line
basis. Videocassettes which are considered new release feature films are 
frequently ordered in large quantities to satisfy initial demand ("hits"). For
each store, the fifth and any succeeding copies of hit titles purchased are 
amortized over six months on a straight-line basis.

Theatrical and Television Inventories - Inventories related to theatrical and
television product (which include direct production costs, production overhead,
capitalized interest, acquisition costs, prints and certain exploitation costs)
are stated at the lower of amortized cost or net realizable value.  Inventories,
residuals and participations are amortized on an individual product basis based
on the proportion that current revenues bear to the estimated remaining total 
lifetime revenues.  Domestic syndication and basic cable revenue estimates are 
not included in the estimated lifetime revenues of network series until such 
sales are probable. Estimates of total lifetime revenues and expenses are 
periodically reviewed.  The costs of feature and television films are 
classified as

                                     II-21


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

current assets to the extent such costs are expected to be recovered through 
their respective primary markets.  Other costs related to film production are 
classified as noncurrent.  A portion of the cost to acquire Paramount 
Communications and Blockbuster was allocated to theatrical and television 
inventories based upon estimated revenues from certain films less related 
costs of distribution and a reasonable profit allowance for the selling 
effort.  The cost allocated to films is being amortized over their estimated 
economic lives not to exceed 20 years.

The Company estimates that approximately 66% of unamortized film costs
(including amounts allocated under purchase accounting) at December  31, 1994 
will be amortized within the next three years.

Program Rights - The Company acquires rights to exhibit programming on its
broadcast stations or cable networks.  The costs incurred in acquiring programs
are capitalized, to the extent they are estimated to be recovered from future
revenues, and amortized over the license period.  Program rights and the related
liabilities are recorded at the gross amount of the liabilities when the license
period has begun, the cost of the program is determinable, and the program is
accepted and available for airing.

Property and Equipment - Property and equipment is stated at cost.  Depreciation
is computed principally by the straight-line method over estimated useful lives
ranging from 3 to 40 years.  Depreciation expense, including capitalized lease
amortization, was $215.9 million (1994), $92.8 million (1993) and $81.5 million
(1992).

Intangible Assets - Intangible assets, which primarily consist of the cost of
acquired businesses in excess of the market value of tangible assets and
liabilities acquired, are generally amortized by the straight-line method over
estimated useful lives of up to 40 years.  The Company evaluates the 
amortization period of intangibles on an ongoing basis in light of changes in 
any business conditions, events or circumstances that may indicate the 
potential impairment of intangible assets.  Accumulated amortization of 
intangible assets at December 31 was $663.2 million (1994) and $412.5 million
(1993).

Revenue Recognition - Subscriber fees for Networks and Cable Television are
recognized in the period the service is provided.  Advertising revenues for
Networks and Broadcasting are recognized in the period during which the spots 
are aired.  Revenues from the Company owned video and music stores are 
recognized at the time of rental or sale. The publishing segment recognizes 
revenue when merchandise is shipped and billed.

Theatrical and Television Revenues - Feature motion pictures are produced or
acquired for distribution, normally, for exhibition in U.S. and foreign theaters
followed by videocassettes and discs, pay-per-view, premium subscription
television, network television, basic cable television and syndicated television
exploitation.  On average, the length of the initial revenue cycle for feature
films approximates four to seven years.  Theatrical revenues from domestic and
foreign markets are recognized as films are exhibited; revenues from the sale of
videocassettes are recognized upon delivery of the merchandise; and revenues 
from all television sources are recognized upon availability of the film for 
telecast.

                                     II-22


<PAGE>

                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Television series initially produced for the networks and first-run syndication
are generally licensed to domestic and foreign markets concurrently.  The more
successful series are later syndicated in domestic markets and in certain 
foreign markets.  The length of the revenue cycle for television series will 
vary depending on the number of seasons a series remains in active production.
Revenues arising from television license agreements are recognized in the year
that the films or television series are available for telecast.

Interest - Costs associated with the refinancing or issuance of debt, as well as
with debt discount, are expensed as interest over the term of the related debt.
The Company enters into interest rate exchange agreements; the amount to be paid
or received under such agreements is accrued as interest rates change and is
recognized over the life of the agreements as an adjustment to interest expense.
Amounts paid for purchased interest rate cap agreements are amortized into
interest over the term of the agreement (See Note 6).

Equity In Earnings (Loss) of Affiliated Companies - Equity in earnings (loss)
of affiliated companies in the Consolidated Statement of Operations is
primarily comprised of the Company's interest in Lifetime (33% owned), Comedy
Central (50% owned), Nickelodeon (UK) (50% owned) and All News Channel (50%
owned), as well as, in 1994, investments that were acquired as part of the
Mergers (as defined in Note 2).  Such investments were USA Networks (50%
owned), Cinamerica (50% owned), United Cinemas International Multiplex B.V.
(49% owned), Cinema International Corporation N.V. (49% owned) and Discovery
Zone (50% owned).  The Company's interest in Lifetime was sold in 1994 (See
Note 14).

The Company, through the normal course of business, is involved in transactions
with affiliated companies that have not been material in any of the periods
presented.

Foreign Currency Translation and Transactions - The Company's foreign
subsidiaries' assets and liabilities are translated at exchange rates in effect
at the balance sheet date, while results of operations are translated at average
exchange rates for the respective periods.  The resulting translation gains or
losses are included as a separate component of shareholders' equity.  Foreign
currency transaction gains and losses have been included in results of 
operations and have not been material in any of the years presented.

Provision for Doubtful Accounts - The provision for doubtful accounts charged 
to expense was $61.6 million (1994), $16.7 million (1993) and $9.4 million 
(1992).

Net Earnings per Common Share - Primary net earnings per common share is
calculated based on the weighted average number of common shares outstanding
during each period and for 1994, the effects of common shares potentially 
issuable in connection with the contingent value rights ("CVRs"), variable 
common rights ("VCRs"), stock options and warrants.  For 1993 and 1992, the 
effect of contingently issuable common shares from stock options was 
immaterial and, therefore, the effect is not reflected in primary net earnings 
per common share for those periods.  For 1994 and 1993, the effect of the 
assumed conversion of Preferred Stock is antidilutive and, therefore, not 
reflected in fully diluted net earnings per common share.

                                     II-23


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2) PARAMOUNT MERGER, BLOCKBUSTER MERGER AND
   RELATED TRANSACTIONS

On March 11, 1994, the Company acquired a majority of the shares of Paramount
Communications common stock outstanding at a price of $107 per share in cash. On
July 7, 1994, Paramount Communications became a wholly owned subsidiary of the
Company (the "Paramount Merger"). Each share of Paramount Communications 
common stock outstanding at the time of the Paramount Merger (other 
than shares held in the treasury of Paramount Communications or owned 
by the Company and other than shares held by any stockholders who demanded
and perfected appraisal rights) was converted into the right to receive 
(i) 0.93065 of a share of Class B Common Stock, (ii) $17.50 principal amount 
of 8% exchangeable subordinated debentures ("8% Merger Debentures"), 
(iii) 0.93065 of a CVR (iv) 0.5 of a warrant to purchase one share of Viacom 
Class B Common Stock at any time prior to the third anniversary of the 
Paramount Merger at a price of $60 per share, and (v) 0.3 of a warrant to 
purchase one share of Viacom Class B Common Stock at any time prior to the 
fifth anniversary of the Paramount Merger at a price of $70 per share.

Each CVR represents the right to receive the amount, if any, by which the Target
Price exceeds the greater of the Current Market Value or the Minimum Price (see
defined terms in following paragraph).  The CVRs will mature on the first
anniversary of the Paramount Merger (the "Maturity Date"), provided, however, 
that the Company may, at its option, (i) extend the Maturity Date to the second
anniversary of the Paramount Effective Time (the "First Extended Maturity Date")
or (ii) extend the First Extended Maturity Date to the third anniversary or the
Paramount Effective Time (the "Second Extended Maturity Date").  The Company, at
its option, may pay any amount due under the terms of the CVRs in cash or in the
equivalent value of registered securities of the Company, including, without
limitation, common stock, preferred stock, notes or other securities.

The "Minimum Price" means (a) at the Maturity Date, $36, (b) at the First 
Extended Maturity Date, $37 and (c) at the Second Extended Maturity Date, $38.
"Target Price" means (a) at the Maturity Date, $48, (b) at the First Extended 
Maturity Date, $51, and (c) at the Second Extended Maturity Date, $55.  The 
"Current Market Value" means the average market price of Viacom Class B Common 
Stock for a specified period prior to the respective maturity dates.

On September 29, 1994, Blockbuster was merged with and into the Company (the
"Blockbuster Merger").  Each share of Blockbuster Common Stock outstanding at 
the time of the Blockbuster Merger (other than shares held in the treasury of
Blockbuster or owned by the Company) was converted into the right to receive (i)
0.08 of a share of Viacom Class A Common Stock, (ii) 0.60615 of a share of 
Viacom Class B Common Stock, and (iii) one VCR.

The VCRs represent the right to receive a fraction of a share of Viacom
Class B Common Stock, with the exact fraction dependent on the market price of
Viacom Class B Common Stock during the year following the effective time of the
Blockbuster Merger.  The VCRs mature on the first anniversary date of the
Blockbuster Merger.  Based upon the market price of Viacom Class B Common Stock,
following the Blockbuster Merger the maximum fraction of a share issuable 
pursuant to the VCRs was reduced from 0.13829 of a share of Viacom Class B 
Common Stock to 0.05929 of a share of Viacom Class B Common Stock, or a 
maximum issuable potential of approximately 16.7 million shares of Viacom 
Class B Common Stock.

                                     II-24


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Paramount Merger and the Blockbuster Merger (collectively, the "Mergers") 
have been accounted for under the purchase method of accounting.  Accordingly, 
the total cost to acquire Paramount Communications of $9.9 billion and 
Blockbuster of $7.6 billion has been allocated to the respective assets and 
liabilities acquired based on their fair values at the time of the Mergers with
the aggregate excess cost over the fair value of net tangible assets acquired 
of $7.9 billion and $6.8 billion, respectively, allocated to goodwill.

The unaudited condensed pro forma results of operations data presented below
assumes that the Mergers and related transactions, the sale of the one-third
partnership interest in Lifetime and the sale of MSG (as defined in Note 3)
occurred at the beginning of each period presented.  The unaudited condensed 
pro forma results of operations data was prepared based upon the historical
consolidated results of operations of the Company for the years ended December 
31, 1994 and 1993, Paramount for the two months ended February 28, 1994 and 
year ended December 31, 1993, and Blockbuster for the nine months ended 
September 30, 1994 and year ended December 31, 1993, adjusted to exclude the 
non-recurring merger-related charges of $332.1 million (as described below). 
Financial information for Paramount Communications and Blockbuster subsequent 
to the date of acquisition is included in the Company's historical information.
Intangible assets are amortized principally over 40 years on a straight-line 
basis.  The following unaudited pro forma information is not necessarily 
indicative of the combined results of operations of the Company, Paramount 
Communications and Blockbuster that would have occurred if the completion of 
the transactions had occurred on the dates previously indicated nor are they 
necessarily indicative of future operating results of the combined company.


<TABLE><CAPTION>

                                                                                    Year ended December 31,
                                                                                    -----------------------
                                                                                      1994            1993
                                                                                      ----            ----
                                                                        (Millions of dollars, except per share amounts)
<S>                                                                                <C>              <C>  
Revenues                                                                           $10,121.6        $ 9,235.5
Earnings from continuing operations                                                  1,040.0            758.7
Net earnings from continuing operations before
  extraordinary loss, cumulative effect of a change in
  accounting principle and preferred stock dividends                                   111.6             10.9
Net earnings (loss) attributable to common stock
  before extraordinary loss and cumulative
  effect of a change in accounting principle                                            51.6            (49.1)
Earnings (loss) per common share before extraordinary
  loss and cumulative effect of change in
  accounting principle                                                                   .13             (.14)
</TABLE>


Pro forma earnings from continuing operations for the year ended December 31, 
1994 exclude $332.1 million of non-recurring merger-related charges reflecting 
the integration of the Company's pre-merger businesses with similar Paramount
Communications units, and related management and strategic changes principally
related to the merger with Paramount Communications.

                                     II-25


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During each of the three years presented, the Company has also acquired or
sold certain other businesses.  The contributions of these businesses in
the aggregate were not significant to the Company's results of operations
for the periods presented, nor are they expected to have a material effect
on the Company's results on a continuing basis.


3) SUBSEQUENT EVENTS

On January 20, 1995, the Company agreed to sell its cable television systems to
a partnership of which Mitgo Corp., a company wholly owned by Frank Washington,
is a general partner, for approximately $2.3 billion, subject to certain 
conditions, including, receipt of a tax certificate from the Federal 
Communications Commission and the availability of certain federal tax 
consequences of the sale advantageous to the Company.  The U. S. House of 
Representatives and U. S. Senate have each approved a similar version of 
legislation that would eliminate such tax consequences.  The House of 
Representatives has also approved a compromise version of the bill, which 
is awaiting Senate approval. The Company has announced that it will not proceed
with the agreed transaction in the event that such tax consequences are 
unavailable.  The Company has also announced that it is considering other 
options with respect to the disposition of its cable systems and that it 
intends to proceed with such disposition.  Until a formal plan for the 
disposition is established, operating results for Cable Television will be 
included in earnings from continuing operations.

During March 1995, the Company sold Madison Square Garden Corporation (which
includes the Madison Square Garden Arena, The Paramount theater, the New York
Knickerbockers, the New York Rangers and the Madison Square Garden Network,
collectively "MSG") to a joint venture of ITT Corporation and Cablevision 
Systems Corporation for closing proceeds of $1.009 billion, representing the 
sale price of approximately $1.075 billion, less approximately $66 million in 
working capital adjustments.  The sale of MSG resulted in no after-tax book 
gain.  Proceeds from the sale were used to pay down notes payable to banks.  
The Company acquired MSG as part of the Paramount Merger.

MSG has been accounted for as a discontinued operation and, accordingly, its
operating results and net assets have been separately disclosed in the
Consolidated Financial Statements.

                                     II-26


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Summarized results of operations for the year ended December 31, 1994 and
financial position data as of December 31, 1994 for MSG are as follows
(millions of dollars).

         Results of operations:
         Revenues                                             $273.4
         Loss from operations before income tax benefit       $(25.4)
         Income tax benefit                                   $  4.9
         Net loss                                             $(20.5)

         Financial position:
         Current assets                                       $107.8
         Net property, plant and equipment                     312.9
         Other assets                                          409.4
         Total liabilities                                    (132.7)
                                                              ------
         Net assets of discontinued operations                $697.4
                                                              ======


<TABLE><CAPTION>

4) INVENTORIES

Inventories consist of the following:
                                                                          December 31,
                                                                      -----------------
                                                                      1994         1993
                                                                      ----         ----
                                                                      (Millions of dollars)
<S>                                                                 <C>           <C>     
Prerecorded music and video cassettes                               $  509.2       $     --
Videocassette rental inventory                                         297.6             --
Publishing:
      Finished goods                                                   218.9             --
      Work in process                                                   35.8             --
      Materials and supplies                                            27.1             --
Other                                                                   73.8             .5
                                                                    --------       --------
                                                                     1,162.4             .5
          Less current portion                                         830.9             --
                                                                    --------       --------
                                                                    $  331.5       $     .5
                                                                    ========       ========

Theatrical and television inventory:
      Theatrical and television productions:
            Released                                                $1,488.0       $  166.2
            Completed, not released                                     12.8             --
            In process and other                                       260.8             --
      Program rights                                                   838.3          979.3
                                                                    --------       --------
                                                                     2,599.9        1,145.5
      Less current portion                                             986.9          356.5
                                                                    --------       --------
                                                                    $1,613.0       $  789.0
                                                                    ========       ========
Total non-current inventory                                         $1,944.5       $  789.5
                                                                    ========       ========
</TABLE>


                                     II-27


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5) BANK FINANCING AND DEBT


<TABLE><CAPTION>

Long-term debt consists of the following:
                                                                                          December 31,
                                                                                    ------------------------
                                                                                    1994                1993
                                                                                    ----                ----
                                                                                     (Millions of dollars)
<S>                                                                               <C>                 <C>
Notes payable to banks (a)                                                        $7,709.4            $1,983.2
  6.625% Senior Notes due 1998                                                       150.0                  --
  5.875% Senior Notes due 2000*                                                      149.5                  --
  7.5% Senior Notes due 2002*                                                        247.0                  --
  8.25% Senior Debentures due 2022*                                                  247.0                  --
  7.5% Senior Debentures due 2023*                                                   149.5                  --
  9.125% Senior Subordinated Notes due 1999*                                         150.0               150.0
  8.75%  Senior Subordinated Reset Notes due 2001 (b)*                               100.0               100.0
 10.25% Senior Subordinated Notes due 2001*                                          200.0               200.0
   7.0% Senior Subordinated Debentures due 2003, net of                                                      
      unamortized discount of $48.4 million*                                         183.1                  --
  8.0% Merger Debentures due 2006,                                                                          
      net of unamortized discount of $131.3 million (c)                              938.6                  --
  Other Notes due 1995 to 1996                                                        71.8                  --
Obligations under capital leases                                                     127.5                65.3
                                                                                  --------            --------
                                                                                  10,423.4             2,498.5
Less current portion                                                                  21.0                58.5
                                                                                 ---------            --------
                                                                                 $10,402.4            $2,440.0
                                                                                 =========            ========
</TABLE>

* Issues of Viacom International guaranteed by the Company.

      (a) -- On July 1, 1994, the Company entered into an aggregate $6.489 
billion credit agreement (the "Viacom Credit Agreement"), and Viacom 
International Inc. ("Viacom International") and certain of its subsidiaries 
(the "Subsidiary Obligors") entered into a $311 million credit agreement (the
"Viacom International Credit Agreement," together with the Viacom Credit 
Agreement, collectively the "Credit Agreements") each with certain banks, the 
proceeds of which were used to refinance debt related to the Paramount Merger 
and the previously existing bank debt of the Company, Viacom International and 
Paramount.  On September 29, 1994, the Company entered into an aggregate $1.8 
billion credit agreement (the "$1.8 billion Credit Agreement") with certain 
banks, the proceeds of which were used to refinance the previously existing 
bank debt of Blockbuster.

The Company guarantees the Viacom International Credit Agreement and notes and
debentures issued by Viacom International.  Viacom International guarantees
Viacom's Credit Agreement, the $1.8 billion Credit Agreement and notes and
debentures issued by the Company.

                                     II-28


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following is a summary description of the credit agreements.  The 
description does not purport to be complete and should be read in conjunction 
with each of the credit agreements.

The Viacom Credit Agreement is comprised of (i) a $2.5 billion senior 
unsecured 2-1/2 year revolving short term loan (the "Short-Term Loan") 
maturing December 31, 1996, (ii) a $1.8 billion senior unsecured 8 year 
reducing revolving loan (the "Revolving Loan") maturing July 1, 2002 and (iii) 
a $2.189 billion 8 year term loan maturing July 1, 2002 (the "Term Loan").  
The Viacom International Credit Agreement is comprised of a $311 million 8-year
term loan to Viacom International and certain of its subsidiaries maturing 
July 1, 2002.  The $1.8 billion Credit Agreement is comprised of a $1.8 
billion senior unsecured reducing revolving loan to the Company maturing 
July 1, 2002.

The interest rate on all loans made under the three facilities is based upon
Citibank, N.A.'s base rate or the London Interbank Offered Rate and is affected
by the Company's credit rating.  At December 31, 1994, the London Interbank 
Offered Rates ("LIBOR") (upon which the Company's borrowing rate was based) for
borrowing periods of one month and two months were 6.0% and 6.25%, respectively.
At December 31, 1993, LIBOR for borrowing periods of one and two months were 
3.25% and 3.3125%, respectively.

The Company may prepay the loans and reduce commitments under the Viacom Credit
Agreement and the $1.8 billion Credit Agreement in whole or in part at any time.
The Company is required, subject to certain conditions, to make prepayments 
under the Short-Term Loan resulting from receipt of the first $2.5 billion in 
the aggregate of net cash proceeds from asset sales other than in the ordinary 
course of business or from capital market transactions.  In the event that a 
Subsidiary Obligor ceases to be a wholly owned subsidiary of the Company or 
Viacom International, the loans of such Subsidiary Obligor shall be due and 
payable on the date on which such subsidiary ceases to be a wholly owned 
subsidiary.  If such event occurs prior to December 31, 1996 or the repayment 
in full of all Short-Term Loans, the Company may elect to convert any 
outstanding portion of the Short-Term Loan into additional Term Loans in an 
amount equal to the principal amount of such Subsidiary Obligor's loan.

The credit agreements contain certain covenants which, among other things, 
require that the Company maintain certain financial ratios and impose on the 
Company and its subsidiaries certain limitations on substantial asset sales 
and mergers with any other company in which the Company is not the surviving 
entity.

The credit agreements contain certain customary events of default and provide 
that it is an event of default if National Amusements, Inc. ("NAI") fails to 
own at least 51% of the outstanding voting stock of the Company.

The Company is required to pay a commitment fee based on the aggregate daily
unborrowed portion of the loan commitments.  As of December 31, 1994, the 
Company had $957 million of available loan commitments.  The credit agreements 
do not require compensating balances.

                                     II-29


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      (b) -- The $100 million aggregate principal amount of 8.75% Senior
Subordinated Reset Notes ("8.75% Reset Notes") are due on May 15, 2001.  On May
15, 1995 and May 15, 1998, unless a notice of redemption of the 8.75% Reset 
Notes on such date has been given by the Company, the interest rate on the 
8.75% Reset Notes will, if necessary, be adjusted from the rate then in effect 
to a rate to be determined on the basis of market rates in effect on May 5, 
1995 and on May 5, 1998, respectively, as the rate the 8.75% Reset Notes 
should bear in order to have a market value of 101% of principal amount 
immediately after the resetting of the rate.  In no event will the interest 
rate be lower than 8.75% or higher than the average three year treasury rate
(as defined in the indenture) multiplied by two. The interest rate reset on 
May 15, 1995 will remain in effect on the 8.75% Reset Notes through and 
including May 15, 1998 and the interest rate reset on May 15, 1998 will remain 
in effect on the 8.75% Reset Notes thereafter.  The 8.75% Reset Notes are 
redeemable at the option of the Company, in whole but not in part, on May 15, 
1995 or May 15, 1998, at a redemption price of 101% of principal amount plus 
accrued interest to, but not including, the date of redemption.

      (c) -- The Company issued an aggregate principal amount of $1,069.9 
million of 8% Merger Debentures as part of the Paramount Merger consideration.
The balance sheet reflects the fair value of the 8% Merger Debentures plus
amortization of the related discount.
                              _____________________

Extraordinary Losses

During 1994, the proceeds from the Viacom Credit Agreement were used to 
refinance the previously existing bank debt of the Company.  The Company 
recognized an extraordinary loss from the extinguishment of debt of $20.4 
million, net of a tax benefit of $11.9 million.

On July 15, 1993, Viacom International redeemed all of the $298 million 
principal amount outstanding of the 11.80% Senior Subordinated Notes at a 
redemption price equal to 103.37% of the principal amount plus accrued 
interest to July 15, 1993. Viacom International recognized an extraordinary 
loss from the extinguishment of debt of $8.9 million, net of a tax benefit of 
$6.1 million.

On June 18, 1992, the Company redeemed all of the $356.5 million principal 
amount outstanding of the 14.75% Senior Subordinated Discount Debentures at a 
redemption price equal to 105% of the principal amount plus accrued interest 
to June 18, 1992.  On March 10, 1992, the Company redeemed all of the $193 
million principal amount outstanding of its 11.50% Senior Subordinated 
Extendible Reset Notes at a redemption price equal to 101% of the principal 
amount plus accrued interest to the redemption date.  The Company recognized 
an extraordinary loss of $17.1 million, net of a tax benefit of $11.3 million.

The Company borrowed the funds necessary for each of these redemptions under 
its bank credit facilities existing in the respective periods.

                                     II-30


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Interest costs incurred, interest income and capitalized interest are 
summarized below:

                                          Year Ended December 31,
                                     ----------------------------------
                                          (Millions of dollars)
                                     1994            1993          1992
                                     ----            ----          ----
  Interest Incurred                $ 536.3          $154.5        $195.7
  Interest Income                  $  32.6          $  9.1        $  1.1
  Capitalized Interest             $   9.6          $   .4        $   .5

Scheduled maturities of long-term debt of the Company through December 31, 1999,
assuming full utilization of the commitments under the credit agreements (after
giving effect to the reduction in commitments resulting from the sale of MSG), 
are $1.9 billion (1996), $163 million (1997), $1.0 billion (1998) and $1.5 
billion (1999).

6) FINANCIAL INSTRUMENTS

The Company's carrying value of the financial instruments approximates fair 
value, except for differences with respect to the senior subordinated debt and 
certain differences related to other financial instruments which are not 
significant.  The carrying value of the senior and senior subordinated debt is 
$2.5 billion and the fair value, which is estimated based on quoted market 
prices, is approximately $2.4 billion.

The Company enters into interest rate exchange agreements with off-balance sheet
risk in order to reduce its exposure to changes in interest rates on its 
variable rate long-term debt and/or take advantage of changes in interest rates.
These interest rate exchange agreements include interest rate swaps and interest
rate caps. At December 31, 1994, the Company had $2.1 billion of interest rate 
exchange agreements outstanding with commercial banks.  $1.6 billion of these 
agreements, which expire over the next three years, effectively change the 
Company's interest rate on an equivalent amount of variable rate borrowings to 
a fixed rate of 6.8%. The remaining $500 million of interest rate exchange 
agreements, which expire during 1995, effectively convert $500 million of its 
debt from an average fixed rate of 7.9% to a variable rate (8.0% at 
December 31). The Company is exposed to credit loss in the event of 
nonperformance by the counterparties to the agreements.  However, the Company 
does not anticipate nonperformance by the counterparties.

The Company enters into foreign currency exchange contracts in order to reduce 
its exposure to changes in foreign currency exchange rates.  To date, the 
hedges have been purchased options and forward contracts.  A forward contract 
is an agreement between parties to purchase and sell a foreign currency, for a 
price specified at the contract date, with delivery and settlement in the 
future.  An option contract provides the right, but not the obligation, to buy 
or sell currency at a fixed rate on a future date.  At December 31, 1994, the 
Company had outstanding contracts with a notional value of approximately $36 
million, which hedge the European Currency Unit and Japanese Yen, and expire 
in 1995 and 1996.  Realized gains and losses on contracts that hedge expected 
future cash flows are recognized in "Other Items, Net" and were not material 
in the current period.

                                     II-31


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7) SHAREHOLDERS' EQUITY

On July 7, 1994 and September 29, 1994, the Company issued equity securities to
holders of Paramount Communications and Blockbuster common stock, respectively
(See Note 2).

During March 1994, Blockbuster purchased 22.7 million shares of Viacom Class B
Common Stock at a price of $55 per share.  The common stock was canceled upon
consummation of the Blockbuster Merger.

On October 22, 1993, Blockbuster purchased 24 million shares of cumulative
convertible preferred stock, par value $.01 per share, of the Company ("Series A
Preferred Stock") for $600 million.  The Preferred Stock purchased by 
Blockbuster was canceled upon consummation of the Blockbuster Merger.  On 
November 19, 1993, NYNEX Corporation ("NYNEX") purchased 24 million shares of 
cumulative convertible preferred stock, par value $.01 per share, of the 
Company ("Series B Preferred Stock," collectively with the Series A Preferred 
Stock, "Preferred Stock") for $1.2 billion.  Series B Preferred Stock has a 
liquidation preference of $50 per share,  an annual dividend rate of 5%, is 
convertible into shares of Viacom Class B Common Stock at a conversion price 
of $70 and does not have voting rights other than those required by law.  The 
Series B Preferred Stock is redeemable by the Company at declining premiums 
after five years.

NAI holds approximately 26% and the public holds approximately 74% of the
Company's outstanding Common Stock as of December 31, 1994.  NAI owns 61% of 
the outstanding Viacom Class A Common Stock as of December 31, 1994.

Long-Term Incentive Plans - The purpose of the Long-Term Incentive Plans (the
"Plans") is to benefit and advance the interests of the Company by rewarding
certain key employees for their contributions to the financial success of the
Company and thereby motivating them to continue to make such contributions in
the future.  The Plans provide for grants of equity-based interests pursuant to
awards of phantom shares, stock options, stock appreciation rights, restricted
shares or other equity-based interests ("Awards"), and for subsequent payments
of cash with respect to phantom shares or stock appreciation rights based,
subject to certain limits, on their appreciation in value over stated periods of
time.

During December 1992, a significant portion of the liability associated with the
phantom shares was satisfied through the cash payment of $68.6 million and the
issuance of 177,897 shares of Viacom Class B Common Stock valued at $6.9 
million.

In addition to the 25.0 million stock option Awards outstanding under various
plans, as of December 31, 1994 there are phantom shares for 643,098 shares of
common stock all of which are vested, at an average grant price of $29 and vest
over a three year period from the date of grant.  The stock options generally 
vest over a four to six year period from the date of grant and expire 10 years 
after the date of grant.
                                     II-32


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Each of the unexercised stock options to purchase Paramount or Blockbuster
common stock that was outstanding at the time of the respective mergers,
automatically became options to purchase the merger consideration applicable to
the stock option under the same price and terms, except that, for employees of
Paramount Communications who were employees on the date of the Paramount Merger,
additional Viacom Class B Common Stock valued July 1995, will be issued on
exercise of such options as consideration for the cash portion of the blended
purchase price per share of Paramount Communications that was not reflected in
the Merger consideration because of the transaction structure.  These options
generally became vested upon the effective date of the Merger, and are
exercisable over a three to five year period and expire 10 years after the date
of grant.

The following table summarizes the stock activity under the various plans:


<TABLE><CAPTION>

                                                                                                    Per Share
                                                                 Number of                           Option
                                                                   Shares                          Price range
                                                                   ------                          -----------
<S>                                                               <C>                         <C>
Balance at December 31, 1992                                      3,557,591                   $   20.75  to $31.875
  Granted                                                           856,990                       43.25  to   55.25
  Exercised                                                        (346,378)                      20.75  to  31.875
  Canceled                                                          (95,146)                      20.75  to   55.25
                                                                 -----------
Balance at December 31, 1993                                      3,973,057                       20.75  to   55.25
  Granted                                                         3,931,562                       34.75  to  52.125
  Assumed in connection with the Mergers                         19,955,783                        1.45  to   44.94
  Exercised                                                      (1,336,751)                       6.67  to   37.07
  Canceled                                                       (1,508,535)                      11.74  to   55.25
                                                                -----------
Balance at December 31, 1994                                     25,015,116                   $    1.45  to  $55.25
                                                                -----------
                                                                -----------
Stock options available for future grant:                                                      
  December 31, 1994                                               6,143,638                    
  December 31, 1993                                               1,994,020                    
Shares issuable under exercisable stock                                                        
     options:                                                                                  
  December 31, 1994                                              18,110,234                   
  December 31, 1993                                               1,448,570                    

</TABLE>


The Company has reserved 1,847,302 shares of Viacom Class A Common Stock and
57,577,294 shares of Viacom Class B Common Stock principally for exercise of
stock options and warrants, the conversion of the Preferred Stock, CVRs and
VCRs.  Such shares are based on the average market value of Viacom Class B
Common Stock as of March 27, 1995.

                                     II-33


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8) INCOME TAXES

The provision for income taxes shown below for the years ended December 31,
1994, 1993 and 1992 represents federal, state and foreign income taxes on
earnings before income taxes.  Earnings (loss) accounted for under the equity
method of accounting are shown net of tax on the Company's Statement of
Operations.  The tax provision (benefit) relating to earnings (loss) from equity
investments in 1994, 1993 and 1992 are $9.8 million, $(.6) million and $(2.2)
million, respectively.  See Note 3 and 5 for tax benefits relating to the
Discontinued Operations and Extraordinary Losses.

During the first quarter of 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") on a
prospective basis and recognized an increase to earnings of $10.4 million in
1993 as the cumulative effect of a change in accounting principle.  SFAS 109
mandates the liability method for computing deferred income taxes.

Earnings before income taxes are attributable to the following jurisdictions:

                                                Year Ended December 31,
                                      1994              1993            1992
                                     ------             ------         ------
                                               (Millions of dollars)

United States                        $179.4             $267.8         $138.2
Foreign                               197.3               34.0           17.4
                                     ------             ------         ------
Total                                $376.7             $301.8         $155.6
                                     ------             ------         ------
                                     ------             ------         ------

Components of the provision for income taxes on earnings before income taxes are
as follows:

                                                Year Ended December 31,
                                      1994              1993            1992
                                     ------             ------         ------
                                                (Millions of dollars)
Current:
  Federal                            $139.1              $89.5          $47.3
  State and local                      78.3               10.4           17.9
  Foreign                              65.8                5.6            4.6
                                     ------             ------         ------
                                      283.2              105.5           69.8

Deferred                               (3.5)              24.3           15.0
                                     ------             ------         ------
                                     $279.7             $129.8          $84.8
                                     ------             ------         ------
                                     ------             ------         ------

                                     II-34


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A reconciliation of the U.S. Federal statutory tax rate to the Company's
effective tax rate on earnings before income taxes is summarized as
follows:

                                                Year Ended December 31,
                                      1994              1993            1992
                                     ------             ------         ------
Statutory U.S. tax rate               35.0%              35.0%          34.0%
State and local taxes, net
  of federal tax benefit               6.6                5.7            4.7
Effect of foreign operations            .2                 .5            1.9
Amortization of intangibles           25.9                7.1           18.2
Divestiture tax versus book            1.5               (3.2)            --
Property and equipment basis
  difference                            --                 --            7.2
Income tax reserve adjustment           --               (5.0)         (12.9)
Effect of changes in statutory rate     --                 .5             --
Other, net                             5.1                2.4            1.4
                                      ----               ----           ----
  Effective tax rate                  74.3%              43.0%          54.5%
                                      =====              =====          =====

The annual effective tax rate of 43% for 1993 and 54.5% for 1992 includes a
reduction of certain prior year tax reserves in the amount of $22 million and
$20 million, respectively.  The reduction is based on management's view
concerning the outcome of several tax issues based upon the progress of
federal, state and local audits.

                                     II-35


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following is a summary of the deferred tax accounts in accordance with SFAS
109 for the year ended December 31, 1994 and 1993.


<TABLE><CAPTION>
                                                            Year Ended December 31,
                                                            -------------------
                                                              1994       1993
                                                              ----       ----
                                                           (Millions of dollars)
<S>                                                          <C>        <C>
Current deferred tax assets and (liabilities):
Recognition of revenue                                       $  22.5    $  17.8
Sales return and allowances                                     96.6         --
Publishing costs                                                72.2         --
Employee compensation and other payroll related expenses        24.1         --
Other differences between tax and financial statement values   (21.6)      (1.5)
                                                               -----       ----
     Gross current deferred net tax assets                     193.8       16.3
                                                               -----       ----

Noncurrent deferred tax assets and (liabilities):
Depreciation/amortization of fixed assets and intangibles       (9.8)    (102.1)
Reserves including restructuring and relocation charges        334.4       39.3
Program costs                                                  (67.9)     (18.4)
Acquired net operating loss and tax credit carryforwards       100.3         --
Amortization of discount on 8%  Merger Debentures               85.7         --
Recognition of revenue                                          89.9       (3.5)
Other differences between tax and financial statement values    72.8        (.5)
                                                               -----       ----

  Gross noncurrent deferred net tax assets                     605.4      (85.2)
                                                               -----       ----

Valuation allowance                                            (75.7)        --
                                                             -------    -------
Total net deferred tax assets (liabilities)                  $ 723.5    $ (68.9)
                                                             -------    -------
                                                             -------    -------
</TABLE>

As of December 31, 1994 and December 31, 1993, the Company had total non-current
deferred net tax assets (liabilities) of $605.4 million and ($85.2) million, and
current deferred net tax assets of $193.8 million and $16.3 million, 
respectively. The 1994 net deferred tax assets include a valuation allowance 
of $75.7 million, principally relating to acquired net operating loss and tax 
credit carryforwards which are subject to statutory limitations.

As of December 31, 1994, the Company had net operating loss carryforwards of
approximately $239 million, capital loss carryforwards of approximately $10
million and tax credit carryforwards of approximately $12 million, which were
acquired by the Company as a result of its 1994 mergers with Paramount
Communications and Blockbuster.  The carryforwards are subject to statutory
limitations which resulted from a change of ownership.  The carryforward periods
expire in years 1995 through 2009.

                                     II-36


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company's share of the undistributed earnings of foreign subsidiaries not
included in its consolidated Federal income tax return that could be subject to
additional income taxes if remitted, was approximately $881 million at December
31, 1994.  No provision has been made for additional U.S. or foreign taxes that
could result from the remittance of such undistributed earnings since the
Company intends to reinvest these earnings indefinitely, and it is not
practicable to estimate the amount of any such additional taxes.

The following table identifies the deferred tax items which were part of the
Company's tax provision under previously applicable accounting principles for
the year ended December 31, 1992 (millions of dollars):

Deferred compensation                                       $22.7
Depreciation                                                  7.6
Syndication advance payments                                  4.1
Litigation accrual                                          (13.3)
Sale of cable system                                         (6.9)
Other, net                                                     .9
                                                            -----
                                                            $15.1
                                                            -----
                                                            -----

9) PENSION PLANS, OTHER POSTRETIREMENT BENEFITS AND
   POSTEMPLOYMENT BENEFITS

The Company and certain of its subsidiaries have non-contributory pension plans
covering specific groups of employees.  The Company continues to maintain the
pension plans of the former Paramount Communications.  The benefits for these
plans are based primarily on an employee's years of service and pay near
retirement.  Participant employees are vested in the plans after five years of
service.  The Company's policy for all pension plans is to fund amounts in
accordance with the Employee Retirement Income Security Act of 1974.  Plan
assets consist principally of common stocks, marketable bonds and United States
government securities.

Net periodic pension cost consists of the following components:

                                                      Year Ended December 31,
                                                   ----------------------------
                                                   1994         1993       1992
                                                   ----         ----       ----
                                                        (Millions of dollars)
Service cost - benefits earned during
   the period                                   $   22.1       $  5.4    $  4.6
Interest cost on projected benefit
   obligation                                       33.4          4.1       3.3
Return on plan assets:
  Actual                                             2.9         (1.8)     (1.4)
  Deferred                                         (37.7)        (1.1)      (.8)
Net amortizations                                     .6           .5        .5
                                                --------       ------    ------
Net pension cost                                $   21.3       $  7.1    $  6.2
                                                --------       ------    ------
                                                --------       ------    ------
                                     II-37


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The funded status of the pension plans for the periods indicated is as follows:


<TABLE><CAPTION>

                                                                                                 December 31,
                                                                       ---------------------------------------------------------
                                                                                        1994                          1993
                                                                       -------------------------------------    ----------------
                                                                         Accumulated           Assets Exceed      Accumulated
                                                                       Benefits Exceed          Accumulated      Benefits Exceed
                                                                           Assets                Benefits            Assets
                                                                           ------                --------            ------
                                                                                            (Millions of dollars)
<S>                                                                    <C>                   <C>                   <C>  
Actuarial present value of benefit obligations:
Accumulated benefit obligation:
   Vested                                                              $    (414.8)          $       (4.1)         $     (34.4)
   Non-vested                                                                (28.5)                    --                 (3.2)
                                                                       ------------          -------------         ------------
  Total                                                                $    (443.3)          $       (4.1)         $     (37.6)
                                                                       ============          =============         ============
Projected benefit obligation                                           $    (519.7)          $       (5.9)         $     (58.8)
Plan assets at fair value                                                    442.2                    5.8                 32.6
                                                                       ------------          -------------         ------------
Projected Benefit Obligation in excess of
      Plan assets                                                            (77.5)                   (.1)               (26.2)
Unrecognized net (gain) losses                                               (13.4)                    .8                  8.1
Unrecognized prior service cost                                                3.8                     --                  3.7
Unrecognized transition obligation                                             1.8                     --                   --
Adjustment to recognize minimum liability                                      (.9)                    --                  (.5)
                                                                       ------------          -------------         ------------
(Pension liability) Prepaid pension cost
      at year end                                                      $     (86.2)          $         .7          $     (14.9)
                                                                       ============          =============         ============

</TABLE>


The following assumptions were used in accounting for the pension plans:


<TABLE><CAPTION>

                                                                           1994                    1993               1992
                                                                           ----                    ----               ----
<S>                                                                       <C>                      <C>                <C>  
Discount rate                                                              8.5%                    7.5%               8.25%
Return on plan assets                                                     9-10%                      9%                  9%
Rate of increase in future compensation                                    5-6%                      6%                  6%

</TABLE>


In addition, during 1994, certain of the Company's employees participated in
multiemployer pension plans, for which the Company had other pension expense of
$10.9 million.

The Company sponsors a welfare plan which provides certain postretirement health
care and life insurance benefits to substantially all of the Paramount
Communications employees and their covered dependents who generally have worked
10 years and are eligible for early or normal retirement under the provisions of
the Paramount Communications retirement plan.  The welfare plan is contributory
and contains cost-sharing features such as deductible and coinsurance which are
adjusted annually.  The plan is not funded.  The Company continues to fund these
benefits as claims are paid.
                                     II-38


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


The components of the amount recognized as of December 31, 1994 are as follows
(in millions):

Accumulated postretirement benefit obligation attributable to:   
Current retirees                                                     $  88.9
Fully eligible active plan participants                                 17.8
Other active plan participants                                          35.1
Unrecognized net gain                                                   21.4
                                                                     -------
Accumulated postretirement  benefit obligation                       $ 163.2
                                                                     -------
                                                                     -------
The components of net periodic postretirement benefit cost for the 
year ended December 31, 1994 are as follows (in millions):

Service costs-benefits earned                                        $ 4.4
Interest cost on accumulated postretirement benefit obligation         9.5
                                                                     ------
Net periodic postretirement benefit cost                             $13.9
                                                                     ------
                                                                     ------

For purposes of valuing the accumulated postretirement benefit obligation, the
discount rate was 8.5%, the assumed weighted average health care cost trend
rates are 12% grading down to 5.5% over 8 years for retired both over and under
age 65, and 10% grading down to 5.5% over 7 years for managed care under age 65.
A one percentage point increase in each year of these health care cost trend
rates would increase the accumulated postretirement benefit obligation at
December 31, 1994 by $19.9 million, and increase the sum of the service and
interest cost components of net period postretirement benefit cost by $2.6
million.

In addition the Company contributed to multiemployer plans which provide health
and welfare benefits to active as well as retired employees.  The Company had
costs of $10.0 million related to these benefits during 1994.

In 1994, the Company adopted Statement of Financial Accounting Standards No. 
112, "Employers' Accounting For Postemployment Benefits" ("SFAS 112").  SFAS 
112 did not have a significant effect on the Company's consolidated financial 
position or results of operations.

10) COMMITMENTS AND CONTINGENCIES

The Company has long-term noncancellable lease commitments for office space and
equipment, transponders, studio facilities and vehicles.

                                     II-39


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, 1994, minimum rental payments under noncancellable leases are 
as follows:

                                               Operating                Capital
                                                 Leases                  Leases
                                                 ------                  ------
                                                     (Millions of dollars)
                                                                    
1995                                          $   487.1              $   28.9
1996                                              407.9                  23.7
1997                                              367.7                  21.4
1998                                              323.6                  23.1
1999                                              270.6                  20.6
2000 and thereafter                             1,373.9                  65.0
                                              ---------              --------
Total minimum lease payments                  $ 3,230.8                 182.7
Less amounts representing interest            =========                  55.2
                                                                     --------
Present value of net minimum payments                                  $127.5
                                                                     ========

The Company has also entered into capital leases for transponders with future
minimum commitments commencing in future periods of approximately $207.9
million payable over the next eleven years  Such commitments are contingent
upon the successful operation of satellites.  Future minimum capital lease
payments have not been reduced by future minimum sublease rentals of $23.7
million.  Rent expense amounted to $240.2 million (1994), $74.2 million (1993),
and $67.9 million (1992).

The commitments of the Company for program license fees, which are not
reflected in the balance sheet as of December 31, 1994 and are estimated to
aggregate approximately $2.0 billion, principally reflect commitments under
Showtime Networks Inc.'s ("SNI's") exclusive arrangements with several motion
picture companies.  This estimate is based upon a number of factors.  A
majority of such fees are payable over several years, as part of normal
programming expenditures of SNI.  These commitments are contingent upon
delivery of motion pictures which are not yet available for premium television
exhibition and, in many cases, have not yet been produced.

There are various lawsuits and claims pending against the Company.  Management
believes that any ultimate liability resulting from those actions or claims
will not have a material adverse effect on the Company's results of operations
or financial position.

Certain subsidiaries and affiliates of the Company from time to time receive
claims from Federal and state environmental regulatory agencies and other
entities asserting that they are or may be liable for environmental cleanup
costs and related damages, principally relating to discontinued operations
conducted by its former mining and manufacturing businesses (acquired as part of
the Mergers).  The Company has recorded a liability at approximately the mid-
point of its estimated range of environmental exposure.  Such liability was not
reduced by potential insurance recoveries and reflects management's estimate of
cost sharing at multiparty sites.  The estimated range of the potential
liability was calculated based upon currently available facts, existing
technology and presently enacted laws and regulations.  On the basis of

                                     II-40


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

its experience and the information currently available to it, the Company
believes that the claims it has received will not have a material adverse 
effect on its results of operations or financial position.

11) FOREIGN OPERATIONS

The consolidated financial statements include the following amounts applicable
to foreign subsidiaries:

                                                 Year Ended December 31,
                                                 -----------------------
                                              1994         1993        1992
                                              ----         ----        ----
                                                   (Millions of dollars)

Revenues                                   $  1,223.2     $122.2       $68.2
Earnings before income taxes               $    197.3     $ 34.0       $17.4
Net earnings                               $    170.9     $ 33.7       $16.4
Current assets                             $  1,021.3     $ 54.2       $47.8
Total assets                               $  2,397.6     $115.7       $73.9
Total liabilities                          $    784.9     $ 68.7       $57.4


Total export revenues were $137.4 million (1994), $25.2 million (1993) and 
$34.9 million (1992).

Foreign currency transaction gains and losses were immaterial in each period
presented.
                                     II-41


<PAGE>

                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


<TABLE><CAPTION>

12) BUSINESS SEGMENTS
                                                                              Year Ended December 31,
                                                                   -------------------------------------------------
                                                                   1994                  1993                   1992
                                                                   ----                  ----                   ----
                                                                               (Millions of dollars)
<S>                                                            <C>                     <C>                  <C>        
Revenues:
Networks and Broadcasting                                      $    1,855.1            $   1,403.0          $    1,227.7
Entertainment                                                       2,285.2                  209.1                 248.3
Video and Music/Theme Parks                                         1,070.4                     --                   --
Publishing                                                          1,786.4                     --                   --
Cable Television                                                      406.2                  416.0                 411.1
Intercompany elimination                                              (40.1)                 (23.2)                (22.4)
                                                               ------------            -----------          ------------
     Total revenues                                            $    7,363.2            $   2,004.9          $    1,864.7
                                                               ------------            -----------          ------------
                                                               ------------            -----------          ------------
                                                                                                        
Earnings (loss) from continuing operations:                                                             
Networks and Broadcasting                                      $      357.1            $     314.4          $      237.5
Entertainment                                                         (88.4)                  32.5                  59.7
Video and Music/Theme Parks                                           199.5                     --                    --
Publishing                                                            193.9                     --                    --
Cable Television                                                       78.8                  110.2                 122.0
Corporate                                                            (132.6)                 (72.1)                (71.3)
                                                               ------------            -----------          ------------
    Total earnings from operations                             $      608.3            $     385.0          $      347.9
                                                               ------------            -----------          ------------
                                                               ------------            -----------          ------------
Depreciation and amortization:                                                                          
Networks and Broadcasting                                      $       96.2            $      68.2          $       66.3
Entertainment                                                          94.4                    9.5                   6.8
Video and Music/Theme Parks                                            90.4                     --                   --
Publishing                                                            103.0                     --                   --
Cable Television                                                       76.4                   71.5                  68.5
Corporate                                                               5.3                    3.9                   3.2
                                                               ------------            -----------          ------------
    Total depreciation and amortization                        $      465.7            $     153.1          $      144.8
                                                               ------------            -----------          ------------
                                                               ------------            -----------          ------------
Identifiable assets at year end:                                                                        
Networks and Broadcasting                                      $    3,939.3            $   2,538.6          $    2,326.5
Entertainment                                                       7,402.0                  845.6                 829.6
Video and Music/Theme Parks                                        10,135.3                     --                   --
Publishing                                                          5,194.7                      --                  --
Cable Television                                                    1,030.1                  963.0                 972.1
Corporate                                                             572.3                2,069.7                 188.9
                                                               ------------            -----------          ------------
    Total identifiable assets at year end                      $   28,273.7            $   6,416.9          $    4,317.1
                                                               ------------            -----------          ------------
                                                               ------------            -----------          ------------
Capital expenditures:                                                                                   
Networks and Broadcasting                                      $       53.8            $      40.7          $       31.2
Entertainment                                                          19.6                    4.9                   7.1
Video and Music/Theme Parks                                           145.9                     --                   --
Publishing                                                             34.5                      --                  --
Cable Television                                                       99.8                   79.5                  54.6
Corporate                                                              11.3                    9.9                  17.3
                                                               ------------            -----------          ------------
    Total capital expenditures                                 $      364.9            $     135.0          $      110.2
                                                               ------------            -----------          ------------
                                                               ------------            -----------          ------------

                                     II-42


<PAGE>

                          VIACOM INC. AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

 13) QUARTERLY FINANCIAL DATA (unaudited):

 Summarized quarterly financial data for 1994 and 1993 appears below:

</TABLE>


<TABLE><CAPTION>

                                                             First         Second       Third         Fourth
                                                            Quarter       Quarter      Quarter       Quarter       Total Year
                                                            -------       -------      -------       -------       ----------
                                                                       (In millions, except per share amounts)
<S>                                                      <C>            <C>           <C>          <C>             <C>
 1994
 Revenue (1) ..........................................  $   837.8      $ 1,612.6     $ 2,135.4    $ 2,777.4       $  7,363.2
 Earnings (loss) from continuing operations (1) .......  $  (306.7)     $   185.8     $   422.8    $   306.4       $    608.3
 Net earnings (loss) from continuing operations
 before extraordinary losses and cumulative
 effect of change in accounting principle (1) (2) .....  $  (435.5)     $   265.6     $   335.1    $   (34.7)      $    130.5
 Net earnings (loss) (1) (2) ..........................  $  (431.6)     $   244.1     $   327.3    $   (50.2)      $     89.6
 Net earnings (loss) attributable to common
 stock (1) (2) ........................................  $  (454.1)     $   221.6     $   312.3    $   (65.2)      $     14.6

Net earnings per common share:
Primary:
Net earnings (loss) from continuing operations
before extraordinary losses and cumulative
effect of change in accounting principle ..............  $   (3.62)     $     1.69    $    1.45    $     (.14)     $      .25
Net earnings (loss) ...................................  $   (3.59)     $     1.54    $    1.41    $     (.18)     $      .07
Weighted average number of common shares ..............      126.4           143.5        221.1         358.2           220.0
Fully diluted:
Net earnings (loss) from continuing operations
before extraordinary losses and cumulative
effect of change in accounting principle ..............  $  (3.62)      $    1.43     $    1.36    $     (.14)     $      .25
Net earnings (loss) ...................................  $  (3.59)      $    1.30     $    1.32    $     (.18)     $      .07
Weighted average number of common shares ..............     126.4           169.7         247.2         358.2           220.4

1993
Revenues ..............................................  $  470.7       $   495.8     $   508.1    $    530.3      $  2,004.9
Earnings from continuing operations ...................  $   90.2       $   106.6     $   110.1    $     78.1      $    385.0
Net earnings before extraordinary losses
    and cumulative effect of changes in
    accounting principle (3) ..........................  $   70.6       $    41.6     $    30.9     $    26.4       $   169.5
Net earnings ..........................................  $   81.0       $    41.6     $    22.0     $    26.4       $   171.0
Net earnings attributable to commmon stock ............  $   81.0       $    41.6     $    22.0     $    13.6       $   158.2
Net earnings per common share:
Net earnings (loss) before extraordinary losses
and cumulative effect of changes in
accounting principle ..................................  $    .59       $     .35     $     .25     $     .11       $    1.30
Net earnings ..........................................  $    .67       $     .35     $     .18     $     .11       $    1.31
Weighted average number of common shares .......            120.5           120.5         120.6         120.8           120.6
</TABLE>


(1) The first quarter of 1994 reflects Paramount Communications' results of 
    operations commencing March 1, 1994 and merger-related charges of $332.1
    million. Results of operations of MSG have been restated to discontinued
    operations. The fourth quarter of 1994 reflects Blockbuster's results of
    operations commencing October 1, 1994. (See Notes 2 and 3.)
(2) The second quarter of 1994 reflects the pre-tax gain on the sale of the 
    one-third partnership interest in Lifetime of $267.4 million.  (See 
    Note 14.)
(3) The first quarter of 1993 reflects a pre-tax gain of $55 million related
    to the sale of the stock of Viacom Cablevision of Wisconsin, Inc. (See 
    Note 14.)

                                      II-43


<PAGE>
                          VIACOM INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14) OTHER ITEMS, NET

On April 4, 1994, Viacom International sold its one-third partnership interest
in Lifetime for approximately $317.6 million, which resulted in a pre-tax gain
of approximately $267.4 million in the second quarter of 1994.  Proceeds from
the sale were used to reduce outstanding debt of Viacom International.

As part of the settlement of the Time Warner antitrust lawsuit, the Company
sold all the stock of Viacom Cablevision of Wisconsin, Inc. to Warner
Communications Inc. ("Warner").  This transaction was effective on January 1,
1993.  As consideration for the stock, Warner paid the sum of $46 million plus
repayment of debt under the Credit Agreement in the amount of $49 million,
resulting in a pre-tax gain of approximately $55 million reflected in "Other
items, net."  Also reflected in this line item is the net gain on the sale of a
portion of an investment held at cost and adjustments to previously established
non-operating litigation reserves, and other items.

"Other items, net" reflects a gain of $35 million recorded in the third quarter
of 1992; representing payments received in the third quarter relating to certain
aspects of the settlement of the Time Warner antitrust lawsuit, net of the
Company's 1992 legal expenses related to this lawsuit.  "Other items, net" also
reflects a reserve for litigation of $33 million during the second quarter of
1992 related to a summary judgment against the Company in a dispute with CBS 
Inc. arising under the 1970 agreement associated with the spin-off of Viacom
International Inc. by CBS Inc.  On July 30, 1993, the Company settled all
disputes arising under such litigation.


15) SUPPLEMENTAL CASH FLOW INFORMATION


<TABLE><CAPTION>
                                                                                        Year Ended December 31,
                                                                             ----------------------------------------
                                                                             1994               1993             1992
                                                                             ----               ----             ----
                                                                                         (Millions of dollars)
<S>                                                                       <C>                 <C>               <C>  
Cash payments for interest net of amounts capitalized                     $ 293.6             $167.4            $194.9
Cash payments for income taxes                                              135.2               32.7              50.7

Supplemental schedule of non-cash financing and
    investing activities:
  Paramount Merger Consideration                                          3,175.0                 --                --
  Blockbuster Merger Consideration                                        7,622.8                 --                --
  Class B Common Stock issued as satisfaction for LTIP liability               --                 --               6.9
  Equipment acquired under capitalized leases                                47.6               44.4              26.2
  Cancellation of Preferred Stock and Viacom
      Class B Common Stock issued to Blockbuster                          1,850.0                 --                --

</TABLE>



                                     II-44


<PAGE>
                        VIACOM INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

  Viacom International is a wholly owned subsidiary of Viacom. Viacom's 
  guarantees of the Viacom International debt securities are full and 
  unconditional (See Note 5). Viacom has determined that separate financial 
  statements and other disclosures concerning Viacom International are not 
  material to investors. On January 3, 1995, Paramount Communications was 
  merged into Viacom International and, therefore, the net assets of
  Paramount Communications (reflected in non-guarantor affiliates) which
  includes approximately $1.0 billion of issuances of long-term debt 
  became obligations of Viacom International.

  The following condensed consolidating financial statements present the 
  results of operations, financial position and cash flows of Viacom, Viacom 
  International (carrying any investments in non-guarantor affiliates under 
  the equity method), and non-guarantor affiliates of Viacom, and the 
  eliminations necessary to arrive at the information for the Company on a
  consolidated basis. Financial statements of Viacom International for 1993 and 
  1992 as previously filed on Form 10-K are incorporated by reference herein.


<TABLE><CAPTION>
                                                                           1994
                                              ---------------------------------------------------------------------
                                                                            Non-                           The
                                                          Viacom        Guarantor                        Company
                                              Viacom   International    Affiliates    Eliminations     Consolidated
                                              ------   -------------    ----------    ------------     ------------
                                                                        (In millions)
<S>                                          <C>         <C>            <C>            <C>              <C>     
 Revenues .................................  $1,031.1    $ 988.6        $5,356.7       $ (13.2)         $7,363.2

 Expenses:
     Operating ............................     691.7      601.0         3,121.5         (13.2)          4,401.0
     Selling, general and
     administrative .......................      73.8      414.8         1,399.6            --           1,888.2
     Depreciation and amortization ........      59.8       47.6           358.3            --             465.7
                                             --------   --------        --------      --------          --------
            Total expenses ................     825.3    1,063.4         4,879.4         (13.2)          6,754.9
                                             --------   --------        --------      --------          --------
 Earnings (loss) from continuing
 operations ...............................     205.8      (74.8)          477.3            --             608.3

 Other income (expense):
 Interest expense, net ....................    (325.6)     (78.7)          (89.8)           --            (494.1)
 Other items, net .........................      (1.6)     267.1            (3.0)           --             262.5
                                             --------   --------        --------      --------          --------

 Earnings (loss) from continuing
 operations before income taxes ...........    (121.4)     113.6           384.5            --             376.7
 Provision (benefit) for income taxes .....     (14.8)      61.3           233.2            --             279.7
 Equity in earnings (loss) of
    affiliated companies, net of tax ......     207.6      167.0            24.4        (380.4)             18.6
 Minority interest ........................      (3.0)       (.2)           18.1            --              14.9
                                             --------   --------        --------      --------          --------
 Net earnings from continuing operations ..      98.0      219.1           193.8        (380.4)            130.5
 Loss from discontinued operations,
  net of tax ...............................        --         --          (20.5)           --             (20.5)
                                             --------   --------        --------      --------          --------
 Net earnings before extraordinary loss
 and cumulative effect of change
 in accounting principle ..................      98.0      219.1           173.3        (380.4)            110.0
 Extraordinary loss, net of tax ...........      (8.4)     (12.0)             --            --             (20.4)
                                             --------   --------        --------      --------          --------
 Net earnings .............................      89.6      207.1           173.3        (380.4)             89.6
 Cumulative convertible preferred
        stock dividend requirement ........      75.0         --              --            --              75.0
                                             --------   --------        --------      --------          --------

 Net earnings attributable to
 common stock .............................    $ 14.6    $ 207.1         $ 173.3      $ (380.4)         $   14.6
                                             --------   --------        --------      --------          --------
                                             --------   --------        --------      --------          --------
</TABLE>

                                    II-45



<PAGE>
                      VIACOM INC. AND SUBSIDIARIES

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

<TABLE><CAPTION>
                                                                                  1994
                                                     ------------------------------------------------------------------------
                                                                                    Non-                             The
                                                                   Viacom        Guarantor                          Company
                                                     Viacom     International   Affiliates      Elimination      Consolidated
                                                     ------     -------------   ----------     ------------      ------------
                                                                              (In millions)
<S>                                                <C>         <C>              <C>         <C>                 <C>   
Assets
Current Assets:
       Cash and cash equivalents ................  $   135.6   $     63.4       $    398.7  $        --         $    597.7
       Receivables, less allowances .............      279.0        236.8          1,138.0        (15.0)           1,638.8
       Inventory ................................      515.7         10.8            304.4           --              830.9
       Theatrical and television inventory ......      178.4        133.5            675.0           --              986.9
       Other current assets .....................       59.8         49.6            394.1           --              503.5
       Net assets of discontinued
           operations ...........................         --           --            697.4           --              697.4
                                                    --------     --------         --------     --------           --------
           Total current assets .................    1,168.5        494.1          3,607.6        (15.0)           5,255.2
                                                    --------     --------         --------     --------           --------

Property and equipment ..........................      667.0        170.8          2,261.8           --            3,099.6
Less accumulated depreciation ...................      (17.2)       (46.7)          (452.6)          --             (516.5)
                                                    --------     --------         --------     --------           --------
Net property and equipment ......................      649.8        124.1          1,809.2           --            2,583.1
                                                    --------     --------         --------     --------           --------

Inventory .......................................      419.1        282.4          1,243.0           --            1,944.5
Intangibles, at amortized cost ..................    6,787.5        801.6          8,522.6           --           16,111.7
Investment in consolidated subsidiaries..........    3,577.0        176.2               --     (3,753.2)               --
Other assets ....................................      712.8        348.8          1,458.1       (140.5)           2,379.2
                                                    --------     --------         --------     --------           --------
                                                  $ 13,314.7     $2,227.2       $ 16,640.5   $ (3,908.7)        $ 28,273.7
                                                    --------     --------         --------     --------           --------
                                                    --------     --------         --------     --------           --------
Liabilities and Shareholders' Equity
Current Liabilities:
     Accounts payable ........................... $    450.9    $    23.4       $    296.6   $       --         $    770.9
     Accrued interest ...........................      131.5         14.9             88.5           --              234.9
     Accrued compensation........................       42.0         83.4            215.2           --              340.6
     Deferred income, current ...................         --          9.8            241.1                           250.9
     Merger consideration payable ...............      261.7           --               --           --              261.7
     Other accrued expenses .....................      323.5        183.4            938.6          (8.7)          1,436.8
     Participants share, residuals and
     royalties payable ..........................       11.4        104.8            513.8           --              630.0
     Program rights, current ....................         --         20.3            180.5         (16.4)            184.4
     Current portion of long-term debt ..........        3.8          7.4              9.8           --               21.0
                                                    --------     --------         --------     ---------          --------
         Total current liabilities ..............    1,224.8        447.4          2,484.1         (25.1)          4,131.2
                                                    --------     --------         --------     ---------          --------

Long-term debt ..................................    8,583.0        560.1          1,496.7        (237.4)         10,402.4
Other liabilities ...............................   (8,299.6)      (192.0)         2,585.3       7,854.8           1,948.5

Shareholders' equity 
     Preferred Stock ............................    1,200.0           --               --            --           1,200.0
     Common Stock ...............................        3.5           .1               --           (.1)              3.5
     Additional paid-in capital .................   10,576.0        787.6          9,973.1     (10,757.2)         10,579.5
     Retained earnings ..........................       31.7        627.6             95.0        (743.7)             10.6
     Cumulative translation adjustment ..........       (4.7)        (3.6)             6.3            --              (2.0)
                                                    --------     --------         --------     ---------          --------
                Total shareholders' equity ......   11,806.5      1,411.7         10,074.4     (11,501.0)         11,791.6
                                                    --------     --------         --------     ---------          --------
                                                  $ 13,314.7    $ 2,227.2       $ 16,640.5   $  (3,908.7)       $ 28,273.7
                                                    --------     --------         --------     ---------          --------
                                                    --------     --------         --------     ---------          --------
</TABLE>


                                                   II-46


<PAGE>

                        VIACOM INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


<TABLE><CAPTION>
                                                                                  1994
                                                      --------------------------------------------------------------------
                                                                                   Non-                           The
                                                                 Viacom         Guarantor                       Company
                                                      Viacom  International    Affiliates    Elimination      Consolidated
                                                      ------  -------------    ----------    -----------      ------------
                                                                              (In millions)
<S>                                                <C>          <C>            <C>           <C>              <C>    
Net cash flow from operating
activities ......................................  $  (25.5)    $ 22.4         $ 376.8       $ (34.5)         $ 339.2
                                                   --------     ------         -------       -------          -------
Investing Activities:
Capital expenditures ............................    (112.2)     (39.5)         (213.2)           --           (364.9)
Investments in and advances to
affiliated companies ............................        --      (26.5)          (24.8)           --           (51.3)
Distribution from affiliated companies ..........        --        4.5            33.2            --            37.7
Proceeds from disposition .......................        --      317.6              --                         317.6
Acquisitions, net of cash acquired ..............  (6,609.1)        --           354.5            --        (6,254.6)
Proceeds from sale of short-term
investments .....................................        --         --           156.2            --           156.2
Payments for purchase of short-term
investments .....................................        --         --          (102.2)           --          (102.2)
Deposits on transponders ........................        --       (1.1)             --            --            (1.1)
Other, net ......................................     (19.2)      (5.8)           (3.3)         (7.8)          (36.1)
                                                   --------     ------         -------       -------          -------
Net cash flow from investing
activities ...................................... (6,740.5)      249.2           200.4          (7.8)       (6,298.7)
                                                   --------     ------         -------       -------          -------
Financing Activities:
Short-term borrowings (repayments)
from banks, net .................................   5,175.9   (1,541.1)          (74.8)           --          3,560.0
Repayment to banks under credit facilities ......     (13.9)        --              --            --            (13.9)
Increase (decrease) in intercompany
payables ........................................  (1,202.1)   1,271.2          (111.4)         42.3               --
Proceeds from issuance of Class B
Common Stock ....................................   1,250.0        --              --             --          1,250.0
Payment of Preferred Stock
dividends .......................................     (72.7)       --              --             --            (72.7)
Payment of deferred financing costs .............     (86.8)      (.3)             --             --            (87.1)
Other, net ......................................      42.8       (.9)           (3.4)            --             38.5
                                                   --------     ------         -------       -------          -------
Net cash flow from financing
activities ......................................   5,093.2    (271.1)         (189.6)          42.3          4,674.8
                                                   --------     ------         -------       -------          -------
Net increase (decrease) in cash and
cash equivalents ................................  (1,672.8)       .5           387.6             --         (1,284.7)
Cash and cash equivalents at beginning
of year .........................................   1,808.4      62.9            11.1             --          1,882.4
                                                   --------     ------         -------       -------          -------
Cash and cash equivalents at end
of year .........................................  $  135.6    $ 63.4         $ 398.7        $    --          $ 597.7
                                                   --------     ------         -------       -------          -------
                                                   --------     ------         -------       -------          -------
</TABLE>



I
tem 9. Disagreements on Accounting and Financial Disclosure - Not applicable.

                              II-47




<PAGE>
                               VIACOM INC. AND SUBSIDIARIES

                       INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

  The following consolidated financial statements and schedule of the
  registrant and its subsidiaries are submitted herewith as part of this
  report:


<TABLE><CAPTION>
                                                                                Reference
                                                                                 (Page/s)
<S>                                                                             <C>
  1. Report of Independent Accountants ...................................         II-14

  2. Management's Statement of Responsibility for Financial Reporting ....         II-15

  3. Consolidated Statements of Operations for the years ended
     December 31, 1994, 1993 and 1992 ....................................         II-16

  4. Consolidated Balance Sheets as of December 31, 1994 and 1993 ........   II-17-II-18

  5. Consolidated Statements of Cash Flows for the years ended
     December 31, 1994, 1993 and 1992 ....................................         II-19

  6. Consolidated Statements of Shareholders' Equity for the
     years ended December 31, 1994, 1993 and 1992 ........................         II-20

  7. Notes to Consolidated Financial Statements ..........................    II-21-II-47

  Report of Independent Accountants on Financial Statement Schedule ......          F-2

  Financial Statement Schedule:

     II. Valuation and qualifying accounts .............................            F-3

</TABLE>


  All other Schedules are omitted since the required information is not present.




                                       F-1

<PAGE>




        REPORT OF INDEPENDENT ACCOUNTANTS

        To the Board of Directors and
        Shareholders of Viacom Inc.

        Our audits of the consolidated financial statements referred to in
        our report dated February 10, 1995,appearing on page II-14 of this
        annual report on Form 10-K also included an audit of the Financial
        Statement Schedule listed in Item 14(a) of this Form 10-K. In our
        opinion, the Financial Statement Schedule presents fairly, in all
        material respects, the information set forth therein when read in
        conjunction with the related consolidated financial statements.

        PRICE WATERHOUSE LLP

        1177 Avenue of the Americas
        New York, New York 10036
        February 10, 1995






                                           F-2


<PAGE>



                           VIACOM INC. AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS


<TABLE><CAPTION>
                               (Millions of dollars)

        Col. A                          Col. B                 Col. C                 Col. D              Col.E
        ------                          ------                 ------                 ------              -----
                                        Balance at    Charged to   Charged to                          Balance at
                                        Beginning of   Costs and      Other                               End of
        Description                       Period       Expenses     Accounts        Deductions           Period
        -----------                       ------       --------     --------        ----------           ------
<S>                                     <C>            <C>          <C>             <C>                <C>   
Allowance for doubtful accounts:

Year ended December 31, 1994 ...........   $33.9          $61.6     $46.1 (A)(B)      $65.8              $75.8

Year ended December 31, 1993 ...........   $25.8          $16.7     $ 3.5 (B)         $12.1              $33.9

Year ended December 31, 1992 ...........   $28.6          $ 9.4     $ (.2)(B)         $12.0              $25.8

Valuations allowance on deferred
   tax assets:

Year ended December 31, 1994 ...........     --           $75.7         --              --               $75.7

Reserves for inventory obsolescence:

Year ended December 31, 1994 ...........     --           $32.3     $119.9 (A)       $26.9              $125.3

</TABLE>


Notes:
(A) Primarily represents adjustments made as part of the Mergers.
(B) Represents balance sheet reclassifications related to certain entertainment
    receivables.
(C) Includes amounts written off, net of recoveries.



                                                      F-3



<PAGE>

                                        

                                    PART III


Item 10.  Directors and Executive Officers.

          The information contained in the Viacom Inc.
Definitive Proxy Statement under the caption "Information
Concerning Directors and Nominees" is incorporated herein by
reference.


Item 11.  Executive Compensation.

          The information contained in the Viacom Inc.
Definitive Proxy Statement under the captions "Directors'
Compensation" and "Executive Compensation" is incorporated
herein by reference.


Item 12.  Security Ownership of Certain Beneficial Owners
and Management.

          The information contained in the Viacom Inc.
Definitive Proxy Statement under the caption "Security
Ownership of Certain Beneficial Owners and Management" is
incorporated herein by reference.


Item 13.  Certain Relationships and Related Transactions.

          The information contained in the Viacom Inc.
Definitive Proxy Statement under the caption "Related
Transactions" is incorporated herein by reference.





                            III-1



<PAGE>


                                     PART IV


Item 14.  Exhibits, Financial Statement Schedules and
Reports on Form 8-K.

          (a) and (d) Financial Statements and Schedules
(see Index on Page F-1)

          (b)       Reports on Form 8-K

          Current Report on Form 8-K of Viacom Inc. with a report
          date of October 18, 1994
          relating to the commencement of a litigation
          concerning Blockbuster's acquisition of the
          plaintiffs' interests in a limited partnership.

          Current Report on Form 8-K of Viacom Inc. with a report
          date of December 15, 1994
          relating to the institution of cross-guarantees by
          each of Viacom Inc., Viacom International Inc. and
          Paramount Communications Inc.

          (c)       Exhibits (see index on Page E-1)







                            IV-1



<PAGE>





                                   SIGNATURES

          Pursuant to the requirements of Section 13 or
15(D) of the Securities Exchange Act of 1934, Viacom Inc.
has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.

                                            VIACOM INC.

                                 By  /s/ Frank J. Biondi, Jr.
                                         ------------------------------
                                         Frank J. Biondi, Jr., President,
                                         Chief Executive Officer

                                 By  /s/ George S. Smith, Jr.
                                         ------------------------------
                                         George S. Smith, Jr., Senior Vice
                                         President, Chief Financial Officer

                                 By  /s/ Kevin C. Lavan
                                         ------------------------------
                                         Kevin C. Lavan, Senior Vice President,
                                         Controller, Chief Accounting Officer

Date: March 31, 1995

          Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by the
following persons on behalf of Viacom Inc. and in the
capacities and on the dates indicated:

          By                  *                               March 31, 1995
             -------------------------------------
                    George S. Abrams, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    Steven R. Berrard, Director

          By  /s/ Frank J. Biondi, Jr   .                     March 31, 1995
             -------------------------------------
                    Frank J. Biondi, Jr., Director

          By  /s/ Philippe P. Dauman                          March 31, 1995
             -------------------------------------
                    Philippe P. Dauman, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    William C. Ferguson, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    H. Wayne Huizenga, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    George D. Johnson, Jr., Director

          By                  *                               March 31, 1995
             -------------------------------------
                    Ken Miller, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    Brent D. Redstone, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    Sumner M. Redstone, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    Shari Redstone, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    Frederic V. Salerno, Director

          By                  *                               March 31, 1995
             -------------------------------------
                    William Schwartz, Director

        * By  /s/ Philippe P. Dauman                          March 31, 1995
             ---------------------------------------
                    Philippe P. Dauman
                    Attorney-in-Fact
                    for the Directors




<PAGE>

                      VIACOM INC. AND SUBSIDIARIES
                           INDEX TO EXHIBITS

                               ITEM 14(C)

EXHIBIT NO.            DESCRIPTION OF DOCUMENT         PAGE NO.

(2)  Plan of Acquisition

 (a)    Agreement and Plan of Merger dated as of
        January 7, 1994, as amended as of June 15, 1994, between
        Viacom Inc. and Blockbuster Entertainment Corporation
        (incorporated by reference to Exhibit 2 1 to the Registration
        Statement on Form S-4 filed by Viacom Inc.) (File No. 33-
        55271).

 (b)    Amended and Restated Agreement and Plan of
        Merger dated as of February 4, 1994 between Viacom Inc.
        and Paramount Communications Inc., as further amended as
        of May 26, 1994, among Viacom, Viacom Sub Inc. and
        Paramount Communications Inc. (incorporated by reference
        to Exhibit 2.1, included as Annex I, to the Registration
        Statement on Form S-4 filed by Viacom Inc.) (File No. 33-
        53977).

(3)  Articles of Incorporation and By-laws

 (a)    Restated Certificate of Incorporation of Viacom
        Inc. (incorporated by reference to Exhibit 3(a) to the
        Annual Report on Form 10-K of Viacom Inc. for the fiscal
        year ended December 31, 1992, as amended by Form 10-K/A
        Amendment No. 1 dated November 29, 1993 and as
        further amended by Form 10-K/A Amendment No. 2 dated
        December 9, 1993) (File No. 1-9553).

 (b)    Amendment to Restated Certificate of Incorporation of
        Viacom Inc. (incorporated by reference to Exhibit 3.2 to the
        Registration Statement on Form S-4 filed by Viacom Inc.
        (File No. 33-55271).

 (c)    Certificate of Merger merging Blockbuster Entertainment
        Corporation with and into Viacom Inc. (incorporated by
        reference to Exhibit 4.3 to the Registration Statement on
        Form S-3 filed by Viacom Inc. ) (File No. 33-55785).

                              E-1

<PAGE>

 (d)    Certificate of the Designations, Powers,
        Preferences and Relative, Participating or other Rights, and
        the Qualifications, Limitations or Restrictions thereof, of
        Series B Cumulative Convertible Preferred Stock ($0.01 par
        value) of Viacom Inc. (incorporated by reference to Exhibit
        4.1 to the Quarterly Report on Form 10-Q of Viacom Inc.
        for the quarter ended September 30, 1993) (File No. 1-
        9553)

 (e)    By-laws of Viacom Inc. (incorporated by
        reference to Exhibit 3.3 to the Registration Statement on
        Form S-4 filed by Viacom Inc.) (File No. 33-13812).

(4)  Instruments defining the rights of security holders, including indentures:

 (a)    Specimen certificate representing the Viacom
        Inc. Voting Common Stock (currently Class A Common
        Stock) (incorporated by reference to Exhibit 4.1 to the
        Registration Statement on Form S-4 filed by Viacom Inc. )
        (File No. 33-13812).

 (b)    Specimen certificate representing Viacom Inc.
        Class B Non-Voting Common Stock (incorporated by
        reference to Exhibit 4(a) to the Quarterly Report on Form
        10-Q of Viacom Inc. for the quarter ended June 30, 1990)
        (File No. 1-9553).

 (c)    Specimen certificate representing Viacom Inc.
        Series B Cumulative Convertible Preferred Stock of Viacom
        Inc. (incorporated by reference to Exhibit 4(d) to the
        Annual Report on Form 10-K of Viacom Inc. for the fiscal
        year ended December 31, 1993, as amended by Form 10-
        K/A Amendment No. 1 dated May 2, 1994) (File No. 1-
        9533).

 (d)    Form of Contingent Value Rights Agreement between
        Viacom Inc. and Harris Trust and Savings Bank, as Trustee
        (including the Form of Contingent Value Right)
        (incorporated by reference to Exhibit 4.6 to the Registration
        Statement on Form S-4 filed by Viacom Inc. ) (File No. 33-
        53977).

 (e)    Form of Warrant Agreement between Viacom Inc.
        and Harris Trust and Savings Bank, as Warrant Agent with
        respect to the Warrants expiring July 1, 1997 of Viacom
        Inc. (including the Form of Warrant expiring July 1, 1997)
        (incorporated by reference to Exhibit 4.7 to the Registration
        Statement on Form S-4 filed by Viacom Inc.) (File No. 33-
        53977).

                                   E-2


<PAGE>

 (f)    Form of Warrant Agreement between Viacom Inc.
        and Harris Trust and Savings Bank, as Warrant Agent with
        respect to the Warrants expiring July 1, 1999 of Viacom
        Inc. (including the Form of Warrant expiring July 1, 1999)
        (incorporated by reference to Exhibit 4.8 to the Registration
        Statement on Form S-4 filed by Viacom Inc.) (File No. 33-
        53977).

 (g)    Form of Certificate representing the Variable Common
        Rights of Viacom Inc. (incorporated by reference to Exhibit
        4.3 to the Registration Statement on Form S-4 filed by
        Viacom Inc.) (File No. 33-55271).

 (h)    Credit Agreement dated as of July 1, 1994 among Viacom
        Inc.; the Bank parties thereto; The Bank of New York
        ("BNY"), Citibank N.A. ("Citibank"), Morgan Guaranty
        Trust Company of New York and Bank of America
        NT&SA, as Managing Agents; BNY, as Documentation
        Agent; Citibank, as Administrative Agent: JP Morgan
        Securities Inc., as Syndication Agent: and the Agents and
        Co-Agents named therein (incorporated by reference to
        Exhibit 4.1 to the Current Report on Form 8-K of Viacom
        Inc. dated July 22, 1994) (File No. 1-9553).

 (i)    Credit Agreement dated as of September 29, 1994,
        among Viacom Inc., the Banks parties thereto, the Bank of
        New York, as a Managing Agent and as the Documentation
        Agent, Citibank, N.A, as a Managing Agent and as the
        Administrative Agent, Morgan Guaranty Trust Company of
        New York, as a Managing Agent, JP Morgan Securities
        Inc., as the Syndication Agent, The Bank of America
        NT&SA, as a Managing Agent, and the Banks named as
        Agents therein (incorporated by reference to Exhibit 99.2 to
        the Current Report on Form 8-K of Viacom Inc. dated
        September 29, 1994) (File No. 1-9553).

 (j)    The instruments defining the rights of holders of the
        long-term debt securities of Viacom Inc. and its subsidiaries
        are omitted pursuant to section (b)(4)(iii)(A) of Item 601 of
        Regulation S-K. Viacom Inc. hereby agrees to furnish
        copies of these instruments to the Securities and Exchange
        Commission upon request.


                                   E-3


<PAGE>

(10) Material Contracts

 (a)    Viacom Inc. 1989 Long-Term Management
        Incentive Plan (as amended and restated through April 23,
        1990) (incorporated by reference to Exhibit A to Viacom
        Inc.'s Definitive Proxy Statement dated April 27. 1990).

 (b)    Viacom Inc. 1994 Long-Term Management
        Incentive Plan (incorporated by reference to Exhibit B to
        Viacorn Inc.'s Proxy Statement/Prospectus dated June 6,
        1994). *

 (c)    Viacom Inc. Senior Executive Short-Term Incentive
        Plan (incorporated by reference to Exhibit A to Viacom
        Inc.'s Proxy Statement/Prospectus dated June 6, 1994). *

 (d)    Viacom Inc. Long-Term Incentive Plan
        (incorporated by reference to Exhibit A to Viacom Inc.'s
        Definitive Proxy Statement dated April 29, 1988), and
        amendment thereto (incorporated by reference to Exhibit
        10(d) to the Annual Report on Form 10-K of Viacom Inc.
        for the fiscal year ended December 21, 1991 ) (File No. 1 -
        9553), and as further amended by amendment dated
        December 17, 1992 (incorporated by reference to Exhibit
        10(d) to the Annual Report on Form 10-K of Viacom Inc.
        for the fiscal year ended December 31, 1992, as amended
        by Form 10-K/A Amendment No. 1 dated November 29,
        1993 and as further amended by Form 10-K/A Amendment
        No. 2 dated December 9, 1993) (File No. 1-9553).*

 (e)    Viacom Inc. Long-Term Incentive Plan (Divisional)
        (incorporated by reference to Exhibit 10.2 to the Quarterly
        Reports on Form 10-Q of Viacom Inc. for the quarter ended
        June 30, 1993) (File No. 1-9553).*

 (f)    Viacom International Inc. Deferred
        Compensation Plan for Non-Employee Directors (as
        amended and restated through December 17, 1992)
        (incorporated by reference to Exhibit 10(e) to the Annual
        Report on Form 10-K of Viacom Inc. for the fiscal year
        ended December 31, 1992, as amended by Form 10-K/A
        Amendment No. 1 dated November 29, 1993 and as further
        amended by Form 10-K/A Amendment No. 2 dated
        December 9, 1993) (File No. 1-9553).*

 (g)    Viacom Inc. and Viacom International Inc.
        Retirement Income Plan for Non-Employee Directors
        (incorporated by reference to Exhibit 10(f) to the Annual

---------------

* Management contract or compensatory plan required to be
  filed as an exhibit to this form pursuant to Item 14(c).

                                   E-4


<PAGE>

        Reports on Form 10-K of Viacom Inc. for the fiscal year
        ended December 31, 1989) (File No. 1-9553).*

 (h)    Viacom Inc. Stock Option Plan for Non-Employee
        Directors (incorporated by reference to Exhibit 10.2 to the
        Quarterly Report on Form 10-Q of Viacom Inc. for the
        quarter ended June 30, 1993)(File No. 1-9553).

 (i)    Viacom Inc. 1994 Stock Option Plan for Non-Employee
        Directors (filed herewith). *

 (j)    Excess Benefits Investment Plan for Certain
        Key Employees of Viacom International Inc. (effective April
        1, 1984 and amended as of January 1, 1990) (incorporated
        by reference to Exhibit 10(h) to the Annual Report on Form
        10-K of Viacom Inc. for the fiscal year ended December 31,
        1990) (File No. 1-9553).*

 (k)    Excess Pension Plan for Certain Key Employees
        of Viacom International Inc. (incorporated by reference to
        Exhibit 10(i) to the Annual Reports on Form 10-K of
        Viacom Inc. and Viacom International Inc. for the fiscal
        year ended December 31, 1990) (File Nos. 1-9553/1-
        9554).*

 (l)    Employment Agreement, dated as of August 1,
        1994, between Viacom Inc. and Frank J. Biondi, Jr.
        (incorporated by reference to Exhibit 10.1 to the Quarterly
        Report on Form 10-Q of Viacom Inc. for the quarter ended
        September 30, 1994) (File No. 1-9533). Agreement under
        the Viacom Inc. 1994 Long-Term Management Incentive
        Plan, dated as of August 18, 1994, between Viacom Inc.
        and Frank J. Biondi, Jr. (incorporated by reference to
        Exhibit 10.1 to the Quarterly Report on Form 10-Q of
        Viacom Inc. for the quarter ended September 30, 1994)
        (File No. 1-9533)*

 (m)    Agreement, dated as of August 1, 1990, between
        Viacom International Inc. and Mark M. Weinstein
        (incorporated by reference to Exhibit 10(p) to the Annual
        Reports on Form 10-K of Viacom Inc. and Viacom
        International Inc. for the fiscal year ended December 31,
        1990) (File Nos. 1-9553/1-9554), as amended by an
        Agreement dated as of February 1, 1993 (incorporated by
        reference to Exhibit 10(n) to the Annual Report on Form
        10-K of Viacom Inc. for the fiscal year ended December 31,

----------------------

* Management contract or compensatory plan required to be
  filed as an exhibit to this form pursuant to Item 14(c).

                                  E-5

<PAGE>

        1992, as amended by Form 10-K/A Amendment No. 1
        dated November 29. 1993 and as further amended by Form
        10-K/A Amendment No. 2 dated December 9. 1993) (File
        No. 1-9553), and as further amended by an Agreement
        dated February 7, 1995 (filed herewith). *

 (n)    Agreement, dated as of April 1, 1994, between
        Viacom Inc. and Thomas E. Dooley (filed herewith)*.
        Letter Agreement, dated as of April 1, 1994, between
        Viacom Inc. and Thomas E. Dooley (filed herewith).*

 (o)    Agreement, dated as of July 1, 1994, between
        Viacom Inc. and Edward D. Horowitz (filed herewith).*
        Letter Agreement, dated as of July 1, 1994, between
        Viacom Inc. and Edward D. Horowitz (filed herewith). *

 (p)    Agreement, dated as of February 1, 1993. between
        Viacom International Inc. and Philippe P. Dauman
        (incorporated by reference to Exhibit 10(q) to the Annual
        Report on Form 10-K of Viacom Inc. for the fiscal year
        ended December 31, 1992, as amended by Form 10-K/A
        Amendment No. 1 dated December 29. 1993 and as further
        amended by Form 10-K/A Amendment No. 2 dated
        December 9, 1993) (File No. 1-9553), as amended by an
        Agreement, dated as of April 1, 1994, between Viacom
        Inc., Viacom International Inc. and Philippe P. Dauman
        (filed herewith). * Letter Agreement, dated as of April 1,
        1994, between Viacom Inc. and Philippe P. Dauman (filed
        herewith). *

 (q)    Service Agreement, dated as of March 1. 1994.
        between George S. Abrams and Viacom Inc. (filed
        herewith). *

 (r)    Blockbuster Entertainment Corporation ("BEC") stock
        option plans* assumed by Viacom Inc. after the Blockbuster
        Merger consisting of the following:

          (i) BEC's 1989 Stock Option Plan (incorporated by
        reference to BEC's Proxy Statement dated March 31,
        1989)

          (ii) Amendments to BEC's 1989 Stock Option Plan
        (incorporated by reference to BEC's Proxy Statement
        dated April 3, 1991 )

--------------------

* Management contract or compensatory plan required to be
filed as an exhibit to this form pursuant to Item 14(c).

                                E-6


<PAGE>



           (iii) BECs 1990 Stock Option Plan (incorporated by
        reference to BEC's Proxy Statement dated March 29.
        1990)

           (iv) Amendments to BEC's 1990 Stock Option Plan
        (incorporated by reference to BEC's Proxy Statement
        dated April 15.1991 )

           (v) BEC's 1991 Employee Director Stock Option
        Plan (incorporated by reference to BEC's Proxy
        Statement dated April 15.1991 )

           (vi) BEC's 1991 Non-Employee Director Stock
        Option Plan (incorporated by reference to BEC's Proxy
        Statement dated April 15, 1991 )

           (vii) BEC's 1994 Stock Option Plan (incorporated
        by reference to Exhibit 10.35 to the Annual Report on
        Form 10-K of BEC for the fiscal year ended December
        31, 1993)(File No. 0-12700)

 (s)    Asset Purchase Agreement dated as of January. 20,
        1995 among Tele-Vue Systems, Inc., Viacom International
        Inc., Intermedia Partners, IV. L.P. and RCS Pacific, L.P.
        (filed herewith).

 (11)    Statements re Computation of Net Earnings Per Share

 (21)    Subsidiaries of Viacom Inc.

 (23)    Consents of Experts and Counsel

  (a)    Consent of price Waterhouse

 (24)    Powers of Attorney

 (27)    Financial Data Schedule


                                     E-7








                                                                EXHIBIT 10(i)

                                   VIACOM INC.
                                        
                             1994 STOCK OPTION PLAN
                                   FOR OUTSIDE
                                    DIRECTORS
                                        
                                    ARTICLE I
                                        
                                     GENERAL



Section 1.1         Purpose.

The purpose of the Viacom Inc. 1994 Stock Option Plan for Outside Directors (the
"Plan") is to benefit and advance the interests of Viacom Inc., a Delaware
corporation (the "Company"), and its affiliates by obtaining and retaining the
services of qualified persons who are not employees of the Company or its
affiliates to serve as directors and to induce them to make a maximum
contribution to the success of the Company and its affiliates.

Section 1.2         Definitions.

As used in the Plan, the following terms shall have the following meanings:

(a)       "Board" shall mean the Board of Directors of the Company.

(b)       "Class B Common Stock" shall mean the shares of Class B Common Stock,
          par value $0.01 per share, of the Company.

(c)       "Code" shall mean the Internal Revenue Code of 1986, as amended,
          including any successor law thereto.

(d)       "Date of Grant" shall mean November 8, 1994, and each succeeding
          August 1, commencing with August 1, 1995.

(e)       "Exchange Act" shall mean the Securities Exchange Act of 1934, as
          amended, including any successor law thereto.

(f)       "Effective Date" of the Plan shall be November 8, 1994.


<PAGE>

(g)       "Fair Market Value" of a share of Class B Common Stock
 on a given date
          shall be the average closing price of a share of Class B Common Stock
          on the American Stock Exchange or such other national securities
          exchange as may be designated by the Board or, in the event that the
          Class B Common Stock is not listed for trading on a national
          securities exchange but is quoted on an automated quotation system,
          the average closing bid price per share of Class B Common Stock on
          such automated quotation system or, in the event that the Class B
          Common Stock is not quoted on any such system, the average of the
          closing bid prices per share of Class B Common Stock as furnished by a
          professional marketmaker making a market in the Class B Common Stock
          designated by  the Board.

(h)       "Grant" shall mean a grant of Stock Options under the Plan.

(i)       "LTMIP" shall mean the Company's 1994 Long-Term Management Incentive
          Plan and/or any successor to such Plan, as applicable.

(j)       "Non-Qualified Stock Options" shall mean Stock Options which do not
          meet the requirements of Section 422 of the Code.

(k)       "Outside Director" shall mean any member of the Board of Directors of
          the Company who is not an employee of the Company, Viacom
          International Inc., Paramount Communications Inc., National
          Amusements, Inc. or any of their respective affiliates.  An individual
          shall not be deemed an employee for purposes of the Plan unless such
          individual receives compensation from either the Company or an
          affiliate of the Company for services performed as an employee of the
          Company or any of its affiliates.

(l)       "Outstanding Stock Option" shall mean a Stock Option granted to an
          Outside Director which has not yet been exercised and which has not
          yet expired in accordance with its terms.

(m)       "Stock Option" shall mean a contractual right granted to an Outside
          Director under the Plan to purchase a share of Class B Common Stock at
          such time and price, and subject to the terms and conditions, as are
          set forth in the Plan.

(n)       To "vest" a Stock Option held by an Outside Director shall mean to
          render such Stock Option nonforfeitable.

                                      2

<PAGE>

Section 1.3         Administration of the Plan.

The Plan shall be administered by the members of the Board who are not Outside
Directors.  All questions of interpretation, administration and application of
the Plan shall be determined by the Board.  The Board may authorize any officer
of the Company to execute and deliver a stock option certificate on behalf of
the Company to an Outside Director.

Section 1.4         Class B Common Stock Subject to the Plan.

The total number of shares of Class B Common Stock that shall be reserved for
distribution upon grant of Stock Options under the Plan shall be 200,000,
subject to adjustment pursuant to Section 4.2 hereof.  The shares of Class B
Common Stock shall be made available from authorized but unissued Class B Common
Stock or from Class B Common Stock issued and held in the treasury of the
Company, as shall be determined by the Board.  Exercise of Stock Options in any
manner shall result in a decrease in the number of shares of Class B Common
Stock which thereafter may be issued for purposes of this Section 1.4, by the
number of shares as to which the Stock Options are exercised.  Shares of Class B
Common Stock with respect to which Stock Options expire, are cancelled without
being exercised or are otherwise terminated, may be regranted under the Plan.


                                   ARTICLE II

                             GRANTS OF STOCK OPTIONS


Each person who is an Outside Director on the Effective Date shall be granted an
award of Non-Qualified Stock Options to purchase 1,500 shares of Class B Common
Stock at  an option price per share equal to the Fair Market Value of a share of
Class B Common Stock on such date (the "Date of Grant" of such Stock Options),
on the terms and conditions set forth in the Plan.  In addition, in recognition
of their long years of dedicated service to the Company as Outside Directors and
their role in helping to steer the Company through its spectacular growth and
development, each person who is an Outside Director on the Effective Date and
who was an Outside Director in July 1987 shall be granted an award of Non-
Qualified Stock Options to purchase 10,000 shares of Class B Common Stock at an
option price per share equal to the Fair Market Value of a share of Class B
Common Stock on the Effective Date (the "Date of Grant" of such Stock Options"),
on the terms and conditions set forth in the Plan.  Thereafter, on August 1,
1995 and each of the second through ninth anniversaries thereof, each person who
is an Outside Director on such date shall be granted an additional award of Non-
Qualified Stock Options to purchase 1,500 shares of Class B Common Stock,
effective as of such date (the "Date of Grant" of such Stock Options), at an
                                      3


<PAGE>

option price per share equal to the Fair Market Value of a share of Class B
Common Stock on the Date of Grant, on the terms and conditions set forth in the
Plan.  The exercise price of the Stock Options granted under the Plan shall be
subject to adjustment in accordance with the provisions of Section 4.2 of the
Plan.  The terms and conditions of a Grant of Stock Options shall be set forth
in an option certificate which shall be delivered to the Outside Director
reasonably promptly following the Date of Grant of such Stock Options.


                                   ARTICLE III
                                        
                      TERMS AND CONDITIONS OF STOCK OPTIONS


Section 3.1         Exercise of Stock Options.

(a)       Exercisability.  Stock Options shall be exercisable only to the extent
          the Outside Director is vested therein.  Each Grant of Stock Options
          under the Plan shall vest on the first anniversary of the Date of
          Grant of such Stock Options.

(b)       Option Period.

          (i)       Earliest Exercise Date.  No Stock Option granted under the
                    Plan shall be exercisable until six months after the Date of
                    Grant thereof.
          
          (ii)      Latest Exercise Date.  No Stock Option granted under the
                    Plan shall be exercisable after the tenth anniversary of the
                    Date of Grant thereof.
          
          (iii)   Registration Restrictions.  Any attempt to exercise a Stock
                  Option or to transfer any share issued upon exercise of a
                  Stock Option by any Outside Director shall be void and of no
                  effect, unless and until (A) a registration statement under
                  the Securities Act of 1933, as amended, has been duly filed
                  and declared effective pertaining to the shares of Class B
                  Common Stock subject to such Stock Option have been duly
                  qualified under applicable Federal or state securities or
                  blue sky laws or (B) the Board, in its sole discretion,
                  determines, or the Outside Director, upon the request of the
                  Board, provides an opinion of counsel satisfactory to the
                  Board, that such registration or qualification is not
                  required as a result of the availability of any exemption

                                      4

<PAGE>

                  from registration or qualification under such laws.  Without
                  limiting the foregoing, if at any time the Board shall
                  determine, in its sole discretion, that the listing,
                  registration or qualification of the shares of Class B Common
                  Stock under any Federal or state law or on any securities
                  exchange or the consent or approval of any governmental
                  regulatory body is necessary or desirable as a condition of,
                  or in connection with, delivery or purchase of such shares
                  pursuant to the exercise of a Stock Option, such Stock Option
                  shall not be exercised in whole or in part unless and until
                  such listing, registration, qualification, consent or
                  approval shall have been effected or obtained free of any
                  conditions not acceptable to the Board.

(c)       Exercise in the Event of Termination of Services.

          (i)     Termination other than for Death or Permanent Disability.  If
                  the services of an Outside Director as a Director of the
                  Company terminate for any reason other than for death or
                  permanent disability, the Outside Director may exercise any
                  Outstanding Stock Options only within one year after the
                  termination date, but only to the extent such Outstanding
                  Stock Options were vested on the date of such Outside
                  Director's termination.  Upon a termination described in this
                  Section 3.1(c)(i), the Outside Director shall relinquish all
                  rights with respect to Stock Options that are not vested as
                  of such termination date.
          
          (ii)    Death.  If an Outside Director dies within a period during
                  which his Stock Options could have been exercised by him, his
                  Outstanding Stock Options may be exercised only within one
                  year after his death, but only to the extent such Outstanding
                  Stock Options were vested on the date of death, by any person
                  who acquired the right to exercise such Stock Options by will
                  or the laws of descent and distribution.  All rights with
                  respect to Outstanding Stock Options that are not vested on
                  the date of death will be relinquished.
          
          (iii)   Permanent Disability.  If the services of an Outside Director
                  as a Director of the Company terminate by reason of permanent
                  disability, he may exercise his Outstanding Stock Options
                  only within one year after the termination of his services,
                  but only to the extent such Outstanding Stock Options were
                  vested when his services terminated.  Upon a termination
                  described in this Section 3.1(c)(iii), the Outside Director
                  shall relinquish all rights with respect to Stock Options
                  that are not vested as of such termination date.
                                      5

<PAGE>

Section 3.2         Payment of Purchase Price Upon Exercise.

Every share of Class B Common Stock purchased through the exercise of a Stock
Option shall be paid for in full at the time of exercise in cash (e.g. personal
bank check, certified check or official bank check).


                                   ARTICLE IV
                                        
                     EFFECT OF CERTAIN CORPORATE CHANGES AND
                               CHANGES IN CONTROL


Section 4.1         Effect of Reorganization.

In the event that (i) the Company is merged or consolidated with another
corporation, (ii) one person becomes the beneficial owner of more than fifty
percent (50%) of the issued and outstanding voting equity securities of the
Company (for purposes of this Section 4.1, the terms "person" and "beneficial
owner" shall have the meanings assigned to them in Section 13(d) of the Exchange
Act), (iii) all or substantially all of the assets of the Company are acquired
by another corporation, person or entity (each such event in (i), (ii) or (iii)
or any other similar event or series of events which results in an event
described in (i), (ii) or (iii), being hereinafter referred to as a
"Reorganization Event") or (iv) the Board shall propose that the Company enter
into a Reorganization Event, then all the Outstanding Stock Options under the
Plan shall be immediately exercisable as of the date of such Reorganization
Event.  For the purposes of this Section 4.1, no event or series of events
involving National Amusements, Inc., the Company or any of their affiliates
shall be deemed to be a Reorganization Event unless such event or series or
events results in there being no class of equity securities of the Company (or
the successor of the Company) which is publicly traded.

Section 4.2         Dilution and Other Adjustments.

In the event of a stock dividend or split, issuance or repurchase of stock or
securities convertible into or exchangeable for shares of stock, grants of
options, warrants or rights (other than pursuant to the Plan) to purchase stock,
recapitalization, combination, exchange or similar change affecting the Class B
Common Stock, as the case may be, in order to provide each Outside Director with
a benefit equivalent to that which he would have been entitled had such event
not occurred, the Outstanding Stock Options under the Plan shall be adjusted in
the same manner as the Outstanding Stock Options (as such term is defined in the
LTMIP) under the LTMIP shall be adjusted.  Such adjustments shall be conclusive
and binding for all purposes.  In the event of a change in the Class B Common
Stock which is limited to a change in the designation thereof to "Capital Stock"
or other similar designation, or to a change in the par value thereof, or from
par value to no par value, without increase or decrease in the number of issued
shares, the shares resulting from any such change shall be deemed to be Class B
Common Stock within the meaning of the Plan.

                                      6

<PAGE>

                                    ARTICLE V
                                        
                                  MISCELLANEOUS


Section 5.1         Restriction on Transfer.

Except to the extent permitted by the rules under Section 16b-3 of the Exchange
Act, the rights of an Outside Director with respect to Stock Options shall not
be transferable by the Outside Director to whom such Stock Options are granted,
otherwise than by will or the laws of descent and distribution.

Section 5.2         Stockholder Rights.

No Grant of Stock Options under the Plan shall entitle an Outside Director to
any rights of a holder of shares of Class B Common Stock, except upon the
delivery of share certificates to an Outside Director upon exercise of a Stock
Option.

Section 5.3         No Restriction on Right of Company to Effect
                    Corporate Changes.

The Plan shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalization,
reorganization or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of stock
or of options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or affect the
Class B Common Stock or the rights thereof or which are convertible into or
exchangeable for Class B Common Stock, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

                                      7

<PAGE>

Section 5.4         No Right to Reelection.

Nothing in the Plan shall be deemed to create any obligation on the part of the
Board to nominate any of its members for reelection by the Company's
stockholders, nor confer upon any Outside Director the right to remain a member
of the Board for any period of time, or at any particular rate of compensation.


                                   ARTICLE VI
                                        
                            AMENDMENT AND TERMINATION


The Board may at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part; provided, however, that in no event may
the provisions of the Plan respecting eligibility to participate or the timing
or amount of grants be amended more frequently than once every six months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or any rules or regulations thereunder; and
provided, further, that any amendment which under the requirements of applicable
law must be approved by the stockholders of the Company shall not be effective
unless and until such stockholder approval has been obtained in compliance with
such law; and provided, further, that any amendment that must be approved by the
stockholders of the Company in order to maintain the continued qualification of
the Plan under Rule 16b-3(c)(2)(ii) under the Exchange Act shall not be
effective unless and until such stockholder approval has been obtained in
compliance with such rule.  No termination or amendment of the Plan may, without
the consent of an Outside Director to whom a Grant has been made, adversely
affect the rights of such Director in the Stock Options covered by such Grant.
Unless previously terminated pursuant to this Article VI, the Plan shall
terminate on the tenth anniversary of the Effective Date, and no further Grants
may be awarded hereunder after such date.


                                   ARTICLE VII
                                        
                                 INTERPRETATION


Section 7.1         Governmental Regulations.

The Plan, and all Grants hereunder, shall be subject to all applicable rules and
regulations of governmental or other authorities.

                                      8

<PAGE>

Section 7.2         Headings.

The headings of sections and subsections herein are included solely for the
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.

Section 7.3         Governing Law.

The Plan and all rights hereunder shall be construed in accordance with and
governed by the laws of the State of Delaware.


                                  ARTICLE VIII
                                        
                     EFFECTIVE DATE AND STOCKHOLDER APPROVAL


The Effective Date of the Plan shall be November 8, 1994 and stockholder
approval shall be sought at the first annual meeting of stockholders following
such date.  In the event that stockholder approval is not obtained on or before
the date of such annual meeting, the Plan and all Grants hereunder shall be void
ab initio and of no effect.  No Stock Option shall be exercisable until the date
of such stockholder approval.

















                                      9





                                                            Exhibit 10(m)

                                                            February 7, 1995

                                                            VIACOM

Mr. Mark M. Weinstein
One Gracie Square
New York, New York  10028

Dear Mr. Weinstein:


          Reference is made to that certain employment agreement between you and
Viacom International Inc. ("Viacom"), dated as of August 1, 1990, as amended as
of February 1, 1993 (the "Employment Agreement").

          This letter, when fully executed below, shall amend your Employment
Agreement as follows:

          1.        Duties.  Section 2 shall be amended, effective January 17,
1995, to replace the second and third sentences with the following sentence:

                    "You will be Senior Vice President,
                    Government Affairs of Viacom and Viacom
                    Inc. and you agree to perform the duties
                    of such office, and such other duties
                    reasonable and consistent with such
                    office as may be assigned to you from
                    time to time by the President, Chief
                    Executive Officer of Viacom (the "CEO")
                    or his designee who shall be a person
                    who reports to the CEO, which duties
                    include the performance of national
                    government affairs and the operation of
                    a Washington, D.C. office for a
                    Washington, D.C. subsidiary of Viacom."

          2.        Salary/Long-Term Incentive Plan.  Section 3(c) shall be
amended, effective as of February 1, 1993, to replace the third sentence with
the following:

                    "You have received a grant of stock

                    options for 60,000 shares of Class B
                    Common Stock under the Viacom Inc. 1994
                    Long-Term Management Incentive Plan (the
                    "1994 LTMIP") which represented a two-
                    year grant of stock options covering
                    1994 and 1995 (the



<PAGE>

                    "1994/1995 Stock Options").  Any such
                    1994/1995 Stock Options that have not
                    vested on December 31, 1997 shall be
                    accelerated and become immediately
                    exercisable on December 31, 1997."

          Except as herein amended, all other terms and conditions of the
Employment Agreement shall remain the same and the Employment Agreement, as
herein amended, shall remain in full force and effect.

          If the foregoing correctly sets forth our understanding, please sign
one copy of this letter and return it to the undersigned, whereupon this letter
shall constitute a binding amendment to your Employment Agreement.


                                             Very truly yours,

                                             VIACOM INTERNATIONAL INC.


                                             By: /s/ William A. Roskin
                                                --------------------------
                                                Name: William A. Roskin
                                                Title: Senior Vice President,
                                                       Human Resources and 
                                                       Administration

ACCEPTED AND AGREED:


   /s/ Mark M. Weinstein
_____________________________
       Mark M. Weinstein






                                                            Exhibit 10(n)

                                                             As of April 1, 1994


Thomas E. Dooley
147 Oxford Boulevard
Garden City, New York  11530

Dear Mr. Dooley

          Viacom Inc. ("Viacom"), having an address at 1515 Broadway, New York,
New York 10036, agrees to employ you and you agree to accept such employment
upon the following terms and conditions:

          l.        Term.  The term of your employment hereunder shall commence
on April 1, 1994 and, unless terminated by Viacom or you pursuant to paragraph 8
hereof, shall continue through and until August 1, 1999.  The period from April
1, 1994 through August 1, 1999 shall hereinafter be referred to as the 
"Employment Term" notwithstanding any earlier termination pursuant to paragraph
8.

          2.        Duties.  During the Employment Term, you agree to devote
your entire business time, attention and energies to the business of Viacom and
its subsidiaries.  You will be Executive Vice President - Finance, Corporate
Development and Communications of Viacom, reporting directly to the Chief
Executive Officer of Viacom (the "CEO"), and you agree to perform such duties,
and such other duties reasonable and consistent with such office as may be
assigned to you from time to time by the CEO.  Your principal place of business
shall be at Viacom's headquarters in the New York
 City metropolitan area.

          3.        Compensation.

                    (a)       Salary:  For all the services rendered by you in
any capacity hereunder, Viacom agrees to pay you the sum of Eight Hundred
Thousand Dollars ($800,000) per annum ("Salary"), payable in accordance with
Viacom's then effective payroll practices.  Your Salary will be reviewed and
increased by a minimum of 10% on each of April 1, 1995 and April 1, 1996.  On
April 1, 1997, your Salary will be reviewed and increased to no less than One
Million Dollars ($1,000,000) per annum (and may be reviewed and increased
thereafter) for the remainder of the Employment Term.


<PAGE>

                    (b)       Bonus Compensation:  In addition to your Salary,
you shall be entitled to receive bonus compensation for each of the calendar
years during the Employment Term, determined and payable as follows ("Bonus"):

                    (i)       Your Bonus for each of the calendar years during
                              the Employment Term will be based upon a
                              measurement of performance against objectives in
                              accordance with the Viacom Senior Executive Short-
                              Term Incentive Plan, as the same may be amended
                              from time to time.

                    (ii)      Your Target Bonus for each of calendar years 1994,
                              1995 and 1996 shall be 150% of your Salary on
                              November 1st of such calendar year.  Your Target
                              Bonus for each of calendar years 1997, 1998 and
                              1999 shall be 180% of your Salary on November
                              1st of such calendar year (or August 1st in the
                              case of 1999). Your Target Bonus may be prorated
                              for 1999.

                    (iii)     Your Bonus for any calendar year shall be payable
                              by February 28 of the following year.

                    (c)       Long-Term Incentive Plans:  You will be eligible
to participate in one or more of Viacom's long-term incentive plans at a level
appropriate to your position as determined by the Viacom Board of Directors.

          4.        Benefits.

                    (a)       You shall be entitled to participate in such
vacation, medical, dental and life insurance, 401(k), pension and other plans as
Viacom, as applicable, may have or establish from time to time and in which you
would be entitled to participate pursuant to the terms thereof.  The foregoing,
however, shall not be construed to require Viacom to establish any such plans or
to prevent the modification or termination of such plans once established, and
no such action or failure thereof shall affect this Agreement.  It is further
understood and agreed that all benefits you may be entitled to as an employee of
Viacom shall be based upon your Salary, as set forth in paragraph 3(a) hereof,
and not upon any bonus compensation due, payable or paid to you hereunder,
except where the benefit plan expressly provides otherwise.

                    (b)       Viacom shall provide you with no less than Three
Million Dollars ($3,000,000) of life insurance during the Employment Term.


<PAGE>

          5.        Business Expenses.  During the Employment Term, you shall be
reimbursed for such reasonable travel and other expenses incurred in the
performance of your duties hereunder as are customarily reimbursed to senior
executives of Viacom reporting directly to the CEO.  You shall be entitled to a
car allowance of Eleven Hundred Dollars ($1,100) per month.

          6.        Exclusive Employment, Confidential Information, Etc.

                    (a)       Non-Competition.  You agree that your employment
hereunder is on an exclusive basis, and that during the Employment Term, you
will not engage in any other business activity which is in conflict with your
duties and obligations hereunder.  You agree that during the Employment Term you
shall not directly or indirectly engage in or participate as an officer,
employee, director, agent of or consultant for any business directly competitive
with that of Viacom, nor shall you make any investments in any company or
business competing with Viacom; provided, however, that nothing herein shall
prevent you from investing as less than a one (1%) percent shareholder in the
securities of any company listed on a national securities exchange or quoted on
an automated quotation system.

                    (b)       Confidential Information.  You agree that you
shall not, during the Employment Term or at any time thereafter, use for your
own purposes, or disclose to or for the benefit of any third party, any trade
secret or other confidential information of Viacom or any of its affiliates
(except as may be required by law or in the performance of your duties hereunder
consistent with Viacom's policies) and that you will comply with any
confidentiality obligations of Viacom to a third party, whether under agreement
or otherwise.  Notwithstanding the foregoing, confidential information shall be
deemed not to include information which (i) is or becomes generally available to
the public other than as a result of a disclosure by you or any other person who
directly or indirectly receives such information from you or at your direction
or (ii) is or becomes available to you on a non-confidential basis from a source
which is entitled to disclose it to you.

                    (c)       No Employee Solicitation.  You agree that, during
the Employment Term and for one (1) year thereafter, you shall not, directly or
indirectly, engage, employ, or solicit the employment of any person who is then
or has been within six (6) months prior thereto, an employee of Viacom or any of
Viacom's affiliates.

                    (d)       Viacom Ownership.  The results and proceeds of
your services hereunder, including, without limitation, any works of authorship
resulting from your services during your employment with Viacom and/or any of
its affiliates and any works in progress, shall be works-made-for-hire and
Viacom shall be deemed the sole owner throughout the universe of any and all
rights of whatsoever nature therein, whether or not now or hereafter known,
existing, contemplated, recognized or developed, with the right to use the same



<PAGE>

in perpetuity in any manner Viacom determines in its sole discretion without any
further payment to you whatsoever.  If, for any reason, any of such results and
proceeds shall not legally be a work-for-hire and/or there are any rights which
do not accrue to Viacom under the preceding sentence, then you hereby
irrevocably assign and agree to assign any and all of your right, title and
interest thereto, including, without limitation, any and all copyrights,
patents, trade secrets, trademarks and/or other rights of whatsoever nature
therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed to Viacom, and Viacom shall have the right to use the
same in perpetuity throughout the universe in any manner Viacom determines
without any further payment to you whatsoever.  You shall, from time to time, as
may be requested by Viacom, do any and all things which Viacom may deem useful
or desirable to establish or document Viacom's exclusive ownership of any and
all rights in any such results and proceeds, including, without limitation, the
execution of appropriate copyright and/or patent applications or assignments.
To the extent you have any rights in the results and proceeds of your services
that cannot be assigned in the manner described above, you unconditionally and
irrevocably waive the enforcement of such rights.  This paragraph 6(d) is
subject to, and shall not be deemed to limit, restrict, or constitute any waiver
by Viacom of any rights of ownership to which Viacom may be entitled by
operation of law by virtue of Viacom or any of its affiliates being your
employer.

                    (e)       Litigation.  You agree that, during the Employment
Term, for one (1) year thereafter and, if longer, during the pendancy of any
litigation or other proceeding, (i) you shall not communicate with anyone (other
than your own attorneys and tax advisors and except to the extent necessary in
the performance of your duties hereunder) with respect to the facts or subject
matter of any pending or potential litigation, or regulatory or administrative
proceeding involving any of Viacom's affiliates, other than any litigation or
other proceeding in which you are a party-in-opposition, without giving prior
notice to Viacom or Viacom's counsel, and (ii) in the event that any other party
attempts to obtain information or documents from you with respect to matters
possibly related to such litigation or other proceeding, you shall promptly so
notify Viacom's counsel.

                    (f)       No Right to Give Interviews or Write Books,
Articles, Etc.  During the Employment Term, except as authorized by Viacom,
you shall not (i) give any interviews or speeches, or (ii) prepare or assist
any person or entity in the preparation of any books, articles, television or
motion picture productions or other creations, in either case, concerning
Viacom or any of Viacom's affiliates or any of their officers, directors,
agents, employees, suppliers or customers.


<PAGE>

                    (g)       Return of Property.  All documents, data,
recordings, or other property, whether tangible or intangible, including all
information stored in electronic form, obtained or prepared by or for you and
utilized by you in the course of your employment with Viacom or any of its
affiliates shall remain the exclusive property of Viacom.  In the event of the
termination of your employment for any reason, Viacom reserves the right, to the
extent permitted by law and in addition to any other remedy Viacom may have, to
deduct from any monies otherwise payable to you the following:  (i) the full
amount of any debt you owe to Viacom or any of its affiliates at the time of or
subsequent to the termination of your employment with Viacom, and (ii) the value
of the Viacom property which you retain in your possession after the termination
of your employment with Viacom.  In the event that the law of any state or other
jurisdiction requires the consent of an employee for such deductions, this
Agreement shall serve as such consent.

                    (h)       Non-Disparagement.  You agree that you shall not,
during the Employment Term and for one (1) year thereafter, in any
communications with any customer or client of Viacom or any of Viacom's
affiliates, criticize, ridicule or make any statement which disparages or is
derogatory of Viacom or Viacom's affiliates or any of their officers, directors,
agents or employees.

                    (i)       Injunctive Relief.  Viacom has entered into this
Agreement in order to obtain the benefit of your unique skills, talent, and
experience.  You acknowledge and agree that any violation of paragraphs 6(a)
through (h) hereof will result in irreparable damage to Viacom, and,
accordingly, Viacom may obtain injunctive and other equitable relief for any
breach or threatened breach of such paragraphs, in addition to any other
remedies available to Viacom.

                    (j)       Survival; Modification of Terms.  Your obligations
under paragraphs 6(a) through (i) hereof shall remain in full force and effect
for the entire period provided therein notwithstanding the termination of the
Employment Term pursuant to paragraph 8 hereof or otherwise; provided, however,
that your obligations under paragraph 6(a) shall cease if you terminate your
employment for "Good Reason" or Viacom terminates your employment without
"cause" (as such terms are defined in paragraph 8) and you notify Viacom in
writing that you have elected to waive your right to receive, or to continue to
receive, payments and benefits pursuant to clauses (i), (ii), (iii), (iv) and
(v) of paragraph 8(d).  You and Viacom agree that the restrictions and remedies
contained in paragraphs 6(a) through (i) are reasonable and that it is your




<PAGE>


intention and the intention of Viacom that such restrictions and remedies shall
be enforceable to the fullest extent permissible by law.  If it shall be found
by a court of competent jurisdiction that any such restriction or remedy is
unenforceable but would be enforceable if some part thereof were deleted or the
period or area of application reduced, then such restriction or remedy shall
apply with such modification as shall be necessary to make it enforceable.

          7.        Incapacity.  You agree to enroll in the Viacom Long-Term
Disability program, as the same may exist from time to time ("LTD").  In the
event you become totally medically disabled and cannot substantially perform
your duties at any time during the Employment Term, the CEO, at any time after
such disability has continued for 30 consecutive days, may determine that Viacom
requires such duties and responsibilities be performed by another executive.  In
the event the CEO makes such a determination, you shall be placed on a "medical
payroll".  You will first receive benefits under Viacom's short-term disability
program for the first 26 weeks of consecutive absence.  Thereafter, you will be
eligible to receive benefits under the LTD program in accordance with its terms.
Upon receipt of benefits under the LTD program, you will also be entitled to
receive a pro-rated Target Bonus for the calendar year in which such benefits
commence.

          8.        Termination.

                    (a)       Termination for Cause.  Viacom may, at its option,
terminate this Agreement forthwith for "cause", and Viacom shall thereafter have
no further obligations under this Agreement, including, without limitation, any
obligation to pay Salary or Bonus or provide benefits under this Agreement.  For
purposes of this Agreement, termination of this Agreement for "cause" shall mean
termination for dishonesty, conviction of a felony, or willful unauthorized
disclosure of confidential information, or if you at any time materially breach
this Agreement (including, without limitation, your failure, neglect of or
refusal to substantially perform your obligations hereunder as set forth in
paragraphs 2 and 11 hereof) except in the event of your disability as set forth
in paragraph 7.  Anything herein to the contrary notwithstanding, Viacom will
give you written notice prior to terminating this Agreement for your material
breach setting forth the exact nature of any alleged breach and the conduct
required to cure such breach.  You shall have ten (10) business days from the
giving of such notice within which to cure.

                    (b)       Good Reason Termination.  You may terminate your
employment hereunder for "Good Reason" at any time during the Employment Term by
written notice to Viacom not more than thirty (30) days after the occurrence of
the event constituting "Good Reason".  Such notice shall state an effective date
no later than ten (10) business days after the date it is given.  Good Reason


<PAGE>


shall mean, without your prior written consent, other than in connection with
the termination of your employment for "cause" (as defined above) or in
connection with your permanent disability, the assignment to you by Viacom of
duties substantially inconsistent with your positions, duties, responsibilities,
titles or offices, the withdrawal of a material part of your responsibilities as
set forth in paragraph 2, or the breach by Viacom of any of its material
obligations hereunder.

                    (c)       Termination Without Cause.  Viacom may terminate
your employment hereunder without "cause" (as defined above) at any time during
the Employment Term by written notice to you.

                    (d)       Termination Payments, Etc.  In the event that your
employment terminates pursuant to paragraph 8(b) or 8(c) hereof, you shall be
entitled to receive, subject to applicable withholding taxes:

                    (i)       your Salary as provided in paragraph 3(a) until
                              the end of the Employment Term, payable in
                              accordance with Viacom's then effective payroll
                              practices;
                    
                    (ii)      bonus compensation for each calendar year during
                              the Employment Term equal to your Target Bonus as
                              set forth in paragraph 3(b);
                    
                    (iii)     your car allowance as provided in paragraph 5
                              until the end of the Employment Term, payable in
                              accordance with Viacom's then effective payroll
                              practices;
                    
                    (iv)      medical and dental insurance coverage under COBRA
                              until the end of the Employment Term or, if
                              earlier, the date on which you become eligible for
                              medical and dental coverage from a third party
                              employer; during this period, Viacom will pay an
                              amount equal to the applicable COBRA premiums (or
                              such other amounts as may be required by
                              applicable law) (which amount will be included in
                              your income for tax purposes to the extent
                              required by applicable law); at the end of such
                              period, you may elect to continue your medical and
                              dental insurance coverage at your own expense for
                              the balance, if any, of the period required by
                              law;
                    
                    (v)       the life insurance coverage set forth in paragraph
                              4(b) until the end of the Employment Term (the
                              amount of Salary covered by such insurance to be
                              reduced by the amount of any salary payable to you
                              by a third party); and



<PAGE>

                    
                    (vi)      the following with respect to grants to you under
                              Viacom's 1989 and 1994 Long-Term Management
                              Incentive Plans and any successor plans
                              (collectively, the "LTMIP"):
                              
                              (x)       stock options granted to you under the
                                        LTMIP which are exercisable on or prior
                                        to the date of the termination of your
                                        employment under paragraph 8(b) or 8(c)
                                        or that would have vested and become 
                                        exercisable on or before  the  last day
                                        of  the  Employment Term  will  be  
                                        exercisable  until  six  (6) months 
                                        after the date of such termination or, 
                                        if earlier, the expiration date of the 
                                        stock options; and
                              
                              (y)       payments on the phantom shares granted
                                        to  you  under  the LTMIP in 1989 will 
                                        be calculated in the manner and made 
                                        at such times as  provided in the LTMIP;

provided, however, you shall be required to mitigate the amount of any payment
provided for in (i), (ii) and (iii) of this paragraph 8(d) by seeking other
employment or otherwise, and the amount of any such payment provided for in (i),
(ii) and (iii) shall be reduced by any compensation earned by you from a third
person except that mitigation shall not be required for eighteen(18) months
after the termination of your employment or for the period commencing with the
termination of your employment and ending on the last day of the Employment
Term, whichever is shorter.  The payments provided for in (i) above are in lieu
of any severance or income continuation or protection under any Viacom plan that
may now or hereafter exist.  The payments and benefits to be provided pursuant
to this paragraph 8(d) shall constitute liquidated damages, and shall be deemed
to satisfy and be in full and final settlement of all obligations of Viacom to
you under this Agreement.

                    (e)       Termination of Benefits.  Notwithstanding anything
in this Agreement to the contrary (except as otherwise provided in paragraph
8(d) with respect to medical, dental and life insurance), coverage under all
Viacom benefit plans and programs (including, without limitation, vacation,
401(k) and excess 401(k) plans, pension and excess pension plans, LTD, car
insurance and accidental death and dismemberment and business travel and
accident insurance) will terminate upon the termination of your employment
except to the extent otherwise expressly provided in such plans or programs.

          9.        Death.  If you die prior to the end of the Employment Term,
your beneficiary or estate shall be entitled to receive your Salary up to the
date on which the death occurs and a pro-rated Target Bonus.




<PAGE>

          10.       Section 317 and 508 of the Federal Communications Act.  You
represent that you have not accepted or given nor will you accept or give,
directly or indirectly, any money, services or other valuable consideration from
or to anyone other than Viacom for the inclusion of any matter as part of any
film, television program or other production produced, distributed and/or
developed by Viacom and/or any of its affiliates.

          11.       Equal Opportunity Employer.  You acknowledge that Viacom is
an equal opportunity employer.  You agree that you will comply with Viacom
policies and applicable federal, state and local laws prohibiting discrimination
on the basis of race, color, creed, national origin, age, sex or disability.

          12.       Notices.  All notices required to be given hereunder shall
be given in writing, by personal delivery or by mail at the respective addresses
of the parties hereto set forth above, or at such other address as may be
designated in writing by either party, and in the case of Viacom, to the
attention of the General Counsel of Viacom.  Any notice given by mail shall be
deemed to have been given three days following such mailing.

          13.       Assignment.  This is an Agreement for the performance of
personal services by you and may not be assigned by you or Viacom except that
Viacom may assign this Agreement to any affiliate or any successor in interest
to Viacom.

          14.       New York Law, Etc.  This Agreement and all matters or issues
collateral thereto shall be governed by the laws of the State of New York
applicable to contracts entered into and performed entirely therein.

          15.       No Implied Contract.  Nothing contained in this Agreement
shall be construed to impose any obligation on Viacom to renew this Agreement or
any portion thereof.  The parties intend to be bound only upon execution of a
written agreement and no negotiation, exchange of draft or partial performance
shall be deemed to imply an agreement.  Neither the continuation of employment
nor any other conduct shall be deemed to imply a continuing agreement upon the
expiration of this Agreement.

          16.       Entire Understanding.  This Agreement contains the entire
understanding of the parties hereto relating to the subject matter herein
contained, and can be changed only by a writing signed by both parties hereto.


<PAGE>



          17.       Void Provisions.  If any provision of this Agreement, as
applied to either party or to any circumstances, shall be adjudged by a court to
be void or unenforceable, the same shall be deemed stricken from this Agreement
and shall in no way affect any other provision of this Agreement or the validity
or enforceability of this Agreement.

          18.       Supersedes Previous Agreement.  This Agreement supersedes
and cancels all prior agreements relating to your employment by Viacom or any of
its affiliates.

          If the foregoing correctly sets forth our understanding, please sign
one copy of this letter and return it to the undersigned, whereupon this letter
shall constitute a binding agreement between us.


                                                  Very truly yours,

                                                  VIACOM INC.



                                                  By: /S/ Frank J. Biondi, Jr.
                                                     ________________________
                                                     Name:  Frank J. Biondi, Jr.
                                                     Title: President, Chief 
                                                            Executive Officer


ACCEPTED AND AGREED:

/S/  Thomas E. Dooley
_________________________
       Thomas E. Dooley




<PAGE>



                                                        As of April 1, 1994


          Thomas E. Dooley
          147 Oxford Boulevard
          Garden City, New York 11530


          Dear Mr. Dooley:

               Viacom   Inc.  ("Viacom")  and  you  have  entered  into  an
          employment  agreement on the date hereof  (the "Agreement").  All
          defined  terms  used  herein without  definition  shall  have the
          meanings set forth in the Agreement.

               The Agreement provides that, in the event that you terminate
          your  employment  for  Good  Reason  or  Viacom  terminates  your
          employment  without "cause", stock  options granted to  you under
          the LTMIP that have vested on the termination date or would  have
          vested by the end of the Employment  Term will be exercisable for
          six (6)  months after the  termination date.  In  order for these
          provisions  to be  effective, the  LTMIP must  be amended  by the
          Viacom  Board of  Directors and  the amendments  approved  by the
          Viacom stockholders at the 1995 Annual Stockholders Meeting.

               In  the event  that  the  amendments to  the  LTMIP are  not
          adopted or  your employment  terminates  before these  amendments
          become  effective,  Viacom and  you  agree  that clause  (vi)  of
          paragraph 8(d) of the Agreement shall read as follows:

                    "(vi)          the following with  respect to grants to
                                   you under Viacom's  1989 and 1994  Long-
                                   Term Management Incentive  Plans and any
                                   successor   plans   (collectively,   the
                                   "LTMIP"):

                     (x)      stock options granted to you under  the LTMIP
                              which become  exercisable on or prior  to the
                              date of  the termination  of your  employment
                              under   paragraph  8(d)   or  8(c)   must  be
                              exercised  within three  (3) months of   such
                              termination;

                     (y)      stock options granted to you under  the LTMIP
                              which  are not exercisable on or prior to the
                              date  of the  termination of  your employment
                              under paragraph  8(b) or 8(c) but  that would
                              have vested on or before the last day  of the
                              Employment  Term,   (1)  may,  at   the  sole
                              determination of  the Compensation  Committee
                              of the  Viacom  Board  of  Directors,  become
                              immediately  exercisable  and   then  may  be
                              exercised in accordance with the terms of the
                              LTMIP  or (2) shall  be canceled and  in lieu



<PAGE>

          Thomas E. Dooley
          As of April 1, 1994
          Page 2

                              thereof  you shall  be  deemed  to have  been
                              granted  stock  appreciation  rights ("SARs")
                              subject to the  same terms and conditions  as
                              the canceled  stock options.  Such SARs shall
                              be deemed to vest  on the dates set forth  in
                              the  LTMIP   until  the   last  day   of  the
                              Employment Term, you  may exercise such  SARs
                              by  written notice to Viacom  until three (3)
                              months  after  the  last day  of  day  of the
                              Employment  Term  and you  shall  receive the
                              difference between the exercise price and the
                              value  of  Viacom  stock as  of  the  date of
                              exercise, as such value  is determined in the
                              LTMIP, payable within ten (10) business  days
                              of such exercise: and

                     (z)      payments on the phantom shares granted to you
                              under the LTMIP in 1989 will be calculated in
                              the manner and made at such times as provided
                              in the LTMIP;"


                                                  Very truly yours, 


                                                  VIACOM INC.

                                               By: Frank J. Biondi, Jr.
                                                  --------------------------
                                                  Name: Frank J. Biondi, Jr.
                                                 Title: President, Chief
                                                        Executive Officer



          ACCEPTED AND AGREED:


          /s/ Thomas E. Dooley
          ---------------------
            Thomas E. Dooley




                                                            Exhibit 10(o)

                                                           As of July 1, 1994

Edward D. Horowitz
105 Lawrence Drive
Short Hills, New Jersey  07078


Dear Mr. Horowitz:

          Viacom Inc. ("Viacom"), having an address at 1515 Broadway, New York,
New York 10036, agrees to employ you and you agree to accept such employment
upon the following terms and conditions:

          1.        Term.  The term of your employment hereunder shall commence
on July 1, 1994 and, unless terminated by Viacom or you pursuant to paragraph 8
hereof, shall continue through and until June 30, 1997.  The period from July 1,
1994  through June 30, 1997 shall hereinafter be referred to as the "Employment
Term" notwithstanding any earlier termination pursuant to paragraph 8.

          2.        Duties.  During the Employment Term, you agree to devote
your entire business time, attention and energies to the business of Viacom and
its subsidiaries.  You will be Senior Vice President, Technology and Chairman,
Chief Executive Officer, Viacom Interactive Media of Viacom reporting directly
to the Chief Executive Officer of Viacom (the "CEO") and you agree to perform
such duties, and such other duties reasonable and consistent with such office as
may be assigned to you from time to time by the CEO.  Your principal place of
business shall be at Viacom's headquarters
 in the New York City metropolitan
area.

          3.        Compensation.

                    (a)       Salary:  For all the services rendered by you in
any capacity hereunder, Viacom agrees to pay you the sum of Five Hundred
Thousand Dollars ($500,000) per annum ("Salary"), payable in accordance with
Viacom's then effective payroll practices.  Your Salary will be increased to
Five Hundred Fifty Thousand Dollars ($550,000) per annum on July 1, 1995 and Six
Hundred Thousand Dollars ($600,000) per annum on July 1, 1996.


<PAGE>

                    (b)       Bonus Compensation:  In addition to your Salary,
you shall be entitled to receive bonus compensation for each of the calendar
years during the Employment Term, determined and payable as follows ("Bonus"):

                    (i)       Your Bonus for each of the calendar years during
                              the Employment Term will be based upon a
                              measurement of performance against objectives in
                              accordance with the Viacom Senior Executive Short-
                              Term Incentive Plan, as the same may be amended
                              from time to time.

                    (ii)      Your Target Bonus for each of the calendar years
                              during the Employment Term shall be 100% of Salary
                              which may be prorated for any partial calendar
                              year during the Employment Term.

                    (iii)     Your Bonus for any calendar year shall be payable
                              by February 28 of the following year.

                    (c)       Long-Term Incentive Plans:  You will be eligible
to participate in one or more of Viacom's long-term incentive plans at a level
appropriate to your position as determined by the Viacom Board of Directors.

          4.        Benefits.  You shall be entitled to participate in such
vacation, medical, dental and life insurance, 401(k), pension and other plans as
Viacom may have or establish from time to time and in which you would be
entitled to participate pursuant to the terms thereof.  The foregoing, however,
shall not be construed to require Viacom to establish any such plans or to
prevent the modification or termination of such plans once established, and no
such action or failure thereof shall affect this Agreement.  It is further
understood and agreed that all benefits you may be entitled to as an employee of
Viacom shall be based upon your Salary, as set forth in paragraph 3(a) hereof,
and not upon any bonus compensation due, payable or paid to you hereunder,
except where the benefit plan expressly provides otherwise.

          5.        Business Expenses.  During the Employment Term, you shall be
reimbursed for such reasonable travel and other expenses incurred in the
performance of your duties hereunder as are customarily reimbursed to senior
executives of Viacom.  You shall be entitled to a car allowance in accordance
with Viacom's policy.



<PAGE>

          6.        Exclusive Employment, Confidential Information, Etc.

                    (a)       Non-Competition.  You agree that your employment
hereunder is on an exclusive basis, and that during the Employment Term, you
will not engage in any other business activity which is in conflict with your
duties and obligations hereunder.  You agree that during the Employment Term you
shall not directly or indirectly engage in or participate as an officer,
employee, director, agent of or consultant for any business directly competitive
with that of Viacom, nor shall you make any investments in any company or
business competing with Viacom; provided, however, that nothing herein shall
prevent you from investing as less than a one (1%) percent shareholder in the
securities of any company listed on a national securities exchange or quoted on
an automated quotation system.

                    (b)       Confidential Information.  You agree that you
shall not, during the Employment Term or at any time thereafter, use for your
own purposes, or disclose to or for the benefit of any third party, any trade
secret or other confidential information of Viacom or any of its affiliates
(except as may be required by law or in the performance of your duties hereunder
consistent with Viacom's policies) and that you will comply with any
confidentiality obligations of Viacom to a third party, whether under agreement
or otherwise.  Notwithstanding the foregoing, confidential information shall be
deemed not to include information which (i) is or becomes generally available to
the public other than as a result of a disclosure by you or any other person who
directly or indirectly receives such information from you or at your direction
or (ii) is or becomes available to you on a non-confidential basis from a source
which is entitled to disclose it to you.

                    (c)       No Employee Solicitation.  You agree that, during
the Employment Term and for one (1) year thereafter, you shall not, directly or
indirectly, engage, employ, or solicit the employment of any person who is then
or has been within six (6) months prior thereto, an employee of Viacom or any of
Viacom's affiliates.

                    (d)       Viacom Ownership.  The results and proceeds of
your services hereunder, including, without limitation, any works of authorship
resulting from your services during your employment with Viacom and/or any of
its affiliates and any works in progress, shall be works-made-for-hire and
Viacom shall be deemed the sole owner throughout the universe of any and all
rights of whatsoever nature therein, whether or not now or hereafter known,
existing, contemplated, recognized or developed, with the right to use the same
in perpetuity in any manner Viacom determines in its sole discretion without any
further payment to you whatsoever.  If, for any reason, any of such results and
proceeds shall not legally be a work-for-hire and/or there are any rights which
do not accrue to Viacom under the preceding sentence, then you hereby
irrevocably assign and agree to assign any and all of your right, title and


<PAGE>

interest thereto, including, without limitation, any and all copyrights,
patents, trade secrets, trademarks and/or other rights of whatsoever nature
therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed to Viacom, and Viacom shall have the right to use the
same in perpetuity throughout the universe in any manner Viacom determines
without any further payment to you whatsoever.  You shall, from time to time, as
may be requested by Viacom, do any and all things which Viacom may deem useful
or desirable to establish or document Viacom's exclusive ownership of any and
all rights in any such results and proceeds, including, without limitation, the
execution of appropriate copyright and/or patent applications or assignments.
To the extent you have any rights in the results and proceeds of your services
that cannot be assigned in the manner described above, you unconditionally and
irrevocably waive the enforcement of such rights.  This paragraph 6(d) is
subject to, and shall not be deemed to limit, restrict, or constitute any waiver
by Viacom of any rights of ownership to which Viacom may be entitled by
operation of law by virtue of Viacom or any of its affiliates being your
employer.

                    (e)       Litigation.  You agree that, during the Employment
Term, for one (1) year thereafter and, if longer, during the pendancy of any
litigation or other proceeding, (i) you shall not communicate with anyone (other
than your own attorneys and tax advisors and except to the extent necessary in
the performance of your duties hereunder) with respect to the facts or subject
matter of any pending or potential litigation, or regulatory or administrative
proceeding involving any of Viacom's affiliates, other than any litigation or
other proceeding in which you are a party-in-opposition, without giving prior
notice to Viacom or Viacom's counsel, and (ii) in the event that any other party
attempts to obtain information or documents from you with respect to matters
possibly related to such litigation or other proceeding, you shall promptly so
notify Viacom's counsel.

                    (f)       No Right to Give Interviews or Write Books,
Articles, Etc.  During the Employment Term, except as authorized by Viacom, you
shall not (i) give any interviews or speeches, or (ii) prepare or assist any 
person or entity in the preparation of any books, articles, television or motion
picture productions or other creations, in either case, concerning Viacom or
any of Viacom's affiliates or any of their officers, directors, agents,
employees, suppliers or customers.

                    (g)       Return of Property.  All documents, data,
recordings, or other property, whether tangible or intangible, including all
information stored in electronic form, obtained or prepared by or for you and
utilized by you in the course of your employment with Viacom or any of its
affiliates shall remain the exclusive property of Viacom.  In the event of the
termination of your employment for any reason, Viacom reserves the right, to the
extent permitted by law and in addition to any other remedy Viacom may have, to



<PAGE>

deduct from any monies otherwise payable to you the following:  (i) the full
amount of any debt you owe to Viacom or any of its affiliates at the time of or
subsequent to the termination of your employment with Viacom, and (ii) the value
of the Viacom property which you retain in your possession after the termination
of your employment with Viacom.  In the event that the law of any state or other
jurisdiction requires the consent of an employee for such deductions, this
Agreement shall serve as such consent.

                    (h)       Non-Disparagement.  You agree that you shall not,
during the Employment Term and for one (1) year thereafter, in any
communications with any customer or client of Viacom or any of Viacom's
affiliates, criticize, ridicule or make any statement which disparages or is
derogatory of Viacom or Viacom's affiliates or any of their officers, directors,
agents or employees.

                    (i)       Injunctive Relief.  Viacom has entered into this
Agreement in order to obtain the benefit of your unique skills, talent, and
experience.  You acknowledge and agree that any violation of paragraphs 6(a)
through (h) hereof will result in irreparable damage to Viacom, and,
accordingly, Viacom may obtain injunctive and other equitable relief for any
breach or threatened breach of such paragraphs, in addition to any other
remedies available to Viacom.

                    (j)       Survival; Modification of Terms.  Your obligations
under paragraphs 6(a) through (i) hereof shall remain in full force and effect
for the entire period provided therein notwithstanding the termination of the
Employment Term pursuant to paragraph 8 hereof or otherwise; provided, however,
that your obligations under paragraph 6(a) shall cease if you terminate your
employment for "Good Reason" or Viacom terminates your employment without
"cause" (as such terms are defined in paragraph 8) and you notify Viacom in
writing that you have elected to waive your right to receive, or to continue to
receive, payments and benefits pursuant to clauses (i), (ii), (iii), (iv) and
(v) of paragraph 8(d).  You and Viacom agree that the restrictions and remedies
contained in paragraphs 6(a) through (i) are reasonable and that it is your
intention and the intention of Viacom that such restrictions and remedies shall
be enforceable to the fullest extent permissible by law.  If it shall be found
by a court of competent jurisdiction that any such restriction or remedy is
unenforceable but would be enforceable if some part thereof were deleted or the
period or area of application reduced, then such restriction or remedy shall
apply with such modification as shall be necessary to make it enforceable.


<PAGE>

          7.        Incapacity.  You agree to enroll in the Viacom Long-Term
Disability program, as the same may exist from time to time ("LTD").  In the
event you become totally medically disabled and cannot substantially perform
your duties at any time during the Employment Term, the CEO, at any time after
such disability has continued for 30 consecutive days, may determine that Viacom
requires such duties and responsibilities be performed by another executive.  In
the event the CEO makes such a determination, you shall be placed on a "medical
payroll".  You will first receive benefits under Viacom's short-term disability
program for the first 26 weeks of consecutive absence.  Thereafter, you will be
eligible to receive benefits under the LTD program in accordance with its terms.
Upon receipt of benefits under the LTD program, you will also be entitled to
receive a pro-rated Target Bonus for the calendar year in which such benefits
commence.

          8.        Termination.

                    (a)       Termination for Cause.  Viacom may, at its option,
terminate this Agreement forthwith for "cause", and Viacom shall thereafter have
no further obligations under this Agreement, including, without limitation, any
obligation to pay Salary or Bonus or provide benefits under this Agreement.  For
purposes of this Agreement, termination of this Agreement for "cause" shall mean
termination for dishonesty, conviction of a felony, or willful unauthorized
disclosure of confidential information, or if you at any time materially breach
this Agreement (including, without limitation, your failure, neglect of or
refusal to substantially perform your obligations hereunder as set forth in
paragraphs 2 and 11 hereof) except in the event of your disability as set forth
in paragraph 7.  Anything herein to the contrary notwithstanding, Viacom will
give you written notice prior to terminating this Agreement for your material
breach setting forth the exact nature of any alleged breach and the conduct
required to cure such breach.  You shall have ten (10) business days from the
giving of such notice within which to cure.

                    (b)       Good Reason Termination.  You may terminate your
employment hereunder for "Good Reason" at any time during the Employment Term by
written notice to Viacom not more than thirty (30) days after the occurrence of
the event constituting "Good Reason".  Such notice shall state an effective date
no later than ten (10) business days after the date it is given.  Good Reason
shall mean, without your prior written consent, other than in connection with
the termination of your employment for "cause" (as defined above) or in
connection with your permanent disability, the



<PAGE>

assignment to you by Viacom of duties substantially inconsistent with your
positions, duties, responsibilities, titles or offices, the withdrawal of a
material part of your responsibilities as set forth in paragraph 2, or the
breach by Viacom of any of its material obligations hereunder.

                    (c)       Termination Without Cause.  Viacom may terminate
your employment hereunder without "cause" (as defined above) at any time during
the Employment Term by written notice to you.

                    (d)       Termination Payments, Etc.  In the event that your
employment terminates pursuant to paragraph 8(b) or 8(c) hereof, you shall be
entitled to receive, subject to applicable withholding taxes:

                    (i)       your Salary as provided in paragraph 3(a) until
                              the end of the Employment Term, payable in
                              accordance with Viacom's then effective payroll
                              practices;
                    
                    (ii)      bonus compensation for each calendar year during
                              the Employment Term equal to your Target Bonus as
                              set forth in paragraph 3(b);
                    
                    (iii)     your car allowance as provided in paragraph 5
                              until the end of the Employment Term, payable in
                              accordance with Viacom's then effective payroll
                              practices;
                    
                    (iv)      medical and dental insurance coverage under COBRA
                              until the end of the Employment Term or, if
                              earlier, the date on which you become eligible for
                              medical and dental coverage from a third party
                              employer; during this period, Viacom will pay an
                              amount equal to the applicable COBRA premiums (or
                              such other amounts as may be required by
                              applicable law) (which amount will be included in
                              your income for tax purposes to the extent
                              required by applicable law); at the end of such
                              period, you may elect to continue your medical and
                              dental insurance coverage at your own expense for
                              the balance, if any, of the period required by
                              law;
                    
                    (v)       life insurance coverage until the end of the
                              Employment Term (the amount of Salary covered by
                              such insurance to be reduced by the amount of any
                              salary payable to you by a third party);

<PAGE>


                    
                    (vi)      the following with respect to grants to you under
                              Viacom's 1989 and 1994 Long-Term Management
                              Incentive Plans and any successor plans
                              (collectively, the "LTMIP"):
                              
                              (x)       stock options granted to you under the
                                        LTMIP which are exercisable on or prior
                                        to the date of the termination of your
                                        employment under paragraph 8(b) or 8(c)
                                        or that would have vested and become
                                        exercisable on or before the last day of
                                        the Employment Term will be exercisable
                                        until six (6) months after the date of
                                        such termination or, if earlier, the
                                        expiration date of the stock options;
                                        and
                              
                              (y)       payments on the phantom shares granted
                                        to you under the LTMIP in 1989 will be
                                        calculated in the manner and made at
                                        such times as provided in the LTMIP; and
                    
                    (vii)     payments on any performance shares granted to you
                              under the Divisional Long-Term Incentive Plan
                              ("Divisional LTIP") will be calculated in the
                              manner provided in the Divisional LTIP for
                              employees terminating their employment on the last
                              day of the Employment Term; such payments will be
                              made at such times as payments under the
                              Divisional LTIP would otherwise be made;

provided, however, you shall be required to mitigate the amount of any payment
provided for in (i), (ii) and (iii) of this paragraph 8(d) by seeking other
employment or otherwise, and the amount of any such payment provided for in (i),
(ii) and (iii) shall be reduced by any compensation earned by you from a third
person except that mitigation shall not be required for eighteen (18) months
after the termination of your employment or for the period commencing with the
termination of your employment and ending on the last day of the Employment
Term, whichever is shorter.  The payments provided for in (i) above are in lieu
of any severance or income continuation or protection under any Viacom plan that
may now or hereafter exist.  The payments and benefits to be provided pursuant
to this paragraph 8(d) shall constitute liquidated damages, and shall be deemed
to satisfy and be in full and final settlement of all obligations of Viacom to
you under this Agreement.

          (e)       Termination of Benefits.  Notwithstanding anything in this
Agreement to the contrary (except as otherwise provided in paragraph 8(d) with
respect to medical, dental and life insurance), coverage under all Viacom
benefit plans and programs (including, without limitation, vacation, 401(k) and
excess 401(k) plans,


<PAGE>

pension and excess pension plans, LTD, car insurance and accidental death and
dismemberment and business travel and accident insurance) will terminate upon
the termination of your employment except to the extent otherwise expressly
provided in such plans or programs.

          (f)       Non-Renewal Notice, Etc.  Viacom shall give you notice in
writing in the event that Viacom elects not to extend or renew this Agreement.
If Viacom gives you such notice less than twelve (12) months before the end of
the Employment Term, or your employment terminates pursuant to paragraph 8(b) or
8(c) hereof during the final twelve (12) months of the Employment Term, you
shall be entitled to receive Salary as provided in paragraph 3(a), payable in
accordance with Viacom's then effective payroll practices, subject to applicable
withholding requirements, for the period commencing after the end of the
Employment Term which, when added to the portion of the Employment Term
remaining when the notice is given or the termination occurs, equals twelve (12)
months; provided, however, you shall be required to mitigate the amount of any
payment pursuant to this paragraph 8(f) by seeking other employment or
otherwise, and the amount of any such payment shall be reduced by any
compensation earned by you from a third person.  The payments provided for in
this paragraph 8(f) are in lieu of any severance or income continuation or
protection under any Viacom plan that may now or hereafter exist.

          9.        Death.  If you die prior to the end of the Employment Term,
your beneficiary or estate shall be entitled to receive your Salary up to the
date on which the death occurs and a pro-rated Target Bonus.

          10.       Section 317 and 508 of the Federal Communications Act.  You
represent that you have not accepted or given nor will you accept or give,
directly or indirectly, any money, services or other valuable consideration from
or to anyone other than Viacom for the inclusion of any matter as part of any
film, television program or other production produced, distributed and/or
developed by Viacom and/or any of its affiliates.

          11.       Equal Opportunity Employer.  You acknowledge that Viacom is
an equal opportunity employer.  You agree that you will comply with Viacom
policies and applicable federal, state, and local laws prohibiting
discrimination on the basis of race, color, creed, national origin, age, sex or
disability.

          12.       Notices.  All notices required to be given hereunder shall
be given in writing, by personal delivery or by mail at the respective addresses
of the parties hereto set forth above, or at such other address as may be
designated in writing by either party, and in the case of Viacom, to the
attention of the General Counsel of Viacom.  



<PAGE>

Any notice given by mail shall be deemed to have been given three days following
such mailing.

          13.       Assignment.  This is an Agreement for the performance of
personal services by you and may not be assigned by you or Viacom except that
Viacom may assign this Agreement to any affiliate of or any successor in
interest to Viacom.

          14.       New York Law, Etc.  This Agreement and all matters or issues
collateral thereto shall be governed by the laws of the State of New York
applicable to contracts entered into and performed entirely therein.

          15.       No Implied Contract.  Nothing contained in this Agreement
shall be construed to impose any obligation on Viacom to renew this Agreement or
any portion thereof.  The parties intend to be bound only upon execution of a
written agreement and no negotiation, exchange of draft or partial performance
shall be deemed to imply an agreement.  Neither the continuation of employment
nor any other conduct shall be deemed to imply a continuing agreement upon the
expiration of this Agreement.

          16.       Entire Understanding.  This Agreement contains the entire
understanding of the parties hereto relating to the subject matter herein
contained, and can be changed only by a writing signed by both parties hereto.

          17.       Void Provisions.  If any provision of this Agreement, as
applied to either party or to any circumstances, shall be adjudged by a court to
be void or unenforceable, the same shall be deemed stricken from this Agreement
and shall in no way affect any other provision of this Agreement or the validity
or enforceability of this Agreement.

          18.       Supersedes Previous Agreement.  This Agreement supersedes
and cancels all prior agreements relating to your employment by Viacom or any of
its affiliates.



<PAGE>

          If the foregoing correctly sets forth our understanding, please sign
one copy of this letter and return it to the undersigned, whereupon this letter
shall constitute a binding agreement between us.


                                               Very truly yours,

                                               VIACOM INC.

                                               By:   /S/ Frank J. Biondi, Jr.
                                                   --------------------------
                                               Name:  Frank J. Biondi, Jr.
                                               Title: President, Chief 
                                                      Executive Officer


ACCEPTED AND AGREED:

 /S/  Edward D. Horowitz
_________________________
       Edward D. Horowitz



<PAGE>

                                                            As of July 1, 1994

Edward D. Horowitz
105 Lawrence Drive
Short Hills, New Jersey  07078

Dear Mr. Horowitz:


          Viacom Inc. ("Viacom") and you have entered into an employment
agreement on the date hereof (the "Agreement").  All defined terms used herein
without definition shall have the meanings set forth in the Agreement.

          The Agreement provides that, in the event that you terminate your
employment for Good Reason or Viacom terminates your employment without "cause",
stock options granted to you under the LTMIP that have vested on the termination
date or would have vested by the end of the Employment Term will be exercisable
for six (6) months after the termination date.  In order for these provisions to
be effective, the LTMIP must be amended by the Viacom Board of Directors and the
amendments approved by the Viacom stockholders at the 1995 Annual Stockholders
Meeting.

          In the event that the amendments to the LTMIP are not adopted or your
employment terminates before these amendments become effective, Viacom and you
agree that clause (vi) of paragraph 8(d) of the Agreement shall read as follows:

                    "(vi)     the following with respect to grants to you under
                              Viacom's 1989 and 1994 Long-Term Management 
                              Incentive Plans and any successor plans 
                              (collectively, the "LTMIP"):
                    
                    (x)       stock options granted to you under the LTMIP which
                              become exercisable on or prior to the date of the
                              termination of your employment under paragraph
                              8(b) or 8(c) must be exercised within three (3)
                              months of such termination; and

<PAGE>


                    
                    (y)       stock options granted to you under the LTMIP which
                              are not exercisable on or prior to the date of the
                              termination of your employment under paragraph
                              8(b) or 8(c) but that would have vested on or
                              before the last day of the Employment Term, (1)
                              may, at the sole determination of the Compensation
                              Committee of the Viacom Board of Directors, become
                              immediately exercisable and then may be exercised
                              in accordance with the terms of the LTMIP or (2)
                              shall be canceled and in lieu thereof you shall be
                              deemed to have been granted stock appreciation
                              rights ("SARs") subject to the same terms and
                              conditions as the canceled stock options.  Such
                              SARs shall be deemed to vest on the dates set
                              forth in the LTMIP until the last day of the
                              Employment Term, you may exercise such SARs by
                              written notice to Viacom until three (3) months
                              after the last day of the Employment Term and you
                              shall receive the difference between the exercise
                              price and the value of Viacom stock as of the date
                              of exercise, as such value is determined in the
                              LTMIP, payable within ten (10) business days of
                              such exercise; and
                    
                    (z)       payments on the phantom shares granted to you
                              under the LTMIP in 1989 will be calculated in the
                              manner and made at such times as provided in the
                              LTMIP; and"


                                              Very truly yours,

                                              VIACOM INC.

                                              By:   /S/ Frank J. Biondi, Jr.
                                                  _________________________
                                                  Name:   Frank J. Biondi, Jr.
                                                  Title:  President, Chief
                                                          Executive Officer

ACCEPTED AND AGREED:

/S/  Edward D. Horowitz
_________________________
      Edward D. Horowitz






                                                            Exhibit 10(p)


                                                            As of April 1, 1994


Philippe P. Dauman, Esq.
655 Park Avenue
New York, New York  10021

Dear Mr. Dauman:

          Reference is made to that certain employment agreement between you and
Viacom International Inc. ("Viacom"), dated as of February 1, 1993 (the
"Employment Agreement").

          This letter, when fully executed below, shall amend your Employment
Agreement as follows:

          1.        Assignment.  Viacom International Inc. hereby assigns all of
its rights and obligations under the Employment Agreement to Viacom Inc., and
you accept such assignment.  All references to Viacom in the Employment
Agreement and this amendment shall be deemed to refer to Viacom Inc.

          2.        Term.  Section 1 shall be amended to read in its entirety as
follows:

                    "The term of your employment hereunder shall commence on
                    February 1, 1993 and, unless terminated by Viacom or you
                    pursuant to Section 8 hereof, shall continue through and
                    until August 1, 1999 (the "Employment Term")."

          3.        Duties.  Section 2 shall be amended to change the title
appearing in two places in the second sentence from "Senior Vice President,
General Counsel and Secretary" to "Executive Vice President, General Counsel and
Chief Administrative Officer and Secretary".

          4.        Compensation/Salary.  Section 3(a) shall be amended
 to
replace the second sentence with the following sentences:

                    "On April 1, 1994, your Salary will be increased to Eight
                    Hundred Thousand Dollars ($800,000) per annum.  Your Salary
                    will be reviewed and increased by a minimum of 10% on each
                    of April 1, 1995 and April 1, 1996.  On April 1, 1997, your


<PAGE>

                    Salary will be reviewed and increased to no less than One
                    Million Dollars ($1,000,000) per annum (and may be reviewed
                    and increased thereafter) for the remainder of the
                    Employment Term."

          5.        Compensation/Bonus Compensation.  Section 3(b) shall be
amended as follows:
                    (1)       Clause (ii) shall be amended to read in its
entirety as follows:

                    "Your Target Bonus for calendar year 1993 shall be 100% of
                    your Salary on November 1, 1993.  Your Target Bonus for each
                    of calendar years 1994, 1995 and 1996 shall be 150% of your
                    Salary on November 1st of such calendar year.  Your Target
                    Bonus for each of calendar years 1997, 1998 and 1999 shall
                    be 180% of your Salary on November 1st of such calendar year
                    (or August 1st in the case of 1999).  Your Target Bonus may
                    be pro-rated for 1999."

                    (2)       Clause (iii) shall be amended to replace the date
          "January 31" with "February 28".

          6.        Benefits.  Section 4 shall be amended to add the following
clause (c):

                    "Viacom shall provide you with no less than Three Million
                    Dollars ($3,000,000) of life insurance during the Employment
                    Term."

          7.        Termination.  Section 8(b) shall be amended as follows:

                    (1)       Clause (iii) shall be amended to replace the
          number "three (3)" in subclause (x) with the number "six (6)" and to
          replace clause (y) in its entirety with the following:

                    "Stock options granted to you under the LTMIP which are not
                    exercisable on or prior to the date of the termination of
                    your employment under this Section 8(b) that would have
                    vested and become exercisable on or before the last day of
                    the Employment Term will be exercisable until six (6) months
                    after the date of such termination or, if earlier, the
                    expiration of the stock options."
                    
                    (2)       The second to the last sentence shall be amended
          to read as follows:
          


<PAGE>


                    "Viacom shall also provide you with the life insurance
                    coverage set forth in Section 4(c) until the end of the
                    Employment Term."

          Except as herein amended all other terms and conditions of the
Employment Agreement shall remain the same and the Employment Agreement as
herein amended shall remain in full force and effect.

          If the foregoing correctly sets forth our understanding, please sign
one (1) copy of this letter and return to the undersigned whereupon this letter
shall constitute a binding amendment to your Employment Agreement.

                                                 Very truly yours,

                                                 VIACOM INTERNATIONAL INC.


                                                 By:  /s/ Frank J. Biondi, Jr.
                                                    ---------------------------
                                                    Name:   Frank J. Biondi, Jr.
                                                    Title:  President, 
                                                             Chief Executive 
                                                             Officer


                                                 VIACOM INC.


                                                 By:  /s/ Frank J. Biondi, Jr.
                                                     ---------------------------
                                                     Name:  Frank J. Biondi, Jr.
                                                            Title: President, 
                                                            Chief Executive 
                                                             Officer


ACCEPTED AND AGREED:

   /s/ Philippe P. Dauman
_________________________
       Philippe P. Dauman


<PAGE>




                                                            As of April 1, 1994

Philippe P. Dauman, Esq.
655 Park Avenue
New York, New York  10021

Dear Mr. Dauman:

          Viacom Inc. ("Viacom") and you have entered into an amendment dated as
of the date hereof (the "Amendment Agreement") to your Employment Agreement
dated as of February 1, 1993 (as amended, the "Employment Agreement").  All
defined terms used herein without definition shall have the meanings set forth
in the Agreement.

          The Employment Agreement provides that, in the event that your
employment terminates under Section 8(b), stock options granted to you under the
LTMIP that have vested on the termination date or would have vested by the end
of the Employment Term will be exercisable for six (6) months after the
termination date.  In order for these provisions to be effective, the LTMIP must
be amended by the Viacom Board of Directors and the amendments approved by the
Viacom stockholders at the 1995 Annual Stockholders Meeting.

          In the event that the amendments to the LTMIP are not adopted or your
employment terminates before these amendments become effective, Viacom and you
agree that the amendment to clause (iii) of Section 8(b) of the Employment
Agreement shall not be made and said clause (iii) shall remain unchanged.

                                                Very truly yours,

                                                VIACOM INC.


                                                By:  /S/   Frank J. Biondi, Jr.
                                                    _________________________
                                                    Name:   Frank J. Biondi, Jr.
ACCEPTED AND AGREED:                                Title:  President, Chief
                                                            Executive Officer
/S/  Philippe P. Dauman
_________________________
       Philippe P. Dauman








                                                            Exhibit 10(q)

                                                             As of March 1, 1994

George S. Abrams
22 Bernard Lane
Waban, MA  02168

Dear Mr. Abrams:

          Viacom Inc. ("Viacom") desires that you perform certain services for
Viacom as provided for in this Agreement upon the following terms and
conditions:

      1.            Term.
      
                    The term of this Agreement commences on March 1,
                1994 and, shall continue unless terminated by Viacom
                or you pursuant to Section 5 hereof.
      
      2.            Duties and Responsibilities.
      
                    You shall provide advice to Viacom respecting
                legal and governmental relations matters or such other
                matters as Viacom through its Executive Vice
                President, General Counsel and Chief Administrative
                Officer may request (the "Services") on a non-
                exclusive basis.  You shall devote the appropriate
                portion of your time to perform the Services; however,
                nothing herein shall prevent you from fulfilling any
                of your obligations as a director of Viacom, Viacom
                International Inc. or Paramount Communications Inc. or
                engaging in other businesses and activities that are
                not in violation of your obligations hereunder.  You
                shall inform Viacom promptly of any conditions or
                limitations which will or might affect your
                performance of the services contemplated hereunder,
                including legal, ethical and personal
 conflicts;
                however, your failure to comply with these provisions
                shall not relieve you of any of your duties,
                liabilities or obligations hereunder.


<PAGE>

      3.            Independent Contractor.
      
                    In performing the Services, you shall be an
                independent contractor and not an employee.  You shall
                comply with instructions from Viacom concerning the
                nature and objective of the Services, but you have the
                discretion to determine the manner and precise timing
                of your performance of the Services.  Except as
                specifically authorized by Viacom, during performance
                of the Services you do not have the authority to
                contractually bind Viacom and you are not Viacom's
                agent.
      
      4.            Compensation.
      
                    For all Services rendered by you in any capacity
                hereunder, Viacom agrees to pay you the sum of ten
                thousand dollars ($10,000) monthly in the manner set
                forth herein, in addition to reimbursement by Viacom
                for reasonable travel and other expenses incurred in
                the performance of the Services.
      
                    Viacom shall issue you a check in the amount of
                ten thousand dollars ($10,000) on the 10th day of the
                month following each month during which you perform
                the Services (other than for March, 1994, the fee for
                which will be paid by check promptly upon your
                execution of this Agreement).  Additionally, a check
                will be issued to you for reimbursement of expenses
                reasonably incurred in conjunction with the Services
                upon submission of an invoice adequately describing
                the expenses paid by you.  Each such invoice shall be
                accompanied and supported by satisfactory evidence of
                the reimbursable expenses listed thereon.  Payment to
                you of each monthly amount shall constitute full and
                sufficient compensation for the Services.  Payment of
                any invoice for expenses shall not prejudice Viacom's
                right to dispute the accuracy thereof.
      
                    You shall retain all related accounting and other
                documentation for a period of 2 years after
                performance of the Services and expenses on each such
                invoice.
      
      5.            Termination.
      
                    Each of Viacom and you shall have the right to
                terminate this Agreement immediately upon written
                notice as provided in Section 7.

<PAGE>

      6.        Assignment.
      
                You shall not assign your rights or delegate your
                duties hereunder without the prior written consent of
                Viacom.
      
      7.        Notices.
      
                All notices, invoices, changes of address, or
                other communication required or permitted to be given
                hereunder shall be deemed to have been duly given when
                personally delivered or when deposited in the U.S.
                mail, postage prepaid,  as follows:
      
                    If to Viacom:   Viacom International Inc.
                                    Executive Vice President, General
                                     Counsel and Chief Administrative Officer
                                     1515 Broadway 
                                     New York, NY 10036
      
                If to you, at your address as set forth above.
      
                Notwithstanding the foregoing, if exigent
                circumstances exist, telephonic communication shall
                suffice if promptly followed by confirmation of such
                communication in the manner described above.
      
                Either party may change its or his address for the
                purpose of this paragraph by written notice similarly
                given.
      
      8.        Governing Law.
      
                This Agreement shall be governed by and construed
                in accordance with the laws of the State of New York
                and the courts of New York State shall have exclusive
                jurisdiction over any matter arising under this
                Agreement.
      
      9.        Void Provisions.
      
                If any provision of this Agreement, as applied to
                either party or to any circumstances, shall be
                adjudged by a court to be void or unenforceable, the
                same shall be deemed stricken from this Agreement and
                shall in no way affect any other provision of this
                Agreement or the validity or enforceability of this
                Agreement.


<PAGE>

      10.       Survival.
      
                The provisions of Sections 4 and 8 shall survive
                any termination or expiration of this Agreement.
      
      11.       Entire Agreement.
      
                The terms and provisions of this Agreement
                constitute the entire agreement between Viacom and you
                with respect to the Services and supersede all
                communications, representations or agreements, either
                verbal or written. This Agreement may not be modified,
                amended or supplemented, or extended except by written
                instrument executed by both Viacom and you.

          If the foregoing correctly sets forth our understanding, please sign
one copy of this letter and return it to the undersigned, whereupon this letter
shall constitute a binding agreement between us.


                                                     Very truly yours,


                                                      VIACOM INC.

                                                    By:  /s/ Philippe P. Dauman
                                                        ----------------------
                                                        Philippe P. Dauman
                                                        Executive Vice
                                                        President, General 
                                                        Counsel and Chief
                                                        Administrative Officer


ACCEPTED AND AGREED:


/s/ George S. Abrams
-------------------
George S. Abrams

          



                                                            Exhibit 10(s)

                            ASSET PURCHASE AGREEMENT

                                     Among

                             TELEVUE SYSTEMS, INC.,

                           VIACOM INTERNATIONAL INC.

                          INTERMEDIA PARTNERS IV, L.P.

                                      and

                               RCS PACIFIC, L.P.

                          Dated as of January 20, 1995



                                       5

<PAGE>

                               TABLE OF CONTENTS
                                                                      Page
                                                                      ----
ARTICLE I - DEFINITIONS ......... ....................................    1

     Section 1.1  Definitions .........................................   1

ARTICLE II - PURCHASE AND SALE OF ASSETS .............................   19

     Section 2.1  Acquired Assets ....................................   19
     Section 2.2  Excluded Assets ....................................   20
     Section 2.3  Efforts to Obtain Consents .........................   21
     Section 2.4  Lack of Regulatory Approvals; Right of First Refusal
                  Franchise Areas ....................................   21
     Section 2.5  Reorganization .....................................   23
     Section 2.6  Purchase Price Allocations .........................   24

ARTICLE III - ASSUMPTION OF LIABILITIES ..............................   24

     Section 3.1  Assumption of Liabilities ..........................   24
     Section 3.2  Retained Liabilities ...............................   24

ARTICLE IV - PURCHASE PRICE ..........................................   25

     Section 4.1  Purchase Price .....................................   25
     Section 4.2  Calculation of Adjustment Amounts ..................   31
     Section 4.3  Adjustment Payment .................................   32
     Section 4.4  Proration ..........................................   32

ARTICLE V - REPRESENTATIONS AND WARRANTIES OF 
            TELEVUE AND VIACOM .......................................   33

     Section 5.1  Corporate Existence and Power ......................   33
     Section 5.2  Corporate Authorization ............................   33
     Section 5.3  Governmental Authorization .........................   33
     Section 5.4  Consents ...........................................   33
     Section 5.5  NonContravention ...................................   34
     Section 5.6  Binding Effect .....................................   34
     Section 5.7  Financial Statements ...............................   34
     Section 5.8  Systems; Local Authorizations and
                  FCC Authorizations
 .................................   34
     Section 5.9  Absence of Changes .................................   35
     Section 5.10 Subsidiaries .......................................   36
     Section 5.11 Assets .............................................   36
     Section 5.12 Intellectual Property ..............................   36
     Section 5.13 Material Contracts .................................   36
     Section 5.14 Litigation .........................................   36
     Section 5.15 Compliance with LegalRequirements ..................   37
     Section 5.16 Employees ..........................................   37
     Section 5.17 Finders' Fees ......................................   38
     Section 5.18 Real Property ......................................   38
     Section 5.19 Environmental Matters ..............................   38
     Section 5.20 FCC and Copyright ..................................   39
     Section 5.21 Taxes ..............................................   39
     Section 5.22 Telecom Capital Expenditures .......................   40
     Section 5.23 Reorganizations ....................................   40
     Section 5.24 Accounts Receivable, Net ...........................   40

ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF BUYER
             AND INTERMEDIA ..........................................   41

     Section 6.1  Partnership Existence and Power ....................   41
     Section 6.2  Partnership Authorization ..........................   41
     Section 6.3  Governmental Authorization .........................   41
     Section 6.4  Consents ...........................................   41
     Section 6.5  NonContravention ...................................   41
     Section 6.6  Binding Effect .....................................   41
     Section 6.7  No Violations of FCC Cross
                  Ownership Rules ....................................   42
     Section 6.8  FCC Certificate ....................................   42
     Section 6.9  Finders' Fees ......................................   42
     Section 6.10 Limited Partner Guaranty ...........................   42
     Section 6.11 First Pledge Agreement .............................   42
     Section 6.12 Value Guarantee Agreement ..........................   42
     Section 6.13 Second Pledge Agreement ............................   42
     Section 6.14 Note ...............................................   43

ARTICLE VII - COVENANTS OF TELEVUE ...................................   43

     Section 7.1  Conduct of the Business ............................   43
     Section 7.2  Telecom Partnerships ...............................   43
     Section 7.3  Access to Information;
                  Confidentiality ....................................   44
     Section 7.4  Additional Financial Statements
                  and Reports ........................................   44
     Section 7.5  Nashville Franchise ................................   45
     Section 7.6  Material Adverse Changes ...........................   45
     Section 7.7  Taxes ..............................................   45
     Section 7.8  Local Authorization and Material
                  Contract Amendments.................................   46
     Section 7.9  Reorganizations ....................................   46
     Section 7.10 Noncompetition .....................................   46


                                       6

<PAGE>

     Section 7.11 Telecom Partnership Leases .........................   47
     Section 7.12 IRS ruling .........................................   47

ARTICLE - VIII  OTHER COVENANTS ......................................   47

     Section 8.1  HartScottRodino ....................................   47
     Section 8.2  Efforts; Filing and Consents .......................   47
     Section 8.3  Release of the Cable Group .........................   51
     Section 8.4  Notices of Certain Events ..........................   51
     Section 8.5  Employment .........................................   52
     Section 8.6  Further Assurances .................................   52
     Section 8.7  Taxes ..............................................   52
     Section 8.8  Employee Matters ...................................   53
     Section 8.9  WARN ...............................................   55
     Section 8.10 FCC Certificate ....................................   55
     Section 8.11 Confidentiality ....................................   56
     Section 8.12 Approved Capital Expenditure Plan ..................   56
     Section 8.13 Reimbursement of Capital
                  Expenditures .......................................   56

ARTICLE IX - CONDITIONS TO THE OBLIGATIONS OF BUYER ..................   57

     Section 9.1  Representations and Warranties;
                  Covenants ..........................................   57
     Section 9.2  HSR Act ............................................   57
     Section 9.3  Consented Subscribers ..............................   57
     Section 9.4  Required Consents ..................................   57
     Section 9.5  Absence of Injunction ..............................   58
     Section 9.6  PVIT Assets ........................................   58
     Section 9.7  Opinions ...........................................   58

ARTICLE X - CONDITIONS TO THE OBLIGATIONS OF TELEVUE .................   58

     Section 10.1  Representations and Warranties;
                   Covenants .........................................   58
     Section 10.2  HSR Act ...........................................   58
     Section 10.3  Consented Subscribers .............................   58
     Section 10.4  Opinions ..........................................   58
     Section 10.5  Consents ..........................................   59
     Section 10.6  Absence of Injunction .............................   59
     Section 10.7  FCC Certificate and Related Tax
                   Matters ...........................................   59
     Section 10.8  Reorganizations ...................................   59
     Section 10.9  Limited Partner Guarantee .........................   60
     Section 10.10 First Pledge Agreement ............................   60



                                       7

<PAGE>

ARTICLE XI - TERMINATION .............................................   60

     Section 11.1  Termination .......................................   60
     Section 11.2  Effect of Termination .............................   60

ARTICLE XII - CLOSING ................................................   61

     Section 12.1  Closing ...........................................   61
     Section 12.2  Deliveries at the Closing .........................   61

ARTICLE XIII - SURVIVAL AND INDEMNIFICATION ..........................   65

     Section 13.1  Survival ..........................................   65
     Section 13.2  Indemnification ...................................   65

ARTICLE XIV - MISCELLANEOUS ..........................................   67

     Section 14.1  Expenses ..........................................   67
     Section 14.2  Headings ..........................................   67
     Section 14.3  Notices ...........................................   67
     Section 14.4  Assignment ........................................   68
     Section 14.5  Entire Agreement ..................................   70
     Section 14.6  Amendment; Waiver .................................   70
     Section 14.7  Counterparts ......................................   70
     Section 14.8  Governing Law .....................................   70
     Section 14.9  Severability ......................................   70
     Section 14.10 Consent to Jurisdiction ...........................   71
     Section 14.11 Third Person Beneficiaries ........................   71
     Section 14.12 Representations and Warranties;
                   Schedules .........................................   71
     Section 14.13 Specific Performance ..............................   71
     Section 14.14 Nonrecourse Provisions ............................   71

ARTICLE XV - UNDERTAKING, REPRESENTATIONS AND WARRANTIES OF VIACOM ...   73

     Section 15.1  Viacom Undertaking as to Tele-Vue's Obligations ...   73
     Section 15.2  Representations and Warranties ....................   73

ARTICLE XVI - UNDERTAKING, REPRESENTATIONS AND 
              WARRANTIES OF INTERMEDIA ...............................   74

     Section 16.1  InterMedia Undertaking as to
                   Buyer's Obligations ...............................   74
     Section 16.2  Representations and Warranties ....................   74


                                       8

<PAGE>

                                    EXHIBITS
                                    --------

A - Systems
B - Approved Capital Expenditure Plan
C - Cable Division Subsidiaries
D - Tax Affidavit Form
E-1 - TeleVue Opinion
E-2 - FCC Counsel Opinion
F-1 - Buyer Opinion
F-2 - Guarantor Opinion
G - PVIT Bill of Sale
H - Limited Partner Guaranty
I - First Pledge Agreement
J - Value Guarantee Agreement
K - Note
L  Second Pledge Agreement

                                   SCHEDULES
                                   ---------

2.2   -  Excluded Assets
4.1   -  Certain Amounts to be Deducted From the Purchase Price
5.7   -  Financial Statements
5.8   -  Systems:  Local Authorizations and FCC Authorizations
5.9   -  Absence of Changes
5.13  -  Material Contracts
5.14  -  Litigation
5.15  -  Legal Requirements
5.16  -  Employment Agreements; Labor Disputes; Labor Agreements; Benefit Plans
5.18  -  Owned Real Property
5.19  -  Underground Storage Tanks
5.20  -  Equal Employment Opportunity Rules
6.4   -  Required Consents
8.13  -  Additional Capital Expenditures
12.2  -  PVIT Assets



                                       9

<PAGE>


                            ASSET PURCHASE AGREEMENT
                            ------------------------

     This Asset Purchase  Agreement is made and entered into as of this 20th day
of January,  1995 by and among TeleVue Systems,  Inc., a Washington  corporation
("TeleVue"),  Viacom  International  Inc.,  a Delaware  corporation  ("Viacom"),
InterMedia  PartnersIV,  L.P., a California limited partnership  ("InterMedia"),
and RCS Pacific, L.P., a California limited partnership ("Buyer").

     WHEREAS, TeleVue is a whollyowned subsidiary of Viacom; and

     WHEREAS, InterMedia owns a substantial beneficial interest in Buyer; and

     WHEREAS,  in order to induce Buyer to enter into this Agreement,  Viacom is
agreeing to cause  TeleVue to pay and perform all  TeleVue's  obligations  under
this Agreement; and

     WHEREAS,  in  order  to  induce  TeleVue  to  enter  into  this  Agreement,
InterMedia is agreeing to cause Buyer to pay and perform all Buyer's obligations
under this Agreement; and

     WHEREAS,  TeleVue and the other Cable Division  Subsidiaries are engaged in
the business of operating  those cable  television  systems  listed on Exhibit A
hereto; and

     WHEREAS, all the Cable Division  Subsidiaries other than TeleVue are direct
or indirect whollyowned Subsidiaries of TeleVue; and

     WHEREAS,  except for the Excluded Assets,  the Acquired Assets and the PVIT
Assets  constitute all material  operating assets of Viacom and its Subsidiaries
used primarily in the Cable Television  Business of Viacom and its Subsidiaries;
and

     WHEREAS, TeleVue desires to sell, and Buyer desires to purchase, the assets
(other than the Excluded  Assets)  relating to the Systems,  on the terms herein
set forth;

     NOW,  THEREFORE,  in consideration  of the mutual  promises,  covenants and
other agreements contained herein, the parties hereby agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

     Section 1.1  Definitions.  The following  terms, as used in this Agreement,
shall have the following meanings:

     "Accounts Payable" shall mean the book value of all accounts payable of the
Cable Group relating to the conduct of the Business calculated as of the Closing
in  accordance  with GAAP on a basis  consistent  with the  application  of such
principles in the preparation of the Financial Statements.



                                       10

<PAGE>

     "Accounts  Receivable,  Net"  shall  mean  the book  value of all  accounts
receivable of the Cable Group  relating to the conduct of the  Business,  net of
the allowance for doubtful  accounts and advance  billings  (other than deferred
customer revenue and accounts  receivable  relating to payments of principal due
from the Telecom  Partnership  referred to in clause (ii) of the  definition  of
Telecom Capital  Expenditure  Amount), in each case calculated as of the Closing
in  accordance  with GAAP on a basis  consistent  with the  application  of such
principles in the preparation of the Financial Statements.

     "Acquired Assets" shall have the meaning set out in Section 2.1.

     "Acquired Employees" shall have the meaning set out in Section 8.8(a).

     "Adjusted Closing Date Basic Subscribers" shall have the meaning set out in
the definition of "Under Base Subscriber Number Retained Subscribers."

     "Adjustment Amounts" shall have the meaning set out in Section4.2(a).

     "Affiliate"  of  any  Person  shall  mean  any  other  Person  directly  or
indirectly controlling, controlled by or under common control with such Person.

     "Agents" shall have the meaning set out in Section 7.3.

     "Aggregate   Cumulative  Adjusted  Capital  Expenditures"  shall  mean  the
aggregate  Cumulative  Adjusted Capital  Expenditures for all Retained Franchise
Areas for the period from the Closing Date to the date of determination, subject
to reduction as provided in Section 2.4(a)(ii).

     "Aggregate  Cumulative  Deemed  Net Cash  Flow"  shall  mean the  aggregate
Cumulative Deemed Net Cash Flow for all Retained  Franchise Areas for the period
from the Closing  Date to the date of  determination,  subject to  reduction  as
provided in Section 2.4(a)(ii).

     "Agreement"  shall  mean  this  Asset  Purchase  Agreement,  including  the
Exhibits and Schedules hereto.

     "Antitrust Laws" shall have the meaning set out in Section 8.2(b).

     "Approved Capital Expenditure Plan" shall mean the capital expenditure plan
for the Cable Group, by System,  which identifies  Covered Capital  Expenditures
and Line Extension and Other Capital Expenditures, attached as ExhibitB hereto.

     "Arbitrating  Firm" shall mean a "big six"  independent  public  accounting
firm (other than KPMG Peat Marwick LLP and Price  Waterhouse&  Co. LLP and their
respective  successors)  selected by  agreement  of the Buyer and TeleVue or, if
they cannot agree, chosen by lot from among the aforesaid firms.

     "Assumed Contracts" shall have the meaning set out in Section 2.1(g).



                                       11

<PAGE>

     "Assumed Liabilities" shall have the meaning set out in Section3.1.

     "Average Market Price" shall mean, with respect to a TCI Stock, the average
of the last  reported  sale price (or,  if no sale price is reported on any day,
the  average  of the high and low bid prices on such day) of a share of such TCI
Stock  on  the  National  Association  of  Securities  Dealers,  Inc.  Automated
Quotation  System on each  trading  day  during  the  period  commencing  on the
twentyfifth trading day prior to the Closing and ending on the fifth trading day
prior to the Closing.

     "AVR  Partnership"  shall have the  meaning  set out in the  definition  of
Telecom Partnership Agreements.

     "Balance Sheet Date" shall mean September30, 1994.

     "Banked Sick Leave Days" shall have the meaning set out in Section 8.8(f).

     "Base Price" shall have the meaning set out in Section 4.1(a)(1).

     "Base  Subscriber  Number"  shall mean a number  equal to 1,134,000 or such
other number as may be fixed pursuant to Section 4.1(d)(i)(B).

     "Basic  Subscriber"  shall mean the sum of the  following  amounts  for all
Franchise Areas:

          (a) with  respect  to a  Franchise  Area,  the  number of all  private
     residential customer accounts (regardless of whether in a singlefamily home
     or in an  individually  billed  unit in a  multipleunit  building)  who are
     receiving basic cable television  service at the Basic Subscriber Rate (but
     excluding  "complimentary  subscribers,"  "second connects" and "additional
     outlets"  as  such  terms  are  customarily  used in the  cable  television
     industry); plus

          (b) with  respect to a  Franchise  Area,  the  number of  private  and
     residential customer accounts (regardless of whether in a singlefamily home
     or in an  individually  billed unit in a multiple  unit  building)  who are
     receiving  basic  cable  television  service  at a  discount  to the  Basic
     Subscriber Rate because the account is or was to the knowledge of TeleVue a
     "low income" and/or "senior  citizen"  account in accordance with TeleVue's
     policy as of the date of this Agreement,  determined as the quotient of the
     total monthly basic service  revenue derived from these customers as of the
     date  of  determination   thereof  (excluding  any  charges  for  taxes  or
     nonrecurring items (including, without limitation, nonrecurring charges for
     installation,  equipment,  any outlet or connection or a passthrough charge
     for sales taxes,  lineitemized  franchise fees and charges)) divided by the
     Basic Subscriber Rate; plus

          (c) with respect to a Franchise Area,  without  duplication of clauses
     (a) and (b)  above,  the  number of  commercial  and bulk  billed  accounts
     (including,  without  limitation,  hotels,  motels,  apartment  houses  and
     multifamily homes) that receive basic cable television service,  determined


                                       12

<PAGE>

     as the  quotient of the monthly  basic  service  revenue  derived  from the
     commercial and bulk billed accounts as of the date of determination thereof
     (excluding any charges for taxes or nonrecurring items (including,  without
     limitation, nonrecurring charges for installation, equipment, any outlet or
     connection or a passthrough charge for sales taxes,  lineitemized franchise
     fees and charges)) divided by the Basic Subscriber Rate.

     "Basic  Subscriber  Rate" shall mean for each  Franchise  Area, the monthly
fees and  charges  for the  provision  of the "basic  service"  (as such term is
customarily  used in the cable  television  industry and  regardless  of whether
customers  taking basic service take any other tier of regulated or  unregulated
service  (excluding  (i)any charges for  installation  fees and revenues derived
from the rental of converters, remote control devices and other like charges for
equipment  and  (ii)any  charges  for taxes or  nonrecurring  items  (including,
without limitation, nonrecurring charges for installation, equipment, any outlet
or connection or a passthrough  charge for sales taxes,  lineitemized  franchise
fees and charges))) charged to customers served by the Franchise Area, as of the
date of determination.

     "Benefit Plans" shall have the meaning set out in Section 5.16(c)(i).

     "Business" shall mean the businesses of the Systems taken as a whole.

     "Business Day" shall mean a day other than a Saturday,  Sunday or other day
on which  banks in New York  City or San  Francisco  are  required  to or may be
closed.

     "Buyer" shall mean RCS Pacific, L.P., a California limited partnership.

     "Buyer's Welfare Plans" shall have the meaning set out in Section 8.8(h).

     "Cable Division  Subsidiaries"  or "Cable Group" shall mean (i) TeleVue and
(ii) the other Persons set out on Exhibit C hereto, for so long as they exist.

     "Cable  Group's  Welfare  Plan"  shall have the  meaning set out in Section
8.8(h).

     "Cable Television Business" shall mean the business of owning and operating
a coaxial or fiber optic cable television signal distribution system.

     "Capital  Expenditure  Amount"  shall mean (i)the  aggregate  amount of all
Covered Capital  Expenditures  plus (ii)the aggregate amount of the Covered Line
Extension  and Other  Capital  Expenditures  plus  (iii)without  duplication  of
clauses (i) and (ii) above,  the  aggregate  amount of all capital  expenditures
made by the  Cable  Group  during  the  period  from the date of this  Agreement
through the Closing Date at the request of, or with the express  written consent
of (whether prior to or after the date of this Agreement),  Buyer minus (iv) the
aggregate  amount of all  Covered  Capital  Expenditures  and all  Covered  Line
Extension  and Other  Capital  Expenditures  relating to Right of First  Refusal
Franchise  Areas  and  Retained   Franchise  Areas  ("Deducted  Covered  Capital
Expenditures").



                                       13

<PAGE>

     "CERCLA" shall have the meaning set out in Section 5.19.

     "Closing" shall have the meaning set out in Section12.1.

     "Closing Date" shall have the meaning set out in Section12.1.

     "Closing  Date Basic  Subscribers"  shall mean the average  number of Basic
Subscribers  for the nine (9)  consecutive  Thursdays (or such other day used by
TeleVue for accounts  receivable  cutoffs) ending on or immediately prior to the
Closing Date,  calculated by summing the number of Basic  Subscribers as of each
such  Thursday (or such other day) and dividing  such sum by nine (9),  without,
for these purposes, giving effect to the loss, if any, of Basic Subscribers as a
result of a Disaster (defined for these purposes without regard to the number of
Basic  Subscribers  affected).  "Closing  Inventory  Amount" shall mean the book
value of all Inventory calculated as of the Closing in accordance with GAAP on a
basis  consistent  with the application of such principles in the preparation of
the Financial Statements multiplied by a fraction:  (i)the numerator of which is
equal to the aggregate book value of all Inventory consumed during the two-month
period ending on the last day of the monthly  accounting  period ending prior to
the Closing Date to the extent such  Inventory was consumed in  connection  with
the Covered  Capital  Expenditures,  Covered Line  Extension  and Other  Capital
Expenditures,  the Telecom Capital  Expenditures Amount or capital  expenditures
made by the Cable Group at the request of, or with the express  written  consent
of, Buyer and (ii)the  denominator of which is equal to the aggregate book value
of all Inventory consumed during such two-month period.

     "Closing  Working  Capital"  shall  mean an  amount  equal  to  (a)Accounts
Receivable,  Net,  plus the  amount  of  Prepaid  Expenses,  plus the  amount of
Transferred  Cash  Balances  plus the amount of deposits  of any Cable  Division
Subsidiary held by others to secure  performance of an Assumed  Liability by any
Cable  Division  Subsidiary,  minus (b)the  amount of Accounts  Payable plus the
amount of Other Current Liabilities, all computed as of the Closing Date.

     "COBRA" shall have the meaning set out in Section 8.8(h).

     "Code" shall mean the Internal Revenue Code of 1986, as amended.

     "Communications  Act" shall mean the  Communications  Act of 1934 including
the Cable  Communications  Policy Act of 1984, and the Cable Television Consumer
Protection  and  Competition  Act of 1992,  each as  amended,  and all rules and
regulations promulgated thereunder, as amended (the "Rules and Regulations").

     "Consented  Subscribers" shall mean the number of Basic Subscribers as of a
date within ten days prior to the Closing Date residing:

          (a) in those Franchise  Areas for which Local Authority  Consents have
     been  obtained  on or  before  such  date  and  in  respect  of  which  the
     ordinances,   resolutions  or  other   appropriate   governmental   actions


                                       14

<PAGE>

     evidencing  the  grant of such  Local  Authority  Consents  shall  not have
     imposed any  material  adverse  change in the terms of the  relevant  Local
     Authorization, except for such material adverse changes as Buyer shall have
     expressly accepted or as otherwise agreed to by Buyer; and

          (b) in those Franchise  Areas for which a Local  Authority  Consent is
     not required for the consummation of the Transaction.

     "Copyright  Act" shall mean Title 17 of the United States Code, as amended,
and all rules and regulations promulgated thereunder, as amended.

     "Covered  Capital  Expenditures"  shall  mean the sum of  (i)the  aggregate
amount of all capital  expenditures  made by the Cable  Group  during the period
from  January 1, 1995  through the Closing  Date  relating to (a)  upgrades  and
rebuilds and associated items (including,  without limitation, headend sites and
headend equipment to expand channel  capacity,  but excluding costs of repairing
damage  caused by a Disaster  that would not have been incurred if such Disaster
had not  occurred)  and  (b)converter  changeouts  (including  the  purchase  of
converters for such purpose),  (ii)without  duplication of clause (i) above, any
capital expenditure  identified as a Covered Capital Expenditure in the Approved
Capital  Expenditure  Plan and  (iii)a  reasonable  allocation  of  construction
overhead  (other than  capitalized  interest)  for such  period  related to such
upgrades and rebuilds  (other than with respect to repairing  damage caused by a
Disaster).

     "Covered Line Extension and Other Capital  Expenditures" shall mean the sum
of (i)the aggregate amount of all Line Extension and Other Capital  Expenditures
made by the Cable Group  during the period from the first date after the date of
this  Agreement  on which the number of Basic  Subscribers  is not less than the
Base Subscriber Number through the Closing Date plus (ii)a reasonable allocation
of  construction  overhead  (other than  capitalized  interest)  for such period
related  to such Line  Extension  and Other  Capital  Expenditures.  "Cumulative
Adjusted Capital Expenditures" shall mean with respect to any Retained Franchise
Area,  cumulative  Monthly  Adjusted  Capital  Expenditures  for  such  Retained
Franchise   Area  for  the  period  from  the  Closing   Date  to  the  date  of
determination, subject to reduction as provided in Section 2.4(a)(ii).

     "Cumulative  Deemed Net Cash Flow" shall mean, with respect to any Retained
Franchise  Area,  cumulative  Monthly  Deemed  Net Cash  Flow for such  Retained
Franchise   Area  for  the  period  from  the  Closing   Date  to  the  date  of
determination, subject to reduction as provided in Section2.4(a)(ii).

     "Dayton Guarantor" shall have the meaning set out in Section 14.4(B).

     "Dayton Third Party" shall have the meaning set out in Section 14.4(B).

     "Deducted Covered Capital  Expenditures"  shall have the meaning set out in
the definition of "Capital Expenditure Amount."


                                       15

<PAGE>

     "Deferred   Closing   Date"   shall   have   the   meaning   set   out   in
Sections4.1(d)(ii) or 4.1(e), as the context requires.

     "Deferred   Purchase   Price"   shall   have   the   meaning   set  out  in
Section12.2(b)(i).

     "Direct Partners" shall have the meaning set out in Section 14.14(c).

     "Disaster" shall have the meaning set out in Section 4.1(b).

     "Dispute Notice" shall have the meaning set out in Section4.2(d).

     "Disqualified Person" shall have the meaning set out in Section 7.10.

     "Distribution" shall have the meaning set out in Section 14.14(d).

     "DOJ" shall mean the United States Department of Justice.

     "Eastern  System Closing Date Basic  Subscribers"  shall mean the aggregate
number of Closing Date Basic  Subscribers  less the number of West Coast Closing
Date Basic Subscribers.

     "Eastern System Closing Date Subscriber  Target" shall mean 133,749 or such
other number as may be fixed pursuant to Section 4.1(d)(i)(E).

     "Eastern System Right of First Refusal  Subscribers" shall have the meaning
set out in Section 4.1(d)(i)(E).

     "Employees" shall mean all employees of the Cable Group with respect to the
Systems at the relevant time.

     "Equipment" shall have the meaning set out in Section 2.1(e).

     "ERISA" shall have the meaning set out in Section 5.16(c).

     "ERISA Affiliates" shall have the meaning set out in Section 8.8(b).

     "Estimated   Adjustment   Amounts"  shall  have  the  meaning  set  out  in
Section 4.2(a).

     "Estimated  Capital  Expenditure  Amount" shall have the meaning set out in
Section 4.2(a).

     "Estimated  Closing Date Basic  Subscribers" shall have the meaning set out
in Section 4.2(a).

     "Estimated  Closing  Inventory  Amount"  shall have the  meaning set out in
Section 4.2(a).


                                       16

<PAGE>

     "Estimated  Closing  Working  Capital"  shall have the  meaning  set out in
Section 4.2(a).

     "Estimated Lost Service Subscriber Reduction Amount" shall have the meaning
set out in Section 4.2(a).

     "Estimated Purchase Price" shall have the meaning set out in Section4.2(b).

     "Estimated  Retained Franchise Reduction Amount" shall have the meaning set
out in Section 4.2(a).

     "Estimated Right of First Refusal  Adjustments"  shall have the meaning set
out in Section 4.2(a).

     "Estimated  Subscriber  Shortfall Amount" shall have the meaning set out in
Section 4.2(a).

     "Estimated  Telecom  Amount"  shall  have the  meaning  set out in  Section
4.2(a).

     "Excess Payment" shall have the meaning set out in Section 4.1(f).

     "Excluded Assets" shall have the meaning set out in Section 2.2.

     "FCC" shall mean the Federal Communications Commission.

     "FCC   Authorizations"   shall   mean   all   authorizations,    approvals,
certifications, franchises, licenses and permits of the FCC granted to the Cable
Group with respect to the Systems.

     "FCC  Certificate"  shall  mean  one or  more  certificates  from  the  FCC
described  in  Section1071  of the  Code  with  respect  to the  sale of all the
Acquired  Assets and any Retained  Assets and any Right of First Refusal  Assets
pursuant to this Agreement to Buyer (including, without limitation, any Acquired
Assets,  Retained Assets and Right of First Refusal Assets which are the subject
of an assignment pursuant to Section 14.4).

     "Final Certificate" shall have the meaning set out in Section 4.2(c).

     "Financial Statements" shall have the meaning set out in Section 5.7.

     "First  Pledge  Agreement"  shall mean a Pledge  Agreement of the Guarantor
executed and  delivered by the Guarantor  pursuant to the First Limited  Partner
Guaranty, in the form of Exhibit I hereto.

     "Fixed  Price" shall mean an amount equal to  $2,227,800,000  or such other
amount as may be fixed pursuant to Section 4.1(d)(i)(A).

     "Franchise  Areas"  shall  mean  the  areas  in which  the  Cable  Group is
authorized to provide cable  television  service under the Local  Authorizations


                                       17

<PAGE>

and the areas  served by any  System in which  the Cable  Group  provides  cable
television service without a Local Authorization.

     "FTC" shall mean the Federal Trade Commission.

     "GAAP" shall mean generally  accepted  accounting  principles  applied on a
consistent basis.

     "Governmental  Authority" shall mean any federal, state, municipal or local
governmental authority or political subdivision thereof.

     "Guarantor" shall mean TeleCommunications, Inc., a Delaware corporation.

     "Hazardous Materials" shall have the meaning set out in Section 5.19.

     "Homes Passed" shall mean the sum of (a)each single family residence in the
Franchise  Areas, and (b)each  townhouse,  condominium or dwelling unit which is
part of a building  containing  multiple  dwelling units in the Franchise Areas,
but  excluding  single  family  residences  and units in multiple  dwelling unit
buildings  which (i)are  located  more than 150 feet from an activated  trunk or
feeder cable of a System, (ii)require an underground service stub in order to be
connected to activated trunk or feeder cable of a System or (iii)are  located in
multiple  dwelling  unit  buildings  to which a System  does not have a right of
access.

     "HSR Act"  shall mean the  HartScottRodino  Antitrust  Improvements  Act of
1976, as amended, and the rules and regulations thereunder, as amended.

     "Indemnified Party" shall have the meaning set out in Section 13.2(a).

     "Indemnifying Party" shall have the meaning set out in Section 13.2(a).

     "Indirect Partners" shall have the meaning set out in Section 14.14(c).

     "Intangible Assets" shall have the meaning set out in Section 2.1(h).

     "InterMedia" shall mean InterMedia  PartnersIV,  L.P., a California limited
partnership.

     "InterMedia Nashville" shall have the meaning set out in Section 14.4(A).

     "Inventory" shall have the meaning set out in Section 2.1(b).

     "IRS" shall mean the Internal Revenue Service.

     "Leased Real Property" shall mean leasehold interests of the Cable Group in
the real property used in connection with any System.



                                       18

<PAGE>

     "Legal  Requirement"  shall mean the  requirements  of any law,  ordinance,
statute, rule, regulation, code, order, judgment, decree, injunction, franchise,
determination,  approval, permit, license, authorization or other requirement of
any Governmental Authority.

     "LIBOR Rate" shall mean a per annum  fluctuating  rate of interest equal to
the sum of (i)the London Interbank  Offered Rate for one month published as such
from time to time in the Money Rates column of The Wall Street Journal  (Eastern
Edition) (or, if the Wall Street Journal  (Eastern  Edition) is not published or
if such rate is for any other  reason  unavailable  on any  relevant  date,  the
highest offered rate for deposits in U.S. Dollars for the one month period which
appears  on  the  Reuters  Screen  London   Interbank   Offered  Rates  Page  at
approximately  11:00 a.m.  (London  time) on the  relevant  date) plus (ii)1 1/4
percentage  points.  For all purposes of this  Agreement,  interest at the LIBOR
Rate shall be  calculated  on the basis of the actual  number of days elapsed in
the relevant period over a year of 360 days, as applicable.

     "Lien" shall mean, with respect to any asset, any mortgage,  lien,  pledge,
charge, security interest or encumbrance of any kind in respect of such asset.

     "Limited  Partner  Guaranty" shall mean the Guaranty of Guarantor dated the
date hereof and executed and delivered by Guarantor  contemporaneously  with the
execution and delivery of this Agreement, in the form of Exhibit H hereto.

     "Line  Extension  and Other  Capital  Expenditures"  shall mean any capital
expenditure  made  after  the  date of  this  Agreement  (calculated  on a basis
consistent   with  the  Cable  Group's   policies  prior  to  the  Closing)  for
(i)extension  of trunk and feeder cable within the Franchise  Areas to serve new
commercial accounts, new residential  developments and/or additional residential
dwelling units,  thereby adding new Homes Passed,  (ii)initial  connections from
trunk and feeder cable in the Franchise  Areas to any single  family  residence,
townhouse,  condominium or dwelling unit which is part of a building  containing
multiple  dwelling  units or to any potential  commercial or bulkbilled  account
which relate to  extensions  covered in clause (i) above,  (iii)the  purchase of
converters (but without  duplication of the amounts  included in Covered Capital
Expenditures pursuant to clause(i)(b) of the definition thereof) and (iv)without
duplication  of clauses  (i),  (ii) and (iii)  above,  any  capital  expenditure
identified  as a Line  Extension  Capital  Expenditure  in the Approved  Capital
Expenditure Plan.

     "Local Authority" shall mean any Governmental Authority having jurisdiction
to grant a cable  television  franchise  with respect to all or a portion of any
System.

     "Local   Authorizations"   shall   mean  all   authorizations,   approvals,
franchises, licenses and permits of Local Authorities granted to the Cable Group
which permit the operation of the Systems as amended, modified or supplemented.

     "Local  Authority  Consent" shall mean the consent of a Local  Authority to
the  transfer  of  a  Local  Authorization  to  Buyer  in  connection  with  the
Transaction.

     "Losses" shall mean losses, liabilities,  claims and reasonable expenses of
defense  thereof  (including,  without  limitation,  expenses of  investigation,


                                       19

<PAGE>

defense and fees and disbursements of counsel,  but excluding  compensation paid
to employees of the relevant Indemnified Party or its Affiliates),  and Liens or
other  obligations  of any nature  whatsoever,  other than  Losses to the extent
recoverable by the relevant  Indemnified  Party under any  applicable  insurance
policy and net of the present  value  (using  Buyer's  weighted  average cost of
borrowing as of the date of  calculation of any such benefit) of any tax benefit
to the relevant Indemnified Party as a result of such Losses.

     "Lost Service  Subscriber  Reduction  Amount" shall mean either zero or, if
applicable, the amount determined pursuant to Section 4.1(b)(i).

     "Lost  Service  Subscribers"  shall  have the  meaning  set out in  Section
4.1(b)(i).

     "Material  Adverse  Effect"  shall  mean a material  adverse  effect on the
business,  financial  condition or results of  operations of the Business or any
System, except for:

          (a) changes  resulting  from  general  economic,  financial  or market
     conditions;

          (b)  changes  in,  or  changes  required  in  order  to  comply  with,
     applicable  legislation  or regulations  affecting  U.S.  cable  television
     operators  generally,  including  but  not  limited  to any  adjustment  in
     subscriber  rates   implemented  in  a  manner  consistent  with  the  rate
     regulations  promulgated  by the FCC under the  Cable  Television  Consumer
     Protection  and  Competition  Act of 1992  and the  rules  and  regulations
     promulgated thereunder from time to time; and

          (c) changes resulting from technological  changes generally applicable
     to the cable television industry.

     "Material  Contract"  shall mean any contract of the Cable Group that (i)is
material to the Business or any System or (ii)requires  aggregate  payments by a
party  thereto in excess of $500,000.  Material  Contract  shall not include any
Local Authorization or FCC Authorization.

     "Monthly  Adjusted  Capital  Expenditures"  shall mean, with respect to any
Retained  Franchise  Area,  during  any  month  (or  portion  thereof),  capital
expenditures  (calculated on a basis  consistent with the Cable Group's policies
prior to the Closing  including  without  limitation a reasonable  allocation of
construction  overhead)  made  during  such  month (or  portion  thereof),  plus
interest  on such  amount at the Prime Rate for the period  from the end of such
month to the Deferred  Closing Date for such  Retained  Franchise  Area,  or, if
earlier, the date TeleVue is reimbursed therefor pursuant to Section 2.4(a)(ii),
compounded quarterly.

     "Monthly  Deemed Net Cash Flow"  shall  mean,  during any month (or portion
thereof),  with respect to any Franchise Area, the product of Closing Date Basic
Subscribers (except that for these purposes Closing Date Basic Subscribers shall
not  include  Lost  Service  Subscribers  during the  period  that they are Lost
Service  Subscribers)  for such Franchise Area  multiplied by $13.16 ($0.44 on a


                                       20

<PAGE>

daily basis in the case of a portion of any month), plus interest on such amount
at the  Prime  Rate for the  period  from  the end of such  month to the date of
determination for such Franchise Area, compounded quarterly.

     "MultiCategory  Subscriber"  shall  have  the  meaning  set out in  Section
4.1(f).

     "MultiCategory  Retained  Subscriber"  shall  have the  meaning  set out in
Section 4.1(f).

     "Nashville Local  Authorizations" shall have the meaning set out in Section
7.5.

     "NonAcquired Employee" shall have the meaning set out in Section 8.8(a).

     "NonAssumed  Contracts"  shall mean (i)the  Viacom  Pension  Plan,  (ii)the
401(k) Plan, (iii)any other employee benefit plan, (iv)any employment agreements
whether listed on Schedule 5.16 or otherwise, (v)any programming agreements with
The Science  Fiction  Channel,  Inc.  or any  whollyowned  subsidiary  of Viacom
(whether as of the date  hereof or  hereafter)  (other  than (1) the  Agreement,
dated the date hereof,  among MTV Networks  Affiliation  Sales and Marketing,  a
division of PVI Sales and Marketing,  Inc., Satellite Services,  Inc., Buyer and
InterMedia and (2) the Agreement dated the date hereof,  among Showtime Networks
Sales and  Marketing,  Satellite  Services,  Inc. and Buyer),  (vi)to the extent
permitted  under  applicable  Legal  Requirements,   the  Collective  Bargaining
Agreement referred to on Schedule5.16,  (vii)any  arrangements with USA Network,
(viii)obligations arising after December31,  1995 to the Comedy Channel, (ix)any
programming  agreement  that is not by its terms  required  to be  assigned to a
transferee  of any of the Systems if TeleVue and its  Affiliates  will not incur
any liability or obligation under or with respect to such programming  agreement
as a result of the failure to assign  such  programming  agreement  to Buyer and
(x)the  Lease  dated  December27,   1985  between  A.L.   McCormick  and  Viacom
International,  Inc., an Ohio  corporation,  as amended by Lease  Amendment No.1
dated January 15, 1985.

     "Nonrecourse" shall have the meaning set out in Section 14.14(b).

     "Note" shall have the meaning set out in Section 12.2(b)(i).

     "Other Current Liabilities" shall mean all current liabilities  (including,
but not limited to,  accrued  vacation  pay for Acquired  Employees,  subscriber
security  deposits,  customer  prepayments  for service to be rendered after the
Closing Date and deferred  customer  revenues (other than any deferred  customer
revenues  arising  out of  any  payments  of  principal  due  from  the  Telecom
Partnerships  referred to in clause (ii) of the  definition  of Telecom  Capital
Expenditure  Amount),  but excluding  (i) Accounts  Payable and (ii) any advance
billings subtracted in the calculation of Accounts Receivable, Net) of the Cable
Group  relating to the conduct of the Business  calculated  as of the Closing in
accordance  with  GAAP  on a  basis  consistent  with  the  application  of such
principles in the preparation of the Financial Statements.

     "Over Base  Subscriber  Number  Fraction"  shall mean the lesser of one and
(1)$2,227,800,000  divided  by (2)a  dollar  amount  equal to the sum of  (x)the


                                       21

<PAGE>

product of $1,984.98 and West Coast Closing Date Basic  Subscribers  plus (y)the
product of $1,813.47 and Eastern System Closing Date Basic Subscribers (assuming
for purposes of making the calculations required by this definition that Closing
Date Basic Subscribers include Right of First Refusal Subscribers).

     "Over Base  Subscriber  Number  Retained  Subscribers"  shall mean Retained
Subscribers less Under Base Subscriber Number Retained Subscribers.

     "Owned Real  Property"  shall mean all fee  interests of the Cable Group in
the real property used in connection with any System.

     "Per Subscriber  Rate" shall mean (1)if Closing Date Basic  Subscribers are
1,134,000 or less  (i)$1,984.98,  with respect to West Coast  Closing Date Basic
Subscribers,  and  (ii)$1,813.47,  with respect to Eastern  System  Closing Date
Basic  Subscribers,  or (2)if Closing Date Basic  Subscribers  exceed  1,134,000
(i)$1,984.98  multiplied  by the Over  Base  Subscriber  Number  Fraction,  with
respect  to  West  Coast  Closing  Date  Basic  Subscribers,  and  (ii)$1,813.47
multiplied by the Over Base  Subscriber  Number Fraction with respect to Eastern
System  Closing  Date Basic  Subscribers  (assuming  for  purposes of making the
calculations  required by this  definition  that Closing Date Basic  Subscribers
include Right of First Refusal Subscribers).

     "Permits" shall have the meaning set out in Section 2.1(f).

     "Permitted  Liens"  shall mean  (i)Liens for Taxes not yet due and payable;
(ii)any  carrier's,  warehousemen's,   mechanic's,  materialmen's,  repairmen's,
employees' or other like Lien arising in the ordinary course of business, to the
extent the  obligation  secured  thereby  constitutes  an Assumed  Liability  or
relates  to an  obligation  that was paid by the  Cable  Group;  (iii)easements,
rightsofway, restrictions, encroachments and other similar encumbrances which do
not materially interfere with the use of the Acquired Asset as presently used in
the  Business;  (iv)Liens  arising  under  or  specifically  permitted  by  this
Agreement  or as a result  of any  action  by  Buyer  or any of its  Affiliates;
(v)rights  of  first  refusal  in  favor  of,  and   restrictions   imposed  by,
Governmental Authorities; or (vi)in the case of assets leased or licensed to the
Cable Group, the rights of, and any Lien encumbering the interest of, the owner,
lessor or  licensor  of such  assets,  provided  such  Lien does not  materially
interfere with the use of such asset as presently used in the Business.

     "Person" shall mean and include an individual, a corporation, a partnership
(general,  limited or limited  liability),  a joint venture, a limited liability
company, an association,  a trust or any other organization or entity, including
a Governmental Authority.

     "Prepaid  Expenses"  shall  mean the book  value of  prepaid  expenses  and
miscellaneous  prepaids (in each case, only to the extent constituting a current
asset) of the Cable  Group with  respect to the  Business  calculated  as of the
Closing Date in accordance  with GAAP,  applied on a basis  consistent  with the
application of such principles in the  preparation of the Financial  Statements,
to the extent  that such  prepaid  expenses  will accrue to the benefit of Buyer
immediately following the Closing.

     "Primary Classification" shall have the meaning set out in Section 4.1(f).


                                       22

<PAGE>

     "Prime  Rate" shall mean the per annum rate of interest  published  as such
from time to time in the Money Rates column of The Wall Street Journal  (Eastern
Edition).  For all purposes of this Agreement,  interest at the Prime Rate shall
be  calculated on the basis of the actual number of days elapsed in the relevant
period over a year of 365 or 366 days, as applicable.

     "Purchase Price" shall have the meaning set out in Section 4.1.

     "PVIT Assets" shall have the meaning set out in Section 12.2(a)(ii).

     "Real Estate" shall have the meaning set out in Section 2.1(d).

     "Real Property" shall mean Owned Real Property and Leased Real Property.

     "Regulatory Approvals" shall have the meaning set out in Section 8.2(c).

     "Remaining  Cable  Division  Subsidiary"  shall have the meaning set out in
Section 2.1.

     "Reorganizations" shall have the meaning set out in Section 2.5.

     "Retained Assets" shall have the meaning set out in Section 2.2(f).

     "Retained Contracts" shall have the meaning set out in Section 2.2(f).

     "Retained  Franchise  Areas"  shall  have the  meaning  set out in  Section
4.1(b)(ii).

     "Retained  Franchise  Reduction  Amount"  shall  mean  either  zero or,  if
applicable, the amount determined pursuant to Section 4.1(b)(ii).

     "Retained Liabilities" shall have the meaning set out in Section3.2.

     "Retained  Local  Authorization"  shall have the meaning set out in Section
4.1(b)(ii).

     "Retained Permits" shall have the meaning set out in Section 2.2(f).

     "Retained   Subscribers"   shall  have  the  meaning  set  out  in  Section
4.1(b)(ii).

     "Right of First Refusal Adjustments" shall mean the adjustments referred to
in Section 4.1(d)(i).

     "Right of First  Refusal  Assets" shall have the meaning set out in Section
2.2(g)

     "Right  of First  Refusal  Contracts"  shall  have the  meaning  set out in
Section 2.2(g)

     "Right of First Refusal  Franchise  Area" shall have the meaning set out in
Section 4.1(d).


                                       23

<PAGE>

     "Right of First Refusal Local Authorization" shall have the meaning set out
in Section 4.1(d).

     "Right of First Refusal  Permits" shall have the meaning set out in Section
2.2(g).

     "Right of First  Refusal  Subscribers"  shall have the  meaning  set out in
Section 4.1(d).

     "Rules and Regulations" shall have the meaning set out in the definition of
Communications Act.

     "SEC" shall have the meaning set out in Section 7.4.

     "Second   Pledge   Agreement"   shall   have   the   meaning   set  out  in
Section 12.2(b)(i).

     "Second  Request"  shall  mean a  request  for  additional  information  or
documentary material pursuant to 16 C.F.R. 803.20.

     "Secondary  Classification"  shall  have  the  meaning  set out in  Section
4.1(f).

     "Section  2.4  Retained  Subscriber  Amount"  shall  mean,  at any  date of
determination,  an amount equal to (i)(A) the Total Retained  Subscriber  Amount
minus (B) the Retained  Franchise  Reduction  Amount  minus (C) the  Transferred
Subscriber  Amount plus (D) the  aggregate  amount  paid to TeleVue  pursuant to
Section  4.1(e)(A)(1)  plus (ii)  interest  on the amount  computed  pursuant to
clause (i) of this  definition at the Prime Rate for the period from the Closing
Date to the date of payment of such amount, compounded quarterly.

     "626 Letters" shall mean written notices  pursuant to Section  626(a)(1)(B)
of the Communications Act.

     "Subscriber Shortfall Amount" shall mean either zero or, if applicable, the
amount determined pursuant to Section 4.1(a)(2).

     "Subscriber  Shortfall  Number"  shall mean a number  equal to 1,122,660 or
such other number as may be fixed pursuant to Section 4.1(d)(i)(C).

     "Subsidiary"  shall mean,  with respect to any Person,  any entity of which
securities or other ownership  interests having ordinary voting power to elect a
majority of the board of directors of other persons performing similar functions
are directly or indirectly owned by such Person.

     "System" shall mean each of the cable television  systems listed on Exhibit
A hereto.

     "Taxes" shall mean all taxes, fees, duties, imposts, levies,  withholdings,
tax deficiencies,  assessments,  and charges, including, without limitation, all
net income,  gross income, gross receipts,  sales, use, valueadded,  ad valorem,


                                       24

<PAGE>

transfer, franchise, profits, license, withholding, payroll, employment, excise,
estimated,  severance,  stamp,  occupation,  property or other taxes and customs
duties of any kind  whatsoever,  together  with any interest and any  penalties,
additions  to  tax  or  additional  amounts  relating  thereto,  imposed  by any
governmental authority (domestic or foreign).

     "Tax Return"  shall mean any return,  report,  information  return or other
document (including any related or supporting  information) filed or required to
be  filed  with any  taxing  authority  in  connection  with the  determination,
assessment, collection, administration or imposition of any Taxes.

     "TCG San  Francisco  Partnership"  shall  have the  meaning  set out in the
definition of Telecom Partnership Agreements.

     "TCG Seattle  Partnership" shall have the meaning set out in the definition
of Telecom Partnership Agreements.

     "TCI  Stock"  shall  mean  any  class or  series  of  capital  stock of the
TeleCommunications, Inc., a Delaware corporation, that is publicly traded on the
Nasdaq National Market.

     "Telecom  Agreements" shall mean all agreements of the Cable Group relating
to  the  Telecom  Partnerships,   including,  without  limitation,  the  Telecom
Partnership Agreements.

     "Telecom  Amount" shall mean the sum of the Telecom  Capital Account Amount
and the Telecom Capital Expenditure Amount.

     "Telecom  Assets"  shall mean all right,  title and  interest  of the Cable
Group in and to (i)the  Telecom  Partnerships,  including,  without  limitation,
under  the  Telecom  Partnership  Agreements,  and  (ii)all  interests  in  real
property,  all  equipment  and all other  property of the Cable Group  leased or
licensed  to, or held for,  or built for lease,  license or use by, any  Telecom
Partnership.

     "Telecom  Capital  Account  Amount" shall mean the aggregate  amount of all
Capital Contributions (as defined in the relevant Telecom Partnership Agreement)
by the Cable Group to the  Telecom  Partnerships  under the Telecom  Partnership
Agreements as of the Closing Date.

     "Telecom Capital Expenditure Amount" shall mean (i) the aggregate amount of
all capital expenditures  (including allocated overhead) made by the Cable Group
on or prior to the  Closing  Date on behalf of or for the benefit of any Telecom
Partnership in accordance with the allocation  methods provided  pursuant to the
relevant Telecom Partnership  Agreement,  less (ii) the principal portion of any
payments  received  from the  Telecom  Partnerships,  provided  that the Telecom
Capital Expenditure Amount shall not in any event exceed $15.8 million.

     "Telecom  Partnership  Agreements" shall mean (i)the Partnership  Agreement
creating TCG San  Francisco  (the "TCG San Francisco  Partnership")  dated as of
January 1, 1994, by and among Teleport Communications of San Francisco,  Inc., a


                                       25

<PAGE>

Delaware  corporation  and the  other  parties  listed  on the  signature  pages
thereof,  (ii)the  Partnership  Agreement creating TCG Seattle (the "TCG Seattle
Partnership") dated as of January1,  1994, by and among Teleport  Communications
of Seattle,  Inc., a Delaware  corporation  and the other parties  listed on the
signature  pages thereof and (iii)the  Limited  Partnership  Agreement of AVR of
Tennessee,  L.P., a  California  limited  partnership,  dated as of November 15,
1993, by and among Viacom  Telecom Inc., a Delaware  corporation,  and the other
parties signatories thereto (the "AVR Partnership").

     "Telecom  Partnerships" shall mean the TCG San Francisco  Partnership,  the
TCG Seattle Partnership and the AVR Partnership.

     "TeleVue" shall mean TeleVue Systems, Inc., a Washington corporation.

     "Terminated  Retained  Franchise  Areas"  shall have the meaning set out in
Section 2.4(a)(iii).

     "Territory" shall have the meaning set out in Section 7.10.

     "Total  Retained  Subscriber  Amount" shall mean an amount equal to (i) the
number of West  Coast  Closing  Date  Basic  Subscribers  included  in  Retained
Subscribers  multiplied  by the  applicable  Per  Subscriber  Rate plus (ii) the
number of Eastern  System  Closing Date Basic  Subscribers  included in Retained
Subscribers multiplied by the applicable Per Subscriber Rate.

     "Transaction"  shall mean the transactions  contemplated by this Agreement,
including without limitation the sale of the Acquired Assets to Buyer.

     "Transaction Document" shall have the meaning set out in Section 14.14(a).

     "Transferred  Cash  Balances"  shall mean the petty  cash,  cash drawer and
imprest account balances of the Cable Group as of the Closing.

     "Transferred Subscriber Amount" shall mean an amount equal to the sum of

          (a) the product of (x) the aggregate number of West Coast Closing Date
     Basic Subscribers that are Retained Subscribers in Retained Franchise Areas
     that have been  previously  transferred to Buyer pursuant to Section 4.1(e)
     multiplied by (y) the applicable Per Subscriber Rate, plus

          (b) the product of (x) the aggregate  number of Eastern System Closing
     Date Basic Subscribers that are Retained  Subscribers in Retained Franchise
     Areas  that  have  been   previously   transferred  to  Buyer  pursuant  to
     Section 4.1(e) multiplied by (y) the applicable Per Subscriber Rate.


     "Under Base Subscriber Number Retained  Subscribers" shall be determined as
follows:



                                       26

<PAGE>

          (a) if Closing Date Basic Subscribers  minus Lost Service  Subscribers
     ("Adjusted  Closing  Date  Basic   Subscribers")  is  less  than  the  Base
     Subscriber Number,  Under Base Subscriber Number Retained Subscribers shall
     mean Retained Subscribers;

          (b) if Adjusted  Closing Date Basic  Subscribers is more than the Base
     Subscriber Number, then:

               (i) if Adjusted  Closing  Date Basic  Subscribers  minus the Base
          Subscriber  Number is greater than  Retained  Subscribers,  Under Base
          Subscriber Number Retained Subscribers shall mean zero; or

               (ii) if Adjusted  Closing Date Basic  Subscribers  minus the Base
          Subscriber  Number  is less  than  Retained  Subscribers,  Under  Base
          Subscriber  Number Retained  Subscribers  shall mean a number equal to
          (x)Retained  Subscribers minus (y)the number by which Adjusted Closing
          Date Basic Subscribers exceeds the Base Subscriber Number.

     "Unreimbursed  Cumulative Adjusted Capital Expenditures" means, at any date
of determination,  with respect to a Retained Franchise Area, an amount equal to
the Cumulative Adjusted Capital Expenditures for such Retained Franchise Area to
such date of determination.

     "Value  Guarantee  Agreement"  shall  have the  meaning  set out in Section
12.2(b)(i)(C).

     "Viacom" shall mean Viacom International Inc., a Delaware corporation.

     "Viacom Inc." shall mean Viacom Inc., a Delaware corporation.

     "Viacom Pension Plan" shall have the meaning set out in Section 8.8(c).

     "West Coast Closing Date Basic Subscribers" shall mean the aggregate number
of Closing Date Basic Subscribers in the West Coast Systems.

     "West Coast  Closing  Date  Subscriber  Target"  shall mean  988,911 or, if
applicable, such other number as may be fixed pursuant to Section 4.1(d)(i)(D).

     "West Coast Right of First Refusal  Subscribers" shall have the meaning set
out in Section 4.1(d)(i)(E).

     "West Coast Systems" shall mean the Bay Area,  Northern  California,  Puget
Sound, Salem and Dayton Systems listed on ExhibitA hereto.



                                       27

<PAGE>

                                   ARTICLE II

                          PURCHASE AND SALE OF ASSETS

     Section 2.1 Acquired  Assets.  Upon the terms and subject to the conditions
of this  Agreement,  at the  Closing  TeleVue  shall  (and if at the  Closing  a
Reorganization  has not  occurred  with  respect  to any  other  Cable  Division
Subsidiary (a "Remaining Cable Division  Subsidiary"),  TeleVue shall cause each
such Remaining Cable Division Subsidiary to), sell, assign,  transfer and convey
to Buyer,  and Buyer shall  purchase,  assume and acquire from TeleVue (and each
such Remaining Cable Division  Subsidiary,  if any), all of the right, title and
interest  of the Cable  Group in all assets  owned,  used or held for use by the
Cable Group in the Business (the  "Acquired  Assets") as the same shall exist on
the Closing Date, including,  without limitation,  all right, title and interest
of the Cable Group in the following:

          (a) Accounts  Receivable.  All accounts  receivable owing to the Cable
     Group relating to the conduct of the Business.

          (b)   Inventory.   All   inventory   and   supplies  of  the  Business
     (collectively, "Inventory").

          (c) Prepaid Expenses. All prepaid expenses of the Cable Group relating
     to the conduct of the Business to the extent constituting Prepaid Expenses.

          (d) Real Estate. All realty, towers, fixtures, easements, rightsofway,
     leasehold and other interests in real property, buildings and improvements,
     constructioninprogress  and all other  interests of the Cable Group in real
     property  owned,  used or held for use by the Cable Group in the  Business,
     including,  without  limitation,  all Real  Property  (collectively,  "Real
     Estate").

          (e) Equipment.  All equipment and other personal property of the Cable
     Group owned, used or held for use by the Cable Group in connection with the
     Business or the Systems (collectively, "Equipment").

          (f)   Permits   and   Licenses.    All   authorizations,    approvals,
     certifications,   franchises,   licenses   and   permits  of   Governmental
     Authorities necessary to the continued operation of, or owned, used or held
     for use by the Cable Group in  connection  with,  the Business as conducted
     immediately prior to the Closing, including,  without limitation, all Local
     Authorizations,   the   Nashville   Local   Authorizations   and   all  FCC
     Authorizations (collectively, "Permits").

          (g)  Assumed  Contracts.  All  contracts,  purchase  orders  and other
     agreements of the Cable Group relating to the Business,  including, without
     limitation,  all  Material  Contracts,  and  all  Telecom  Agreements,  but



                                       28

<PAGE>
     excluding NonAssumed Contracts (collectively, "Assumed Contracts"). Without
     limitation of Buyer's  obligations  to TeleVue and Viacom  hereunder,  this
     provision  will not be  deemed  to  supersede  any  rights  of Buyer or its
     Affiliates under any of their respective programming agreements.

          (h) Intangible Property.  Subscriber lists and customer records of the
     Systems,  construction  and  engineering  maps  and  data,  schematics  and
     blueprints,  books and financial records pertaining to the operation of the
     Business or the Systems  (except that  TeleVue  shall be entitled to retain
     copies of such books and  records),  and all  correspondence  and documents
     pertaining to subscribers, Governmental Authorities and other third parties
     relevant  to  the  Systems'   ongoing   relationships   with   subscribers,
     Governmental  Authorities and other third parties, in each case then in the
     possession  of the Cable Group;  and all  trademark,  trade names,  service
     marks,  copyrights  and other  intangible  property  used  primarily in the
     Business  (collectively,  "Intangible  Assets");  provided,  that after the
     Closing  TeleVue  and its  Affiliates  shall have  reasonable  access  upon
     reasonable  notice during normal  business hours to the Intangible  Assets.
     Buyer has  delivered or will prior to the Closing  deliver to Viacom a copy
     of its  record  retention  policy,  showing  the  number  of years  certain
     categories of books and records will be retained.  Viacom has the right, by
     delivery  of a notice to Buyer at least 30 days  prior to the date that any
     category of such  records are to be  destroyed  pursuant to the policy,  to
     obtain any or all of such records at Viacom's sole expense. Upon receipt of
     such  notice,  Buyer will not  destroy  such  records,  and shall make them
     available for pickup by Viacom.

          (i) Telecom Assets. The Telecom Assets.

          (j) Transferred Cash Balances. The Transferred Cash Balances.

     Section 2.2 Excluded Assets.  Notwithstanding anything contained in Section
2.1 hereto to the  contrary,  the  Acquired  Assets  will not include any of the
following assets of the Cable Group (the "Excluded Assets"):

          (a) Cash. Cash and cash  equivalents  (other than the Transferred Cash
     Balances).

          (b)  Viacom  Name.  All rights in and to the names  "Viacom,"  "Viacom
     International"  and  "Viacom  Cable"  and  derivations  thereof;  provided,
     however,  that Buyer may continue to use such names on trucks and buildings
     to the extent so used  immediately  prior to the Closing  for a  reasonable
     period after the Closing, but not to exceed ninety (90) days in the case of
     trucks and thirty (30) days in the case of buildings;  and provided further
     that Buyer will provide  replacements  for channel  cards,  remote  control
     stickers and other items containing any such name in the ordinary course of
     business.  Buyer  acknowledges  that it is not  acquiring any rights in any
     such name (except the right of use set forth in this Section  2.2(b)),  and
     Buyer agrees to use such names only in accordance with this Section 2.2(b).



                                       29

<PAGE>

          (c)  Possessory  Interest  Litigation.  All rights and interest in the
     lawsuits,  declaratory  judgment  actions,  administrative  proceedings and
     appeals currently pending or filed, or taken in the future, which arise out
     of the  calculation,  or  collection  from the Cable Group,  of  possessory
     interest taxes by California  counties including,  without limitation,  all
     claims and rights of recovery thereunder.

          (d) Tax Refunds. All rights of the Cable Group to any refunds of Taxes
     imposed upon the Cable Group .

          (e) Other  Assets.  The patent and other  rights and assets  listed on
     Schedule 2.2.

          (f) Retained Assets. With respect to all Retained Franchise Areas, all
     Retained  Local  Authorizations  and all related  Real  Estate,  Equipment,
     Permits ("Retained Permits"),  Assumed Contracts ("Retained Contracts") and
     Intangible Property (collectively, "Retained Assets").

          (g) Right of First Refusal Assets.  With respect to all Right of First
     Refusal  Franchise Areas,  all Right of First Refusal Local  Authorizations
     and all related Real Estate,  Equipment,  Permits  ("Right of First Refusal
     Permits"),  Assumed  Contracts  ("Right of First  Refusal  Contracts")  and
     Intangible  Property  (collectively,   "Right  of  First  Refusal  Assets")
     together  with the  proceeds,  and all claims  and  rights to receive  such
     proceeds, from any disposition of all or any of such Right of First Refusal
     Assets.

          (h) NonAssumed Contracts. All NonAssumed Contracts.

     Section  2.3  Efforts to Obtain  Consents.  To the extent  that any Assumed
Contract to be transferred to Buyer pursuant to Section2.1 hereof is not capable
of being validly and fully assigned, transferred,  conveyed or reissued to Buyer
without consent of another Person,  and such consent has not been obtained prior
to the Closing or does not remain in full force and effect at the Closing,  such
failure to obtain  such  consent or failure of such  consent to be in full force
and effect at the Closing shall not itself  constitute a breach of any provision
hereof,  and upon consummation of the Closing such Assumed Contract shall not be
assigned but TeleVue shall,  after the Closing,  use its  reasonable  commercial
efforts (at the  expense of  TeleVue,  but  without  TeleVue  being  required to
provide any consideration  therefor) to: (i)keep such Assumed Contract in effect
and obtain such  consent;  (ii)provide  to Buyer the  benefits  of such  Assumed
Contract  through  subcontract  or otherwise;  (iii)cooperate  in any reasonable
arrangement designed to provide such benefits to Buyer; and (iv)enforce,  at the
request and sole  expense of Buyer,  any rights of the Cable Group under or with
respect  to  such  Assumed  Contract   against  all  other  Persons   (including
termination  of the  foregoing  in  accordance  with the terms  thereof upon the
election of Buyer).

     Section 2.4 Lack of Regulatory Approvals;  Right of First Refusal Franchise
Areas.  (a)(i)If at the Closing all Regulatory  Approvals have not been obtained
or do not  remain  in full  force  and  effect,  such  failure  to  obtain  such


                                       30

<PAGE>

Regulatory  Approvals or such failure of such Regulatory Approvals to be in full
force and  effect at the  Closing  shall not itself  constitute  a breach of any
provision hereof.  With respect to all Retained  Franchise Areas,  TeleVue shall
retain the Retained Local Authorization and all Retained Assets, and Buyer shall
not  purchase  such assets at the  Closing as  provided  in this  Article II and
Section  4.1,  provided  that  TeleVue and Buyer shall take such steps and enter
into such agreements,  including  management  agreements (with Buyer as manager,
but at no cost to  TeleVue),  as may be  reasonably  necessary so that the Buyer
shall have the use and benefit of (including,  without  limitation,  cash flow),
and burdens (including, without limitation, Taxes and risk of loss) with respect
to, the Retained Assets as if the Retained Assets were Acquired  Assets,  until,
with  respect to any  Retained  Local  Authorization  and the  related  Retained
Assets,  the Deferred  Closing Date or the  termination  of such  agreements  as
contemplated below in this Section 2.4. Such management  agreements will provide
that Buyer will have the right to set  programming,  provided that, with respect
to any  Retained  Franchise  Area,  Buyer will not take any  action,  including,
without  limitation,  increasing  subscriber  rates,  that could  reasonably  be
expected  to delay the  Deferred  Closing  Date with  respect  to such  Retained
Franchise  Area or make the  occurrence  thereof  less likely.  Such  management
agreements  will  also  provide  that  TeleVue  will  continue  to make  capital
expenditures with respect to each Retained  Franchise Area as if the Closing had
not  occurred,  but only  until  the  Deferred  Closing  Date for such  Retained
Franchise  Area.  The  outofpocket  costs and expenses of all such  arrangements
shall be shared  equally by Buyer and TeleVue  (except  that each party shall be
responsible for the fees and expenses of its own legal advisors).

          (ii) With respect to the  Retained  Franchise  Areas,  upon request of
TeleVue  from  time to time  following  the  Closing  (but in any  event no more
frequently than monthly),  Buyer shall promptly reimburse TeleVue for the amount
of Aggregate  Cumulative Adjusted Capital Expenditures made prior to the date of
such  request,  but only to the extent of Aggregate  Cumulative  Deemed Net Cash
Flow at such date. Upon such  reimbursement,  (a)Aggregate  Cumulative  Adjusted
Capital Expenditures and Aggregate Cumulative Deemed Net Cash Flow shall each be
reduced  by  the  amount  of  such  payment,   (b)Cumulative   Adjusted  Capital
Expenditures  for all  Retained  Franchise  Areas shall each be reduced by a pro
rata allocation of the amount of such payment and (c) Cumulative Deemed Net Cash
Flow for all Retained  Franchise Areas shall be reduced by a pro rata allocation
of the amount of such payment.

          (iii)  With  respect  to any  Retained  Franchise  Area as to  which a
Deferred  Closing Date has not occurred within  twentyfour  months following the
Closing,  if TeleVue and Buyer have been unable,  after good faith negotiations,
to enter  into  agreements  providing  in all  material  respects  the  economic
equivalent to Buyer of ownership of the Retained Assets,  then thereafter either
TeleVue or Buyer may, by written notice to the other, elect to terminate all the
agreements  referred to in this Section 2.4 on a termination  date  specified in
such notice for such Retained  Franchise Areas  ("Terminated  Retained Franchise
Areas"),  which  termination  date may not be earlier than 90 days following the
other's  receipt  of  such  notice.  If  TeleVue  so  requests,  prior  to  such
termination  Buyer and  TeleVue  shall  enter  into such  agreements,  including
without  limitation  service  and  management  agreements  for  such  Terminated
Retained Franchise Areas, on reasonable and customary commercial terms (provided


                                       31

<PAGE>

that such  agreements  shall be  cancelable  by Buyer  without  penalty or other
payment  on not more  than 180 days  prior  notice  and shall be  cancelable  by
TeleVue without penalty or other payment on not more than 30 days' prior written
notice to Buyer) as may be  reasonably  necessary so that TeleVue shall have the
use and  benefit  of, and  burdens  with  respect to, and be able to operate the
related Retained Assets as if, from and after such termination,  the Closing had
not  occurred.  Upon such  termination  (i)Buyer  shall pay to TeleVue an amount
equal to the  aggregate  Cumulative  Deemed  Net Cash  Flow for such  Terminated
Franchise  Areas as of the  termination  date,  and if the  number  of Over Base
Subscriber Number Retained  Subscribers exceeds zero, TeleVue shall pay to Buyer
the Section2.4  Retained  Subscriber  Amount,  if any,  provided that if each of
Buyer and TeleVue have obligations  under this clause (i) such obligations shall
be deemed  satisfied  and replaced by an  obligation of the party which owed the
greater amount to pay to the party which owed the lesser amount, an amount equal
to the excess of such greater amount over such lesser amount,  and (ii)TeleVue's
and  Buyer's  obligations  under  Section  4.1(d)  with  respect to the  related
Retained Local Authorization and related Retained Assets shall terminate.

          (iv) Buyer shall provide  TeleVue with access to the books and records
of Buyer relating to the Retained  Franchise Areas and any other assistance that
TeleVue may request in connection with the determination of Cumulative  Adjusted
Capital  Expenditures.  TeleVue shall provide Buyer with access to the books and
records of TeleVue  relating  to the  Retained  Franchise  Areas,  to the extent
relating to the period  following  the Closing,  and any other  assistance  that
Buyer may request in connection with the  determination  of Cumulative  Adjusted
Capital Expenditures.

          (b)  With  respect  to all  Right of First  Refusal  Franchise  Areas,
TeleVue  shall retain the Right of First Refusal  Local  Authorizations  and all
Right of First  Refusal  Assets and Buyer shall not purchase  such assets at the
Closing as provided in this ArticleII and Section4.1.  With respect to any Right
of First Refusal Franchise Area, if TeleVue so requests, Buyer and TeleVue shall
enter  into  such  agreements  (effective  at or after the  Closing),  including
without limitation service (with Buyer providing  services) and management (with
Buyer as manager)  agreements,  on reasonable and customary  commercial terms so
that TeleVue shall be able to operate the related Right of First Refusal  Assets
as if the Closing had not  occurred;  provided  that  (i)such  agreements  shall
provide that as compensation for its services under such agreements, Buyer shall
have the use and  benefit  of the cash flow  derived  from  such  Right of First
Refusal  Assets except that Buyer shall be obligated to pay to TeleVue  promptly
after each  month end an amount  equal to the  Monthly  Deemed Net Cash Flow for
such Right of First  Refusal  Franchise  Area and (ii)such  agreements  shall be
cancelable  without  penalty or other payment by TeleVue and Buyer on 90 and 180
days' notice,  respectively.  Unless otherwise provided therein, such agreements
shall  terminate with respect to any Right of First Refusal  Franchise Area upon
the transfer of the related  Right of First Refusal  Assets  pursuant to Section
4.1(d) or  termination  of the Cable  Group's  rights under the related Right of
First Refusal Local Authorization.  

     Section  2.5  Reorganization.  TeleVue  intends  to cause each of the other
Cable  Division  Subsidiaries  to be merged with and into, or  liquidated  into,
TeleVue.   Such  mergers  and   liquidations  are  herein  referred  to  as  the
"Reorganizations."  Buyer agrees that no Reorganization shall constitute or give
rise to a breach of any provision  hereof,  except that this sentence  shall not
apply to a breach of Section 5.23.



                                       33

<PAGE>

     Section 2.6 Purchase Price Allocations. Buyer and TeleVue agree to allocate
to any  property  included in the  Acquired  Assets with  respect to which Taxes
described in the second sentence of Section 8.7 (a) are imposed a portion of the
Purchase Price equal to the net book value for financial  reporting purposes (as
shown on the  books of the  Cable  Group) of such  property.  Buyer and  TeleVue
shall, and shall cause their respective Affiliates to, file all Tax Returns in a
manner consistent with such allocation.


                                  ARTICLE III

                           ASSUMPTION OF LIABILITIES

     Section 3.1 Assumption of Liabilities. Buyer shall assume, pay, perform and
discharge the following liabilities and obligations (the "Assumed Liabilities"):

          (a) Assumed  Contracts.  All  liabilities and obligations of the Cable
     Group under the Assumed  Contracts to be  satisfied or performed  after the
     Closing.

          (b) Permits. All liabilities and obligations under Permits (including,
     without limitation, any performance guarantees, assumptions of liability or
     indemnities  that have been provided to Local  Authorities) to be satisfied
     or performed after the Closing.

          (c) Accounts  Payable.  All accounts  payable owing by the Cable Group
     relating  to the  conduct  of the  Business,  to  the  extent  constituting
     Accounts Payable.

          (d) Other Current Liabilities. All current liabilities (including, but
     not limited to,  accrued  vacation  pay of Acquired  Employees,  subscriber
     security deposits,  customer  prepayments for services to be rendered after
     the Closing Date and deferred  customer  revenues,  but excluding  Accounts
     Payable) of the Cable Group relating to the conduct of the Business, to the
     extent constituting Other Current Liabilities.

          (e) Post-Closing Liabilities.  All claims,  liabilities,  obligations,
     costs and  expenses  arising  out of or with  respect to the conduct of the
     Business  after  Closing,  including,   without  limitation,  any  and  all
     franchise fees, pole attachment rentals,  copyright fees, federal, state or
     local  income,  sales,  use,  excise,  property or other  Taxes,  and tort,
     contract or Permit claims arising out of or  attributable to the conduct of
     the Business or the Acquired Assets after the Closing. 

     Section 3.2 Retained  Liabilities.  Notwithstanding  anything  contained in
Section 3.1 to the contrary,  except to the extent specifically assumed by Buyer
under Section 3.1(a), (b), (c), (d) or (e), Buyer shall not assume and shall not
be obligated to pay,  perform or discharge any liabilities,  obligations,  costs
and  expenses of the Cable Group with respect to claims  (including  litigation)


                                       34

<PAGE>

insofar  as such  claims  (including  litigation)  relate  to the  ownership  or
operation of the Business prior to the Closing ("Retained Liabilities").

                                   ARTICLE IV

                                 PURCHASE PRICE

     Section 4.1 Purchase Price.

     (a)(1)The  purchase price for the Acquired  Assets (the  "Purchase  Price")
shall be an aggregate  amount equal to (A)an amount (the "Base  Price") equal to
the sum of (i)the  Fixed Price plus (ii)the  Capital  Expenditure  Amount,  plus
(iii)the Closing Inventory  Amount,  plus (iv)an amount equal to Closing Working
Capital,  if Closing Working Capital is a positive  amount,  plus (v)the Telecom
Amount, minus (vi)an amount equal to the amount by which Closing Working Capital
is less than zero,  if Closing  Working  Capital  is a  negative  amount,  minus
(vii)the  Subscriber  Shortfall  Amount,  if any,  minus  (viii)the Lost Service
Subscriber  Reduction Amount, if any, minus (ix)the Retained Franchise Reduction
Amount, if any, minus (x)the amount of the front-end loaded programming payments
set forth on Schedule  4.1,  plus (B)if the  Closing  takes place after June 30,
1995,  an amount  equal to  interest on the Base Price at the LIBOR Rate for the
period from June 30, 1995 to the Closing Date.

     (2) If  Closing  Date  Basic  Subscribers  are  less  than  the  Subscriber
Shortfall  Number,  the  "Subscriber   Shortfall  Amount"  shall  be  an  amount
calculated as follows:

               (i) If West Coast  Closing Date Basic  Subscribers  are less than
     the West Coast Closing Date  Subscriber  Target and Eastern  System Closing
     Date  Basic  Subscribers  are less than the  Eastern  System  Closing  Date
     Subscriber Target,  then the Subscriber  Shortfall Amount shall be equal to
     the sum of (A) the product of  (x)$1,984.98  and (y) the  shortfall of West
     Coast  Closing  Date Basic  Subscribers  below the West Coast  Closing Date
     Subscriber Target and (B) the product of (x)$1,813.47 and (y) the shortfall
     of Eastern System Closing Date Basic  Subscribers  below the Eastern System
     Closing Date Subscriber Target.

               (ii) If West Coast Closing Date Basic  Subscribers  are less than
     the West Coast Closing Date  Subscriber  Target and Eastern  System Closing
     Date Basic  Subscribers  are greater than the Eastern  System  Closing Date
     Subscriber Target,  then the Subscriber  Shortfall Amount shall be equal to
     (1) the product of (A)$1,984.98  and (B)the shortfall of West Coast Closing
     Date Basic  Subscribers below the West Coast Closing Date Subscriber Target
     minus (2) the product of  (A)$1,813.47  and (B)the excess of Eastern System
     Closing  Date  Basic  Subscribers  over the  Eastern  System  Closing  Date
     Subscriber Target.

               (iii) If Eastern System Closing Date Basic  Subscribers  are less
     than the  Eastern  System  Closing  Date  Subscriber  Target and West Coast
     Closing Date Basic Subscribers are greater than the West Coast Closing Date


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     Subscriber Target,  then the Subscriber  Shortfall Amount shall be equal to
     (1) the product of  (A)$1,813.47  and (B)the  shortfall  of Eastern  System
     Closing  Date Basic  Subscribers  below the  Eastern  System  Closing  Date
     Subscriber  Target minus (2) the product of (A)$1,984.98  and (B)the excess
     of West Coast  Closing Date Basic  Subscribers  over the West Coast Closing
     Date Subscriber Target.

     (b) In the event that at the time of the Closing:

               (i) any  natural  disaster  has  occurred  that has  damaged  the
     tangible assets of any one or more Systems  sufficiently to cause more than
     11,340  Basic  Subscribers  then to be unable to receive  cable  television
     service as a result of such damage (a "Disaster",  the aggregate  number of
     Closing Date Basic  Subscribers  not receiving  such service at the Closing
     Date as a result of such Disaster being referred to herein as "Lost Service
     Subscribers"),  the "Lost Service Subscriber  Reduction Amount" shall be an
     amount equal to the product of the Lost Service  Subscribers  multiplied by
     the applicable Per Subscriber Rate; or

               (ii)TeleVue is unable to transfer to Buyer a Local  Authorization
     (other than a Right of First Refusal Local Authorization) whether by reason
     of a failure  to renew a Local  Authorization,  the  inability  to obtain a
     Local Authority  Consent,  or otherwise (a "Retained Local  Authorization";
     the  aggregate  number of Closing Date Basic  Subscribers  in the Franchise
     Areas covered by such  Retained  Local  Authorizations  at the Closing Date
     being referred to herein as "Retained  Subscribers" and the Franchise Areas
     covered by such Retained Local  Authorizations  being referred to herein as
     "Retained  Franchise  Areas"),  the "Retained  Franchise  Reduction Amount"
     shall be an amount equal to the product of the Under Base Subscriber Number
     Retained  Subscribers  multiplied by the  applicable  Per  Subscriber  Rate
     determined and  calculated as provided in the following two sentences.  For
     purposes  of  determining  the  number of West  Coast  Closing  Date  Basic
     Subscribers and Eastern System Closing Date Basic  Subscribers  included in
     Under Base Subscriber Number Retained Subscribers, it shall be assumed that
     (i)the  number of West Coast  Closing  Date Basic  Subscribers  included in
     Under Base Subscriber Number Retained  Subscribers  equals (1)the number of
     West Coast Closing Date Basic Subscribers  included in Retained Subscribers
     multiplied by (2)a fraction equal to Under Base Subscriber  Number Retained
     Subscribers  divided by Retained  Subscribers and (ii)the number of Eastern
     System  Closing Date Basic  Subscribers  included in Under Base  Subscriber
     Number Retained  Subscribers equals (1)the number of Eastern System Closing
     Date Basic Subscribers included in Retained Subscribers  multiplied by (2)a
     fraction equal to Under Base Subscriber Number Retained Subscribers divided
     by Retained  Subscribers.  The Retained Franchise Reduction Amount shall be
     determined  by  multiplying  the numbers of West Coast  Closing  Date Basic
     Subscribers  and Eastern System Closing Date Basic  Subscribers  determined
     pursuant to the preceding  sentence by the applicable Per Subscriber  Rates
     applicable to each such number and adding such amounts.

     (c) If clause(i) of Section  4.1(b)  applies at the Closing,  (i) following
the Closing  Buyer shall  permit  TeleVue to, and TeleVue  shall use  reasonable


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commercial efforts to, cause the damage caused by the Disaster to be repaired as
soon as  reasonably  practicable  to the extent  necessary  to  reconnect  cable
television  service (at a level not substantially less than the level of service
previously provided) to the Lost Service Subscribers and (ii) Buyer shall pay to
TeleVue an amount  equal to (A) the  applicable  Per  Subscriber  Rate times the
number of Lost Service  Subscribers as to whom TeleVue shall have notified Buyer
in good faith that cable television  service has been so reconnected within five
(5) Business  Days after TeleVue  delivers such notice,  plus (B) if the Closing
takes  place  after June 30,  1995,  an amount  equal to  interest on the amount
computed  pursuant to clause (ii)(A) of this paragraph (c) at the LIBOR Rate for
the period from June 30, 1995 to the Closing  Date (except that if any such Lost
Service  Subscribers  were Lost Service  Subscribers  during the period  between
June30,  1995 and the Closing,  such interest shall not be paid pursuant to this
clause (B) on the  portion  of such  amount  computed  pursuant  to such  clause
(ii)(A) that is attributable  to such Lost Service  Subscribers for that part of
the period  between  June30,  1995 and the Closing  that they were Lost  Service
Subscribers),  provided that the aggregate  amount of such payments (but without
regard to any interest paid under this Section 4.1(c)) shall not exceed the Lost
Service Subscriber Reduction Amount.

     (d) If  TeleVue  is  unable  to  transfer  to Buyer at the  Closing a Local
Authorization ( "Right of First Refusal Local  Authorization")  by reason of the
exercise by a Local  Authority of a right of first refusal (the Franchise  Areas
covered by such Right of First Refusal Local  Authorizations  being  referred to
herein as "Right  of First  Refusal  Franchise  Areas"  and the  number of Basic
Subscribers  in the Right of First Refusal  Franchise  Areas at the Closing Date
being referred to as "Right of First Refusal Subscribers"):

     (i)  The  following  adjustments  shall  be  made  before  calculating  the
Estimated Purchase Price and the Purchase Price:

               (A) The Fixed Price shall be reduced  from  $2,227,800,000  by an
          amount equal to (x) Right of First Refusal  Subscribers  multiplied by
          (y) the applicable Per Subscriber Rate;

               (B) The Base Subscriber Number shall be reduced from 1,134,000 to
          a number equal to 1,134,000 minus Right of First Refusal Subscribers;

               (C)  The  Subscriber  Shortfall  Number  shall  be  reduced  from
          1,122,660  to a number  equal to (x)  1,134,000  minus  Right of First
          Refusal Subscribers multiplied by (y) ninetynine one hundredths (.99);

               (D) If Right of First  Refusal  Subscribers  include  West  Coast
          Closing Date Basic Subscribers (assuming for these purposes that Right
          of First  Refusal  Subscribers  are  included  in  Closing  Date Basic
          Subscribers),  the number of West Coast Closing Date Basic Subscribers
          so included  shall be referred to herein as "West Coast Right of First
          of Refusal  Subscribers"  and the West Coast  Closing Date  Subscriber
          Target  shall be reduced to a number  equal to  (x)998,900  minus West
          Coast  Right  of  First  of  Refusal  Subscribers  multiplied  by  (y)
          ninetynine one hundredths (.99); and



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<PAGE>


               (E) If Right of First Refusal  Subscribers include Eastern System
          Closing Date Basic Subscribers (assuming for these purposes that Right
          of First  Refusal  Subscribers  are  included  in  Closing  Date Basic
          Subscribers),   the  number  of  Eastern  System  Closing  Date  Basic
          Subscribers so included shall be referred to herein as "Eastern System
          Right of First of Refusal  Subscribers" and the Eastern System Closing
          Date  Subscriber  Target  shall  be  reduced  to  a  number  equal  to
          (x)135,100 minus Eastern System Right of First of Refusal  Subscribers
          multiplied by (y)ninetynine one hundredths (.99).

     (ii)If  following the Closing  TeleVue is able to transfer to Buyer a Right
of First Refusal Local Authorization, then TeleVue shall so notify Buyer and, on
the  fifth  Business  Day after the date of such  notice  (a  "Deferred  Closing
Date"),  TeleVue  shall  transfer  to Buyer  such Right of First  Refusal  Local
Authorization  and all  related  Right  of  First  Refusal  Assets  held on such
Deferred Closing Date and (x)Buyer shall assume,  pay, perform and discharge the
liabilities  and obligations  arising from and after such Deferred  Closing Date
under or in respect of such related  Right of First  Refusal  Assets  (including
without limitation any related Right of First Refusal Permits and Right of First
Refusal  Contracts) and (y)Buyer shall pay to TeleVue an amount equal to (1) the
sum of (A) the product of the applicable Per Subscriber  Rate  multiplied by the
number of Right of First  Refusal  Subscribers  for the  Right of First  Refusal
Franchise  Area and (B) the  amount of  Deducted  Covered  Capital  Expenditures
attributable to such Right of First Refusal  Franchise Area plus  (C)interest on
the amount of such Deducted  Covered Capital  Expenditures at the Prime Rate for
the period  from the  Closing  Date to the  Deferred  Closing  Date,  compounded
quarterly,  plus (2)if the Closing  takes place after June 30,  1995,  an amount
equal  to  interest  on the  amount  computed  pursuant  to  clause  (A) of this
paragraph (d) at the LIBOR Rate for the period from June 30, 1995 to the Closing
Date. From and after the Deferred  Closing Date with respect to a Right of First
Refusal  Franchise  Area,  such Right of First Refusal  Franchise  Area shall no
longer be considered a "Right of First Refusal Franchise Area" hereunder and the
related  "Right of First Refusal  Assets"  transferred to Buyer on such Deferred
Closing  Date  shall  be  considered   "Acquired  Assets"  and,  to  the  extent
applicable,  "Assumed  Liabilities"  (with the same meanings as if such Acquired
Assets and Assumed Liabilities had been transferred on the Closing Date).

     (e) If  clause(ii)  of  Section4.1(b)  applies  at the  Closing,  then,  if
following  the Closing  TeleVue is able to  transfer  to Buyer a Retained  Local
Authorization,  TeleVue  shall so notify  Buyer and, on the fifth  Business  Day
after  the date of such  notice  (a  "Deferred  Closing  Date"),  TeleVue  shall
transfer to Buyer such Retained  Local  Authorization  and all related  Retained
Assets held on such Deferred  Closing Date and Buyer shall assume,  pay, perform
and discharge the liabilities and obligations arising from and after the Closing
Date under or in respect of such  related  Retained  Assets  (including  without
limitation any related Retained Permits and Retained  Contracts) and Buyer shall
pay to TeleVue an amount equal to:

               (A) the sum of (1)the product of (i)the applicable Per Subscriber
          Rate  multiplied  by (ii)the  number of Retained  Subscribers  for the
          Retained  Franchise Area covered by such Retained Local  Authorization
          multiplied  by (iii) a  fraction  equal to (x) Under  Base  Subscriber


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          Number  Retained  Subscribers  divided  by  (y)  Retained  Subscribers
          (provided that the aggregate amount calculated pursuant to this clause
          (1)shall  not exceed the  Retained  Franchise  Reduction  Amount) plus
          (2)if there are  MultiCategory  Retained  Subscribers  in the Retained
          Franchise  Area  covered by such  Retained  Local  Authorization,  the
          product of (i)the applicable Per Subscriber Rate multiplied by (ii)the
          number of such MultiCategory  Retained  Subscribers plus (3)the amount
          of Deducted Covered Capital Expenditures  attributable to the Retained
          Franchise covered by such Retained Local Authorization plus (4) if the
          Closing  takes place after  June30,  1995,  interest on the sum of the
          amount  determined  pursuant to clauses  (1), (2) and (3) at the LIBOR
          Rate for the period from June30, 1995 to the Closing Date plus

               (B) interest on the amount computed pursuant to clause (A) at the
          Prime  Rate for the  period  from  the  Closing  Date to the  Deferred
          Closing Date, compounded quarterly, plus

               (C) an amount equal to Unreimbursed  Cumulative  Adjusted Capital
          Expenditures  as  of  the  Deferred  Closing  Date  for  the  Retained
          Franchise Area covered by such Retained Local Authorization.

     From and  after  the  Deferred  Closing  Date with  respect  to a  Retained
Franchise  Area,  such Retained  Franchise  Area shall no longer be considered a
"Retained Franchise Area" hereunder,  the related "Retained Local Authorization"
shall no longer be considered a "Retained Local Authorization" hereunder and the
related  "Retained  Assets"  transferred to Buyer on such Deferred  Closing Date
shall be considered  "Acquired Assets" and, to the extent  applicable,  "Assumed
Liabilities"  (with the same  meanings  as if such  Acquired  Assets and Assumed
Liabilities had been transferred on the Closing Date).

     (f) (i)The  parties  understand  and agree that Lost  Service  Subscribers,
Right of  First  Refusal  Subscribers  and  Retained  Subscribers  are  mutually
exclusive.  Any Basic Subscriber that would, but for the preceding sentence,  be
within more than one such  definition (a  "MultiCategory  Subscriber")  shall be
considered  a Right  of First  Refusal  Subscriber  before  being  considered  a
Retained  Subscriber or Lost Service  Subscriber  and shall be considered a Lost
Service  Subscriber  before  being  considered  a  Retained   Subscriber,   such
classification  being deemed the "Primary  Classification" of such MultiCategory
Subscriber and the type of Subscriber definition that would apply next after the
Primary  Classification  pursuant  to  this  sentence  shall  be the  "Secondary
Classification" of such MultiCategory Subscriber. If at any time a MultiCategory
Subscriber  no  longer  fits  the  definition  of  its  Primary  Classification,
effective as of such time (x)such  MultiCategory  Subscriber  shall no longer be
deemed to be the type of Subscriber  covered by its Primary  Classification  and
shall  be  deemed  to be  the  type  of  Subscriber  covered  by  its  Secondary
Classification  (except  that  any  Lost  Service  Subscriber  or Right of First
Refusal  Subscriber  that would  become a Retained  Subscriber  pursuant to this
clause shall be deemed to be a "MultiCategory Retained Subscriber" rather than a
Retained  Subscriber),  (y)if applicable,  the Lost Service Subscriber Reduction
Amount  shall be reduced by an amount  equal to the product of (A) the number of
such  MultiCategory  Subscribers  that are no longer  deemed to be Lost  Service
Subscribers  pursuant  to  clause  (x)  multiplied  by (B)  the  applicable  Per
Subscriber Rate, and (z)if applicable,  the Lost Service Reduction Amount or the
Retained  Franchise  Reduction Amount, as the case may be, shall be increased by
an  amount  equal  to the  product  of (C)  the  number  of  such  MultiCategory


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Subscribers  that  are  deemed  to  be  Lost  Service  Subscribers  or  Retained
Subscribers,  respectively,  pursuant  to  clause  (x)  multiplied  by  (D)  the
applicable Per Subscriber Rate.

     (ii) The following  revisions shall govern the classifications of Franchise
Areas that contain  MultiCategory  Subscribers  for purposes of  Section2.4  (it
being  assumed  for  these  purposes  only  that  the  classifications  of Basic
Subscribers are not mutually exclusive as provided in Section 4.1(f)):

               (A)  MultiCategory  Retained  Subscribers  shall be  deemed to be
          Retained   Subscribers   solely  for  purposes  of   determining   the
          classification  of Franchise Areas.  For all other purposes  hereunder
          (including, without limitation, Section4.1(e)), MultiCategory Retained
          Subscribers shall not be deemed to be Retained Subscribers.

               (B) If a Franchise  Area contains  both Lost Service  Subscribers
          and Retained Subscribers,  such Franchise Area shall be deemed to be a
          Retained Franchise Area.

               (C) A  Franchise  Area  that  contains  Right  of  First  Refusal
          Subscribers  shall be deemed to be a Right of First Refusal  Franchise
          Area until the transfer to Buyer of the Right of First  Refusal  Local
          Authorization relating thereto is no longer prevented by reason of the
          exercise  by a  Local  Authority  of a right  of  first  refusal,  and
          thereafter  shall be deemed to be a Retained  Franchise  Area if there
          are any Retained Subscribers in such Franchise Area.

     (g) Payments  pursuant to Section4.1(c) or (d) or (e) shall be made by wire
transfer  of  immediately  available  funds to an account  in the United  States
designated  by  TeleVue  at least two (2)  Business  Days prior to the date such
payment is due.  Any  payment  pursuant  to  Section4.1(c)  or (d)  (other  than
interest) or (e) shall be deemed to be an adjustment  to the Purchase  Price for
purposes of this Agreement.  Notwithstanding  the provisions of  Sections4.1(c),
(d) and (e), Buyer shall in no event be required to make any payment pursuant to
any such  Section  with  respect  to Lost  Service  Subscribers,  Right of First
Refusal  Subscribers and Retained  Subscribers if and to the extent that,  after
giving effect to such  payment,  (x)the  aggregate  amount of such payments made
pursuant to such Sections (excluding any payments relating to interest,  capital
expenditures   (including,   without   limitation,   Deducted   Covered  Capital
Expenditures)  and cash flow) would exceed  (y)an amount equal to the  aggregate
amount  that  would  have  been  paid  at  the  Closing  for  all  Lost  Service
Subscribers, Right of First Refusal Subscribers and Retained Subscribers if none
of such Basic Subscribers had had the status of Lost Service  Subscriber,  Right
of First Refusal Subscriber or Retained Subscriber as of the Closing (the amount
of any such excess payment being an "Excess Payment"). If and to the extent that
Buyer shall make any Excess Payment to Tele-Vue,  upon Buyer's  written  request
Tele-Vue shall refund to Buyer the amount of such Excess Payment,  together with
interest  thereon at the Prime  Rate for the period  from the date of payment to
the date of refund.


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     Section 4.2  Calculation  of  Adjustment  Amounts.  (a)Prior to the Closing
Date,  TeleVue will  determine in good faith its estimates of Closing Date Basic
Subscribers  ("Estimated  Closing  Date  Basic  Subscribers"),   the  Subscriber
Shortfall  Amount (the "Estimated  Subscriber  Shortfall  Amount"),  the Capital
Expenditure Amount (the "Estimated  Capital  Expenditure  Amount"),  the Closing
Inventory Amount (the "Estimated  Closing  Inventory  Amount"),  Closing Working
Capital  ("Estimated   Closing  Working  Capital"),   the  Telecom  Amount  (the
"Estimated  Telecom  Amount"),  the Lost  Service  Subscriber  Reduction  Amount
("Estimated Lost Service  Subscriber  Reduction  Amount"),  if any, the Retained
Franchise Reduction Amount ("Estimated Retained Franchise Reduction Amount"), if
any,  and, if  applicable,  the Right of First Refusal  Adjustments  ("Estimated
Right  of  First  Refusal  Adjustments").   The  Estimated  Closing  Date  Basic
Subscribers,  the Estimated  Subscriber  Shortfall Amount, the Estimated Capital
Expenditure  Amount,  the Estimated Closing Inventory Amount,  Estimated Closing
Working Capital,  Estimated Lost Service Subscriber Reduction Amount,  Estimated
Retained  Franchise  Reduction  Amount,  the  Estimated  Telecom  Amount and the
Estimated Right of First Refusal Adjustments are referred to herein collectively
as the "Estimated  Adjustment  Amounts" and the Closing Date Basic  Subscribers,
the Capital  Expenditure  Amount, the Closing Inventory Amount,  Closing Working
Capital,  the Telecom Amount, the Subscriber  Shortfall Amount, the Lost Service
Subscriber  Reduction Amount,  the Retained  Franchise  Reduction Amount and the
Right of First Refusal  Adjustments  are referred to herein  collectively as the
"Adjustment  Amounts." At least (45) days prior to the anticipated Closing Date,
TeleVue will  deliver to Buyer a statement  setting  forth its  estimates of the
Adjustment  Amounts  as of the  anticipated  Closing  Date  set  forth  in  such
statement.  Such statement shall be for informational  purposes only and TeleVue
shall not be deemed to have made any  representations  or  warranties as to such
statement, except that it was prepared in good faith. At least ten (10) Business
Days prior to the  anticipated  Closing  Date,  TeleVue  will deliver to Buyer a
statement setting forth the Estimated Adjustment Amounts, which statement shall:
(i)contain  the  information  in  reasonable  detail  required to calculate  the
Estimated   Adjustment   Amounts;   (ii)be   prepared  in  accordance  with  the
requirements of this Agreement;  and (iii)be certified by an authorized  officer
of TeleVue to be TeleVue's good faith estimate as of the date thereof.

     (b) The Purchase Price payable on the Closing Date (the "Estimated Purchase
Price")  will be  preliminarily  calculated  and  adjusted  in  accordance  with
Section4.1  as if the  Estimated  Adjustment  Amounts set forth on the statement
delivered by TeleVue to Buyer  pursuant to the last sentence of paragraph (a) of
this Section4.2 were the actual Adjustment Amounts.

     (c) Not later  than sixty (60) days after the  Closing  Date,  Buyer  shall
deliver  to  TeleVue a  statement  showing  Buyer's  calculation  of the  actual
Adjustment  Amounts  (the "Final  Certificate").  Buyer shall make  available to
TeleVue its accountants' work papers and such other information  relating to the
calculation of the Adjustment Amounts as TeleVue shall reasonably request.

     (d)  In  the  event  that  TeleVue  disputes  Buyer's  calculation  of  the
Adjustment Amounts, TeleVue shall give written notice thereof to Buyer within 30


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days after the Final Certificate was delivered to TeleVue which notice shall set
forth the basis for such dispute in reasonable  detail (the  "Dispute  Notice").
The parties shall use all reasonable efforts to resolve any such dispute, but if
any such dispute cannot be resolved by the parties within thirty (30) days after
the date the Dispute Notice is given, all unresolved  disputes shall be referred
to an  Arbitrating  Firm for  resolution.  The  parties  shall seek to cause the
Arbitrating Firm to make its determination within sixty (60) days after referral
of a  dispute  to  it.  The  determination  of the  Arbitrating  Firm  shall  be
conclusive and binding on each party.  The fees of the Arbitrating Firm shall be
allocated  and paid by TeleVue or Buyer,  or divided  between  them,  on a basis
determined  by  the  Arbitrating  Firm  to  be  fair  taking  into  account  the
correctness  of the  positions  asserted  by each of them  with  respect  to the
disputed matters resolved by the Arbitrating Firm.

     (e) The  Adjustment  Amounts  shall be the  amounts  set forth in the Final
Certificate  unless a Dispute  Notice is given with  respect to the  calculation
thereof,  in which case only those Adjustment Amounts not in dispute shall be as
set forth in the Final Certificate. If a Dispute Notice is given, any Adjustment
Amount  in  dispute  shall be  deemed  finally  determined  on the date that the
Arbitrating Firm gives written notice to Buyer and TeleVue of its  determination
with respect to all disputes regarding the calculation  thereof, or, if earlier,
the date on which the TeleVue and Buyer agree in writing on the amounts thereof,
in which case any Adjustment Amount in dispute shall be calculated in accordance
with such determination or agreement, as the case may be, and the Purchase Price
shall be finally  calculated in accordance with such calculations as provided in
Section 4.1.

     Section 4.3 Adjustment Payment. If the Purchase Price as finally determined
is greater than the amount of the Estimated  Purchase Price,  Buyer shall pay to
TeleVue on the third  Business  Day after such  determination  an amount in cash
equal to such excess plus interest  thereon from the Closing Date to the date of
payment  at the Prime  Rate,  compounded  quarterly.  If the  Purchase  Price as
finally determined is less than the Estimated Purchase Price,  TeleVue shall pay
to Buyer on the third  Business Day after such  determination  an amount in cash
equal to such deficiency plus interest thereon from the Closing Date to the date
of payment at the Prime Rate, compounded quarterly. Payments of cash pursuant to
this Section4.3 shall be made by wire transfer of immediately available funds to
an account in the United States  designated by the party  entitled to payment to
the party  required to make the payment at least two (2) Business  Days prior to
the date such  payment is due.  Any payment  pursuant to this Section 4.3 (other
than  interest)  shall be deemed to be an adjustment  to the Purchase  Price for
purposes of this Agreement.

     Section  4.4  Proration.   Subject  to  Article  III,  property  taxes  and
assessments,  payroll taxes,  utility charges,  association  dues,  rents,  pole
rentals,  applicable  franchise,  copyright  or other  fees,  sales and  service
charges,  wages and payroll  expenses  (including  accrued vacation pay and sick
leave) of  Employees  of the Cable  Group  who are  employed  by Buyer as of the
Closing,  and other operating  income and expenses shall be prorated as of 11:59
p.m. on the Closing Date,  but only to the extent such items were not taken into
account in calculating closing Working Capital.



                                       43

<PAGE>

                                   ARTICLE V

              REPRESENTATIONS AND WARRANTIES OF TELEVUE AND VIACOM

     A. TeleVue and Viacom represent and warrant to Buyer that:

     Section 5.1 Corporate  Existence and Power. Each Cable Division  Subsidiary
(i)is a corporation duly organized,  validly existing and in good standing under
the laws of its  jurisdiction  of  organization,  (ii)is  authorized to transact
business and is in good  standing in each state in which its ownership of assets
or conduct of business requires such  qualification,  and (iii)has all corporate
powers  required  to  carry on its  business  as  conducted  on the date of this
Agreement, with such exceptions to clauses(i),  (ii) and (iii) as would not have
a Material  Adverse Effect or materially and adversely affect the ability of the
Cable Group to consummate the Transaction.

     Section 5.2 Corporate Authorization. Each Cable Division Subsidiary has the
corporate  power  to own the  Acquired  Assets  owned by it and to  operate  the
Systems  operated by it. The execution,  delivery and  performance by TeleVue of
this Agreement,  and the consummation by TeleVue of the Transaction are, and the
performance  by each  Remaining  Cable  Division  Subsidiary,  if  any,  of this
Agreement and the  consummation by such Remaining  Cable Division  Subsidiary of
the  Transaction  are,  or on or before  the  Closing  Date will be,  within the
corporate powers of TeleVue and such Remaining Cable Division  Subsidiary,  and,
with respect to TeleVue,  have been duly  authorized by all necessary  corporate
action  on the part of  TeleVue,  and,  with  respect  to such  Remaining  Cable
Division  Subsidiary,  have been, or on or before the Closing Date will be, duly
authorized by all necessary corporate action on the part of such Remaining Cable
Division  Subsidiary,  and have been or on or before the  Closing  Date will be,
duly   authorized  by  TeleVue's   parent  and  such  Remaining  Cable  Division
Subsidiary's parent.

     Section 5.3 Governmental Authorization.  The execution and delivery of this
Agreement by TeleVue,  and the performance by the Cable Group of this Agreement,
and the consummation by the Cable Group of the Transaction,  require no material
action by or in respect of, or material filing with, any Governmental  Authority
other than compliance  with any applicable  requirements of the HSR Act, the FCC
Authorizations and the Local  Authorizations and those that may be applicable as
a result of the regulatory status of Buyer or its Affiliates.

     Section  5.4  Consents.  Except  as set out in  Schedule5.13,  no  material
consent by any Person under any Material  Contract is required or necessary  for
the execution and delivery of this Agreement by TeleVue,  or the  performance by
the Cable Group of this Agreement, or the consummation by the Cable Group of the
Transaction. Except as indicated in Schedules5.8, 5.13, 5.15 and 6.4, no consent
by any Person is required or necessary  for the  execution  and delivery of this
Agreement by TeleVue,  or the  performance by the Cable Group of this Agreement,
or the consummation by the Cable Group of the Transaction,  with such exceptions
as would not have a Material Adverse Effect.



                                       44

<PAGE>

     Section 5.5 Non-Contravention.  (a)The execution,  delivery and performance
of  this  Agreement  by  TeleVue,   and  the  consummation  by  TeleVue  of  the
Transaction,  do not,  and the  performance  by each  Remaining  Cable  Division
Subsidiary,  if any, of this  Agreement and the  consummation  by such Remaining
Cable Division  Subsidiary of the Transaction do not or on or before the Closing
Date will not,  (x)contravene  the  certificate  of  incorporation  or bylaws of
TeleVue  or  such  Remaining  Cable  Division  Subsidiary  or  (y)result  in the
imposition  of any Lien (other than a Permitted  Lien) upon any  Acquired  Asset
pursuant to, or constitute a breach or default  (including any event that,  with
the  passage  of time or giving of  notice,  or both,  would  become a breach or
default)  under or give  rise to a right  of  termination,  cancellation,  first
refusal or acceleration  under any applicable Legal Requirement or any judgment,
injunction,  order, decree, contract, license, lease, indenture,  mortgage, loan
agreement  or note as to which the Cable Group is a party or by which any of its
properties may be bound,  the effect of which would be to materially  impair the
ability of the Cable Group to perform its obligations under this Agreement.

     (b) The Cable Group is not in breach or default  (including any event that,
with the passage of time or giving of notice,  or both, would become a breach or
default)  under any Assumed  Contract  or contract by which any of the  Acquired
Assets may be bound,  the effect of which  would be to impair the ability of the
Cable Group in any material respect to operate any System as presently operated.

     Section 5.6 Binding  Effect.  This  Agreement  has been duly  executed  and
delivered  by  TeleVue,  and this  Agreement  constitutes  a valid  and  binding
obligation of TeleVue, enforceable against TeleVue in accordance with its terms,
except as enforceability  may be limited by applicable  bankruptcy,  insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by the principles governing the availability of equitable remedies.

     Section 5.7 Financial Statements. The unaudited consolidated balance sheets
of the Cable Group at December 31, 1993 and September 30, 1994 and the unaudited
consolidated income statements of the Cable Group for the year ended December31,
1993 and the ninemonth period ended September 30, 1994 set forth on Schedule 5.7
hereto (the "Financial Statements"),  fairly present in all material respects in
conformity with GAAP, the financial  position of the Cable Group as of the dates
thereof and the results of  operations  of the Cable Group for the periods  then
ended, except that such Financial  Statements omit footnotes (and the disclosure
contained  therein)  and  are  subject  to  normal,  quarterend  and/or  yearend
adjustments,   and  the  financial  information  set  forth  in  such  unaudited
consolidated balance sheet at December 31, 1993 and such unaudited  consolidated
income  statement for the year ended December 31, 1993 was  incorporated  in the
audited  consolidated  financial  statements  of Viacom Inc. at and for the year
ended December31, 1993.

     Section  5.8  Systems;   Local   Authorizations  and  FCC   Authorizations.
(a)(i)Schedule5.8  sets  forth a  complete  list for each  System  of the  Local
Authorizations  (other  than any such  authorization,  approval,  certification,


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<PAGE>

franchise, license or permit which is not material to the ownership or operation
of a System) in effect as of the date of this  Agreement  and indicates for each
System those Local  Authorizations  requiring the consent of the Local Authority
for consummation of the Transaction.

     (ii) Each Local  Authorization  (x)is in all material respects validly held
by a Cable Division  Subsidiary in accordance  with and as required by the terms
thereof and  according to all  applicable  Legal  Requirements  and (y)is in all
material  respects in full force and effect and has not been revoked or canceled
and  the  applicable  Cable  Division   Subsidiary  is  in  material  compliance
therewith.  To the  knowledge of TeleVue,  no  proceeding  to revoke,  cancel or
modify  in any  manner  any  such  Local  Authorization  has been  initiated  or
threatened  in writing,  except such as has been  disclosed  to Buyer in writing
prior to the date of this  Agreement.  The Cable Group has timely  filed all 626
Letters required to be filed in connection with renewal of Local Authorizations.

     (iii) Except as otherwise  indicated on Schedule5.8,  (aa)Schedule 5.8 sets
forth a list, for each Franchise Area, of the date (or, if applicable, the range
of possible expiration dates) of expiration of each material Local Authorization
with respect thereto;  (bb)no other material Local  Authorization is required by
law in connection with the operation and maintenance of the Systems;  and (cc)to
the knowledge of TeleVue,  (x)there are no operating  cable  television  systems
(other than the Systems)  providing cable  television  programming to a material
number of households  in the Franchise  Area and (y)no entity has been awarded a
valid cable  television  franchise  which  enables such entity to provide  cable
television service to a material number of households in the Franchise Area.

     (b)  Schedule  5.8  contains  a  complete  list  as of  the  Cable  Group's
accounting  cutoff date ending  immediately  prior to September  30, 1994,  with
respect to each System,  of (i)the number of Basic  Subscribers  as shown on the
System's monthly subscriber report,  (ii)the number of pay customers by each pay
service as shown in the Cable Group's records,  (iii)the  approximate  length of
installed plant, and (iv)the approximate number of Homes Passed.

     (c)  Schedule  5.8 contains a complete  list of all FCC  Authorizations  in
effect as of the date hereof.

     (d) (i)No  System is in material  violation  of and the Cable Group has not
received  written  notice of any claimed  violation  of, any FCC  Authorization.
(ii)Each such FCC Authorization is validly existing and in full force and effect
in all material  respects.  (iii)Each System has all material FCC Authorizations
required  for its  operation  of the Systems.  To the  knowledge of TeleVue,  no
proceeding to revoke,  cancel or modify in any manner any such FCC Authorization
has been  initiated or  threatened in writing and the  applicable  member of the
Cable Group is in material compliance with all such FCC Authorizations.

     (e) Schedule 5.8 sets forth the Basic  Subscriber  Rate for each  Franchise
Area as of the date indicated therein.

     Section 5.9 Absence of Changes.  Except as described in Schedule5.9,  since
the  Balance  Sheet  Date,  the Cable  Group has  operated  the  Business in the



                                       46

<PAGE>
ordinary course,  consistent with past practices, and there have been no changes
in the Business  which,  individually  or in the  aggregate,  have resulted in a
Material Adverse Effect.

     Section  5.10  Subsidiaries.  At the date of this  Agreement,  (a)all Cable
Division  Subsidiaries  (other than  TeleVue) are  whollyowned  Subsidiaries  of
TeleVue and (b)TeleVue is a whollyowned Subsidiary of Viacom Inc.

     Section  5.11  Assets.  The Cable Group has good and,  subject to Permitted
Liens,  marketable  title to, or a valid  leasehold or license  interest in, all
tangible  assets  purported to be owned,  leased or licensed by the Cable Group,
including,  without limitation, all Inventory, Real Property and Equipment, free
and clear of all Liens other than Permitted Liens. The bill of sale set forth in
ExhibitG  is  sufficient  to transfer  to Buyer good and,  subject to  Permitted
Liens,  marketable title to the PVIT Assets.  The Acquired Assets, the Nashville
Local Authorizations and the PVIT Assets are in all material respects sufficient
to operate the Business as currently conducted.  The Cable Division Subsidiaries
hold all cable  television  franchises  that Viacom Inc.  or any  Subsidiary  of
Viacom Inc. holds, except for the Nashville Local Authorizations. Except for the
Excluded Assets, the Acquired Assets, the Nashville Local Authorizations and the
PVIT Assets constitute all material  operating assets owned,  leased or licensed
by  Viacom  Inc.  or any of its  Subsidiaries  and used  primarily  in the Cable
Television  Business of Viacom  Inc.  and its  Subsidiaries.  Any asset owned by
Viacom Inc. or any  Subsidiary  of Viacom Inc.  which is  primarily  used in the
Business  but is not  held  by the  Cable  Group  on the  date  hereof  will  be
transferred to the Cable Group on or before the Closing.

     Section  5.12  Intellectual  Property.  To the  knowledge  of TeleVue,  the
conduct of the Business  does not infringe upon the patents,  trademarks,  trade
names or other intellectual  property rights of any Person, with such exceptions
as would not result in a Material Adverse Effect.

     Section  5.13  Material  Contracts.  (a)Schedule  5.13  lists all  Material
Contracts in effect on the date of this Agreement. The Cable Group has caused to
be made available to the Buyer or its  representatives  true and complete copies
of the Material Contracts.

     (b) Except as disclosed in Schedule5.13, the Cable Group is not in material
default or breach of any  Material  Contract  and, to the  knowledge of TeleVue,
(i)there  exists no state of facts which  after  notice or lapse of time or both
would  constitute  such a material  default or breach and (ii)no  other party to
such Material Contract is in default or breach thereunder.

     (c) Except as set forth on Schedule  5.13,  the real  property and personal
property which are the subject of leases that constitute  Assumed  Contracts are
currently used in the construction,  operation or maintenance of the Business or
constitute Telecom Agreements.

     Section 5.14 Litigation.  Except as set out in  Schedule5.14,  there are no
actions,  suits or proceedings  pending and, to the knowledge of TeleVue,  there
are no  claims,  grievances,  governmental  investigations,  actions,  suits  or
proceedings threatened, against or affecting the Cable Group with respect to the
Business  at law or in equity or before  or by any  Governmental  Authority,  or
before or by an  arbitrator  or  arbitration  board  which would have a Material
Adverse Effect. Except as set out in Schedule 5.14, there are no judgments,


                                       47

<PAGE>

decrees  or orders  outstanding  against  the Cable  Group  with  respect to the
Business or any System.

     Section 5.15  Compliance  with Legal  Requirements.  Except as set forth on
Schedule 5.15,  (i)the Cable Group is in compliance  with all  applicable  Legal
Requirements  and (ii)the  Business is being  conducted in  compliance  with all
applicable  Legal  Requirements,  with such exceptions to clauses(i) and (ii) as
would not have a Material Adverse Effect.

     Section 5.16 Employees.

     (a)  Employment  Agreements.  Schedule5.16  contains a list of all  written
employment agreements between the Cable Group and Employees. The consummation of
the  Transaction  will  not  result  in  Buyer  becoming  obligated  to make any
severance  payments,  or to accrue  any  severance  costs  with  respect  to any
NonAcquired Employee.

     (b)  Collective  Agreements.  Except as set out in Schedule 5.16, the Cable
Group is not a party to any  material  labor or  employment  dispute  and is not
bound by or a party to any collective bargaining agreement relating to Employees
and no trade  union,  council  of trade  unions,  employee  bargaining  agent or
affiliated  bargaining agent for any of the Employees (i)holds bargaining rights
with respect to any of Employees by way of certification, interim certification,
voluntary  recognition,  designation  or successor  rights;  or (ii)has,  to the
knowledge of TeleVue, applied or indicated an intention to apply to be certified
as the bargaining agent of any of the Employees.

     (c) Employee Benefit Plans/ERISA. (i)Schedule 5.16 lists each stock option,
stock  purchase,  disability,  vacation pay,  incentive,  bonus,  severance pay,
deferred  compensation,  supplemental  income or other  employee  benefit  plan,
policy or arrangement or agreement and each other "employee benefit plan" within
the meaning of Section 3(3) of the Employee  Retirement  Income  Security Act of
1974, as amended ("ERISA"),  maintained by or contributed to by the Cable Group,
including all amendments thereto (collectively  referred to as "Benefit Plans"),
covering  current or former employees or dependents or survivors of employees or
former  employees of the Cable  Group.  Summaries of each Benefit Plan have been
provided to Buyer.

     (ii) Each Benefit Plan is in  substantial  compliance  with all  applicable
laws and regulatory  requirements,  and has been  administered  substantially in
accordance with its terms. Having made due inquiry of Viacom Inc., TeleVue knows
of  no   circumstances   likely  to  result  in  the  denial  or  revocation  of
taxqualification  of any Benefit Plan intended to be taxqualified  under Section
401(a) of the Code. No material liabilities,  other than for payment of benefits
in the ordinary  course,  have been  incurred  nor, to the  knowledge of TeleVue
(having  made due  inquiry  of  Viacom  Inc.),  do any  facts  exist  which  are
reasonably likely to result in any material  liability  (whether or not asserted
as of the date hereof) of the Cable Group arising by virtue of any event, act or
omission  occurring  prior to the Closing Date with respect to any Benefit Plan.
To the  knowledge  of TeleVue  (having made due inquiry of Viacom Inc.) no liens
under Code Section 412(n) or ERISA Section 4068(a) nor  liabilities  under ERISA
Section  4069(a) or Section  4201(a) exist with respect to any employee  benefit
plan  (within  the  meaning of  Section3(a)  of ERISA) of the Cable Group or any


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<PAGE>

member of an ERISA affiliated group (as defined under Section414(b), (c) and (m)
of the Code) which would have a Material  Adverse Effect on the Acquired Assets,
nor do any facts exist which are reasonably likely to result in the assertion of
such liens or liabilities.

     (d)  Immigration.  The Cable Group has in all  material  respects  properly
verified  the identity and  authorization  to work in the United  States and has
completed and retained INS forms I9 for all Acquired Employees where required by
the Immigration Reform and Control Act of 1986 and related statutes. TeleVue has
made available to Buyer true and complete copies of such forms.

     Section 5.17 Finders' Fees. There is no investment banker,  broker,  finder
or other  intermediary  which has been  retained by or is  authorized  to act on
behalf  of the  Cable  Group,  any  Cable  Division  Subsidiary  or any of their
Affiliates  who might be entitled to any fee or commission  from Buyer or any of
its Affiliates in connection with the execution, delivery or performance of this
Agreement or the Transactions.

     Section  5.18 Real  Property.  (a)Schedule  5.18 lists the  address of each
parcel of Owned Real Property.

     (b) Except as set forth in Schedule5.18, all Owned Real Property is used or
useful in the Business.

     (c) The  Cable  Group  has  possession  and the  right to  occupy  the real
property  which is the  subject  of each  lease of  Leased  Real  Property  that
constitutes a Material Contract.

     (d) The Cable Group has not received  written  notice from any party to any
instrument  affecting  any  material  parcel of Real  Property  that such  party
intends to terminate or cancel the same,  with such  exceptions  as would not be
reasonably expected to have a Material Adverse Effect.

     Section  5.19  Environmental  Matters.  There is no past or present  event,
condition or circumstance (i)which constitutes a material violation by the Cable
Group  of any  Legal  Requirements  now  in  effect  relating  to  pollution  or
protection of the environment from  contamination,  including any material Legal
Requirements  relating to the use, treatment,  storage,  disposal,  transport or
handling of, or the spill, deposit, emission,  discharge,  release or threatened
release of, contaminants,  substances, wastes or pollutants, including petroleum
and  "hazardous  substances"  as that term is  defined  under the  Comprehensive
Environmental  Response,  Compensation and Liability Act, as amended  ("CERCLA")
(collectively,  "Hazardous Materials"), into the environment or (ii)which has or
will give rise to any  material  liability  of the Cable  Group,  including  any
material  liability  under CERCLA or other similar state law,  based on, arising
out of or related to the use,  treatment,  storage,  disposal,  transport of, or
handling  or the spill,  deposit,  emission,  discharge,  release or  threatened
release of, any  Hazardous  Material  into the  environment;  provided  that the
representations  in this Section 5.19,  insofar as they apply to the underground
storage tanks listed on  Schedule5.19,  shall apply without any limitation as to
materiality.  Attached hereto as Schedule 5.19 is a true and correct list of all


                                       49

<PAGE>

underground storage tanks located on the Real Property. TeleVue has delivered to
Buyer copies of the most recent tank test reports relating to such tanks.

     Section 5.20 FCC and  Copyright.  (a)The Cable Group is in compliance  with
the Rules and Regulations concerning Cumulative Leakage Index, as defined by the
Rules and Regulations.

     (b) The Cable Group has made all material submissions  (including,  without
limitation,  registration  statements)  required  under the  Communications  Act
applicable  to the conduct and  operation of the  Business and the Systems.  The
Cable Group and the Systems are in compliance in all material  respects with the
Communications  Act.  The Cable  Group has  provided  all  material  notices  to
subscribers  and  maintained in all material  respects all public files required
under the  Communications  Act.  Except as set forth in Schedule 5.20, the Cable
Group is certified as in compliance with the FCC's equal employment  opportunity
rules to the extent required to be so certified under such rules. Each System is
in material  compliance with all "must carry"  requirements and has received all
retransmission consents, except such as are being contested.

     (c) The Cable Group has deposited with the United States  Copyright  Office
all  statements  of account and other  documents and  instruments,  and paid all
royalties,  supplemental  royalties,  fees and other sums to the  United  States
Copyright  Office  required under the Copyright Act with respect to the business
and operations of each System as are sufficient to obtain, hold and maintain the
compulsory  copyright license for cable television systems prescribed in section
111 of the Copyright Act.

     (d) The Cable  Group and each  System  are in  compliance  in all  material
respects  with the Copyright  Act,  except as to potential  copyright  liability
arising  from the  performance,  exhibition  or  carriage  of any  music on each
System. The Cable Group and each System are entitled to hold and do now hold the
compulsory copyright license described in section 111 of the Copyright Act.

     Section 5.21 Taxes.  (a)All  Taxes with  respect to all taxable  periods or
portions  thereof  ending on or before the Closing for which  TeleVue and any of
the other  Cable  Division  Subsidiaries  are or could be liable  have been duly
paid, collected or withheld and remitted to the appropriate  governmental agency
(or  to  other  persons  or  entities  (for   example,   under  tax   allocation
agreements)),  except for any such Taxes not yet  delinquent  and any such Taxes
which,  if not paid,  collected,  or withheld and remitted would not result in a
Lien on the  Acquired  Assets  which  would  remain  after  consummation  of the
Transaction or result in transferee liability on the part of Buyer.

     (b) None of the  Acquired  Assets is required to be treated as owned by any
person other than TeleVue or a Cable Division  Subsidiary pursuant to a socalled
safe harbor lease under the provisions of former  Section  168(f)(8) of the Code
which Buyer is required to assume pursuant to this Agreement.



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<PAGE>

     (c) Neither  TeleVue nor any other Cable Division  Subsidiary is a "foreign
person" within the meaning of Section1445 of the Code.

     Section 5.22 Telecom  Capital  Expenditures.  As of September 30, 1994, the
portion of the Telecom Capital Expenditure Amount expended prior thereto did not
exceed $7 million.

     Section 5.23 Reorganizations.  The Reorganizations will not have a Material
Adverse  Effect  or  prevent  or  substantially  delay the  consummation  of the
Transaction or result in any cost to Buyer that is not reimbursable by TeleVue.

     Section 5.24 Accounts Receivable,  Net. The allowance for customer doubtful
accounts as of the  Closing  will be in an amount not less than the total of all
disconnected  subscriber account balances, all amounts billed to subscribers for
unrecovered  converters and all accounts  receivable aged over 120 days from the
invoice or billing  date,  determined on a basis  consistent  with the Financial
Statements.

     B. TeleVue and Viacom  acknowledge and agree with Buyer that Buyer shall be
entitled to rely upon each and every  representation  and  warranty set forth in
this Agreement notwithstanding that Buyer has conducted its own investigation of
the Acquired Assets and each System and that Buyer may have received information
that  suggests  that a  representation  or  warranty  is untrue,  inaccurate  or
incomplete.

     C. Buyer hereby acknowledges and agrees with TeleVue and Viacom as follows:

     NO OTHER REPRESENTATIONS OR WARRANTIES.  THE ACQUIRED ASSETS ARE BEING SOLD
ON AN "AS IS" "WITH ALL FAULTS" BASIS,  AND EXCEPT FOR THE  REPRESENTATIONS  AND
WARRANTIES CONTAINED IN THIS ARTICLE V AND IN ARTICLE XV HEREOF, TELEVUE AND ITS
AFFILIATES MAKE NO  REPRESENTATION OR WARRANTY,  EXPRESS OR IMPLIED,  WRITTEN OR
ORAL, AND TELEVUE, AND ITS AFFILIATES HEREBY DISCLAIM ANY SUCH REPRESENTATION OR
WARRANTY  (INCLUDING  WITHOUT  LIMITATION  ANY  IMPLIED  WARRANT OR  WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE), WHETHER BY TELEVUE, ITS
AFFILIATES,  OR ANY OF THEIR AGENTS OR REPRESENTATIVES OR ANY OTHER PERSON, WITH
RESPECT TO THE CABLE GROUP,  THE ACQUIRED ASSETS OR THE SYSTEMS OR THE EXECUTION
AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTION,  NOTWITHSTANDING THE DELIVERY
OR  DISCLOSURE  TO  BUYER,  ANY  AFFILIATE  OF BUYER  OR ANY OF THEIR  OFFICERS,
DIRECTORS,  EMPLOYEES,  AGENTS OR  REPRESENTATIVES  OR ANY  OTHER  PERSON OF ANY
DOCUMENT OR OTHER INFORMATION BY THE CABLE GROUP, ANY OF ITS AFFILIATES,  OR ANY
OF THEIR OFFICERS, DIRECTORS,  EMPLOYEES, AGENTS OR REPRESENTATIVES OR ANY OTHER
PERSON WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.



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<PAGE>

                                   ARTICLE VI

             REPRESENTATIONS AND WARRANTIES OF BUYER AND INTERMEDIA

Buyer and InterMedia represent and warrant to TeleVue that:

     Section 6.1 Partnership Existence and Power. Buyer is a limited partnership
duly  organized,  validly  existing and in good  standing  under the laws of the
state of  California,  and is  authorized  to transact  business  and is in good
standing in each state in which its  ownership  of assets or conduct of business
requires such qualification, and has all partnership powers required to carry on
its business as now conducted,  with such exceptions as would not materially and
adversely affect the ability of Buyer to consummate the Transaction.

     Section  6.2  Partnership  Authorization.   The  execution,   delivery  and
performance  by Buyer of this  Agreement  and the  consummation  by Buyer of the
Transaction are within Buyer's  partnership powers and have been duly authorized
by all necessary partnership action on the part of Buyer.

     Section  6.3  Governmental  Authorization.   The  execution,  delivery  and
performance by Buyer of this  Agreement,  and the  consummation  by Buyer of the
Transaction, require no material action by or in respect of, or filing with, any
governmental body, agency,  official or authority other than compliance with any
applicable  requirements of the HSR Act, the FCC  Authorizations,  and the Local
Authorizations  and  filing  the  application  for,  and  receipt  of,  the  FCC
Certificate.

     Section 6.4 Consents.  Except as set out in Schedule 6.4, no consent by any
Person  under any  contract to which Buyer is a party or to which its assets are
subject is required or necessary for the execution,  delivery and performance by
Buyer of this Agreement or the  consummation by Buyer of the  Transaction,  with
such  exceptions as would not  materially  and  adversely  affect the ability of
Buyer to consummate the Transaction.

     Section 6.5 Non-Contravention.  The execution,  delivery and performance by
Buyer of this Agreement and the  consummation by Buyer of the  Transaction  does
not and will  not  (x)contravene  the  certificate  of  limited  partnership  or
agreement of limited  partnership  of Buyer or  (y)result in a, or  constitute a
breach or default  (including any event that, with the passage of time or giving
of notice, or both, would become a breach or default) under any applicable Legal
Requirement or any judgment, order, decree, contract, license, lease, indenture,
mortgage,  loan  agreement or note, as to which Buyer is a party or by which any
of its properties may be bound, the effect of which would materially  impair the
ability of Buyer to perform its obligations under this Agreement.

     Section 6.6 Binding  Effect.  This  Agreement  has been duly  executed  and
delivered by Buyer and this Agreement constitutes a valid and binding obligation
of Buyer,  enforceable  against  Buyer in accordance  with its terms,  except as
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by the principles governing the availability of equitable remedies.



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<PAGE>

     Section 6.7 No Violations of FCC Cross Ownership Rules. Assuming Buyer were
now in  control  of the  Systems,  Buyer  would not be in  violation  of any FCC
restrictions  regarding the ownership of competing media and related  businesses
that impact the ability of Buyer to own the Systems.

     Section  6.8 FCC  Certificate.  Having  made  due  inquiry,  to the best of
Buyer's and InterMedia's knowledge and belief, Buyer and RCS Nashville, L.P. are
"minority  controlled" as that term is defined in the FCC's  Statement of Policy
on  Minority  Ownership  of  Broadcasting  Facilities,  68 FCC 2d 979 (1978) and
Commission   Policy   Regarding  the   Advancement  of  Minority   Ownership  in
Broadcasting,  92 FCC 2d 849 (1982) and subsequent decisions of the FCC prior to
the date hereof  interpreting  such  policies,  such that  TeleVue and any Cable
Division  Subsidiary that sells Acquired Assets as contemplated  hereby shall be
entitled to apply for and receive an FCC  Certificate.  Buyer and its Affiliates
will file with the FCC an application for an FCC Certificate which discloses all
material  information  relevant  to  obtaining  an FCC  Certificate  (including,
without  limitation,  information  regarding any proposed  transfers by Buyer of
Acquired Assets),  and all information in such application insofar as it relates
to Buyer and its Affiliates and the  Transaction and is provided by Buyer or any
of its Affiliates shall be true and correct in all material respects.

     Section 6.9 Finders' Fees. There is no investment banker, broker, finder or
other  intermediary which has been retained by or is authorized to act on behalf
of Buyer or any of its Affiliates who might be entitled to any fee or commission
from the Cable Group or any of its Affiliates in connection  with the execution,
delivery or performance of this Agreement or the Transactions.

     Section 6.10 Limited Partner  Guaranty.  The Limited  Partner  Guaranty has
been duly  executed  and  delivered  by Guarantor  and  constitutes,  and on the
Closing  Date shall  constitute,  a valid and binding  obligation  of  Guarantor
enforceable against Guarantor in accordance with its terms.

     Section 6.11 First Pledge Agreement. If the Guarantor defers payment of the
Deferred  Amount (as  defined  in the  Limited  Partner  Guaranty)  pursuant  to
Section1(c) of the Limited Partner Guaranty,  the First Pledge Agreement will be
duly  executed  and  delivered  by  Guarantor  at the time it is  required to be
executed  and  delivered  and at such time will  constitute  a valid and binding
obligation of Guarantor,  enforceable  against  Guarantor in accordance with its
terms.

     Section  6.12  Value  Guarantee  Agreement.  If payment of a portion of the
Purchase Price is to be deferred pursuant to Section 12.2(b)(i),  at the Closing
the Value  Guarantee  Agreement  shall have been duly  executed and delivered by
Guarantor and Buyer and shall on the Closing Date constitute a valid and binding
obligation of Guarantor  and Buyer  enforceable  against  Guarantor and Buyer in
accordance with its terms.

     Section  6.13  Second  Pledge  Agreement.  If  payment  of a portion of the
Purchase Price is to be deferred pursuant to Section 12.2(b)(i),  at the Closing
the Second Pledge Agreement shall have been duly executed and delivered by Buyer


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<PAGE>

and shall on the Closing Date constitute a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms.

     Section 6.14 Note.  If payment of a portion of the Purchase  Price is to be
deferred pursuant to Section12.2(b)(i),  at the Closing the Note shall have been
duly executed and delivered by Buyer and shall on the Closing Date  constitute a
valid and binding  obligation of Buyer  enforceable  against Buyer in accordance
with its terms.

                                  ARTICLE VII

                              COVENANTS OF TELEVUE
TeleVue agrees and covenants with Buyer that:

     Section 7.1 Conduct of the Business.  Subject to  Sections7.2  and 8.5, and
except for (x)any change described in clause(a), (b) or (c) of the definition of
Material  Adverse Effect and  (y)compliance  with the Cable Group's  obligations
under this Agreement, from the date hereof until the Closing Date, TeleVue shall
cause the Business to be conducted only in the ordinary  course  consistent with
past practices.  Without limiting the generality of the foregoing, TeleVue shall
not, and shall not permit any of the other Cable  Division  Subsidiaries  to, do
any of the following, without the consent of Buyer:

          (i)  increase the Basic  Subscriber  Rate or any other rate  regulated
               pursuant to the  Communications Act without the consent of Buyer,
               provided  that such  consent by Buyer  shall not be  unreasonably
               withheld.

          (ii) materially  amend or,  other than in  accordance  with its terms,
               terminate, any Material Contract;

          (iii)enter into any written employment  agreement providing for a term
               of  employment  other  than as an  employee  at will,  except  as
               disclosed to Buyer prior to the date of this Agreement;

          (iv) increase  the  rate of  compensation  or  bonus  payments  to any
               employee of the Cable  Group,  except in the  ordinary  course of
               business and except for bonus payments in  conjunction  with this
               Transaction where the cost is borne by TeleVue; and

          (v)  sell or dispose  of  tangible  assets  relating  to the  Business
               (other than Excluded  Assets) except for sales or dispositions of
               assets in the  ordinary  course of business,  provided  that such
               assets (other than assets listed as vacant land on  Schedule5.18)
               are  replaced  with  other  assets  in  the  ordinary  course  of
               business.

     Section 7.2 Telecom Partnerships.  Prior to the Closing Date, TeleVue shall
make or cause  to be  made,  when due and  payable,  all  capital  contributions


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<PAGE>

required  to be  made  by  any  Cable  Division  Subsidiary  under  the  Telecom
Partnership  Agreements.  TeleVue agrees to use commercially  reasonable efforts
prior to the Closing to formalize  and enter into  agreements  with each Telecom
Partnership  covering the lease,  license or use by such Telecom  Partnership of
the  plant,  property  and  equipment  of the Cable  Group  relating  to capital
expenditures covered by the definition of Telecom Capital Expenditure Amount, to
the extent such lease,  license or use is not  otherwise  covered by the Telecom
Agreements.

     Section  7.3  Access to  Information;  Confidentiality.  TeleVue  will give
Buyer,  its  counsel,  financial  advisors,  accountants  and  other  authorized
representatives  reasonable  access during normal business hours to the offices,
properties, books and records of the Cable Group, and will furnish to Buyer, its
counsel,  financial advisors,  accountants and authorized  representatives  such
financial  and  operating  data  and  other  information  as  such  Persons  may
reasonably  request.  Prior to the  Closing,  Buyer  shall,  and shall cause its
Affiliates,  and  its  and  their  respective  officers,  directors,  employees,
attorneys,  financial  advisors,  accountants,  authorized  representatives  and
agents  (collectively,  "Agents"),  to  keep  secret  and  retain  in  strictest
confidence any and all confidential  information relating to the Business or the
Systems or otherwise not  available to the general  public  (provided  that such
confidential  information  shall not include any information  that (i)has become
generally  available  to the public  other than as a result of a  disclosure  by
Buyer,  its Affiliates or its Agents,  (ii)has been  independently  developed by
Buyer or such Affiliate of Buyer or (iii)was  available to Buyer or an Affiliate
of Buyer on a  nonconfidential  basis from a third party having no obligation of
confidentiality  to TeleVue or any Affiliate of TeleVue and which has not itself
received  such  information  directly  or  indirectly  in  breach  of  any  such
obligation  of  confidentiality),  and  shall  not  disclose  such  confidential
information,  and shall cause its  Affiliates  and Agents not to  disclose  such
confidential  information,  to any Person other than Buyer,  its Affiliates,  or
their respective Agents who have a need to know such  confidential  information,
except as may be required by law or legal process (in which event Buyer shall so
notify TeleVue as promptly as practicable (and if possible, prior to making such
disclosure) and, if requested by TeleVue,  shall seek confidential  treatment of
such information).

     Section  7.4  Additional  Financial  Statements  and  Reports.  As  soon as
available,  TeleVue shall furnish  Buyer with a  consolidated  balance sheet and
related  statement of income of the Cable Group for all fiscal  quarters  ending
after  September30,  1994 but prior to the Closing  Date  certified by the Chief
Financial  Officer to present fairly in all material respects in conformity with
GAAP, the financial position and results of operations of the Cable Group at and
for the fiscal  quarter  then ended,  except to the extent  that such  unaudited
financial  statements omit footnotes (and the disclosure  contained therein) and
are subject to normal quarterend and/or yearend adjustments.  Promptly following
filing with the  Securities  and  Exchange  Commission  ("SEC"),  TeleVue  shall
deliver copies of each Annual Report on Form 10K,  Quarterly Report on Form 10Q,
Current Report on Form8K and definitive  proxy statement filed by Viacom Inc. or
Viacom  International Inc. with the SEC (in each case without exhibits) and each
prospectus of Viacom Inc. or Viacom  International Inc. filed with the SEC under
the  Securities  Act of 1933 (other than any  prospectus  related to  securities
offered to employees).  Promptly  after the  preparation  thereof,  TeleVue will
deliver to Buyer  (a)copies of (i)each final monthly  profit and loss  statement
for the Business,  (ii)each  final monthly  capital  spending  statement for the


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<PAGE>

Business,  and  (iii)final  monthly  customer  reports for the Business  showing
number of  limited,  tier and premium  households  and (b)to the extent that any
statement referred to in clause(a)(i), (a)(ii) or (a)(iii) above is available on
a System or combined  System basis,  copies of such  statement or report on such
basis; provided,  however, that TeleVue does not and shall not be deemed to have
made any representations or warranties as to any such statement or report.

     Section 7.5  Nashville  Franchise.  Prior to or at the  Closing,  all Local
Authorizations  relating  to the  Nashville  System held by or granted to Viacom
(the "Nashville Local Authorizations") will be transferred to, or renewed in the
name of, TeleVue. Notwithstanding any provision of this Agreement, the fact that
such Local  Authorizations  are in the name of Viacom prior to the Closing shall
not constitute a breach of any provision hereof.

     Section 7.6 Material Adverse  Changes.  TeleVue shall promptly notify Buyer
in writing of any  material  adverse  developments  affecting  any System  which
become known to TeleVue, including, without limitation:  (a)any material adverse
change in the condition,  financial or otherwise, of any System; (b)any material
damage,  destruction  or loss  (whether or not covered by  insurance)  adversely
affecting any Acquired Asset or material to any System;  (c)any  material notice
of  violation,  forfeiture  or  complaint  under  any  Local  Authorization;  or
(d)anything  which,  if not corrected  prior to the Closing  Date,  will prevent
TeleVue from fulfilling any condition precedent described in Article IX.

     Section 7.7 Taxes.  (a)TeleVue  agrees to timely file or cause to be timely
filed all sales or transfer Tax Returns  required to be filed by it or any other
Cable  Division  Subsidiary  with respect to sales,  including the  Transaction,
occurring in connection  with the Acquired  Assets on or before the Closing Date
to the extent that the failure to do so would give rise to a liability  of Buyer
or a Lien (other than Permitted Liens) on the Acquired Assets which would remain
after the consummation of the Transaction.  Any such Tax Returns with respect to
the  Transaction as to which Buyer shares Tax liability  under Section 8.7 shall
not be filed without Buyer's written approval,  not to be unreasonably withheld,
which shall be deemed given on the tenth Business Day after Buyer's receipt of a
copy of such  return,  unless prior to such tenth  Business  Day Buyer  notifies
TeleVue that it approves or disapproves such return; provided,  however, that if
TeleVue and Buyer are unable to agree upon the manner in which the Tax Return is
to be prepared, any dispute shall be resolved by an Arbitrating Firm.

     (b) TeleVue shall not make,  and shall not permit any of the Cable Division
Subsidiaries  to make,  new elections  with respect to Taxes,  or any changes in
current elections with respect to Taxes, affecting the Acquired Assets after the
date of this Agreement if such elections would have a significant adverse effect
on the liability of Buyer for Taxes after the Closing  without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.

     (c) TeleVue shall furnish Buyer affidavits  pursuant to Section  1445(b)(2)
of the Code in the form of ExhibitD attached hereto,  stating,  under penalty of
perjury,  that it and any Remaining  Cable Division  Subsidiary is not a foreign
person.  


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<PAGE>

     Section  7.8  Local   Authorization  and  Material   Contract   Amendments.
(a)TeleVue  agrees to  assist  Buyer in  obtaining  modifications,  renewals  or
extensions  of the terms of Local  Authorizations,  as  necessary  to the extent
TeleVue determines that such modification, renewal or extension will not have an
adverse  effect on the  transfer of such Local  Authorization,  so that all will
have unexpired  terms for at least five (5) years at the Closing Date;  provided
that such renewals or extensions shall be upon terms reasonably  satisfactory to
Buyer and TeleVue.

     (b)  TeleVue  agrees to  consider  in good faith any  request by Buyer that
TeleVue seek to amend a Material Contract, and TeleVue will, at Buyer's expense,
seek to amend such Material  Contract on the terms requested by Buyer so long as
both such amendment and seeking such amendment would not in TeleVue's good faith
opinion  have any  adverse  effect on the Cable  Group or  TeleVue's  ability to
consummate the Reorganization or the Transaction.

     Section 7.9  Reorganizations.  Unless and to the extent that TeleVue waives
the condition precedent set forth in Section 10.8(b),  TeleVue agrees to use its
best  efforts  (a)to   consummate   the   Reorganizations   promptly   following
satisfaction  of the  conditions  precedent  set forth in  Sections  10.7(b) and
10.8(a), and (b)to obtain all Local Authorizations, FCC Authorizations and other
consents by Governmental  Authorities  necessary or in the reasonable opinion of
TeleVue desirable in connection with the consummation of the Reorganizations.

     Section  7.10  Noncompetition.  If the  Closing  occurs,  so long as Buyer,
InterMedia  or  Guarantor  owns and  operates a cable  television  system in any
Franchise Area (determined as of the Closing Date), TeleVue agrees that from and
after the Closing until the third  anniversary of the Closing Date,  TeleVue and
Viacom shall not, and Viacom shall not permit any  Subsidiary of Viacom Inc. to,
(x)directly  engage in Cable  Television  Business in any such Franchise Area in
the Territory or (y)indirectly  engage in Cable Television  Business in any such
Franchise Area in the Territory  through  ownership of an equity interest in any
Disqualified  Person.  For purposes of the preceding sentence (i) Viacom and its
Subsidiaries shall not be deemed to be engaged in Cable Television Business as a
result of the  ownership  of 10% or less of the equity  interests  of any Person
(including,  without  limitation,  the acquisition of TCI ClassA Common pursuant
hereto) and (ii) no Person shall be deemed to be a Disqualified Person until the
first  anniversary of the later of (a)the date Viacom Inc. and its  Subsidiaries
own in excess of 10% of the  equity  interests  of such  Person and (b) the date
such Person becomes a Disqualified Person. The "Territory" shall consist, at any
time, of all Franchise Areas  (determined as of the Closing Date) in which Buyer
owns and  operates a cable  television  system at such time,  provided  that any
Retained  Franchise Area and Right of First Refusal  Franchise Area shall not in
any event be deemed to be part of the  Territory  unless and until the  Deferred
Closing Date, if any, with respect to such Retained  Franchise  Area or Right of
First Refusal Franchise Area, as the case may be. A "Disqualified  Person" shall
mean a  Person,  (i)25%  or  more of  whose  revenues  are  derived  from  Cable
Television  Business within the Territory or (ii)whose Cable Television Business
has active plant passing  100,000 or more of the homes in the Franchise Areas in
the Territory, taken as a whole.



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<PAGE>

     Section  7.11  Telecom  Partnership  Leases.  TeleVue  will use  reasonable
commercial  efforts to cause each Telecom  Partnership to enter into leases with
respect to its  communications  plant as  required  by the  Telecom  Partnership
Agreements.

     Section 7.12 IRS Ruling.  As promptly as reasonably  practicable  after the
signing of this Agreement,  TeleVue shall use its reasonable  commercial efforts
to attempt to arrange a pre-filing  conference  with the IRS regarding a request
for a ruling or rulings  meeting the  requirements  of Section  10.7(b).  Unless
TeleVue  determines in good faith that a ruling  satisfying the  requirements of
Section10.7(b) will not be issued,  TeleVue shall file a request for such ruling
or rulings as promptly as reasonably practicable after such conference.  TeleVue
shall  diligently  and in good faith  pursue  obtaining  such ruling or rulings,
including  responding  as promptly as  reasonably  practicable  to IRS  requests
concerning,  without limitation,  facts or law. To the extent TeleVue determines
in good  faith,  based  upon  conversations  with the IRS,  that the  originally
requested  ruling or rulings will not be obtained,  TeleVue  shall in good faith
make reasonable modifications to such request;  provided,  however, that TeleVue
shall  not be  required  to make any  modifications  that  would  result  in the
requested ruling or rulings not satisfying the requirements of Section 10.7(b).

                                  ARTICLE VIII

                                OTHER COVENANTS

     Section  8.1  HartScottRodino.  As soon as  practicable  (and in any  event
within 10  Business  Days  after the date of this  Agreement),  if  required  by
applicable  Legal  Requirements,  TeleVue and Buyer shall  complete and file, or
cause to be completed  and filed,  any  notification  and report  required to be
filed under the HSR Act.  Each of the parties will  promptly take or cause to be
taken any  additional  action that may be necessary,  proper or advisable,  will
cooperate to prevent  inconsistencies  between their respective filings and will
furnish to each other such necessary  information  and reasonable  assistance as
the other may reasonably request in connection with its preparation of necessary
filings  or  submissions  under  the  HSR  Act.  Buyer  and  TeleVue  shall  use
commercially  reasonable  efforts  (including  the filing of a request for early
termination) to obtain the early termination of the waiting period under the HSR
Act.

     Section 8.2 Efforts; Filing and Consents.

     (a)  General.  Each of  TeleVue  and Buyer  agrees to take,  or cause to be
taken,  all  actions  and to do,  or  cause to be done,  all  things  reasonably
necessary  or  advisable  to  consummate  and  make  effective  as  promptly  as
practicable  the Transaction and to cooperate with the other party in connection
with the foregoing, including using its reasonable commercial efforts:

          (i)  to obtain all Local  Authorizations  (but without  TeleVue  being
               required to provide any consideration therefor);



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<PAGE>

          (ii)   to obtain (but without  TeleVue  being  required to provide any
                 consideration  therefor)  all  necessary  consents  from  other
                 parties to Material Contracts;


          (iii)  to obtain (but without  TeleVue  being  required to provide any
                 consideration    therefor)    all    consents,    actions   and
                 authorizations   that  are   required  to  be  obtained   under
                 applicable  Legal  Requirements  in  order  to  consummate  the
                 Transaction;

          (iv)   to lift or rescind any injunction or restraining order or other
                 order  adversely  affecting  the  ability  of  the  parties  to
                 consummate the Transaction;

          (v)    to  effect  all   necessary   registrations   and  filings  and
                 submissions   of   information    requested   by   Governmental
                 Authorities;

          (vi)   to obtain the FCC Certificate (including,  in the case of Buyer
                 and InterMedia,  making reasonable commercial  modifications to
                 any agreements or arrangements of Buyer or any of its direct or
                 indirect partners); and

          (vii)  to fulfill all conditions to this Agreement.

     Each of TeleVue and Buyer further  agrees,  with respect to a threatened or
pending  action  seeking a preliminary  or permanent  injunction or other order,
decree or ruling or statute,  rule,  regulation  or  executive  order that would
adversely  affect the ability of the parties to consummate the  Transaction,  to
use its best efforts to prevent the entry, enactment or promulgation thereof, as
the case may be.

     (b)  Antitrust  Matters.  In  furtherance  and  not  in  limitation  of the
foregoing,  Buyer and TeleVue shall use their reasonable  commercial  efforts to
resolve  such  objections,  if  any,  as may be  asserted  with  respect  to the
Transaction  under any antitrust or trade  regulatory  laws of any government or
Governmental  Authority ("Antitrust Laws"). If any such objection is made or any
suit is instituted  challenging  any part of the Transaction as violative of any
Antitrust Law, Buyer and TeleVue shall use reasonable commercial efforts to take
such reasonable action as may be required, as the case may be:

          (i)  by  the   applicable   government   or   Governmental   Authority
               (including,  without limitation, the FCC, DOJ or FTC) in order to
               promptly  resolve such objections as such government or authority
               may have to such transactions under such Antitrust Law; or

          (ii) by any  court  or  similar  tribunal,  in any suit  brought  by a
               private  party  or   Governmental   Authority   challenging   the
               transactions  contemplated  hereby as violative of any  Antitrust
               Law, in order to avoid the entry of, or to effect the dissolution
               of, any injunction,  temporary  restraining  order or other order


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<PAGE>

               that has the effect of preventing the consummation of any of such
               transactions. 

     Each of TeleVue and Buyer shall  promptly  inform the other of any material
communication  from  the FCC,  DOJ or FTC or any  other  Governmental  Authority
regarding  any  matter  related  to the  Antitrust  Laws as they  bear  upon the
Transaction.  If either  TeleVue  or Buyer  receives  a request  for  additional
information  or  documentary  material  (including  without  limitation a Second
Request) from any Governmental  Authority with respect to the Transaction,  such
party  will,  after  consultation  with the  other,  supply  any such  requested
information  or  documentary  material  as  promptly  as  practicable  (it being
understood that this obligation does not preclude a party from  negotiating with
such Governmental Authority regarding the scope of and content of such requested
information   provided   such   negotiations   are   conducted  as  promptly  as
practicable).

     (c)  Consents  Process.  TeleVue  and Buyer  shall use their  best  efforts
(including,  without  limitation,  by  attendance  at  FCC or  state  regulatory
hearings, City Council or similar or related meetings and hearings before state,
local and county administrative bodies, by giving the other reasonable notice of
the time and date of such  meetings and hearings and by  responding  promptly to
any requests by  Governmental  Authorities)  to apply for and obtain,  and shall
cooperate  and assist one another in applying for and  obtaining,  all requisite
consents,  actions  and  authorizations  (including  ordinances  or  resolutions
approving  transfers) of Governmental  Authorities (the "Regulatory  Approvals")
required  to be  received  by or on the  part of  TeleVue  or  Buyer in order to
consummate the Transaction.  Without  limiting the foregoing,  in respect of all
such applications for such Regulatory Approvals:

          (i)    TeleVue  shall  coordinate  the efforts to obtain the necessary
                 consents of the Local Authorities.  In this role, TeleVue shall
                 submit all  filings  required  by the Local  Authorities  after
                 Buyer  has  reviewed  and  approved  the  same.  Buyer  will be
                 responsible for negotiating with the Local Authorities the form
                 of the Local Authorizations,  which will be provided to TeleVue
                 for its prior review and approval.

          (ii)   Buyer   will   coordinate   the   effort  to  obtain   all  FCC
                 Authorizations.

          (iii)  Form 394's (which shall include all information required by the
                 Local Authorities  including pro forma and price allocations if
                 required or  requested)  shall be  completed  by Buyer for each
                 franchise, as identified in Schedule 5.8, as requiring consent.
                 The Form 394's  shall be in form and  substance  acceptable  to
                 TeleVue and  delivered to TeleVue  within  twenty (20) Business
                 Days from the date hereof. TeleVue shall be responsible for the
                 filing of the Form394's.

          (iv)   After the Form  394's are  filed,  Buyer  shall  respond to all
                 lawful   requests  from  Local   Authorities   for   additional
                 information as soon as reasonably practicable after the receipt
                 of such request.  If the Buyer receives requests which it deems
                 to be  unlawful,  Buyer  shall use its best  efforts to seek to
                 resolve  the  issues  with  the  Local  Authorities  as soon as
                 practicable. If a resolution cannot be reached within this time



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                 frame,   TeleVue   and  Buyer  will   agree  upon   appropriate
                 administrative  or  judicial   procedures  to  achieve  such  a
                 clarification.

          (v)    TeleVue shall consult with Buyer in connection with proceedings
                 relating to any renewal of a Local Authorization,  and, insofar
                 as  TeleVue  is  concerned,   Buyer  may  participate  in  such
                 proceedings,  subject to  TeleVue's  control.  Buyer  agrees to
                 accept the Local  Authorizations on their terms existing and in
                 effect as of the date of this  Agreement,  with such changes in
                 the case of Local  Authorizations that are renewed prior to the
                 Closing as are not materially adverse to Buyer.

          (vi)   The Cable  Group  shall not be  obligated  to agree,  nor shall
                 Buyer make any representation to Local Authority that the Cable
                 Group would agree to any continuing  obligation under any Local
                 Authorization  as a condition of any consent or approval to the
                 consummation of the Transaction.

          (vii)  Buyer  and  TeleVue  shall  each  be  responsible  for  its own
                 outofpocket costs incurred in applying for and obtaining all of
                 the  Regulatory  Approvals;  provided,  however  that Buyer and
                 TeleVue shall each be solely  responsible  for the cost and the
                 implementation  of all  commitments  to which they have agreed,
                 respectively   in  respect  of  such   consents,   actions  and
                 authorizations referred to above.

          (viii) Buyer and TeleVue shall provide each other with informal weekly
                 progress  reports with  respect to the status of obtaining  the
                 Regulatory  Approvals  consisting  of such  information  as the
                 parties may from time to time reasonably request.

          (ix)   Buyer and  TeleVue  shall  provide to each other  copies of all
                 correspondence between any franchising authority,  the FCC, any
                 federal,   city,  state  or  local  Governmental  Authority  or
                 regulatory body having jurisdiction and their respective agents
                 and advisers in connection  with the  Regulatory  Approvals and
                 the sender of such  correspondence  will provide to the other a
                 copy in advance of its sending.

          (x)    If any regulatory or judicial  proceeding arises from a dispute
                 relating to the process of obtaining the Regulatory  Approvals,
                 TeleVue  shall  have the  right to name the  legal  counsel  to
                 defend  against  such  action  subject to the consent of Buyer.
                 Such expenses  shall be borne by the Buyer and TeleVue in equal
                 shares.  

     If there should be any change in Legal Requirements applicable to obtaining
Regulatory  Approvals  after the date hereof,  the parties shall,  to the extent
necessary,  adapt the  procedures  set forth in paragraphs (i) (x) above to take
into account such changes.



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<PAGE>


     (d) Obligations Unaffected by Section 14.4.  Notwithstanding  Buyer's right
pursuant to Section  14.4 under  certain  circumstances  to assign its rights to
purchase the Nashville  System and the Dayton System to RCS Nashville,  L.P. and
the Dayton Third  Party,  respectively,  (x)Buyer  shall from and after the date
hereof perform its obligations under Section8.1 and this Section 8.2 (including,
without  limitation,  its  obligation to use  reasonable  commercial  efforts to
obtain all consents, actions and authorizations that are required to be obtained
under applicable Legal Requirements in order to consummate the Transaction,  and
to  obtain  all  Local  Authorizations  and  the  FCC  Certificate)  as if  such
assignments  will not  occur,  provided  that  (except  with  respect to the FCC
Certificate  relating to the Dayton System which Buyer shall be  responsible  to
pursue),  so long as a prospective  assignee is duly  performing its obligations
under  Section 8.1 and this Section 8.2 in a  sufficiently  timely  fashion such
that the Closing  will not be delayed,  Buyer shall not be required to duplicate
the efforts of such prospective assignee,  (y)Buyer shall cause each prospective
assignee to comply with the provisions of Section 8.1 and this Section 8.2 as if
such  assignee  were  Buyer  and  (z)Buyer  shall  not  permit  the  prospective
assignments  contemplated  by Section  14.4 to delay the Closing Date beyond the
date  on  which  the  Closing  would  have  occurred  absent  such   prospective
assignments and any proceedings in connection therewith.

     Section 8.3 Release of the Cable Group. As a part of the transfer  process,
the parties hereto shall use their reasonable  commercial efforts to obtain from
Local  Authorities  releases of the Cable Group and its Affiliates  from any and
all obligations and liabilities  under the Local  Authorizations  (including but
not  limited  to  any  performance  guarantees  provided  to  Local  Authorities
thereunder and any assumption of liability  undertaken or imposed or indemnities
given with respect thereto or the obligations of any other party thereunder). In
the event that such releases are not obtained by the Closing  Date,  Buyer shall
indemnify  the Cable Group and its  Affiliates in  accordance  with  Section13.2
hereof for  Losses in  respect of  liabilities  and  obligations  under  Permits
constituting  Assumed Liabilities.  In addition,  Buyer will post at Closing all
reasonable  bonds,   security  deposits  and  letters  of  credit  with  utility
companies,  surety  companies  and others and all bonds,  security  deposits and
letters of credit required by the terms of any of the Local  Authorizations  and
give all guarantees to the extent reasonably  required to enable the Cable Group
and its Affiliates to obtain the release and cancellation of any bonds, security
deposits, letters of credit or guarantees posted or given by the Cable Group and
its Affiliates with or to such utility companies,  surety companies or others or
under the terms of any of the Local  Authorizations.  Nothing  set forth  herein
shall alter TeleVue's obligations under Section 13.2.

     Section  8.4  Notices of Certain  Events.  Each of TeleVue  and Buyer shall
promptly notify the other of:

               (a) any notice or other  communication  received  from any Person
          (other  than with  respect to  consents  identified  on any  Schedule)
          alleging  that the  consent of such  Person is or may be  required  in
          connection with the Transactions;

               (b) any notice or other  communication  from any  governmental or
          regulatory agency or authority in connection with the Transaction;



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<PAGE>


               (c) any actions,  suits,  claims,  investigations  or proceedings
          commenced,  or to its  knowledge  threatened,  against,  relating  to,
          involving  or  otherwise  affecting  the Cable Group or Buyer or their
          Affiliates, relating to the consummation of the Transaction;

               (d) any  information  known to such party that indicates that any
          representation  and  warranty of TeleVue or Buyer will not be true and
          correct in any material respect as of the Closing; and

               (e) the  occurrence  of any event  known to such party which will
          result, or has a reasonable  prospect of resulting,  in the failure to
          satisfy a condition specified in ArticleIX or X hereof.

     Section 8.5 Employment. If any Affiliate (other than an ERISA Affiliate) of
Buyer hires any Acquired  Employee as  contemplated by Section 8.8, Buyer agrees
to indemnify and hold TeleVue  harmless for any obligation or liability  arising
under  ERISA and  related  provisions  of the Code and in each  case,  rules and
regulations  thereunder  which would not have been incurred with respect to such
Acquired  Employee had such Acquired Employee been employed by Buyer or an ERISA
Affiliate of Buyer,  provided,  however,  that this Section8.5 shall not require
Buyer to pay any severance payment to any employee.

     Section  8.6  Further  Assurances.  From time to time after the Closing and
without further consideration,  the parties will execute and deliver, or arrange
for the  execution  and delivery of such other  instruments  of  conveyance  and
transfer or other  instruments  or documents  and take or arrange for such other
actions  as may  reasonably  be  requested  to  complete  more  effectively  the
Transaction.  TeleVue shall use its reasonable  commercial  efforts (but without
TeleVue being required to incur any outofpocket  expenses or costs) to remove or
clear defects to its title to real property included in the Acquired Assets.

     Section 8.7 Taxes.  (a)Except as otherwise  provided in Section4.4 or below
in this paragraph, TeleVue shall be responsible for all Taxes (other than income
or  franchise   Taxes)  arising  out  of,  or  with  respect  to,  the  Business
attributable to taxable periods,  or portions  thereof,  ending on or before the
Closing,  and Buyer shall be  responsible  for all Taxes  (other than income and
franchise  Taxes) arising out of, or with respect to, the Business  attributable
to taxable periods,  or portions thereof,  following the Closing.  All state and
local sales,  use,  transfer and documentary  taxes and recording fees and taxes
applicable to the Transaction  shall be paid 50% by TeleVue and 50% by Buyer (it
being  understood  that the business and  occupation tax imposed by the State of
Washington is not a sales, use, transfer or documentary tax).

     (b) TeleVue and Buyer shall (i)each  provide the other with such assistance
as may reasonably be requested by any of them in connection with the preparation
of any Tax  Return,  audit,  or other  examination  by any taxing  authority  or
judicial or administrative proceedings relating to liability for Taxes, (ii)each
retain and provide the other with any  records or other  information  reasonably
requested  that  may be  relevant  to such Tax  Return,  audit,  examination  or
proceeding,  and (iii)each provide the other with any final determination of any
such audit,  examination or proceeding,  that affects any amount  required to be


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<PAGE>


shown on any Tax  Return of the  other  for any  period.  Without  limiting  the
generality  of the  foregoing,  each of TeleVue and Buyer shall retain until the
applicable  statutes of  limitations  (including any  extensions)  have expired,
copies of all Tax  Returns,  supporting  work  schedules,  and other  records or
information  that may be relevant to the other party or its  Affiliates  for all
tax periods or portions  thereof  ending  before or  including  the Closing Date
unless prior to destroying or otherwise disposing of any such records such party
first provides the other party with a reasonable  opportunity to review and copy
the same.

     Section 8.8 Employee Matters. Buyer agrees as follows:

     (a)  Employment.  Not less than 90 days prior to the Closing  TeleVue shall
provide  to Buyer a list of all  active  employees  of the  Cable  Group as of a
recent date  showing then current  rates of  compensation.  Within 25 days after
TeleVue's  delivery of such list, Buyer shall notify TeleVue in writing of which
employees will be hired by Buyer or its Affiliates and which employees Buyer and
its  Affiliates  do  not  intend  to  hire  at  the  Closing  (the  "NonAcquired
Employees").  All  employees  of the Cable  Group  (other  than the  NonAcquired
Employees)  who are actively  employed,  whether or not actively at work, on the
Closing Date (the "Acquired  Employees"),  shall be offered employment as of the
Closing  Date at  rates of  compensation  which  are the  same or  substantially
similar to their compensation prior to the Closing Date.

     (b) Employee Benefits Generally.  Subject to the provisions of this Section
8.8 as to any  particular  benefit,  as of the Closing Date and for at least one
year thereafter  employee benefits shall be provided to Acquired Employees which
are at least as favorable as those provided to similarly  situated  employees of
Buyer.  All prior  service of  Acquired  Employees  with the Cable Group and any
member of a  controlled  group of  corporations  or trades or  businesses  or an
affiliated  service  group  with the Cable  Group,  within  the  meaning of Code
Sections414(b),  (c),  or  (m),  respectively  ("ERISA  Affiliates"),  shall  be
recognized  for all benefit plan  purposes  (other than benefit  accrual under a
defined  benefit plan), at least to the extent  recognized  under the comparable
Cable  Group  Benefit  Plan as in  effect on the date of this  Agreement.  On or
before the Closing  Date,  TeleVue shall provide Buyer with a list setting forth
the service accrued by each Acquired  Employee.  TeleVue agrees that Buyer shall
not be under any  obligation to and shall not assume  sponsorship of any Benefit
Plan.

     (c) Defined Benefit Pension Plan. As soon as practicable  after the Closing
Date, TeleVue shall prepare and deliver to Buyer a schedule listing the Acquired
Employees who were participants in the Viacom Pension Plan (formerly the Pension
Plan for Divisional Employees of Viacom International Inc.) (the "Viacom Pension
Plan") as of the Closing Date.

     TeleVue  shall cause all Acquired  Employees to become 100% vested in their
accrued  benefits under the Viacom Pension Plan, and to be paid such benefits in
accordance  with the terms of the Viacom  Pension Plan, and Buyer shall not have
any responsibility with respect thereto.  Buyer shall cooperate with TeleVue and
Viacom to provide such current  information  regarding  Acquired Employees on an
ongoing basis as may be necessary to facilitate  payment of pension  benefits to
such employees from the Viacom Pension Plan.



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<PAGE>

     (d) 401(k) Plan Transfers. TeleVue shall cause all Acquired Employees to be
100% vested in their Viacom  Investment  Plan  accounts as of the Closing  Date.
After the Closing Date,  such  reasonable  actions  necessary to cooperate  with
Viacom  shall be taken to  facilitate  ongoing  administration  by Viacom of the
Viacom Investment Plan with respect to Acquired Employees' accounts,  including,
without  limitation,  providing  current  information  to Viacom with respect to
Acquired Employees,  including notifying Viacom of the termination of employment
or retirement of such  employees and of any change of address or marital  status
of which Buyer has received notice;  administering  Investment Savings Plan loan
repayments  through  payroll  deductions for employees with  outstanding  Viacom
Investment Plan loan balances as of the Closing Date and remitting such payments
to the plan trustee;  distributing  information provided by Viacom regarding the
Viacom Investment Plan to Acquired Employees; and taking any other action as may
be reasonably requested by Viacom.

     (e) Severance Obligations. Buyer shall not be responsible for any severance
obligations to NonAcquired Employees.

     (f) Sick Leave.  Effective as of the Closing Date, Acquired Employees shall
be  eligible  for paid sick leave  under their  employer's  personal  sick leave
policy.  Any  Acquired  Employee  who,  during the sixmonth  period  immediately
following the Closing Date,  requires paid sick leave in excess of that provided
to such employee under the personal sick leave policy applicable to them, before
commencement of the long term  disability  policy  applicable to them,  shall be
entitled to paid sick leave at his base salary rate as of the Closing Date in an
amount  equal to the number of accrued  and unused sick leave days to which such
employee was entitled  under the  applicable  Cable Group's  personal sick leave
policy as of the  Closing  Date,  ("Banked  Sick Leave  Days");  provided,  that
TeleVue  shall  reimburse  Buyer for the cost of any such Banked Sick Leave Days
actually used.

     (g)  Vacation.  With  respect to the  computation  year that  includes  the
Closing Date,  Acquired  Employees shall be eligible for paid or unpaid vacation
(as next described) as follows:  The amount of an Acquired  Employee's  vacation
for the remainder of the  computation  year shall be the maximum  number of days
(but in any event not less than zero) accrued for the computation year under the
applicable  vacation  policy  (based on the  employee's  service  and subject to
Section  8.8(b)) less the vacation  days used for the same period as an employee
of the Cable Group.  In  addition,  each  Acquired  Employee  shall  receive the
additional  vacation,  if any, that such employee would have been entitled to as
of the Closing Date under the Cable Group's applicable  vacation policy.  Unless
the Cable  Group  receives  the  employee's  consent to  transfer  unused,  paid
vacation to the employee's  employer,  the Cable Group shall, on or prior to the
Closing Date,  pay the  nonconsenting  Acquired  Employee the amount due for all
accrued and unused  vacation;  provided that no more than four weeks of vacation
may be transferred for any Acquired Employee.  The vacation provided to Acquired
Employees under this  Section8.8(g)  shall be paid vacation only with respect to
those  Acquired  Employees  who  consent to have  accrued  and  unused  vacation
transferred to their  employer or with respect to any  additional  vacation days
that an Acquired  Employee would accrue for the  computation  period under their
employer's vacation policy in excess of the vacation accrued for the same period


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<PAGE>

under the  applicable  Cable Group  policy.  In all other  cases,  the  vacation
provided to Acquired Employees under this Section8.8(g) shall be unpaid.

     (h) Welfare  Plans.  Each Acquired  Employee  shall be entitled to coverage
effective as of the Closing Date under any medical, dental, vision, prescription
drug, life insurance plans or other welfare benefit plans (within the meaning of
Section 3(1) of ERISA,  which are maintained by their employer for its employees
("Buyer's  Welfare  Plans").  Any  waiting  periods  or  preexisting   condition
limitations in their  employer's  Welfare Plans shall be waived unless  coverage
would have been denied on a similar  basis under the welfare  plans of the Cable
Group (the "Cable  Group's  Welfare  Plans") and  deductibles,  maximum  benefit
restrictions and "outofpocket" maximums shall be coordinated so that (i)Acquired
Employees receive credit towards any deductibles under Buyer's Welfare Plans for
deductibles  paid under the Cable Group's Welfare Plans during the relevant plan
year in which the Closing Date occurs, (ii)Acquired Employees receive credit for
eligible  claims  incurred under the Cable Group's Welfare Plans during the plan
year in which the Closing Date occurs toward any  "outofpocket"  maximums  under
Buyer's  Welfare Plans. As soon as practicable  after the Closing Date,  TeleVue
shall  prepare and deliver to Buyer the  information  needed for Buyer to comply
with the preceding  sentence.  TeleVue will pay or cause to be paid all eligible
unpaid  claims  incurred by  Acquired  Employees  prior to the Closing  Date and
timely submitted for  reimbursement in accordance with the Cable Group's Welfare
Plan.  Continuation  health care  coverage  shall be  provided  to all  Acquired
Employees and their qualified beneficiaries, who incur a qualifying event on and
after the Closing Date in accordance with the continuation  health care coverage
requirements of Section 498OB of the Code and  Sections601  through 608 of ERISA
("COBRA").  TeleVue shall be responsible for providing  continuation coverage to
the extent  required by law (x) to any employee who incurs a "qualifying  event"
under  COBRA  before  the  Closing  Date and (y) to any  employee  who is not an
Acquired  Employee  who incurs a  "qualifying  event" under COBRA on the Closing
Date.

     (i) Employment Taxes.  TeleVue and Buyer agree to follow the procedures set
forth in Section5 of Rev. Proc. 8477 with respect to any Acquired Employee.

     (j) No Third Party  Beneficiaries.  Nothing in this Section8.8 or elsewhere
in this  Agreement  shall be deemed to make any  employee  of the Cable  Group a
third party beneficiary of this Agreement.

     Section 8.9 WARN.  Subject to Buyer's  compliance  with Section  8.8(a) (it
being  understood  that  Buyer's  compliance  with  Section8.8(a)  is subject to
TeleVue's  compliance  with  Section8.8(a))  and in reliance on the  information
provided  by Buyer  pursuant  thereto,  to the  extent,  and at such time as is,
necessary,  TeleVue  will  comply  with the  Worker  Adjustment  and  Retraining
Notification Act and any comparable state law.

     Section 8.10 FCC  Certificate.  Buyer agrees that neither it nor any of its
Affiliates  will take any  action,  or fail to take any action it has  otherwise
agreed or  represented  that it would  take,  if such  action or  failure  would
jeopardize the validity of the FCC Certificate.


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     Section 8.11  Confidentiality.  Prior to the Closing, each party shall, and
shall cause its respective Affiliates, directors, officers, agents and employees
to, keep the existence and terms of this Agreement  confidential,  except as the
disclosure  thereof may be required by law or pursuant to any listing  agreement
with, or the rules or regulations of, any national  securities exchange on which
securities of such party or any such Affiliate are listed or traded or except as
may be required to satisfy the "due  diligence"  inquiries  of any  purchaser or
underwriter with respect to any securities of such party or Affiliate. Any press
release concerning this Agreement or the Transaction must be jointly approved by
the parties prior to release.

     Section 8.12 Approved Capital Expenditure Plan. TeleVue shall make or cause
to be  made  the  capital  expenditures  called  for  by  the  Approved  Capital
Expenditure  Plan in all  material  respects  except that  TeleVue  shall not be
required to make or cause to be made (i)expenditures  which were required by law
at the time the Approved Capital Expenditure Plan was approved but are no longer
so required,  (ii)expenditures  which Buyer has agreed in writing do not have to
be made, (iii)expenditures which it is commercially unreasonable to make because
the  assumptions   used  in  developing  and  underlying  the  Approved  Capital
Expenditure   Plan  prove  to  be  incorrect   in  any   material   respect  and
(iv)expenditures  which cannot be made for reasons not within TeleVue's  control
(including,  without limitation,  unavailability of equipment, lack of access to
real property, delays in orders being filled,  unavailability of pole attachment
agreements and force  majeure).  In the event  clause(iii)  above is applicable,
TeleVue  and Buyer  shall  cooperate  and  negotiate  in good faith to amend the
Approved  Capital  Expenditure  Plan to preserve for the parties,  to the extent
reasonably  practicable  and  commercially  reasonable,  the  economic  benefits
originally intended to be afforded by the expenditures not made as a consequence
of   clause(iii)   above.   For  purposes  of   determining   "Covered   Capital
Expenditures",  "Line  Extension  and  Other  Capital  Expenditures",   "Monthly
Adjusted Capital  Expenditures"  and "Telecom Capital  Expenditure  Amounts" and
calculating  "Closing Working  Capital",  a capital  expenditure shall be deemed
made at the time  that a capital  expenditure  is  recorded  on the books of the
Cable Group as such in the ordinary course in accordance with past practices.

     Section  8.13  Reimbursement  of Capital  Expenditures.  If this  Agreement
terminates  without the Closing having occurred,  Buyer shall reimburse  TeleVue
for the amount of  additional  capital  expenditures  that the Cable Group shall
have made in 1995 as a result of  complying  with Buyers  rebuild  standards  as
determined  pursuant to the Approved Capital  Expenditure  Plan. A chart showing
the  incremental  cost per mile of such  capital  expenditures  is  attached  as
Schedule8.13.  Buyer  shall  promptly  pay to  TeleVue  the  amount  of all such
expenditures   as  to  which   TeleVue  has  provided  to  Buyer   documentation
establishing  that such  expenditures  were made,  provided that no such payment
shall be required  earlier  than the fifth  business  day after the date of such
termination  and provided  further that no such payment shall be required in the
event TeleVue  terminates this Agreement  pursuant to  Section11.1(c)  solely by
reason of a failure of a condition set forth in Section10.8.



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                                   ARTICLE IX

                     CONDITIONS TO THE OBLIGATIONS OF BUYER

     The  obligations  of Buyer required to be performed by Buyer at the Closing
are  subject to the  satisfaction,  at or prior to the  Closing,  of each of the
following conditions, each of which may be waived by Buyer:

     Section   9.1   Representations   and   Warranties;    Covenants.   (a)Each
representation  and warranty of TeleVue and Viacom contained in Article V (other
than  Section5.21) of this Agreement that (i)is qualified by a reference therein
to "Material  Adverse Effect",  shall be true and correct as of the Closing Date
as  though  such  representation  and  warranty  was made on and as of such date
(except to the extent a different date is specified therein,  in which case such
representation and warranty will be true and correct as of such date), or (ii)is
not so  qualified,  shall be true and correct as of the  Closing  Date as though
such representation and warranty were made on and as of such date (except to the
extent a different date is specified therein,  in which case such representation
and  warranty  will be true and correct as of such date),  with such  exceptions
that do not,  individually  or in the  aggregate,  result in a Material  Adverse
Effect,  and  except  in the  case of both  clauses  (i) and  (ii)  for  changes
occurring  after  the date of this  Agreement  (x)pursuant  to the terms of this
Agreement, (y)not prohibited by Section 7.1 or (z)consented to by Buyer.

     (b) Each  material  covenant  and  obligation  of TeleVue  required by this
Agreement  to be  performed by it at or prior to the Closing will have been duly
performed and complied with in all material respects at the Closing.

     (c) TeleVue shall have taken the actions described in Section12.2(a).

     (d) At the  Closing,  Buyer  will have  received a  certificate,  dated the
Closing Date and duly executed by an executive  officer of TeleVue and Viacom on
behalf of TeleVue and Viacom,  to the effect  that the  conditions  set forth in
Section9.1(a) and Section 9.1(b) have been satisfied.

     Section 9.2 HSR Act. Any  applicable  waiting period under the HSR Act will
have  expired  or been  terminated  without  the  commencement  or threat of any
litigation by a Governmental Authority of competent jurisdiction to restrain the
consummation of the  Transaction  contemplated by this Agreement in any material
respect.

     Section 9.3  Consented  Subscribers.  The number of  Consented  Subscribers
shall be not less than 90% of Estimated Closing Date Basic Subscribers.

     Section 9.4 Required  Consents.  Notwithstanding  the provisions of Section
2.3 or 2.4, all consents  required to be obtained by Seller in  connection  with
the  Transaction  shall have been  obtained and remain in full force and effect,
with such exceptions as would not have a Material Adverse Effect.


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<PAGE>


     Section 9.5 Absence of Injunction. No order, stay, judgment or decree shall
have been issued by any court and be in effect  restraining or  prohibiting  the
consummation of the Transaction in any material respect.

     Section 9.6 PVIT Assets.  The bill of sale  referred to in Section  12.2(a)
shall have been duly executed and delivered in conformity with said Section.

     Section 9.7 Opinions.  Legal opinions of counsel to TeleVue (who may be the
general  counsel or deputy  general  counsel  of Viacom  Inc.  or any  Affiliate
thereof with respect to Exhibit E1 only)  covering the  substance of the matters
set forth in ExhibitsE1 and E2 shall be delivered to Buyer.

                                   ARTICLE X

                    CONDITIONS TO THE OBLIGATIONS OF TELEVUE

     The  obligations  of TeleVue to be  performed by TeleVue at the Closing are
subject  to the  satisfaction,  at or  prior  to the  Closing,  of  each  of the
following conditions, each of which may be waived by TeleVue:

     Section   10.1   Representations   and   Warranties;   Covenants.   (a)Each
representation  and warranty of Buyer and  InterMedia  contained in ArticleVI of
this  Agreement  will be true and  correct in all  material  respects  as of the
Closing as though such  representation  and  warranty was made on and as of such
date (except to the extent a different date is specified therein,  in which case
such representation and warranty will be true and correct as of such date).

     (b)  Each  material  covenant  and  obligation  of Buyer  required  by this
Agreement  to be  performed by it at or prior to the Closing will have been duly
performed  and  complied  with in all material  respects as of the Closing,  and
Buyer shall have taken the actions described in Section12.2(b).

     (c) At the Closing,  TeleVue will have  received a  certificate,  dated the
Closing Date and duly executed by an executive officer of the general partner of
Buyer to the effect that the conditions set forth in this  Section10.1 have been
satisfied.

     Section 10.2 HSR Act. Any applicable  waiting period under the HSR Act will
have  expired  or been  terminated  without  the  commencement  or threat of any
litigation by a Governmental Authority of competent jurisdiction to restrain the
consummation of the  Transaction  contemplated by this Agreement in any material
respect.

     Section 10.3  Consented  Subscribers.  The number of Consented  Subscribers
shall not be less than 90% of Estimated Closing Date Basic Subscribers.

     Section 10.4 Opinions.  A legal opinion of counsel to Buyer (who may be the
general  counsel or deputy  general  counsel of Buyer or any Affiliate  thereof)
covering the substance of the matters set forth on ExhibitF1  shall be delivered
to TeleVue.  A legal opinion of counsel to the Guarantor (who may be the general


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<PAGE>

counsel or deputy  general  counsel of the Guarantor or any  Affiliate  thereof)
covering the substance of the matters set forth on Exhibit F2 shall be delivered
to TeleVue.

     Section 10.5  Consents.  All  consents  required to be obtained by Buyer in
connection  with the  Transaction  shall have been  obtained  and remain in full
force and effect,  with such  exceptions as do not result in a material  adverse
effect on Buyer's ability to consummate the Transaction.

     Section 10.6 Absence of Injunction. No order, stay, judgment or decree will
have been issued by any court and be in effect  restraining or  prohibiting  the
consummation of the Transaction in any material respect.

     Section 10.7 FCC  Certificate  and Related Tax Matters.  (a)TeleVue and any
Remaining Cable Division  Subsidiary shall have received an FCC Certificate with
respect to the sale of all the Acquired  Assets and any Retained  Assets and any
Right of First Refusal Assets  pursuant to this  Agreement to Buyer  (including,
without  limitation,  any Acquired  Assets,  Retained  Assets and Right of First
Refusal Assets which are the subject of an assignment pursuant to Section 14.4),
which shall be  satisfactory  in form and substance to TeleVue and in full force
and effect at the Closing,  and such FCC  Certificate  shall be the subject of a
final and unappealable order of the FCC.

     (b)  TeleVue  shall  have  received  a  ruling  or  rulings  from  the IRS,
satisfactory  in form and  substance to TeleVue with respect to the  Transaction
and the reinvestment by TeleVue of the proceeds of sale to Buyer of the Acquired
Assets, Retained Assets and Right of First Refusal Assets.

     (c) There shall not have occurred or been proposed (with, in the good faith
judgment of TeleVue,  a  reasonable  likelihood  of  adoption)  any change in or
addition to the Code or other  statute  relating to federal  income taxes or the
regulations  promulgated  pursuant thereto or any written Treasury Department or
IRS or judicial interpretation thereof, that has or would have an adverse impact
on the ability of TeleVue and its Affiliates to benefit from  Section1071 of the
Code in any material respect  (including,  without  limitation,  any such impact
with respect to possible  uses of the  proceeds of sale of the Acquired  Assets)
(it being  understood,  however,  that if the  condition  described  in  Section
10.7(b) shall have been  satisfied,  this Section 10.7(c) shall be deemed not to
have been  satisfied  only in the case of an actual  or  proposed  change in law
otherwise  described  in this  Section  10.7(c) that affects or would affect the
ability of TeleVue and its  Affiliates  to benefit from the ruling  described in
Section 10.7(b)).

     Section   10.8   Reorganizations.    (a)All   Local   Authorizations,   FCC
Authorizations  and other consents of Governmental  Authorities  necessary or in
the reasonable  opinion of TeleVue  desirable in connection with consummation of
the  Reorganizations  shall  have been  obtained  and  remain in full  force and
effect.

     (b) The Reorganizations shall have been consummated.



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     Section 10.9 Limited Partner  Guaranty.  The Limited Partner Guaranty shall
remain in full force and effect.

     Section  10.10 First  Pledge  Agreement.  The First  Pledge  Agreement,  if
executed and delivered by the Guarantor  prior to Closing,  shall remain in full
force and effect.

                                   ARTICLE XI

                                  TERMINATION

     Section 11.1  Termination.  This  Agreement  may be  terminated at any time
prior to the Closing:

               (a) by mutual consent of Buyer and TeleVue;

               (b) by Buyer, if any condition  contained in ArticleIX has become
          incapable of fulfillment  (other than if such incapacity  results from
          actions or omissions of Buyer or its Affiliates);

               (c) by  TeleVue,  if any  condition  contained  in  Article X has
          become incapable of fulfillment (other than if such incapacity results
          from actions or omissions of TeleVue or its Affiliates); or

               (d) by Buyer or TeleVue,  if the  Closing has not  occurred on or
          prior to the date that is  twelve  (12)  months  from the date of this
          Agreement  (other than as a result of the failure by the party seeking
          to  terminate  this  Agreement  (i)to   consummate  the   transactions
          contemplated  hereby when all  conditions to such party's  obligations
          contained in  ArticleIX or X, as the case may be, have been  satisfied
          or waived or (ii)to  duly comply with its  covenants  and  obligations
          hereunder).

     If Buyer or TeleVue  terminate  this  Agreement  pursuant to the provisions
hereof,  such  termination will be effected by written notice to the other party
specifying the provision hereof pursuant to which such termination is made.

     Section 11.2 Effect of Termination.  (a)Upon  termination of this Agreement
pursuant to Section11.1 hereof,  except as provided in clause (b) below: (i)this
Agreement will forthwith become null and void, (ii)such  termination will be the
sole remedy with respect to any breach of any representation, warranty, covenant
or agreement  contained in or made pursuant to this  Agreement and (iii)no party
hereto  or any of  their  respective  officers,  directors,  employees,  agents,
consultants,  shareholders  or principals  will have any liability or obligation
hereunder or with respect hereto.

     (b) The  provisions of clause (a) above  notwithstanding,  no party will be
relieved of:  (i)liability  for any breach of  Sections5.1,  5.2, 5.3, 5.4, 5.5,
5.6, 5.17, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.8, 6.9, 6.10 and 6.11, and ArticlesXV
and XVI,  (ii)liability  for any breach of any  material  covenant or  agreement
contained  herein  or  made  pursuant  hereto  and  (iii)any   obligation  under


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Section14.1. Except as set forth in this Section11.2(b),  no party will have any
liability for any breach of a representation or warranty contained herein if the
Closing does not occur.

                                  ARTICLE XII

                                    CLOSING

     Section 12.1 Closing.  Subject to the  conditions  set forth in Articles IX
and X of this  Agreement,  the purchase and sale of the Acquired  Assets and the
consummation of the  Transaction  (the "Closing") will take place at the offices
of Hughes  Hubbard & Reed,  One Battery Park Plaza,  NewYork,  N.Y. 10004 on the
fifth  Business Day  following  the date on which  TeleVue  gives Buyer  written
notice  that all  conditions  to the  obligations  of Buyer  and  TeleVue  under
Articles IX and X of this Agreement (other than those requiring an exchange of a
certificate,  opinion or other document,  or the taking of other action,  at the
Closing)  shall have been  satisfied or waived or at such other time or place as
TeleVue and Buyer may agree.  TeleVue  shall deliver such notice within five (5)
Business Days of such  satisfaction or waiver.  The date on which the Closing is
to  occur  is  herein  referred  to as  the  "Closing  Date."  All  transactions
consummated  at the Closing  shall be deemed to have taken place  simultaneously
and shall be deemed to be  effective  as of the close of business on the Closing
Date.  Notwithstanding  that the  Closing is  consummated,  Buyer may pursue its
rights and remedies  against TeleVue and/or Viacom with respect to any breach of
a  representation,  warranty,  covenant or obligation by TeleVue or Viacom under
this Agreement in accordance with ArticleXIII of this Agreement. Notwithstanding
that the  Closing is  consummated,  TeleVue  may pursue its rights and  remedies
against Buyer and/or  InterMedia with respect to any breach of a representation,
warranty,  covenant or obligation by Buyer or InterMedia under this Agreement in
accordance with ArticleXIII of this Agreement.

     Section 12.2 Deliveries at the Closing. At the Closing:

     (a) TeleVue  shall (and Viacom shall cause  TeleVue to) make the  following
deliveries to Buyer:

          (i)    bills  of sale,  deeds  and  other  instruments  of  assignment
                 (consistent  with the provisions of this Agreement)  sufficient
                 to sell, assign,  transfer and convey to Buyer all of the Cable
                 Group's right, title and interest in and to the Acquired Assets
                 in conformance with this Agreement;

          (ii)   a bill of sale in the form of  ExhibitG,  duly  executed by PVI
                 Transmission  Inc.,  conveying to Buyer all of PVI Transmission
                 Inc.'s right, title and interest in and to the assets listed on
                 Schedule12.2 (the "PVIT Assets"); and


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<PAGE>


          (iii)  all opinions,  certificates and other instruments and documents
                 contemplated  under Article IX to be delivered by TeleVue at or
                 prior to the Closing.

     (b) Buyer shall (and  InterMedia  shall cause Buyer to) make the  following
deliveries to TeleVue:

          (i)    payment of the Estimated  Purchase Price, such payment to be in
                 immediately  available  federal funds and made by wire transfer
                 to a bank  account  designated  by TeleVue in a written  notice
                 given  to Buyer at least  two (2)  Business  Days  prior to the
                 Closing;  provided,  that, subject to the following proviso, at
                 the  option  of Buyer,  Buyer may  reduce  the  portion  of the
                 Estimated  Purchase  Price  payable  in  immediately  available
                 federal  funds (but not any  interest  payable  thereon)  by an
                 amount of up to  $600,000,000  (the  amount  of such  reduction
                 being  referred  to  as  the  "Deferred   Purchase  Price")  by
                 (x)delivering to TeleVue at the Closing a duly executed secured
                 promissory  note in form of ExhibitK  hereto (the  "Note") in a
                 principal  amount  equal to the  Deferred  Purchase  Price  and
                 (y)duly  executing  and  delivering to TeleVue at the Closing a
                 pledge  agreement  in the form of ExhibitL  hereto (the "Second
                 Pledge  Agreement")  and pledging,  assigning and delivering to
                 Tele-Vue  at the Closing as  collateral  pursuant to the Second
                 Pledge  Agreement as provided therein (i) a number of shares of
                 TCI Stock determined by dividing the Deferred Purchase Price by
                 the Average  Market  Price of such TCI Stock and  rounding  the
                 resulting  number upward to the nearest integer and (ii) all of
                 Buyer's  right,  title  and  interest  in the  Value  Guarantee
                 Agreement;  provided  further that Buyer's  right to reduce the
                 portion of the Estimated  Purchase Price payable in immediately
                 available  federal funds  pursuant to the preceding  proviso is
                 subject  to the  satisfaction  at the  Closing  of  each of the
                 following conditions:

                    (A) As of the  Closing  Date,  the  surplus (as such term is
               defined in Section154 of the Delaware General Corporation Law) of
               Guarantor  shall be not less than 200% of the  Deferred  Purchase
               Price and at the Closing  Buyer and Tel-Vue will have  received a
               certificate,  dated  the  Closing  Date and duly  executed  by an
               executive officer and Guarantor to such effect;

                    (B) Buyer  shall have  delivered  to Tele-Vue at least three
               Business  Days prior to the Closing Date such Uniform  Commercial
               Code  financing  statements  with respect to the  Collateral  (as
               defined  in  the  Second  Pledge   Agreement)  as  TeleVue  shall
               reasonably require,  in form reasonably  satisfactory to TeleVue,
               duly executed by Buyer;



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<PAGE>

                    (C)  (i)Guarantor  shall have duly executed and delivered to
               Buyer a Value Guarantee  Agreement in the form of ExhibitJ hereto
               (the "Value Guarantee  Agreement"),  and the  representations and
               warranties  of Guarantor  contained in Section2  thereof shall be
               true and correct in all respects,

          (ii)   Buyer shall have duly  executed and  delivered to Guarantor the
                 Value Guarantee  Agreement,  (iii)the Value Guarantee Agreement
                 shall  remain in full force and  effect,  (iv)Buyer  shall have
                 duly executed and delivered to Tele-Vue the Note and the Second
                 Pledge  Agreement,  and the Note and  Second  Pledge  Agreement
                 shall   remain   in  full   force   and   effect   and   (v)the
                 representations   and  warranties  of  Guarantor  contained  in
                 Section10  of the  Second  Pledge  Agreement  shall be true and
                 correct in all respects; and

               (D) (i)All  Buyer  Subordinated  Obligations  existing  as of the
               Closing shall be, and Buyer,  InterMedia and any other  Investors
               shall have duly  executed  and  delivered  to Tele-Vue and Viacom
               such  agreements  and  instruments  as  Tele-Vue  and  Viacom may
               reasonably require in order to make effective  provision that all
               Buyer Subordinated  Obligations  (whether created,  incurred,  or
               assumed by Buyer prior to or at the  Closing)  and the payment of
               the principal of (and premium,  if any), and interest,  dividends
               or other  amounts on or with  respect to, all Buyer  Subordinated
               Obligations  are,  subordinate  and junior in right of payment to
               the prior  indefeasible  payment in full of all obligations under
               the Note,  and (ii)as of the Closing Buyer shall have received as
               consideration in respect of Buyer Subordinated  Obligations,  and
               shall  have  available  at  the  Closing,   cash  and  marketable
               securities  (which may  include TCI Stock)  aggregating  not less
               than  $600,000,000  (based  on the  fair  market  value  of  such
               marketable securities which in the case of the TCI Stock shall be
               the Average Market Price).  As used herein,  Investors shall mean
               all persons who hold or acquire Buyer  Subordinated  Obligations;
               Buyer Subordinated Obligations shall mean all securities or other
               instruments representing partnership interests or other equity or
               capital  contributions  to Buyer,  together with, with respect to
               Buyer, (i)all indebtedness,  whether or not represented by bonds,
               debentures, notes or other securities, for the repayment of money
               borrowed and (ii)all deferred indebtedness for the payment of the
               purchase  price of  property  or assets  purchased,  in each case
               whether  created,  incurred  or assumed by Buyer prior to, at, or
               subsequent  to  the  Closing;   provided,   however,  that  Buyer
               Subordinated  Obligations shall not include Senior Bank Debt, the
               Note or any Assumed Liabilities; and Senior Bank Debt shall mean


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               all bank or  insurance  company  indebtedness  to be  incurred by
               Buyer  in  connection  with  the  Transaction.  The  terms of the
               subordination  of  the  Buyer  Subordinated  Obligations  to  the
               obligations evidenced by the Note as set forth in such agreements
               and instruments  shall be on customary terms and conditions,  and
               shall  otherwise  be  reasonably  satisfactory  to  Tele-Vue  and
               Viacom.   The  instruments   and  documents   setting  forth  the
               subordination  of  the  Buyer  Subordinated  Obligations  to  the
               obligations  evidenced  by the Note  shall in any event  provide,
               without limitation,  (A)that (i)no Buyer Subordinated Obligations
               shall  require or permit any  scheduled  interest,  principal  or
               other amortization payments or any mandatory payment, prepayment,
               redemption or repurchase of any Buyer  Subordinated  Obligations,
               and (ii)all such Buyer Subordinated Obligations shall include for
               the express benefit of Tele-Vue and Viacom a prohibition upon any
               optional payment,  prepayment or redemption of, or any payment of
               interest  upon or the payment or  declaration  of any dividend or
               distribution upon, any Buyer Subordinated  Obligations,  prior to
               (in  the  case  of  either   clause  (i)or  clause   (ii)of  this
               clause(A)),  the date on which the Note  shall  have been paid in
               full (the "Note Payment  Date"),  and Buyer and InterMedia  shall
               also use all  reasonable  commercial  efforts  to  include in the
               terms of such Buyer  Subordinated  Obligations a provision to the
               effect that no payment or  transaction of the type referred to in
               clause (i) or (ii) of this  clause(A)  may be made until the date
               which  is 91  days  after  the  Note  Payment  Date;  and  (B)for
               customary  representations  and negative covenants  substantially
               similar to, and consistent with, the representations and negative
               covenants  contained in the Senior Bank Debt (including,  without
               limitation,  a  representation  that  as of the  Closing  Buyer's
               assets shall consist only of the Acquired Assets, related working
               capital  and the TCI Stock and a covenant  that all  transactions
               between  Buyer  and  any  Affiliate  of  Buyer  shall  be  on  an
               arms-length  basis and shall be at least as favorable to Buyer as
               would be obtained in a similar  transaction  with an unaffiliated
               third party).

          (ii)   copies of resolutions  adopted by the board of directors of the
                 general  partner of Buyer,  certified  by the  Secretary  or an
                 Assistant   Secretary   of  the   general   partner  of  Buyer,
                 authorizing  the execution and delivery by the general  partner
                 of Buyer of this Agreement on behalf of Buyer;

          (iii)  an instrument of assumption  sufficient for Buyer to assume and
                 agree to pay, perform and discharge all Assumed Liabilities, in
                 form and  substance  reasonably  satisfactory  to  TeleVue  and



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                 Buyer,  pursuant to which Buyer assumes the Assumed Liabilities
                 in accordance with Section3.1; and

          (iv)   all opinions,  certificates and other instruments and documents
                 contemplated  under  ArticleX  to be  delivered  by Buyer at or
                 prior to the Closing.

                                  ARTICLE XIII

                          SURVIVAL AND INDEMNIFICATION

     Section 13.1  Survival.  The  representations,  warranties,  covenants  and
agreements  contained in or made  pursuant to this  Agreement  shall survive the
Closing,  but the representations  and warranties  contained or made pursuant to
this Agreement  shall terminate and be of no further force on and as of April30,
1996, except that:

               (a) the representations and warranties made by TeleVue in Section
          5.21 shall survive until the expiration of the  applicable  statute of
          limitations;

               (b)  the  representations  and  warranties  made  by  TeleVue  in
          Sections5.11 and 5.19 shall survive indefinitely; and

               (c)  the   representations   and  warranties  made  by  Buyer  in
          Section6.8 shall survive indefinitely.

     Section 13.2 Indemnification. (a)The party seeking indemnification pursuant
to this Section13.2 is referred to as the "Indemnified Party" and the party from
whom  indemnification  is sought  under this  Section13.2  is referred to as the
"Indemnifying Party."

     (b) If the Closing occurs, each of TeleVue and Viacom (without duplication)
shall indemnify and hold harmless,  after taking into account any taxes actually
payable by the Indemnified Party as a result of such indemnification,  Buyer and
its  Affiliates  against  and in respect of any and all Losses  (x)which  may be
incurred  by Buyer or any of its  Affiliates  by  reason  of the  breach  of any
representation,  warranty,  covenant or agreement of TeleVue or Viacom contained
in or made pursuant to this Agreement or (y)constituting Retained Liabilities.

     (c)  If  the  Closing  occurs,   each  of  Buyer  and  InterMedia  (without
duplication)  shall  indemnify and hold harmless,  after taking into account any
taxes  actually   payable  by  the  Indemnified   Party  as  a  result  of  such
indemnification,  TeleVue and its  Affiliates  against and in respect of any and
all Losses  (x)which  may be  incurred  by TeleVue or any of its  Affiliates  by
reason of the breach of any representation,  warranty,  covenant or agreement of
Buyer  or  InterMedia  contained  in or  made  pursuant  to  this  Agreement  or
(y)constituting Assumed Liabilities.

     (d)  Notwithstanding  anything  to the  contrary in this  Agreement  (i)the
aggregate  liability of an  Indemnifying  Party in respect of all Losses  (other


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<PAGE>

than  those  resulting  from the  failure  of Buyer  to pay any  portion  of the
Purchase  Price and other than  those  relating  to Taxes)  shall not exceed the
Purchase  Price;  and (ii)no  party shall be  entitled to recover  consequential
damages  pursuant to this  Section13.2  or otherwise in respect of any breach of
this Agreement (except for breaches of Sections 6.8 and 8.10).

     (e) No claim for  indemnification  shall be made by any party  pursuant  to
Section13.2(b)  or (c) with respect to a breach of a representation  or warranty
contained  herein  or made  pursuant  hereto  (i)unless  notice  of  such  claim
(describing  the basic facts or events,  the  existence or  occurrence  of which
constitute  or have  resulted  in the  alleged  breach  of a  representation  or
warranty made in this Agreement) has been given to the Indemnifying Party during
the survival period set forth in Section13.1; and (ii)except as to liability for
breach of a representation  or warranty set forth in  Sections5.11,  5.17, 5.19,
5.21,  5.23, 6.8 or 6.9,  until the Losses that would be recoverable  under such
claims aggregate in excess of 1/2 of 1% of the Purchase Price, after which event
the  Indemnified  Party shall be entitled to be indemnified for only such Losses
as are in excess of 1/2 of 1% of the Purchase Price.

     (f)  The  Indemnified  Party  shall  give  prompt  written  notice  to  the
Indemnifying Party of any claim for indemnification  under Section13.2(b) or (c)
relating  to a claim or  demand of a third  party  with  respect  to which it is
seeking indemnification  hereunder. The failure to give such prompt notice shall
not relieve the Indemnifying Party of its indemnity  obligations  hereunder with
respect thereto,  except to the extent that the Indemnifying Party is materially
prejudiced  by such  failure.  The  Indemnifying  Party  shall have the right to
defend and to direct the defense  against any such claim or demand,  in its name
or in the name of the  Indemnified  Party, as the case may be, at the expense of
the Indemnifying Party, and with the counsel selected by the Indemnifying Party,
provided that the Indemnifying Party may not settle or compromise any such claim
or demand without the consent of the Indemnified Party (which consent may not be
unreasonably  withheld) if injunctive or other equitable relief would be imposed
against the Indemnified Party as a result thereof.  Notwithstanding  anything in
this Agreement,  to the contrary, the Indemnified Party shall cooperate with the
Indemnifying  Party,  and keep the  Indemnifying  Party  fully  informed  in the
defense of such claim or demand.  The Indemnified  Party shall have the right to
participate in the defense of any claim or demand with counsel employed by it at
the  expense of the  Indemnified  Party.  The  Indemnifying  Party shall have no
indemnification obligations with respect to any such claim or demand which shall
be settled by the  Indemnified  Party without the prior  written  consent of the
Indemnifying Party.

     (g) If the Closing occurs,  the rights of the parties under  Section13.2(b)
and (c) and  Section14.13  shall be the  exclusive  remedy of the  parties  with
respect to breaches of  representations,  warranties,  covenants and  agreements
contained  in or made  pursuant to this  Agreement or any  Transaction  Document
(including without limitation any bill of sale, deed,  instrument of assignment,
instrument of assumption or other  document,  certificate  or opinion  delivered
pursuant to Section 12.2). Buyer, on behalf of itself and its Affiliates, hereby
waives  and  releases  the Cable  Group  and its  Affiliates,  effective  at the
Closing,  from any statutory or other right of contribution or indemnity (except
as set forth in this Section13.2) with respect to the Cable Group's ownership of
the Acquired Assets or operation of, or otherwise relating to, the Systems.



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     (h) In the event that an Indemnifying Party shall be obligated to indemnify
an Indemnified Party pursuant to Section 13.2(b) or (c), the Indemnifying  Party
shall,  upon  payment  of such  indemnity,  be  subrogated  to all rights of the
Indemnified Party with respect to claims to which such indemnification relates.

                                  ARTICLE XIV

                                 MISCELLANEOUS

     Section 14.1 Expenses.  Except as expressly set forth herein,  the fees and
expenses (including the fees of any lawyers, accountants,  investment bankers or
others  engaged  by such  party)  in  connection  with  this  Agreement  and the
transactions  contemplated  hereby whether or not the Transaction is consummated
will be paid by the party incurring the same.

     Section 14.2 Headings.  The section  headings herein are for convenience of
reference  only, do not constitute part of this Agreement and will not be deemed
to limit  or  otherwise  affect  any of the  provisions  hereof.  References  to
Sections,  Schedules and Exhibits, unless otherwise indicated, are references to
Sections, Schedules and Exhibits hereof.

     Section  14.3  Notices.  Any  notice  or other  communication  required  or
permitted to be given hereunder will be in writing and will be mailed by prepaid
registered or certified mail, timely deposited with an overnight courier such as
Federal Express,  by facsimile  transmission,  or delivered against receipt,  as
follows:

     (a) In the case of Buyer or InterMedia, to:

                    RCS Pacific, L.P.
                    235 Montgomery Street, Suite 420
                    San Francisco, CA  94104
                    Attention:  Mr.Frank Washington

          with a copy to:

                    InterMedia Partners IV, L.P.
                    235 Montgomery Street, Suite420
                    San Francisco, CA  94104
                    Attention:  Mr. Leo J. Hindery, Jr.
          and

                    Pillsbury Madison & Sutro
                    235 Montgomery Street
                    San Francisco, CA  94104
                    Attention:  Gregg Vignos,Esq.


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<PAGE>


          and

                    Attn:   Marvin Jones
                    Marvin Jones Associates, Inc.
                    8101 East Prentice Avenue, Suite 500
                    Englewood, CO  80111
                    Fax:   (303) 721-5415
                    Phone: (303) 721-5400

     (b) In the case of TeleVue or Viacom, to:

                    Viacom Cable
                    5924 Stoneridge Drive
                    P.O. Box 13
                    Pleasanton, CA  94566
                    Attention: Law Department and 
                               Chief Financial Officer

          with a copy to:

                    Viacom Inc.
                    1515 Broadway
                    New York, NY  10036
                    Attention:  General Counsel

          and

                    Hughes Hubbard & Reed
                    One Battery Park Plaza
                    New York, NY  10004
                    Attention:  Ed Kaufmann,Esq.

or to such  other  address  as the party may have  furnished  in writing in
accordance  with the  provisions  of this  Section  14.3.  Any  notice  or other
communication  shall be deemed to have been given,  made and received (i)two (2)
days following the day when deposited  with an overnight  courier,  (ii)five (5)
days  following  the day when mailed by prepaid  registered  or certified  mail,
return receipt requested,  (iii)when  confirmed in writing, if sent by facsimile
transmission or (iv)otherwise  (or if earlier),  upon receipt.  Either party may
change the  address to which  notices  are to be  addressed  by giving the other
party notice in the manner herein set forth.

     Section 14.4 Assignment.  This Agreement and all provisions  hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors,  however,  neither  this  Agreement  nor  any  right,  interest,  or
obligation  hereunder  may be  assigned  by any  party  hereto  (other  than  by
operation of law) without the prior written  consent of the other  parties,  and


                                       79

<PAGE>

any such assignment or purported  assignment without such consent shall be void;
provided, that, subject to the following proviso, at the Closing:

     (A) Buyer may  assign its right to  purchase  the  Nashville  System to RCS
Nashville,  L.P.  if Buyer,  InterMedia,  RCS  Nashville,  L.P.  and  InterMedia
Partners of Nashville L.P.  ("InterMedia  Nashville") execute and deliver at the
Closing documents  reasonably  satisfactory to TeleVue pursuant to which (i) RCS
Nashville,  L.P. becomes bound under this Agreement and deemed a "Buyer" for all
purposes  hereunder   (including,   without  limitation,   satisfaction  of  all
conditions set forth in Article X hereof (including, without limitation, receipt
by TeleVue of an FCC  Certificate  complying  with the  requirements  of Section
10.7(a)   relating  to  the  Acquired  Assets  that  are  the  subject  of  such
assignment)),  except that RCS  Nashville,  L.P. shall not be deemed a Buyer for
purposes of the Note and the provisions of Section12.2(b)(i), and (ii)InterMedia
Nashville agrees to cause RCS Nashville,  L.P. to perform its obligations  under
this Agreement; and

     (B) Buyer may assign  its right to  purchase  the Dayton  System to a third
party,  identified  by no later than the  thirtieth  day after the date  hereof,
reasonably acceptable to Viacom (the "Dayton Third Party") if:

               (1) the Dayton Third Party and, if in the reasonable  judgment of
Viacom, the Dayton Third Party is not sufficiently creditworthy,  a creditworthy
third party (which may be an  Affiliate  of the Dayton  Third Party)  reasonably
acceptable to Viacom (the "Dayton Guarantor") execute and deliver at the Closing
documents  reasonably  satisfactory  to TeleVue  pursuant to which (i)the Dayton
Third  Party  becomes  bound under this  Agreement  and deemed a "Buyer" for all
purposes  hereunder   (including,   without  limitation,   satisfaction  of  all
conditions set forth in Article X hereof (including, without limitation, receipt
by TeleVue of an FCC  Certificate  complying  with the  requirements  of Section
10.7(a)   relating  to  the  Acquired  Assets  that  are  the  subject  of  such
assignment))  and (ii)if  applicable,  the Dayton  Guarantor agrees to cause the
Dayton Third Party to perform its obligations under this Agreement; and

               (2) Viacom has not notified Buyer in writing prior to the Closing
that  Viacom  has  reasonably  determined  in  good  faith  that  pursuing  such
assignment  of Buyer's  right to purchase  the Dayton  System will have an undue
adverse effect on obtaining the FCC Certificate or Local Authorizations relating
to the Dayton System or will prevent or otherwise  unduly delay the Closing.  If
Viacom  delivers  such written  notice to Buyer,  Buyer will  promptly  take all
necessary  actions  with  respect  to  obtaining  an FCC  Certificate  and Local
Authorizations for the Dayton System to reflect that Buyer will be acquiring the
Dayton System,  and will otherwise fully comply with its obligations  under this
Agreement  relating to the Dayton  System as if there were no  provision  herein
relating to a possible  assignment  of the right to purchase the Dayton  System.

provided further that, notwithstanding the foregoing proviso:

          (a)    if the  assignment  contemplated  by clause (A) occurs,  (i)RCS
                 Nashville,  L.P.  shall not be  responsible  hereunder  for any
                 claims  hereunder  arising after the Closing that relate solely
                 to Systems other than the Nashville System,  (ii) Buyer and, if
                 the assignment  contemplated  by clause  (B)occurs,  the Dayton
                 Third Party shall not be  responsible  hereunder for any claims
                 hereunder  arising  after the Closing that relate solely to the
                 Nashville  System  and  (iii)  Buyer  (and,  if the  assignment
                 contemplated  by clause  (B)  occurs,  the Dayton  Third  Party
                 jointly and  severally),  on the one hand,  and RCS  Nashville,
                 L.P.,  on the other hand,  shall be severally  responsible  pro
                 rata (based on their  respective  number of Closing  Date Basic
                 Subscribers) for all claims hereunder arising after the Closing
                 that are not  covered by clause  (i) or (ii) of this  paragraph
                 (1); and

          (b)    if the assignment  contemplated by clause (B) occurs, (i) Buyer
                 shall remain fully responsible for all claims hereunder arising
                 after the Closing  (including any claims relating to the Dayton
                 System) and (ii) the Dayton  Third  Party shall be  responsible
                 for any  claims  hereunder  arising  after the  Closing  to the
                 extent such claims relate to the Dayton System).

     Section 14.5 Entire Agreement. This Agreement embodies the entire agreement
and  understanding of the parties with respect to the transactions  contemplated
hereby and supersedes  all prior written or oral  commitments,  arrangements  or
understandings with respect thereto.

     Section 14.6 Amendment;  Waiver.  (a)This  Agreement may only be amended or
modified in writing  signed by the party  against whom  enforcement  of any such
amendment or modification is sought.

     (b) Any party hereto may, by an  instrument  in writing,  waive  compliance
with any term or  provision  of this  Agreement  on the part of such other party
hereto.  The waiver by any party  hereto of a breach of any term or provision of
this Agreement will not be construed as a waiver of any subsequent breach.

     Section 14.7  Counterparts.  This  Agreement may be executed in two or more
counterparts,  all of which will be  considered  one and the same  agreement and
each of which  will be deemed an  original.  All  signatures  need not be on one
counterpart.

     Section 14.8  Governing Law. THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK  9REGARDLESS  OF THE LAWS THAT MIGHT BE  APPLICABLE  UNDER
PRINCIPLES OF CONFLICTS OF LAW0 AS TO ALL MATTERS,  INCLUDING BUT NOT LIMITED TO
MATTERS OF VALIDITY, CONSTRUCTION, EFFECT AND PERFORMANCE. 

     Section 14.9  Severability.  If any one or more of the  provisions  of this
Agreement  is  held to be  invalid,  illegal  or  unenforceable,  the  validity,
legality or  enforceability  of the remaining  provisions of this Agreement will
not be affected thereby,  and TeleVue and Buyer will use their reasoable efforts
to substitute one or more valid, legal and enforceable  provisions which insofar
as practicable implement the purposes and intent hereof. To the extent permitted
by  applicable  law,  each party waives any  provision of law which  renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.

     Section 14.10  Consent to  Jurisdiction.  Each party hereby  submits to the
non-exclusive  jurisdiction of the courts of general  jurisdiction of the States
of New York and  California  and the  federal  courts  of the  United  States of
America, located in the City of New York, New York and San Francisco, California
solely in respect of the  interpretation  and  enforcement  of the provisions of
this Agreement and hereby waives,  and agrees not to assert, as a defense in any
action,  suit  or  proceeding  for the  interpretation  or  enforcement  of this
Agreement that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not  maintainable in such courts or that this Agreement
may not be  enforced  in or by such  courts  or that its  property  is exempt or
immune from  execution,  that the suit,  action or  proceeding  is brought in an
inconvenient  forum,  or that the venue of the suit,  action  or  proceeding  is
improper.  Service or process with respect thereto may be made upon any party by
mailing a copy thereof by registered or certified mail, postage prepaid, to such
party at its address as provided in Section 14.3 hereof,  provided  that service
of process may be accomplished in any other manner permitted by applicable law.

     Section 14.11 Third Person  Beneficiaries.  Except as expressly provided in
Sections 8.8, 31.2, 14.4 and 14.14(d),  this Agreement is not intended to confer
upon any Person (other than Buyer and TeleVue) any rights or remedies  hereunder
(it being understood that this Section 14.11 shall not prejudice any subrogation
rights that Guarantor may have).

     Section  14.12  Representation  and  Warranties;   Schedules.  Neither  the
specification  of any dollar amount in the  representations  and  warranties set
forth in Article IV or elsewhere  herein nor the  indemnification  provisions of
Article XIII nor the  inclusion  of any items in any Schedule  will be deemed to
constitute  an  admission  by  TeleVue  or  Viacom  or BUyer or  InterMedia,  or
otherwise imply, that any such amounts or the items so included are material for
the purposes of this  Agreement.  All documents or information  disclosed in the
Schedules are intended to be disclosed for all purposes under this Agreement and
will also be deemed to be  incorporated  by  reference  in each Scheule to which
they may be relevant without further disclosure.

     Section 14.3 Specific  Performance.  Buyer and TeleVue  recognize  that any
breach of any covenant or agreement contained in this Agreement may give rise to
irreparable  harm for which money damages would not be an adequate  remedy,  and
accordingly  agree that, in addition to other remedies any  non-breaching  party
will be entitled to enforce the  agreements  and covenants  contained  herein of
Buyer and  InterMedia or TeleVue and Viacom,  as the case may be, by a decree of
specific performance without the necessity of proving the inadequacy as a remedy
of money damages.

     Section 14.4  Nonrecourse  Provisions.  (a) TeleVue agrees that,  except as
provided in Section 14.14(d) below,  notwithstanding any other provision in this
Agreement  (other  than  Section  14.14(d)  or  any  agreement,   instrument  or
certificate of Buyer  delivered  pursuant to this Agreement (each a "Transaction
Document",  except that Transaction  Document shall not in any event include the
Limited  Partner  Guaranty,  the Value  Guarantee  Agreement or the First Pledge
Agreement) and any rule of law or equity to the contrary,  to the fullest extent


                                       80

<PAGE>

permitted by law,  Buyer's  obligations  and  liabilities  under all Transaction
Documents and in connection with the transactions  contemplated therein shall be
Nonrecourse  to all direct and  indirect  general and limited  partners of Buyer
other than InterMedia.

     (b)  Definition  of   Nonrecourse.   "Nonrecourse"   shall  mean  that  the
obligations  and  liabilities  are limited in  recourse  solely to Buyer and the
assets of Buyer (for those purposes, any capital contribution obligations of the
general and limited  partners of Buyer or any negative  capital account balances
of such  partners  shall  not be  deemed  to be  assets  of  Buyer)  and are not
guaranteed directly or indirectly by, or the primary obligations of, any general
or limited  partner of Buyer,  and no general or limited partner or any officer,
director,  partner, employee or agent of Buyer or any general or limited partner
of any successor partnership, either directly or indirectly, shall be personally
liable in any respect (except to the extent of their respective interests in the
assets of Buyer) for any obligation or liability of Buyer under any  Transaction
Document or any transaction contemplated therein,  provided that nothing in this
Section  14.14(b)  shall (i) apply to  InterMedia  or (ii) preclude a party from
naming the other party (and, if necessary as a procedural matter, any partner in
the other party) as a party  defendant in any action.  It is understood that any
reference to  "InterMedia"  in this Section 14.14 refers only to InterMedia  and
not to any of its partners, employees or agents.

     (c) Definition of Direct. "Direct" partners include all general and limited
partners  of Buyer,  and  "indirect"  partners  include  all general and limited
partners of each direct  partner and all general and further  indirect  partners
thereof and each such indirect partner.

     (d) Limited Recourse.  Notwithstanding Section 14.14(a), Sections 14.14(a),
(b) and (c) shall not apply and TeleVue and Viacom  shall have full  recourse to
all direct and indirect  general and limited partners of Buyer or any of them in
connection with any claim by TeleVue or Viacom  relating to Buyer's  obligations
and   liabilities   under  all  Transaction   Documents  and  the   transactions
contemplated  therein to the extent of the aggregate amount of all Distributions
that have been made during the 24 month period  immediately  preceding  any such
claim. As used herein, "Distribution" means any direct or indirect distribution,
dividend or transfer for less than fair value of any assets  (including cash) of
Buyer.

     (e) No Suits. (i) Each of Buyer and InterMedia  hereby covenants for itself
and its  successors  and assigns that it and its successors and assigns will not
make, bring, claim, commence,  prosecute or, maintain, any action, either at law
or equity,  in any court of the United States or any state  thereof  against any
officer,  director,  partner,  employee or agent of TeleVue, or any Affiliate of
TeleVue and (ii) each of TeleVue and Viacom hereby  covenants for itself and its
successors  and assigns  that it and its  successors  and assigns will not make,
bring,  claim,  commence,  prosecute or maintain,  any action,  either at law or
equity,  in any court of the United States or any state thereof  against (x) any
officer, director, partner (other than InterMedia),  employee or agent of Buyer,
(y) any officer, director,  partner, employee or agent of InterMedia, or (z) any
direct or indirect  general or limited partner of Buyer (other than  InterMedia)
or InterMedia, in each case for (i) the payment of any amount or the performance
of any obligation under any Transaction Document or (ii) the satisfaction of any
liability  arising  in  connection  with  any  such  payment  or  obligation  or
otherwise,  including  without  limitation,  liability  arising  in law for tort


                                       81

<PAGE>

(including,  without limitation,  for active and passive  negligence,  negligent
misrepresentation  and  fraud),  equity  (including,   without  limitation,  for
indemnification and contribution) and contract  (including,  without limitation,
monetary damages for the breach of  representation or warranty or performance of
any of the covenants or  obligations  contained in any  Transaction  Document or
with the transaction contemplated herein or therein).

                                   ARTICLE XV

             UNDERTAKING, REPRESENTATIONS AND WARRANTIES OF VIACOM

     Section 15.1 Viacom Undertaking as to TeleVue's Obligations.  Viacom hereby
agrees  with  Buyer to cause  TeleVue to pay when due all of  TeleVue's  payment
obligations  under this Agreement and to perform when due all of TeleVue's other
obligations under this Agreement.

     Section 15.2  Representations and Warranties.  Viacom hereby represents and
warrants to Buyer as follows:

     (a) Corporate  Existence and Power. Viacom is a corporation duly organized,
validly  existing and in good standing  under the laws of the state of Delaware,
and is authorized to transact  business and is in good standing in each state in
which its ownership of asets or conduct of business requires such qualification,
and has all corporate powers required to carry on its business as now conducted,
with such exceptions as would not impair in any material  respect the ability of
Viacom to perform its obligations under this Agreement.

     (b) Corporate  Authorization.  The execution,  delivery and  performance by
Viacom of this Agreement are within Viacom's corporate powers and have been duly
authorized by all necessary corporate action on the part of Viacom.

     (c) Governmental Authorization.  The execution, delivery and performance by
Viacom of this  Agreement  require no  material  action by or in respect  of, or
filing with, any  governmental  body,  agency,  official or authority other than
compliance   with  any  applicable   requirements   of  the  HSR  Act,  the  FCC
Authorizations and the Local Authorizations.

     (d)  Consents.  No consent by any Person under any contract to which Viacom
is a party or to which its assets are subject is required or  necessary  for the
execution,  delivery  and  performance  by Viacom of this  Agreement,  with such
exceptions as would not impair in any material  respect the ability of Viacom to
perform its obligations under this Agreement.

     (e) Non-Contravention.  The execution, delivery and perormance by Viacom of
this  Agreement  does  not  and  will  not (x)  contravene  the  certificate  of
incorporation or by-laws of Viacom or (y) result in a, or constitute a breach or
default (including any event that, with the passage of time or giving of notice,
or  both,  would  become  a  breach  or  default)  under  any  applicable  Legal
Requirement or any judgment, order, decree, contract, license, lease, indenture,
mortgage,  loan agreement or note, as to which Viacom is a party or by which any


                                       82

<PAGE>

of its properties may be bound, the effect of which would impair in any material
respect the ability of Viacom to perform its obligations under this Agreement.

     (f) Binding Effect.  This Agreement has been duly executed and delivered by
each of Viacom and TeleVue and this  Agreement  constitutes  a valid and binding
obligation of each of Viacom and TeleVue, enforceable against each of Viacom and
TeleVue in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting  creditors'  rights  generally  or by  the  principles  governing  the
availability of equitable remedies.

                                  ARTICLE XVI

           UNDERTAKING, REPRESENTATIONS AND WARRANTIES OF INTERMEDIA

     Section 16.1 Intermedia  Undertaking as to Buyer's Obligations.  InterMedia
hereby agrees with TeleVue to cause Buyer to pay when due all of Buyer's payment
obligations  under  this  Agreement  and the  Note and to  perform  when due all
Buyer's other obligations under this Agreement and the Note.

     Section 16.2  Representations and Warranties.  InterMedia hereby represents
and warrants to TeleVue as follows:

     (a) Partnership  Existence and Power.  InterMedia is a limited  partnership
duly  organized,  validly  existing and in good  standing  under the laws of the
state of  California,  and is  authoirzed  to transact  business  and is in good
standing in each state in which its  ownership  of assets or conduct of business
requires such qualification, and has all partnership powers required to carry on
its business as now conducted,  with such  exceptions as would not impair in any
material respect the ability of InterMedia to perform its obligations under this
Agreement.

     (b) Partnership Authorization.  The execution,  delivery and performance by
InterMedia of this Agreement are within InterMedia's partnership powers and have
been  duly  authorized  by all  necessary  partnership  action  on the  part  of
InterMedia.

     (c) Governmental Authorization.  The execution, delivery and performance by
InterMedia of this Agreement  require no material action by or in respect of, or
filing with, any  governmental  body,  agency,  official or authority other than
compliance   with  any  applicable   requirements   of  the  HSR  Act,  the  FCC
Authorizations and the Local Authorizations.

     (d)  Consents.  No  consent  by any  Person  under  any  contract  to which
InterMedia  is a party or to  which  its  assets  are  subject  is  required  or
necessary fo the  execution,  delivery and  performance  by  InterMedia  of this
Agreement with such  exceptions as would not impair in any material  respect the
ability of InterMedia to perform its obligations under this Agreement.



                                       83

<PAGE>


     (e)   Non-Contravention.   The  execution,   delivery  and  performance  by
InterMedia  of  this  Agreement  does  not  and  will  not  (x)  contravene  the
certificate  of limited  partnership  or  agreement  of limited  partnership  of
InterMedia or (y) result in a, or constitute a breach or default  (including any
event that, with the passage of time or giving of notice,  or both, would become
a breach or default)  under any  applicable  Legal  Requirement or any judgment,
order, decree, contract, license, lease, indenture,  mortgage, loan agreement or
note, as to which InterMedia is a party or by which any of its properties may be
bound, the effect of which would impair in any material respect the a ability of
InterMedia to perform its obligations under this Agreement.

     (f) Binding Effect.  This Agreement has been duly executed and delivered by
each of InterMedia and Buyer and this Agreement  constitutes a valid and binding
obligation  of  each  of  InterMedia  and  Buyer,  enforceable  against  each of
InterMedia and Buyer in accordance with its terms,  except as enforceability may
be limited by applicable bankruptcy, insolvency,  reorganization,  moratorium or
similar  laws  affecting  creditors'  rights  generally  or  by  the  principles
governing the availability of equitable remedies.



                                       84

<PAGE>

     IN WITNESS WHEREOF, the parties hereo have caused this Agreement to be duly
executed in New York, New York, as of the day and year first above written.

                                        RCS PACIFIC, L.P.


                                        By MITGO CORP, its General Partner

                                           By: /s/ Frank Washington
                                              --------------------------------
                                              Name:   Frank Washington
                                              Title:  President



                                    TELE-VUE SYSTEMS, INC.

                         
                                    By: /s/ Michael D. Fricklas
                                       ------------------------------------
                                       Name:   Michael D. Fricklas
                                       Title:  Senior Vice President and
                                               Deputy General Counsel


                                    VIACOM INTERNATIONAL INC.
                                   
                                          
                                    By:  /s/ Thomas E. Dooley
                                       ------------------------------------
                                       Name:   Thomas E. Dooley
                                       Title: Executive Vice President
                                              Finance, Corporate Development
                                              and Communications


                                    INTERMEDIA PARTNERS IV, L.P.
                                        
                                    By:  InterMedia Capital Management IV, L.P.
                                         its General Partner

                                    By:  InterMedia Management, Inc.
                                         its General Partner

                                    By:  /s/ Leo J. Hindery, Jr.
                                       ------------------------------------
                                       Name:  Leo J. Hindery, Jr.
                                       Title: President and Chief
                                              Executive Officer



                                                            Exhibit 11

                         Viacom Inc. and Subsidiaries
                         Computation of Net Earnings Per Share

<TABLE><CAPTION>
                                                                          Year ended December 31,
                                                                          -----------------------
                                                                        1994         1993     1992
                                                                        ----         ----     ----
                                                                 (In millions, except per share amounts)
<S>                                                                   <C>         <C>       <C>
Net earnings from continuing operations ..........................    $ 130.5     $ 169.5   $ 66.1
Cumulative convertible preferred stock dividend requirement ......       75.0        12.8       --
                                                                      -------     -------   ------
Earnings from continuing operations attributable to
      common stock ...............................................       55.5       156.7     66.1
Loss from discontinued operations, net of tax ....................      (20.5)         --       --
Extraordinary losses, net of tax .................................      (20.4)       (8.9)   (17.1)
Cumulative effect of change in accounting principle ..............         --        10.4       --
                                                                      -------     -------   ------
Net earnings attributable to common stock ........................    $  14.6     $ 158.2   $ 49.0
                                                                      -------     -------   ------
                                                                      -------     -------   ------
Primary Computation:
Shares:
     Weighted average number of common shares ....................      207.6       120.6    120.2
     Common shares potentially issuable in connection with:
     Stock options and warrants (a) ..............................        2.6          --       --
     Contingent value rights .....................................        5.8          --       --
     Variable common rights ......................................        4.0          --       --
                                                                      -------     -------   ------
     Weighted average common shares and common
     share equivalents ...........................................      220.0       120.6    120.2
                                                                      -------     -------   ------
                                                                      -------     -------   ------
 Net earnings per common share
      Net earnings from continuing operations ....................    $   .25      $ 1.30  $   .55
      Loss from discontinued operations, net of tax ..............       (.09)         --       --
      Extraordinary losses, net of tax ...........................       (.09)       (.07)    (.14)
      Cumulative effect of change in accounting principle ........         --         .08       --
                                                                      -------     -------   ------
      Net earnings ...............................................    $   .07      $ 1.31  $   .41
                                                                      -------     -------   ------
                                                                      -------     -------   ------

Fully Diluted Computation (b)
Shares:
     Weighted average number of common
 shares outstanding ........     207.6        120.6    120.2
     Common shares potentially issuable in connection with:
          Stock options and warrants (a) .........................       3.0            --      --
     Contingent value rights .....................................       5.8            --      --
     Variable common rights ......................................       4.0            --      --
                                                                     -------       -------  ------
     Weighted average common shares and common
     share equivalents ...........................................     220.4         120.6   120.2
                                                                     -------       -------  ------
                                                                     -------       -------  ------
 Net earnings per common share:
 Net earnings from continuing operations .........................    $   .25        $ 1.30  $ 0.55
 Loss from discontinued operations, net of tax ...................       (.09)          --      --
 Extraordinary losses, net of tax ................................       (.09)         (.07)   (.14)
 Cumulative effect of change in accounting principle .............         --           .08     --
                                                                      -------       -------  ------
 Net earnings ....................................................    $   .07        $ 1.31  $ 0.41
                                                                      -------       -------  ------
                                                                      -------       -------  ------
</TABLE>


(a) The aggregate dilution of stock options was less than 3% in 1993 and 1992 
    and, therefore, were excluded from the computation.
(b) The Preferred Stock and related dividend requirement had an anti-dilutive 
    effect on earnings per share in 1994 and 1993 and, therefore, were 
    excluded from the computation.







                                                               Exhibit 21


The following are all of the direct and indirect subsidiaries of Viacom Inc.

NETWORKS

PCI'S Holdings Corporation (Delaware) (100%)
          Eighth Century Corporation (Delaware) (100%)
Viacom International Inc. (Delaware) (100%)
          Viacom HA! Holding Company (Delaware) (100%)

MTV Networks

Viacom International Inc. (Delaware)
          Games Productions Inc. (Delaware) (100%)
                    Antics Inc. (Delaware) (100%)
                    Bardwire Inc. (Delaware) (100%)
                    Games Animation Inc. (Delaware) (100%)
                    QWERTY Inc. (Delaware) (100%)
                    Uptown Productions Inc. (Delaware) (100%)
          MTV Asia Development Company Inc. (Delaware) (100%)
          MTV Australia Inc. (Delaware) (100%)
          MTV India Development Company Inc. (Delaware) (100%)
          MTV Korea Development Company Inc. (Delaware) (100%)
          MTV Latino Inc. (Delaware) (100%)
          MTV Networks Company (Delaware) (100%)
          MTV Networks Europe Inc. (Delaware) (100%)
          MTV Networks South Africa Inc. (Delaware) (100%)
          MTV Songs Inc. (Delaware) (100%)
          MTVN Shopping Inc. (Delaware) (100%)
          Music By Nickelodeon Inc. (Delaware) (100%)
          Music By Video Inc. (Delaware) (100%)
          Nickelodeon Huggings U.K. Limited (United Kingdom) (100%)
          Nickelodeon Magazines Inc. (Delaware) (100%)
          Reality Check Productions Inc. (Delaware) (100%)
                    Outatown Productions Inc. (Delaware) (100%)
          Remote Productions Inc. (Delaware) (100%)
                    Big Shows Inc. (Delaware) (100%)
                    State of Mind Inc. (Delaware)
 (100%)
          Tunes By Nickelodeon Inc. (Delaware) (100%)
          VHONE Inc. (Delaware) (100%)
          Viacom Camden Lock Inc. (Delaware) (100%)
          Viacom Networks Europe Inc. (Delaware) (100%)
          Viacom Networks Inc. (New York) (100%)
          Viacom VHENO Inc. (Delaware) (100%)


<PAGE>


Showtime Networks Inc.

Viacom International Inc. (Delaware)
          Showtime Networks Inc. (Delaware) (100%)
                    All Media Inc. (Delaware) (100%)
                    Interstital Programs Inc. (Delaware) (100%)
                    Part-Time Productions Inc. (Delaware) (100%)
                    Satellite Holdings Inc. (Delaware) (100%)
                    Showtime Networks Inc. (U.K.) (Delaware) (100%)
                    Showtime Networks Satellite Programming Company (California)
                           (100%)
                    Showtime Satellite Networks Inc. (Delaware) (100%)
                    SNI Development Corp. (Delaware) (100%)
                    Toe-To-Toe Productions Inc. (Delaware) (100%)
          Viacom Satellite News Inc. (Delaware) (100%)

BROADCASTING

Viacom International Inc. (Delaware)
          Broadcast Holdings Ltd. L.P. (Delaware) (95%)*
          KBSG Inc. (Delaware) (100%)
          KNDD Inc. (Delaware) (100%)
          KYSR Inc. (Delaware) (100%)
          Newtel Inc. (Delaware) (100%)
                    Paramount Stations Group Inc. (Virginia) (79%)*
                              Paramount Stations Group Holding Company Inc.
                                    (Virginia) (100%)
                                        Paramount Stations Group of Fort
                                             Worth/Dallas Inc. (Virginia) (100%)
                                        Paramount Stations Group of Philadelphia
                                              Inc. (Virginia) (100%)
                                        Paramount Stations Group of
                                            Raleigh/Durham Inc. (Virginia) 
                                               (100%)
                                        Paramount Stations Group of Washington
                                             Inc. (Virginia) (100%)
                              Paramount Stations Group of Houston Inc.
                                       (Virginia) (100%)
                              Paramount Stations Group of Kerrville Inc.
                                    (Virginia) (100%)
          Riverside Broadcasting Co., Inc. (Delaware) (100%)
          Viacom Broadcasting East Inc. (Delaware) (100%)
          Viacom Broadcasting of Missouri Inc. (Delaware) (100%)
          Viacom Broadcasting West Inc. (Delaware) (100%)
          Viacom WSBK Inc. (Delaware) (100%)
          VSC Communications Inc. (Delaware) (100%)
          WMZQ Inc. (Delaware) (100%)
          WNYT Inc. (Delaware) (100%)
          WVIT Inc. (Delaware) (100%)

* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.



<PAGE>

ENTERTAINMENT

Film & Television

Film Properties International B.V. (Netherlands)
          Cinema International Corporation (Israel) (95%)*
          Film Investments International (FII) N.V. (Netherlands Antilles) 
           (100%)
                    Securitas Services Limited (Bermuda) (100%)
          Film Properties International (Argentina) B.V. (Netherlands) (100%)
          PLM Film Produzione SpA (Liq.) (Italy) (99.97%)*
Paramount Communications Holding Company (Delaware)
          International Overseas Film Services, Inc. (Delaware) (66.67%)
          International Overseas Productions, Inc. (California) (66.67%)
          Number One FSC Ltd. (US Virgin Islands) (100%)
          Paramount British Pictures Limited (United Kingdom) (100%)
          Paramount Communications B.V. (Netherlands) (100%)
                    Aros N.V. (Netherlands Antilles) (100%)
                    Cinematic Arts B.V. (Netherlands) (100%)
                    Compania Insular Tabacalera S.A. (Spain) (93.33%)*
                    Global Film Distributors B.V. (Netherlands) (100%)
                    Gulf & Western Intercontinental Investments N.V.
                      (Netherlands Antilles) (100%)
                    Gulf & Western International Finance N.V. (Netherlands
                      Antilles) (100%)
                    Gulf & Western International N.V. (Netherlands Antilles)
                      (100%)
                    International Film Productions (IFP) N.V. (Netherlands
                      Antilles) (50%)
                    Mars Film Produzione S.P.A. (Italy) (100%)
                    Monetas N.V. (Netherlands Antilles) (100%)
                    Overseas Services B.V. (Netherlands) (100%)
                    Paramount Film Production (Deutschland) GmbH (Germany)
                      (100%)
                    Tabaco Canario S.A. (Spain) (50%)
                    United Cinemas International Multiplex B.V. (Partnership)
                      (Netherlands) (49.02%)
          Paramount Pictures (U.K.) Limited (United Kingdom) (75%)*
          Paramount Television International Services, Ltd. (Bermuda) (100%)
          Paramount Television Limited (United Kingdom) (75%)*
                    Capital Equipment Leasing Limited ((United Kingdom) (100%)

<TABLE>
<S>                                                                   <C>          <C>       <C>  
                                                                      -------       -------  ------
 Net earnings ....................................................    $   .07        $ 1.31  $ 0.41
                                                                      -------       -------  ------
                           Zenith North Limited (United Kingdom) (100%)

------------------------

* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.


<PAGE>



          PCI Canada Inc. (Delaware) (100%)
                    Paramount Communications (Canada) Limited (Canada (Ontario))
                      (100%)
                    Paramount Productions, Inc. (Canada (Ontario)) (100%)
                              Famous Players International B.V. (Netherlands)
                                (100%)
                              Paramount Pictures Corporation (Canada), Inc.
                                (Canada (Ontario)) (100%)
                                        Paramount Canadian Productions, Inc.
                                          (Delaware) (100%)
Paramount Communications Realty Corporation (Delaware)
          Columbus Circle Films Inc. (Delaware) (100%)
                    Pet II Productions Inc. (Delaware) (100%)
Paramount-Immobiliare Inc. (Delaware)
          Paramount Studios, Inc. (California) (100%)
          WC Property Holdings, Inc. (Liq.) (California) (100%)
PCI'S Holdings Corporation (Delaware)
          Ages Entertainment Software, Inc. (Delaware) (100%)
                    Ages Electronics, Inc. (Delaware) (100%)
                    Congo Films Ltd. (United Kingdom) (99%)*
          Coronet Films, Inc. (New York) (100%)
          Paramount Pictures Corporation (Delaware) (100%)
                    5555 Communications Inc. (Delaware) (100%)
                    All Is Forgiven Productions (Partnership) (California) (50%)
                    America Today (Joint Venture) (California) (50%)
                    Desilu Productions, Inc. (Delaware) (100%)
                    Entertainment Tonight (Partnership) (California) (50%)
                    Forty-Fourth Century Corporation (Delaware) (100%)
                    Future General Corporation (Delaware) (100%)
                    Long Road Productions (Partnership) (Illinois) (75%)
                    MacGyver Productions (Partnership) (California) (50%)
                    Newdon Productions (Partnership) (Illinois) (76%)
                    One and Only Joint Venture, The (New York) (53.37%)
                    Paramount Americas Film Corporation (Delaware) (100%)
                    Paramount Home Video, Inc. (Delaware) (100%)
                    Paramount International Holding Company (Delaware) (100%)
                              Paramount Films B.V. (Netherlands) (100%)
                              Paramount Films of Australia Inc. (Delaware)
                                (100%)
                              Paramount Films of China, Inc. (Delaware) (100%)
                              Paramount Films of Egypt, Inc. (Delaware) (100%)
                              Paramount Films of India, Ltd. (Delaware) (100%)
                              Paramount Films of Italy, Inc. (New York) (100%)
                              Paramount Films of Lebanon, Inc. (New York) (100%)
                              Paramount Films of Pakistan Ltd. (New York) (100%)
                              Paramount Films of Southeast Asia Inc. (Delaware)
                                (100%)
                              Paramount Overseas Productions, Inc. (Delaware)
                                (100%)
                              Paramount Pictures (Australia) Pty. Limited
                                (Australia) (100%)

------------------------

* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.



<PAGE>

                              Paramount Pictures (Iran) Inc. (Liq.) (Delaware)
                                (100%)
                              Triohurst Limited (United Kingdom) (100%)
                              Worldwide Productions, Inc. (Delaware) (100%)
                    Paramount Production Support Inc. (Delaware) (100%)
                    Paramount Productions Service Corporation (Delaware) (100%)
                    Paramount Television Service, Inc. (Delaware) (100%)
                    PCI Network Partner Inc. (Delaware) (100%)
                    PPC Space Production (Partnership) (California) (50%)
                    Premier Advertiser Sales Inc. (Delaware) (100%)
                    Shirley Valentine Company Joint Venture, The (New York)
                      (50%)
                    Taking Advantage (Partnership) (California) (50%)
United Cinemas International Multiplex B.V. (Netherlands)
          Cinesa/UCI B.V. (Netherlands) (100%)
          United Cinemas International (Ireland) Limited (Ireland) (100%)
          United Cinemas International (Japan) K.K. (Japan) (99.5%)
          United Cinemas International (U.K.) Limited (United Kingdom) (99.995%)
                    Hollywood Express Limited (United Kingdom) (50%)*
                    UCI Developments (U.K.) Limited (United Kingdom) (50%)*
                    UCI Exhibition (U.K.) Limited (United Kingdom) (99.98%)*
          United Cinemas International Multiplex GmbH (Austria) (98%)
          United Cinemas International Multiplex GmbH (Germany) (100%)
                    CIC Video GmbH (Germany) (95%)
United International Pictures B.V. (Netherlands)
          UIP (U.K.) Limited (United Kingdom) (50%)
          UIP Danube International Services Ltd. (Hungary) (95%)
          UIP International Services B.V. (Netherlands) (100%)
          UIP Limited (United Kingdom) (50%)
          UIP Pay Television B.V. (Netherlands) (100%)
          Unicorn Services (Bermuda) (47.5%; 95% aggregate Viacom Inc.
            ownership)**
          United International Pictures (Trinidad & Tobago) (95%)
          United International Pictures (United Kingdom) (95%)
          United International Pictures (Far East) (Hong Kong) (95%)
          United International Pictures (Netherlands) B.V. (Netherlands) (100%)
          United International Pictures (NZ) (New Zealand) (95%)


------------------------

* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.

** Direct and/or indirect subsidiaries of Viacom Inc. in the aggregate own a 
majority (but less than 100%) of the outstanding stock of such subsidiary.


<PAGE>


          United International Pictures (Pay TV) B.V. (Netherlands) (99%)
                    Latin American Pay Television Service V.O.F. (Netherlands
                                Antilles) (37.5%)
                              LAPTV (N.A.) N.V. (Netherlands Antilles) (100%)
                              Latin American Pay Television Service C.V.
                                (Netherlands Antilles) (99%)*
                              Latin American Pay Television Service de Venezuela
                                C.A. (Venezuela) (100%)
                              Latin American Pay Television Service S.A. de C.V.
                                (Mexico) (100%)
          United International Pictures (Schweiz) GmbH (Switzerland) (94%)
          United International Pictures (South Africa) (South Africa) (95%)
                    UIP Distributions (Proprietary) Ltd. (South Africa) (50%)
          United International Pictures (U.K.) (United Kingdom) (95%)
          United International Pictures A.B. (Sweden) (95%)
          United International Pictures A/S (Norway) (95%)
          United International Pictures and Company SNC (Belgium) (95%)
          United International Pictures ApS (Denmark) (95%)
          United International Pictures Distribuidora de Filmes Limitada
            (Brazil) (95%)
          United International Pictures EPE (Greece) (95%)
          United International Pictures Filmcilik ve Ticaret Limited Sirketi
            (Turkey) (95%)
          United International Pictures GmbH (Germany) (95%)
                    UIP Filmverleih Gesellschaft mbH (Austria) (95%)
          United International Pictures Limitada (Colombia) (95%)
          United International Pictures Ltda. (Chile) (95%)
          United International Pictures of Colombia Inc. (Colombia (Delaware))
            (95%)
          United International Pictures of Panama Inc. (Panama (Delaware)) (95%)
          United International Pictures OY (Finland) (95%)
          United International Pictures Pay TV (Netherlands) B.V. (Liq.)
            (Netherlands (100%)
          United International Pictures PTE (Singapore) (95%)
          United International Pictures Pty. (Australia) (95%)
          United International Pictures S. de R.L. (Argentina) (95%)
          United International Pictures SARL (France) (95%)
          United International Pictures SRL (Italy) (95%)
          United International Pictures SRL (Peru) (95%)
          United International Pictures SRL (Venezuela) (95%)
                    C.A. Cinematografica Blancica (Venezuela) (50%)
          United International Pictures y Cia SRC (Spain) (95%)
Viacom International Inc. (Delaware)
          Film Intex Corporation (Delaware) (100%)
          Tele-Vu Ltee. (Canada (Federal)) (100%)
          Viacom A.G. (Switzerland) (100%)
          Viacom Canada Limited (Canada (Federal)) (100%)
          Viacom Enterprises Canada Ltd. (Canada (Federal)) (100%)

------------------------

* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.



<PAGE>


          Viacom First Run Limited (Delaware) (100%)
                    Our Home Productions Inc. (Delaware) (100%)
                    TV Scoop Inc. (Delaware) (100%)
                    VE Development Company (Delaware) (100%)
                    VE Drive Inc. (Delaware) (100%)
                    VE Television Inc. (Delaware) (100%)
                    Viacom First Run Development Company Inc. (Delaware) (100%)
                    VJK Inc. (Delaware) (100%)
          Viacom International Limited (United Kingdom) (100%)
          Viacom International Pty. Limited (Australia) (100%)
          Viacom Japan Inc. (New York) (85%)
          Viacom Pacific Limited (Vila, Vanuatu) (100%)
          Viacom Pictures Inc. (Delaware) (100%)
                    Viacom Pictures Development Company (Delaware) (100%)
                    Viacom Pictures Movie Music Inc. (Delaware) (100%)
                    Viacom Pictures Overseas Inc. (Delaware) (100%)
                    Viacom Pictures Songs Inc. (Delaware) (100%)
          Viacom Productions Inc. (Delaware) (100%)
                    Low Key Productions Inc. (Delaware) (100%)
                    Matlock Company, The (Delaware) (100%)
                    My Shadow Productions Inc. (Delaware) (100%)
                    PMV Productions Inc. (Delaware) (100%)
                    They Productions Inc. (Delaware (100%)
                    VP Programs Inc. (California) (100%)
          Viacom Video-Audio Communicacoes Limitada (Brazil) (100%)
          VSC Productions Inc. (New York) (100%)

Spelling Entertainment Group Inc. (Florida) (77%)
          Republic Entertainment Inc. (Delaware) (100%)
                    Republic Distribution Corporation (Delaware) (100%)
                    Proxy Music Corporation (California) (100%)
                    Creative Film, Inc. (Colorado) (100%)
                    Republic Pictures Entertainment Inc. (Delaware) (100%)
                    Compelling Music Corporation (California) (100%)
                    World Entertainment Corporation (New York) (100%)
                    Republic Pictures Enterprises (Delaware) (100%)
                    Republic Pictures Productions, Inc. (California) (100%)
                    Early Morning Madness Productions, Inc. (California) (100%)
                    Repix Inc. (Delaware) (100%)
                    Republic Direct Inc. (California) (100%)
                    Eagle Direct Inc. (Delaware) (100%)



<PAGE>


          Spelling Entertainment Inc. (Delaware) (100%)
                    Aaron Spelling Productions, Inc. (California) (100%)
                              A.S. Payroll Company (California) (100%)
                              Dynamic Soap, Inc. (California) (100%)
                              Preye, Inc. (California) (100%)
                              A.S.P. International, Inc. (Virgin Islands) (100%)
                    Laurel Entertainment, Inc. (Delaware) (100%)
                              Laurel Pictures, Inc. (Delaware) (100%)
                              Laurel Cinema Inc. (Delaware) (100%)
                              Laurel Film Inc. (Delaware) (100%)
                              Laurel-King Inc. (Delaware) (100%)
                              Laurel-T.V. Inc. (Delaware) (100%)
                    Spelling Films International Inc. (Delaware) (100%)
                    Torand Productions Inc. (Delaware) (100%)
                              90210 Productions, Inc. (California) (100%)
                              Branded Productions Inc. (California) (100%)
                              Melrose Productions Inc. (California) (100%)
                              Northshore Productions Inc. (California) (100%)
                              Spelling Television Inc. (Delaware) (100%)
                              Spelling Television (Canada) Inc. (Canada (British
                                Columbia)) (100%)
                              T & R Payroll Company (Delaware) (100%)
                              Torand Payroll Company (Delaware) (100%)
                    Worldvision Enterprises, Inc. (New York) (100%)
                              Evergreen Programs, Inc. (New York) (100%)
                                        Great American Entertainment Motion
                                          Pictures, Inc. (California) (100%)
                                        Great American Entertainment Television,
                                          Inc. (California) (100%)
                                        QM Productions, Inc. (California) (100%)
                                        QM Music Company (California) (100%)
                                        Quinn Martin Music Company (California)
                                          (100%)
                                        Sunn Classic Pictures Inc. (Utah) (100%)
                                        Titus Productions, Inc. (California)
                                          (100%)
                              Hamilton Projects, Inc. (New York) (100%)
                              Image Edit, Inc. (Delaware) (100%)
                              Worldvision Enterprises (United Kingdom), Ltd.
                                (New York) (100%)
                              Worldvision Enterprises of Canada, Limited (New
                                York) (100%)
                              Worldvision Home Video, Inc. (New York) (100%)
                              World Volleyball League, Inc. (New York) (100%)
                              Worldvision Television Programming, Inc.
                                (Delaware) (100%)
                              WV Productions, Inc. (Delaware) (100%)
                              Vision Productions, Inc. (New York) (100%)
                              Worldvision Enterprises of Australia, Pty., Ltd.
                                (Australia) (100%)
                              Worldvision Enterprises (France) S.A.R.L. (France)
                                (100%)



<PAGE>


                              Worldvision Enterprises, G.m.b.H. (Germany) (100%)
                              Worldvision Enterprises Latino-americana (Panama)
                                (100%)
                              Worldvision Enterprises de Venezuela (Venezuela)
                                (100%)
                              Worldvision Filmes do Brasil, Ltd. (Brazil) (100%)
                              Worldvision Foreign Sales Corporation (Virgin
                                Islands) (100%)
          Big Ticket Pictures Inc. (Delaware) (100%)
          Big Ticket Productions Inc. (Delaware) (100%)
          Big Ticket Television Inc. (Delaware) (100%)
          Granite Productions, Inc. (California) (100%)
          RH Productions Inc. (California) (100%)

New Media

PCI'S Holdings Corporation (Delaware)
          Paramount Communications Technology Group Inc. (Delaware) (100%)
Viacom International Inc. (Delaware)
          VNM Inc. (Delaware) (100%)

Theatres

Famous Players International B.V. (Netherlands)
          Films Paramount S.A. (France) (100%)
Maarten Investerings Partnership (New York)
          1020917 Ontario Inc. (Canada (Ontario)) (100%)
Paramount Communications (Canada) Limited (Canada (Ontario))
          Famous Players Investments B.V. (Netherlands) (100%)
          Gulf & Western Holdings Limited (Bahamas) (100%)
Paramount Communications Holding Company (Delaware)
          Cinema Dominicana S.A. (Dominican Republic) (100%)
Paramount Pictures (Canada) Inc. (Canada (Ontario))
          176309 Canada Inc. (Canada (Federal)) (100%)
          2853-5912 Quebec Inc. (Canada (Quebec)) (100%)
          Aetrax International Corporation (Delaware) (87.41%)*
                    Beta Theatres Inc. (Delaware) (100%)
                    Theatre 59 Ltd. (Delaware) (100%)
                              Centurion Satellite Broadcast Inc. (Delaware)
                                (100%)
                              Festival Inc. (Delaware) (100%)
          Famous Players Inc. (Canada (Federal)) (100%)
                    730995 Ontarion Inc. (Canada (Ontario)) (100%)
                    779991 Ontario Inc. (Canada (Ontario)) (100%)
                    Central Park Theatres Limited (Canada (Alberta)) (100%)
                    Majestic Theatres Limited (Canada (Alberta)) (100%)
                    Strand Theatre Limited (Canada (Saskatchewan)) (50%)

--------------------------
* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.



<PAGE>


                    Sudbury (Joint Venture) (Canada (Federal)) (66.7%)
                    Wilson Century Theatres Limited (Canada (Ontario)) (50%)

Cinema International B.V. (Netherlands) (49%)
          Biscondi Sdn Bhd (Malaysia) (95%)
          CIC Home Video GmbH (Switzerland) (95%)
                    CIC Video (Proprietary) Limited (South Africa) (100%)
          CIC Video (United Kingdom) (95%)
          CIC Video (Far East) Ltd. (Japan) (100%)
          CIC Video (Finland) OY (Finland) (95%)
          CIC Video (Hong Kong) Ltd. (Hong Kong) (95%)
          CIC Video (New Zealand) Ltd. (New Zealand) (95%)
          CIC Video Australia Pty. Ltd. (Australia) (95%)
                    CIC-Taft Video Pty. Ltd. (Australia) (66.67%)
          CIC Video B.V. (Netherlands) (95%)
          CIC Video International B.V. (Netherlands) (95%)
                    CIC Video (Denmark) I/S (Denmark) (95%)
                    CIC Video (Norway) ANS (Norway) (95%)
          CIC Video International U.K. (United Kingdom) (95%)
          CIC Video Limitada (Brazil) (94.99%)
          CIC Video SNC (France) (94.80%)
          CIC Video SRL (Italy) (95%)



<PAGE>

          CIC Video by CIA SRC (Spain) (94%; 95% aggregate Viacom Inc.
            ownership)**
          CIC-Victor Video, Limited K.K. (Japan) (75%)
          Cinema International (Germany) B.V. (Netherlands) (95%)
          Cinema International Corporation (1991) SDN (Malaysia) (95%)
          Cinema International Corporation (Scandinavia) AB (Sweden) (95%)
          Cinema International Corporation Pty. (Australia) (95%)
          UIP-CIC Film & Video Distribution Company (South Korea) (50%)*
Cinema International Corporation N.V. (Netherlands) (49%)
          CIC International B.V. (Netherlands) (90%; 95% aggregate Viacom Inc.
            ownership)**
          CIC Television B.V. (Netherlands) (95%)*
          CIC Theatres B.V. (Netherlands) (100%)
          Cinema International Corporation (Sao Jorge) y Cia (Portugal) (99%)
          Cinema International Corporation (U.K.) (United Kingdom) (95%)
                    CIC Film Properties (United Kingdom) (100%)
                              Empire-Ritz (Leicester Square) (United Kingdom)
                                (95%)
                    CIC Theatre Group (United Kingdom) (100%)
                              Plaza Theatre Company, The (United Kingdom) (95%)
          Cinema International Corporation Distribuidora de Filmes Limitada
            (Brazil) (99.54%)
          Cinema International Corporation GmbH (Schweiz) (Switzerland) (95%)
          Cinema International Corporation Limitada Suiza (Uruguay Branch) Liq.
            (Uruguay) (95%)
          Cinema International Corporation (Dominicana) S.A. (Dominican
            Republic) (95%)
                    UIP-Coblan SA (Dominican Republic) (50%)
                    United International Pictures (SDN) (Malaysia) (95%)
          Cinema International Corporation y Cia SC (Panama) (99%)
          Concordia Films B.V. (Netherlands) (97.14%)
          Essential Cinemas B.V. (Netherlands) (100%)
          Film Properties International B.V. (Netherlands) (100%)
          Gemini International B.V. (Netherlands) (100%)
                    Cinema International Corporation (Dominicana) S.A.
                      (Dominican Republic) (95%)
                    Cinema International Corporation SARL (Lebanon) (90%; 95%
                      aggregate Viacom Inc. ownership)**
          United International Pictures S. de R.L. (Mexico) (95%)
          Uranus Productions France S.A.R.L. (France) (100%)
            Cinesa/UCI B.V. (Spain) (100%)
          Cinesa - Compania de Iniciativas y Espectaculos, S.A. (Spain) (67.30%;
            99.70% aggregate Viacom Inc. ownership)**
                                        Immobiliaria y Espectaculos, S.A.
                                          (Spain) (100%)
                                        Rey Soria y Compania, S.L. (Spain)
                                          (100%)
                                        Uro, S.A. (Spain) (100%)

Music Publishing

PCI'S Holdings Corporation
          Famous Music Corporation (Delaware) (100%)
                    Addax Music Co., Inc. (Delaware) (100%)
                    Desilu Music Corp. (New York) (50%)
                    Ensign Music Corporation (Delaware) (100%)
                              Bruin Music Company (Delaware) (100%)
                    Para-Sac Music Corporation (Delaware) (100%)
                    Paramount Music Corporation (Delaware) (100%)
                    Paramount-Roy Rogers Music Co., Inc. (New York) (50%)
                    Scarab Publishing Corporation (Delaware) (100%)
Viacom International Inc. (Delaware)
          VSC Compositions (New York) (100%)
          VSC Music Inc. (New York) (100%)
          VSC Productions Inc. (New York) (100%)

--------------------------

** Direct and/or indirect subsidiaries of Viacom Inc. in the aggregate own a 
majority (but less than 100%) of the outstanding stock of such subsidiary.


* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.



<PAGE>

Entertainment Miscellaneous

PCI'S Holdings Corporation (Delaware)
          Paramount Communications Merchandising and Licensing Corporation
            (Delaware) (100%)

VIDEO AND MUSIC

101 Properties Corporation (Florida)
AHV Holding Corporation (Delaware)
          Atlantic Home Video, GP (Delaware) (100%)
Blockbuster Airship Holding Corporation (Delaware)
          Blockbuster Airships, Inc. (Delaware) (100%)
Blockbuster Amusement Holding Corporation (Delaware)
          Blockbuster Adventures, Inc. (Delaware) (100%)
          Blockbuster Discovery Investment Inc. (Delaware) (100%)
          Blockbuster Fun & Fitness Holding Corp. (Delaware) (100%)
                    Blockbuster Family Fun, Inc. (Delaware) (100%)
Blockbuster Entertainment Inc. (Delaware)
          200 S. Andrews, Inc. (Delaware) (100%)
          Atlantic Associates, Inc. (Delaware) (100%)
          Blockbuster Amphitheater Corporation (Delaware) (100%)
                    Charlotte Amphitheater Corporation (Delaware) (100%)
                    The Westside Amphitheater Corp. (Arizona) (100%)
          Blockbuster Computer Systems Corporation (Florida) (100%)
          Blockbuster Technology Holding Corporation (Delaware) (100%)
                    New Leaf Entertainment Corporation (Delaware) (100%)
          Blockbuster UK Group Limited (United Kingdom) (100%)
                    Blockbuster Entertainment Corporation Limited (United
                       Kingdom) (100%)
                              Century Entertainment Ltd. (United Kingdom) (100%)
                    Cityvision plc (United Kingdom) (100%)
                              Cityvision Videotheken Ges. M.B.H. (Austria)
                                 (100%)
                              Video Store (Jersey) Limited (Channel Islands)
                                (100%)
                              Ritz Video Film Hire Limited (United Kingdom)
                                (100%)
                              Tredegars Home Entertainment Limited (United
                                 Kingdom) (100%)
                              Video Club (G.B.) Limited (United Kingdom) (100%)
          Blockbuster Video Acquisition Corp. (Delaware) (100%)
                    Southeastern Home Video, Inc. (Delaware) (100%)
          Blockbuster Video Distribution, Inc. (Delaware) (100%)
          Blockbuster Videos, Inc. (Texas) (100%)
                    Houston Video Management Inc. (Texas) (100%)
          Family Entertainment Centers, Inc. (Florida) (100%)
          FLC Holding Corporation (Florida) (100%)
          Montgomery Acquisition, Inc. (Texas) (100%)



<PAGE>

Blockbuster Music Holding Corporation (Delaware)
          Blockbuster Music Corporation (Delaware) (100%)
          Blockbuster Music Retail, Inc. (Texas) (100%)
          BVJV Corporation (Delaware) (100%)
                    Blockbuster Virgin Partnership, a DE Gen'l Ptnshp.
                       (Delaware) (75%)
                    Blockbuster Virgin Partnership USA, a DE Gen'l Ptnshp.
                       (Delaware) (75%)    
             Show Industries, Inc. (California) (100%)
          Virgin Blockbuster Ltd. (UK) (United Kingdom) (50%)
          Virgin Retail Australia Pty Ltd. (Australia) (50%)
                    Virgin Retail Delaware II Inc. (Delaware) (50%)
Blockbuster Park Holding Corporation (Delaware)
          Blockbuster Park, Inc. (Delaware) (100%)
          Blockbuster Park Lands, Inc. (Florida) (100%)
Blockbuster Pictures Holding Corporation (Delaware)
          Blockbuster Productions Corporation (Delaware) (100%)
          New River Entertainment Corporation (Delaware) (100%)
          SEGI Holding Corp. (Delaware) (100%)
Blockbuster Promotions Inc. (Delaware)
Blockbuster SC Holding Corporation (Delaware)
          Blockbuster SC Music Corporation (Delaware) (100%)
          Blockbuster SC Video Holding Corporation
                    Blockbuster SC Video Operating Corporation (Delaware) (100%)
                    TS Video, Inc. (Louisiana) (100%)
Blockbuster Video Canada Inc. (Canada (Ontario))
          Extra Provincial Registration - New Brunswick (Canada (Ontario))
            (100%)
          Extra Provincial Registration - British Columbia (Canada (Ontario))
            (100%)
          Extra Provincial Registration - Manitoba (Canada (Ontario)) (100%)
          Extra Provincial Registration - Quebec (Canada (Ontario)) (100%)
          Extra Provincial Registration - Saskatchewan (Canada (Ontario)) (100%)
          Extra Provincial Registration - Nova Scotia (Canada (Ontario)) (100%)
          Extra Provincial Registration - Newfoundland (Canada (Ontario)) (100%)
          Extra Provincial Registration - Prince Edward Island (Canada
            (Ontario)) (100%)
Blockbuster Video International Corporation (Delaware)
          Blockbuster Australia Pty Ltd. (Australia) (100%)
                    Blockbuster Video Superstores (Australia) Pty Limited
                      (Australia) (100%)
          Blockbuster Japan Ltd. (Japan) (50%)
          Blockbuster Video Deutschland GmbH (Germany) (100%)
          Blockbuster Video de Mexico S. de R.L. (Mexico) (100%)
          Blockbuster Video Italy, Inc. (Delaware) (100%)
Erol's Inc. (Delaware) (100%)
Houston Video Venture, Inc. (Florida) (100%)
Major Video Corp. (Nevada) (100%)
          Major Video National Advertising Council Corporation (Non-Profit)
(Nevada) (100%)
          Major Video Super Stores, Inc. (Nevada) (100%)





<PAGE>

M.R.E. Enterprises, Inc. (Florida) (100%)
UIV Acquisition Corporation (Delaware) (100%)
          UI Video Stores, Inc. (Colorado) (100%)
Blockbuster Amusement Corporation (Delaware) (100%)
Blockbuster Entertainment Corporation (Delaware) (100%)
Blockbuster Music U.S. Corporation (Delaware) (100%)
Blockbuster Music International Corporation (Delaware) (100%)
Blockbuster Video U.S. Corporation (Delaware) (100%)
Blockbuster Videos, Inc. Trademark Registration (Australia) (100%)
Focus Video Pty Ltd. (Australia) (100%)

Theme Parks

1020917 Ontario Inc. (Canada (Ontario))
          Paramount Canada's Wonderland Inc. (Canada (Ontario)) (100%)
                    809623 Ontarion Inc. (Canada (Ontario)) (100%)
CPW Investments Ltd., L.P. (Delaware)
          Kings Island Company (Delaware) (99%)*
                    KIC Investments Inc. (Delaware) (100%)
                    Western Row Properties, Inc. (Ohio) (100%)
          Maarten Investerings Partnership (New York) (98.0222%)*
Nine W Inc. (Delaware)
          CPW Holdings Inc. (Delaware) (100%)
Paramount Communications Realty Corporation (Delaware)
          Paramount Parks Inc. (Delaware) (100%)

PUBLISHING

Ginn Publishing Canada Inc. (Canada (Federal))
          GLC Publishers Limited (Canada (Ontario)) (100%)
          Ginn Publishing (Canada) Limited (Canada (Federal)) (100%)
Paramount Communications Acquisition Corporation (Delaware)
          Prentice-Hall, Inc. (Delaware) (100%)
                    Appleton & Lange, Inc. (Delaware) (100%)
                    Arco Publishing, Inc. (Delaware) (100%)
                    Brady Communications Company, Inc. (District of Columbia)
                      (100%)
                    Center for Applied Research in Education, Inc., The
                      (Delaware) (100%)
                    Computer Curriculum Corporation (Delaware) (100%)
                    Direct Response Associates, Inc. (Connecticut) (100%)
                    EBF Liquidating Company, Inc. (District of Columbia) (100%)
                    Electronic Publishing, Inc. (New York) (100%)
                    Executive Reports Corporation (New Jersey) (100%)
                    Executive Tax Reports, Inc. (New York) (100%)

--------------------------
* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.


<PAGE>

                    Greenvale Editorial Services, Inc. (New York) (100%)
                    Institute for Business Planning, Inc. (New York) (100%)
                    International Bureau of Software Test, Inc. (Delaware)
                      (100%)
                    Katled Liquidating Inc. (Delaware) (100%)
                    Living Color Financial Displays, Inc. (Florida) (100%)
                    Macmillan, Inc. (Delaware) (100%)
                              Jossey-Bass, Inc., Publishers (California) (100%)
                              Macmillan College Publishing Company, Inc.
                      (Delaware) (100%)
                    Master Data Center, Inc. (Michigan) (100%)
                    Notgnirrab Inc. (California) (100%)
                    Parker Publishing Company, Inc. (New York) (100%)
                    Pren-Hall Corporation, The (New York) (100%)
                    Prentice-Hall Developmental Learning Centers, Inc. (New
                       Jersey) (100%)
                    Prentice-Hall Hispanoamericana, S.A. (Mexico) (85%)
                    Prentice-Hall International, Inc. (New York) (100%)
                              Editora Prentice-Hall do Brazil Ltda. (Brazil)
                                (50%)
                              Paramount Publishing Europe B.V. (Netherlands)
                                (100%)
                                        Paramount Publishing Deutschland GmbH
                                           (Germany) (100%)
                                           Paramount Publishing
                                             Nederland B.V. (Netherlands) (100%)
                                   Prentice-Hall (China) Pte. Limited (Hong 
                                       Kong) (100%)
                              Prentice-Hall (M) Sdn Bhd (Malaysia) (100%)
                              Prentice-Hall Canada Inc. (Canada (Ontario))
                                 (100%)
                                        Ginn Publishing Canada Inc. (Canada
                                          (Ontario)) (100%)
                    Prentice-Hall Learning Systems, Inc. (Delaware) (100%)
                    Prentice-Hall of Australia Pty. Limited (Australia) (100%)
                              Brookvale Developments No. 1 Pty. Limited
                                  (Australia (NSW)) (100%)
                                    Brookvale Developments No. 2 Pty. Limited 
                                        (Australia (NSW)) (100%)
                             Simon & Schuster (Australia) Pty., Limited 
                                 (Australia) (100%)
                    Prentice Hall of Japan, Inc. (Japan) (100%)
                    Prentice-Hall Professional Software, Inc. (Delaware) (100%)
                              Manac-Prentice Hall Software, Inc. (Delaware)
                                 (100%)
                    Reston Publishing Co., Inc. (Delaware) (100%)
                              Reston Information Systems, Inc. (Pennsylvania)
                                (100%)
                    Robert J. Brady Co. (Maryland) (100%)
                    Simon & Schuster (Asia) Pte. Ltd. (Singapore) (100%)
                    Warren Schloat Productions, Inc. (New York) (100%)



<PAGE>


Paramount Communications Holding Company (Delaware)
          International Book Distributors Limited (United Kingdom) (100%)
                    Ellis Horwood Limited (United Kingdom) (100%)
                    Harvester Press Limited, The (United Kingdom) (100%)
                    Prentice-Hall International (U.K.) Ltd. (United Kingdom)
                      (100%)
                    Simon & Schuster Limited (United Kingdom) (100%)
                    Wheatsheaf Books Limited (United Kingdom) (100%)
                    Woodhead-Faulkner (Publishers) Limited (United Kingdom)
                      (100%)
                              Fitzwilliam Publishing Limited (United Kingdom)
                                (100%)
          Publishing FSC Ltd. (US Virgin Islands) (100%)
PCI'S Holdings Corporation (Delaware)
          Esquire Films, Inc. (Delaware) (100%)
          Globe Fearon Inc. (California) (100%)
          Simon & Schuster, Inc. (New York) (100%)
                    A-R Acquisition Corp. (Delaware) (100%)
                              Regents Publishing Co., Inc. (New York) (65%)*
                                        Japan Regents Publishing Company Inc.
                                          (Japan) (100%)
                    Green Tiger Press, Inc. (California) (100%)
                    H.M. Gousha Company, The (California) (100%)
                    IMR Acquisition Corp. (Delaware) (100%)
                    J.K. Lasser, Inc. (Delaware) (100%)
                    Latin American Press, Inc. (Liq.) (New York) (100%)
                    Plaza Publishing Corporation (Liq.) (Delaware) (100%)
                    Pocket Books of Canada, Ltd. (Canada (Federal)) (100%)
                    Pocket Books, Inc. (Liq.) (Delaware) (100%)
                    Silver Burdett Ginn Inc. (Delaware) (100%)
                              American Teaching Aids, Inc. (California) (100%)
                    Simon & Schuster Enterprises, Inc. (Delaware) (100%)
                    Simon & Schuster of Canada (1976) Ltd. (Canada (Federal))
                      (100%)
                    Summit Books, Inc. (Liq.) (Delaware) (100%)
                    Total Warehouse Services Corporation (Delaware) (100%)
                    Washington Square Press, Inc. (Liq.) (New York) (100%)
                    Young Reader's Press, Inc. (Delaware) (100%)

CABLE TELEVISION

Viacom International Inc. (Delaware)
          Tele-Vue Systems, Inc. (Washington) (100%)
                    Broadview Television Company (Washington) (100%)
                    Cable TV of Marin, Inc. (California) (100%)
                    Cable TV of Puget Sound, Inc. (Washington) (100%)
                    Channel 3 Everett, Inc. (Washington) (100%)
                    Clear View Cable Systems, Inc. (California) (100%)

--------------------------
* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.



<PAGE>

                    Com-Cable TV, Inc. (Delaware) (100%)
                              H-C-G Cablevision, Inc. (California) (100%)
                              Viacom Cablevision Inc. (California) (100%)
                    Community Telecable of Bellevue, Inc. (Washington) (100%)
                    Community Telecable of Seattle, Inc. (Washington) (100%)
                    Contra Costa Cable Co. (Washington) (100%)
                    Crockett Cable System, Inc. (California) (100%)
                    Everett Cablevision, Inc. (Washington) (100%)
                    Far-West Communications, Inc. (Oregon) (100%)
                    Marin Cable Television, Inc. (California) (100%)
                    Television Signal Corporation (California) (100%)
                    United Community Antenna System, Inc. (Washington) (100%)
                              Vista Television Cable, Inc. (Washington) (100%)
                    Viacom Bay Area Sports Inc. (Delaware) (100%)
                    Viacom Bay Interconnect Inc. (California) (100%)
                    Viacom Cablevision of Dayton Inc. (Delaware) (100%)
                    Viacom Cablevision of Northern California Inc. (California)
                      (100%)
                    VSC Cable Inc. (Delaware) (100%)

MISCELLANEOUS

Future General Corporation (Delaware) (100%)
          Magicam, Inc. (Delaware) (83.5%)
Gulf & Western Holdings Limited (Bahamas) (100%)
          Gulf & Western Limited (Bahamas) (100%)
Gulf & Western International N.V. (Netherlands Antilles)
Viacom International Inc. (Delaware)
          Broadcast Leasing Inc. (Delaware) (100%)
          CPW Investments Ltd., L.P. (Delaware) (98%)*
          Glendale Property Corp. (Delaware) (100%)
          LT Holdings Inc. (Delaware) (100%)
          PCI'S Holdings Corporation (Delaware) (100%)
                    Energy Development Associates, Inc. (Delaware) (100%)
                    Fifty-Sixth Century Antrim Iron Company, Inc. (Delaware)
                      (100%)
                    G & W Leasing Company (Delaware) (100%)
                    G & W Natural Resources Company, Inc. (Delaware) (100%)
                              Kilo Mining Corporation (Pennsylvania) (100%)
                              New Jersey Zinc Exploration Company, The
                                (Delaware) (100%)
                                        Casmo Mining, Ltd. (Canada (B.C.)) (95%)
                                        New Jersey Zinc Exploration Company
                                          (Canada) Ltd. (Canada (Federal)) 
                                            (100%)

--------------------------
* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.


<PAGE>


                              Quemahoning Coal Processing Company (Pennsylvania)
                                (100%)
                              Saucon Valley Iron and Railroad Company, The
                                (Pennsylvania) (100%)
                              Solar Service Company (Delaware) (100%)
                              Trans-American Resources, Inc. (Delaware) (100%)
                    Gloucester Titanium Company, Inc. (Delaware) (100%)
                    Gulf & Western Casket Corporation (Delaware) (100%)
                    Gulf & Western Indonesia, Inc. (Delaware) (100%)
                    Merritt Inc. (Delaware) (100%)
                    Nine W Inc. (Delaware) (100%)
                    Paramount Communications Acquisition Corporation (Delaware)
                      (100%)
                    Paramount Communications Holding Company (Delaware) (100%)
                              EWB Corporation (Delaware) (100%)
                              Gulf & Western International Holdings B.V.
                                (Netherlands) (100%)
                              Gulf & Western Overseas, B.V. (Liq.) (Netherlands)
                                (100%)
                                        Bonney Forge International Ltd. (Liq.)
                                          (Scotland) (100%)
                                        C.I.P.G. (No. 3) (Liq.) (United Kingdom)
                                           (100%)
                                        C.I.P.G. (No. 5) (Liq.) (United Kingdom)
                                           (100%)
                                        Gilwise Ray Materials (U.K.) Co. (Liq.)
                                           (United Kingdom) (100%)
                                        Gracemark Ltd. (Liq.) (United Kingdom)
                                          (100%)
                                        Gulf & Western do Brazil Industria e
                                           Comercio Limitada (Brazil)
                                              (69%)*
                                        Gulf & Western Group Limited (Liq.)
                                           (United Kingdom) (100%)
                                        Gulf & Western Limited (Liq.) (United
                                           Kingdom) (100%)
                                        Paramount Communications Limited (United
                                           Kingdom) (100%)
                                        Stockfast Limited (Liq.) (United
                                           Kingdom) (100%)
                                        Widewell Ltd. (Liq.) (United Kingdom)
                                           (100%)
                              International Raw Materials Limited (Bahamas)
                                           (100%)
                                        Abaco Farms, Limited (Bahamas) (100%)
                                        Belhaven Limited (Bahamas) (100%)
                              Katled Systems Inc. (Delaware) (99.9%)*
                                        Katled Systems GmbH (Liq.) (Germany)
                                          (100%)
                    Paramount Communications Realty Corporation (Delaware)
                                          (100%)
                              Paramount Communications Properties Inc.
                                          (Delaware) (100%)
                              Paramount-Immobiliare Inc. (Delaware) (100%)
                              Premier House, Inc. (Delaware) (100%)
                              Special Effects Merchandise, Inc. (Delaware)
                                  (100%)
                              Third Century Company (Delaware) (100%)
                              TRF III Entertainment, Inc. (Delaware) (100%)

--------------------------
* The balance of such subsidiary's outstanding stock is owned by one or more 
direct and/or indirect subsidiaries of Viacom Inc.


<PAGE>


                              Wilshire Court Productions, Inc. (Delaware) (100%)
                                        Direct Court Productions, Inc.
                                           (Delaware) (100%)
                                        Park Court Productions, Inc. (Delaware)
                                          (100%)
                                        Talent Court Productions, Inc.
                                           (Delaware) (100%)
                              Woburn Insurance Ltd. (Bermuda) (100%)
                    PCCGW Company, Inc. (Delaware) (99%)*
                    Scott Mattson Farms, Inc. (Florida) (100%)
                    Taylor Forge Memphis, Inc. (Delaware) (100%)
                    Thirteenth Century Corporation (Delaware) (100%)
                    Thirtieth Century Corporation (Delaware) (100%)
                              Manac Development Corporation (Delaware) (100%)
                    Universal American Corporation (Delaware) (100%)
          Shootward Limited (United Kingdom) (100%)
          Soakcroft Limited (United Kingdom) (100%)
          Viacom Capital Ownership Inc. (Delaware) (100%)
          Viacom International Inc. Political Action Committee Corporation (New
             York) (100%)
          Viacom K-Band Inc. (Delaware) (100%)
          Viacom MGS Services Inc. (Delaware) (100%)
          Viacom Shopping Inc. (Delaware) (100%)
          Viacom Telecom Inc. (Delaware) (100%)
          Viacom Telecommunications (D.C.) Inc. (Delaware) (100%)
          Viacom World Wide Ltd. (New York) (100%)


----------------------
* The balance of such subsidiary's outstanding stock is owned by one or more
direct and/or indirect subsidiaries of Viacom Inc.



</TABLE>







Consent of Independent Accountants


We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-3 (No. 33-59356
and No. 33-55785) of Viacom Inc. and Viacom International Inc. and Form S-8 
(No. 33-41394, No. 33-56088, No. 33-55173, and No. 33-55709) of Viacom Inc., 
of our reports dated February 10, 1995, which appear on pages II-14 and F-2 of 
this Form 10-K.



PRICE WATERHOUSE LLP

New York, New York
March 31, 1995






                                                                      Exhibit 24


                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  Sumner M. Redstone
                                                 -----------------------
                                                 Sumner M. Redstone

<PAGE>


                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,

with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  George S. Abrams
                                                 -----------------------
                                                 George S. Abrams


<PAGE>

                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  Steven R. Berrard
                                                 -----------------------
                                                 Steven R. Berrard



<PAGE>
                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  William C. Ferguson
                                                 -------------------------
                                                 William C. Ferguson


<PAGE>

                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  H. Wayne Huizenga
                                                 -----------------------
                                                 H. Wayne Huizenga


<PAGE>

                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  George D. Johnson, Jr.
                                                 ----------------------------
                                                 George D. Johnson, Jr.


<PAGE>

                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  Ken Miller
                                                 -----------------------
                                                 Ken Miller


<PAGE>

                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  Brent D. Redstone
                                                 -----------------------
                                                 Brent D. Redstone


<PAGE>

                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas her true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for her and in her name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as she might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  Shari Redstone
                                                 -----------------------
                                                 Shari Redstone


<PAGE>

                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/  Frederic V. Salerno
                                                 -------------------------
                                                 Frederic V. Salerno


<PAGE>


                                   VIACOM INC.
                                        
                                Power of Attorney
                                        

          KNOW ALL MEN BY THESE PRESENTS that the undersigned director of VIACOM
INC., a Delaware corporation (the "Company"), hereby constitutes and appoints
Philippe Dauman and Michael Fricklas his true lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994 (and any amendments
thereto); granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he might or could do in
person hereby ratifying and confirming all that the said attorney-in-fact and
agent, shall do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, I have hereunto signed my name this 23rd day of
March, 1995.



                                                 /s/ William Schwartz
                                                 -----------------------
                                                 William Schwartz






<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000,000
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1994
<PERIOD-END>                               DEC-31-1994
<CASH>                                             598
<SECURITIES>                                         0
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</TABLE>