SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 1-9553
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VIACOM INC.
(Exact Name Of Registrant As Specified In Its Charter)
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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
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Securities Registered Pursuant to Section 12(B) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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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
6.625% Senior Notes due 1998 New York Stock Exchange
6.75% Senior Notes due 2003 American Stock Exchange
7.75% Senior Notes due 2005 American Stock Exchange
8% Exchangeable Subordinated Debentures due 2006 American Stock Exchange
7.625% Senior Debentures due 2016 American 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 22, 1996, 75,099,274 shares of Viacom Inc. Class A Common
Stock, $0.01 par value ("Class A Common Stock"), and 294,853,114 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 $40.875 per share as reported by the American
Stock Exchange on that date) held by non-affiliates was approximately
$1,207,943,150 and the aggregate market value of the shares of the Class B
Common Stock (based upon the closing price of $41.75 per share as reported by
the American Stock Exchange on that date) held by non-affiliates was
approximately $10,366,032,214.
DOCUMENTS INCORPORATED BY REFERENCE
The Definitive Proxy of the Registrant for the 1996 Annual Meeting of
Shareholders (Part III to the extent described herein).
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 stations and 12 radio stations. Through
the Entertainment segment, which includes PARAMOUNT PICTURES(R) and the
Company's approximately 75%-owned subsidiary SPELLING ENTERTAINMENT GROUP INC.
("SPELLING"), 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(R),
the Company is the leading worldwide owner, operator and franchiser 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 and one water park 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 1.2 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"). During July 1995,
the Company announced an agreement to split-off its cable systems to its
shareholders through a "dutch auction" exchange offer and the subsequent
investment in and acquisition of all of the common stock of such entity by a
subsidiary of Tele-Communications, Inc. immediately following the split-off. The
exchange offer and related transactions are subject to several conditions,
including regulatory approvals, receipt of a tax ruling and consummation of the
exchange offer. The Company is currently exploring the sale of SPELLING and the
related purchase of SPELLING's subsidiary, VIRGIN INTERACTIVE ENTERTAINMENT
LIMITED ("VIRGIN INTERACTIVE"). 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, 1996, National Amusements, Inc. ("NAI"), a closely held
corporation that owns and operates more than 1,000 movie screens in the U.S. and
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the U.K., owned approximately 61% of the Company's voting Class A Common Stock
("Class A Common Stock"), and approximately 25% 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 and
Chief Executive Officer 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, 1995, the Company and
its affiliated companies employed approximately 81,700 people, of which
approximately 36,500 were full-time salaried employees.
Business
Networks and Broadcasting
Networks. The Company owns and operates advertiser-supported basic cable
television program services and premium subscription television program services
in the U.S. and internationally. The MTV Networks division ("MTVN") includes
such owned and operated program services as MTV: MUSIC TELEVISION(R) ("MTV") in
the U.S., MTV(TM) in Europe ("MTV EUROPE") and in Latin America ("MTV LATINO"),
NICKELODEON(R), NICK AT NITE(R), VH1 MUSIC FIRST(TM) (in the U.S., "VH1"), and
VH-1(TM) in the U.K., as well as program services in which MTVN participates as
a joint venturer, including MTV(TM) in ASIA ("MTV ASIA"), NICKELODEON(TM) and
THE PARAMOUNT CHANNEL(TM) in the U.K., NICKELODEON(TM) in Australia
("NICKELODEON AUSTRALIA"), and NICKELODEON(TM) and VH-1(TM) in Germany. Showtime
Networks Inc. ("SNI") owns and operates SHOWTIME(R), THE MOVIE CHANNEL(TM) and
FLIX(TM), and participates as a joint venturer in SUNDANCE CHANNEL(TM), a
premium subscription television program service which launched on February 29,
1996. Additionally, the Company participates as a joint venturer in four
advertiser-supported basic cable program services: 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). The Company also packages
satellite-delivered program services for distribution to TVRO subscribers in the
U.S. through SHOWTIME SATELLITE NETWORKS(TM).
Generally, the Company's Networks are offered to customers of cable
television operators, distributors of direct-to-home satellite services ("DTH")
and other multichannel distributors. DTH distributors provide service by either
low-powered C-Band satellite technology (received by large satellite dishes at
customers' premises, "TVRO") or mid-to high-powered K-Band satellite technology
(received by smaller satellite dishes at customers' premises, "DBS") (TVRO and
DBS, together, "DTH"). Cable television operators are currently the predominant
distributors of the Company's Networks in the U.S. Internationally, the
predominant distribution technology varies territory by territory.
MTV Networks. MTV targets viewers from the ages of 12 to 34 with
programming that consists primarily of music videos and concerts, augmented by
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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, and on-air personalities, and use of the local language.
MTV has expanded its business opportunities based on its programming to
include, among other enterprises, MTV ONLINE(TM) which provides promotional
opportunities for MTV and its programming; the MTV RADIO NETWORK(TM), which MTV
licenses to Westwood One Entertainment for syndication in the U.S. and which
features exclusive concert simulcasts, music information and MTV shows; 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 business unit. The first two motion pictures produced
through MTV Productions are to be released in 1996, JOE'S APARTMENT(TM) which is
based on MTV programming and is to be released through Geffen Pictures/Warner
Bros., and a film featuring MTV's Beavis & Butt-Head characters to be released
through PARAMOUNT PICTURES. MTV has joined with POCKET BOOKS(TM), a division of
SIMON & SCHUSTER, in a venture under which books are published under an MTV
BOOKS imprint for the youth market. MTV has reintroduced its "Choose or Lose"
political awareness campaign for the 1996 presidential election, consisting of
news specials, interviews with the candidates and weekly coverage of the primary
season, designed to educate and inform young viewers about the political
process.
MTV was licensed to approximately 59.6 million domestic subscribers at
December 31, 1995 (based on subscriber counts provided by each distributor of
the service). According to the December 1995 sample reports issued by the A.C.
Nielsen Company (the "Nielsen Report"), MTV reached approximately 63.2 million
domestic subscriber households.
MTV EUROPE is designed to particularly attract the European youth market
by providing a high percentage of European-sourced youth programming, featuring
music videos, and including coverage of fashion, movies, news, trends and social
issues. MTV EUROPE is distributed in Europe and certain countries in the former
Soviet Union and the Middle East. Based on subscriber counts provided by
distributors of the service, MTV EUROPE reached approximately 51.5 million
subscribers at December 31, 1995. In 1995, MTV encrypted its service in Europe
in order to maximize subscription revenues.
MTV LATINO is customized for Spanish-speaking viewers in approximately
20 countries in Latin America and in the U.S. MTV LATINO was distributed to
approximately 6.5 million subscribers, including 668,000 U.S. subscribers at
December 31, 1995 (based on subscriber counts provided by each distributor of
the service).
MTV ASIA is operated by a joint venture of the Company and PolyGram Asia
L.L.C., which was launched in the second quarter of 1995, and reached
approximately 29.5 million subscribers throughout Asia at December 31, 1995
(based on subscriber counts provided by each distributor of the service). MTV
ASIA consists of two separate satellite feeds, one primarily in Mandarin, the
other primarily in English.
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MTVN has licensing arrangements covering the distribution of
regionally-specific program services in Brazil and Japan. MTVN also licenses MTV
programs, merchandise and format rights worldwide. The Company has also entered
into a joint venture agreement for the development and launch of DTH programming
packages anticipated to be available in the Middle East in April 1996, including
programming from MTV, VH-1, NICKELODEON, THE PARAMOUNT CHANNEL (described
below), and a new premium subscription movie-based program service managed by
SNI called THE MOVIE CHANNEL, among other services.
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.(TM), a program block designed for 2 to 5 year olds),
features live-action, animation and original children's game shows; and NICK AT
NITE, which primarily attracts audiences 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, 1995, NICKELODEON/NICK AT NITE was
licensed to approximately 61.7 million domestic subscribers (based on subscriber
counts provided by each distributor of the service). According to the Nielsen
Report, NICKELODEON and NICK AT NITE each reached approximately 65 million
subscriber households. In 1996, the Company plans to launch NICK AT NITE'S TV
LAND(TM), a 24-hour, seven-days-a-week program service comprised of a broad
range of well-known television programs from various genres. Upon launch, NICK
AT NITE'S TV LAND will feature a wide range of genres including comedies,
dramas, westerns, variety and other formats from the 1950s through the 1980s
while NICK AT NITE programs will remain primarily comedies. NICKELODEON conducts
its brand and character licensing programs in the U.S. and international markets
by entering into merchandising agreements throughout the world. Additionally,
the Company publishes a monthly NICKELODEON MAGAZINE, which had approximately
481,000 subscribers at December 31, 1995; launched NICKELODEON ONLINE(TM) which
offers original content for children including live events, games and
videoclips; launched NICK AT NITE ONLINE(TM), an online resource regarding
classic television and pop culture; and created NICKELODEON MOVIES(TM), a new
unit, which is developing a mix of story and character-driven projects based on
original ideas and NICKELODEON programming, including the upcoming feature film,
HARRIET THE SPY(TM), which is being co-produced with PARAMOUNT PICTURES and is
expected to be released in 1996.
NICKELODEON in the U.K. is a joint venture of the Company and British
Sky Broadcasting Limited ("BSkyB") and is a 13-hour weekday and 12-hour weekend,
satellite-delivered children's television program service. On November 1, 1995,
PARAMOUNT PICTURES and NICKELODEON, in a joint venture with BSkyB, launched THE
PARAMOUNT CHANNEL in the U.K., which features comedies, dramas, light
documentaries and films during the daypart following the NICKELODEON in the
U.K. program segment. NICKELODEON in Australia is operated by a joint venture of
the Company and XYZ Entertainment Pty Ltd. (which is owned by Foxtel, Century
Communications Corp. and United International Holdings Inc.) and is a
subscription television program service which launched in October 1995.
NICKELODEON in Germany, which launched in July 1995, is a joint venture of the
Company, The Bear Stearns Companies Inc. ("Bear Stearns") and Ravensburger Film
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& TV GmbH. This joint venture has required the receipt of certain regulatory
approvals. The international NICKELODEON services deliver children's programming
which generally includes U.S. NICKELODEON programming, acquired programming
(including locally produced programs) and original programming produced by
NICKELODEON and the applicable joint venture.
VH1 presents music videos, long-form music-based series and specials,
original concerts, music-based news and information, artist interviews and
fashion, and targets an audience from the ages of 25 to 44. At December 31,
1995, VH1 was licensed to approximately 51 million domestic subscribers (based
on subscriber counts provided by each distributor of the service). According to
the Nielsen Report, VH1 reached approximately 53.2 million domestic subscriber
households. In 1995, VH1 launched VH1 ONLINE(TM) giving viewers the opportunity
to go behind the scenes at VH1 special events, chat with VH1 artists and learn
more about VH1 programming. VH-1 in the U.K. was launched in September 1994 and
was distributed to approximately 4.3 million viewers in the U.K. and Ireland as
of December 31, 1995 (based on subscriber counts provided by each distributor of
the service). VH-1 in Germany, launched in March 1995, is a joint venture of the
Company and Bear Stearns. This joint venture has required the receipt of certain
regulatory approvals.
MTVN, in exchange for cash and advertising time or for promotional
consideration only, licenses from record companies music videos for exhibition
on MTV, VH1 and other MTVN program services. The agreements generally provide
for a license period of three to five years, and in the U.S., that videos are
available for debut by MTVN and are subject to exclusive exhibition periods on
MTV. MTVN has entered into multi-year global music video licensing agreements
with certain record companies. MTVN also has shorter term and regional clip
licensing arrangements with other record companies. MTVN is negotiating and
expects to conclude additional license agreements with independent labels and
additional global music video license agreements with major international
labels. However, there can be no assurance that such agreements can be concluded
on favorable terms. MTVN is continuing to take measures to assure access to
music videos worldwide. (See "Business--Competition--Networks")
MTVN derives revenues principally from two sources: the sale of time on
its own networks to advertisers and the license of the networks to cable
television operators, DTH 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. (See "Business--Competition--Networks")
Showtime Networks Inc. SNI operates three commercial-free, premium
subscription television program services: SHOWTIME, offering recently released
theatrical feature films, drama and comedy series, boxing events, and original
movies; THE MOVIE CHANNEL, offering recently released theatrical films and
related programming including film festivals; and FLIX, an added-value program
service featuring theatrical movies primarily from the 1960s, 70s and 80s. At
December 31, 1995, SHOWTIME, THE MOVIE CHANNEL and FLIX, in the aggregate, had
approximately 14.8 million cable and other subscribers in 50 states and certain
U.S. territories. SUNDANCE CHANNEL, a joint venture among SNI, an affiliate of
Robert Redford and an affiliate of PolyGram Filmed Entertainment Distribution
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Inc., which is managed and operated by SNI, launched on February 29, 1996.
SUNDANCE CHANNEL is a commercial-free 24-hour, seven-days-a-week premium
subscription service, dedicated to independent film, featuring top-quality
American independent films, documentaries, foreign and classic art films, shorts
and animation, with an emphasis on recently released premium titles. The Company
has also entered into a joint venture agreement for the development and launch
of DTH programming packages anticipated to be available in the Middle East in
April 1996, including a new premium subscription movie-based program service
called THE MOVIE CHANNEL, which is managed by SNI, and programming from MTV
EUROPE, VH-1, NICKELODEON and THE PARAMOUNT CHANNEL, among other services.
SNI also provides special events, such as sports events, to licensees on
a pay-per-view basis. In March 1995, SNI entered into an exclusive multi-year
agreement with former heavyweight champion Mike Tyson and Don King Productions,
Inc. for SHOWTIME EVENT TELEVISION's pay-per-view marketing and distribution of
Mike Tyson's fights over three years. SHOWTIME EVENT TELEVISION(TM) is a
pay-per-view distributor of special events, including boxing events. In
addition, SNI, through its subsidiary, SHOWTIME SATELLITE NETWORKS INC.,
packages for distribution to TVRO viewers 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 cover the U.S. and may, on a contract-by-contract basis, cover additional
territories. In addition to SNI's other theatrical motion picture license
agreements, SNI recently entered into agreements with PolyGram Filmed
Entertainment Distribution Inc. under which SNI will acquire the exclusive U.S.
premium television rights to up to 100 of PolyGram's feature titles initially
theatrically released in the U.S. through the year 2001; with PARAMOUNT PICTURES
to acquire the exclusive U.S. premium television rights to up to 196 of
PARAMOUNT PICTURES' feature films, commencing with feature films initially
theatrically released in the U.S. in 1998 for a minimum seven-year period, as
well as 300 titles from its film library (see "Business--Entertainment"); and
with Phoenix Pictures, a new feature film production and distribution company
headed by Mike Medavoy, to acquire the exclusive U.S. premium television rights
to up to 40 of Phoenix Pictures' films initially theatrically released in the
U.S. through the end of 2002, and to acquire an approximate 11% equity
investment in Phoenix Pictures. 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 in the U.S. on SHOWTIME, unless they are previously
theatrically released. Such programming is also exploited in various media
worldwide. As part of its original programming strategy, SNI intends to produce
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or acquire approximately 50 SHOWTIME original movies in 1996. SNI has entered
into and plans to continue to enter into co-financing, co-production and/or
distribution arrangements with other parties to reduce the net cost to SNI for
all of its original movies.
The cost of acquiring premium television rights to programming is the
principal expense of SNI. At December 31, 1995, in addition to program
acquisition commitments reflected in the Company's financial statements, SNI had
commitments to acquire programming rights and original programming commitments
in an aggregate amount of approximately $2 billion, most of which is payable
over the next six years as part of SNI's normal programming expenditures. SNI's
commitments to acquire programming rights 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.
Other Joint Ventures. USA Networks, a joint venture of the Company and
MCA, Inc. ("MCA"), operates two advertiser-supported basic cable television
program services in the U.S.: USA NETWORK, a general entertainment and sports
channel, and the SCI-FI CHANNEL, a science fiction channel. Internationally, USA
Networks operates USA NETWORK in Latin America and the SCI-FI CHANNEL in Europe.
COMEDY CENTRAL, a joint venture of the Company and Home Box Office ("HBO"), a
division of Time Warner, is an advertiser-supported basic cable television
comedy program service. ALL NEWS CHANNEL, a joint venture 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.
Broadcasting. The Company owns and operates 12 television stations and
12 radio stations. All of these television and radio stations operate pursuant
to the Communications Act of 1934, as amended (the "Communications Act"), and
licenses granted by the Federal Communications Commission ("FCC"). Under the
Telecommunications Act of 1996 (the "1996 Telecommunications Act") which was
signed into law on February 8, 1996 and, upon its implementation by the FCC,
licenses will be renewable every eight years. Until such implementation,
licenses 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 major U.S. markets to the extent advantageous in conjunction with
the Company's formation of the United Paramount Network(TM) ("UPN") (see
"Business--Entertainment"). The Company acquired WUPA-TV (formerly WVEU-TV),
serving Atlanta, Georgia, on September 1, 1995; WPSG-TV (formerly WGBS-TV),
serving Philadelphia, Pennsylvania, on August 25, 1995; WBFS-TV, serving
Miami-Fort Lauderdale, Florida, on August 3, 1995; and WSBK-TV, serving Boston,
Massachusetts, on March 7, 1995. The Company sold KSLA-TV, a CBS affiliated
station serving Shreveport, Louisiana, on September 1, 1995; WTXF-TV, a Fox
Network affiliated station serving Philadelphia, Pennsylvania, on August 25,
1995; KRRT-TV, a Fox Network affiliated station serving San Antonio, Texas, on
August 3, 1995; and WLFL-TV, a Fox affiliated station serving Raleigh/Durham,
North Carolina, on January 17, 1995. The table below sets forth a list of the 12
television properties owned and operated by the Company at March 1, 1996.
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Network Affiliation and
Station and Market Expiration Date of
Metropolitan Area Served* Rank Type Affiliation Agreement
- ------------------------- ------ ---- -----------------------
WPSG-TV
Philadelphia, PA 4 UHF UPN/January 16, 1998
WSBK-TV
Boston, MA 6 UHF UPN/January 16, 1998
WDCA-TV
Washington, DC 7 UHF UPN/January 16, 1998
KTXA-TV
Dallas-Ft. Worth, TX 8 UHF UPN/January 16, 1998
WKBD-TV
Detroit, MI 9 UHF UPN/January 16, 1998
WUPA-TV
Atlanta, GA 10 UHF UPN/January 16, 1998
KTXH-TV
Houston, TX 11 UHF UPN/January 16, 1998
WBFS-TV
Miami-Ft. Lauderdale, FL 16 UHF UPN/January 16, 1998
KMOV-TV
St. Louis, MO 20 VHF CBS/December 31, 1996
WVIT-TV
Hartford-New Haven, CT 26 UHF NBC/February 1, 2002
WNYT-TV
Albany-Schenectady-Troy, NY 52 VHF NBC/February 1, 2002
WHEC-TV
Rochester, NY 71 VHF NBC/February 1, 2002
*Metropolitan Areas Served are A.C. Nielsen Company's Designated Market Areas
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 WBZS-AM (Business News),
each serving Washington, D.C.; KBSG-AM/FM, serving Seattle/Tacoma, Washington
(Oldies); and KNDD-FM, serving Seattle, Washington (Modern Rock). 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--Broadcasting"). The Company has
requested a temporary waiver of this obligation from the FCC until such time
as the FCC completes its pending review of local ownership limitations.
Depending on the outcome of that review, the Company may request a permanent
waiver of this undertaking. In March 1996, the Company entered into agreements
which will result in the exchange of KBSG-AM/FM and KNDD-FM for WAXQ-FM, serving
New York, New York. On March 22, 1995, the Company sold KSOL-FM, serving San
Francisco, California, and KYLZ-FM, serving Santa Cruz/San Jose, California.
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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, 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 distributed
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. The normal distribution cycle of motion
pictures produced or acquired for distribution by PARAMOUNT PICTURES is
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 1995,
PARAMOUNT PICTURES theatrically released 14 feature motion pictures in the U.S.,
including, BRAVEHEART, winner of five Academy Awards including "Best Picture",
CONGO, CLUELESS, THE BRADY BUNCH MOVIE and SABRINA. PARAMOUNT PICTURES plans to
release approximately 20 films in 1996, including MISSION: IMPOSSIBLE, STAR TREK
GENERATIONS II, THE GHOST AND THE DARKNESS, PRIMAL FEAR, BEAVIS AND BUTT-HEAD
and HARRIET THE SPY, which is being co-produced with NICKELODEON.
In seeking to maximize PARAMOUNT PICTURES' output while limiting its
financial exposure, the Company has from time to time entered into agreements to
distribute films produced and/or financed, in whole or in part, with 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 a term of no less than 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.
PARAMOUNT PICTURES generally 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, generally 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 U.S. premium subscription television, which
includes new PARAMOUNT PICTURES motion pictures released theatrically through
December 1997. PARAMOUNT PICTURES has licensed to SNI for exhibition on SHOWTIME
and THE MOVIE CHANNEL the exclusive U.S. premium subscription television rights
to up to 196 of PARAMOUNT PICTURES' feature films, commencing with feature films
initially theatrically released in the U.S. in 1998 for a minimum seven-year
period, as well as 300 titles from its film library. PARAMOUNT PICTURES also
distributes its motion pictures for premium subscription television release
9
outside the U.S. and Canada, in part through UIP, and licenses its motion
pictures to home and hotel/motel pay-per-view, airlines, schools and
universities. In addition, PARAMOUNT PICTURES is a joint venture partner in HBO
Pacific Partners C.V., Latin American Pay Television Service, VOF, Telecine
Programacao de Filmes Ltda., Pay-TV Movies Australia and Star Channel, which are
premium television services in Asia, Spanish-speaking Latin America, Brazil,
Australia and Japan, respectively. UIP and United Cinemas International ("UCI",
as described below) are the subject of governmental inquiries by the Commission
of the European Community ("EC").
In addition to premium subscription television, most motion pictures are
also licensed for exhibition on broadcast and basic cable television, with fees
generally collected in installments. All of the above license fees for
television exhibition (including international and U.S. 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, 1995, the
unrecognized revenues attributable to such licensing of completed films from
PARAMOUNT PICTURES' license agreements were approximately $639.3 million.
PARAMOUNT PICTURES has approximately 900 motion pictures in its library.
Television Production and Syndication. The Company also produces,
acquires and distributes series, miniseries, specials and made-for-television
movies primarily for network television, first-run syndication, and basic cable
television. As a result of the Blockbuster Merger, the Company now owns
approximately 75% of SPELLING, which includes SPELLING TELEVISION(TM), REPUBLIC
PICTURES(TM) and WORLDVISION ENTERPRISES(TM) ("WORLDVISION"). The Company is
currently exploring the sale of SPELLING and the related purchase of SPELLING's
subsidiary, VIRGIN INTERACTIVE(TM).
The Company's current network programming includes FRASIER(R),
WINGS(TM), ALMOST PERFECT(TM), THE HOME COURT(TM), LEEZA(TM), SISTER,
SISTER(TM), JAG(TM), DIAGNOSIS MURDER(TM) and GOOD COMPANY(TM), and through
SPELLING, BEVERLY HILLS, 90210(TM), MELROSE PLACE(TM), MALIBU SHORES(TM) and
SAVANNAH(TM). 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
typically 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 and/or distributes original television programming
for first-run syndication which it sells 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. The Company's
first-run syndicated programming includes such shows as STAR TREK: DEEP SPACE
NINE(R), ENTERTAINMENT TONIGHT(R), HARD COPY(R), SIGHTINGS(R), THE MAURY POVICH
SHOW(R), THE MONTEL WILLIAMS SHOW(TM) and beginning in 1996, REAL TV(TM) and
10
VIPER. In early 1995, PARAMOUNT PICTURES entered into an agreement with The
Procter & Gamble Company ("P&G") pursuant to which P&G will co-finance certain
network and first-run syndicated programming produced by PARAMOUNT PICTURES
during the three year term of the agreement. Later in 1995, PARAMOUNT PICTURES
and P&G announced a strategic alliance with NBC to develop and produce programs
for network series, first-run syndication and international distribution,
pursuant to which NBC has been granted specific "first-look" rights and has
agreed to multiple series commitments.
The Company produces original programming, including STAR TREK:
VOYAGER(R) and THE SENTINEL(TM), for UPN. UPN launched on January 16, 1995 in
approximately 96 U.S. television markets, providing its affiliates a two-hour
prime-time programming block two nights a week. At December 31, 1995, UPN had
affiliates in approximately 151 U.S. television markets. On March 6, 1996, UPN
added an additional night of two hours of prime-time 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 its television programming to basic cable
program services such as USA NETWORK. On November 1, 1995, PARAMOUNT PICTURES
and NICKELODEON, in a joint venture with BSkyB, launched THE PARAMOUNT CHANNEL
in the U.K., which features comedies, dramas, light documentaries and films
during the daypart following the NICKELODEON in the U.K. program segment.
PARAMOUNT PICTURES is also a joint venture partner in TV1 Australia, a basic
cable channel in Australia.
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 distribution fee, recoupment of
distribution expenses and recoupment of any advance payments.
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, 1995, the unrecognized
revenues attributable to television program license agreements were
approximately $502.7 million.
Theatrical Exhibition. The Company's movie theater operations consist
primarily of FAMOUS PLAYERS(R) in Canada, UCI and FILMS PARAMOUNT(TM) in Europe,
and CINAMERICA(TM) in the Western U.S. UCI, a 50%-owned joint venture of
11
entities associated with the Company and MCA, operates theaters in the U.K.,
Ireland, Germany, Austria and Spain. CINAMERICA, a 50%-owned joint venture of
entities associated with the Company and Time Warner Inc., includes MANN(TM) and
FESTIVAL(TM) Theaters, and operates 371 screens in 66 theaters in California,
Colorado, Arizona and Alaska.
New Media and Interactive Services. VIACOM INTERACTIVE MEDIA(TM) is
comprised of VIACOM NEW MEDIA(TM) and VIACOM INTERACTIVE SERVICES(TM). VIACOM
NEW MEDIA develops and publishes interactive entertainment software for personal
computers and video game consoles on a wide variety of platforms. VIACOM NEW
MEDIA derives its content from brands and franchises developed by the Company's
business units, including MTV NETWORKS and PARAMOUNT TELEVISION, and also
secures outside licenses and original titles. In 1995, VIACOM NEW MEDIA released
11 titles, some of which were released for multiple platforms; the titles
represent 23 stock keeping units ("sku's"; a title in each platform is a
distinct sku). VIACOM INTERACTIVE SERVICES collaborates with the Company's
various business units to develop their respective on-line and interactive
television environments. In 1995, PARAMOUNT DIGITAL ENTERTAINMENT(TM) was formed
to exploit various PARAMOUNT-owned and other properties on-line, and this unit
entered into an agreement with The Microsoft Network to establish STAR TREK(R)
and ENTERTAINMENT TONIGHT(TM) sites on Microsoft Corporation's on-line service
in 1996. VIRGIN INTERACTIVE, a subsidiary of SPELLING, develops and publishes
interactive entertainment software for personal computers and video game
consoles on a wide variety of platforms, and distributes products in
approximately 30 countries. The Company is currently exploring the purchase of
VIRGIN INTERACTIVE and the related sale of SPELLING. In 1995, VIRGIN INTERACTIVE
released 41 titles, including THE 11th HOUR: THE SEQUEL TO THE 7TH GUEST,
COMMAND & CONQUER, and AGILE WARRIOR: F-111, some of which were released for
multiple platforms. These 1995 titles represent 50 sku's.
Video and Music/Theme Parks
The Company operates in the home video retailing and rental business and
music retailing business through its BLOCKBUSTER ENTERTAINMENT GROUP
("BLOCKBUSTER").
Home Video Retailing. BLOCKBUSTER is the leading worldwide owner,
operator and franchiser 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. BLOCKBUSTER
offers titles primarily for rental and also offers titles for purchase on a
"sell-thru" basis (See "Business--Competition--Video").
At December 31, 1995, there were 4,513 BLOCKBUSTER VIDEO stores
operating worldwide; 3,180 BLOCKBUSTER VIDEO stores were operating in all 50
U.S. states, 2,537 of which were owned by the Company and 643 of which were
owned by franchisees; and 1,333 BLOCKBUSTER VIDEO stores were operating in 18
foreign markets, 1,117 of which were owned by the Company, 85 were owned by
various joint ventures in which the Company is a partner and 131 of which were
12
owned by franchisees. At December 31, 1995, 576 of the Company's stores located
in the United Kingdom were operated under the "BLOCKBUSTER VIDEO EXPRESS"(TM)
trade name.
During 1995, the Company entered into eight new foreign markets and
acquired equity interests in certain foreign franchisees. Franchises to develop,
own and operate BLOCKBUSTER VIDEO stores were granted in Colombia, Ecuador, El
Salvador, Panama, Peru, Portugal and Thailand. In addition, the Company entered
into a joint venture to develop, own and operate BLOCKBUSTER VIDEO stores in
Germany. The Company also increased its participation in three previously
franchised foreign markets during 1995. The Company acquired a 71% interest in
its franchisee in Mexico, a 51% interest in its franchisee in Argentina and a
51% interest in a newly formed joint venture with its franchisee in Spain. The
Company also entered into agreements pursuant to which it will manage the
development and operation of BLOCKBUSTER VIDEO stores in such markets. As a
result, as of December 31, 1995, 81 of the 107 BLOCKBUSTER VIDEO stores located
in Mexico, all 22 BLOCKBUSTER VIDEO stores located in Argentina and all 17
BLOCKBUSTER VIDEO stores located in Spain were managed by the Company. The 26
BLOCKBUSTER VIDEO stores located in Mexico not managed by the Company were
managed by joint venture partners of the Company's franchisee in Mexico.
The Company's home video business may be affected by a variety of
factors, including but not limited to, general economic trends in the movie and
home video industries including the quality of new release titles available for
rental and sale, acquisitions made by the Company, existing and additional
competition, marketing programs, weather, special or unusual events, changes in
technology, variations in the number of store openings 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"(TM) trade name, BLOCKBUSTER is among the largest specialty retailers of
prerecorded music in the U.S. At December 31, 1995, BLOCKBUSTER owned
and operated 516 BLOCKBUSTER MUSIC stores in 34 states in the U.S. and six
BLOCKBUSTER MUSIC stores in Australia. During 1995, the Company restructured its
music retail joint ventures with Virgin Retail Group, Ltd. which owned and
operated Virgin Megastores in the U.S., Europe and Australia. As a
result of the restructuring of these joint ventures, BLOCKBUSTER acquired the
four stores developed by the Australian joint venture (which were all converted
to BLOCKBUSTER MUSIC stores during 1995) and retained a 19.9% interest in the
European joint venture, which operated 20 Virgin Megastores at December 31,
1995. BLOCKBUSTER no longer owns any interest in the Virgin Megastores located
in the U.S.
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, marketing programs, changes in technology, and similar
factors that may affect retailers in general. The Company's music business is
13
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, owns and operates
five regional theme parks and one water park in the U.S. and Canada: PARAMOUNT'S
CAROWINDS(R), in Charlotte, North Carolina; PARAMOUNT'S GREAT AMERICA(TM), in
Santa Clara, California; PARAMOUNT'S KINGS DOMINION(TM) located near Richmond,
Virginia; PARAMOUNT'S KINGS ISLAND(TM) located near Cincinnati, Ohio; and
PARAMOUNT CANADA'S WONDERLAND(R) located near Toronto, Ontario. In May 1995,
PARAMOUNT PARKS purchased RAGING WATERS(TM), the San Francisco Bay Area's
premier water theme park located in San Jose, California. Each of the theme
parks features attractions based on intellectual properties of the Company.
Substantially all of the theme parks' operating income is generated from May
through September. PARAMOUNT PARKS and Las Vegas Hilton Corporation expect to
launch STAR TREK: THE EXPERIENCE(TM) at the Las Vegas Hilton, a
futuristic-themed, interactive environment in early 1997.
Other Entertainment. At December 31, 1995, the Company held an equity
interest of approximately 49% of the outstanding common stock of Discovery Zone,
Inc. ("Discovery Zone"). Discovery Zone(R) owns, operates and franchises large
indoor recreational spaces known as FunCenters, and operates Leaps and Bounds
indoor entertainment and fitness facilities. On March 25, 1996, Discovery Zone
filed a voluntary petition with the U.S. Bankruptcy Court for the District of
Delaware for protection from its creditors under Chapter 11 of the U.S.
Bankruptcy Code.
Publishing
The Company, through the SIMON & SCHUSTER family of companies, publishes
and distributes hardcover and paperback books, interactive CD-ROM products,
audio books, educational textbooks and supplemental educational materials,
multimedia curricula, and information and reference materials for businesses and
professionals. SIMON & SCHUSTER also publishes and distributes certain of its
content on the Internet and commercial on-line services. 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, PRENTICE HALL, THE FREE PRESS(TM), POCKET BOOKS,
MACMILLAN PUBLISHING USA, SCRIBNER(R), QUE(R), SILVER BURDETT GINN(R), MODERN
CURRICULUM(TM), ALLYN & BACON(R), COMPUTER CURRICULUM CORPORATION(TM) and
EDUCATIONAL MANAGEMENT GROUP(TM), among others. Additionally, SIMON & SCHUSTER
develops special imprints and publishes titles based on MTV, NICKELODEON and
PARAMOUNT PICTURES products. 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 groups 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, GLOBE FEARON(TM), MODERN CURRICULUM and
ALLYN & BACON, among others. In February 1995, Simon & Schuster acquired all of
14
the outstanding stock of EDUCATIONAL MANAGEMENT GROUP, INC.(TM), an interactive
educational company that develops and distributes customized instructional
materials and live interactive television program services to schools and
reaches more than one million students in approximately 3,800 schools. COMPUTER
CURRICULUM CORPORATION(TM), a subsidiary of SIMON & SCHUSTER, delivers
multimedia coursework to approximately 1.5 million students in approximately
8,000 schools in five countries. The educational marketplace is subject to
seasonal fluctuations in its business which correlate to the traditional school
year. SIMON & SCHUSTER sales to elementary and secondary schools are dependent,
in part, on the "adoption" or selection of instructional materials by designated
state agencies. Twenty-two states and some localities limit the textbooks that
may be purchased with state funds to those books that have been approved by the
adoption authorities.
Consumer Publishing. The Consumer group publishes and distributes
hardcover, trade paperback, mass-market books, audio books and interactive
products under imprints including SIMON & SCHUSTER, POCKET BOOKS, SCRIBNER, THE
FREE PRESS, SIMON & SCHUSTER TRADE PAPERBACK(TM), which includes FIRESIDE(R),
TOUCHSTONE(R), SCRIBNER PAPERBACK FICTION(TM) and SIMON & SCHUSTER LIBROS EN
ESPANOL(TM), as well as SIMON & SCHUSTER CHILDREN'S PUBLISHING(TM), which
includes ALADDIN PAPERBACKS(TM), ATHENEUM BOOKS FOR YOUNG READERS(TM), LITTLE
SIMON(R), MARGARET K. McELDERRY BOOKS(TM), NICK JR.(TM) and SIMON & SCHUSTER
BOOKS FOR YOUNG READERS(TM). Titles released in 1995 included "Remember Me" and
"The Lottery Winner" (Mary Higgins Clark), "All That Glitters" and "Hidden
Jewel" (V.C. Andrews), "The Children's Book of Virtues" (William J. Bennett) and
"The Christmas Box" (Richard Paul Evans). SIMON & SCHUSTER AUDIO(TM) is the
world's largest publisher of audio books. In 1995, the Consumer Group created
SIMON & SCHUSTER INTERACTIVE, which published 11 titles in 1995 and has 25
CD-ROM titles scheduled for publication in 1996. The consumer marketplace is
subject to increased periods of demand in the summer months and during the
end-of-year holiday season. In March 1995, SIMON & SCHUSTER acquired an
approximately 20% ownership stake in Byron Preiss MultiMedia Corporation, a
leading interactive software developer. SIMON & SCHUSTER ONLINE(TM), formed in
January 1996, will publish original content on the Internet and commercial
on-line services.
Business and Professional Publishing. Through a wide variety of
imprints, SIMON & SCHUSTER publishes a full range of business, professional
training, and medical and healthcare information products, including books,
newsletters, journals, seminars, videos, loose-leaf series and multimedia
programs, and operates seminars. Operating units include THE NEW YORK INSTITUTE
OF FINANCE(TM), APPLETON & LANGE(R), JOSSEY-BASS(TM), THE BUREAU OF BUSINESS
PRACTICE(TM), AND PRENTICE HALL DIRECT(TM).
Reference Publishing. 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 COMPUTER PUBLISHING USA(TM) (QUE(R), SAMS(R),
HAYDEN BOOKS(TM), NEW RIDERS(TM), SAMS.NET(TM), BRADY GAMES(TM) and QUE
EDUCATION & TRAINING(TM)), MACMILLAN REFERENCE USA(TM) (ARCO(TM), BETTY
CROCKER(R), BURPEE(TM), FROMMER'S(TM) TRAVEL GUIDE, HARRAP'S BILINGUAL
15
DICTIONARIES(TM), HOWELL BOOK HOUSE(TM), MONARCH(R) NOTES, J.K. LASSER(TM), THE
PLACES RATED(R) ALMANAC, THE UNOFFICIAL GUIDES(TM), WEBSTER'S NEW WORLD(R),
WEIGHT WATCHERS(R), ALPHA(TM), MACMILLAN BOOKS(TM), MACMILLAN COOKING AND
GARDENING(TM), MACMILLAN SPECTRUM(TM), THORNDIKE(R), SCHIRMER BOOKS(TM), CHARLES
SCRIBNER SONS(R) REFERENCE, G.K. HALL(TM), MACMILLAN TRAVEL(TM) and MACMILLAN
DIGITAL USA(TM)) and MACMILLAN ONLINE USA(TM), the online presence for MACMILLAN
PUBLISHING both on the Internet and commercial online services such as
CompuServe and America Online. In July 1995, the Company acquired ZIFF-DAVIS
PRESS(TM), the book publishing operation of Ziff-Davis Publishing Company, which
will publish approximately 65 titles in 1996. In January 1996, the Company
acquired the WAITE GROUP, INC.(R), which publishes titles on computer
programming languages and emerging technologies.
International Publishing. The Company distributes its English language
books originally published in the U.S. worldwide. The Company also expects to
publish approximately 1,200 books in 10 languages and 34 countries outside North
America in 1996, primarily in the areas of academic, computer, English language
training, and professional publishing. The publishing includes local language
translation and adaptation of U.S. product and indigenous publishing. SIMON &
SCHUSTER also maintains co-publishing partnerships in approximately 14
countries, such as Japan (Toppan and Impress) and the People's Republic of
China, where the operations include distribution of U.S. products. In January
1994, the Company acquired German computer book publisher MARKT & TECHNIK(TM),
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, 1995, the Company, through Viacom
Cable Television ("Viacom Cable"), was approximately the 12th largest multiple
cable television system operator in the U.S. with approximately 1.2 million
subscribers. During July 1995, the Company announced an agreement to split-off
its cable systems to its shareholders through a "dutch auction" exchange offer
and the subsequent investment in and acquisition of all of the common stock of
such entity by a subsidiary of Tele-Communications, Inc. immediately following
the split-off. The exchange offer and related transactions are subject to
several conditions, including receipt of a tax ruling and consummation of the
exchange offer. 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 is subject to rate regulation by
local franchise authorities and consists generally of local and distant
broadcast stations, and all public, educational and governmental ("PEG")
channels as may be required by the local franchise authorities; and the
"Satellite Value Package," which, until March 31, 1999, is subject to rate
regulation by the FCC and which provides additional channels of
satellite-delivered cable networks, including the Company's own basic program
services and joint venture services, as well as third-party services. Fees for
these two levels of service constitute the major source of the systems' revenue.
In addition, Viacom Cable offers a third tier of non-premium service which
qualifies as a non-regulated "new product tier" in the following systems:
16
Nashville, TN; Dayton, OH; Pittsburg, CA; Petaluma, CA; Livermore, CA; Puget
Sound South, WA; and most of Puget Sound North/Central, WA. Each such tier
consists of either five or six channels of advertiser-supported cable networks.
The Communications Act precludes rate regulation wherever a cable system
faces "effective competition". None of Viacom Cable's systems is presently
subject to "effective competition" and therefore none of such systems is exempt
from such regulation. Pursuant to the 1996 Telecommunications Act, which amends
the Communications Act, regulation of the Satellite Value Package will cease as
of March 31, 1999 (even in the absence of "effective competition"). Regulation
of rates for Limited Service will end only when any cable system becomes subject
to "effective competition". The 1996 Telecommunications Act adds a new
"effective competition" test to the three already included in the Communications
Act. The new test finds effective competition in areas where a local telephone
company, its affiliate, or a multichannel video programming distributor using
the facilities of the telephone company or its affiliate -- irrespective of the
number of subscribers to the service -- offers programming to subscribers by any
means (other than DTH) in the franchise area of the cable system, provided that
the programming so offered is "comparable" to the programming provided by the
cable operator in that area. 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 program services, to its customers for
an additional monthly fee of up to $12.95 per premium service. At December 31,
1995, the Company's cable television systems had approximately 921,000
subscriptions to premium subscription television program services.
Viacom Cable earns revenues from sources in addition to subscriber fees.
In all of its markets, revenues are generated from advertising sales as well as
from commissions on the sales of products on home shopping services offered by
Viacom Cable to its customers. Viacom also derives revenues, in three of its
markets, from the lease of certain fiber optic capacity to partnerships engaged
in competitive access telephone services. Viacom Cable has equity interests in
each of these partnerships.
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 the installation of fiber optic cable and the capacity to engage
in 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: 1991: $45 million; 1992: $55 million; 1993: $79
million; 1994: $100 million; and 1995: $119 million. The Company expects that
Viacom Cable's capital expenditures in 1996 will be approximately $150 million.
17
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 22.6% equity interest on a
combined basis), other interactive programs with VIACOM INTERACTIVE MEDIA,
multiplexed services, experimental interactive video and data services and
access to on-line computer services and the Internet through a PC-cable modem.
In January 1996, the Castro Valley system began testing full telephone service
over the cable system.
18
Viacom Cable
As of December 31, 1995
- --------------------------------------------------------------------------------
Approximate
Approximate Homes Homes Number of
in Franchise Area Passed by Primary Primary Premium Premium Miles of
(1) Cable (2) Customers(3) Penetration(4) Units(5) Penetration(6) Cable Distribution
Bay Area Region
Marin(7) 81,000 77,800 63,000 81% 38,600 61% 648
Sonoma(7) 48,000 45,700 36,100 79% 23,600 65% 542
Napa 33,000 32,700 24,100 74% 16,500 68% 323
East Bay/Castro
Valley(7) 90,000 88,700 74,700 84% 68,300 91% 691
Pittsburg/Pinole(7) 74,000 73,900 55,500 75% 55,800 101% 572
San Francisco 358,000 339,500 178,500 53% 148,700 83% 711
--------- --------- --------- -- ------- --- ------
Total Bay Area Region 684,000 658,300 431,900 66% 351,500 81% 3,487
Ore-Cal Region
Redding(7) 58,000 55,800 36,600 66% 21,500 59% 682
Oroville 44,000 40,100 26,500 66% 13,000 49% 504
Salem 79,000 76,200 47,800 63% 29,600 62% 632
--------- --------- --------- -- ------- --- ------
Total Ore-Cal Region 181,000 172,100 110,900 64% 64,100 58% 1,818
Puget Sound Region(7) 645,000 624,400 438,100 70% 302,100 69% 6,410
Midwest Region
Nashville(7) 271,000 240,700 146,300 61% 143,800 98% 2,357
Dayton(7) 98,000 94,100 52,300 56% 59,600 114% 635
--------- --------- --------- -- ------- --- ------
Total Midwest Region 369,000 334,800 198,600 59% 203,400 102% 2,992
Total Viacom Cable 1,879,000 1,789,600 1,179,500 66% 921,100 78% 14,707
========= ========= ========= === ======= === ======
(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 trunk 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.
19
Intellectual Property
It is the Company's practice to protect 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), the MTV: MUSIC
TELEVISION(R) family of marks, THE MOVIE CHANNEL(TM), NICK AT NITE(R) and the
NICKELODEON(R) family of marks, NICK AT NITE'S TV LAND(TM), the PARAMOUNT(R)
family of marks, POCKET BOOKS(TM), SIMON & SCHUSTER(R), SHOWTIME(R), the STAR
TREK(R) family of marks and the VH1 MUSIC FIRST(TM) family of marks.
Competition
All of the Company's segments compete generally with various forms of
leisure, entertainment and recreational activities.
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 program service depend on the number of households
subscribing to the service through local cable operators and other distributors.
(See "Business --Competition--Entertainment")
Certain major record companies have either launched or have announced
plans to launch music-based program services in the U.S. Certain major record
companies have also announced plans to launch, or have launched, music-based
program services outside the U.S., including but not limited to: V-Channel which
is jointly owned and operated in Asia by Star TV and four major record labels;
and Viva and Viva 2, German-language music channels distributed in Germany and
owned in large part by four major record labels. MuchMusic, a music service
which originated in Canada, commenced U.S. distribution in spring 1995; and a
MuchMusic service customized for the Latin American market is being distributed
in Mexico and Argentina.
SNI. Competition among premium subscription television program services
in the U.S. 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 U.S. 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. (See
"Business--Competition--Entertainment")
Broadcasting
The principal methods of competition in the television and radio
broadcasting field are the development of audience interest through programming
and promotions. While three of the Company's television stations are affiliated
with NBC and another of the Company's television stations is affiliated with
CBS, the Company's expansion strategy has been to seek to acquire UPN affiliates
or independent stations which will become primary affiliates of UPN. At this
time, UPN has limited programming. Therefore, with respect to the Company's
current UPN affiliated stations, and, to the extent that the Company acquires
independent stations, there will be a need for those stations to acquire
additional programming to a greater extent than would otherwise be required if
the stations were affiliated with the older, more established networks.
20
Television and radio stations compete for advertising revenues with other
stations in their respective coverage areas as well as with all other
advertising media. Generally, technological advances with respect to the methods
of providing home entertainment alternatives and changing regulatory policies
with respect to the broadcast industry may have an impact upon broadcasting's
future competitive environment. In addition, the 1996 Telecommunications Act
liberalizes television and radio station ownership limits and consequently
allows for increased group ownership or control of stations on both a national
and, with respect to radio, a local market basis. The Company is unable to
predict what impact these changes will have on its businesses in each applicable
market. (See "Business--Regulation--Broadcasting")
In recent years, competition has arisen from the DBS distribution of
programming which commenced in 1994. Moreover, the FCC has issued rules which
may significantly increase the number of MMDS systems. 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 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.
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.
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 game-playing and distribution
technologies.
Recently announced transactions, resulting in greater consolidation in
the entertainment and media industries, may also present significant competitive
challenges to several of the Company's businesses, including its theatrical
motion picture division and its basic and premium subscription program services.
Video
The home video retail business is highly competitive. The Company
believes that the principal competitive factors in the business are title
21
selection, number of copies of titles available, the quality of customer service
and pricing. 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 wide selection of titles and larger and more accessible
inventory than most of 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.
From time to time, home video companies and distributors offer titles at
a price substantially lower than the range in which titles are ordinarily priced
to home video retailers. These titles, known as "sell-thru" titles because their
lower wholesale price is intended to increase the number of copies sold by
retailers, consist primarily of successful children's movies and other movies
that have unique characteristics or other mass ownership appeal. BLOCKBUSTER
offers these titles both for rental and sale in its stores. The competition for
sales of these titles is greater than "rental-priced products" due to the
participation in this market of mass merchants, grocery stores and other
retailers not engaged in the business of renting videocassettes. Although the
number of sell-thru priced products increased in 1996, the Company believes that
the substantially higher profit margins to movie studios on rental product will
continue to limit the number of sell-thru titles.
In the retail rental marketplace, the Company and its franchise owners
compete with other national and regional video rental chains, local video rental
stores, grocery stores and several other retailers engaged in the rental of
videocassettes. As noted above, the market for sell-thru product at retail is
significantly broader. The Company and its franchise owners also compete
generally with other feature film distribution media, such as movie theaters and
broadcast, cable and DBS television.
A significant competitive advantage that the Company and its franchisees
(and all other video retail outlets) currently enjoy over broadcast, cable and
DBS television is a limited exclusive distribution "window". Generally, after
the initial domestic theatrical exhibition of a film, studios make the films
available to video rental outlets on an exclusive basis for a period of time.
The length of this period, however, varies based upon a number of factors
including, but not limited to, the box-office success of the film and license
fee commitments made by pay-per-view distributors, premium subscription program
services and broadcast networks to exhibit the film in such alternative windows.
While certain films had shorter home video windows than historically available
to retailers, the average window for major releases during the year did not
differ materially from prior years and the Company does not expect this window
to differ materially in 1996. However, there can be no assurances that the
studios will not alter the window due to new methods of distribution or other
factors.
In 1994, several consumer product companies announced plans to introduce
different types of products to exhibit prerecorded filmed entertainment products
on television sets. During 1995, these companies collectively established
uniform technological standards on which all such products would be based. The
product, now commonly referred to as the "digital versatile disc" or "DVD"
player, is based on digital technology and permits a film that is recorded in
digital format on a compact disc to be shown on a standard television set. This
new technology is said to offer significant benefits to consumers by enabling
home video companies and their distributors to produce a lower cost, higher
22
quality product than videocassettes. Manufacturers are planning to introduce
their DVD products into the U.S. The Company is unable to determine at this time
whether this new format will gain significant consumer acceptance generally or
among the Company's customers. As a result, the Company is unable to determine
the impact, if any, this new format will have on the Company's business. Once
such technology is introduced, the Company will monitor its acceptance by the
market and endeavor to exploit this new medium, both in the rental and sale of
the product.
Music
Competition among music retailers has intensified greatly over the past
two years with the entry into the business of a number of mass merchants. Many
of these retail chains have significantly reduced their prices on prerecorded
music products (primarily new releases) to attract customers into their stores
and generate sales of other, higher margin products. To protect its market
share, the Company has lowered the prices at which it sells many of its
products, resulting in lower revenue and reduced profit margins. Several other
specialty music retail chains, however, have been unable to compete. Some of
these chains have declared bankruptcy while others have begun closing
unprofitable stores in an attempt to minimize operating losses. The intense
competition in the industry coupled with a generally soft overall retail
environment during 1995, also negatively affected many of the mass merchants.
Theme Parks
The Company's theme parks compete directly with other theme parks in
their respective geographic regions as well as generally 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 the PARAMOUNT PARKS theme parks and
water park.
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. Competition to be included on state adoption lists is
considerable. 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.
23
Cable Television
The Company's cable television systems operate pursuant to non-exclusive
franchises granted by local governing authorities (either municipal or county).
The Communications Act prohibits a franchiser from granting exclusive franchises
and from unreasonably refusing to award additional competitive franchises.
Accordingly, other cable operators have been franchised and may continue to
apply for franchises in certain areas served by the Company's cable systems.
However, no new franchises were granted in such areas during 1995.
The Company's cable systems also may compete for viewers with other
distribution systems which deliver programming by MMDS (multichannel, multipoint
distribution systems via microwave transmission) and SMATV (satellite
transmission to a central receiving facility for distribution to a number of
subscribers) or directly to subscribers via DTH technology (either TVRO or DBS).
The strength of competition depends upon the availability, 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.
In addition, the 1996 Telecommunications Act permits telephone companies
("telcos") to enter the business of distributing programming inside their
respective service areas (telcos were previously permitted to do so outside
their local telephone areas) either as traditional cable operators, as common
carriers, as operators of wireless systems such as MMDS or as operators of a
hybrid common carrier/cable system known as an "open video system" ("OVS") (see
"Business--Regulation--Cable Television"). The 1996 Telecommunications Act also
permits registered utility holding companies to provide cable services under
certain conditions (these utilities were previously prohibited from doing so
under the Public Utilities Holding Company Act) (see
"Business--Regulation--Cable Television").
Wireless distribution systems such as MMDS generally do not require
local government franchises in order to provide service, nor will telcos require
local franchises if they provide service on a common carrier or OVS basis.
With respect to the provision of telephony services, the Company is a
general partner in three partnerships that provide commercial competitive access
services. These are services linking business customers to long distance
carriers via private networks. Portions of these networks are owned by the
partnerships and other portions are owned by the Company's local cable system
and leased to the partnerships. These partnership interests will be sold as part
of the proposed split-off of the Company's cable systems.
The Company views the future success of the cable business in a
competitive environment as being dependent on the supply of additional
programming and new services to its customers and an increase in primary and
premium subscriber penetrations.
24
Regulation
The Company's businesses are either subject to or affected by
regulations of federal, state and local governmental authorities. 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 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. Congress may also
consider legislation to update the Copyright Act to take into account new
technological developments relating to the distribution of copyrighted
materials. On November 1, 1995, the Digital Performance Right in Sound
Recordings Act of 1995 was enacted, which legislation is not expected to have a
material effect on the Company.
Compulsory Copyright. Cable television and SMATV systems are subject to
the Copyright Act which provides a compulsory license for carriage of broadcast
signals at prescribed rates (the proceeds are divided among the various
copyright holders of the programs carried on distant broadcast 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. "Open video systems" under the 1996 Telecommunications Act will also be
subject to the compulsory license. (See "Business -- Competition --Cable
Television" above)
The Copyright Act also provides a similar compulsory license for DTH
services. Legislation adopted by Congress in 1994 extended the DTH compulsory
license for five years, raised the statutory 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. Such legislation 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 vested in the copyright holder) for audiovisual works or for computer
software made for limited purpose computers would have an adverse impact on the
25
Company's home video business; however, no such legislation is pending in
Congress at the present time.
Networks and Broadcasting
Networks
Communications Act; 1996 Telecommunications Act. (See "Business--
Regulation--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. Under the 1996 Telecommunications Act, broadcast
station licenses (both television and radio) will ordinarily be granted for
maximum periods of eight years, and will be renewable for additional eight-year
periods upon application and approval. Prior to this Act, licenses were
renewable and were ordinarily granted for the maximum periods of five years, in
the case of television stations, and seven years, in the case of radio stations.
There is no indication in the 1996 Telecommunications Act as to whether the
eight-year term will apply retroactively or only to those licensees who apply
for renewals in the future. Licenses may be revoked by the FCC for serious
violations of its regulations. Under prior law, competing applications could be
filed against a broadcaster seeking to renew its license, and the FCC was
required to conduct a hearing to consider the comparative merits of the
incumbent and the competing applicant. Although the FCC typically gave the
incumbent a "renewal expectancy" if it had complied with FCC rules and broadcast
a minimum of public affairs and informational programming during the previous
license term, an incumbent nevertheless might have to endure the expense and
uncertainty of the comparative hearing process.
The 1996 Telecommunications Act eliminates competing applications and
comparative hearings if the renewal applicant has served the public interest and
has not seriously violated the Communications Act or FCC rules, or shown a
pattern of abuse. Only if the FCC finds the licensee failed to satisfy these
requirements, finds there are no mitigating factors to justify imposing a
condition on the license or short-term renewal, and ultimately denies the
renewal, can it accept and consider new applications for the now-vacant channel.
26
As in the past, the FCC must decide what factors are relevant to whether
a broadcaster has "served the public interest," and it may use the same factors
it formerly considered or such other factors that it may adapt relevant to a
renewal expectancy. In addition to the broadcaster's record of providing news,
public affairs, and other informational programming, the FCC has also considered
children's programming relevant to television renewals.
The new renewal schedules pursuant to the 1996 Telecommunications Act
will be set by the FCC. However, under the five and seven-year schedules which
have not yet been revised, the licenses for the Company's television stations
expire as follows: WDCA-TV on October 1, 1996; WBFS-TV on February 1, 1997
WUPA-TV on April 1, 1997; WPSG-TV on August 1, 1997; WKBD-TV on October 1, 1997;
KMOV-TV on February 1, 1998; each of KTXA-TV and KTXH-TV on August 1, 1998; each
of WVIT-TV and WSBK-TV on April 1, 1999; and each of WNYT-TV and WHEC-TV on June
1, 1999. The Company's licenses for its radio stations expire as follows:
WLTI-FM on October 1, 1996; WLIT-FM on December 1, 1996; each of KYSR-FM and
KXEZ-FM on December 1, 1997; each of KBSG-AM/FM and KNDD-FM on February 1, 1998;
WLTW-FM on June 1, 1998; and each of WMZQ-AM/FM, WBZS-AM and WJZW-FM on October
1, 2002. The Company will apply for renewal of such licenses which expire in
1996 and expects that such licenses will be renewed.
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, as amended by the 1996 Telecommunications Act, provides that
no license may be held by a corporation if 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 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.
Broadcast signals are presently transmitted in analog rather than
digital form. The FCC is currently considering allotting to broadcasters
additional spectrum in new, digital transmission modes. If the FCC adopts its
proposals, the 1996 Telecommunications Act requires the FCC to also permit
broadcasters to utilize the digitally transmitted signals for various purposes
including for additional channels of programming and services "ancillary and
supplemental" to broadcasting. Full conversion from analog to digital mode, if
it is to occur at all, is expected to occur over the course of a transition
period subsequent to the FCC's adoption of digital standards. Until such
transition is complete, broadcasters may be licensed to transmit on two
channels, one for carriage of the analog transmission and the second for
carriage of the digital signal, which can be used to transmit either a single
"high definition" channel of video programming or, alternatively, up to six
different channels carrying either an enhanced (although not "high definition")
broadcast signal or the aforesaid ancillary and supplemental services (e.g.,
data transmissions or subscription video services). The 1996 Telecommunications
Act requires that if separate analog and digital channels are used
transitionally, one of the two channels used during the transition period must
eventually be returned to the government. However, this legislation does not
establish a time frame for return of the channel nor specify which of the two
channels (i.e., the analog or digital channel) must be returned. To the extent
digital
27
spectrum is used for any service which generates subscription or usage fees, a
broadcaster must pay the government, at a rate to be determined by the FCC, for
use of the spectrum.
Despite the 1996 Telecommunications Act's recent passage, Congress is
currently considering the issue of whether the additional spectrum authorized
for broadcasters by the legislation should be auctioned to the highest bidder
(either broadcasters or other users) rather than allotted to incumbent
broadcasters without charge. Congress is also considering whether to require
broadcasters, should they be allotted the spectrum, to convert to full digital
transmission within a specified period of time so that returned channels could
then be auctioned to other users not later than a designated date. A spectrum
auction or a short-term analog-to-digital transition period could have an
adverse effect on the business of broadcasting.
Must Carry/Retransmission Consent. The Communications 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 Business-Regulation-"Cable Television" below). All of the Company's
television stations are carried on cable systems serving the communities in the
stations' markets. Certain of the stations obtained carriage by asserting must
carry rights and other stations granted retransmission consent. Failure to be
carried on cable systems could be detrimental to the business of a television
station. The application of must carry requirements to additional services which
a broadcaster might transmit over the digital spectrum is to be decided by the
FCC except that the 1996 Telecommunications Act expressly provides that any
"ancillary and supplementary" services provided by broadcasters will not be
entitled to mandatory cable carriage. 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 challenge.
In June 1994, the U.S. Supreme Court held that the rules were content-neutral
rather than unconstitutional, but nevertheless vacated the District Court's
decision and remanded the case back to the District Court for determination of
the impact of such rules on the broadcast and cable industries. On December 13,
1995, the District Court again upheld the rules in a two-to-one decision. This
decision has been appealed to the U.S. Supreme Court, which has agreed to review
the decision. Oral argument before the U.S. Supreme Court is expected to occur
in the fourth quarter of 1996.
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, while there is currently no proposal to
do so, 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.
28
Ownership Limitations. The 1996 Telecommunications Act increases the
ownership limits on the number of radio and television stations in which one
entity can own an "attributable interest" as defined by the FCC. The Company
currently owns radio and television stations below these limits. Under the new
law, a single entity can have an "attributable" ownership or management interest
in an unlimited number of AM and FM stations nationwide, including multiple AM
and/or FM stations licensed to serve the same market. The limit on the number of
such multiple stations in a particular market in which a single entity may hold
an "attributable interest" depends upon the total number of AM and/or FM
stations in that market. With respect to television, the 1996 Telecommunications
Act limits the maximum number of stations nationwide in which one entity can
have an "attributable interest", to that number which serves up to 35% of U.S.
television households. (FCC rules count only one-half of the households in a
market when determining the household reach of stations which broadcast on a UHF
frequency). That rule is presently under consideration in a pending proceeding
reviewing the television broadcast ownership rules. Subject to waiver, the FCC
currently prohibits a single entity from owning more than one television station
serving the same market or two or more stations which have overlapping signals
with a certain strength. 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 would multiple ownership of radio facilities by one entity.
Similar brokerage agreements among television stations are being implemented in
a number of markets and are not now subject to any explicit FCC regulations but
may be affected by pending FCC rulemakings. The recently enacted legislation
prevents the FCC from totally banning such television agreements. The FCC is
currently considering whether to revise its ownership rules as well as redefine
its current standards of what level of ownership or control constitutes an
"attributable interest" under its rules. Moreover, the 1996 Telecommunications
Act requires the FCC to review all of its ownership rules every two years and
modify or repeal those that no longer serve the public interest.
The FCC's ownership limitations also preclude (except on a grandfathered
basis) 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. All such restrictions are
subject to waiver by the FCC on a case-by-case basis and radio-television
cross-ownership prohibitions in particular are routinely granted in the major
television markets so long as at least 30 separately owned and operated radio
television and television stations serve the market. 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 is
obligated to dispose of one AM and one FM radio station serving Washington, D.C.
The Company has requested a waiver of this obligation from the FCC until such
time as the FCC completes its pending review of local ownership limitations.
Depending on the outcome of that review, the Company may request a permanent
waiver of this undertaking. The FCC's previous prohibition on a national
29
television network's ownership or operation of cable systems has been repealed
by the 1996 Telecommunications Act.
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") which were adopted by the FCC in 1970 expired
in September 1995. 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. Elimination of the finsyn rules may have an adverse effect on
the Company's distribution and production of network prime time programming.
Prime Time Access Rule. The Prime Time Access Rule ("PTAR") will expire
on August 30, 1996. 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. First-run programming produced by a network is
considered network programming for this purpose. Expiration 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 U.S.
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. In March 1995, the Executive Commission of
the EU approved revisions to the directive which would, if adopted, increase the
discrimination against non-European programming. The EU Council of Ministers
modified the proposed revisions in November 1995. In February 1996, the European
Parliament recommended further modifications, which are now being considered by
both the Executive Commission and the Council of Ministers. At this time, it is
impossible to predict what changes will be adopted by the EU, or to predict
30
their impact on the Company's theatrical distribution and television syndication
businesses. The Company believes that its program services in Europe are in
compliance with the EU broadcast quotas.
Video and Music Distribution
Franchising. Certain states, the United States Federal Trade Commission
and certain foreign jurisdictions require a franchiser to transmit specified
disclosure statements to potential owners before issuing a franchise.
Additionally, some states and foreign jurisdictions require the franchiser 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,
are not generally subject to any government regulation other than customary laws
and local zoning and permit requirements.
Cable Television
Federal Regulation
Communications Act; 1996 Telecommunications Act. The Communications Act
sets forth the framework under which cable television systems are regulated. On
February 8, 1996, the 1996 Telecommunications Act was enacted. When fully
implemented by the FCC, this legislation will change regulation of the
communications industry, and alter federal, state and local laws and regulations
regarding the provision of cable and telephony services. Among other items, the
1996 Telecommunications Act authorizes entry of cable operators and electric
utilities into the telephone/telecommunications business. It authorizes entry of
telephone companies into the multichannel video distribution business in their
own service areas and, beginning in March 1999, eliminates the regulations of
certain cable rates. The following is a summary of certain significant aspects
of the Communications Act's regulation of cable television, as amended by the
1996 Telecommunications Act:
Rate Regulation. Rates for two types of cable programming tiers of
service are currently subject to regulation under the Communications Act: basic
service (corresponding to Viacom Cable's "Limited Service" tier) and cable
programming service (corresponding to Viacom Cable's "Satellite Value Package")
(see "Business--Cable Television"). Rates for premium services (such as
SHOWTIME), per-program services (such as pay-per-view events and movies), and
"new product tiers" (a new type of tier authorized by the FCC in 1994 which
offers broad pricing and packaging flexibility) are not regulated. The FCC may
in the future determine to regulate "new product tiers".
For regulated tiers of service, the FCC established a "benchmark"
formula to set a cable operator's "initial permitted rate." Cable systems whose
rates exceeded the applicable benchmark were required to reduce their rates
either to the benchmark or by 17% 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
31
on the operator's actual cost plus an 11.25% return. The FCC has also adopted
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.
Once a cable operator establishes its initial rates under either the
benchmark or cost of service methods, FCC regulations provide for periodic rate
increases 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 on, increases in an operator's programming expenses. On November 10,
1994, the FCC adopted "going forward" rules (the "Going Forward Regulations")
that increased the mark-up for channels added to regulated tiers (other than the
basic tier). These 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. In addition, the FCC proposed eliminating 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.
Implementation of the FCC's rate 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. Viacom Cable implemented additional rate
increases in 1995 pursuant to the Going Forward Regulations. These increases and
future increases will continue to mitigate the adverse impact of rate regulation
on revenues of the Cable Television segment. Any adverse revenue impact will be
further mitigated when the rates for tiers such as the Company's "Satellite
Value Package" (i.e., tiers of service other than basic service) are deregulated
commencing March 31, 1999.
The 1996 Telecommunications Act eliminates rate regulation for all tiers
of regulated service, other than the basic service tier, after March 31, 1999,
or possibly earlier to the extent that any cable system becomes subject to
"effective competition" prior to such date. The 1996 Telecommunications Act adds
a new "effective competition" test to the three already included in the
Communications Act. The new test finds effective competition in areas where a
local telephone company, its affiliate, or a multichannel video programming
distributor using the facilities of the telephone company or its affiliate --
irrespective of the number of subscribers to the service -- offers programming
to subscribers by any means (other than DTH) in the franchise area of the cable
system, provided that the programming so offered is "comparable" to the
programming provided by the cable operator in that area. Basic service tier
regulation will continue without a specific sunset date, but will also end when
any cable system becomes subject to "effective competition". (See
"Business--Cable Television")
Vertical Integration. Certain pricing and other restrictions (the
"program access rules") are imposed on vertically integrated cable programmers
(such as the Company) with respect to their dealings with multichannel
32
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 1996 Telecommunications Act extends the
program access rules to (i) telcos and their affiliates providing video
programming to their subscribers by any means and (ii) programmers in which a
telco providing video programming has an attributable interest. 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.
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 (or other
multichannel video distributor) 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 retransmission; however, these "distant" television stations do not
have Must Carry rights. Television stations may require payment in consideration
for Retransmission Consent.
The initial round of Must Carry/Retransmission Consent elections
occurred in 1993. Pursuant to these elections, the Company has negotiated
retransmission rights for a number of commercial television stations which it
carries. Some of these agreements are on an interim basis and may be canceled by
the stations. The Company carries other television 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. Local
commercial television stations must make new Must Carry/Retransmission Consent
elections by October 1, 1996. Cable carriage pursuant to these new elections
commences January 1, 1997.
Buy-Through to Premium Services. Pursuant to the Communications 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 until 2002 to fully comply with this provision through the
implementation of fully addressable technology. The Company's cable systems have
already substantially implemented compliance.
Legal Challenges. Lawsuits have been filed challenging various
provisions of the Communications Act including the provisions relating to Must
Carry and Retransmission Consent (see "Business--Regulation--Broadcasting"
above), the pricing and other restrictions imposed on vertically integrated
33
cable programmers with respect to their dealings with multichannel programming
distributors (see "Business--Regulation--Cable Television--Vertical
Integration"), and the mandated availability of cable channels for leased access
and PEG programming.
Competitive Entry. The 1996 Telecommunications Act permits telcos to
enter the multichannel video distribution business in their service areas either
as cable operators, as operators of wireless distribution systems (such as
MMDS), as operators of "open video systems" or on a common carrier basis. The
1996 Telecommunications Act further permits registered utility holding companies
(which had previously been prohibited from providing cable service under the
Public Utilities Holding Company Act) to provide cable services. The 1996
Telecommunications Act also generally eliminates 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. The FCC is required to
adopt regulations implementing the interconnection and non-discriminatory access
requirements of the 1996 Telecommunications Act, in order to assure that new
entrants such as cable operators have access to network elements of telcos and
other carriers, and that the systems built by all telecommunications carriers
are interoperable. 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. Telcos
have stated their general intention to enter the video programming business.
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 ("LFA") and agrees to abide by applicable
ordinances. The Communications Act sets up the basic regulatory framework within
which LFAs can exercise franchising powers. In general, an LFA may exercise its
police power to regulate public rights-of-way and has broad powers with respect
to customer service standards. LFAs may impose franchise fees, subject to a
federal cap, and may elect to regulate the rates for the basic service tier,
subject to compliance with the FCC's benchmark, cost of service and related
rules.
Under the Communications Act, LFAs 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 "Business--Regulation--Cable Television--Must Carry/Retransmission
Consent" above)
The Communications Act 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 1996 Telecommunications Act prohibits an LFA from requiring a
cable operator to provide telecommunications service or facilities as a
condition of renewal, and from specifying the type, use or capacity of equipment
34
or technology employed by a cable operator upon renewal. The Company's current
franchises expire on various dates through 2017. During the five-year period
1996 through 2000, franchises having an aggregate of approximately 292,000
customers (at December 31, 1995) will expire unless renewed. The Company expects
its franchises to be renewed.
Item 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. The Company owns the PARAMOUNT PICTURES studio
at 5555 Melrose Avenue, Los Angeles, California, which consists of approximately
380 acres containing sound stages, administrative, technical and dressing room
structures, screening theaters, machinery and equipment facilities, plus a back
lot and parking lots. PARAMOUNT PARKS' operations in the U.S. include
approximately 1,640 acres owned and 295 acres leased and in Canada include
approximately 380 acres owned. 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, supplemented by
another approximately 97,000 square feet of leased office space at 110 East
Broward Avenue, Fort Lauderdale, Florida. The BLOCKBUSTER retail and
distribution operations in the U.S. and Canada consist of approximately 56
owned properties, aggregating approximately 361,000 square feet, and
approximately 3,303 leased locations, aggregating approximately 21.9 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, retail 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.
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). The
defendants included 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 was based upon plaintiffs' claims of
35
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 plaintiffs'
interest in a limited partnership which owned three Blockbuster stores. The
court entered judgment against all defendants, jointly and severally, in the
amount of $14,850,175, including compensatory damages, attorneys fees and
prejudgment interest. In addition, the Court entered judgment totaling
$108,840,030 for exemplary damages. The Howell action was settled in December
1995 with the payment by the Company of an amount without material adverse
effect on its financial condition or result of operations. The settlement
involved the vacation of the judgment and withdrawal of all the Court's findings
of fact and conclusions of law.
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 plaintiff Howell in the 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 or their predecessors, and intends to vigorously defend the claims.
(While the Company maintained that certain of these defenses were also available
in the Howell litigation, significantly stronger facts support their application
in this litigation.) In addition, the Murphy plaintiffs have stipulated that
they will make no use of the Howell judgment or findings of fact or conclusions
of law in their action.
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) alleged 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.
The Company has announced that it has 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 split-off 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.
Certain subsidiaries of the Company from time to time receive claims
from federal and state environmental regulatory agencies and other entities
36
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 results of
operations financial position or cash flows (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, these proceedings are not likely to result in
judgments that will have a material adverse effect on its results of operations,
financial position or cash flows.
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 13 and 14
to the Consolidated Financial Statements of the Company included elsewhere
herein.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
37
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.
Name Age Title
Sumner M. Redstone 72 Chairman of the Board of Directors
and Chief Executive Officer
Philippe P. Dauman 42 Deputy Chairman, Executive Vice President,
General Counsel, Chief Administrative Officer
and Secretary and Director
Thomas E. Dooley 39 Deputy Chairman, Executive Vice President--
Finance, Corporate Development and
Communications and Director
Vaughn A. Clarke 42 Senior Vice President, Treasurer
Carl D. Folta 38 Senior Vice President, Corporate Relations
Michael D. Fricklas 36 Senior Vice President, Deputy General
Counsel
Susan C. Gordon 42 Vice President, Controller and Chief
Accounting Officer
Rudolph L. Hertlein 55 Senior Vice President, Corporate Development
Edward D. Horowitz 48 Senior Vice President, Technology of the
Company; Chairman, Chief Executive
Officer of Viacom Interactive Media
William A. Roskin 53 Senior Vice President, Human Resources and
Administration
George S. Smith, Jr 47 Senior Vice President, Chief Financial Officer
Mark M. Weinstein 53 Senior Vice President, Government Affairs
- ----------
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.
Mr. Redstone has been a Director of the Company since 1986 and Chairman
of the Board since 1987, acquiring the additional title of Chief Executive
Officer in January 1996. Mr. Redstone has served as President, Chief Executive
Officer of NAI since 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 Theatre 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 since 1994, he has been a
38
Visiting Professor at Brandeis University. In 1944, Mr. Redstone graduated from
Harvard University and, in 1947, received an LL.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. Dauman has been a Director of the Company since 1987 and was
appointed Deputy Chairman of the Company in January 1996. 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 NAI in 1992 and
a Director of Spelling in 1994.
Mr. Dooley was appointed a Director and Deputy Chairman of the Company
in January 1996 and 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.
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 in April 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.
39
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. 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.
40
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.
VIACOM CLASS A VIACOM CLASS B
COMMON STOCK COMMON STOCK
-------------------------------------
HIGH LOW HIGH LOW
---- --- ---- ---
1995
1st quarter.................... $48 1/4 $41 1/8 $47 3/8 $40 1/4
2nd quarter.................... 49 1/2 41 48 5/8 40 3/4
3rd quarter.................... 54 1/8 44 3/4 54 1/4 44 5/8
4th quarter.................... 50 5/8 44 50 3/4 44 5/8
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
Viacom Inc. has not declared cash dividends on its common stock and has no
present intention of so doing.
As of March 22, 1996 there were approximately 13,307 holders of Viacom Inc.
Class A Common Stock, and 24,622 holders of Viacom Inc. Class B Common Stock.
II-1
ITEM 6. SELECTED FINANCIAL DATA.
VIACOM INC. AND SUBSIDIARIES
(Millions of dollars, except per share amounts)
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Revenues......................... $ 11,688.7 $ 7,363.2 $ 2,004.9 $ 1,864.7 $ 1,711.6
Operating income (a)
before depreciation and
amortization..................... $ 2,313.7 $ 1,074.0 $ 538.1 $ 492.7 $ 445.1
Depreciation and amortization.... $ 820.4 $ 465.7 $ 153.1 $ 144.8 $ 132.9
Operating income (a)............. $ 1,493.3 $ 608.3 $ 385.0 $ 347.9 $ 312.2
Earnings (loss) before
extraordinary loss and
cumulative effect of change
in accounting principle........ $ 222.5 $ 110.0 $ 169.5 $ 66.1 $ (46.6)
Net earnings (loss).............. $ 222.5 $ 89.6 $ 171.0 $ 49.0 $ (49.7)
Net earnings (loss) attributable
to common stock................. $ 162.5 $ 14.6 $ 158.2 $ 49.0 $ (49.7)
Primary and fully diluted net
earnings (loss) per common share:
Earnings (loss) from continuing
operations before extraordinary
loss and cumulative effect of
change in accounting principle...$ .41 $ .25 $ 1.30 $ .55 $ (.41)
Net earnings (loss)........... $ .43 $ .07 $ 1.31 $ .41 $ (.44)
At year end:
Total assets.................. $ 29,026.0 $ 28,273.7 $ 6,416.9 $ 4,317.1 $4,188.4
Long-term debt, net of current
portion.................... $ 10,712.1 $ 10,402.4 $ 2,440.0 $ 2,397.0 $2,320.9
Shareholders' equity.......... $ 12,093.8 $ 11,791.6 $ 2,718.1 $ 756.5 $ 699.5
(a) Operating income is defined as net earnings before cumulative effect of
change in accounting principle, extraordinary losses, discontinued operations,
minority interest, equity in earnings (loss) of affiliated companies (net of
tax), income taxes, other items (net), and interest expense.
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 stock for any of the periods presented above.
II-2
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 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 commencing 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 Subscription Television
Program Services, 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 - Education; Consumer; Business and Professional; Reference; and
International Groups.
CABLE TELEVISION - Cable Television Distribution Systems. (See Note 3 of
Notes to Consolidated Financial Statements.)
The following tables set forth revenues, operating income and operating income
before interest, taxes, depreciation and amortization ("EBITDA"), by business
segment, with the year ended December 31, 1994 presented on a pro forma and
historical basis. The pro forma information is provided in addition to
historical information solely to assist in the comparison of results of
operations and is not necessarily indicative of the combined results of
operations of Viacom, Paramount Communications and Blockbuster that would have
occurred if the completion of the Mergers and related transactions had occurred
on January 1, 1994.
II-3
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Also included is a comparison of actual EBITDA to pro forma EBITDA, which does
not reflect the effect of significant amounts of amortization of goodwill
related to the Mergers and other business combinations accounted for under the
purchase method of accounting. 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,
operating income, net earnings, cash flow and other measures of financial
performance prepared in accordance with generally accepted accounting
principles.
BUSINESS SEGMENT INFORMATION
(Millions of dollars)
YEAR ENDED PERCENT YEAR ENDED
DECEMBER 31, CHANGE DECEMBER 31,
------------ ------ ------------
1995 1994 1994 (C) 1993
---- ---- -------- ----
PRO FORMA
REVENUES:
Networks and Broadcasting........... $2,137.4 $1,886.0 13% $1,855.1 $1,403.0
Entertainment....................... 3,650.4 2,938.7 24 2,285.2 209.1
Video and Music/Theme Parks......... 3,333.4 2,907.8 15 1,070.4 --
Publishing.......................... 2,171.1 2,027.5 7 1,786.4 --
Cable Television.................... 444.4 406.2 9 406.2 416.0
Intercompany........................ (48.0) (44.6) 8 (40.1) (23.2)
--------- --------- --------- ---------
Total revenues.................. $11,688.7 $10,121.6 15 $7,363.2 $2,004.9
========= ========= ======== ========
OPERATING INCOME (a):
Networks and Broadcasting........... $ 561.3 $ 447.0 26% $ 357.1 $ 314.4
Entertainment....................... 307.3 129.9 137 (88.4) 32.5
Video and Music/Theme Parks......... 501.5 388.3 29 199.5 --
Publishing.......................... 186.3 121.3 54 193.9 --
Cable Television.................... 101.1 78.8 28 78.8 110.2
-------- -------- -------- --------
Segment operating income........ 1,657.5 1,165.3 42 740.9 457.1
Corporate........................... (164.2) (125.3) 31 (132.6) (72.1)
--------- --------- --------- ---------
Total operating income.......... $1,493.3 $1,040.0 44 $ 608.3 $ 385.0
======== ======== ======== ========
EBITDA (b):
Networks and Broadcasting........... $ 678.3 $ 549.0 24% $ 453.3 $ 382.6
Entertainment....................... 445.9 265.5 68 6.0 42.0
Video and Music/Theme Parks......... 823.0 688.5 20 289.9 --
Publishing.......................... 340.2 254.9 33 296.9 --
Cable Television.................... 182.9 155.2 18 155.2 181.7
-------- -------- -------- --------
Segment EBITDA.................. 2,470.3 1,913.1 29 1,201.3 606.3
Corporate........................... (156.6) (119.7) 31 (127.3) (68.2)
--------- --------- --------- ---------
Total EBITDA.................... $2,313.7 $1,793.4 29 $1,074.0 $ 538.1
======== ======== ======== ========
(a) Operating income is defined as net earnings before cumulative effect of
change in accounting principle, extraordinary losses, discontinued operations,
minority interest, equity in earnings (loss) of affiliated companies (net of
tax), income taxes, other items (net), and interest expense.
(b) EBITDA is defined as operating income before depreciation and amortization.
(c) Paramount Communications' and Blockbuster's results of operations are
included commencing March 1, 1994 and October 1, 1994, respectively.
II-4
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
- ---------------------
1995 VERSUS 1994
- ----------------
Revenues increased to $11.7 billion for 1995 from $7.4 billion for 1994. EBITDA
increased to $2.3 billion for 1995 from $1.1 billion for 1994. Operating income
increased to $1.5 billion for 1995 from $608.3 million for 1994.
The comparability of results of operations for 1995 and 1994 has been affected
by the Mergers and the non-recurring merger-related charges (see Note 2 of Notes
to Consolidated Financial Statements). The following discussion of segment
results of operations includes the 1994 results of operations presented on a pro
forma basis, as if the Mergers occurred on January 1, 1994, and are adjusted to
exclude non-recurring merger-related charges.
Revenues increased 15% to $11.7 billion for 1995 from pro forma revenues of
$10.1 billion for 1994. EBITDA increased 29% to $2.3 billion for 1995 from pro
forma EBITDA of $1.8 billion for 1994. Operating income increased 44% to $1.5
billion for 1995 from pro forma operating income of $1.0 billion for 1994.
SEGMENT RESULTS OF OPERATIONS - 1995 VERSUS PRO FORMA 1994
- ----------------------------------------------------------
NETWORKS AND BROADCASTING (Basic Cable and Premium Subscription Television
Program Services, Television and Radio Stations)
The Networks and Broadcasting segment is comprised of MTV Networks ("MTVN"),
Showtime Networks Inc. ("SNI"), television stations and radio stations. Revenues
increased 13% to $2.1 billion for 1995 from $1.9 billion for 1994. EBITDA
increased 24% to $678.3 million for 1995 from $549.0 million for 1994. Operating
income increased 26% to $561.3 million for 1995 from $447.0 million for 1994.
MTVN revenues of $1.0 billion, EBITDA of $410.9 million and operating income of
$355.8 million increased 20%, 26% and 25%, respectively. The increase in MTVN's
revenues was principally attributable to higher advertising revenues due to rate
increases and to a lesser extent increased affiliate revenues. MTVN's EBITDA and
operating income gains were driven by the increased revenues partially offset by
higher operating costs, primarily representing increased programming costs.
SNI's revenues, EBITDA and operating income increased 6%, 44% and 51%,
respectively, reflecting an increase of 1.3 million subscribers from December
31, 1994, partially offset by the absence in 1995 of royalty revenues resulting
from the settlement of a contractual claim with a third party during 1994 and
increased programming costs. The television and radio stations revenues
increased 10%, EBITDA increased 12% and operating income increased 16% primarily
reflecting increased advertising revenues and the Company's acquisition of
television stations in large markets, offset by the disposition of television
stations in smaller markets.
II-5
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ENTERTAINMENT (Motion Pictures and Television Programming, Movie Theaters, and
New Media and Interactive Services)
The Entertainment segment is principally comprised of Paramount Pictures,
Paramount Television, Spelling Entertainment Group Inc. ("Spelling"), and the
former Viacom Entertainment. Revenues increased 24% to $3.7 billion for 1995
from $2.9 billion for 1994. EBITDA increased 68% to $445.9 million for 1995 from
$265.5 million for 1994. Operating income increased 137% to $307.3 million for
1995 from $129.9 million for 1994. The increase in results of operations is
attributable to a number of factors, notably during 1995 the strong home video
performance of Paramount Pictures' Forrest Gump, Clear and Present Danger, Congo
and Star Trek: Generations and the sale of certain syndication rights to Carsey
Werner, as compared to the 1994 domestic and foreign theatrical success of
Forrest Gump and Clear and Present Danger. The Company also recognized
approximately $250.0 million of revenues and $68.0 million of EBITDA and
operating income during 1995 resulting from the conforming of accounting
policies pertaining to the television programming libraries of Viacom
Entertainment, Spelling and Paramount.
License fees for the television exhibition of motion pictures and for
syndication and basic cable exhibition of television programming are recorded as
revenue in the year that the products are available for such exhibition, which,
among other reasons, may cause substantial fluctuation in operating results. As
of December 31, 1995, the unrecognized revenues attributable to such licensing
agreements were approximately $1.1 billion.
The Company is currently exploring the sale of Spelling Entertainment Group Inc.
("Spelling") and the related purchase of Spelling's interest in Virgin
Interactive Entertainment Limited ("Virgin"). An independent committee of
Spelling's Board of Directors has been formed to negotiate the terms of the
Virgin transaction. The Company acquired its approximately 75% interest in the
common equity of Spelling as a part of the Blockbuster Merger.
VIDEO AND MUSIC/THEME PARKS (Home Video and Music Retailing/Theme Parks)
The Video and Music/Theme Parks segment is comprised of Blockbuster Video and
Music, and Paramount Parks. Revenues increased 15% to $3.3 billion for 1995 from
$2.9 billion for 1994. EBITDA increased 20% to $823.0 million for 1995 from
$688.5 million for 1994. Operating income increased 29% to $501.5 million for
1995 from $388.3 million for 1994. The gains in results of operations primarily
reflect the increased number of domestic Company-owned video stores in operation
in 1995 as compared to 1994 and an increase of greater than 3% in same-store
sales, partially offset by increased overall operating and overhead expenses.
Music stores revenues increased $26.4 million, EBITDA and operating income
decreased $13.4 million and $20.2 million, respectively, reflecting the highly
competitive music retail environment. Theme Parks revenues increased $10.3
million, EBITDA increased $7.3 million and operating income increased $6.9
million primarily reflecting increased attendance, and the acquisition of a
water park partially offset by increased operating expenses and in the case of
operating income, higher depreciation expenses.
II-6
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
PUBLISHING (Education; Consumer; Business and Professional; Reference; and
International Groups)
Publishing is comprised of Simon & Schuster which includes imprints such as
Simon & Schuster, Pocket Books, Prentice Hall and Macmillian Computer
Publishing. Revenues increased 7% to $2.2 billion for 1995 from $2.0 billion
for 1994. EBITDA increased 33% to $340.2 million for 1995 from $254.9 million
for 1994. Operating income increased 54% to $186.3 million for 1995 from
$121.3 million for 1994. Results of operations primarily reflect increased
Education Group sales resulting from strong Higher Education frontlist sales
and increased Elementary and Secondary Group state adoptions and contributions
from Consumer Group frontlist titles at Pocket Books. EBITDA and operating
income for 1994 reflect an aggregate charge of $32.8 million attributable to
certain non-recurring transition costs and the pro forma results of operations
of Macmillan for the two months prior to acquisition.
CABLE TELEVISION (Cable Television Distribution Systems)
Cable Television revenues increased 9% to $444.4 million for 1995 from $406.2
million for 1994, primarily attributable to increased primary, premium and
pay-per-view revenues. EBITDA increased 18% to $182.9 million for 1995 from
$155.2 million for 1994. Operating income increased 28% to $101.1 million for
1995 from $78.8 million for 1994. The increased results of operations reflect
13% and 4% increases in average premium and primary customers, a 5% increase in
primary rates, partially offset by a 7% decrease for the average premium rate.
Total revenues per primary customer per month increased 5% to $31.90 for 1995
from $30.30 for 1994.
As of December 31, 1995, Viacom Cable served approximately 1,180,000 primary
customers subscribing to approximately 921,000 premium units, representing an
increase of 4% and 5%, respectively, since December 31, 1994.
On July 24, 1995, Viacom announced a multi-step transaction which, if completed,
would result in the split-off of its cable operations (see Note 3 of Notes to
Consolidated Financial Statements).
OTHER INCOME AND EXPENSE INFORMATION
- ------------------------------------
Corporate expenses
Corporate expenses, including depreciation, increased 24% to $164.2 million for
1995 from $132.6 million for 1994. The increase in Corporate expenses reflects
the recognition of higher systems, facility and incentive compensation
obligations that occurred in 1995.
Interest Expense
Net interest expense of $821.4 million for 1995 compared to
$494.1 million for 1994 reflects the effects of the full year impact of the
issuance of 8% exchangeable subordinated debentures and debt incurred and
acquired as part of the Mergers and the issuance of notes during 1995, offset by
decreased bank borrowings. The notes issued during 1995, pursuant to the shelf
registration statement described in Liquidity and Capital Resources, were $350
million of 6.75% Senior Notes, $200 million of 7.625% of Senior Debentures and
$1 billion of 7.75% Senior Notes. The Company had approximately $10.8 billion
and $10.4 billion principal amount of debt outstanding as of
II-7
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
December 31, 1995 and December 31, 1994, respectively, at a weighted average
interest rate of 7.4% and 7.5%. (See Note 7 of Notes to Consolidated Financial
Statements.)
Other Items, Net
For 1995, "Other items, net" primarily reflects a gain on the sale of
marketable securities.
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.
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 61% for
1995 and 74% for 1994 were both adversely affected by amortization of
intangibles resulting from the Mergers which are not deductible for tax
purposes.
Equity in Earnings (Loss) of Affiliates
"Equity in loss of affiliated companies, net of tax" was $53.9 million for 1995
as compared to earnings of $18.6 million for 1994, primarily reflecting, in
1995, an equity loss, net of tax, of $49.4 million related to the Company's
approximately 49% interest in Discovery Zone and net losses of equity
investments in international start-up ventures, partially offset by improved
operating results of USA Networks.
Minority Interest
Minority interest primarily represents the minority ownership of Spelling's
common stock for 1995 and fourth quarter 1994 and minority ownership of
Paramount Communications' common stock, for the period March through June 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 a part of the Paramount Merger. (See Note 4 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 tax benefit of $11.9 million.
1994 VERSUS 1993
- ----------------
Revenues increased 267% to $7.4 billion for 1994 from $2.0 billion for 1993.
EBITDA increased 100% to $1.1 billion for 1994 from $538.1 million for 1993.
Operating income increased 58% to $608.3 million for 1994 from $385.0 million
for 1993. The foregoing increases in results of
II-8
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
operations are principally attributable to the acquisitions of Paramount
Communications and Blockbuster, partially offset by the merger-related charges
described below.
Operating income for 1994 includes 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.
OPERATING
INCOME PRIOR TO
OPERATING MERGER-RELATED MERGER-RELATED
INCOME CHARGES CHARGES
------ ------- -------
(MILLIONS OF DOLLARS)
Networks and Broadcasting.... $ 357.1 $ 90.7 $ 447.8
Entertainment................ (88.4) 224.0 135.6
Video and Music/Theme Parks.. 199.5 -- 199.5
Publishing................... 193.9 -- 193.9
Cable Television............. 78.8 -- 78.8
Corporate.................... (132.6) 17.4 (115.2)
-------- -------- --------
$ 608.3 $332.1 $ 940.4
======= ====== =======
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.
SEGMENT RESULTS OF OPERATIONS - 1994 VERSUS 1993
- ------------------------------------------------
NETWORKS AND BROADCASTING
Revenues increased 32% to $1.9 billion for 1994 from $1.4 billion for 1993.
EBITDA increased 42% to $544.0 million for 1994 from $382.6 million for 1993.
Operating income increased 42% to $447.8 million for 1994 from $314.4 million
for 1993. The increase in revenues, EBITDA and operating income 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 operating income 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 operating income of
$65.8 million for the period subsequent to their acquisition.
II-9
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ENTERTAINMENT
Revenues increased to $2.3 billion for 1994 from $209.1 million for 1993. EBITDA
increased to $230.0 million for 1994 from $42.0 million for 1993. Operating
income increased to $135.6 million for 1994 from $32.5 million for 1993. The
increase in revenues, EBITDA and operating income 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 operating income of $157.7 million. The Entertainment
segment's operating income was 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. Operating income
benefited from a lower cost base and efficiencies associated with the Paramount
Merger.
VIDEO AND MUSIC/THEME PARKS
Revenues, EBITDA and operating income were $1.1 billion, $289.9 million and
$199.5 million, respectively. Video and Music revenues, EBITDA and operating
income 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 operating
income 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.
PUBLISHING
Publishing revenues, EBITDA and operating income were $1.8 billion, $296.9
million and $193.9 million, respectively, subsequent to its acquisition in March
1994. Results of operations reflect Simon & Schuster's Higher Education,
Consumer and International groups, and the U.S. publishing assets of Macmillan,
Inc.
CABLE TELEVISION
Cable Television revenues decreased 2% to $406.2 million for 1994 from $416.0
million for 1993, primarily attributable to a decrease in basic revenues. EBITDA
decreased 15% to $155.2 million for 1994 from $181.7 million for 1993. Operating
income decreased 28% to $78.8 million for 1994 from $110.2 million for 1993. 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 operating income principally reflect the
decreased revenues attributable to the above rate regulations and increased
operating, general and administrative expenses.
II-10
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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.
OTHER INCOME AND EXPENSE INFORMATION
- ------------------------------------
Corporate Expenses
Corporate expenses including depreciation increased 60% to $115.2 million in
1994 from $72.1 million in 1993 reflecting overall increased expenses primarily
attributable to the mergers.
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 amounts of debt
outstanding as of December 31, 1994 and December 31, 1993 at weighted average
interest rates of 7.5% and 5.3%, respectively.
Other Items, Net
For 1993, "Other items, net" reflects the pre-tax gain of approximately $55.0
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 annual effective tax rates of 74% for 1994 and 43% for 1993 were both
adversely affected by amortization of goodwill 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 the favorable outcome 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 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.
Extraordinary Losses
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
II-11
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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.
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 was issued 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 and amendments thereto, 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, 2000
assuming full utilization of the credit agreements are $1.6 billion (1996),
$248.9 million (1997), $1.0 billion (1998), $1.5 billion (1999) and $1.3 billion
(2000). The Company has classified certain short-term indebtedness as long-term
debt based upon its intent and ability to refinance such indebtedness on a
long-term basis. (See Note 7 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 $100 million to $150 million in 1996. Planned
capital expenditures, including information systems costs, are approximately
$800 million to $900 million in 1996. Capital expenditures are primarily related
to capital additions for new and existing video stores and theme park
attractions, and approximately $150 million for additional construction and
equipment upgrades for the Company's existing cable franchises.
The Company was in compliance with all debt covenants and had satisfied all
financial ratios and tests as of December 31, 1995 under its Credit Agreement
and the Company expects to be in compliance and satisfy all such covenant ratios
as may be applicable from time to time during 1996.
II-12
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Debt as a percentage of total capitalization of the Company was 47% at December
31, 1995 and December 31, 1994.
The Company filed a shelf registration statement with the Securities and
Exchange Commission registering debt securities, preferred stock and contingent
value rights of Viacom and guarantees of such debt securities by Viacom
International which may be issued for aggregate gross proceeds of $3.0 billion.
The registration statement was declared effective on May 10, 1995. The net
proceeds from the sale of the offered securities may be used by Viacom to repay,
redeem, repurchase or satisfy its obligations in respect of its outstanding
indebtedness or other securities; to make loans to its subsidiaries; for general
corporate purposes; or for such other purposes as may be specified in the
applicable Prospectus Supplement. During 1995, the Company issued $1.6 billion
of notes and debentures under this shelf registration statement.
See Note 12 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, 1995 and are estimated to aggregate
approximately $2.2 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,
financial position or cash flows.
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, financial position or cash flows.
Current assets decreased to $5.2 billion for 1995 from $5.3 billion for 1994
reflecting the disposition of the net assets of MSG offset by increased
receivables and inventory. The increased receivables principally reflect the
conforming of accounting policies pertaining to the television programming
libraries of Viacom Entertainment, Spelling and Paramount Communications and the
effects of
II-13
MANAGEMENT DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
increased revenues. The allowance for doubtful accounts as a percentage of
receivables increased to 6% for 1995 from 4% for 1994 reflecting increased
reserves on Blockbuster receivables and the potential effects of the changes in
the retail bookstore environment. Both current and non-current inventory
increased principally reflecting the timing of the release of motion pictures
at Paramount Pictures, increased production activity at Spelling and increased
video and game product purchases at Blockbuster for new and existing video
stores. Property and equipment increased reflecting the capital expenditures
of $730.6 million and equipment acquired under capital leases of $314.5 million
primarily related to capital additions for new and existing video and music
stores and additional construction and equipment upgrades for the Company's
existing cable franchises. Current liabilities remained constant at $4.1 billion
for 1995 and 1994 primarily reflecting normal operating activity. The increase
in total debt is described in Note 7 of Notes to Consolidated Financial
Statements.
Net cash flow from operating activities decreased 85% to $55.6 million in 1995
from $376.9 million for 1994. Such amounts are not comparable due to the
Mergers. The decreased operating cash flow primarily reflects payments of $1.4
billion for 1995 versus $429 million for 1994 for interest and taxes, as well as
payments for significant levels of Blockbuster video product purchases made, as
is typical, in the first quarter of 1995 partially offset by increased operating
income. Net cash flow from operating activities increased 134% to $376.9 million
in 1994 from $161.0 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 operating earnings of
Viacom's pre-merger businesses, prior to merger-related charges. Net cash
expenditures from investing activities of $79.6 million for 1995, principally
reflects capital expenditures and other acquisitions partially offset by
proceeds from the sale of MSG and other dispositions. 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 interest in Lifetime. Financing activities
reflect borrowings and repayment of debt under the credit agreements during each
period presented; proceeds from the issuance of senior notes during 1995; the
issuance of Viacom Class B Common Stock to Blockbuster during 1994; and the
redemption of the 11.80% senior notes and the issuance of the Preferred Stock
during 1993.
II-14
ITEM 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, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, 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.
Our audits of the consolidated financial statements of Viacom Inc. 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
New York, New York
February 14, 1996
II-15
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/ Sumner M. Redstone
--------------------------
Sumner M. Redstone
Chairman of the Board of Directors,
Chief Executive Officer
By: /s/ George S. Smith, Jr.
----------------------------
George S. Smith, Jr.
Senior Vice President,
Chief Financial Officer
By: /s/ Susan C. Gordon
-----------------------
Susan C. Gordon
Vice President, Controller,
Chief Accounting Officer
II-16
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------
(in millions, except per share amounts)
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994 1993
---- ---- ----
Revenues...................................... $11,688.7 $7,363.2 $2,004.9
Expenses:
Operating.................................... 7,072.7 4,401.0 877.6
Selling, general and administrative.......... 2,302.3 1,888.2 589.2
Depreciation and amortization................ 820.4 465.7 153.1
-------- ------- --------
Total expenses............................ 10,195.4 6,754.9 1,619.9
-------- -------- --------
Operating income.............................. 1,493.3 608.3 385.0
Other income (expense):
Interest expense, net....................... (821.4) (494.1) (145.0)
Other items, net (See Note 16).............. 17.3 262.5 61.8
-------- ------- --------
Earnings from continuing operations before
income taxes................................ 689.2 376.7 301.8
Provision for income taxes.................. (417.0) (279.7) (129.8)
Equity in earnings (loss) of affiliated
companies, net of tax....................... (53.9) 18.6 (2.5)
Minority interest........................... (3.4) 14.9 --
--------- -------- ----------
Net earnings from continuing operations....... 214.9 130.5 169.5
Earnings (loss) from discontinued operations,
net of tax (See Note 4)..................... 7.6 (20.5) --
-------- -------- ----------
Earnings before extraordinary loss and
cumulative effect of change in accounting
principle................................... 222.5 110.0 169.5
Extraordinary loss, net of tax (See Note 7). -- (20.4) (8.9)
Cumulative effect of change in accounting
principle................................... -- -- 10.4
-------- ------- ----------
Net earnings.................................. 222.5 89.6 171.0
Cumulative convertible preferred stock
dividend requirement....................... 60.0 75.0 12.8
-------- ------- --------
Net earnings attributable to common stock..... $ 162.5 $ 14.6 $ 158.2
======== ======= ========
Primary and fully diluted net earnings per common share:
Net earnings from continuing operations.. .41 $ .25 $ 1.30
Earnings (loss) from discontinued
operations, net of tax................. .02 (.09) --
Extraordinary loss, net of tax........... -- (.09) (.07)
Cumulative effect of change in
accounting principle................... -- -- .08
-------- ------- --------
Net earnings............................. $ .43 $ .07 $ 1.31
======== ======= ========
Weighted average number of common shares and
common share equivalents:
Primary...................................... 375.1 220.0 120.6
Fully diluted................................ 375.5 220.4 120.6
See notes to consolidated financial statements.
II-17
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ---------------------------
(in millions)
DECEMBER 31,
------------
1995 1994
---- ----
Assets
Current Assets:
Cash and cash equivalents......................... $ 464.1 $ 597.7
Receivables, less allowances of $126.0 (1995) and
$75.8 (1994).................................... 1,872.4 1,638.8
Inventory (See Note 5)............................ 903.1 830.9
Theatrical and television inventory (See Note 5).. 1,275.0 986.9
Other current assets.............................. 684.4 503.5
Net assets of discontinued operations (See Note 4) -- 697.4
--------- --------
Total current assets................................ 5,199.0 5,255.2
Property and Equipment:
Land.............................................. 477.6 470.3
Buildings......................................... 1,161.7 798.8
Cable television systems.......................... 539.8 465.4
Equipment and other............................... 1,795.6 1,365.1
--------- --------
3,974.7 3,099.6
Less accumulated depreciation and amortization.... 756.8 516.5
--------- --------
Net property and equipment...................... 3,217.9 2,583.1
--------- --------
Inventory (See Note 5).............................. 2,271.5 1,944.5
Intangibles, at amortized cost...................... 16,153.2 16,111.7
Other assets........................................ 2,184.4 2,379.2
--------- --------
$29,026.0 $28,273.7
========= =========
See notes to consolidated financial statements.
II-18
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ---------------------------
(in millions, except per share amounts)
DECEMBER 31,
------------
1995 1994
---- ----
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable..................................... $ 788.8 $ 770.9
Accrued interest..................................... 149.8 234.9
Deferred income...................................... 243.5 250.9
Merger consideration payable......................... 167.4 261.7
Accrued compensation ................................ 449.4 340.6
Other accrued expenses............................... 1,216.0 1,436.8
Participants' share, residuals and royalties payable. 798.2 630.0
Program rights....................................... 240.4 184.4
Current portion of long-term debt.................... 45.1 21.0
----------- -----------
Total current liabilities....................... 4,098.6 4,131.2
----------- -----------
Long-term debt (See Note 7).............................. 10,712.1 10,402.4
Other liabilities........................................ 2,121.5 1,948.5
Commitments and contingencies (See Note 12)
Shareholders' Equity:
Preferred Stock, par value $.01 per share; 200.0 shares
authorized; 24.0 (1995) and 24.0 (1994) shares issued and
outstanding ......................................... 1,200.0 1,200.0
Class A Common Stock, par value $.01 per share; 200.0
shares authorized; 75.1 (1995) and 74.6 (1994) shares
issued and outstanding............................... 0.8 0.7
Class B Common Stock, par value $.01 per share; 1,000.0
shares authorized; 294.6 (1995) and 284.1 (1994) shares
issued and outstanding............................... 2.9 2.8
Additional paid-in capital............................. 10,726.9 10,579.5
Retained earnings...................................... 173.1 10.6
Cumulative translation adjustments..................... (9.9) (2.0)
----------- -----------
Total shareholders' equity............................. 12,093.8 11,791.6
----------- -----------
$ 29,026.0 $ 28,273.7
=========== ===========
See notes to consolidated financial statements.
II-19
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
(in millions)
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994 1993
---- ---- ----
OPERATING ACTIVITIES:
Net earnings..................................... $ 222.5 $ 89.6 $171.0
Adjustments to reconcile net earnings to net cash
flow from operating activities:
Depreciation and amortization................... 820.4 465.7 153.1
Merger-related charges (Note 2)................. -- 332.1 --
Equity in (earnings) losses of affiliated
companies, net of tax ........................ 53.9 (18.6) 2.5
Distribution from affiliated companies.......... 82.2 37.7 13.4
Gain on the sale of marketable securities (Note
16)........................................... (26.9) -- --
Gain on dispositions , net of tax (Note 16)..... -- (164.4) (45.9)
Extraordinary losses, net of tax (Note 7)....... -- 20.4 8.9
Change in operating assets and liabilities:
Increase in receivables....................... (233.8) (152.6) (31.9)
Increase in inventory and related programming
liabilities, net............................ (320.9) (557.0) (137.5)
Increase in prepublication costs, net......... (75.7) (47.0) --
(Increase) decrease in prepaid expenses and
other current assets........................ (84.5) 110.1 --
(Increase) decrease in unbilled receivables... (55.6) 17.3 (4.2)
(Decrease) increase in accounts payable and
accrued expenses............................. (329.1) 164.7 (17.2)
(Decrease) increase in income taxes payable
and deferred income taxes, net.............. (56.5) 28.8 82.9
Increase (decrease) in deferred income........ 68.0 9.8 (9.0)
Other, net...................................... (8.4) 40.3 (25.1)
------ --------- ----------
NET CASH FLOW FROM OPERATING ACTIVITIES............ 55.6 376.9 161.0
------ -------- ----------
INVESTING ACTIVITIES:
Proceeds from dispositions....................... 1,442.9 317.6 144.7
Acquisitions, net of cash acquired............... (616.2) (6,254.6) (82.2)
Capital expenditures............................. (730.6) (364.9) (135.0)
Investments in and advances to affiliated
companies........................................ (138.1) (51.3) (21.6)
Proceeds from sale of short-term investments..... 281.3 156.2 --
Payments for purchase of short-term investments.. (301.2) (102.2) --
Other, net....................................... (17.7) (37.2) (47.7)
------- ------------ ----------
NET CASH FLOW FROM INVESTING ACTIVITIES........... (79.6) (6,336.4) (141.8)
------- ---------- ----------
FINANCING ACTIVITIES:
Short-term (repayments to) borrowings from banks,
net ........................................... (1,560.2) 3,560.0 334.3
Proceeds from the issuance of senior notes....... 1,538.6 -- --
Proceeds from the issuance of Class B Common Stock -- 1,250.0 --
Proceeds from exercise of stock options and
warrants........................................ 125.6 52.6 8.8
Payment of Preferred Stock dividends............. (60.0) (72.7) --
Settlement of CVRs............................... (81.9) -- --
Proceeds from the issuance of Preferred Stock.... -- -- 1,800.0
Redemption of notes and debentures............... -- -- (298.0)
Deferred financing fees.......................... (23.4) (87.1) (18.1)
Other, net....................................... (48.3) (28.0) (12.2)
------ ---------- ----------
NET CASH FLOW FROM FINANCING ACTIVITIES............ (109.6) 4,674.8 1,814.8
------- -------- ----------
Net increase (decrease) in cash and cash equivalents (133.6) (1,284.7) 1,834.0
Cash and cash equivalents at beginning of year..... 597.7 1,882.4 48.4
------ --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR........... $ 464.1 $ 597.7 $1,882.4
======= ======= ========
See notes to consolidated financial statements.
II-20
VIACOM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- -----------------------------------------------
(in millions)
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1995 1994 1993
-------------------- ------------------ ---------------------
SHARES AMOUNTS SHARES AMOUNTS SHARES AMOUNTS
PREFERRED STOCK
- ---------------
Balance, beginning of year.... 24.0 $ 1,200.0 48.0 $ 1,800.0 -- $ --
Issuance of Series A and Series B
Preferred Stock............ -- -- -- -- 48.0 1,800.0
Cancellation of Series A
Preferred stock .............. -- -- (24.0) (600.0) -- --
------ -------- ------ --------- ----- ----------
Balance, end of year.......... 24.0 $ 1,200.0 24.0 $ 1,200.0 48.0 $ 1,800.0
====== ======== ====== ======== ===== ==========
CLASS A COMMON STOCK
- --------------------
Balance, beginning of year.... 74.6 $ .7 53.4 $ .5 53.4 $ .5
Exercise of stock options and
warrants.................... .5 .1 .2 -- -- --
Blockbuster Merger Consideration. -- -- 21.0 .2 -- --
------ -------- ------ --------- ------ ----------
Balance, end of year.......... 75.1 $ .8 74.6 $ .7 53.4 $ .5
======= ======== ====== ========= ====== ==========
CLASS B COMMON STOCK
- --------------------
Balance, beginning of year.... 284.1 $ 2.8 67.3 $ .7 67.1 $ .7
Exercise of stock options and 4.4 -- 1.2 -- .2 --
warrants......................
Paramount Merger Consideration -- -- 56.7 .5 -- --
Blockbuster Merger Consideration. -- -- 158.9 1.6 -- --
Issuance of shares............ -- -- 22.7 .2 -- --
Cancellation of shares....... -- -- (22.7) (.2) -- --
Conversion of VCRs to B Shares 6.1 .1 -- -- -- --
-------- ------- ------- --------- ------ ---------
Balance, end of year.......... 294.6 $ 2.9 284.1 $ 2.8 67.3 $ .7
======== ======= ======= ========= ====== =========
ADDITIONAL PAID-IN CAPITAL
- --------------------------
Balance, beginning of year.... $10,579.5 $ 920.9 $ 917.5
Exercise of stock options and
warrants, net of tax benefit.. 233.3 65.8 3.4
Paramount Merger Consideration -- 2,190.9 --
Blockbuster Merger Consideration. -- 7,412.1 --
Settlement of CVRs............ (81.9) -- --
Settlement of Paramount Merger
appraisal rights............ (4.0) -- --
Issuance of Class B Common shares -- 1,250.0 --
Cancellation of Class B Common
shares...................... -- (1,250.0) --
Expenses associated with stock
issuances................... -- (10.2) --
--------- --------- --------
Balance, end of year.......... $10,726.9 $10,579.5 $ 920.9
========= ========= ========
RETAINED EARNINGS (ACCUMULATED DEFICIT)
- ---------------------------------------
Balance, beginning of year.... $ 10.6 $ (4.0) $ (162.2)
Net earnings.................. 222.5 89.6 171.0
Preferred stock dividend
requirements.................. (60.0) (75.0) (12.8)
-------- -------- ----------
Balance, end of year.......... $ 173.1 $ 10.6 $ (4.0)
======= ======== ==========
CUMULATIVE TRANSLATION ADJUSTMENTS
- ----------------------------------
Balance, beginning of year.... $ (2.0) $ -- $ --
Translation adjustments....... (7.9) (2.0) --
-------- ---------- ---------
Balance, end of year.......... $ (9.9) $ (2.0) $ --
======== ========== =========
TOTAL SHAREHOLDERS' EQUITY.... $12,093.8 $11,791.6 $ 2,718.1
========== ========== =========
See notes to consolidated financial statements.
II-21
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in millions, except per share amounts)
1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
BASIS OF PRESENTATION - Viacom Inc. (the "Company") is a diversified
entertainment and publishing company with operations in the five segments
described below. The Company's consolidated results of operations include the
results of operations of Paramount Communications Inc. ("Paramount
Communications") commencing March 1, 1994 and Blockbuster Entertainment
Corporation ("Blockbuster") commencing October 1, 1994 (See Note 2). See Note 13
regarding the relative contribution to revenues and operating income of each of
the following business segments:
Networks and Broadcasting
The Company, through MTV Networks, owns and operates advertiser-supported basic
cable television program services, and through Showtime Networks Inc. owns and
operates premium subscription cable television program services. The Company
also owns and operates 12 television stations and 12 radio stations.
Entertainment
The Company, through Paramount Pictures and Spelling Entertainment Group, Inc.
("Spelling"): 1) produces, acquires, finances and distributes feature motion
pictures, normally, for exhibition in U.S. and foreign theaters followed by
videocassettes and discs, pay-per-view television, premium subscription
television, network television, basic cable television and syndicated television
exploitation; 2) produces, acquires and distributes series, mini-series,
specials and made-for-television movies primarily for network television,
first-run syndication and basic cable television; 3) operates movie theaters;
and 4) provides new media and interactive services.
Video and Music/Theme Parks
The Company, through Blockbuster Entertainment Group, operates and franchises
videocassette rental and retail sales stores, and operates music stores
throughout the United States and internationally. Additionally, the Company,
through Paramount Parks, owns and operates five regional theme parks and one
water park in the United States and Canada.
Publishing
The Company, through Simon & Schuster, publishes and distributes consumer
hardcover and paperback books, interactive CD-ROM products, audio books,
educational textbooks and supplemental educational materials, multimedia
curriculum and information and reference materials for businesses and
professionals.
Cable Television
The Company owns and operates cable television distribution systems serving
approximately 1.2 million subscribers primarily in Northern California, the
Pacific Northwest region of the United States, Nashville, Tennessee and Dayton,
Ohio. Revenues are primarily earned from subscriber fees for primary and premium
subscription services, sale of advertising and pay-per-view programming fees.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the
II-22
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
reported amounts of revenues and expenses during the reporting period. Actual
results could subsequently differ from those estimates.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the Company and 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 sell through inventory 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. 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,
acquisition costs, prints and certain exploitation costs) are stated at the
lower of amortized cost or net realizable value. Inventories are amortized, and
liabilities for residuals and participations are accrued, on an individual
product basis based on the proportion that current revenues bear to the
estimated remaining total lifetime revenues. Estimates for initial domestic
syndication and basic cable revenues 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 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 68% of unamortized film costs
(including amounts allocated under purchase accounting) at December 31, 1995
will be amortized within the next three years.
II-23
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
Program Rights - The Company acquires rights to exhibit programming on its
broadcast stations or cable networks. The costs incurred in acquiring programs
are capitalized 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 $364.1 million (1995), $215.9 million (1994) and $92.8 million
(1993).
Property and equipment includes capital leases of $358.5 million and $102.4
million as of December 31, 1995 and December 31, 1994, respectively, net of
accumulated amortization of $53.5 million and $21.8 million, respectively.
Amortization expense related to capital leases was $39.1 million (1995), $13.1
million (1994) and $3.6 million (1993).
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 (goodwill), 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 $1.1 billion (1995) and $663.2 million (1994).
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 video and music stores are recognized at the time
of rental or sale. The publishing segment and new media recognize revenue when
merchandise is shipped.
Theatrical and Television Revenues - 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 and discs are recognized
upon delivery of the merchandise; and revenues from all television sources are
recognized upon availability of the film for telecast.
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
II-24
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
purchased interest rate cap agreements are amortized as interest expense over
the term of the agreement (See Note 8).
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 other items, net,
and have not been material in any of the years presented.
PROVISION FOR DOUBTFUL ACCOUNTS - The provision for doubtful accounts charged to
expense was $104.3 million (1995), $61.6 million (1994) and $16.7 million
(1993).
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, the effects of common shares potentially issuable in
connection with the variable common rights ("VCRs") (prior to their settlement)
and stock options and warrants for 1995 and 1994 and contingent value rights
("CVRs") for 1994. For 1993, 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 each of the full years presented, the
effect of the assumed conversion of Preferred Stock is antidilutive and
therefore, not reflected in fully diluted net earnings per common share.
RECLASSIFICATIONS
Certain amounts reported for prior years have been reclassified to conform with
the current presentation.
RECENT PRONOUNCEMENTS
During 1995, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long -Lived Assets to Be Disposed Of,"
which the Company will be required to adopt in 1996. SFAS 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable intangibles to be
disposed of. The Company does not expect that SFAS 121 will have a significant
effect on the consolidated financial position or results of operations.
During 1995, the FASB issued Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation," which establishes a
fair value based method of accounting for compensation cost related to stock
option plans and other forms of stock based compensation plans as an alternative
to the intrinsic value based method of accounting defined under Accounting
Principles Board Opinion No. 25. Companies that do not elect the new method of
accounting for 1996 will be required to provide pro forma disclosures as if the
fair value based method had been applied for the current period and prior
comparable period. The Company intends to adopt SFAS 123 by providing the pro
forma disclosures.
II-25
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
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.
On July 7, 1995 the CVRs matured. The Company paid approximately $81.9 million
in cash, or approximately $1.44 per CVR, to settle its obligation under the
CVRs.
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.
On September 29, 1995 the VCRs matured. The Company issued approximately 6.1
million shares of Viacom Inc. Class B Common Stock, or .022665 of a share of
Viacom Inc. Class B Common Stock per VCR, to settle its obligation under the
VCRs.
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 4)
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
II-26
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
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.
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993
---- ----
(UNAUDITED)
Revenues....................................... $10,121.6 $ 9,235.5
Operating income............................... 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)
Pro forma operating income for the year ended December 31, 1994 excludes $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.
During each of the 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.
As part of the Mergers, the Company recognized costs of plans to exit activities
and terminate and relocate employees of Paramount Communications and
Blockbuster. The total liabilities accrued for such costs were $228.7 million,
of which $71.4 million represents costs to exit activities, $119.2 million for
severance costs and $38.1 million for relocation costs. During 1995 and 1994,
the Company paid and charged against the liabilities $79.9 million and $84.6
million, respectively. The Company expects to substantially complete the
activities related to these liabilities during 1996.
3) POTENTIAL TRANSACTION
During July 1995, the Company entered into an agreement to split-off its cable
systems to its shareholders through a dutch-auction exchange offer. The exchange
offer will allow shareholders to exchange shares of Viacom Inc. Class A or Class
B Common Stock for shares of cumulative, redeemable exchangeable preferred stock
of a subsidiary of Viacom that holds its cable systems. Prior to the
consummation of the
II-27
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
exchange offer, such subsidiary will enter into a $1.7 billion credit agreement,
the proceeds of which will be transferred to another subsidiary of Viacom. The
Company also entered into a definitive agreement with Tele-Communications, Inc.
("TCI") under which a subsidiary of TCI, through a capital contribution of $350
million in cash, will purchase all of the common shares of such subsidiary
immediately following the split-off. National Amusements, Inc. ("NAI"), which
owns approximately 25% of Viacom Inc. Class A and Class B Common Stock on a
combined basis, will not participate in the exchange offer. The exchange offer
and related transactions are subject to several conditions, including regulatory
approvals, receipt of a tax ruling and consummation of the exchange offer.
4) DISPOSITION
On March 10, 1995, the Company sold Madison Square Garden Corporation, which
included 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 $1.0 billion, representing the sale
price of $1.1 billion, less approximately $66 million in working capital
adjustments. MSG was acquired by the Company as part of Paramount Communications
with its book value recorded at fair value and therefore no gain was recorded on
its sale. Proceeds from the sale of MSG and other dispositions were used to
repay notes payable to banks, of which approximately $600 million represents a
permanent reduction of the Company's bank commitments.
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. Summarized results of operations and
financial position data for MSG, reflected in the Company's financial
statements, are as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1995 (1) 1994 (2)
-------- --------
RESULTS OF OPERATIONS:
Revenues...................................... $ 91.5 $ 273.4
Earnings (loss) from operations before income taxes $ 12.7 $ (25.4)
(Provision) benefit for income taxes.......... $ (5.1) $ 4.9
Net earnings (loss)........................... $ 7.6 $ (20.5)
YEAR ENDED DECEMBER 31, 1994
----------------------------
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
======
(1) Reflects results of operations from January 1 through March 9.
(2) Reflects results of operations from March 1 through December 31.
II-28
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The provision for income taxes of $5.1 million for 1995 and benefit for income
taxes of $4.9 million for 1994 represent effective tax rates of 40.0% and 19.3%,
respectively. The differences between the effective tax rate and the statutory
federal tax rate of 35% principally relate to the allocation of nondeductible
goodwill amortization and state and local taxes.
5) INVENTORIES
Inventories consist of the following:
DECEMBER 31,
-----------------------
1995 1994
---- ----
Prerecorded music and video cassettes........... $ 474.8 $ 509.2
Videocassette rental inventory.................. 520.3 297.6
Publishing:
Finished goods.............................. 303.6 218.9
Work in process............................. 44.9 35.8
Materials and supplies...................... 30.2 27.1
Other........................................... 87.9 73.8
------- ---------
1,461.7 1,162.4
Less current portion......................... 903.1 830.9
------- ---------
$ 558.6 $ 331.5
======= =========
Theatrical and television inventory:
Theatrical and television productions:
Released................................ $1,612.1 $ 1,488.0
Completed, not released................. 52.5 12.8
In process and other.................... 357.0 260.8
Program rights............................. 966.3 838.3
------- ---------
2,987.9 2,599.9
Less current portion....................... 1,275.0 986.9
------- ---------
$1,712.9 $ 1,613.0
======== =========
Total non-current inventory..................... $2,271.5 $ 1,944.5
======== =========
6) INVESTMENTS IN AFFILIATED COMPANIES
The Company accounts for its investments in affiliated companies over which the
Company has significant influence or ownership of more than 20% but less than or
equal to 50% under the equity method. Such investments are principally comprised
of the Company's interest in Comedy Central (50% owned) and Nickelodeon (UK)
(50% owned), investments acquired during 1994 as part of the Mergers and in
1995, several start-up international ventures including MTV Asia. Investments
acquired as part of the Mergers were USA Networks (50% owned), Discovery Zone
(approximately 49% owned) and theatrical exhibition and other distribution
ventures. The Company's interest in Lifetime is included prior to its sale in
1994 (See Note 16). Investments in affiliates are included in other assets.
II-29
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The following is a summary of financial information as reported by the equity
investees on a 100% basis.
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---- ---- ----
Results of operations:
Revenues........................ $2,212.6 $1,514.0 $ 281.1
Operating income (loss)......... (364.6) 86.3 23.3
Net earnings (loss)............. (412.0) 57.4 10.1
DECEMBER 31,
--------------------
1995 1994
---- ----
Financial position:
Current assets.................. $ 891.8 $ 925.6
Noncurrent assets............... 1,367.8 1,445.9
Current liabilities............. 990.5 784.2
Noncurrent liabilities.......... 825.8 726.3
Equity.......................... 443.3 861.0
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.
II-30
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
7) BANK FINANCING AND DEBT
Long-term debt consists of the following:
DECEMBER 31,
-----------------
1995 1994
---- ----
Notes payable to banks (a).............................. $ 6,206.9 $7,709.4
6.625% Senior Notes due 1998.......................... 150.0 150.0
5.875% Senior Notes * due 2000........................ 149.5 149.5
7.5% Senior Notes * due 2002.......................... 247.4 247.0
6.75% Senior Notes due 2003, net of unamortized
discount of $.3 (b).................................. 349.7 --
7.75% Senior Notes due 2005, net of unamortized
discount of $9.0 (c)................................. 991.0 --
7.625% Senior Debentures due 2016, net of unamortized
discount of $1.4 (b)................................. 198.6 --
8.25% Senior Debentures * due 2022.................... 247.1 247.0
7.5% Senior Debentures * due 2023..................... 149.5 149.5
9.125% Senior Subordinated Notes * due 1999........... 150.0 150.0
8.75% Senior Subordinated Reset Notes * due 2001 (d). 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 $44.6 (1995) and $48.4 (1994) 186.8 183.1
8.0% Merger Debentures due 2006, net of unamortized
discount of $120.1 (1995) and $131.3 (1994)........ 946.7 938.6
Other Notes......................................... 62.1 71.8
Obligations under capital leases...................... 421.9 127.5
--------- ---------
$10,757.2 $10,423.4
Less current portion.................................. 45.1 21.0
---------- ---------
$10,712.1 $10,402.4
========== =========
* 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
Communications. 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-31
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The following is a summary description of the credit agreements as of December
31, 1995. The description does not purport to be complete and should be read in
conjunction with each of the credit agreements which have been previously filed
as an exhibit and are incorporated by reference herein.
The Viacom Credit Agreement is comprised of (i) a $1.5 billion senior unsecured
revolving short term loan (the "Short-Term Loan") maturing December 31, 1996,
(ii) a $1.8 billion senior unsecured reducing revolving loan (the "Revolving
Loan") maturing July 1, 2002 and (iii) a $2.189 billion term loan maturing July
1, 2002 (the "Term Loan"). The Viacom International Credit Agreement is
comprised of a $311 million 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 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.
During 1995, the Company permanently prepaid amounts and reduced commitments
under the Short-Term Loan by $1.0 billion primarily from the proceeds from the
sale of MSG and issuance of the 7.75% Senior Notes. These prepayments and
commitment reductions are reflected in the Short-Term Loan.
Effective December 1995, certain provisions of the Credit Agreement were amended
which among other things (i) eliminated required prepayments prior to December
31, 1996, except for prepayment of certain amounts received by the Company in
connection with the completion of the pending cable transaction described in
Note 3 or the potential sale of Spelling (ii) permitted completion of the cable
transaction and (iii) reduced the applicable borrowing margin payable on all
loans under the three facilities.
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, 1995, 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 5.69% and 5.63%,
respectively. At December 31, 1994, LIBOR for borrowing periods of one and two
months were 6.0% and 6.25%, respectively.
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 NAI fails to own at least 51% of the
outstanding voting stock of the Company.
II-32
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The Company is required to pay a commitment fee based on the aggregate daily
unborrowed portion of the loan commitments. As of December 31, 1995, the Company
had $1.5 billion of available unborrowed loan commitments. The credit agreements
do not require compensating balances.
(b) -- During December 1995, the Company issued an aggregate principal amount
of $350 million of 6.75% Senior Notes due 2003 at a price to the public of
99.903% and $200 million of 7.625% Senior Debentures due 2016 at a price to the
public of 99.29%. Proceeds from the issuance were used to repay notes payable to
banks. Such notes and debentures were issued pursuant to the shelf registration
statement described below.
(c) -- During May 1995, the Company issued an aggregate principal amount of
$1 billion of 7.75% Senior Notes due June 1, 2005 at a price to the public of
99.04%. Proceeds from the issuance were used to repay notes payable to banks, of
which approximately $400 million was a permanent reduction of the Company's bank
commitments. Such notes were issued pursuant to the shelf registration statement
described below.
(d) -- 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 the interest rate was reset at the original interest rate of 8.75% . On
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, 1998, 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. 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, or on May 15, 1998, at a redemption price of 101% of principal
amount plus accrued interest to, but not including, the date of redemption.
The Company filed a shelf registration statement with the Securities and
Exchange Commission registering debt securities, preferred stock and contingent
value rights of Viacom and guarantees of such debt securities by Viacom
International which may be issued for aggregate gross proceeds of $3.0 billion.
The registration statement was declared effective on May 10, 1995. The net
proceeds from the sale of the offered securities may be used by Viacom to repay,
redeem, repurchase or satisfy its obligations in respect of its outstanding
indebtedness or other securities; to make loans to its subsidiaries; for general
corporate purposes; or for such other purposes as may be specified in the
applicable Prospectus Supplement. During 1995, the Company issued $1.6 billion
of notes and debentures under this shelf registration statement.
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. The effective tax rate of 36.8%
is greater than the federal statutory tax rate of 35% due to state tax benefits.
II-33
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
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.
The effective tax rate of 40.7% is greater than the federal statutory tax rate
of 35% due to state tax benefits.
The Company borrowed the funds necessary for each of these redemptions under its
bank credit facilities existing in the respective periods.
Interest costs incurred, interest income and capitalized interest are summarized
below:
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
---- ---- ----
Interest Incurred....... $ 868.5 $ 536.3 $ 154.5
Interest Income......... $ 33.4 $ 32.6 $ 9.1
Capitalized Interest.... $ 13.7 $ 9.6 $ .4
Scheduled maturities of long-term debt of the Company through December 31, 2000,
assuming full utilization of the commitments under the credit agreements are
$1.6 billion (1996), $248.9 million (1997), $1.0 billion (1998), $1.5 billion
(1999) and $1.3 billion (2000). The Company has classified certain short-term
indebtedness as long-term debt based upon its intent and ability to refinance
such indebtedness on a long-term basis.
8) FINANCIAL INSTRUMENTS
The Company's carrying value of the financial instruments approximates fair
value, except for differences with respect to the notes and debentures and
certain differences related to other financial instruments which are not
significant. The carrying value of the senior debt, senior subordinated debt and
subordinated debt is $4.1 billion and the fair value, which is estimated based
on quoted market prices, is approximately $4.3 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, 1995, the Company had $1.6 billion of interest rate
exchange agreements outstanding with commercial banks. These agreements, which
expire over the next two years, effectively change the Company's interest rate
on an equivalent amount of variable rate borrowings to a fixed rate of 6.3%.
The Company enters into foreign currency exchange contracts in order to reduce
its exposure to changes in foreign currency exchange rates that affect the value
of its firm commitments and certain anticipated foreign currency cash flows.
These contracts generally mature within the calendar year. The Company does not
enter into foreign currency contracts for speculative purposes. To date, the
II-34
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
contracts utilized have been purchased options and forward contracts. A forward
contract is an agreement between two parties to exchange a specified amount of
foreign currency, at a specified exchange rate on a specified future date. An
option contract provides the right, but not the obligation, to buy or sell
currency at a fixed exchange rate on a future date. The contracts have
principally hedged the British pound, the Australian dollar, the Japanese yen,
the Candian dollar, the German deutschemark and the European Currency Unit/
British pound relationship. At December 31, 1995, the Company had outstanding
contracts with a notional value of approximately $12.0 million which expire in
1996. Realized gains and losses on contracts that hedge anticipated future cash
flows are recognized in "Other Items, Net" and were not material in each of the
periods. Option premiums are amortized over the life of the contract. Deferred
gains and losses on foreign currency exchange contracts as of December 31, 1995
were not material.
The Company continually monitors its positions with, and credit quality of, the
financial institutions which are counterparties to its financial instruments.
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's receivables do not represent
significant concentrations of credit risk at December 31, 1995, due to the wide
variety of customers, markets and geographic areas to which the Company's
products and services are sold.
9) SHAREHOLDERS' EQUITY
On July 7, 1995 the CVRs matured. The Company paid approximately $81.9 million
in cash, or approximately $1.44 per CVR, to settle its obligation under the
CVRs.
On September 29, 1995 the VCRs matured. The Company issued approximately 6.1
million shares of Viacom Inc. Class B Common Stock, or .022665 of a share of
Viacom Inc. Class B Common Stock per VCR, to settle its obligation under the
VCRs.
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 from issuance.
II-35
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
NAI holds approximately 25% and the public holds approximately 75% of the
Company's outstanding Common Stock as of December 31, 1995. NAI owns 61% of the
outstanding Viacom Class A Common Stock as of December 31, 1995.
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.
In addition to the 18.6 million stock option awards outstanding under various
plans, as of December 31, 1995 there are phantom shares for 321,549 shares of
common stock all of which are vested, at an average grant price of $29. 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.
Each of the unexercised stock options to purchase Paramount Communications 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 in 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.
II-36
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The following table summarizes the stock activity under the various plans:
PER SHARE
NUMBER OF OPTION
SHARES PRICE RANGE
------ -----------
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
----------
Granted............................... 295,184 39.875 to 50.50
Exercised............................. (5,312,711) 1.52 to 47.26
Canceled.............................. (1,429,268) 12.34 to 55.25
-----------
BALANCE AT DECEMBER 31, 1995............ 18,568,321 $1.52 to $55.25
==========
STOCK OPTIONS AVAILABLE FOR FUTURE GRANT:
December 31, 1993..................... 1,994,020
December 31, 1994..................... 6,143,638
December 31, 1995..................... 7,229,853
SHARES ISSUABLE UNDER EXERCISABLE STOCK OPTIONS:
December 31, 1993..................... 1,448,570
December 31, 1994..................... 18,110,234
December 31, 1995..................... 13,120,626
The Company has reserved a total of 1,311,211 shares of Viacom Class A Common
Stock and 34,399,967 shares of Viacom Class B Common Stock principally for
exercise of stock options and warrants, and the conversion of the Preferred
Stock.
10) INCOME TAXES
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.
II-37
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
Earnings from continuing operations before income taxes are attributable to the
following jurisdictions:
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
---- ---- ----
United States............ $416.3 $179.4 $267.8
Foreign.................. 272.9 197.3 34.0
------ ------ ------
Total.................... $689.2 $376.7 $301.8
====== ====== ======
Components of the provision for income taxes on earnings from continuing
operations before income taxes are as follows:
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
---- ---- ----
Current:
Federal............... $83.7 $139.1 $89.5
State and local....... 46.5 78.3 10.4
Foreign............... 64.1 65.8 5.6
----- ------ ------
194.3 283.2 105.5
Deferred................ 222.7 (3.5) 24.3
----- -------- ------
$417.0 $279.7 $129.8
====== ====== ======
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
(benefits) relating to earnings (loss) from equity investments in 1995, 1994 and
1993 are $(22.7) million, $9.8 million and $(.6) million, respectively, which
represents an effective tax rate of 29.6%, 35.0% and 19.4%, respectively. The
difference between the effective tax rates and the federal statutory tax rate of
35% is principally due to the effect of nondeductible goodwill amortization and
state and local taxes related to equity earnings (loss). See Notes 4 and 7 for
tax benefits relating to the Discontinued Operations and Extraordinary Losses,
respectively. In addition to the amounts reflected in the table above, $35.8
million and $13.3 million of income tax benefit in 1995 and 1994, respectively,
was recorded as a component of shareholders' equity as a result of exercised
stock options.
II-38
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
A reconciliation of the U.S. Federal statutory tax rate to the Company's
effective tax rate on earnings from continuing operations before income taxes is
summarized as follows:
YEAR ENDED DECEMBER 31,
----------------------------
1995 1994 1993
---- ---- ----
Statutory U.S. tax rate............. 35.0% 35.0% 35.0%
State and local taxes, net
of federal tax benefit............ 5.3 6.6 5.7
Effect of foreign operations........ (5.2) .2 .5
Amortization of intangibles......... 22.5 25.9 7.1
Divestiture tax versus book......... .8 1.5 (3.2)
Income tax reserve adjustment....... -- -- (5.0)
Effect of changes in statutory rate. -- -- .5
Other, net.......................... 2.1 5.1 2.4
---- ---- -----
Effective tax rate on earnings from
continuing operations............... 60.5% 74.3% 43.0%
===== ===== =====
The annual effective tax rate of 43% for 1993 includes a reduction of certain
prior year tax reserves in the amount of $22 million based on the favorable
settlement of federal and state and local audits.
II-39
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The following is a summary of the components of the deferred tax accounts in
accordance with SFAS 109:
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
---- ----
Current deferred tax assets and (liabilities):
Recognition of revenue............................. $ 68.4 $ 22.5
Sales return and allowances........................ 100.6 96.6
Publishing costs................................... 37.8 72.2
Employee compensation and other payroll related
expenses......................................... 37.5 24.1
Other differences between tax and financial statement
values........................................... 2.1 (21.6)
-------- --------
Gross current deferred net tax assets........... 246.4 193.8
-------- --------
Noncurrent deferred tax assets and (liabilities):
Depreciation/amortization of fixed assets and
intangibles....................................... (138.5) (9.8)
Reserves including restructuring and relocation
charges........................................... 285.1 334.4
Program costs...................................... (17.4) (67.9)
Acquired net operating loss and tax credit
carryforwards.................................... 105.4 100.3
Amortization of discount on 8% Merger Debentures... 78.5 85.7
Recognition of revenue............................. 24.8 89.9
Other differences between tax and financial statement
values........................................... 125.0 72.8
-------- --------
Gross noncurrent deferred net tax assets......... 462.9 605.4
-------- --------
Valuation allowance................................ (81.8) (75.7)
-------- --------
Total net deferred tax assets (liabilities).... $ 627.5 $ 723.5
======== ========
As of December 31, 1995 and December 31, 1994, the Company had total deferred
tax assets of $865.2 million and $898.5 million, respectively, and total
deferred tax liabilities of $155.9 million and $99.3 million, respectively.
As of December 31, 1995, the Company had net operating loss carryforwards of
approximately $202.0 million and capital loss carryforwards of approximately
$4.8 million which expire in various years from 1996 through 2010. The Company
has foreign tax credit and investment tax credit carryforwards of approximately
$22.3 million which expire by the year 2000. In addition, the Company has
alternative minimum tax credit carryforwards of approximately $7.0 million that
may be carried forward indefinitely.
The 1995 and 1994 net deferred tax asset is reduced by a valuation allowance of
$81.8 million and $75.7 million, respectively, principally relating to tax
benefits of net operating loss and tax credit carryforwards which are not
expected to be recognized as a result of limitations applied where there is a
change of ownership. The $6.1 million increase during 1995 in the deferred tax
valuation allowance primarily relates to an increase in the amount of acquired
tax credit carryforwards for which a full valuation allowance has been recorded.
II-40
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
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 $1.1 billion and $881
million at December 31, 1995 and December 31, 1994, respectively. No provision
has been recorded for the U.S. or foreign taxes that could result from the
remittance of such undistributed earnings since the Company intends to reinvest
these earnings outside the United States indefinitely and it is not practicable
to estimate the amount of such taxes.
11) 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,
-----------------------------
1995 1994 1993
---- ---- ----
Service cost - benefits earned during
the period.......................... $ 25.2 $ 22.1 $ 5.4
Interest cost on projected benefit
obligation.......................... 48.9 33.4 4.1
Return on plan assets:
Actual............................... (108.9) 2.9 (1.8)
Deferred............................. 67.2 (37.7) (1.1)
Net amortizations...................... (.4) .6 .5
--------- ------- --------
Net pension cost....................... $ 32.0 $ 21.3 $ 7.1
======== ======= ========
II-41
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The funded status of the pension plans for the periods indicated is as follows:
DECEMBER 31,
---------------------------------------------------------------
1995 1994
------------------------------ ------------------------------
ACCUMULATED ASSETS EXCEED ACCUMULATED ASSETS EXCEED
BENEFITS EXCEED ACCUMULATED BENEFITS EXCEED ACCUMULATED
ASSETS BENEFITS ASSETS BENEFITS
------ -------- ------ --------
Actuarial present value of benefit obligations:
Accumulated benefit obligation:
Vested......................... $ (96.9) $ (454.6) $ (32.3) $ (386.6)
Non-vested..................... (3.4) (15.5) (.7) (27.8)
-------- -------- ------- --------
Total.......................... $ (100.3) $ (470.1) $ (33.0) $ (414.4)
======== ======== ======= ========
Projected benefit obligation...... $ (132.1) $ (542.0) $ (45.4) $ (480.2)
Plan assets at fair value......... 43.0 503.9 8.7 439.3
-------- -------- ------- --------
Projected benefit obligation in
excess of plan assets............. (89.1) (38.1) (36.7) (40.9)
Unrecognized net (gain) losses.... 18.7 2.4 (4.7) (7.9)
Unrecognized prior service cost... 3.2 (12.7) 5.5 (1.7)
Unrecognized transition obligation 3.5 (9.8) 1.8 --
Adjustment to recognize minimum
liability......................... (8.5) -- (.9) --
-------- --------- ------- -------
Pension liability at year end..... $ (72.2) $ (58.2) $ (35.0) $ (50.5)
========= ========== ======== =========
The following assumptions were used in accounting for the pension plans:
1995 1994 1993
---- ---- ----
Discount rate........................... 7.25% 8.5% 7.5%
Return on plan assets................... 9.5% 9.0-10.0% 9.0%
Rate of increase in future compensation. 5.0-5.5% 5.0-6.0% 6.0%
In addition, the Company contributes to multiemployer pension plans which
provide benefits to certain employees under collective bargaining agreements.
The pension expense for these plans was $18.0 million (1995) and $10.9 million
(1994).
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-42
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
The components of the amount recognized are as follows:
DECEMBER 31,
------------
1995 1994
---- ----
Accumulated postretirement benefit obligation
attributable to:
Current retirees.................................... $ 98.5 $ 88.9
Fully eligible active plan participants............. 15.7 17.8
Other active plan participants...................... 40.5 35.1
Unrecognized net gain............................... 13.6 21.4
------- -------
Accumulated postretirement benefit obligation....... $ 168.3 $ 163.2
======= =======
The components of net periodic postretirement benefit cost
are as follows:
DECEMBER 31,
------------
1995 1994
---- ----
Service costs-benefits earned........................ $ 3.8 $ 4.4
Interest cost on accumulated postretirement
benefit obligation................................ 10.8 9.5
Amortization of gain................................. (1.4) --
------- -------
Net periodic postretirement benefit cost............. $13.2 $13.9
===== =====
1995 1994
---- ----
The following assumptions were used in accounting for
post retirement benefits:
Projected health care cost trend rate............... 11% 12%
Ultimate trend rate............................... 5.5% 5.5%
Year ultimate trend rate is achieved.............. 2001 2001
Discount rate..................................... 7.25% 8.5%
Effect of a 1% point increase in the health
care cost trend rate:
Postretirement benefit obligation................. $20.6 $19.9
Aggregate of service and interest cost............ $ 2.4 $ 2.6
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 $12.1 million and $10.0 million related to these benefits during the
years ended December 31, 1995 and 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.
II-43
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
12) COMMITMENTS AND CONTINGENCIES
The Company has long-term noncancelable lease commitments for retail and office
space and equipment, transponders, studio facilities and vehicles.
At December 31, 1995, minimum rental payments under noncancelable leases are as
follows:
LEASES
----------------------
OPERATING CAPITAL
--------- -------
1996................................... $ 502.5 $ 90.3
1997................................... 452.4 89.0
1998................................... 409.9 90.5
1999................................... 356.0 92.3
2000................................... 299.0 70.1
2001 and thereafter.................... 1,598.1 218.5
------- -------
Total minimum lease payments........... $3,617.9 650.7
=======
Less amounts representing interest..... 228.8
-------
Present value of net minimum payments.. $ 421.9
=======
The Company has also entered into capital leases for transponders with future
minimum commitments commencing in future periods of approximately $262.5 million
payable over the next thirteen 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 $122.9 million. Rent
expense amounted to $487.8 million (1995), $240.2 million (1994) and $74.2
million (1993).
The commitments of the Company for program license fees, which are not reflected
in the balance sheet as of December 31, 1995 and are estimated to aggregate
approximately $2.2 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,
financial position or cash flows.
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
II-44
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
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, financial position or cash flows.
II-45
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
13) BUSINESS SEGMENTS
YEAR ENDED OR AT DECEMBER 31,
--------------------------------
1995 1994 1993
---- ---- ----
REVENUES:
Networks and Broadcasting........ $ 2,137.4 $ 1,855.1 $1,403.0
Entertainment.................... 3,650.4 2,285.2 209.1
Video and Music/Theme Parks...... 3,333.4 1,070.4 --
Publishing....................... 2,171.1 1,786.4 --
Cable Television................. 444.4 406.2 416.0
Intercompany elimination......... (48.0) (40.1) (23.2)
-------- --------- --------
Total revenues.............. $11,688.7 $ 7,363.2 $2,004.9
========= ========= ========
OPERATING INCOME:
Networks and Broadcasting........ $ 561.3 $ 357.1 $ 314.4
Entertainment.................... 307.3 (88.4) 32.5
Video and Music/Theme Parks...... 501.5 199.5 --
Publishing....................... 186.3 193.9 --
Cable Television................. 101.1 78.8 110.2
Corporate........................ (164.2) (132.6) (72.1)
---------- ---------- --------
Total operating income....... $ 1,493.3 $ 608.3 $ 385.0
========== ========= ========
DEPRECIATION AND AMORTIZATION:
Networks and Broadcasting........ $ 117.0 $ 96.2 $ 68.2
Entertainment.................... 138.6 94.4 9.5
Video and Music/Theme Parks...... 321.5 90.4 --
Publishing....................... 153.9 103.0 --
Cable Television................. 81.8 76.4 71.5
Corporate........................ 7.6 5.3 3.9
------- -------- --------
Total depreciation and
amortization............... $ 820.4 $ 465.7 $ 153.1
======= ======== ========
IDENTIFIABLE ASSETS AT YEAR END:
Networks and Broadcasting........ $ 4,417.8 $ 4,115.2 $2,538.6
Entertainment.................... 7,920.1 8,171.8 845.6
Video and Music/Theme Parks...... 9,646.3 9,189.6 --
Publishing....................... 5,343.7 5,194.7 --
Cable Television................. 1,063.6 1,030.1 963.0
Corporate........................ 634.5 572.3 2,069.7
------- -------- -------
Total identifiable assets at
year end................... $29,026.0 $28,273.7 $6,416.9
========= ========= ========
CAPITAL EXPENDITURES:
Networks and Broadcasting........ $ 58.2 $ 53.8 $ 40.7
Entertainment.................... 58.1 19.6 4.9
Video and Music/Theme Parks...... 388.5 145.9 --
Publishing....................... 52.4 34.5 --
Cable Television................. 119.3 99.8 79.5
Corporate........................ 54.1 11.3 9.9
--------- -------- --------
Total capital expenditures... $ 730.6 $ 364.9 $ 135.0
========= ========= ========
II-46
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
14) OPERATIONS BY GEOGRAPHIC AREA
YEAR ENDED OR AT DECEMBER 31,
-------------------------------------
1995 1994 1993
---- ---- ----
Revenues:
United States............................... $ 9,526.2 $ 6,002.6 $ 1,857.5
United States export sales.................. 215.2 137.4 25.2
International............................... 1,947.3 1,223.2 122.2
--------- --------- ---------
Total revenues........................ $ 11,688.7 $ 7,363.2 $ 2,004.9
========= ========= =========
Operating income:
United States............................... $ 1,287.8 $ 423.8 $ 341.8
International............................... 205.5 184.5 43.2
--------- --------- ---------
Total operating income................ $ 1,493.3 $ 608.3 $ 385.0
========== ========= =========
Identifiable assets at year end:
United States............................... $ 26,146.6 $ 25,876.1 $ 6,301.2
Other....................................... 2,879.4 2,397.6 115.7
--------- --------- ---------
Total identifiable assets............. $ 29,026.0 $ 28,273.7 $ 6,416.9
========= ========= =========
Intercompany transfers between geographic areas are not significant.
II-47
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
15) QUARTERLY FINANCIAL DATA (unaudited):
Summarized quarterly financial data for 1995 and 1994 appears below:
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL YEAR
------- ------- ------- ------- ----------
1995
- ----
Revenue (1)........................... $ 2,695.6 $ 2,865.2 $ 3,062.4 $ 3,065.5 $ 11,688.7
Operating income (1).................. $ 335.1 $ 388.2 $ 489.6 $ 280.4 1,493.3
Net earnings from continuing operations
(2)................................... $ 63.6 $ 53.0 $ 93.8 $ 4.5 214.9
Net earnings (2)...................... $ 71.2 $ 53.0 $ 93.8 $ 4.5 222.5
Net earnings attributable to common
stock................................. $ 56.2 $ 38.0 $ 78.8 $ (10.5) 162.5
Primary and fully diluted net earnings
per common share:
Net earnings from continuing
operations........................ $ .13 $ .10 $ .21 $ (.03) $ .41
Net earnings........................ $ .15 $ .10 $ .21 $ (.03) $ .43
Weighted average number of common
shares:
Primary (3)......................... 384.9 386.1 376.1 369.2 375.1
Fully diluted (3)................... 385.3 386.8 376.4 369.2 375.5
1994
- ----
Revenue (4) .......................... $ 837.8 $ 1,612.6 $ 2,135.4 $ 2,777.4 $ 7,363.2
Operating income (4).................. $ (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 (4) (5)..... $ (435.5) $ 265.6 $ 335.1 $ (34.7) $ 130.5
Net earnings (loss) (4) (5)........... $ (431.6) $ 244.1 $ 327.3 $ (50.2) $ 89.6
Net earnings (loss) attributable to
common stock (4) (5).................. $ (454.1) $ 221.6 $ 312.3 $ (65.2) $ 14.6
Net earnings (loss) 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) $ 1.55 $ 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 (6)...................... $ (3.62) $ 1.57 $ 1.36 $ (.14) $ .25
Net earnings (loss) (6)............. $ (3.59) $ 1.44 $ 1.32 $ (.18) $ .07
Weighted average number of common
shares............................ 126.4 169.7 247.2 358.2 220.4
The timing of the Company's results of operations is affected by the seasonality
of the educational publishing business, the typical timing of major motion
picture releases, the summer operation of the theme parks, the positive effect
of the holiday season on advertising and video store revenues, and the impact of
the broadcasting television season on television production.
(1) The first quarter of 1995 included $250.0 million of revenues and $68.0
million of operating income resulting from the conforming of accounting
principles pertaining to the television programming libraries of Viacom
Entertainment, Spelling and Paramount.
(2) The fourth quarter of 1995 included an after-tax equity loss of $31.5
million related to Discovery Zone.
(3) The first and second quarter of 1995 includes shares of common stock
potential issuance under CVRs. The CVRs were settled in cash on July 7,
1995 (See Note 2.)
(4) The first quarter of 1994 reflects Paramount Communications' results of
operations commencing March 1, 1994 and merger-related charges of $332.1
million. The fourth quarter of 1994 reflects Blockbuster results of
operations commencing October 1, 1994. (See Notes 2 .)
(5) 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
16.)
(6) The second and third quarter of 1994 reflect the effects of the assumed
conversion of the Preferred Stock.
II-48
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
16) OTHER ITEMS, NET
For 1995, "Other items, net" primarily reflects a gain of $26.9 million on the
sale of marketable securities.
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.
17) SUPPLEMENTAL CASH FLOW INFORMATION
YEAR ENDED DECEMBER 31,
----------------------------
1995 1994 1993
---- ---- ----
Cash payments for interest net of amounts
capitalized................................ $925.9 $ 293.6 $167.4
Cash payments for income taxes............. 485.7 135.2 32.7
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING
AND INVESTING ACTIVITIES:
Settlement of VCRs with Class B Common
Stock.................................. 402.6 -- --
Paramount Merger Consideration........... -- 3,175.0 --
Blockbuster Merger Consideration......... -- 7,622.8 --
Equipment acquired under capitalized leases 314.5 47.6 44.4
Cancellation of Preferred Stock and Viacom
Class B Common Stock issued to
Blockbuster............................ -- 1,850.0 --
18) 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
7). 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, Viacom International holds the assets of Paramount
Communications subject to its liabilities including approximately $1.0 billion
of issuances of long-term debt (reflected in non-guarantor affiliates for 1994).
II-49
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
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 as previously filed on Form 10-K are
incorporated by reference herein.
1995
----------------------------------------------------------------
NON- THE
VIACOM GUARANTOR COMPANY
VIACOM INTERNATIONAL AFFILIATES ELIMINATIONS CONSOLIDATED
------ ------------- ---------- ------------ ------------
Revenues..................... $ 3,674.1 $ 1,005.4 $ 7,025.9 $ (16.7) $ 11,688.7
Expenses:
Operating................. 2,528.0 337.9 4,223.5 (16.7) 7,072.7
Selling, general and
administrative.......... 304.3 450.7 1,547.3 -- 2,302.3
Depreciation and amortization 307.0 52.2 461.2 -- 820.4
--------- --------- --------- --------- --------
Total expenses......... 3,139.3 840.8 6,232.0 (16.7) 10,195.4
--------- --------- --------- --------- --------
Operating income............. 534.8 164.6 793.9 -- 1,493.3
Other income (expense):
Interest expense, net..... (696.3) (98.1) (27.0) -- (821.4)
Other items, net.......... 0.1 28.6 (11.4) -- 17.3
--------- --------- --------- --------- --------
Earnings (loss) from continuing
operations before income taxes (161.4) 95.1 755.5 -- 689.2
Provision for income taxes (3.7) (51.5) (361.8) -- (417.0)
Equity in earnings (loss) of
affiliated companies, net of
tax 391.1 405.6 38.2 (888.8) (53.9)
Minority interest......... (3.5) (.7) 0.8 -- (3.4)
--------- --------- --------- --------- --------
Net earnings from continuing
operations................... 222.5 448.5 432.7 (888.8) 214.9
Income from discontinued
operations, net of tax ...... -- -- 7.6 -- 7.6
--------- --------- --------- --------- --------
Net earnings.................. 222.5 448.5 440.3 (888.8) 222.5
Cumulative convertible preferred
stock dividend requirement 60.0 -- -- -- 60.0
--------- --------- --------- --------- --------
Net earnings attributable to
common stock.............. $ 162.5 $ 448.5 $ 440.3 $ (888.8) $ 162.5
========= ========= ========= ======== ========
II-50
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
1994
-------------------------------------------------------------------
NON- THE
VIACOM GUARANTOR COMPANY
VIACOM INTERNATIONAL AFFILIATES ELIMINATIONS CONSOLIDATED
------ ------------- ---------- ------------ ------------
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
-------- ------- ------- ------- --------
Operating income (loss).... 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 of
affiliated 207.6 167.0 24.4 (380.4) 18.6
companies, net of tax...
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..................... 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
====== ====== ====== ======== ========
II-51
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
1995
--------------------------------------------------------------------------
NON- THE
VIACOM GUARANTOR COMPANY
VIACOM INTERNATIONAL AFFILIATES ELIMINATION CONSOLIDATED
------ ------------- ---------- ----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents.. $ 176.2 $ 223.3 $ 64.6 $ -- $ 464.1
Receivables, net....... 259.4 267.7 1,366.8 (21.5) 1,872.4
Inventory.............. 736.5 102.3 1,339.3 -- 2,178.1
Other current assets... 44.6 103.3 544.1 (7.6) 684.4
-------- -------- --------- ------- ----------
Total current assets. 1,216.7 696.6 3,314.8 (29.1) 5,199.0
-------- -------- ---------- ------- ----------
Property and equipment..... 1,132.9 280.2 2,561.6 -- 3,974.7
Less accumulated
depreciation........... 141.5 55.9 559.4 -- 756.8
-------- -------- --------- ------- ----------
Net property and
equipment.............. 991.4 224.3 2,002.2 -- 3,217.9
-------- -------- --------- ------- ----------
Inventory 682.0 182.2 1,407.3 -- 2,271.5
Intangibles, at amortized
cost..................... 7,118.3 557.5 8,477.4 -- 16,153.2
Investments in consolidated
subs..................... 1,943.5 11,295.9 -- (13,239.4) --
Other assets............... 237.3 314.6 1,982.8 (350.3) 2,184.4
-------- -------- ---------- ---------- ----------
$12,189.2 $13,271.1 $17,184.5 $(13,618.8) $ 29,026.0
========= ========= =========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts payable........ $ 339.4 $ 44.2 $411.7 $ (6.5) $ 788.8
Accrued interest........ 97.6 50.8 1.4 -- 149.8
Merger consideration
payable............... 167.4 -- -- -- 167.4
Accrued compensation.... 47.5 145.7 256.2 -- 449.4
Participants share,
residuals and
royalties payable.... 87.3 -- 710.9 -- 798.2
Current portion of
long-term debt....... 25.2 1.5 18.4 -- 45.1
Other current liabilities 298.7 330.8 1,098.9 (28.5) 1,699.9
-------- -------- --------- -------- --------
Total current liabilities 1,063.1 573.0 2,497.5 (35.0) 4,098.6
-------- -------- --------- -------- --------
Long-term debt............. 8,705.1 1,595.2 592.2 (180.4) 10,712.1
Other liabilities.......... (10,468.5) 1,152.1 11,799.7 (361.8) 2,121.5
Shareholders' equity:
Preferred Stock......... 1,200.0 -- -- 1,200.0
Common Stock............ 3.7 212.0 722.4 (934.4) 3.7
Additional paid-in
capital............... 10,726.9 8,544.4 1,052.7 (9,597.1) 10,726.9
Retained earnings....... 976.8 1,171.1 535.3 (2,510.1) 173.1
Cumulative translation
adjustment............ (17.9) 23.3 (15.3) -- (9.9)
--------- -------- ---------- ------- ----------
Total shareholders'
equity 12,889.5 9,950.8 2,295.1 (13,041.6) 12,093.8
-------- -------- ---------- --------- ----------
$12,189.2 $13,271.1 $ 17,184.5 $(13,618.8) $29,026.0
========= ========= ========== =========== ==========
II-52
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
1994
------------------------------------------------------------------------------
NON- THE
VIACOM GUARANTOR COMPANY
VIACOM INTERNATIONAL AFFILIATES ELIMINATION CONSOLIDATED
------ ------------- ---------- ----------- ------------
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.............. 694.1 144.3 979.4 -- 1,817.8
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
Investments in consolidated
subs......................... 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
Merger consideration 261.7 -- -- -- 261.7
payable...............
Accrued compensation.... 42.0 83.4 215.2 -- 340.6
Participants share,
residuals and 11.4 104.8 513.8 -- 630.0
royalties payable.....
Current portion of long-term
debt.................. 3.8 7.4 9.8 -- 21.0
Other accrued expenses.. 323.5 213.5 1,360.2 (25.1) 1,872.1
--------- -------- ---------- --------- ---------
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
=========== ========== ========== =========== ==========
II-53
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
1995
------------------------------------------------------------------------
NON- THE
VIACOM GUARANTOR COMPANY
VIACOM INTERNATIONAL AFFILIATES ELIMINATION CONSOLIDATED
------ ------------- ---------- ----------- -----------
NET CASH FLOW FROM OPERATING ACTIVITIES $ 318.4 $ (66.5) $(196.3) $ -- $ 55.6
------- -------- ------- -------- ------
INVESTING ACTIVITIES:
Proceeds from dispositions....... -- 1,036.1 406.8 -- 1,442.9
Acquisitions, net of cash acquired (230.7) -- (385.5) (616.2)
Capital expenditures............. (335.9) (93.8) (300.9) -- (730.6)
Investments in and advances to
affiliated companies.......... (45.0) (72.4) (20.7) -- (138.1)
Proceeds from sale of short-term
investments................... -- 281.3 -- -- 281.3
Payments for purchase of short-term
investments................... -- (301.2) -- -- (301.2)
Other, net....................... (20.5) (3.1) 5.9 -- (17.7)
------- ------- ------ -------- -------
NET CASH FLOW FROM INVESTING
ACTIVITIES.................... (632.1) 846.9 (294.4) -- (79.6)
------- ------ ------- -------- -------
FINANCING ACTIVITIES:
Short-term borrowings from
(repayments to) banks, net..... (1,560.2) -- -- -- (1,560.2)
Increase (decrease) in intercompany
payables ..................... 440.3 (616.2) 175.9 -- --
Proceeds from issuance of senior
notes......................... 1,538.6 -- -- -- 1,538.6
Proceeds from exercise of
stock options and warrants.... 125.6 -- -- -- 125.6
Payment of Preferred Stock
dividends..................... (60.0) -- -- -- (60.0)
Settlement of CVRs............... (81.9) -- -- -- (81.9)
Deferred financing fees.......... (23.4) -- -- -- (23.4)
Other, net....................... (24.7) (4.3) (19.3) -- (48.3)
-------- ------- ------- -------- ---------
NET CASH FLOW FROM FINANCING
ACTIVITIES.................... 354.3 (620.5) 156.6 -- (109.6)
-------- ------- ------- -------- ---------
Net increase (decrease) in cash and
cash equivalents.............. 40.6 159.9 (334.1) -- (133.6)
Cash and cash equivalents at beginning
of year....................... 135.6 63.4 398.7 -- 597.7
-------- ------- ------- -------- ---------
CASH AND CASH EQUIVALENTS AT END
OF YEAR....................... $ 176.2 $223.3 $ 64.6 -- $ 464.1
======== ======= ======= ======== =========
II-54
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Tabular dollars in millions, except per share amounts)
1994
--------------------------------------------------------------------
NON- THE
VIACOM GUARANTOR COMPANY
VIACOM INTERNATIONAL AFFILIATES ELIMINATION CONSOLIDATED
------ ------------- ---------- ----------- ------------
NET CASH FLOW FROM OPERATING ACTIVITIES....... $ (25.5) $ 26.9 $ 410.0 $ (34.5) $ 376.9
-------- -------- --------- --------- --------
INVESTING ACTIVITIES:
Proceeds from dispositions..... -- 317.6 -- -- 317.6
Acquisitions, net of cash acquired............ (6,609.1) -- 354.5 -- (6,254.6)
Capital expenditures........... (112.2) (39.5) (213.2) -- (364.9)
Investments in and advances to
affiliated companies....... -- (26.5) (24.8) -- (51.3)
Proceeds from sale of short-term
investments................. -- -- 156.2 -- 156.2
Payments for purchase of short-term
investments................. -- -- (102.2) -- (102.2)
Other, net..................... (19.2) (6.9) (3.3) (7.8) (37.2)
--------- --------- ---------- --------- ---------
NET CASH FLOW FROM INVESTING
ACTIVITIES.................. (6,740.5) 244.7 167.2 (7.8) (6,336.4)
--------- -------- --------- --------- ---------
FINANCING ACTIVITIES:
Short-term borrowings (repayments)
from banks, net............. 5,175.9 (1,541.1) (74.8) -- 3,560.0
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
Proceeds from exercise of
stock options and warrants.. 52.6 -- -- -- 52.6
Payment of Preferred Stock
dividends................... (72.7) -- -- -- (72.7)
Deferred financing fees........ (86.8) (.3) -- -- (87.1)
Other, net..................... (23.7) (.9) (3.4) -- (28.0)
------- -------- ------- -------- ---------
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
======== ======== ========= ========= ========
Item 9. Disagreements on Accounting and Financial Disclosure - Not applicable.
II-55
PART III
Item 10. Directors and Executive Officers.
The information contained in the Viacom Inc. Definitive Proxy Statement
under the captions "Information Concerning Directors and Nominees" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" 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 captions "Compensation Committee Interlocks and Insider Participation"
and "Related Transactions" is incorporated herein by reference.
41
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 December
15, 1995, relating to the execution of an underwriting agreement between Viacom
Inc. and Viacom International Inc. and Goldman, Sachs & Co., Bear, Stearns & Co.
Inc., Lehman Brothers Inc. and Smith Barney Inc., dated December 12, 1995,
pursuant to which, on December 15, 1995, Viacom Inc. issued and sold $550
million aggregate principal amount of Viacom Inc.'s 6.75% Senior Notes due 2003
and 7.625% Senior Debentures due 2016, unconditionally guaranteed as to payment
of principal and interest by Viacom International Inc.
(c) Exhibits (see index on Page E-1)
42
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/ SUMNER M. REDSTONE
-----------------------
Sumner M. Redstone,
Chairman of the Board of
Directors, Chief Executive
Officer
By /s/ GEORGE S. SMITH, JR.
-----------------------
George S. Smith, Jr.,
Senior Vice President,
Chief Financial Officer
By /s/ SUSAN C. GORDON
------------------------
Susan C. Gordon,
Vice President,
Controller, Chief
Accounting Officer
Date: April 1, 1996
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:
Signature Title Date
* Director April 1, 1996
- -------------------------
George S. Abrams
/s/ PHILIPPE P. DAUMAN Director April 1, 1996
- -------------------------
Philippe P. Dauman
* Director April 1, 1996
- -------------------------
Thomas E. Dooley
43
* Director April 1, 1996
- -------------------------
George D. Johnson, Jr.
* Director April 1, 1996
- -------------------------
Ken Miller
* Director April 1, 1996
- -------------------------
Brent D. Redstone
* Director April 1, 1996
- -------------------------
Shari Redstone
/s/ SUMNER M. REDSTONE Director April 1, 1996
- -------------------------
Sumner M. Redstone
* Director April 1, 1996
- -------------------------
Frederic V. Salerno
* Director April 1, 1996
- -------------------------
William Schwartz
* Director April 1, 1996
- -------------------------
Ivan Seidenberg
*By /s/ PHILIPPE P. DAUMAN April 1, 1996
------------------------
Philippe P. Dauman
Attorney-in-Fact
for the Directors
44
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).
(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).
45
EXHIBIT
NO. DESCRIPTION OF DOCUMENT PAGE NO.
(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. 1-9553).
(d) 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) 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).
(f) 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) as
amended by Amendment No. 1 dated as of August 5, 1994, Amendment No. 2
dated as of September 29, 1994, Amendment No. 3 dated as of May 15,
1995 and Amendments No. 4 and 5 dated as of November 17, 1995 (filed
herewith).
(g) Credit Agreement dated as of July 1, 1994 among Viacom Cablevision of
Dayton Inc.; WNYT Inc., WMZQ Inc., WVIT Inc. and Viacom International
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 4.2 to the Current Report on
Form 8-K of Viacom Inc. dated July 22, 1994) (File No. 1-9553) as
amended by Amendment No. 1 dated as of August 5, 1994, Amendment No. 2
dated as of May 15, 1995 and Amendments No. 3 and 4 dated as of
November 17, 1995 (filed herewith).
46
EXHIBIT
NO. DESCRIPTION OF DOCUMENT PAGE NO.
(h) Credit Agreement dated as of September 29, 1994, among Viacom Inc.,
the Bank 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, 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) as amended by Amendment No. 1
dated as of May 15, 1995 and Amendments No. 2 and 3 dated as of
November 17, 1995 (filed herewith).
(i) 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.
(10) Material Contracts
(a) Viacom Inc. 1994 Long-Term Management Incentive Plan (as amended and
restated through April 27, 1995) (incorporated by reference to Exhibit
A-1 to Viacom Inc.'s Definitive Proxy Statement dated April 28,
1995).*
(b) Viacom Inc. 1989 Long-Term Management Incentive Plan (as amended and
restated through April 23, 1990 and as further amended and restated
through April 27, 1995) (incorporated by reference to Exhibit A-2 to
Viacom Inc.'s Definitive Proxy Statement dated April 28, 1995).*
(c) Viacom Inc. Senior Executive Short-Term Incentive Plan (as amended and
restated through March 27, 1996) (filed herewith).*
(d) Viacom Inc. Long-Term Incentive Plan (Divisional) (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).*
(e) 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).*
(f) Viacom Inc. and Viacom International Inc. Retirement Income Plan for
Non-Employee Directors (incorporated by reference to Exhibit 10(f) to
the Annual Report on Form 10-K of Viacom Inc. for the fiscal year
ended December 31, 1989) (File No. 1-9553).*
(g) Viacom Inc. Stock Option Plan for Outside 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).*
(h) Viacom Inc. 1994 Stock Option Plan for Outside Directors (incorporated
by reference to Exhibit B to Viacom Inc.'s Definitive Proxy Statement
dated April 28, 1995).*
(i) 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).*
(j) Excess Pension Plan for Certain Key Employees of Viacom International
Inc. (incorporated by reference to Exhibit 10(i) to the Annual Report
on Form 10-K of Viacom Inc. for the fiscal year ended December 31,
1990) (File No. 1-9553).*
*Management contract or compensatory plan required to be filed as an exhibit to
this form pursuant to Item 14(c).
47
EXHIBIT
NO. DESCRIPTION OF DOCUMENT PAGE NO.
(k) 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.
1-9553).*
(l) Agreement, dated as of January 1, 1996, between Viacom Inc. and
Philippe P. Dauman (filed herewith).*
(m) Agreement, dated as of January 1, 1996, between Viacom Inc. and Thomas
E. Dooley (filed herewith).*
(n) Agreement, dated as of July 1, 1994, between Viacom Inc. and Edward D.
Horowitz (incorporated by reference to Exhibit 10(o) to the Annual
Report on Form 10-K of Viacom Inc. for the fiscal year ended December
31, 1994)(File No. 1-9553).*
(o) 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 Report on Form 10-K of Viacom Inc. for the fiscal year
ended December 31, 1990) (File No. 1-9553), 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, 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 (incorporated
by reference to Exhibit 10(m) to the Annual Report on Form 10-K of
Viacom Inc. for the fiscal year ended December 31, 1994)(File No.
1-9553).*
(p) Service Agreement, dated as of March 1, 1994, between George S. Abrams
and Viacom Inc. (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, 1994)(File No. 1-9553).*
(q) 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).
(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).
*Management contract or compensatory plan required to be filed as an exhibit to
this form pursuant to Item 14(c).
48
EXHIBIT
NO. DESCRIPTION OF DOCUMENT PAGE NO.
(r) Parents Agreement dated as of July 24, 1995 among Viacom Inc.,
Tele-Communications, Inc. and TCI Communications, Inc. (incorporated
by reference to Exhibit 10.1 to the Registration Statement on Form S-4
filed by Viacom International Inc.) (File No. 33-64467).
(s) Implementation Agreement dated as of July 24, 1995 between Viacom
International Inc. and Viacom International Services Inc.
(incorporated by reference to Exhibit 10.2 to the Registration
Statement on Form S-4 filed by Viacom International Inc.) (File No.
33-64467).
(t) Subscription Agreement dated as of July 24, 1995 among Viacom
International Inc., Tele-Communications, Inc. and TCI Communications,
Inc. (incorporated by reference to Exhibit 10.3 to the Registration
Statement on Form S-4 filed by Viacom International Inc.) (File No.
33-64467).
(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
49
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
VIACOM INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
ITEM 14A
The following consolidated financial statements and schedule of the registrant
and its subsidiaries are submitted herewith as part of this report:
Reference
(Page/s)
---------
1. Report of Independent Accountants........................... II-15
2. Management's Statement of Responsibility for Financial Reporting II-16
3. Consolidated Statements of Operations for the years ended
December 31, 1995, 1994 and 1993........................... II-17
4. Consolidated Balance Sheets as of December 31, 1995 and 1994 II-18-II-19
5. Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993.......................... II-20
6. Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1995, 1994 and 1993.............. II-21
7. Notes to Consolidated Financial Statements.................. II-22-II-55
Financial Statement Schedule:
II. Valuation and qualifying accounts................... F-2
All other Schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule.
F-1
VIACOM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
VIACOM INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(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 (C) PERIOD
- ----------- ------ -------- -------- -------------- --------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
Year ended December 31,
1995..................... $75.8 $104.3 $37.4 (A) $91.5 $126.0
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
VALUATION ALLOWANCE ON
DEFERRED TAX ASSETS:
Year ended December 31, 1995 $75.7 -- $ 6.1 (A) -- $81.8
Year ended December 31, 1994 -- -- $75.7 (A) -- $75.7
RESERVES FOR INVENTORY
OBSOLESCENCE:
Year ended December 31, 1995 $125.3 $35.4 $13.7 $44.8 $129.6
Year ended December 31, 1994 -- $32.3 $119.9 (A) $26.9 $125.3
Notes:
- ------
(A) Includes amounts charged to goodwill as part of the determination of the
fair value of net assets acquired.
(B) Represents balance sheet reclassifications related to certain entertainment
receivables.
(C) Includes amounts written off, net of recoveries.
F-2
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of August 5, 1994 (this "Amendment"), to:
(i) the CREDIT AGREEMENT, dated as of July 1, 1994 (the "Parent
Facility"), among VIACOM INC., a Delaware corporation ("Viacom"), each of the
several Banks identified on the signature pages thereof, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified as
Co-Agents on the signature pages thereof, as Co-Agents; and
(ii) the CREDIT AGREEMENT, dated as of July 1, 1994 (the "Subsidiary
Facility"), among VIACOM CABLEVISION OF DAYTON INC., WNYT INC., WMZQ INC., WVIT
INC. and VIACOM INTERNATIONAL INC., each a Delaware corporation (collectively,
"Subsidiary Borrowers"), each of the several Banks identified on the signature
pages thereof, 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, BANK OF AMERICA
NT&SA, as a Managing Agent, the Banks identified as Agents on the signature
pages thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
W I T N E S S E T H:
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to effect a general syndication
of the Parent Facility and Subsidiary Facility and the related assignment of the
outstanding Loans thereunder by amending certain provisions of such agreements;
and
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Amendments
Section 1.1. All references to "Schedule I" in each of the Parent
Facility and Subsidiary Facility are hereby amended to refer to Schedule I
attached to this Amendment.
Section 1.2. All references to "Schedule II" in each of the Parent
Facility and the Subsidiary Facility are hereby amended to refer to the
appropriate Schedule II relating to such agreement and attached to this
Amendment.
Section 1.3 All references to an "Agent" or a "Co-Agent" shall have
the meanings set forth in each of the Parent Facility and Subsidiary Facility.
ARTICLE II
Funding
Section 2.1. Subject to the prior effectiveness of this Amendment,
and in order to give effect to the reallocation of the commitments and the
outstanding Loans provided for by this Section 2.1, before 11:00 A.M. (New York
City time) on August 15, 1994 (the "Effective Date"):
(i) Each lender that is to become a Bank party to either of the
Parent Facility or the Subsidiary Facility (each such lender, a "New
Lender") shall make available to the Administrative Agent, for the
respective accounts of the Banks that are parties to either of the Parent
Facility or the Subsidiary Facility (the "Existing Lenders"), an amount
equal to the aggregate of (x) such New Lender's Ratable Portion (as
defined in each of the Parent Facility and the Subsidiary Facility, after
giving effect to the provisions of Article I of this Amendment (the
"Adjusted Ratable Portion")) of the outstanding Loans under (and as
defined in) each of the Parent Facility and the Subsidiary Facility, and
(y) such New Lender's Adjusted Ratable Portion of the Breakage Amount (as
defined below), if any, payable by the New Lenders with respect to each
Eurodollar Rate Loan outstanding on the Effective Date (other than any
Eurodollar Rate Loans with respect to which the Effective Date is the
first day of a new Interest Period); and
2
(ii) Promptly thereafter (but in any event on the same day), the
Administrative Agent shall cause to be distributed in like funds to each
Existing Lender, for the account of its Applicable Lending Office, such
Existing Lender's Ratable Portion (as defined in each of the Parent
Facility and the Subsidiary Facility, but without giving effect to the
provisions of Article I of this Agreement (the "Unadjusted Ratable
Portion")) of (x) the amount paid by the New Lenders pursuant to clause
(i) of this Section 2.1 in respect of the reallocation of loans and (y)
the Breakage Amount, if any, paid by the New Lenders.
Section 2.2. Subject to the prior effectiveness of this Amendment,
before 11:00 A.M. (New York City time) on the Effective Date:
(i) Each Existing Lender shall make available to the Administrative
Agent, for the respective accounts of the New Lenders, an amount equal to
the aggregate of (x) such Existing Lender's Unadjusted Ratable Portion of
the Breakage Amount (as defined below), if any, payable by the Existing
Lenders, and (y) the Participation Fee (as defined below) payable by such
Existing Lender; and
(ii) Promptly thereafter (but in any event on the same day), the
Administrative Agent shall cause to be distributed in like funds to each
New Lender, for the account of its Applicable Lending Office, such New
Lender's Adjusted Ratable Portion of the (x) Breakage Amount, if any, paid
by the Existing Lenders and (y) the aggregate of the Participation Fees
paid by the Existing Lenders.
Section 2.3. The "Breakage Amount" with respect to each Eurodollar
Rate Loan shall be the amount calculated in accordance with the following
formula:
Principal Amount x [(New LIBOR - Old LIBOR)/360] x Number of Days
Remaining
where:
Principal Amount = The aggregate of the Adjusted
Ratable Portions of the New Lenders of
the applicable Eurodollar Rate Loan
New LIBOR = Eurodollar Rate determined in respect of such Loan for
the Interest Period commencing on the Effective Date
3
Old LIBOR = Eurodollar Rate in effect with respect to such Loan
immediately prior to the Effective Date
Number of Days Remaining = Number of days remaining in
the Interest Period applicable to such Loan
If such amount is a negative number, the absolute value of such amount shall be
payable only by the New Lenders for the account of the Existing Lenders. If such
amount is a positive number, such amount shall be payable only by the Existing
Lenders to the New Lenders.
Section 2.3. The "Participation Fee" payable by each Existing Lender
shall be the amount set forth with respect to such Existing Lender in the
following table:
Category of Existing Lender Amount of Participation Fee
- --------------------------- ---------------------------
Managing Agent $67,286.50
Agent $64,851.57
Co-Agent $46,322.55
Section 2.4 Upon receipt of the monies by the Administrative Agent,
as provided in Sections 2.1(i) and 2.2(i), and payment of the monies by the
Administrative Agent, as provided in Section 2.1(ii) and 2.2(ii), the
Administrative Agent shall make appropriate entries in its books pursuant to
Section 13.7(g) of the Parent Facility and Section 10.7(g) of the Subsidiary
Facility to reflect the reallocation of Commitments and Loans effected by this
Amendment.
Section 2.4. The provisions of this Article are solely for the
benefit of the Existing Lenders and the New Lenders and may not be enforced by
any other party.
ARTICLE III
Effectiveness
Section 3.1. This Amendment will be effective as of the Effective
Date and following the execution thereof by each of Viacom, each Subsidiary
Borrower, each Guarantor Subsidiary and each Existing Lender and New Lender
identified on the signature pages hereof.
4
ARTICLE IV
Representations and Warranties
Section 4.1. Each of the Borrower, the Subsidiary Borrowers and the
Subsidiary Guarantors hereby represents and warrants that on the Effective Date,
both before and after giving effect to this Amendment, no Default or Event of
Default shall exist or be continuing under the Parent Facility or the Subsidiary
Facility.
ARTICLE V
Miscellaneous
Section 5.1. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in each of the Parent Facility
and the Subsidiary Facility.
Section 5.2. Except as amended hereby, all of the terms of each of
the Parent Facility and the Subsidiary Facility shall remain and continue in
full force and effect and are hereby confirmed in all respects.
Section 5.3. This Amendment shall be a Loan Document for the
purposes of the Parent Facility and Subsidiary Facility.
Section 5.4. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument. Delivery of an executed
counterpart of a signature page of this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
Section 5.5. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower
By: /s/ Vaughn A. Clarke
---------------------
Name: Vaughn A. Clarke
Title: Senior Vice
President, Treasurer
VIACOM INTERNATIONAL INC., as a
Subsidiary Borrower and as a
Subsidiary Guarantor
By: /s/ Vaughn A. Clarke
---------------------
Name: Vaughn A. Clarke
Title: Senior Vice
President, Treasurer
On behalf of the following Subsidiary
Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.
PARAMOUNT COMMUNICATIONS INC., as a
Subsidiary Guarantor
By: /s/ Vaughn A. Clarke
---------------------
Name: Vaughn A. Clarke
Title: Senior Vice
President, Treasurer
6
EXISTING LENDERS
Managing Agents
THE BANK OF NEW YORK, as Managing
Agent, the Documentation Agent and
a Bank
By: /s/ Vincent L. Pacilio
----------------------------
Name: Vincent L. Pacilio
Title: Vice President
CITIBANK, N.A., as Managing Agent,
the Administrative Agent and a Bank
By: /s/ David D. Clark
----------------------------
Name: David D. Clark
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Managing Agent and a
Bank
By: /s/ Stephen J. Kenneally
----------------------------
Name: Stephen J. Kenneally
Title: Vice President
BANK OF AMERICA NT&SA, as Managing
Agent and a Bank
By: /s/ Nancy L. Sun
----------------------------
Name: Nancy L. Sun
Title: Vice President
7
Agents
BANK OF MONTREAL, as Agent and a
Bank
By: /s/ Yvonne Bos
----------------------------
Name: Yvonne Bos
Title: Managing Director
THE BANK OF NOVA SCOTIA, as Agent
and a Bank
By: /s/ Vince Fitzgerald
----------------------------
Name: Vince Fitzgerald
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY, as
Agent and a Bank
By: /s/ Neal Hoffson
----------------------------
Name: Neal Hoffson
Title: Vice President
BARCLAYS BANK PLC, as Agent and a
Bank
By: /s/ James L. Hatter
----------------------------
Name: James L. Hatter
Title: Director
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent and a Bank
By: /s/ John H. Tyler
----------------------------
Name: John H. Tyler
Title: Vice President
8
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Agent and a Bank
By: /s/ Bruce Langenkamp
----------------------------
Name: Bruce Langenkamp
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, as Agent and a Bank
By: /s/ M. Bernadette Collins
----------------------------
Name: M. Bernadette Collins
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as Agent and a Bank
By: /s/ Mary M. Barcus
----------------------------
Name: Mary M. Barcus
Title: Vice President
THE FUJI BANK, LIMITED, as Agent
and a Bank
By: /s/ Katsunori Nozawa
----------------------------
Name: Katsunori Nozawa
Title: Vice President &
Manager
THE INDUSTRIAL BANK OF JAPAN, LTD.,
as Agent and a Bank
By: /s/ Jeffrey Cole
----------------------------
Name: Jeffrey Cole
Title: Vice President
9
LTCB TRUST COMPANY, as Agent and a
Bank
By: /s/ Tetsuya Fukunaga
----------------------------
Name: Tetsuya Fukunaga
Title: Vice President
MELLON BANK, N.A., as Agent and a
Bank
By: /s/ Sean C. Gannon
----------------------------
Name: Sean C. Gannon
Title: Assistant Vice
President
NATIONSBANK OF TEXAS N.A., as Agent
and a Bank
By: /s/ Chad E. Coben
----------------------------
Name: Chad E. Coben
Title: Assistant Vice
President
SOCIETE GENERALE, as Agent and a
Bank
By: /s/ Pascale Hainline
----------------------------
Name: Pascale Hainline
Title: Vice President
THE TORONTO-DOMINION BANK, as Agent
and a Bank
By: /s/ David G. Parker
----------------------------
Name: David G. Parker
Title: Mgr. Cr. Admin.
10
UNION BANK, as Agent and a Bank
By: /s/ Bill D. Gooch
----------------------------
Name: Bill D. Gooch
Title: Assistant Vice
President
Co-Agents
CREDIT SUISSE, as Co-Agent and a
Bank
By: /s/ Michael C. Mast
----------------------------
Name: Michael C. Mast
Title: Member of Senior
Management
By: /s/ Scott E. Zoellner
----------------------------
Name: Scott E. Zoellner
Title: Associate
THE DAI-ICHI KANGYO BANK LTD., NEW
YORK BRANCH, as Co-Agent and a Bank
By: /s/ Yosada Onoda
----------------------------
Name: Yosada Onoda
Title: Senior Vice
President
THE MITSUBISHI BANK, LIMITED, as
Co-Agent and a Bank
By: /s/ Paula Mueller
----------------------------
Name: Paula Mueller
Title: Vice President
11
THE MITSUBISHI TRUST & BANKING
CORPORATION, as Co-Agent and a Bank
By: /s/ Patricia Loret de Mola
----------------------------
Name: Patricia Loret de Mola
Title: Senior Vice
President
ROYAL BANK OF CANADA, as Co-Agent
and a Bank
By: /s/ E. Salazar
----------------------------
Name: E. Salazar
Title: Senior Manager
THE SANWA BANK, LTD., as Co-Agent and
a Bank
By: /s/ Masaaki Ariyoshi
----------------------------
Name: Masaaki Ariyoshi
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Co-Agent and a Bank
By: /s/ Shuntaro Higashi
----------------------------
Name: Shuntaro Higashi
Title: Joint General Manager
12
UNION BANK OF SWITZERLAND, as
Co-Agent and a Bank
By: /s/ James P. Kelleher
----------------------------
Name: James P. Kelleher
Title: Assistant Treasurer
By: /s/ Peter B. Yearly
----------------------------
Name: Peter B. Yearly
Title: Vice President
Syndication Agent
JP MORGAN SECURITIES INC., as the
Syndication Agent
By: /s/ Barbara J. Asch
----------------------------
Name: Barbara J. Asch
Title: Vice President
NEW LENDERS
Lead Managers
CHEMICAL BANK, as Lead Manager and a
Bank
By: /s/ John C. Coffin
----------------------------
Name: John C. Coffin
Title: Vice President
13
DEUTSCHE BANK AG, through its New
York and/or Cayman Islands Branch, as
Lead Manager and a Bank
By: /s/ John R. Lilly
----------------------------
Name: John R. Lilly
Title: Vice President
By: /s/ Alain M. Bolea
----------------------------
Name: Alain M. Bolea
Title: Director
Participants
THE SAKURA BANK, LIMITED, as
Participant and a Bank
By: /s/ Yasuhiro Terada
----------------------------
Name: Yasahiro Terada
Title: Senior Vice President
& Assistant General
Manager
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, NEW YORK BRANCH,
as Participant and a Bank
By: /s/ Marcus Edward
----------------------------
Name: Marcus Edward
Title: Vice President
By: /s/ Sean Mounier
----------------------------
Name: Sean Mounier
Title: Vice President
14
PNC BANK N.A., as Participant and a
Bank
By: /s/ Karen M. Wolters
----------------------------
Name: Karen M. Wolters
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON,
N.A., as Participant and a Bank
By: /s/ Susan Hendrixson
----------------------------
Name: Susan Hendrixson
Title: Vice President
GULF INTERNATIONAL BANK, as
Participant and a Bank
By: /s/ Abdel-Fattah Tahoun
----------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By: /s/ Haytham F. Khalil
----------------------------
Name: Haytham F. Khalil
Title: Assistant Vice
President
THE TOKAI BANK, LIMITED, NEW YORK
BRANCH, as Participant and a Bank
By: /s/ Masaharu Muto
----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
15
THE YASUDA TRUST AND BANKING CO.,
LTD., NEW YORK BRANCH, as Participant
and a Bank
By: /s/ Neil T. Chau
----------------------------
Name: Neil T. Chau
Title: First Vice President
16
Schedule I
List of Lending Offices
Bank
The Bank of New York Domestic Lending Office:
The Bank of New York
One Wall Street
16th Floor
New York, New York 10286
Eurodollar Lending Office:
Same
Citibank, N.A. Domestic Lending Office:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Eurodollar Lending Office:
Same
Morgan Guaranty Trust Company Domestic Lending Office:
of New York
Morgan Guaranty Trust Company of
New York
60 Wall Street
New York, New York 10260-0060
Attention Loan Department
Telex #177615 MGT VT
Eurodollar Lending Office:
Morgan Guaranty Trust
Company of New York
Nassau, Bahamas Office
c/o J.P. Morgan Services
Loan Operations - 3rd Floor
500 Stanton Christiana Road
Newark, Delaware 19713
I-1
Bank
Bank of America NT&SA Domestic Lending Office:
Bank of America NT&SA
1850 Gateway Boulevard
4th Floor
Concord, California 94520
Eurodollar Lending Office:
Same
Bank of Montreal Domestic Lending Office:
Bank of Montreal, Chicago Branch
115 South LaSalle Street
11th Floor
Chicago, IL 60603
Eurodollar Lending Office:
Same
The Bank of Nova Scotia Domestic Lending Office:
The Bank of Nova Scotia
1 Liberty Plaza
26th Floor
New York, NY 10006
Eurodollar Lending Office:
Same
The Bank of Tokyo Trust Company Domestic Lending Office:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116
Eurodollar Lending Office:
Same
I-2
Bank
Barclays Bank PLC Domestic Lending Office:
Barclays Bank
222 Broadway
12th Floor
New York, NY 10038
Eurodollar Lending Office:
Same
Canadian Imperial Bank Domestic Lending Office:
of Commerce
Canadian Imperial Bank of Commerce
425 Lexington Avenue
Syndication Department
7th Floor
New York, New York 10017
Eurodollar Lending Office:
Same
The Chase Manhattan Bank Domestic Lending Office:
(National Association)
The Chase Manhattan Bank
(National Association)
One Chase Manhattan Plaza
New York, New York 10081
Eurodollar Lending Office:
Same
Credit Lyonnais Cayman Island Domestic Lending Office:
Branch
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Eurodollar Lending Office:
Same
I-3
Bank
The First National Bank of Boston Domestic Lending Office:
The First National Bank of Boston
100 Federal Street
Mailstop 01-08-08
Boston, MA 02110
Eurodollar Lending Office:
Same
The Fuji Bank, Limited Domestic Lending Office:
The Fuji Bank, Limited
Two World Trade Center
79th Floor
New York, New York 10048
Eurodollar Lending Office:
Same
The Industrial Bank of Domestic Lending Office:
Japan, Ltd.
The Industrial Bank of Japan, Ltd.
245 Park Avenue
New York, New York 10167
Eurodollar Lending Office:
Same
LTCB Trust Company Domestic Lending Office:
LTCB Trust Company
165 Broadway
49th Floor
New York, NY 10006
Eurodollar Lending Office:
Same
I-4
Bank
Mellon Bank, N.A. Domestic Lending Office:
Mellon Bank, N.A.
3 Mellon Bank Center
Room 2304
Pittsburgh, PA 15259
Eurodollar Lending Office:
Same
NationsBank of Texas N.A. Domestic Lending Office:
NationsBank
901 Miami Street
67th Floor
Dallas, TX 75202
Eurodollar Lending Office:
Same
Societe Generale Domestic Lending Office:
Societe Generale
50 Rockefeller Plaza
5th Avenue
14th Floor
New York, NY 10020
Eurodollar Lending Office:
Same
The Toronto-Dominion Bank Domestic Lending Office:
The Toronto-Dominion Bank
909 Fannin Street
Houston, TX 77010
Eurodollar Lending Office:
Same
I-5
Bank
Union Bank Domestic Lending Office:
Union Bank of California
445 South Figuera Street
15th Floor
Los Angeles, CA 90071
Eurodollar Lending Office:
Same
Credit Suisse Domestic Lending Office:
Credit Suisse
12 East 49th Street
New York, New York 10017
Eurodollar Lending Office:
Same
The Dai-Ichi Kangyo Bank Ltd., New York Domestic Lending Office:
Branch
The Dai-Ichi Kangyo Bank
One World Trade Center
Suite 4911
New York, NY 10048
Eurodollar Lending Office:
Same
The Mitsubishi Bank, Limited Domestic Lending Office:
The Mitsubishi Bank, Ltd.
New York Branch
Two World Financial Center
225 Liberty Street
New York, New York 10281
Eurodollar Lending Office:
Same
I-6
Bank
The Mitsubishi Trust & Banking Corporation Domestic Lending Office:
The Mitsubishi Trust & Banking Corp.
520 Madison Avenue
26th Floor
New York, NY 10022
Eurodollar Lending Office:
Same
Royal Bank of Canada Domestic Lending Office:
Royal Bank of Canada
New York Branch
c/o Royal Bank of Canada
New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Eurodollar Lending Office:
Same
The Sanwa Bank, Ltd. Domestic Lending Office:
The Sanwa Bank, Ltd.
Park Avenue Plaza
55 East 52nd Street
24th Floor
New York, New York 10055
Eurodollar Lending Office:
Same
I-7
Bank
The Sumitomo Bank, Limited, New York Branch Domestic Lending Office:
The Sumitomo Bank, Limited, New York
Branch
One World Trade Center
Suite 9651
New York, NY 10048
Eurodollar Lending Office:
Same
Union Bank of Switzerland Domestic Lending Office:
Union Bank of Switzerland
299 Park Avenue
33rd Floor
New York, NY 10171
Eurodollar Lending Office:
Same
Chemical Bank Domestic Lending Office:
Chemical Bank
270 Park Avenue
10th Floor
New York, New York 10172
Eurodollar Lending Office:
Same
Deutsche Bank AG Domestic Lending Office:
Deutsche Bank
31 West 52nd Street
24th Floor
New York, New York 10019
Eurodollar Lending Office:
Same
I-8
Bank
The Sakura Bank, Limited Domestic Lending Office:
The Sakura Bank, Limited,
New York Branch
277 Park Avenue
45th Floor
New York, New York 10172
Eurodollar Lending Office:
Same
Compagnie Financiere de CIC Domestic Lending Office:
et de l'Union Europeenne,
New York Branch Compagnie Financiere de CIC
et de l'Union Europeenne,
New York Branch
520 Madison Avenue
37th Floor
New York, New York 10022
Eurodollar Lending Office:
Same
PNC Bank N.A. Domestic Lending Office:
PNC Bank N.A.
Broad & Chestnut Streets
P. O. Box 7648
Philadelphia, Pennsylvania 19101
Eurodollar Lending Office:
Same
First Interstate Bank of Washington, N.A. Domestic Lending Office:
First Interstate Bank of Washington,
N.A.
999 Third Avenue
Mail Stop 984
Seattle, Washington 98104
Eurodollar Lending Office:
Same
I-9
Bank
Gulf International Domestic Lending Office:
Gulf International Bank
380 Madison Avenue
New York, New York 10017
Eurodollar Lending Office:
Same
The Tokai Bank, Limited, Domestic Lending Office:
New York Branch
The Tokai Bank, Limited,
New York Branch
55 East 52nd Street
(Park Avenue Plaza)
New York, New York 10055
Eurodollar Lending Office:
Same
The Yasuda Trust and Domestic Lending Office:
Banking Co., Ltd.,
New York Branch The Yasuda Trust and
Banking Co., Ltd.,
New York Branch
666 Fifth Avenue
Suite 801
New York, New York 10103
Eurodollar Lending Office:
Same
I-10
SCHEDULE II - PARENT FACILITY
Short-Term Loan Revolving Loan Term Loan Total
Commitment Commitment Commitment Commitment
--------------- -------------- -------------- ---------------
The Bank of New York $110,294,117.65 $79,411,764.71 $96,573,529.42 $286,279,411.78
Citibank, N.A. $110,294,117.64 $79,411,764.70 $96,573,529.44 $286,279,411.78
Morgan Guaranty Trust $110,294,117.65 $79,411,764.71 $96,573,529.42 $286,279,411.78
Company of New York
Bank of America NT&SA $110,294,117.65 $79,411,764.71 $96,573,529.42 $286,279,411.78
Bank of Montreal $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Bank of Nova Scotia $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Bank of Tokyo Trust Company $68,220,715.01 $49,118,914.81 $59,734,058.06 $177,073,687.88
Barclays Bank PLC $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Canadian Imperial Bank $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
of Commerce
The Chase Manhattan Bank N.A. $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Credit Lyonnais Cayman $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Island Branch
The First National Bank of Boston $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Fuji Bank, Limited $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Industrial Bank of $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Japan, Ltd.
LTCB Trust Company $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Mellon Bank, N.A. $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
NationsBank of Texas N.A. $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Societe Generale $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Toronto-Dominion Bank $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Union Bank $22,740,238.33 $16,372,971.60 $19,911,362.69 $59,024,562.62
Credit Suisse $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Dai-Ichi Kangyo Bank $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Mitsubishi Bank, Limited $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Mitsubishi Trust & $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
Banking Corporation
Royal Bank of Canada $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Sanwa Bank, Ltd. $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
Sumitomo Bank, Limited, $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
New York Branch
Union Bank of Switzerland $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
Chemical Bank $36,764,705.88 $26,470,588.24 $32,191,176.47 $95,426,470.59
Deutsche Bank AG $36,764,705.88 $26,470,588.24 $32,191,176.47 $95,426,470.59
The Sakura Bank, Limited $27,573,529.41 $19,852,941.18 $24,143,382.35 $71,569,852.94
Compagnie Financiere de CIC $18,382,352.94 $13,235,294.12 $16,095,588.24 $47,713,235.30
et de L'Union Europeenne,
New York Branch
PNC Bank N.A. $18,382,352.94 $13,235,294.12 $16,095,588.24 $47,713,235.30
First Interstate Bank of $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
Washington, N.A.
Gulf International Bank $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
The Tokai Bank, Limited, $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
New York Branch
The Yasuda Trust and Banking $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
Co., Ltd., New York Branch
$2,500,000,000.00 $1,800,000,000.00 $2,189,000,000.00 $6,489,000,000.00
SCHEDULE II - SUBSIDIARY FACILITY
Viacom CableVision of
International Dayton, Inc. WNYT Inc.
--------------- -------------- --------------
The Bank of New York $4,411,764.71 $2,514,705.87 $1,588,235.29
Citibank, N.A. $4,411,764.74 $2,514,705.87 $1,588,235.28
Morgan Guaranty Trust $4,411,764.71 $2,514,705.87 $1,588,235.29
Company of New York
Bank of America NT&SA $4,411,764.71 $2,514,705.87 $1,588,235.29
Bank of Montreal $3,638,438.13 $2,073,909.74 $1,309,837.73
The Bank of Nova Scotia $3,638,438.13 $2,073,909.74 $1,309,837.73
The Bank of Tokyo Trust Company $2,728,828.60 $1,555,432.30 $982,378.30
Barclays Bank PLC $3,638,438.13 $2,073,909.74 $1,309,837.73
Canadian Imperial Bank $3,638,438.13 $2,073,909.74 $1,309,837.73
of Commerce
The Chase Manhattan Bank N.A. $3,638,438.13 $2,073,909.74 $1,309,837.73
Credit Lyonnais Cayman $3,638,438.13 $2,073,909.74 $1,309,837.73
Island Branch
The First National Bank of Boston $3,638,438.13 $2,073,909.74 81,309,837.73
The Fuji Bank, Limited $3,638,438.13 $2,073,909.74 $1,309,837.73
The Industrial Bank of $3,638,438.13 $2,073,909.74 $1,309,837.73
Japan, Ltd.
LTCB Trust Company $3,638,438.13 $2,073,909.74 $1,309,837.73
Mellon Bank, N.A. $3,638,438.13 $2,073,909.74 $1,309,837.73
NationsBank of Texas N.A. $3,638,438.13 $2,073,909.74 $1,309,837.73
Societe Generale $3,638,438.13 $2,073,909.74 $1,309,837.73
Toronto-Dominion Bank $3,638,438.13 $2,073,909.74 $1,309,837.73
Union Bank $909,609.53 $518,477.43 $327,459.43
Credit Suisse $2,598,884.38 $1,481,364.10 $935,598.38
The Dai-Ichi Kangyo Bank $2,598,884.38 $1,481,364.10 $935,598.38
The Mitsubishi Bank, Limited $2,598,884.38 $1,481,364.10 $935,598.38
The Mitsubishi Trust & $2,598,884.38 $1,481,364.10 $935,598.38
Banking Corporation
Royal Bank of Canada $2,598,884.38 $1,481,364.10 $935,598.38
The Sanwa Bank, Ltd. $2,598,884.38 $1,481,364.10 $935,598.38
Sumitomo Bank, Limited, $2,598,884.38 $1,481,364.10 $935,598.38
New York Branch
Union Bank of Switzerland $2,598,884.38 $1,481,364.10 $935,598.38
Chemical Bank $1,470,588.24 $838,235.29 $529,411.76
Deutsche Bank AG $1,470,588.24 $838,235.29 $529,411.76
The Sakura Bank, Limited $1,102,941.18 $628,676.47 $397,058.82
Compagnie Financiere de CIC et $735,294.12 $419,117.65 $264,705.88
de L'Union Europeenne,
New York Branch
PNC Bank N.A. $735,294.12 $419,117.65 $264,705.88
First Interstate Bank of Washington, N.A. $367,647.06 $209,558.82 $132,352.94
Gulf International Bank $367,647.06 $209,558.82 $132,352.94
The Tokai Bank, Limited, $367,647.06 $209,558.82 $132,352.94
New York Branch
The Yasuda Trust and Banking $367,647.06 $209,558.82 $132,352.94
Co., Ltd., New York Branch
$100,000,000.00 $57,000,000.00 $36,000,000.00
WMZQ Inc. WVIT Inc. Total
Commitment
-------------- -------------- ---------------
The Bank of New York $2,250,000.00 $2,955,882.35 $13,720,588.22
Citibank, N.A. $2,250,000.00 $2,955,882.33 $13,720,588.22
Morgan Guaranty Trust $2,250,000.00 $2,955,882.35 $13,720,588.22
Company of New York
Bank of America NT&SA $2,250,000.00 $2,955,882.35 $13,720,588.22
Bank of Montreal $1,855,603.45 $2,437,753.55 $11,315,542.60
The Bank of Nova Scotia $1,855,603.45 $2,437,753.55 $11,315,542.60
The Bank of Tokyo Trust Company $1,391,702.59 $1,828,315.16 $8,486,656.95
Barclays Bank PLC $1,855,603.45 $2,437,753.55 $11,315,542.60
Canadian Imperial Bank $1,855,603.45 $2,437,753.55 $11,315,542.60
of Commerce
The Chase Manhattan Bank N.A. $1,855,603.45 $2,437,753.55 $11,315,542.60
Credit Lyonnais Cayman $1,855,603.45 $2,437,753.55 $11,315,542.60
Island Branch
The First National Bank of Boston $1,855,603.45 $2,437,753.55 $11,315,542.60
The Fuji Bank, Limited $1,855,603.45 $2,437,753.55 $11,315,542.60
The Industrial Bank of $1,855,603.45 $2,437,753.55 $11,315,542.60
Japan, LTD.
LTCB Trust Company $1,855,603.45 $2,437,753.55 $11,315,542.60
Mellon Bank, N.A. $1,855,603.45 $2,437,753.55 $11,315,542.60
NationsBank of Texas N.A. $1,855,603.45 $2,437,753.55 $11,315,542.60
Societe Generale $1,855,603.45 $2,437,753.55 $11,315,542.60
Toronto-Dominion Bank $1,855,603.45 $2,437,753.55 $11,315,542.60
Union Bank $463,900.87 $609,438.39 $2,828,885.65
Credit Suisse $1,325,431.03 $1,741,252.54 $8,082,530.43
The Dai-Ichi Kangyo Bank $1,325,431.03 $1,741,252.54 $8,082,530.43
The Mitsubishi Bank, Limited $1,325,431.03 $1,741,252.54 $8,082,530.43
The Mitsubishi Trust & $1,325,431.03 $1,741,252.54 $8,082,530.43
Banking Corporation
Royal Bank of Canada $1,325,431.03 $1,741,252.54 $8,082,530.43
The Sanwa Bank, Ltd. $1,325,431.03 $1,741,252.54 $8,082,530.43
Sumitomo Bank, Limited, $1,325,431.03 $1,741,252.54 $8,082,530.43
New York Branch
Union Bank of Switzerland $1,325,431.03 $1,741,252.54 $8,082,530.43
Chemical Bank $750,000.00 $985,294.12 $4,573,529.40
Deutsche Bank AG $750,000.00 $985,294.12 $4,573,529.40
The Sakura Bank Limited $562,500.00 $738,970.59 $3,430,147.06
Compagnie Financiere de $375,000.00 $492,647.06 $2,286,764.71
CIC et de L'Union Europeenne,
New York Branch
PNC Bank N.A. $375,000.00 $492,647.06 $2,286,764.71
First Interstate Bank of Washington, N.A. $187,500.00 $246,323.53 $1,143,382.35
Gulf International Bank $187,500.00 $246,323.53 $1,143,382.35
The Tokai Bank, Limited, $187,500.00 $246,323.53 $1,143,382.35
New York Branch
The Yasuda Trust and Banking $187,500.00 $246,323.53 $1,143,382.35
Co., Ltd., New York Branch
$51,000,000.00 $67,000,000.00 $311,000,000.00
AMENDMENT NO. 2
AMENDMENT NO. 2, dated as of September 29, 1994 ("Amendment No. 2"),
to the $6.489 Billion Credit Agreement, dated as of July 1, 1994, as amended as
of August 5, 1994 by Amendment No. 1, (the "Credit Agreement") among VIACOM
INC., a Delaware corporation ("Viacom"), each of the several 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, BANK OF AMERICA NT&SA, as a Managing
Agent, the Banks identified as Agents on the signature pages thereof, as Agents,
and the Banks identified as Co-Agents on the signature pages thereof, as
Co-Agents.
W I T N E S S E T H:
WHEREAS, Viacom, each of the several Banks identified on the
signature pages thereof, 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, BANK OF AMERICA
NT&SA, as a Managing Agent and the Banks identified as Agents on the signature
pages thereof as Agents are entering into a $1.8 Billion Credit Agreement dated
as of September 29, 1994 (the "$1.8 Billion Credit Agreement") in order to
provide senior debt for, among other things, the refinancing by Viacom of
certain existing indebtedness of Blockbuster Entertainment Corporation, a
Delaware Corporation and for general corporate purposes; and
WHEREAS, the parties who have heretofore entered into the Credit
Agreement now desire to amend certain provisions of such Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments. (a) The definition of EBIDT in Section 1.1 of
the Credit Agreement is hereby amended by:
(i) adding the following clause after the word `Merger' at the end of
clause (a)(iv):
"or the "Merger" (as defined in the $1.8 Billion Credit Agreement)",
and
(ii) adding the following clause after the word "definition" at the
end of clause (b):
"less (c) Net Video Tape Purchases".
(b) The definition of "Indebtedness" is hereby amended to (i) replace
Schedule 1.1 referred to therein with Schedule 1.1(a) to this Amendment No. 2,
and (ii) to delete the words "the date hereof" appearing after the phrase "in
existence at" in clause (b) of the proviso to clause (vi) thereof, and to
replace such words with "September 29, 1994".
(c) Section 1.1 of the Credit Agreement is hereby amended to insert
the following definitions:
"`Blockbuster' means Blockbuster Entertainment Corporation, a
Delaware corporation."
"'$1.8 Billion Credit Agreement' means the Credit Agreement, dated as
of September 29, 1994 among the Borrower, each of the several banks
identified on the signature pages thereof, THE BANK OF NEW YORK, as a
Managing Agent and as Documentation Agent, CITIBANK, N.A., as a
Managing Agent and as the Documentation Agent, MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as a Managing Agent, JP MORGAN SECURITIES INC.,
as the Syndication Agent, BANK OF AMERICA NT&SA, as a Managing Agent
and the banks identified as Agents on the signature pages thereof as
Agents."
"`Net Video Tape Purchases' means the aggregate purchases of
videocassettes less (i) purchases to stock new or remodeled stores
and (ii) videocassette sales of previously viewed videocassettes."
2
"'6.625% Blockbuster Senior Notes' means Blockbuster's $150,000,000
senior notes due February 15, 1998."
(d) Section 2.3(b) of the Credit Agreement is hereby amended by: (i)
deleting "and" at the end of Section 2.3(b)(x); (ii) deleting "." at the end of
Section 2.3(b)(y), and (iii) adding the following:
"; and (z) no such reduction shall be required in respect of funds
borrowed under the $1.8 Billion Credit Agreement."
(e) Section 7.4 of the Credit Agreement is hereby amended by deleting
it in its entirety and replacing it with the following:
"7.4. Financial Information. (a) The reports of the
Borrower on Form 10-K for the Fiscal year ended December 31, 1993 as
amended by Amendment No. 1 on Form 10-K/A dated May 2, 1994 and on
Form 10-Q for the Fiscal Quarter ended June 30, 1994 are respectively
complete and correct in all material respects as of such respective
dates, and the financial statements therein have been prepared in
accordance with GAAP and fairly present the financial condition and
results of operations of the Borrower and its consolidated
Subsidiaries as of such respective dates (subject, in the case of
such reports on Form 10-Q, to changes resulting from normal year-end
adjustments).
(b) Since June 30, 1994, there has been no Material
Adverse Change or Material Credit Agreement Change.
(c) None of the Borrower or any Subsidiary of the Borrower
had at June 30, 1994 any obligation, contingent liability, or
liability for taxes or long-term leases material to the Borrower and
its Subsidiaries taken as a whole which is not reflected in the
balance sheets referred to in subsection (a) above or in the notes
thereto."
(f) Section 7.15 of the Credit Agreement is hereby amended by
inserting the words "and Blockbuster and its Subsidiaries" after the reference
therein to "the Borrower and its Subsidiaries."
3
(g) Article VIII of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
"ARTICLE VIII
Financial Covenants
As long as any of the Loans shall remain unpaid or any Bank shall
have any Commitment hereunder, unless otherwise agreed by the written consent of
the Majority Banks:
8.1 Total Leverage RatioTotal Leverage Ratio. The Total Leverage
Ratio shall not exceed, as of the last day of any Fiscal Quarter described
below, the amount specified with respect to such period:
Date Ratio
---- -----
September 30, 1994 7.15x
December 31, 1994 6.50x
March 31, 1995 through 6.25x
September 30, 1995
December 31, 1995 5.75x
March 31, 1996 through 5.25x
December 31, 1997
March 31, 1998 through 4.50x
December 31, 1998
March 31, 1999 and 4.00x
Thereafter
8.2 Ratio of EBIDT to Trailing Total Cash Interest and Preferred
DividendsRatio of EBIDT to Trailing Total Cash Interest and Preferred Dividends.
The ratio of EBIDT to Total Cash Interest and Preferred Dividends shall not be
less, as of the last day of any Fiscal Quarter occurring during any period set
forth below, than the amount specified with respect to such period:
Date Ratio
- ---- -----
September 30, 1994 1.50x
December 31, 1994 1.75x
March 31, 1995 through December 31, 1996 2.00x
March 31, 1997 and thereafter 2.25x
8.3 Minimum Net WorthMinimum Net Worth. On the last day of each
Fiscal Quarter, commencing September 30, 1994, the Net Worth of the Borrower and
its Subsidiaries shall not be less than 75% of the Net Worth of the Borrower and
its Subsidiaries on the date which is the first Fiscal Quarter end date after
the Effective Date (as defined in the $1.8 Billion Credit Agreement)."
4
(h) Sections 9.8(a) and 9.8(b) of the Credit Agreement are hereby
amended by deleting all references to "and consolidating" and adding the
following clause after the words "Fiscal Year to the end of such Fiscal Quarter"
in Section 9.8(a) and after the words "its Subsidiaries for such year" in
Section 9.8(b):
"(along with business segment information customarily prepared by the
Borrower)"
(i) Sections 9.8(a) and 9.8(b) of the Credit Agreement are hereby
amended by deleting "Five Million Dollars ($5,000,000)" and replacing it with
"Fifty Million Dollars ($50,000,000)."
(j) Section 10.6 of the Credit Agreement is hereby amended by adding
the following clause to the end of the sentence:
"or under existing facilities identified on Schedule 10.6 to
Amendment No. 2 to this Agreement or any replacement facilities
thereto which in the aggregate do not exceed the amounts of the
commitments on such Schedule"
(k) Section 10.7 of the Credit Agreement is hereby amended by adding
the following clause to the end of the sentence:
"provided however, that the Borrower may enter into the $1.8 Billion
Credit Agreement and may become an obligor under the 6.625%
Blockbuster Senior Notes"
SECTION 2. Effectiveness. This Amendment No. 2 will be effective upon
the execution thereof by each of Viacom, each Guarantor Subsidiary and the
Majority Banks and the occurrence of the Effective Date (as defined in the $1.8
Billion Credit Agreement).
SECTION 3. Representations and Warranties. Each of the Borrower and
the Subsidiary Guarantors hereby represents and warrants that as of the date
hereof, both before and after giving effect to this Amendment, no Default or
Event of Default shall exist or be continuing under the Credit Agreement.
5
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.
(b) Except as amended hereby, all of the terms of the Credit
Agreement shall remain and continue in full force and effect and are hereby
confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of the
Credit Agreement.
(d) This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 5. Subsidiary Guarantor Confirmation. By signing below, each
of the Subsidiary Guarantors hereby agrees to the terms of the foregoing
Amendment No. 2 and confirms that the VII Guarantee and the Paramount Guarantee,
respectively, remain in full force and effect.
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower
VIACOM INTERNATIONAL INC., as a
Subsidiary Guarantor
PARAMOUNT COMMUNICATIONS INC., as a
Subsidiary Guarantor
By: /s/ Vaughn A. Clarke
-----------------------
Name: Vaughn A. Clarke
Title: Senior Vice President,
Treasurer
Managing Agents
THE BANK OF NEW YORK, as Managing
Agent, the Documentation Agent and a
Bank
By:/s/ Geoffrey C. Brooks
-----------------------
Name: Geoffrey C. Brooks
Title: Vice President
CITIBANK, N.A., as Managing Agent,
the Administrative Agent and a Bank
By:/s/ Frederick B. Pickering, Jr.
-------------------------------
Name: Frederick B. Pickering, Jr.
Title: Managing Director
7
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Managing Agent and a Bank
By:/s/ Stephen J. Kenneally
---------------------------
Name: Stephen J. Kenneally
Title: Vice President
BANK OF AMERICA NT&SA, as Managing
Agent and a Bank
By:/s/ Nancy L. Sun
---------------------------
Name: Nancy L. Sun
Title: Vice President
Agents
BANK OF MONTREAL, as Agent and a
Bank
By:/s/ Yvonne Bos
---------------------------
Name: Yvonne Bos
Title: Managing Director
THE BANK OF NOVA SCOTIA, as Agent
and a Bank
By:/s/ Vince Fitzgerald
---------------------------
Name: Vince Fitzgerald
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY, as
Agent and a Bank
By:/s/ Charles Poer
---------------------------
Name: Charles Poer
Title: Vice President
8
BARCLAYS BANK PLC, as Agent and a
Bank
By:/s/ Andrew Wynn
---------------------------
Name: Andrew Wynn
Title: Director
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent and a Bank
By:/s/ John H. Tyler
---------------------------
Name: John H. Tyler
Title: Vice President
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Agent and a Bank
By:/s/ Bruce Langenkamp
---------------------------
Name: Bruce Langenkamp
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, as Agent and a Bank
By:/s/ M. Bernadette Collins
---------------------------
Name: M. Bernadette Collins
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as Agent and a Bank
By:/s/ Mary M. Barcus
---------------------------
Name: Mary M. Barcus
Title: Vice President
9
THE FUJI BANK, LIMITED, as Agent and
a Bank
By:/s/ Katsunori Nozawa
---------------------------
Name: Katsunori Nozawa
Title: Vice President &
Manager
THE INDUSTRIAL BANK OF JAPAN, LTD.,
as Agent and a Bank
By:/s/ Junri Oda
---------------------------
Name: Junri Oda
Title: Sr. Vice President
and Sr. Manager
LTCB TRUST COMPANY, as Agent and a
Bank
By:/s/ Hiroshi Sasaki
---------------------------
Name: Hiroshi Sasaki
Title: Sr. Vice President
MELLON BANK, N.A., as Agent and a
Bank
By:/s/ G. Lewis Ashley
---------------------------
Name: G. Lewis Ashley
Title: First Vice President
NATIONSBANK OF TEXAS, N.A., as Agent
and a Bank
By:/s/ Chad E. Coben
---------------------------
Name: Chad E. Coben
Title: Assistant Vice
President
10
SOCIETE GENERALE, as Agent and a
Bank
By:/s/ Pascale Hainline
---------------------------
Name: Pascale Hainline
Title: Vice President
THE TORONTO-DOMINION BANK, as Agent
and a Bank
By:/s/ David G. Parker
---------------------------
Name: David G. Parker
Title: Mgr. Cr. Admin.
UNION BANK, as Agent and a Bank
By:/s/ Michael K. McShane
---------------------------
Name: Michael K. McShane
Title: Vice President
Co-Agents
CREDIT SUISSE, as Co-Agent and a
Bank
By:/s/ Michael C. Mast
---------------------------
Name: Michael C. Mast
Title: Member of Senior
Management
By:/s/ J. Hamilton Crawford
---------------------------
Name: J. Hamilton Crawford
Title: Associate
11
THE DAI-ICHI KANGYO BANK LTD., NEW
YORK BRANCH, as Co-Agent and a Bank
By:/s/ Shinya Wako
---------------------------
Name: Shinya Wako
Title: Vice President and
Department Head
THE MITSUBISHI BANK, LIMITED, as
Co-Agent and a Bank
By:/s/ Paula Mueller
---------------------------
Name: Paula Mueller
Title: Vice President
THE MITSUBISHI TRUST & BANKING
CORPORATION, as Co-Agent and a Bank
By:/s/ Masataka Ushio
---------------------------
Name: Masataka Ushio
Title: Senior Vice
President
ROYAL BANK OF CANADA, as Co-Agent
and a Bank
By:/s/ Eduardo Salazar
---------------------------
Name: Eduardo Salazar
Title: Senior Manager
12
THE SANWA BANK, LTD., as Co-Agent
and a Bank
By:/s/ Dominic Sorresso
---------------------------
Name: Dominic Sorresso
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Co-Agent and a Bank
By:/s/ Yoshinori Kawamura
---------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
UNION BANK OF SWITZERLAND, as
Co-Agent and a Bank
By:/s/ James P. Kelleher
---------------------------
Name: James P. Kelleher
Title: Assistant Treasurer
By:/s/ Peter B. Yearly
---------------------------
Name: Peter B. Yearly
Title: Vice President
Syndication Agent
JP MORGAN SECURITIES INC., as the
Syndication Agent
By:/s/ Barbara J. Asch
---------------------------
Name: Barbara J. Asch
Title: Vice President
13
Lead Managers
CHEMICAL BANK, as Lead Manager and a
Bank
By:/s/ John C. Coffin
---------------------------
Name: John C. Coffin
Title: Vice President
DEUTSCHE BANK AG, through its New
York and/or Cayman Islands Branch,
as Lead Manager and a Bank
By:/s/ Bina R. Dabbah
---------------------------
Name: Bina R. Dabbah
Title: Vice President
By:/s/ John R. Lilly
---------------------------
Name: John R. Lilly
Title: Vice President
Participants
THE SAKURA BANK, LIMITED, as
Participant and a Bank
By:/s/ Masahiro Nakajo
---------------------------
Name: Masahiro Nakajo
Title: Senior Vice President
& Manager
14
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, NEW YORK BRANCH,
as Participant and a Bank
By:/s/ Marcus Edward
---------------------------
Name: Marcus Edward
Title: Vice President
By:/s/Sean Mounier
---------------------------
Name: Sean Mounier
Title: Vice President
PNC BANK N.A., as Participant and a
Bank
By:/s/ Margot C. Bright
---------------------------
Name: Margot C. Bright
Title: Assistant Vice
President
FIRST INTERSTATE BANK OF WASHINGTON,
N.A., as Participant and a Bank
By:/s/ Susan Hendrixson
---------------------------
Name: Susan Hendrixson
Title: Vice President
15
GULF INTERNATIONAL BANK, as
Participant and a Bank
By:/s/ Haythan F. Khalil
---------------------------
Name: Haythan F. Khalil
Title: Assistant Vice
President
By:/s/ Abdel-Fattah Tahoun
---------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
THE TOKAI BANK, LIMITED, NEW YORK
BRANCH, as Participant and a Bank
By:/s/ Masaharu Muto
---------------------------
Name: Masaharu Muto
Title: Deputy General Manager
THE YASUDA TRUST AND BANKING CO.,
LTD., NEW YORK BRANCH, as
Participant and a Bank
By:/s/ Neil T. Chau
---------------------------
Name: Neil T. Chau
Title: First Vice President
16
Schedule 1.1(a)
- -----------------------------------------------------------------
Guarantees Related to Discontinued Operations
- -----------------------------------------------------------------
Principal
Amount
Guarantor Obligor Type Expiry Currency Outstanding
--------- ------- ---- ------ -------- -----------
PCI JMZ Co. Capitalized 6/19/98 USD 11,105,484
Lease
PCI Kayser-Roth 9-1/2% Notes 7/31/95 USD 305,716
PCI Kayser-Roth 9% Notes 1/31/96 USD 151,106
PCI Simmons 7% IRB's 10/15/17 USD 9,700,000
Manufacturing
PCI CBF Fabrics 7-1/4% IRB's 7/1/97 USD 1,960,000
- --------------------------------------------------------
Guaranteed Joint-Venture Credit Facilities * in foreign currency
- --------------------------------------------------------
Total Maximum
Facility Guarantee
Guarantor Obligor Type Expiry Currency Size* Exposure*
--------- ------- ---- ------ -------- ----- ---------
PCI UCI (UK) Term Loan 9/30/97 Pounds 58,722,500 29,361,250
Sterling
PCI UCI (UK) Revolver 6/11/96 Pounds 27,000,000 13,500,000
Sterling
PCI CIC (UK) Revolver 12/6/96 Pounds 31,000,000 15,500,000
Sterling
PCI UCI Germany Revolver/Term 8/22/95 Deutschemark 100,000,000 50,000,000
PCI UCI Spain Revolver/Term 4/15/99 Spanish 5,000,000,000 2,500,000,000
Peseta
Blockbuster Enter. Blockbuster Japan Revolver 7/14/95 Yen 700,000,000 2,025,000,000
Co. (a) Co. Ltd.
Blockbuster Enter. Blockbuster Japan Revolver 9/27/95 Yen 4,050,000,000 350,000,000
Co. (a) Co. Ltd.
- ----------------------
Guarantees: Other
- ----------------------
Total Maximum
Facility Guarantee
7Guarantor Obligor Type Expiry Currency Size Exposure*
---------- ------- ---- ------ -------- -------- ---------
Blockbuster Enter. Panthers Invest. Revolver 5/31/01 USD 20,000,000 20,000,000
Co. (a) Venture
Blockbuster Enter. Backlick Mortgage 4/19/95 USD 5,500,000 5,500,000
Co. (a) Springfield LP
Blockbuster Enter. Pavillion Partners Promissory 10/1/04 USD 25,000,000 12,500,000
Co. (a) Note
(a) to be assumed by Viacom Inc.
Page 1
Schedule 10.6
Subsidiary Indebtedness
Total
Facility
Obligor Type Expire Currency Size
------- ---- ------ -------- ----
Virgin Revolver 6/30/95 USD 75,000,000
Interactive
Entertainment
Inc.
Virgin Revolver 10/31/94 Pounds Sterling 10,000,000*
Interactive
Entertainment
Inc.
Page 2
AMENDMENT
This Amendment ("Amendment"), dated as of May 15, 1995, shall be:
AMENDMENT NO. 3 to the $6.489 BILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended as of August 5, 1994 by Amendment No. 1 and as of
September 29, 1994 by Amendment No. 2 (the "Parent Facility"), among VIACOM
INC., a Delaware corporation ("Viacom"), each of the several Banks, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified as
Co-Agents on the signature pages thereof, as Co-Agents; and
AMENDMENT NO. 2 to the $311 MILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended as of August 5, 1994 by Amendment No. 1 (the
"Subsidiary Facility"), among VIACOM CABLEVISION OF DAYTON INC., WNYT INC., WMZQ
INC., WVIT INC. and VIACOM INTERNATIONAL INC., each a Delaware corporation
(collectively, "Subsidiary Borrowers"), each of the several Banks, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified as
Co-Agents on the signature pages thereof, as Co-Agents.
W I T N E S S E T H:
WHEREAS, Viacom and the Subsidiary Borrowers have requested certain
amendments to be made to certain provisions of the Parent Facility and the
Subsidiary Facility, respectively; and
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to amend such provisions of such
agreements.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments. (a) The definition of EBIDT in Section 1.1 of
the Parent Facility is hereby amended by:
(i) deleting clause (a)(ii) in its entirety and replacing it with the
following:
"(ii) amortization expense (including all amortization expenses
recognized in accordance with APB 16 and 17 but excluding (A) all
other amortization of programming, production and pre-publication
costs and (B) amortization of videocassettes)";
and
(ii) deleting the phrase ", less (c) Net Video Tape Purchases" after
the word "definition" at the end of clause (b).
(b) Section 1.1 of the Parent Facility is hereby amended to delete
the definition of Net Video Tape Purchases.
(c) The definition of "Applicable Eurodollar Rate Margin" in Section
1.1 of each of the Parent Facility and the Subsidiary Facility is hereby amended
by deleting the first proviso in its entirety and replacing it with the
following:
"provided, however, that if the ratings assigned by S&P and
Moody's shall differ, the Credit Rating shall be the rating which is
the higher rating".
(d) Section 2.3 (b) of the Parent Facility is hereby amended by:
(i) inserting the words "or Capital Market Transaction date" after
the words "related sale date" in clause (y) thereof;
(ii) deleting the number $250 million in clause (y)(C) thereof and
replacing it with the number $500 million;
(iii) replacing the word "reinvested", wherever it appears therein,
with the words "used to acquire assets";
2
(iv) replacing the word "reinvestment", in the first place it appears
therein, with the words "use for acquisitions"; and
(v) replacing the words "reinvestment of Net Cash Proceeds" with the
words "use of Net Cash Proceeds for acquisitions".
(e) Each of Section 5.4 (a) of the Parent Facility and Section 3.4
(a) of the Subsidiary Facility is hereby amended by deleting the proviso in its
entirety and replacing it with the following:
"provided, however, that if the ratings assigned by S&P and
Moody's shall differ, the Credit Rating shall be the rating which is
the higher rating".
(f) Section 10.6 of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"10.6. Subsidiary Indebtedness. The Borrower shall not permit
any of its Subsidiaries, other than a Guarantor Subsidiary, to incur
Indebtedness for borrowed money other than (a) the Subsidiary Loans
(as defined in the Subsidiary Facility), (b) under existing
facilities identified on Schedule 10.6 to Amendment No. 2 to this
Agreement or any replacement facilities thereto which in the
aggregate do not exceed the amounts of the commitments on such
Schedule and (c) Indebtedness for borrowed money in an aggregate
amount at any time outstanding of not more than $25 million for all
of its Subsidiaries other than a Guarantor Subsidiary".
(g) Section 7.4 of the Subsidiary Facility is hereby amended by
adding after the word "Agreement" the phrase "and other than Indebtedness
permitted pursuant to Section 10.6 of the Parent Facility".
(h) Each of Section 10.7 of the Parent Facility and Section 7.5 of
the Subsidiary Facility is hereby amended by inserting the following after the
words "Commercial Paper" in the parentheses:
"and up to $500 million of Indebtedness with maturities of no
less than seven years from the date such Indebtedness is incurred".
3
SECTION 2. Effectiveness. This Amendment will be effective upon the
execution hereof by each of Viacom, each Subsidiary Borrower, the Guarantor
Subsidiary and (i) except in the case of the amendments contained in Sections
1(c) and (e) hereof, the Majority Banks and (ii) in the case of the amendments
contained in Sections 1(c) and (e) hereof, each of the Banks.
SECTION 3. Representations and Warranties. Each of Viacom, the
Subsidiary Borrowers and the Guarantor Subsidiary hereby represents and warrants
that as of the date hereof, both before and after giving effect to this
Amendment, no Default or Event of Default shall exist or be continuing under the
Parent Facility or the Subsidiary Facility.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in each of the
Parent Facility and the Subsidiary Facility.
(b) Except as amended hereby, all of the terms of each of the Parent
Facility and the Subsidiary Facility shall remain and continue in full force and
effect and are hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of the
Parent Facility and the Subsidiary Facility.
(d) This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
4
SECTION 6. Viacom Inc. Confirmation. By signing below, Viacom Inc.,
as guarantor under the Parent Guarantee ("Parent Guarantor"), hereby agrees to
the terms of the foregoing Amendment and confirms that the Parent Guarantee
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower and as Parent Guarantor
By: /s/ Vaughn A. Clark
----------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
VIACOM INTERNATIONAL INC., as a Subsidiary
Borrower and as a Guarantor Subsidiary
By: /s/ Vaughn A. Clark
----------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
On behalf of the following Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.
By: /s/ Vaughn A. Clark
----------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
5
Managing Agents
THE BANK OF NEW YORK, as Managing Agent, the
Documentation Agent and a Bank
By: /s/ Geoffrey C. Brooks
----------------------------
Name: Geoffrey C. Brooks
Title: Vice President
CITIBANK, N.A., as Managing Agent, the
Administrative Agent and a Bank
By: /s/ Margaret C. Ullrich
----------------------------
Name: Margaret C. Ullrich
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Managing Agent and a Bank
By: /s/ Mathias Blumschein
----------------------------
Name: Mathias Blumschein
Title: Associate
BANK OF AMERICA NT&SA, as Managing Agent and a
Bank
By:/s/ Amy S. Trapp
----------------------------
Name: Amy S. Trapp
Title: Vice President
6
Agents
BANK OF MONTREAL, as Agent and a Bank
By: /s/ Yvonne Bos
----------------------------
Name: Yvonne Bos
Title:Managing Director
THE BANK OF NOVA SCOTIA, as Agent and a Bank
By: /s/ Vince J. Fitzgerald
----------------------------
Name: Vince J. Fitzgerald
Title: Senior Relationship Mgr.
BANK OF TOKYO TRUST COMPANY, as Agent and a Bank
By: /s/ Charles Poer
----------------------------
Name: Charles Poer
Title: Vice President & Manager
BARCLAYS BANK PLC, as Agent and a Bank
By: /s/ Michael W. Ballard
----------------------------
Name: Michael W. Ballard
Title:Associate Director
CANADIAN IMPERIAL BANK OF COMMERCE, as Agent and
a Bank
By:/s/ John Tyler
----------------------------
Name: John Tyler
Title: Vice President
7
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as Agent and a Bank
By: /s/ Bruce Longenkamp
----------------------------
Name: Bruce Longenkamp
Title:Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as Agent
and a Bank
By: /s/ M. Bernadette Collins
----------------------------
Name: M. Bernadette Collins
Title:Authorized Signature
THE FIRST NATIONAL BANK OF BOSTON, as Agent and a
Bank
By: /s/ Mary M. Barcus
----------------------------
Name: Mary M. Barcus
Title: Vice President
THE FUJI BANK, LIMITED, as Agent and a Bank
By: /s/ Kazuaki Kitabatake
----------------------------
Name: Kazuaki Kitabatake
Title:Joint General Manager
THE INDUSTRIAL BANK OF JAPAN, LTD., as Agent and
a Bank
By: /s/ Jeffrey Cole
----------------------------
Name: Jeffrey Cole
Title:Senior Vice President
8
LTCB TRUST COMPANY, as Agent and a Bank
By: /s/ John A. Krob
----------------------------
Name: John A. Krob
Title: Senior Vice President
MELLON BANK, N.A., as Agent and a Bank
By: /s/ G. Luis Ashley
----------------------------
Name: G. Luis Ashley
Title: First Vice President
NATIONSBANK OF TEXAS, N.A., as Agent and a Bank
By: /s/ Chad E. Coben
----------------------------
Name: Chad E. Coben
Title: Vice President
SOCIETE GENERALE, as Agent and a Bank
By: /s/ Pascale Hainline
----------------------------
Name: Pascale Hainline
Title:Vice President
9
THE TORONTO-DOMINION BANK, as Agent and a Bank
By: /s/ Neva Nesbitt
----------------------------
Name: Neva Nesbitt
Title:Manager Credit Admin.
UNION BANK, as Agent and a Bank
By: /s/ J. Kevin Sampson
----------------------------
Name: J. Kevin Sampson
Title:
Co-Agents
CREDIT SUISSE, as Co-Agent and a Bank
By: /s/ Michael C. Mast
----------------------------
Name: Michael C. Mast
Title: Member of Senior
Management
By: /s/ Kristina Catlin
----------------------------
Name: Kristina Catlin
Title: Associate
THE DAI-ICHI KANGYO BANK LTD., NEW YORK BRANCH,
as Co-Agent and a Bank
By: /s/ Shinya Wako
----------------------------
Name: Shinya Wako
Title:Senior Vice President
and Department Head
10
THE MITSUBISHI BANK, LIMITED, as Co-Agent and a
Bank
By: /s/ Paula Mueller
----------------------------
Name: Paula Mueller
Title: Vice President
THE MITSUBISHI TRUST & BANKING CORPORATION, as
Co-Agent and a Bank
By: /s/ Patricia Loret de Mola
----------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
ROYAL BANK OF CANADA, as Co-Agent and a Bank
By: /s/ Eduardo Salazar
----------------------------
Name: Eduardo Salazar
Title: Senior Manager
THE SANWA BANK, LTD., as Co-Agent and a Bank
By: /s/ Dominic J. Sorresso
----------------------------
Name: Dominic J. Sorresso
Title:Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH, as
Co-Agent and a Bank
By: /s/ Shuntaro Hisashi
----------------------------
Name: Shuntaro Hisashi
Title: Joint General Manager
11
UNION BANK OF SWITZERLAND, as Co-Agent and a Bank
By: /s/ James P. Kelleher
----------------------------
Name: James P. Kelleher
Title: Assistant Vice
President
By: /s/ Peter B. Yearley
----------------------------
Name: Peter B. Yearley
Title: Vice President
Syndication Agent
JP MORGAN SECURITIES INC., as the Syndication
Agent
By: /s/ Barbara J. Asch
----------------------------
Name: Barbara J. Asch
Title:Vice President
Lead Managers
CHEMICAL BANK, as Lead Manager and a Bank
By: /s/ Mary E. Cameron
----------------------------
Name: Mary E. Cameron
Title: Vice President
12
DEUTSCHE BANK AG, through its New York and/or
Cayman Islands Branch, as Lead Manager and a Bank
By: /s/ Steven M. Godeke
----------------------------
Name: Steven M. Godeke
Title: Vice President
By: /s/ Bina R. Dabbah
----------------------------
Name: Bina R. Dabbah
Title: Vice President
Participants
THE SAKURA BANK, LIMITED
By: /s/ Hiroshi Shimazaki
----------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
and Manager
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE, NEW YORK BRANCH
By:/s/ Brian O'Leary/Marcus Edward
-------------------------------
Name: Brian O'Leary/Marcus Edward
Title: Vice Presidents
PNC BANK N.A.
By: /s/ Karen M. Wolters
----------------------------
Name: Karen M. Wolters
Title: Vice President
13
FIRST INTERSTATE BANK OF WASHINGTON, N.A.
By:/s/ Susan Hendrixson
----------------------------
Name: Susan Hendrixson
Title: Vice President
GULF INTERNATIONAL BANK
By:/s/ Abdel-Fattah Tahoun
----------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By:/s/ Haytham F. Khalil
----------------------------
Name: Haytham F. Khalil
Title: Assistant Vice President
THE TOKAI BANK, LIMITED, NEW YORK BRANCH
By: /s/ Masaharu Muto
----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
THE YASUDA TRUST AND BANKING CO., LTD., NEW YORK
BRANCH
By:/s/ Neil T. Chau
----------------------------
Name: Neil T. Chau
Title: First Vice President
14
BANK BRUSSELS LAMBERT, NEW YORK BRANCH
By: /s/ Denise Isherwood By: /s/ Eric Hollanders
----------------------- ----------------------------
Name: Denise Isherwood Name: Eric Hollanders
Title: Assistant Vice Title: Senior Vice President
President Credit Department
BANQUE FRANCAISE DU COMMERCE EXTERIEUR, NEW YORK
BRANCH
By: /s/ Peter K. Harris
----------------------------
Name: Peter K. Harris
Title: Vice President
By: /s/ William Marer
----------------------------
Name: William Marer
Title: Vice President/Manager
DEN DANSKE BANK
By: /s/ George Wendell
----------------------------
Name: George Wendell
Title: Vice President
By: /s/ Mogens Sondergaard
----------------------------
Name: Mogens Sondergaard
Title: Vice President
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By: /s/ William F. Laponte, III
----------------------------
Name: William F. Laponte, III
Title: Vice President
15
NIPPON CREDIT BANK, LTD., LOS ANGELES AGENCY
By: /s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President and Manager
SHAWMUT BANK CONNECTICUT, N.A.
By: /s/ Robert F. West
----------------------------
Name: Robert F. West
Title: Director
VAN KAMPEN PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
----------------------------
Name: Jeffrey W. Maillet
Title: Vice President
& Portfolio Mgr.
FIRST HAWAIIAN BANK
By: /s/ William B. Schink
----------------------------
Name: William B. Schink
Title: Vice President
BAYERISCHE VEREINS BANK, A.G.
By: /s/ John Carlson
----------------------------
Name: John Carlson
Title: Vice President
By: /s/ Sylvia Cheng
----------------------------
Name: Sylvia Cheng
Title: Vice President
BANK OF HAWAII
By: /s/ J. Bryan Scearce
----------------------------
Name: J. Bryan Scearce
Title: Associate Vice President
16
THE SUMITOMO TRUST BANKING COMPANY, LTD.
By: /s/ Suraj P. Bhatia
----------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Manager, Corp. Finance
17
AMENDMENT
This Amendment ("Amendment"), dated as of November 17, 1995, shall
be:
AMENDMENT NO. 4 to the $6.489 BILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, ("Parent Facility") among VIACOM INC., a Delaware
corporation ("Viacom"), each of the several Banks, 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,
BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as Agents on
the signature pages thereof, as Agents, and the Banks identified as Co-Agents on
the signature pages thereof, as Co-Agents.
AMENDMENT NO. 3 to the $311 MILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, (the "Subsidiary Facility") among VIACOM CABLEVISION
OF DAYTON INC., WNYT INC., WMZQ INC., WVIT INC., AND VIACOM INTERNATIONAL INC.,
each a Delaware corporation (collectively "Subsidiary Borrowers"), each of the
several Banks, 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, BANK OF AMERICA
NT&SA, as a Managing Agent, the Banks identified as Agents of the signature
pages thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
WITNESSETH:
WHEREAS, Viacom, Viacom International Inc., a wholly-owned subsidiary
of Viacom ("VII"), Viacom International Services Inc., a wholly-owned subsidiary
of VII ("VII Services"), Tele-Communications Inc. ("TCI"), and TCI
Communications Inc. ("TCI Sub"), a wholly-owned subsidiary of TCI, have entered
into a series of agreements ("the Transaction Documents", which are listed on
Schedule I attached hereto) pursuant to which (i) VII will convey to VII
Services proceeds from the $1.7 billion bank debt described below and all of its
assets relating to business operations other than the cable television business
(the "Non Cable Businesses"), and VII Services will assume all of VII's
liabilities (including its existing public debt and bank debt) other than the
$1.7 Billion bank debt described below and liabilities relating to the cable
television business (the "Cable Business"), (ii) VII will distribute the stock
of VII Services to Viacom (the "First Distribution"), (iii) VII, after giving
effect to the First Distribution, will be solely engaged in the Cable Business
and VII will be recapitalized with new VII Class A common stock, (iv) the Class
A common stock of VII will be split off to the shareholders of Viacom in an
exchange offer (the "Exchange Offer") in which shares of Viacom common stock
will be exchanged for shares of VII Class A common stock, (v) VII prior to the
expiration of the Exchange Offer will borrow $1.7 billion from a syndicate of
lenders, the proceeds of which will be deposited in a secured collateral account
until the date of consummation of the Exchange Offer when VII will transfer such
proceeds to VII Services as described above, and (vi) immediately after the
split off, TCI has agreed to purchase Class B common stock of VII and the Class
A common stock will be automatically converted upon such purchase into preferred
stock, and (vii) VII will no longer be a subsidiary of Viacom and will be
renamed TCI Pacific Communications Inc. and VII Services will be renamed Viacom
International Inc. (collectively the "Cable Transaction"); and
WHEREAS, Viacom and the Subsidiary Borrowers have requested certain
amendments to be made to and certain consents obtained with respect to certain
provisions of the Parent Facility and the Subsidiary Facility, respectively; and
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to amend certain provisions of
such agreements and for the Majority Banks to consent to the waiver of the
application of certain other provisions in connection with the Cable
Transaction,
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments.
(a) The definition of Net Cash Proceeds in Section 1.1 of the
Parent Facility is hereby amended by adding the following provisions: "(v) with
reference to proceeds from any sale of Spelling Entertainment Group Inc., the
net amount paid by the Borrower for the portion of Virgin Interactive
Entertainment Limited ("VIEL") not theretofore directly or indirectly owned by
the Borrower, and (vi) with reference to proceeds from any sale of Spelling
Entertainment Group Inc., that portion of the Net Cash Proceeds attributable to
repayment of Indebtedness owed by Spelling Entertainment Group Inc. to the
Borrower;"
2
(b) Section 2.3 (b) of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"2.3(b) Mandatory Reductions. The Borrower shall reduce
the Short-Term Loan Commitment of each Bank by (i) each Bank's Ratable Portion
of the amount received by the Borrower from VII Services representing the loan
proceeds from VII in connection with the consummation of the Exchange Offer (the
"Cable Transaction Effective Date") and (ii) in the event that the Cable
Transaction Effective Date has not occurred by May 31, 1996, by each Bank's
Ratable Portion of the amount by which any Net Cash Proceeds received by the
Borrower from the sale of Spelling Entertainment Group Inc. (or any of its
subsidiaries other than VIEL) exceed $150 million. After the Short-Term Loan
Commitments have been reduced to $0 and all Short-Term Loans have been repaid,
no mandatory reductions of any Commitment shall be required from Net Cash
Proceeds".
(c) Section 10.6 of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"10.6. Subsidiary Indebtedness. The Borrower shall not
permit any of its Subsidiaries, other than the Guarantor Subsidiary, to incur
Indebtedness for borrowed money other than (a) the Subsidiary Loans (as defined
in the Subsidiary Facility), (b) under existing facilities identified on
Schedule 10.6 to this Amendment No. 4 or any replacement facilities thereto
which in the aggregate do not exceed the amounts of the commitments on such
Schedule and (c) Indebtedness for borrowed money in an aggregate amount at any
time outstanding of not more than $300 million; provided, however, the aggregate
amount of Indebtedness for borrowed money scheduled to mature earlier than six
months after the Commitment Termination Date at any time permitted to be
outstanding under 10.6(c) and 10.7(b) may not exceed $300 million."
(d) Section 10.7 of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"10.7. Other Restrictions on Indebtedness. The Borrower
shall not, and shall not permit the Guarantor Subsidiary to, incur Indebtedness
for borrowed money maturing earlier than six months after the Commitment
Termination Date other than (a) Commercial Paper and (b) up to $300 million at
any time outstanding (less the aggregate amount outstanding under 10.6(c)
3
scheduled to mature earlier than six months after the Commitment Termination
Date) and on terms no more onerous than the terms hereof".
(e) Section 7.5 of the Subsidiary Facility is hereby amended by
replacing it in its entirety with the following:
"7.5 Other Restrictions on Indebtedness. No Subsidiary
Borrower shall incur Indebtedness for borrowed money maturing earlier than six
months after the Commitment Termination Date other than (a) Commercial Paper and
(b) up to $300 million at any time outstanding (less the aggregate amount
outstanding scheduled to mature earlier than six months after the Commitment
Termination Date under 10.6(c) of the Parent Facility)".
(f) Section 13.1 of the Parent Facility is hereby amended by
deleting the word "or" preceding clause (f) thereof and inserting the following
new clause (g): "or (g) amend clause (i) of Section 13.6".
(g) Section 10.1 of the Subsidiary Facility is hereby amended by
deleting the word "or" preceding clause (f) and inserting the following new
clause (g): "or (g) amend clause (i) of Section 10.6".
(h) Clause (i) of Section 13.6 of the Parent Facility is hereby
amended to read in its entirety as follows: "the Borrower shall have no right to
assign its rights or obligations hereunder or any interest herein (and any such
purported assignment shall be void) without the prior consent of the Banks
except in connection with any (x) merger or consolidation permitted under
Section 10.2 or (y) merger, consolidation or sale of assets consented to by the
Majority Banks".
(i) Clause (i) of Section 10.6 of the Subsidiary Facility is
hereby amended to read in its entirety as follows: "no Subsidiary Borrower shall
have the right to assign its rights or obligations hereunder or any interest
herein (and any such purported assignment shall be void) without the prior
consent of the Banks, except in connection with any (x) merger or consolidation
permitted under Section 10.2 of the Parent Facility or (y) merger, consolidation
or sale of assets consented to by the Majority Banks".
SECTION 2. Consents. In connection with the Cable Transaction:
4
(a) On the Cable Transaction Effective Date, the Guarantor
Subsidiary may assign all of its rights and obligations under the VII Guaranty
to VII Services (which will change its name to Viacom International Inc.) if in
connection therewith VII Services (i) assumes all of the obligations of VII
under the VII Guaranty and (ii) receives an assignment of the Non Cable
Businesses. VII Services will become the Guarantor Subsidiary and VII will be
released from all of its obligations thereunder.
(b) On the Cable Transaction Effective Date, the Subsidiary Loan
made to VII under the Subsidiary Facility may be assigned to VII Services if in
connection therewith VII Services (i) assumes all of the obligations of VII
under the Subsidiary Loan and (ii) receives an assignment of the Non Cable
Businesses. VII Services will become a Subsidiary Borrower under the Subsidiary
Facility and VII will be released from all of its obligations thereunder.
(c) Prior to the expiration of the Exchange Offer, VII may
borrow $1.7 billion from a syndicate of banks on terms permitted pursuant to the
Transaction Documents substantially in the form of those in effect at the date
hereof and may grant such banks a Lien on such funds until they are released to
VII Services on the date of consummation of the Exchange Offer and a lien on
rights under the Subscription Agreement referred to in Schedule I.
(d) After the Cable Transaction Effective Date, VII Services may
hold certain cable franchises for the benefit of VII until regulatory approvals
are obtained and may assign the receivables related to such franchises to the
banks lending to VII.
(e) For purposes of the Parent Facility and the Subsidiary
Facility, the $1.7 Billion loan to VII shall not be considered Indebtedness of
the Borrower or a Subsidiary Borrower.
Upon the execution and delivery hereof of the Majority Banks, the
Majority Banks shall have consented to each of the foregoing relating to the
Cable Transaction and, to the extent any of the matters described in (a) - (e)
above are otherwise inconsistent with the terms of the Parent Facility or
Subsidiary Facility, as hereby amended, this Amendment shall constitute a waiver
of the provisions thereof to the extent necessary to permit the Cable
Transaction.
5
SECTION 3. Assumption of Liabilities. As of the Cable Transaction
Effective Date, VII Services hereby expressly assumes and agrees to pay, satisfy
and perform when due all liabilities of VII under each Loan Document to which
VII is a party. For purposes of clarity, VII's obligations under the $1.7
billion of bank debt described above will not be assumed by VII Services.
SECTION 4. Effectiveness. This Amendment will be effective upon the
execution hereof by each of Viacom, each Subsidiary Borrower, VII and VII
Services and the Majority Banks.
SECTION 5. Representations and Warranties. Each of Viacom, the
Subsidiary Borrowers and the Guarantor Subsidiary hereby represents and warrants
that (i) as of the date hereof, both before and after giving effect to this
Amendment, and (ii) as of the date of, and after giving effect to consummation
of, the Cable Transaction, no Default or Event of Default shall exist or be
continuing under the Parent Facility or the Subsidiary Facility.
SECTION 6. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in each of the
Parent Facility and the Subsidiary Facility.
(b) Except as amended or waived hereby, all of the terms of each
of the Parent Facility and the Subsidiary Facility shall remain and continue in
full force and effect and are hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of
the Parent Facility and the Subsidiary Facility.
(d) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 7. Covenant. Viacom shall within two Business Days following
6
the Cable Transaction Effective Date deliver to the Documentation Agent, dated
as of the Cable Transaction Effective Date, as to VII Services only:
(i) each of the documents referred to in Section 6.1(a), (b) and (c)
of the Parent Facility;
(ii) each of the documents referred to in Section 4.1(a), (b) and (c)
of the Subsidiary Facility;
(iii) a favorable opinion of Shearman & Sterling, special counsel to
the Loan Parties, with respect to this Amendment substantially to the same
effect as contemplated by paragraph 1 of Exhibit E-1 to the Parent Agreement and
paragraph 1 of Exhibit E-1 to the Subsidiary Agreement; and
(iv) a favorable opinion of Philippe P. Dauman, General Counsel to
the Loan Parties, with respect to this Amendment substantially to the same
effect as contemplated by paragraphs 1 - 6 of Exhibit E-2 to the Parent
Agreement and paragraphs 1 - 6 of Exhibit E-2 to the Subsidiary Agreement.
SECTION 8. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
SECTION 9. Viacom Inc. Confirmation. By signing below, Viacom Inc.,
as guarantor under the Parent Guaranty ("Parent Guarantor"), hereby agrees to
the terms of the foregoing Amendment and confirms that the Parent Guaranty
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower and Parent Guarantor
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL INC., as a Subsidiary
Borrower and as a Guarantor Subsidiary
7
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
On behalf of the following Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.,
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL SERVICES INC.
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
CREDIT SUISSE
By:/s/ J. Hamilton Crawford
--------------------------------
Name: J. Hamilton Crawford
Title: Associate
By:/s/ Michael C. Mast
--------------------------------
Name: Michael C. Mast
Title: Member of Senior Mgmt.
8
SOCIETE GENERALE
By:/s/ Elaine I. Khalil
--------------------------------
Name: Elaine I. Khalil
Title: Vice President
9
THE BANK OF NEW YORK
By:/s/ Geoffrey C. Brooks
---------------------------------
Name: Geoffrey C. Brooks
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:/s/ John P. Judge
---------------------------------
Name: John P. Judge
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON
By:/s/ Susan Hendrixson
---------------------------------
Name: Susan Hendrixson
Title: Vice President
UNION BANK OF SWITZERLAND
By:/s/ Stephen A. Cayer
---------------------------------
Name: Stephen A. Cayer
Title: Assistant Treasurer
By:/s/ Peter B. Yearly
---------------------------------
Name: Peter B. Yearly
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD
By:/s/ Gerald Gill
---------------------------------
Name: Gerald Gill
Title: Vice President
10
BAYERISCHE VEREINSBANK AG
By:/s/ John Carlson
---------------------------------
Name: John Carlson
Title: Vice President
By:/s/ Sylvia Chang
---------------------------------
Name: Sylvia Chang
Title: Vice President
MITSUBISHI BANK, LTD.
By:/s/ Paula Mueller
---------------------------------
Name: Paula Mueller
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:/s/ Patricia Loret De Mola
---------------------------------
Name: Patricia Loret De Mola
Title: Senior Vice President
NATWEST BANK, N.A.
By:/s/ Michael A. Cerullo
---------------------------------
Name: Michael A. Cerullo
Title: Vice President
11
GULF INTERNATIONAL BANK BSC
By:/s/ Haytham F. Halil
---------------------------------
Name: Haytham F. Halil
Title: Assistant Vice President
By:/s/ Abdel-Fattah Tahoun
---------------------------------
Name: Haytham F. Halil
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By:/s/ Karen M. Wolters
---------------------------------
Name: Karen M. Wolters
Title: Vice President
THE SUMITOMO BANK, LTD.
By:/s/ S. Higashi
---------------------------------
Name: S. Higashi
Title: Joint General Manager
THE SUMITOMO TRUST AND BANKING CO., LTD.
By:/s/ Suraj P. Bhatia
---------------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Mgr. Corp. Finance Dept.
CORESTATES BANK, N.A.
By:/s/ Edward L. Kittrell
---------------------------------
Name: Edward L. Kittrell
Title: Vice President
12
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By:/s/ Peter Karl Harris
---------------------------------
Name: Peter Karl Harris
Title: Vice President
By:/s/ William C. Maier
---------------------------------
Name: William C. Maier
Title: VP-Group Manager
THE SAKURA BANK, LTD.
By:/s/ Hiroshi Shimazaki
---------------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
& Manager
DEN DANSKE BANK
By:/s/ Mogens Sondergaard
---------------------------------
Name: Mogens Sondergaard
Title: Vice President
By:/s/ Bent V. Christensen
---------------------------------
Name: Bent V. Christensen
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LTD.
By:/s/ Jeffrey Cole
---------------------------------
Name: Jeffrey Cole
Title: Senior Vice President
13
ROYAL BANK OF CANADA
By:/s/ Cynthia K. Wong
---------------------------------
Name: Cynthia K. Wong
Title: Manager
THE SANWA BANK, LTD.
By: /s/ Dominic J. Sorresso
---------------------------------
Name: Dominic J. Sorresso
Title: Vice President
TOKAI BANK, LTD.
By:/s/ Stuart Schulman
---------------------------------
Name: Stuart Schulman
Title: Senior Vice President
CHEMICAL BANK
By:/s/ John J. Huber III
---------------------------------
Name: John J. Huber III
Title: Managing Director
THE DAI-CHI KANGYO BANK, LTD.
By:/s/ Ronald Wolinsky
---------------------------------
Name: Ronald Wolinsky
Title: Vice President & Group Leader
14
FIRST HAWAIIAN BANK
By:/s/ William B. Schink
---------------------------------
Name: William B. Schink
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:/s/ R. BLake Witherington
---------------------------------
Name: R. BLake Witherington
Title: Vice President
CITIBANK, N.A.
By:/s/ Margaret C. Ullrich
---------------------------------
Name: Margaret C. Ullrich
Title: Vice President
THE NIPPON CREDIT BANK, LTD.
By:/s/ Bernardo E. Correa-Henschke
---------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President & Manager
RIGGS NATIONAL BANK
By:/s/ David H. Olson
---------------------------------
Name: David H. Olson
Title: Vice President
15
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:/s/ Jim F. Redman
---------------------------------
Name: Jim F. Redman
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ G. Luis Ashley
---------------------------------
Name: G. Luis Ashley
Title: First Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPENNE
By:/s/ Brian O'Leary
---------------------------------
Name: Brian O'Leary
Title: Vice President
By:/s/ Marcus Edward
---------------------------------
Name: Marcus Edward
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By:/s/ Jeffrey W. Maillet
---------------------------------
Name: Jeffrey W. Maillet
Title: Sr. Vice Pres. &
Portfolio Manager
16
CIBC, INC.
By:/s/ John Tyler
---------------------------------
Name: John Tyler
Title: Vice President
THE CHASE MANHATTAN BANK
By:/s/ Bruce Langenkamp
---------------------------------
Name: Bruce Langenkamp
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ Vincent Fitzgerald, Jr.
---------------------------------
Name: Vincent Fitzgerald, Jr.
Title: Authorized Signatory
THE FUJI BANK, LTD.
By:/s/ Katsunori Nozawa
---------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:/s/ John A. Krob
---------------------------------
Name: John A. Krob
Title: Deputy General Manager
17
BANQUE NATIONALE DE PARIS
By:/s/ John S. Mitchell
---------------------------------
Name: John S. Mitchell
Title: Vice President
By:/s/ Nancy Stengel
---------------------------------
Name: Nancy Stengel
Title: Assistant Treasurer
BANK OF HAWAII
By:/s/ J. Bryan Scearce
---------------------------------
Name: J. Bryan Scearce
Title: Vice President
BANK OF AMERICA
By:/s/ Amy S. Trapp
---------------------------------
Name: Amy S. Trapp
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By:/s/ Chad E. Coben
---------------------------------
Name: Chad E. Coben
Title: Vice President
18
DEUTSCHE BANK
By:/s/ Steven M. Godeke
---------------------------------
Name: Steven M. Godele
Title: Vice President
By:/s/ Bina R. Dabbah
---------------------------------
Name: Bina R. Dabbah
Title: Vice President
UNION BANK
By:/s/ Gabriel A. Renga
---------------------------------
Name: Gabriel A. Renga
Title: Senior Vice President
THE TORONTO DOMINION BANK
By:/s/ Neva Nesbitt
---------------------------------
Name: Neva Nesbitt
Title: Manager, Credit Administration
FLEET NATIONAL BANK OF CONNECTICUT
By:/s/ Stephen Charles
---------------------------------
Name: Stephen Charles
Title: Senior Vice President
BARCLAYS BANK PLC
By:/s/ James K. Downy
---------------------------------
Name: James K. Downy
Title: Associate Director
19
BANK BRUSSELS LAMBERT, NY BRANCH
By:/s/ Gerrit Verlodt
---------------------------------
Name: Gerrit Verlodt
Title: Senior Vice President
By:/s/ Dominick H.J. Vangaever
---------------------------------
Name: Dominick H.J. Vangaever
Title: Vice President, Credit Dept.
BANK OF MONTREAL
By:/s/ Yvonne Bos
---------------------------------
Name: Yvonne Bos
Title: Managing Director
CREDIT LYONNAIS
By:/s/ James E. Morris
---------------------------------
Name: James E. Morris
Title: Vice President
20
Schedule I
1. Parents Agreement, dated as of July 24, 1995, among
Viacom, TCI and TCI Sub.
2. Implementation Agreement, dated as of July 24, 1995,
between VII and VII Services.
3. Subscription Agreement, dated as of July 24, 1995, among
VII, TCI and TCI Sub.
21
PRICING
AMENDMENT
This Amendment ("Amendment"), dated as of November 17, 1995, shall
be:
AMENDMENT NO. 5 to the $6.489 BILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, ("Parent Facility") among VIACOM INC., a Delaware
corporation ("Viacom"), each of the several Banks, 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,
BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as Agents on
the signature pages thereof, as Agents, and the Banks identified as Co-Agents on
the signature pages thereof, as Co-Agents.
AMENDMENT NO. 4 to the $311 MILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, (the "Subsidiary Facility") among VIACOM CABLEVISION
OF DAYTON INC., WNYT INC., WMZQ INC., WVIT INC., AND VIACOM INTERNATIONAL INC.,
each a Delaware corporation (collectively "Subsidiary Borrowers"), each of the
several Banks, 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, BANK OF AMERICA
NT&SA, as a Managing Agent, the Banks identified as Agents of the signature
pages thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
WITNESSETH:
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to amend certain provisions of
such agreements to provide for a change in the Applicable Eurodollar Rate Margin
and Commitment Fees payable thereunder,
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments.
(a) The definition of Applicable Eurodollar Rate Margin in
Section 1.1 of the Parent Facility and Section 1.1 of the Subsidiary Facility
are hereby amended by deleting the tables appearing therein and replacing them
in each case with the following table:
CREDIT RATING MARGIN
------------- ------
A-/A3 or better 0.300%
BBB+/Baa1 0.375%
BBB/Baa2 0.450%
BBB-/Baa3 0.500%
BB+/Ba1 0.750%
BB/Ba2 0.875%
BB-/Ba3 or lower 1.250%
(b) Section 5.4 (a) of the Parent Facility and Section 3.4(a) of
the Subsidiary Facility are hereby amended by deleting the tables appearing
therein and replacing them in each case with the following table:
CREDIT RATING COMMITMENT FEE
------------- --------------
A-/A3 or better 0.1250%
BBB+/Baa1 0.1500%
BBB/Baa2 0.1875%
BBB-/Baa3 0.2000%
BB+/Ba1 0.3125%
BB/Ba2 0.3500%
BB-/Ba3 or lower 0.4000%
SECTION 2. Effectiveness. This Amendment will be effective upon the
execution hereof by each of Viacom, each Subsidiary Borrower, VII and VII
Services and each of the Banks.
SECTION 3. Representations and Warranties. Each of Viacom, the
Subsidiary Borrowers and the Guarantor Subsidiary hereby represents and warrants
that as of the date hereof, both before and after giving effect to this
Amendment no Default or Event of Default shall exist or be continuing under the
Parent Facility or the Subsidiary Facility.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and not
2
otherwise defined herein shall have the meanings ascribed to them in each of the
Parent Facility and the Subsidiary Facility.
(b) Except as amended hereby, all of the terms of each of the
Parent Facility and the Subsidiary Facility shall remain and continue in full
force and effect and are hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of
the Parent Facility and the Subsidiary Facility.
(d) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
SECTION 6. Viacom Inc. Confirmation. By signing below, Viacom Inc.,
as guarantor under the Parent Guaranty ("Parent Guarantor"), hereby agrees to
the terms of the foregoing Amendment and confirms that the Parent Guaranty
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower and Parent Guarantor
By: /s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
3
VIACOM INTERNATIONAL INC., as a Subsidiary Borrower
and as a Guarantor Subsidiary
By: /s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
On behalf of the following Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.,
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL SERVICES INC.
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
CREDIT SUISSE
By:/s/ J. Hamilton Crawford
--------------------------------
Name: J. Hamilton Crawford
Title: Associate
4
SOCIETE GENERALE
By:/s/ Elaine I. Khalil
--------------------------------
Name: Elaine I. Khalil
Title: Vice President
THE BANK OF NEW YORK
By:/s/ Geoffrey C. Brooks
--------------------------------
Name: Geoffrey C. Brooks
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:/s/ John P. Judge
--------------------------------
Name: John P. Judge
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON
By:/s/ Susan Hendrixson
--------------------------------
Name: Susan Hendrixson
Title: Vice President
5
UNION BANK OF SWITZERLAND
By:/s/ Stephen A. Cayer
--------------------------------
Name: Stephen A. Cayer
Title: Assistant Treasurer
By:/s/ Peter B. Yearly
--------------------------------
Name: Peter B. Yearly
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD
By:/s/ Gerald Gill
--------------------------------
Name: Gerald Gill
Title: Vice President
BAYERISCHE VEREINSBANK AG
By:/s/ John Carlson
--------------------------------
Name: John Carlson
Title: Vice President
By:/s/
--------------------------------
Name:
Title: Vice President
LLOYDS BANK, PLC
By:/s/ Paul D. Brianente
--------------------------------
Name: Paul D. Brianente
Title: Vice President
By:/s/ Theodore R. Walser
--------------------------------
Name: Theodore R. Walser
Title: Senior Vice President
6
MITSUBISHI BANK, LTD.
By:/s/ Paula Mueller
--------------------------------
Name: Paula Mueller
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:/s/ Patricia Loret De Mola
--------------------------------
Name: Patricia Loret De Mola
Title: Senior Vice President
NATWEST BANK, N.A.
By:/s/ Michael A. Cerullo
--------------------------------
Name: Michael A. Cerullo
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By:/s/ Karen M. Wolters
--------------------------------
Name: Karen M. Wolters
Title: Vice President
THE SUMITOMO TRUST AND BANKING CO., LTD.
By:/s/ Suraj P. Bhatia
--------------------------------
Name: Suraj P. Bhatia
Title: Senior VP, Mgr. Corp.
Finance Dept
7
THE SUMITOMO BANK, LTD.
By:/s/ S. Higashi
--------------------------------
Name: S. Higashi
Title: Joint General Manager
CORESTATES BANK, N.A.
By:/s/ Edward L. Kittrell
--------------------------------
Name: Edward L. Kittrell
Title: Vice President
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By:/s/ Peter Karl Harris
--------------------------------
Name: Peter Karl Harris
Title: Vice President
By:/s/ William C. Maier
--------------------------------
Name: William C. Maier
Title: VP-Group Manager
THE NIPPON CREDIT BANK, LTD.
By:/s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President & Manager
THE SAKURA BANK, LTD.
By:/s/ Hiroshi Shimazaki
--------------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
& Manager
8
DEN DANSKE BANK
By:/s/ Mogens Sondergaard
--------------------------------
Name: Mogens Sondergaard
Title: Vice President
By:/s/ Bent V. Christensen
--------------------------------
Name: Bent V. Christensen
Title: Vice President
THE ROYAL BANK OF CANADA
By:/s/ Cynthia K. Wong
--------------------------------
Name: Cynthia K. Wong
Title: Manager
THE SANWA BANK, LTD.
By: /s/ Dominic J. Sorresso
--------------------------------
Name: Dominic J. Sorresso
Title: Vice President
TOKAI BANK, LTD.
By:/s/ Stuart Schulman
--------------------------------
Name: Stuart Schulman
Title: Senior Vice President
CHEMICAL BANK
By:/s/ John J. Huber III
--------------------------------
Name: John J. Huber III
Title: Managing Director
9
THE DAI-CHI KANGYO BANK, LTD.
By:/s/ Ronald Wolinsky
--------------------------------
Name: Ronald Wolinsky
Title: Vice President & Group Leader
FIRST HAWAIIAN BANK
By:/s/ William B. Schink
--------------------------------
Name: William B. Schink
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:/s/ R. BLake Witherington
--------------------------------
Name: R. BLake Witherington
Title: Vice President
CITIBANK, N.A.
By:/s/ Margaret C. Ullrich
--------------------------------
Name: Margaret C. Ullrich
Title: Vice President
RIGGS NATIONAL BANK
By:/s/ David H. Olson
--------------------------------
Name: David H. Olson
Title: Vice President
10
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:/s/ Jim P. Wedman
--------------------------------
Name: Jim P. Wedman
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ G. Luis Ashley
--------------------------------
Name: G. Luis Ashley
Title: First Vice President
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPENNE
By:/s/ Brian O'Leary
--------------------------------
Name: Brian O'Leary
Title: Vice President
By:/s/ Marcus Edward
--------------------------------
Name: Marcus Edward
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
By:/s/ Jeffrey W. Maillet
--------------------------------
Name: Jeffrey W. Maillet
Title: Sr. Vice Pres.
& Portfolio Mgr.
11
CIBC, INC.
By:/s/ John Tyler
--------------------------------
Name: John Tyler
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ Vincent Fitzgerald, Jr.
--------------------------------
Name: Vincent Fitzgerald, Jr.
Title: Authorized Signatory
THE FUJI BANK, LTD.
By:/s/ Katsunori Nozawa
--------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:/s/ John A. Krob
--------------------------------
Name: John A. Krob
Title: Deputy General Manager
BANQUE NATIONALE DE PARIS
By:/s/ John S. McGill
--------------------------------
Name: John S. McGill
Title: Vice President
By:/s/ Nancy L. Stengel
--------------------------------
Name: Nancy L. Stengel
Title: Assistant Treasurer
12
BANK OF HAWAII
By:/s/ J. Bryan Scearce
--------------------------------
Name: J. Bryan Scearce
Title: Vice President
BANK OF AMERICA
By:/s/ Amy S. Trapp
--------------------------------
Name: Amy S. Trapp
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By:/s/ Chad E. Coben
--------------------------------
Name: Chad E. Coben
Title: Vice President
DEUTSCHE BANK
By:/s/ Steven M. Godeke
--------------------------------
Name: Steven M. Godele
Title: Vice President
By:/s/ Bina R. Dabbah
--------------------------------
Name: Bina R. Dabbah
Title: Vice President
UNION BANK
By:/s/ Gabriel A. Renga
--------------------------------
Name: Gabriel A. Renga
Title: Senior Vice President
13
THE TORONTO DOMINION BANK
By:/s/ Neva Nesbitt
--------------------------------
Name: Neva Nesbitt
Title: Manager, Credit Administration
By:/s/ Cindy D. Hewitt
--------------------------------
Name: Cindy D. Hewitt
Title: Vice President
FLEET NATIONAL BANK OF CONNECTICUT
By:/s/ Stephen Charles
--------------------------------
Name: Stephen Charles
Title: Senior Vice President
BARCLAYS BANK PLC
By:/s/ James K. Downy
--------------------------------
Name: James K. Downy
Title: Associate Director
BANK BRUSSELS LAMBERT
By:/s/ Dominick H. J. Vangaever
--------------------------------
Name: Dominick H. J. Vangaever
Title: Vice President
BANK OF MONTREAL
By:/s/ Yvonne Bos
--------------------------------
Name: Yvonne Bos
Title: Managing Director
14
CREDIT LYONNAIS
By:/s/ James E. Morris
--------------------------------
Name: James E. Morris
Title: Vice President
15
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of August 5, 1994 (this "Amendment"), to:
(i) the CREDIT AGREEMENT, dated as of July 1, 1994 (the "Parent
Facility"), among VIACOM INC., a Delaware corporation ("Viacom"), each of the
several Banks identified on the signature pages thereof, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified as
Co-Agents on the signature pages thereof, as Co-Agents; and
(ii) the CREDIT AGREEMENT, dated as of July 1, 1994 (the "Subsidiary
Facility"), among VIACOM CABLEVISION OF DAYTON INC., WNYT INC., WMZQ INC., WVIT
INC. and VIACOM INTERNATIONAL INC., each a Delaware corporation (collectively,
"Subsidiary Borrowers"), each of the several Banks identified on the signature
pages thereof, 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, BANK OF AMERICA
NT&SA, as a Managing Agent, the Banks identified as Agents on the signature
pages thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
W I T N E S S E T H:
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to effect a general syndication
of the Parent Facility and Subsidiary Facility and the related assignment of the
outstanding Loans thereunder by amending certain provisions of such agreements;
and
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Amendments
Section 1.1. All references to "Schedule I" in each of the Parent
Facility and Subsidiary Facility are hereby amended to refer to Schedule I
attached to this Amendment.
Section 1.2. All references to "Schedule II" in each of the Parent
Facility and the Subsidiary Facility are hereby amended to refer to the
appropriate Schedule II relating to such agreement and attached to this
Amendment.
Section 1.3 All references to an "Agent" or a "Co-Agent" shall have
the meanings set forth in each of the Parent Facility and Subsidiary Facility.
ARTICLE II
Funding
Section 2.1. Subject to the prior effectiveness of this Amendment,
and in order to give effect to the reallocation of the commitments and the
outstanding Loans provided for by this Section 2.1, before 11:00 A.M. (New York
City time) on August 15, 1994 (the "Effective Date"):
(i) Each lender that is to become a Bank party to either of the
Parent Facility or the Subsidiary Facility (each such lender, a "New
Lender") shall make available to the Administrative Agent, for the
respective accounts of the Banks that are parties to either of the Parent
Facility or the Subsidiary Facility (the "Existing Lenders"), an amount
equal to the aggregate of (x) such New Lender's Ratable Portion (as
defined in each of the Parent Facility and the Subsidiary Facility, after
giving effect to the provisions of Article I of this Amendment (the
"Adjusted Ratable Portion")) of the outstanding Loans under (and as
defined in) each of the Parent Facility and the Subsidiary Facility, and
(y) such New Lender's Adjusted Ratable Portion of the Breakage Amount (as
defined below), if any, payable by the New Lenders with respect to each
Eurodollar Rate Loan outstanding on the Effective Date (other than any
Eurodollar Rate Loans with respect to which the Effective Date is the
first day of a new Interest Period); and
2
(ii) Promptly thereafter (but in any event on the same day), the
Administrative Agent shall cause to be distributed in like funds to each
Existing Lender, for the account of its Applicable Lending Office, such
Existing Lender's Ratable Portion (as defined in each of the Parent
Facility and the Subsidiary Facility, but without giving effect to the
provisions of Article I of this Agreement (the "Unadjusted Ratable
Portion")) of (x) the amount paid by the New Lenders pursuant to clause
(i) of this Section 2.1 in respect of the reallocation of loans and (y)
the Breakage Amount, if any, paid by the New Lenders.
Section 2.2. Subject to the prior effectiveness of this Amendment,
before 11:00 A.M. (New York City time) on the Effective Date:
(i) Each Existing Lender shall make available to the Administrative
Agent, for the respective accounts of the New Lenders, an amount equal to
the aggregate of (x) such Existing Lender's Unadjusted Ratable Portion of
the Breakage Amount (as defined below), if any, payable by the Existing
Lenders, and (y) the Participation Fee (as defined below) payable by such
Existing Lender; and
(ii) Promptly thereafter (but in any event on the same day), the
Administrative Agent shall cause to be distributed in like funds to each
New Lender, for the account of its Applicable Lending Office, such New
Lender's Adjusted Ratable Portion of the (x) Breakage Amount, if any, paid
by the Existing Lenders and (y) the aggregate of the Participation Fees
paid by the Existing Lenders.
Section 2.3. The "Breakage Amount" with respect to each Eurodollar
Rate Loan shall be the amount calculated in accordance with the following
formula:
Principal Amount x [(New LIBOR - Old LIBOR)/360] x Number of Days
Remaining
where:
Principal Amount = The aggregate of the Adjusted
Ratable Portions of the New Lenders of
the applicable Eurodollar Rate Loan
New LIBOR = Eurodollar Rate determined in respect of
such Loan for the Interest Period
commencing on the Effective Date
3
Old LIBOR = Eurodollar Rate in effect with respect to such Loan
immediately prior to the Effective Date
Number of Days Remaining = Number of days remaining in
the Interest Period applicable to such Loan
If such amount is a negative number, the absolute value of such amount shall be
payable only by the New Lenders for the account of the Existing Lenders. If such
amount is a positive number, such amount shall be payable only by the Existing
Lenders to the New Lenders.
Section 2.3. The "Participation Fee" payable by each Existing Lender
shall be the amount set forth with respect to such Existing Lender in the
following table:
Category of Existing Lender Amount of Participation Fee
--------------------------- ---------------------------
Managing Agent $67,286.50
Agent $64,851.57
Co-Agent $46,322.55
Section 2.4 Upon receipt of the monies by the Administrative Agent,
as provided in Sections 2.1(i) and 2.2(i), and payment of the monies by the
Administrative Agent, as provided in Section 2.1(ii) and 2.2(ii), the
Administrative Agent shall make appropriate entries in its books pursuant to
Section 13.7(g) of the Parent Facility and Section 10.7(g) of the Subsidiary
Facility to reflect the reallocation of Commitments and Loans effected by this
Amendment.
Section 2.4. The provisions of this Article are solely for the
benefit of the Existing Lenders and the New Lenders and may not be enforced by
any other party.
ARTICLE III
Effectiveness
Section 3.1. This Amendment will be effective as of the Effective
Date and following the execution thereof by each of Viacom, each Subsidiary
Borrower, each Guarantor Subsidiary and each Existing Lender and New Lender
identified on the signature pages hereof.
4
ARTICLE IV
Representations and Warranties
Section 4.1. Each of the Borrower, the Subsidiary Borrowers and the
Subsidiary Guarantors hereby represents and warrants that on the Effective Date,
both before and after giving effect to this Amendment, no Default or Event of
Default shall exist or be continuing under the Parent Facility or the Subsidiary
Facility.
ARTICLE V
Miscellaneous
Section 5.1. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in each of the Parent Facility
and the Subsidiary Facility.
Section 5.2. Except as amended hereby, all of the terms of each of
the Parent Facility and the Subsidiary Facility shall remain and continue in
full force and effect and are hereby confirmed in all respects.
Section 5.3. This Amendment shall be a Loan Document for the purposes
of the Parent Facility and Subsidiary Facility.
Section 5.4. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon the same instrument. Delivery of an executed
counterpart of a signature page of this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.
Section 5.5. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower
By: /s/ Vaughn A. Clarke
-----------------------
Name: Vaughn A. Clarke
Title: Senior Vice
President, Treasurer
VIACOM INTERNATIONAL INC., as a
Subsidiary Borrower and as a Subsidiary
Guarantor
By: /s/ Vaughn A. Clarke
-----------------------
Name: Vaughn A. Clarke
Title: Senior Vice
President, Treasurer
On behalf of the following Subsidiary
Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.
PARAMOUNT COMMUNICATIONS INC., as a
Subsidiary Guarantor
By: /s/ Vaughn A. Clarke
-----------------------
Name: Vaughn A. Clarke
Title: Senior Vice
President, Treasurer
6
EXISTING LENDERS
Managing Agents
THE BANK OF NEW YORK, as Managing Agent, the
Documentation Agent and a Bank
By: /s/ Vincent L. Pacilio
-----------------------------
Name: Vincent L. Pacilio
Title: Vice President
CITIBANK, N.A., as Managing Agent, the
Administrative Agent and a Bank
By: /s/ David D. Clark
-----------------------------
Name: David D. Clark
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Managing Agent and a Bank
By: /s/ Stephen J. Kenneally
-----------------------------
Name: Stephen J. Kenneally
Title: Vice President
BANK OF AMERICA NT&SA, as Managing Agent and a
Bank
By: /s/ Nancy L. Sun
-----------------------------
Name: Nancy L. Sun
Title: Vice President
7
Agents
BANK OF MONTREAL, as Agent and a Bank
By: /s/ Yvonne Bos
-----------------------------
Name: Yvonne Bos
Title: Managing Director
THE BANK OF NOVA SCOTIA, as Agent and a Bank
By: /s/ Vince Fitzgerald
-----------------------------
Name: Vince Fitzgerald
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY, as Agent and a
Bank
By: /s/ Neal Hoffson
-----------------------------
Name: Neal Hoffson
Title: Vice President
BARCLAYS BANK PLC, as Agent and a Bank
By: /s/ James L. Hatter
-----------------------------
Name: James L. Hatter
Title: Director
CANADIAN IMPERIAL BANK OF COMMERCE, as Agent and
a Bank
By: /s/ John H. Tyler
-----------------------------
Name: John H. Tyler
Title: Vice President
8
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as Agent and a Bank
By: /s/ Bruce Langenkamp
-----------------------------
Name: Bruce Langenkamp
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as Agent
and a Bank
By: /s/ M. Bernadette Collins
-----------------------------
Name: M. Bernadette Collins
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON, as Agent and a
Bank
By: /s/ Mary M. Barcus
-----------------------------
Name: Mary M. Barcus
Title: Vice President
THE FUJI BANK, LIMITED, as Agent and a Bank
By: /s/ Katsunori Nozawa
-----------------------------
Name: Katsunori Nozawa
Title: Vice President &
Manager
THE INDUSTRIAL BANK OF JAPAN, LTD., as Agent and
a Bank
By: /s/ Jeffrey Cole
-----------------------------
Name: Jeffrey Cole
Title: Vice President
9
LTCB TRUST COMPANY, as Agent and a Bank
By: /s/ Tetsuya Fukunaga
-----------------------------
Name: Tetsuya Fukunaga
Title: Vice President
MELLON BANK, N.A., as Agent and a Bank
By: /s/ Sean C. Gannon
-----------------------------
Name: Sean C. Gannon
Title: Assistant Vice President
NATIONSBANK OF TEXAS N.A., as Agent and a Bank
By: /s/ Chad E. Coben
-----------------------------
Name: Chad E. Coben
Title: Assistant Vice President
SOCIETE GENERALE, as Agent and a Bank
By: /s/ Pascale Hainline
-----------------------------
Name: Pascale Hainline
Title: Vice President
THE TORONTO-DOMINION BANK, as Agent and a Bank
By: /s/ David G. Parker
-----------------------------
Name: David G. Parker
Title: Mgr. Cr. Admin.
10
UNION BANK, as Agent and a Bank
By: /s/ Bill D. Gooch
-----------------------------
Name: Bill D. Gooch
Title: Assistant Vice President
Co-Agents
CREDIT SUISSE, as Co-Agent and a Bank
By: /s/ Michael C. Mast
-----------------------------
Name: Michael C. Mast
Title: Member of Senior Management
By: /s/ Scott E. Zoellner
-----------------------------
Name: Scott E. Zoellner
Title: Associate
THE DAI-ICHI KANGYO BANK LTD., NEW YORK BRANCH,
as Co-Agent and a Bank
By: /s/ Yosada Onoda
-----------------------------
Name: Yosada Onoda
Title: Senior Vice President
THE MITSUBISHI BANK, LIMITED, as Co-Agent and a
Bank
By: /s/ Paula Mueller
-----------------------------
Name: Paula Mueller
Title: Vice President
11
THE MITSUBISHI TRUST & BANKING CORPORATION, as
Co-Agent and a Bank
By: /s/ Patricia Loret de Mola
-----------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
ROYAL BANK OF CANADA, as Co-Agent and a Bank
By: /s/ E. Salazar
-----------------------------
Name: E. Salazar
Title: Senior Manager
THE SANWA BANK, LTD., as Co-Agent and a Bank
By: /s/ Masaaki Ariyoshi
-----------------------------
Name: Masaaki Ariyoshi
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH, as
Co-Agent and a Bank
By: /s/ Shuntaro Higashi
-----------------------------
Name: Shuntaro Higashi
Title: Joint General Manager
12
UNION BANK OF SWITZERLAND, as Co-Agent and a Bank
By: /s/ James P. Kelleher
-----------------------------
Name: James P. Kelleher
Title: Assistant Treasurer
By: /s/ Peter B. Yearly
-----------------------------
Name: Peter B. Yearly
Title: Vice President
Syndication Agent
JP MORGAN SECURITIES INC., as the Syndication
Agent
By: /s/ Barbara J. Asch
-----------------------------
Name: Barbara J. Asch
Title: Vice President
NEW LENDERS
Lead Managers
CHEMICAL BANK, as Lead Manager and a Bank
By: /s/ John C. Coffin
-----------------------------
Name: John C. Coffin
Title: Vice President
13
DEUTSCHE BANK AG, through its New York and/or
Cayman Islands Branch, as Lead Manager and a Bank
By: /s/ John R. Lilly
-----------------------------
Name: John R. Lilly
Title: Vice President
By: /s/ Alain M. Bolea
-----------------------------
Name: Alain M. Bolea
Title: Director
Participants
THE SAKURA BANK, LIMITED, as Participant and a
Bank
By: /s/ Yasuhiro Terada
-----------------------------
Name: Yasahiro Terada
Title: Senior Vice President & Assistant
General Manager
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE, NEW YORK BRANCH, as Participant and a
Bank
By: /s/ Marcus Edward
-----------------------------
Name: Marcus Edward
Title: Vice President
By: /s/ Sean Mounier
-----------------------------
Name: Sean Mounier
Title: Vice President
14
PNC BANK N.A., as Participant and a Bank
By: /s/ Karen M. Wolters
-----------------------------
Name: Karen M. Wolters
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON, N.A., as
Participant and a Bank
By: /s/ Susan Hendrixson
-----------------------------
Name: Susan Hendrixson
Title: Vice President
GULF INTERNATIONAL BANK, as Participant and a
Bank
By: /s/ Abdel-Fattah Tahoun
-----------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By: /s/ Haytham F. Khalil
-----------------------------
Name: Haytham F. Khalil
Title: Assistant Vice President
THE TOKAI BANK, LIMITED, NEW YORK BRANCH, as
Participant and a Bank
By: /s/ Masaharu Muto
-----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
15
THE YASUDA TRUST AND BANKING CO., LTD., NEW YORK
BRANCH, as Participant and a Bank
By: /s/ Neil T. Chau
-----------------------------
Name: Neil T. Chau
Title: First Vice President
Schedule I
List of Lending Offices
Bank
The Bank of New York Domestic Lending Office:
The Bank of New York
One Wall Street
16th Floor
New York, New York 10286
Eurodollar Lending Office:
Same
Citibank, N.A. Domestic Lending Office:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Eurodollar Lending Office:
Same
Morgan Guaranty Trust Company Domestic Lending Office:
of New York
Morgan Guaranty Trust Company of
New York
60 Wall Street
New York, New York 10260-0060
Attention Loan Department
Telex #177615 MGT VT
Eurodollar Lending Office:
Morgan Guaranty Trust
Company of New York
Nassau, Bahamas Office
c/o J.P. Morgan Services
Loan Operations - 3rd Floor
500 Stanton Christiana Road
Newark, Delaware 19713
I-1
Bank
Bank of America NT&SA Domestic Lending Office:
Bank of America NT&SA
1850 Gateway Boulevard
4th Floor
Concord, California 94520
Eurodollar Lending Office:
Same
Bank of Montreal Domestic Lending Office:
Bank of Montreal, Chicago Branch
115 South LaSalle Street
11th Floor
Chicago, IL 60603
Eurodollar Lending Office:
Same
The Bank of Nova Scotia Domestic Lending Office:
The Bank of Nova Scotia
1 Liberty Plaza
26th Floor
New York, NY 10006
Eurodollar Lending Office:
Same
The Bank of Tokyo Trust Company Domestic Lending Office:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116
Eurodollar Lending Office:
Same
I-2
Bank
Barclays Bank PLC Domestic Lending Office:
Barclays Bank
222 Broadway
12th Floor
New York, NY 10038
Eurodollar Lending Office:
Same
Canadian Imperial Bank Domestic Lending Office:
of Commerce
Canadian Imperial Bank of
Commerce
425 Lexington Avenue
Syndication Department
7th Floor
New York, New York 10017
Eurodollar Lending Office:
Same
The Chase Manhattan Bank Domestic Lending Office:
(National Association)
The Chase Manhattan Bank
(National Association)
One Chase Manhattan Plaza
New York, New York 10081
Eurodollar Lending Office:
Same
Credit Lyonnais Cayman Island Domestic Lending Office:
Branch
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Eurodollar Lending Office:
Same
I-3
Bank
The First National Bank of Boston Domestic Lending Office:
The First National Bank of Boston
100 Federal Street
Mailstop 01-08-08
Boston, MA 02110
Eurodollar Lending Office:
Same
The Fuji Bank, Limited Domestic Lending Office:
The Fuji Bank, Limited
Two World Trade Center
79th Floor
New York, New York 10048
Eurodollar Lending Office:
Same
The Industrial Bank of Domestic Lending Office:
Japan, Ltd.
The Industrial Bank of Japan,
Ltd.
245 Park Avenue
New York, New York 10167
Eurodollar Lending Office:
Same
LTCB Trust Company Domestic Lending Office:
LTCB Trust Company
165 Broadway
49th Floor
New York, NY 10006
Eurodollar Lending Office:
Same
I-4
Bank
Mellon Bank, N.A. Domestic Lending Office:
Mellon Bank, N.A.
3 Mellon Bank Center
Room 2304
Pittsburgh, PA 15259
Eurodollar Lending Office:
Same
NationsBank of Texas N.A. Domestic Lending Office:
NationsBank
901 Miami Street
67th Floor
Dallas, TX 75202
Eurodollar Lending Office:
Same
Societe Generale Domestic Lending Office:
Societe Generale
50 Rockefeller Plaza
5th Avenue
14th Floor
New York, NY 10020
Eurodollar Lending Office:
Same
The Toronto-Dominion Bank Domestic Lending Office:
The Toronto-Dominion Bank
909 Fannin Street
Houston, TX 77010
Eurodollar Lending Office:
Same
I-5
Bank
Union Bank Domestic Lending Office:
Union Bank of California
445 South Figuera Street
15th Floor
Los Angeles, CA 90071
Eurodollar Lending Office:
Same
Credit Suisse Domestic Lending Office:
Credit Suisse
12 East 49th Street
New York, New York 10017
Eurodollar Lending Office:
Same
The Dai-Ichi Kangyo Bank Ltd., New Domestic Lending Office:
York Branch
The Dai-Ichi Kangyo Bank
One World Trade Center
Suite 4911
New York, NY 10048
Eurodollar Lending Office:
Same
The Mitsubishi Bank, Limited Domestic Lending Office:
The Mitsubishi Bank, Ltd.
New York Branch
Two World Financial Center
225 Liberty Street
New York, New York 10281
Eurodollar Lending Office:
Same
I-6
Bank
The Mitsubishi Trust & Banking Domestic Lending Office:
Corporation
The Mitsubishi Trust & Banking
Corp.
520 Madison Avenue
26th Floor
New York, NY 10022
Eurodollar Lending Office:
Same
Royal Bank of Canada Domestic Lending Office:
Royal Bank of Canada
New York Branch
c/o Royal Bank of Canada
New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Eurodollar Lending Office:
Same
The Sanwa Bank, Ltd. Domestic Lending Office:
The Sanwa Bank, Ltd.
Park Avenue Plaza
55 East 52nd Street
24th Floor
New York, New York 10055
Eurodollar Lending Office:
Same
I-7
Bank
The Sumitomo Bank, Limited, New York Domestic Lending Office:
Branch
The Sumitomo Bank, Limited, New
York Branch
One World Trade Center
Suite 9651
New York, NY 10048
Eurodollar Lending Office:
Same
Union Bank of Switzerland Domestic Lending Office:
Union Bank of Switzerland
299 Park Avenue
33rd Floor
New York, NY 10171
Eurodollar Lending Office:
Same
Chemical Bank Domestic Lending Office:
Chemical Bank
270 Park Avenue
10th Floor
New York, New York 10172
Eurodollar Lending Office:
Same
Deutsche Bank AG Domestic Lending Office:
Deutsche Bank
31 West 52nd Street
24th Floor
New York, New York 10019
Eurodollar Lending Office:
Same
I-8
Bank
The Sakura Bank, Limited Domestic Lending Office:
The Sakura Bank, Limited,
New York Branch
277 Park Avenue
45th Floor
New York, New York 10172
Eurodollar Lending Office:
Same
Compagnie Financiere de CIC Domestic Lending Office:
et de l'Union Europeenne,
New York Branch Compagnie Financiere de CIC
et de l'Union Europeenne,
New York Branch
520 Madison Avenue
37th Floor
New York, New York 10022
Eurodollar Lending Office:
Same
PNC Bank N.A. Domestic Lending Office:
PNC Bank N.A.
Broad & Chestnut Streets
P. O. Box 7648
Philadelphia, Pennsylvania 19101
Eurodollar Lending Office:
Same
First Interstate Bank of Washington, Domestic Lending Office:
N.A.
First Interstate Bank of
Washington, N.A.
999 Third Avenue
Mail Stop 984
Seattle, Washington 98104
Eurodollar Lending Office:
Same
I-9
Gulf International Domestic Lending Office:
Gulf International Bank
380 Madison Avenue
New York, New York 10017
Eurodollar Lending Office:
Same
The Tokai Bank, Limited, Domestic Lending Office:
New York Branch
The Tokai Bank, Limited,
New York Branch
55 East 52nd Street
(Park Avenue Plaza)
New York, New York 10055
Eurodollar Lending Office:
Same
The Yasuda Trust and Domestic Lending Office:
Banking Co., Ltd.,
New York Branch The Yasuda Trust and
Banking Co., Ltd.,
New York Branch
666 Fifth Avenue
Suite 801
New York, New York 10103
Eurodollar Lending Office:
Same
I-10
SCHEDULE II - PARENT FACILITY
Short-Term Loan Revolving Loan Term Loan Total
Commitment Commitment Commitment Commitment
--------------- -------------- -------------- ---------------
The Bank of New York $110,294,117.65 $79,411,764.71 $96,573,529.42 $286,279,411.78
Citibank, N.A. $110,294,117.64 $79,411,764.70 $96,573,529.44 $286,279,411.78
Morgan Guaranty Trust $110,294,117.65 $79,411,764.71 $96,573,529.42 $286,279,411.78
Company of New York
Bank of America NT&SA $110,294,117.65 $79,411,764.71 $96,573,529.42 $286,279,411.78
Bank of Montreal $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Bank of Nova Scotia $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Bank of Tokyo Trust Company $68,220,715.01 $49,118,914.81 $59,734,058.06 $177,073,687.88
Barclays Bank PLC $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Canadian Imperial Bank $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
of Commerce
The Chase Manhattan Bank N.A. $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Credit Lyonnais Cayman $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Island Branch
The First National Bank of Boston $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Fuji Bank, Limited $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
The Industrial Bank of $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Japan, Ltd.
LTCB Trust Company $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Mellon Bank, N.A. $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
NationsBank of Texas N.A. $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Societe Generale $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Toronto-Dominion Bank $90,960,953.35 $65,491,886.41 $79,645,410.75 $236,098,250.51
Union Bank $22,740,238.33 $16,372,971.60 $19,911,362.69 $59,024,562.62
Credit Suisse $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Dai-Ichi Kangyo Bank $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Mitsubishi Bank, Limited $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Mitsubishi Trust & $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
Banking Corporation
Royal Bank of Canada $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
The Sanwa Bank, Ltd. $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
Sumitomo Bank, Limited, $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
New York Branch
Union Bank of Switzerland $64,972,109.53 $46,779,918.86 $56,889,579.10 $168,641,607.49
Chemical Bank $36,764,705.88 $26,470,588.24 $32,191,176.47 $95,426,470.59
Deutsche Bank AG $36,764,705.88 $26,470,588.24 $32,191,176.47 $95,426,470.59
The Sakura Bank, Limited $27,573,529.41 $19,852,941.18 $24,143,382.35 $71,569,852.94
Compagnie Financiere de CIC $18,382,352.94 $13,235,294.12 $16,095,588.24 $47,713,235.30
et de L'Union Europeenne,
New York Branch
PNC Bank N.A. $18,382,352.94 $13,235,294.12 $16,095,588.24 $47,713,235.30
First Interstate Bank of $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
Washington, N.A.
Gulf International Bank $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
The Tokai Bank, Limited, $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
New York Branch
The Yasuda Trust and Banking $9,191,176.47 $6,617,647.06 $8,047,794.12 $23,856,617.65
Co., Ltd., New York Branch
$2,500,000,000.00 $1,800,000,000.00 $2,189,000,000.00 $6,489,000,000.00
SCHEDULE II - SUBSIDIARY FACILITY
Viacom CableVision of
International Dayton, Inc. WNYT Inc.
------------- ------------- -------------
The Bank of New York $4,411,764.71 $2,514,705.87 $1,588,235.29
Citibank, N.A. $4,411,764.74 $2,514,705.87 $1,588,235.28
Morgan Guaranty Trust $4,411,764.71 $2,514,705.87 $1,588,235.29
Company of New York
Bank of America NT&SA $4,411,764.71 $2,514,705.87 $1,588,235.29
Bank of Montreal $3,638,438.13 $2,073,909.74 $1,309,837.73
The Bank of Nova Scotia $3,638,438.13 $2,073,909.74 $1,309,837.73
The Bank of Tokyo Trust Company $2,728,828.60 $1,555,432.30 $982,378.30
Barclays Bank PLC $3,638,438.13 $2,073,909.74 $1,309,837.73
Canadian Imperial Bank $3,638,438.13 $2,073,909.74 $1,309,837.73
of Commerce
The Chase Manhattan Bank N.A. $3,638,438.13 $2,073,909.74 $1,309,837.73
Credit Lyonnais Cayman $3,638,438.13 $2,073,909.74 $1,309,837.73
Island Branch
The First National Bank of Boston $3,638,438.13 $2,073,909.74 81,309,837.73
The Fuji Bank, Limited $3,638,438.13 $2,073,909.74 $1,309,837.73
The Industrial Bank of $3,638,438.13 $2,073,909.74 $1,309,837.73
Japan, Ltd.
LTCB Trust Company $3,638,438.13 $2,073,909.74 $1,309,837.73
Mellon Bank, N.A. $3,638,438.13 $2,073,909.74 $1,309,837.73
NationsBank of Texas N.A. $3,638,438.13 $2,073,909.74 $1,309,837.73
Societe Generale $3,638,438.13 $2,073,909.74 $1,309,837.73
Toronto-Dominion Bank $3,638,438.13 $2,073,909.74 $1,309,837.73
Union Bank $909,609.53 $518,477.43 $327,459.43
Credit Suisse $2,598,884.38 $1,481,364.10 $935,598.38
The Dai-Ichi Kangyo Bank $2,598,884.38 $1,481,364.10 $935,598.38
The Mitsubishi Bank, Limited $2,598,884.38 $1,481,364.10 $935,598.38
The Mitsubishi Trust & $2,598,884.38 $1,481,364.10 $935,598.38
Banking Corporation
Royal Bank of Canada $2,598,884.38 $1,481,364.10 $935,598.38
The Sanwa Bank, Ltd. $2,598,884.38 $1,481,364.10 $935,598.38
Sumitomo Bank, Limited, $2,598,884.38 $1,481,364.10 $935,598.38
New York Branch
Union Bank of Switzerland $2,598,884.38 $1,481,364.10 $935,598.38
Chemical Bank $1,470,588.24 $838,235.29 $529,411.76
Deutsche Bank AG $1,470,588.24 $838,235.29 $529,411.76
The Sakura Bank, Limited $1,102,941.18 $628,676.47 $397,058.82
Compagnie Financiere de CIC et $735,294.12 $419,117.65 $264,705.88
de L'Union Europeenne,
New York Branch
PNC Bank N.A. $735,294.12 $419,117.65 $264,705.88
First Interstate Bank of Washington, N.A. $367,647.06 $209,558.82 $132,352.94
Gulf International Bank $367,647.06 $209,558.82 $132,352.94
The Tokai Bank, Limited, $367,647.06 $209,558.82 $132,352.94
New York Branch
The Yasuda Trust and Banking $367,647.06 $209,558.82 $132,352.94
Co., Ltd., New York Branch
$100,000,000.00 $57,000,000.00 $36,000,000.00
Total
WMZQ Inc. WVIT Inc. Commitment
--------- --------- ----------
The Bank of New York $2,250,000.00 $2,955,882.35 $13,720,588.22
Citibank, N.A. $2,250,000.00 $2,955,882.33 $13,720,588.22
Morgan Guaranty Trust $2,250,000.00 $2,955,882.35 $13,720,588.22
Company of New York
Bank of America NT&SA $2,250,000.00 $2,955,882.35 $13,720,588.22
Bank of Montreal $1,855,603.45 $2,437,753.55 $11,315,542.60
The Bank of Nova Scotia $1,855,603.45 $2,437,753.55 $11,315,542.60
The Bank of Tokyo Trust Company $1,391,702.59 $1,828,315.16 $8,486,656.95
Barclays Bank PLC $1,855,603.45 $2,437,753.55 $11,315,542.60
Canadian Imperial Bank $1,855,603.45 $2,437,753.55 $11,315,542.60
of Commerce
The Chase Manhattan Bank N.A. $1,855,603.45 $2,437,753.55 $11,315,542.60
Credit Lyonnais Cayman $1,855,603.45 $2,437,753.55 $11,315,542.60
Island Branch
The First National Bank of Boston $1,855,603.45 $2,437,753.55 $11,315,542.60
The Fuji Bank, Limited $1,855,603.45 $2,437,753.55 $11,315,542.60
The Industrial Bank of $1,855,603.45 $2,437,753.55 $11,315,542.60
Japan, LTD.
LTCB Trust Company $1,855,603.45 $2,437,753.55 $11,315,542.60
Mellon Bank, N.A. $1,855,603.45 $2,437,753.55 $11,315,542.60
NationsBank of Texas N.A. $1,855,603.45 $2,437,753.55 $11,315,542.60
Societe Generale $1,855,603.45 $2,437,753.55 $11,315,542.60
Toronto-Dominion Bank $1,855,603.45 $2,437,753.55 $11,315,542.60
Union Bank $463,900.87 $609,438.39 $2,828,885.65
Credit Suisse $1,325,431.03 $1,741,252.54 $8,082,530.43
The Dai-Ichi Kangyo Bank $1,325,431.03 $1,741,252.54 $8,082,530.43
The Mitsubishi Bank, Limited $1,325,431.03 $1,741,252.54 $8,082,530.43
The Mitsubishi Trust & $1,325,431.03 $1,741,252.54 $8,082,530.43
Banking Corporation
Royal Bank of Canada $1,325,431.03 $1,741,252.54 $8,082,530.43
The Sanwa Bank, Ltd. $1,325,431.03 $1,741,252.54 $8,082,530.43
Sumitomo Bank, Limited, $1,325,431.03 $1,741,252.54 $8,082,530.43
New York Branch
Union Bank of Switzerland $1,325,431.03 $1,741,252.54 $8,082,530.43
Chemical Bank $750,000.00 $985,294.12 $4,573,529.40
Deutsche Bank AG $750,000.00 $985,294.12 $4,573,529.40
The Sakura Bank Limited $562,500.00 $738,970.59 $3,430,147.06
Compagnie Financiere de $375,000.00 $492,647.06 $2,286,764.71
CIC et de L'Union Europeenne,
New York Branch
PNC Bank N.A. $375,000.00 $492,647.06 $2,286,764.71
First Interstate Bank of Washington, N.A. $187,500.00 $246,323.53 $1,143,382.35
Gulf International Bank $187,500.00 $246,323.53 $1,143,382.35
The Tokai Bank, Limited, $187,500.00 $246,323.53 $1,143,382.35
New York Branch
The Yasuda Trust and Banking $187,500.00 $246,323.53 $1,143,382.35
Co., Ltd., New York Branch
$51,000,000.00 $67,000,000.00 $311,000,000.00
AMENDMENT
This Amendment ("Amendment"), dated as of May 15, 1995, shall be:
AMENDMENT NO. 3 to the $6.489 BILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended as of August 5, 1994 by Amendment No. 1 and as of
September 29, 1994 by Amendment No. 2 (the "Parent Facility"), among VIACOM
INC., a Delaware corporation ("Viacom"), each of the several Banks, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified as
Co-Agents on the signature pages thereof, as Co-Agents; and
AMENDMENT NO. 2 to the $311 MILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended as of August 5, 1994 by Amendment No. 1 (the
"Subsidiary Facility"), among VIACOM CABLEVISION OF DAYTON INC., WNYT INC., WMZQ
INC., WVIT INC. and VIACOM INTERNATIONAL INC., each a Delaware corporation
(collectively, "Subsidiary Borrowers"), each of the several Banks, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents on the signature pages thereof, as Agents, and the Banks identified as
Co-Agents on the signature pages thereof, as Co-Agents.
W I T N E S S E T H:
WHEREAS, Viacom and the Subsidiary Borrowers have requested certain
amendments to be made to certain provisions of the Parent Facility and the
Subsidiary Facility, respectively; and
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to amend such provisions of such
agreements.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments. (a) The definition of EBIDT in Section 1.1 of
the Parent Facility is hereby amended by:
(i) deleting clause (a)(ii) in its entirety and replacing it with the
following:
"(ii) amortization expense (including all amortization expenses
recognized in accordance with APB 16 and 17 but excluding (A) all
other amortization of programming, production and pre-publication
costs and (B) amortization of videocassettes)";
and
(ii) deleting the phrase ", less (c) Net Video Tape Purchases" after
the word "definition" at the end of clause (b).
(b) Section 1.1 of the Parent Facility is hereby amended to delete
the definition of Net Video Tape Purchases.
(c) The definition of "Applicable Eurodollar Rate Margin" in Section
1.1 of each of the Parent Facility and the Subsidiary Facility is hereby amended
by deleting the first proviso in its entirety and replacing it with the
following:
"provided, however, that if the ratings assigned by S&P and
Moody's shall differ, the Credit Rating shall be the rating which is
the higher rating".
(d) Section 2.3 (b) of the Parent Facility is hereby amended by:
(i) inserting the words "or Capital Market Transaction date" after
the words "related sale date" in clause (y) thereof;
(ii) deleting the number $250 million in clause (y)(C) thereof and
replacing it with the number $500 million;
(iii) replacing the word "reinvested", wherever it appears therein,
with the words "used to acquire assets";
2
(iv) replacing the word "reinvestment", in the first place it appears
therein, with the words "use for acquisitions"; and
(v) replacing the words "reinvestment of Net Cash Proceeds" with the
words "use of Net Cash Proceeds for acquisitions".
(e) Each of Section 5.4 (a) of the Parent Facility and Section 3.4
(a) of the Subsidiary Facility is hereby amended by deleting the proviso in its
entirety and replacing it with the following:
"provided, however, that if the ratings assigned by S&P and
Moody's shall differ, the Credit Rating shall be the rating which is
the higher rating".
(f) Section 10.6 of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"10.6. Subsidiary Indebtedness. The Borrower shall not permit
any of its Subsidiaries, other than a Guarantor Subsidiary, to incur
Indebtedness for borrowed money other than (a) the Subsidiary Loans
(as defined in the Subsidiary Facility), (b) under existing
facilities identified on Schedule 10.6 to Amendment No. 2 to this
Agreement or any replacement facilities thereto which in the
aggregate do not exceed the amounts of the commitments on such
Schedule and (c) Indebtedness for borrowed money in an aggregate
amount at any time outstanding of not more than $25 million for all
of its Subsidiaries other than a Guarantor Subsidiary".
(g) Section 7.4 of the Subsidiary Facility is hereby amended by
adding after the word "Agreement" the phrase "and other than Indebtedness
permitted pursuant to Section 10.6 of the Parent Facility".
(h) Each of Section 10.7 of the Parent Facility and Section 7.5 of
the Subsidiary Facility is hereby amended by inserting the following after the
words "Commercial Paper" in the parentheses:
"and up to $500 million of Indebtedness with maturities of no
less than seven years from the date such Indebtedness is incurred".
3
SECTION 2. Effectiveness. This Amendment will be effective upon the
execution hereof by each of Viacom, each Subsidiary Borrower, the Guarantor
Subsidiary and (i) except in the case of the amendments contained in Sections
1(c) and (e) hereof, the Majority Banks and (ii) in the case of the amendments
contained in Sections 1(c) and (e) hereof, each of the Banks.
SECTION 3. Representations and Warranties. Each of Viacom, the
Subsidiary Borrowers and the Guarantor Subsidiary hereby represents and warrants
that as of the date hereof, both before and after giving effect to this
Amendment, no Default or Event of Default shall exist or be continuing under the
Parent Facility or the Subsidiary Facility.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in each of the
Parent Facility and the Subsidiary Facility.
(b) Except as amended hereby, all of the terms of each of the Parent
Facility and the Subsidiary Facility shall remain and continue in full force and
effect and are hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of the
Parent Facility and the Subsidiary Facility.
(d) This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
4
SECTION 6. Viacom Inc. Confirmation. By signing below, Viacom Inc.,
as guarantor under the Parent Guarantee ("Parent Guarantor"), hereby agrees to
the terms of the foregoing Amendment and confirms that the Parent Guarantee
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower and as Parent
Guarantor
By: /s/ Vaughn A. Clark
----------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
VIACOM INTERNATIONAL INC., as a
Subsidiary Borrower and as a Guarantor
Subsidiary
By: /s/ Vaughn A. Clark
----------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
On behalf of the following Subsidiary
Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.
By: /s/ Vaughn A. Clark
----------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
5
Managing Agents
THE BANK OF NEW YORK, as Managing Agent,
the Documentation Agent and a Bank
By: /s/ Geoffrey C. Brooks
----------------------------
Name: Geoffrey C. Brooks
Title: Vice President
CITIBANK, N.A., as Managing Agent, the
Administrative Agent and a Bank
By: /s/ Margaret C. Ullrich
----------------------------
Name: Margaret C. Ullrich
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Managing Agent and a Bank
By: /s/ Mathias Blumschein
----------------------------
Name: Mathias Blumschein
Title: Associate
BANK OF AMERICA NT&SA, as Managing Agent
and a Bank
By:/s/ Amy S. Trapp
----------------------------
Name: Amy S. Trapp
Title: Vice President
6
Agents
BANK OF MONTREAL, as Agent and a Bank
By: /s/ Yvonne Bos
----------------------------
Name: Yvonne Bos
Title:Managing Director
THE BANK OF NOVA SCOTIA, as Agent and a
Bank
By: /s/ Vince J. Fitzgerald
----------------------------
Name: Vince J. Fitzgerald
Title: Senior Relationship Mgr.
BANK OF TOKYO TRUST COMPANY, as Agent
and a Bank
By: /s/ Charles Poer
----------------------------
Name: Charles Poer
Title: Vice President & Manager
BARCLAYS BANK PLC, as Agent and a Bank
By: /s/ Michael W. Ballard
----------------------------
Name: Michael W. Ballard
Title:Associate Director
CANADIAN IMPERIAL BANK OF COMMERCE, as
Agent and a Bank
By:/s/ John Tyler
----------------------------
Name: John Tyler
Title: Vice President
7
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Agent and a Bank
By: /s/ Bruce Longenkamp
----------------------------
Name: Bruce Longenkamp
Title:Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as
Agent and a Bank
By: /s/ M. Bernadette Collins
----------------------------
Name: M. Bernadette Collins
Title:Authorized Signature
THE FIRST NATIONAL BANK OF BOSTON, as
Agent and a Bank
By: /s/ Mary M. Barcus
----------------------------
Name: Mary M. Barcus
Title: Vice President
THE FUJI BANK, LIMITED, as Agent and a
Bank
By: /s/ Kazuaki Kitabatake
----------------------------
Name: Kazuaki Kitabatake
Title:Joint General Manager
THE INDUSTRIAL BANK OF JAPAN, LTD., as
Agent and a Bank
8
By: /s/ Jeffrey Cole
----------------------------
Name: Jeffrey Cole
Title:Senior Vice President
LTCB TRUST COMPANY, as Agent and a Bank
By: /s/ John A. Krob
----------------------------
Name: John A. Krob
Title: Senior Vice President
MELLON BANK, N.A., as Agent and a Bank
By: /s/ G. Luis Ashley
----------------------------
Name: G. Luis Ashley
Title: First Vice President
NATIONSBANK OF TEXAS, N.A., as Agent and
a Bank
By: /s/ Chad E. Coben
----------------------------
Name: Chad E. Coben
Title: Vice President
SOCIETE GENERALE, as Agent and a Bank
By: /s/ Pascale Hainline
----------------------------
Name: Pascale Hainline
Title:Vice President
9
THE TORONTO-DOMINION BANK, as Agent and
a Bank
By: /s/ Neva Nesbitt
----------------------------
Name: Neva Nesbitt
Title:Manager Credit Admin.
UNION BANK, as Agent and a Bank
By: /s/ J. Kevin Sampson
----------------------------
Name: J. Kevin Sampson
Title:
Co-Agents
CREDIT SUISSE, as Co-Agent and a Bank
By: /s/ Michael C. Mast
----------------------------
Name: Michael C. Mast
Title: Member of Senior Management
By: /s/ Kristina Catlin
----------------------------
Name: Kristina Catlin
Title: Associate
THE DAI-ICHI KANGYO BANK LTD., NEW YORK
BRANCH, as Co-Agent and a Bank
By: /s/ Shinya Wako
----------------------------
Name: Shinya Wako
Title:Senior Vice President
and Department Head
10
THE MITSUBISHI BANK, LIMITED, as
Co-Agent and a Bank
By: /s/ Paula Mueller
----------------------------
Name: Paula Mueller
Title: Vice President
THE MITSUBISHI TRUST & BANKING
CORPORATION, as Co-Agent and a Bank
By: /s/ Patricia Loret de Mola
----------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
ROYAL BANK OF CANADA, as Co-Agent and a
Bank
By: /s/ Eduardo Salazar
----------------------------
Name: Eduardo Salazar
Title: Senior Manager
THE SANWA BANK, LTD., as Co-Agent and a
Bank
By: /s/ Dominic J. Sorresso
----------------------------
Name: Dominic J. Sorresso
Title:Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Co-Agent and a Bank
By: /s/ Shuntaro Hisashi
----------------------------
Name: Shuntaro Hisashi
Title: Joint General Manager
11
UNION BANK OF SWITZERLAND, as Co-Agent
and a Bank
By: /s/ James P. Kelleher
----------------------------
Name: James P. Kelleher
Title: Assistant Vice President
By: /s/ Peter B. Yearley
----------------------------
Name: Peter B. Yearley
Title: Vice President
Syndication Agent
JP MORGAN SECURITIES INC., as the
Syndication Agent
By: /s/ Barbara J. Asch
----------------------------
Name: Barbara J. Asch
Title:Vice President
Lead Managers
CHEMICAL BANK, as Lead Manager and a
Bank
By: /s/ Mary E. Cameron
----------------------------
Name: Mary E. Cameron
Title: Vice President
12
DEUTSCHE BANK AG, through its New York
and/or Cayman Islands Branch, as Lead
Manager and a Bank
By: /s/ Steven M. Godeke
----------------------------
Name: Steven M. Godeke
Title: Vice President
By: /s/ Bina R. Dabbah
----------------------------
Name: Bina R. Dabbah
Title: Vice President
Participants
THE SAKURA BANK, LIMITED
By: /s/ Hiroshi Shimazaki
----------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
and Manager
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, NEW YORK BRANCH
By:/s/ Brian O'Leary/Marcus Edward
--------------------------------
Name: Brian O'Leary/Marcus Edward
Title: Vice Presidents
PNC BANK N.A.
By: /s/ Karen M. Wolters
----------------------------
Name: Karen M. Wolters
Title: Vice President
13
FIRST INTERSTATE BANK OF WASHINGTON,
N.A.
By:/s/ Susan Hendrixson
----------------------------
Name: Susan Hendrixson
Title: Vice President
GULF INTERNATIONAL BANK
By:/s/ Abdel-Fattah Tahoun
----------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By:/s/ Haytham F. Khalil
----------------------------
Name: Haytham F. Khalil
Title: Assistant Vice President
THE TOKAI BANK, LIMITED, NEW YORK BRANCH
By: /s/ Masaharu Muto
----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
THE YASUDA TRUST AND BANKING CO., LTD.,
NEW YORK BRANCH
By:/s/ Neil T. Chau
----------------------------
Name: Neil T. Chau
Title: First Vice President
14
BANK BRUSSELS LAMBERT, NEW YORK BRANCH
By: /s/ Denise Isherwood By: /s/ Eric Hollanders
--------------------- -----------------------------
Name: Denise Isherwood Name: Eric Hollanders
Title: Assistant Vice Title: Senior Vice President
President Credit Department
BANQUE FRANCAISE DU COMMERCE EXTERIEUR,
NEW YORK BRANCH
By: /s/ Peter K. Harris
----------------------------
Name: Peter K. Harris
Title: Vice President
By: /s/ William Marer
----------------------------
Name: William Marer
Title: Vice President/Manager
DEN DANSKE BANK
By: /s/ George Wendell
----------------------------
Name: George Wendell
Title: Vice President
By: /s/ Mogens Sondergaard
----------------------------
Name: Mogens Sondergaard
Title: Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: /s/ William F. Laponte, III
----------------------------
Name: William F. Laponte, III
Title: Vice President
15
NIPPON CREDIT BANK, LTD., LOS ANGELES
AGENCY
By: /s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President and Manager
SHAWMUT BANK CONNECTICUT, N.A.
By: /s/ Robert F. West
----------------------------
Name: Robert F. West
Title: Director
VAN KAMPEN PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
----------------------------
Name: Jeffrey W. Maillet
Title: Vice President
& Portfolio Mgr.
FIRST HAWAIIAN BANK
By: /s/ William B. Schink
----------------------------
Name: William B. Schink
Title: Vice President
BAYERISCHE VEREINS BANK, A.G.
By: /s/ John Carlson
----------------------------
Name: John Carlson
Title: Vice President
By: /s/ Sylvia Cheng
----------------------------
Name: Sylvia Cheng
Title: Vice President
BANK OF HAWAII
By: /s/ J. Bryan Scearce
----------------------------
Name: J. Bryan Scearce
Title: Associate Vice President
16
THE SUMITOMO TRUST BANKING COMPANY, LTD.
By: /s/ Suraj P. Bhatia
----------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Manager, Corp. Finance
17
AMENDMENT
This Amendment ("Amendment"), dated as of November 17, 1995, shall
be:
AMENDMENT NO. 4 to the $6.489 BILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, ("Parent Facility") among VIACOM INC., a Delaware
corporation ("Viacom"), each of the several Banks, 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,
BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as Agents on
the signature pages thereof, as Agents, and the Banks identified as Co-Agents on
the signature pages thereof, as Co-Agents.
AMENDMENT NO. 3 to the $311 MILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, (the "Subsidiary Facility") among VIACOM CABLEVISION
OF DAYTON INC., WNYT INC., WMZQ INC., WVIT INC., AND VIACOM INTERNATIONAL INC.,
each a Delaware corporation (collectively "Subsidiary Borrowers"), each of the
several Banks, 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, BANK OF AMERICA
NT&SA, as a Managing Agent, the Banks identified as Agents of the signature
pages thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
WITNESSETH:
WHEREAS, Viacom, Viacom International Inc., a wholly-owned subsidiary
of Viacom ("VII"), Viacom International Services Inc., a wholly-owned subsidiary
of VII ("VII Services"), Tele-Communications Inc. ("TCI"), and TCI
Communications Inc. ("TCI Sub"), a wholly -owned subsidiary of TCI, have entered
into a series of agreements ("the Transaction Documents", which are listed on
Schedule I attached hereto) pursuant to which (i) VII will convey to VII
Services proceeds from the $1.7 billion bank debt described below and all of its
assets relating to business operations other than the cable television business
(the "Non Cable Businesses"), and VII Services will assume all of VII's
liabilities (including its existing public debt and bank debt) other than the
$1.7 Billion bank debt described below and liabilities relating to the cable
television business (the "Cable Business"), (ii) VII will distribute the stock
of VII Services to Viacom (the "First Distribution"), (iii) VII, after giving
effect to the First Distribution, will be solely engaged in the Cable Business
and VII will be recapitalized with new VII Class A common stock, (iv) the Class
A common stock of VII will be split off to the shareholders of Viacom in an
exchange offer (the "Exchange Offer") in which shares of Viacom common stock
will be exchanged for shares of VII Class A common stock, (v) VII prior to the
expiration of the Exchange Offer will borrow $1.7 billion from a syndicate of
lenders, the proceeds of which will be deposited in a secured collateral account
until the date of consummation of the Exchange Offer when VII will transfer such
proceeds to VII Services as described above, and (vi) immediately after the
split off, TCI has agreed to purchase Class B common stock of VII and the Class
A common stock will be automatically converted upon such purchase into preferred
stock, and (vii) VII will no longer be a subsidiary of Viacom and will be
renamed TCI Pacific Communications Inc. and VII Services will be renamed Viacom
International Inc. (collectively the "Cable Transaction"); and
WHEREAS, Viacom and the Subsidiary Borrowers have requested certain
amendments to be made to and certain consents obtained with respect to certain
provisions of the Parent Facility and the Subsidiary Facility, respectively; and
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to amend certain provisions of
such agreements and for the Majority Banks to consent to the waiver of the
application of certain other provisions in connection with the Cable
Transaction,
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments.
(a) The definition of Net Cash Proceeds in Section 1.1 of the
Parent Facility is hereby amended by adding the following provisions: "(v) with
reference to proceeds from any sale of Spelling Entertainment Group Inc., the
net amount paid by the Borrower for the portion of Virgin Interactive
Entertainment Limited ("VIEL") not theretofore directly or indirectly owned by
the Borrower, and (vi) with reference to proceeds from any sale of Spelling
Entertainment Group Inc., that portion of the Net Cash Proceeds attributable to
repayment of Indebtedness owed by Spelling Entertainment Group Inc. to the
Borrower;"
2
(b) Section 2.3 (b) of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"2.3(b) Mandatory Reductions. The Borrower shall reduce
the Short-Term Loan Commitment of each Bank by (i) each Bank's Ratable Portion
of the amount received by the Borrower from VII Services representing the loan
proceeds from VII in connection with the consummation of the Exchange Offer (the
"Cable Transaction Effective Date") and (ii) in the event that the Cable
Transaction Effective Date has not occurred by May 31, 1996, by each Bank's
Ratable Portion of the amount by which any Net Cash Proceeds received by the
Borrower from the sale of Spelling Entertainment Group Inc. (or any of its
subsidiaries other than VIEL) exceed $150 million. After the Short-Term Loan
Commitments have been reduced to $0 and all Short-Term Loans have been repaid,
no mandatory reductions of any Commitment shall be required from Net Cash
Proceeds".
(c) Section 10.6 of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"10.6. Subsidiary Indebtedness. The Borrower shall not
permit any of its Subsidiaries, other than the Guarantor Subsidiary, to incur
Indebtedness for borrowed money other than (a) the Subsidiary Loans (as defined
in the Subsidiary Facility), (b) under existing facilities identified on
Schedule 10.6 to this Amendment No. 4 or any replacement facilities thereto
which in the aggregate do not exceed the amounts of the commitments on such
Schedule and (c) Indebtedness for borrowed money in an aggregate amount at any
time outstanding of not more than $300 million; provided, however, the aggregate
amount of Indebtedness for borrowed money scheduled to mature earlier than six
months after the Commitment Termination Date at any time permitted to be
outstanding under 10.6(c) and 10.7(b) may not exceed $300 million."
(d) Section 10.7 of the Parent Facility is hereby amended by
replacing it in its entirety with the following:
"10.7. Other Restrictions on Indebtedness. The Borrower
shall not, and shall not permit the Guarantor Subsidiary to, incur Indebtedness
for borrowed money maturing earlier than six months after the Commitment
Termination Date other than (a) Commercial Paper and (b) up to $300 million at
any time outstanding (less the aggregate amount outstanding under 10.6(c)
3
scheduled to mature earlier than six months after the Commitment Termination
Date) and on terms no more onerous than the terms hereof".
(e) Section 7.5 of the Subsidiary Facility is hereby amended by
replacing it in its entirety with the following:
"7.5 Other Restrictions on Indebtedness. No Subsidiary
Borrower shall incur Indebtedness for borrowed money maturing earlier than six
months after the Commitment Termination Date other than (a) Commercial Paper and
(b) up to $300 million at any time outstanding (less the aggregate amount
outstanding scheduled to mature earlier than six months after the Commitment
Termination Date under 10.6(c) of the Parent Facility)".
(f) Section 13.1 of the Parent Facility is hereby amended by
deleting the word "or" preceding clause (f) thereof and inserting the following
new clause (g): "or (g) amend clause (i) of Section 13.6".
(g) Section 10.1 of the Subsidiary Facility is hereby amended by
deleting the word "or" preceding clause (f) and inserting the following new
clause (g): "or (g) amend clause (i) of Section 10.6".
(h) Clause (i) of Section 13.6 of the Parent Facility is hereby
amended to read in its entirety as follows: "the Borrower shall have no right to
assign its rights or obligations hereunder or any interest herein (and any such
purported assignment shall be void) without the prior consent of the Banks
except in connection with any (x) merger or consolidation permitted under
Section 10.2 or (y) merger, consolidation or sale of assets consented to by the
Majority Banks".
(i) Clause (i) of Section 10.6 of the Subsidiary Facility is
hereby amended to read in its entirety as follows: "no Subsidiary Borrower shall
have the right to assign its rights or obligations hereunder or any interest
herein (and any such purported assignment shall be void) without the prior
consent of the Banks, except in connection with any (x) merger or consolidation
permitted under Section 10.2 of the Parent Facility or (y) merger, consolidation
or sale of assets consented to by the Majority Banks".
SECTION 2. Consents. In connection with the Cable Transaction:
4
(a) On the Cable Transaction Effective Date, the Guarantor
Subsidiary may assign all of its rights and obligations under the VII Guaranty
to VII Services (which will change its name to Viacom International Inc.) if in
connection therewith VII Services (i) assumes all of the obligations of VII
under the VII Guaranty and (ii) receives an assignment of the Non Cable
Businesses. VII Services will become the Guarantor Subsidiary and VII will be
released from all of its obligations thereunder.
(b) On the Cable Transaction Effective Date, the Subsidiary Loan
made to VII under the Subsidiary Facility may be assigned to VII Services if in
connection therewith VII Services (i) assumes all of the obligations of VII
under the Subsidiary Loan and (ii) receives an assignment of the Non Cable
Businesses. VII Services will become a Subsidiary Borrower under the Subsidiary
Facility and VII will be released from all of its obligations thereunder.
(c) Prior to the expiration of the Exchange Offer, VII may
borrow $1.7 billion from a syndicate of banks on terms permitted pursuant to the
Transaction Documents substantially in the form of those in effect at the date
hereof and may grant such banks a Lien on such funds until they are released to
VII Services on the date of consummation of the Exchange Offer and a lien on
rights under the Subscription Agreement referred to in Schedule I.
(d) After the Cable Transaction Effective Date, VII Services may
hold certain cable franchises for the benefit of VII until regulatory approvals
are obtained and may assign the receivables related to such franchises to the
banks lending to VII.
(e) For purposes of the Parent Facility and the Subsidiary
Facility, the $1.7 Billion loan to VII shall not be considered Indebtedness of
the Borrower or a Subsidiary Borrower.
Upon the execution and delivery hereof of the Majority Banks, the
Majority Banks shall have consented to each of the foregoing relating to the
Cable Transaction and, to the extent any of the matters described in (a) - (e)
above are otherwise inconsistent with the terms of the Parent Facility or
Subsidiary Facility, as hereby amended, this Amendment shall constitute a waiver
of the provisions thereof to the extent necessary to permit the Cable
Transaction.
5
SECTION 3. Assumption of Liabilities. As of the Cable Transaction
Effective Date, VII Services hereby expressly assumes and agrees to pay, satisfy
and perform when due all liabilities of VII under each Loan Document to which
VII is a party. For purposes of clarity, VII's obligations under the $1.7
billion of bank debt described above will not be assumed by VII Services.
SECTION 4. Effectiveness. This Amendment will be effective upon the
execution hereof by each of Viacom, each Subsidiary Borrower, VII and VII
Services and the Majority Banks.
SECTION 5. Representations and Warranties. Each of Viacom, the
Subsidiary Borrowers and the Guarantor Subsidiary hereby represents and warrants
that (i) as of the date hereof, both before and after giving effect to this
Amendment, and (ii) as of the date of, and after giving effect to consummation
of, the Cable Transaction, no Default or Event of Default shall exist or be
continuing under the Parent Facility or the Subsidiary Facility.
SECTION 6. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in each of the
Parent Facility and the Subsidiary Facility.
(b) Except as amended or waived hereby, all of the terms of each
of the Parent Facility and the Subsidiary Facility shall remain and continue in
full force and effect and are hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of
the Parent Facility and the Subsidiary Facility.
(d) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 7. Covenant. Viacom shall within two Business Days following
6
the Cable Transaction Effective Date deliver to the Documentation Agent, dated
as of the Cable Transaction Effective Date, as to VII Services only:
(i) each of the documents referred to in Section 6.1(a), (b) and (c)
of the Parent Facility;
(ii) each of the documents referred to in Section 4.1(a), (b) and (c)
of the Subsidiary Facility;
(iii) a favorable opinion of Shearman & Sterling, special counsel to
the Loan Parties, with respect to this Amendment substantially to the same
effect as contemplated by paragraph 1 of Exhibit E-1 to the Parent Agreement and
paragraph 1 of Exhibit E-1 to the Subsidiary Agreement; and
(iv) a favorable opinion of Philippe P. Dauman, General Counsel to
the Loan Parties, with respect to this Amendment substantially to the same
effect as contemplated by paragraphs 1 - 6 of Exhibit E-2 to the Parent
Agreement and paragraphs 1 - 6 of Exhibit E-2 to the Subsidiary Agreement.
SECTION 8. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
SECTION 9. Viacom Inc. Confirmation. By signing below, Viacom Inc.,
as guarantor under the Parent Guaranty ("Parent Guarantor"), hereby agrees to
the terms of the foregoing Amendment and confirms that the Parent Guaranty
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower and Parent Guarantor
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
7
VIACOM INTERNATIONAL INC., as a Subsidiary
Borrower and as a Guarantor Subsidiary
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
On behalf of the following Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.,
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL SERVICES INC.
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
CREDIT SUISSE
By:/s/ J. Hamilton Crawford
--------------------------------
Name: J. Hamilton Crawford
Title: Associate
By:/s/ Michael C. Mast
--------------------------------
Name: Michael C. Mast
Title: Member of Senior Mgmt.
SOCIETE GENERALE
By:/s/ Elaine I. Khalil
--------------------------------
Name: Elaine I. Khalil
Title: Vice President
8
THE BANK OF NEW YORK
By:/s/ Geoffrey C. Brooks
--------------------------------
Name: Geoffrey C. Brooks
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:/s/ John P. Judge
--------------------------------
Name: John P. Judge
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON
By:/s/ Susan Hendrixson
--------------------------------
Name: Susan Hendrixson
Title: Vice President
UNION BANK OF SWITZERLAND
By:/s/ Stephen A. Cayer
--------------------------------
Name: Stephen A. Cayer
Title: Assistant Treasurer
By:/s/ Peter B. Yearly
--------------------------------
Name: Peter B. Yearly
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD
By:/s/ Gerald Gill
--------------------------------
Name: Gerald Gill
Title: Vice President
9
BAYERISCHE VEREINSBANK AG
By:/s/ John Carlson
--------------------------------
Name: John Carlson
Title: Vice President
By:/s/ Sylvia Chang
--------------------------------
Name: Sylvia Chang
Title: Vice President
MITSUBISHI BANK, LTD.
By:/s/ Paula Mueller
--------------------------------
Name: Paula Mueller
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:/s/ Patricia Loret De Mola
--------------------------------
Name: Patricia Loret De Mola
Title: Senior Vice President
NATWEST BANK, N.A.
By:/s/ Michael A. Cerullo
--------------------------------
Name: Michael A. Cerullo
Title: Vice President
10
GULF INTERNATIONAL BANK BSC
By:/s/ Haytham F. Halil
--------------------------------
Name: Haytham F. Halil
Title: Assistant Vice President
By:/s/ Abdel-Fattah Tahoun
--------------------------------
Name: Haytham F. Halil
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By:/s/ Karen M. Wolters
--------------------------------
Name: Karen M. Wolters
Title: Vice President
THE SUMITOMO BANK, LTD.
By:/s/ S. Higashi
--------------------------------
Name: S. Higashi
Title: Joint General Manager
THE SUMITOMO TRUST AND BANKING CO., LTD.
By:/s/ Suraj P. Bhatia
--------------------------------
Name: Suraj P. Bhatia
Title: Senior Vice President
Mgr. Corp. Finance Dept.
CORESTATES BANK, N.A.
By:/s/ Edward L. Kittrell
--------------------------------
Name: Edward L. Kittrell
Title: Vice President
11
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By:/s/ Peter Karl Harris
--------------------------------
Name: Peter Karl Harris
Title: Vice President
By:/s/ William C. Maier
--------------------------------
Name: William C. Maier
Title: VP-Group Manager
THE SAKURA BANK, LTD.
By:/s/ Hiroshi Shimazaki
--------------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
& Manager
DEN DANSKE BANK
By:/s/ Mogens Sondergaard
--------------------------------
Name: Mogens Sondergaard
Title: Vice President
By:/s/ Bent V. Christensen
--------------------------------
Name: Bent V. Christensen
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LTD.
By:/s/ Jeffrey Cole
--------------------------------
Name: Jeffrey Cole
Title: Senior Vice President
12
ROYAL BANK OF CANADA
By:/s/ Cynthia K. Wong
--------------------------------
Name: Cynthia K. Wong
Title: Manager
THE SANWA BANK, LTD.
By: /s/ Dominic J. Sorresso
--------------------------------
Name: Dominic J. Sorresso
Title: Vice President
TOKAI BANK, LTD.
By:/s/ Stuart Schulman
--------------------------------
Name: Stuart Schulman
Title: Senior Vice President
CHEMICAL BANK
By:/s/ John J. Huber III
--------------------------------
Name: John J. Huber III
Title: Managing Director
THE DAI-CHI KANGYO BANK, LTD.
By:/s/ Ronald Wolinsky
--------------------------------
Name: Ronald Wolinsky
Title: Vice President & Group Leader
13
FIRST HAWAIIAN BANK
By:/s/ William B. Schink
--------------------------------
Name: William B. Schink
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:/s/ R. BLake Witherington
--------------------------------
Name: R. BLake Witherington
Title: Vice President
CITIBANK, N.A.
By:/s/ Margaret C. Ullrich
--------------------------------
Name: Margaret C. Ullrich
Title: Vice President
THE NIPPON CREDIT BANK, LTD.
By:/s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President & Manager
RIGGS NATIONAL BANK
By:/s/ David H. Olson
--------------------------------
Name: David H. Olson
Title: Vice President
14
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:/s/ Jim F. Redman
--------------------------------
Name: Jim F. Redman
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ G. Luis Ashley
--------------------------------
Name: G. Luis Ashley
Title: First Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPENNE
By:/s/ Brian O'Leary
--------------------------------
Name: Brian O'Leary
Title: Vice President
By:/s/ Marcus Edward
--------------------------------
Name: Marcus Edward
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME
TRUST
By:/s/ Jeffrey W. Maillet
--------------------------------
Name: Jeffrey W. Maillet
Title: Sr. Vice Pres. &
Portfolio Manager
15
CIBC, INC.
By:/s/ John Tyler
--------------------------------
Name: John Tyler
Title: Vice President
THE CHASE MANHATTAN BANK
By:/s/ Bruce Langenkamp
--------------------------------
Name: Bruce Langenkamp
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ Vincent Fitzgerald, Jr.
--------------------------------
Name: Vincent Fitzgerald, Jr.
Title: Authorized Signatory
THE FUJI BANK, LTD.
By:/s/ Katsunori Nozawa
--------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:/s/ John A. Krob
--------------------------------
Name: John A. Krob
Title: Deputy General Manager
16
BANQUE NATIONALE DE PARIS
By:/s/ John S. Mitchell
--------------------------------
Name: John S. Mitchell
Title: Vice President
By:/s/ Nancy Stengel
--------------------------------
Name: Nancy Stengel
Title: Assistant Treasurer
BANK OF HAWAII
By:/s/ J. Bryan Scearce
--------------------------------
Name: J. Bryan Scearce
Title: Vice President
BANK OF AMERICA
By:/s/ Amy S. Trapp
--------------------------------
Name: Amy S. Trapp
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By:/s/ Chad E. Coben
--------------------------------
Name: Chad E. Coben
Title: Vice President
17
DEUTSCHE BANK
By:/s/ Steven M. Godeke
--------------------------------
Name: Steven M. Godele
Title: Vice President
By:/s/ Bina R. Dabbah
--------------------------------
Name: Bina R. Dabbah
Title: Vice President
UNION BANK
By:/s/ Gabriel A. Renga
--------------------------------
Name: Gabriel A. Renga
Title: Senior Vice President
THE TORONTO DOMINION BANK
By:/s/ Neva Nesbitt
--------------------------------
Name: Neva Nesbitt
Title: Manager, Credit Administration
FLEET NATIONAL BANK OF CONNECTICUT
By:/s/ Stephen Charles
--------------------------------
Name: Stephen Charles
Title: Senior Vice President
BARCLAYS BANK PLC
By:/s/ James K. Downy
--------------------------------
Name: James K. Downy
Title: Associate Director
18
BANK BRUSSELS LAMBERT, NY BRANCH
By:/s/ Gerrit Verlodt
--------------------------------
Name: Gerrit Verlodt
Title: Senior Vice President
By:/s/ Dominick H.J. Vangaever
--------------------------------
Name: Dominick H.J. Vangaever
Title: Vice President, Credit Dept.
BANK OF MONTREAL
By:/s/ Yvonne Bos
--------------------------------
Name: Yvonne Bos
Title: Managing Director
CREDIT LYONNAIS
By:/s/ James E. Morris
--------------------------------
Name: James E. Morris
Title: Vice President
19
Schedule I
1. Parents Agreement, dated as of July 24, 1995, among Viacom, TCI
and TCI Sub.
2. Implementation Agreement, dated as of July 24, 1995, between VII
and VII Services.
3. Subscription Agreement, dated as of July 24, 1995, among VII, TCI
and TCI Sub.
20
PRICING
AMENDMENT
This Amendment ("Amendment"), dated as of November 17, 1995, shall
be:
AMENDMENT NO. 5 to the $6.489 BILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, ("Parent Facility") among VIACOM INC., a Delaware
corporation ("Viacom"), each of the several Banks, 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,
BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as Agents on
the signature pages thereof, as Agents, and the Banks identified as Co-Agents on
the signature pages thereof, as Co-Agents.
AMENDMENT NO. 4 to the $311 MILLION CREDIT AGREEMENT, dated as of
July 1, 1994, as amended, (the "Subsidiary Facility") among VIACOM CABLEVISION
OF DAYTON INC., WNYT INC., WMZQ INC., WVIT INC., AND VIACOM INTERNATIONAL INC.,
each a Delaware corporation (collectively "Subsidiary Borrowers"), each of the
several Banks, 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, BANK OF AMERICA
NT&SA, as a Managing Agent, the Banks identified as Agents of the signature
pages thereof, as Agents, and the Banks identified as Co-Agents on the signature
pages thereof, as Co-Agents.
WITNESSETH:
WHEREAS, the parties who have heretofore entered into the Parent
Facility and the Subsidiary Facility now desire to amend certain provisions of
such agreements to provide for a change in the Applicable Eurodollar Rate Margin
and Commitment Fees payable thereunder,
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments.
(a) The definition of Applicable Eurodollar Rate Margin in
Section 1.1 of the Parent Facility and Section 1.1 of the Subsidiary Facility
are hereby amended by deleting the tables appearing therein and replacing them
in each case with the following table:
CREDIT RATING MARGIN
------------- ------
A-/A3 or better 0.300%
BBB+/Baa1 0.375%
BBB/Baa2 0.450%
BBB-/Baa3 0.500%
BB+/Ba1 0.750%
BB/Ba2 0.875%
BB-/Ba3 or lower 1.250%
(b) Section 5.4 (a) of the Parent Facility and Section 3.4(a) of
the Subsidiary Facility are hereby amended by deleting the tables appearing
therein and replacing them in each case with the following table:
CREDIT RATING COMMITMENT FEE
------------- --------------
A-/A3 or better 0.1250%
BBB+/Baa1 0.1500%
BBB/Baa2 0.1875%
BBB-/Baa3 0.2000%
BB+/Ba1 0.3125%
BB/Ba2 0.3500%
BB-/Ba3 or lower 0.4000%
SECTION 2. Effectiveness. This Amendment will be effective upon the
execution hereof by each of Viacom, each Subsidiary Borrower, VII and VII
Services and each of the Banks.
SECTION 3. Representations and Warranties. Each of Viacom, the
Subsidiary Borrowers and the Guarantor Subsidiary hereby represents and warrants
that as of the date hereof, both before and after giving effect to this
Amendment no Default or Event of Default shall exist or be continuing under the
Parent Facility or the Subsidiary Facility.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and not
2
otherwise defined herein shall have the meanings ascribed to them in each of the
Parent Facility and the Subsidiary Facility.
(b) Except as amended hereby, all of the terms of each of the
Parent Facility and the Subsidiary Facility shall remain and continue in full
force and effect and are hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of
the Parent Facility and the Subsidiary Facility.
(d) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
SECTION 6. Viacom Inc. Confirmation. By signing below, Viacom Inc.,
as guarantor under the Parent Guaranty ("Parent Guarantor"), hereby agrees to
the terms of the foregoing Amendment and confirms that the Parent Guaranty
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower and Parent Guarantor
By: /s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
3
VIACOM INTERNATIONAL INC., as a Subsidiary
Borrower and as a Guarantor Subsidiary
By: /s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
On behalf of the following Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.,
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL SERVICES INC.
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
CREDIT SUISSE
By:/s/ J. Hamilton Crawford
--------------------------------
Name: J. Hamilton Crawford
Title: Associate
4
SOCIETE GENERALE
By:/s/ Elaine I. Khalil
--------------------------------
Name: Elaine I. Khalil
Title: Vice President
THE BANK OF NEW YORK
By:/s/ Geoffrey C. Brooks
--------------------------------
Name: Geoffrey C. Brooks
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:/s/ John P. Judge
--------------------------------
Name: John P. Judge
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON
By:/s/ Susan Hendrixson
--------------------------------
Name: Susan Hendrixson
Title: Vice President
5
UNION BANK OF SWITZERLAND
By:/s/ Stephen A. Cayer
--------------------------------
Name: Stephen A. Cayer
Title: Assistant Treasurer
By:/s/ Peter B. Yearly
--------------------------------
Name: Peter B. Yearly
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD
By:/s/ Gerald Gill
--------------------------------
Name: Gerald Gill
Title: Vice President
BAYERISCHE VEREINSBANK AG
By:/s/ John Carlson
--------------------------------
Name: John Carlson
Title: Vice President
By:/s/
--------------------------------
Name:
Title: Vice President
LLOYDS BANK, PLC
By:/s/ Paul D. Brianente
--------------------------------
Name: Paul D. Brianente
Title: Vice President
By:/s/ Theodore R. Walser
--------------------------------
Name: Theodore R. Walser
Title: Senior Vice President
6
MITSUBISHI BANK, LTD.
By:/s/ Paula Mueller
--------------------------------
Name: Paula Mueller
Title:
THE MITSUBISHI TRUST AND BANKING CORPORATION
By:/s/ Patricia Loret De Mola
--------------------------------
Name: Patricia Loret De Mola
Title: Senior Vice President
NATWEST BANK, N.A.
By:/s/ Michael A. Cerullo
--------------------------------
Name: Michael A. Cerullo
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By:/s/ Karen M. Wolters
--------------------------------
Name: Karen M. Wolters
Title: Vice President
THE SUMITOMO TRUST AND BANKING CO., LTD.
By:/s/ Suraj P. Bhatia
--------------------------------
Name: Suraj P. Bhatia
Title: Senior VP, Mgr. Corp.
Finance Dept
7
THE SUMITOMO BANK, LTD.
By:/s/ S. Higashi
--------------------------------
Name: S. Higashi
Title: Joint General Manager
CORESTATES BANK, N.A.
By:/s/ Edward L. Kittrell
--------------------------------
Name: Edward L. Kittrell
Title: Vice President
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By:/s/ Peter Karl Harris
--------------------------------
Name: Peter Karl Harris
Title: Vice President
By:/s/ William C. Maier
--------------------------------
Name: William C. Maier
Title: VP-Group Manager
THE NIPPON CREDIT BANK, LTD.
By:/s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President & Manager
THE SAKURA BANK, LTD.
By:/s/ Hiroshi Shimazaki
--------------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
& Manager
8
DEN DANSKE BANK
By:/s/ Mogens Sondergaard
--------------------------------
Name: Mogens Sondergaard
Title: Vice President
By:/s/ Bent V. Christensen
--------------------------------
Name: Bent V. Christensen
Title: Vice President
THE ROYAL BANK OF CANADA
By:/s/ Cynthia K. Wong
--------------------------------
Name: Cynthia K. Wong
Title: Manager
THE SANWA BANK, LTD.
By: /s/ Dominic J. Sorresso
--------------------------------
Name: Dominic J. Sorresso
Title: Vice President
TOKAI BANK, LTD.
By:/s/ Stuart Schulman
--------------------------------
Name: Stuart Schulman
Title: Senior Vice President
CHEMICAL BANK
By:/s/ John J. Huber III
--------------------------------
Name: John J. Huber III
Title: Managing Director
9
THE DAI-CHI KANGYO BANK, LTD.
By:/s/ Ronald Wolinsky
--------------------------------
Name: Ronald Wolinsky
Title: Vice President & Group Leader
FIRST HAWAIIAN BANK
By:/s/ William B. Schink
--------------------------------
Name: William B. Schink
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ R. BLake Witherington
--------------------------------
Name: R. BLake Witherington
Title: Vice President
CITIBANK, N.A.
By:/s/ Margaret C. Ullrich
--------------------------------
Name: Margaret C. Ullrich
Title: Vice President
RIGGS NATIONAL BANK
By:/s/ David H. Olson
--------------------------------
Name: David H. Olson
Title: Vice President
10
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:/s/ Jim P. Wedman
--------------------------------
Name: Jim P. Wedman
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ G. Luis Ashley
--------------------------------
Name: G. Luis Ashley
Title: First Vice President
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPENNE
By:/s/ Brian O'Leary
--------------------------------
Name: Brian O'Leary
Title: Vice President
By:/s/ Marcus Edward
--------------------------------
Name: Marcus Edward
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME
TRUST
By:/s/ Jeffrey W. Maillet
--------------------------------
Name: Jeffrey W. Maillet
Title: Sr. Vice Pres.
& Portfolio Mgr.
11
CIBC, INC.
By:/s/ John Tyler
--------------------------------
Name: John Tyler
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ Vincent Fitzgerald, Jr.
--------------------------------
Name: Vincent Fitzgerald, Jr.
Title: Authorized Signatory
THE FUJI BANK, LTD.
By:/s/ Katsunori Nozawa
--------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:/s/ John A. Krob
--------------------------------
Name: John A. Krob
Title: Deputy General Manager
BANQUE NATIONALE DE PARIS
By:/s/ John S. McGill
--------------------------------
Name: John S. McGill
Title: Vice President
By:/s/ Nancy L. Stengel
--------------------------------
Name: Nancy L. Stengel
Title: Assistant Treasurer
12
BANK OF HAWAII
By:/s/ J. Bryan Scearce
--------------------------------
Name: J. Bryan Scearce
Title: Vice President
BANK OF AMERICA
By:/s/ Amy S. Trapp
--------------------------------
Name: Amy S. Trapp
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By:/s/ Chad E. Coben
--------------------------------
Name: Chad E. Coben
Title: Vice President
DEUTSCHE BANK
By:/s/ Steven M. Godeke
--------------------------------
Name: Steven M. Godele
Title: Vice President
By:/s/ Bina R. Dabbah
--------------------------------
Name: Bina R. Dabbah
Title: Vice President
UNION BANK
By:/s/ Gabriel A. Renga
--------------------------------
Name: Gabriel A. Renga
Title: Senior Vice President
13
THE TORONTO DOMINION BANK
By:/s/ Neva Nesbitt
--------------------------------
Name: Neva Nesbitt
Title: Manager, Credit Administration
By:/s/ Cindy D. Hewitt
--------------------------------
Name: Cindy D. Hewitt
Title: Vice President
FLEET NATIONAL BANK OF CONNECTICUT
By:/s/ Stephen Charles
--------------------------------
Name: Stephen Charles
Title: Senior Vice President
BARCLAYS BANK PLC
By:/s/ James K. Downy
--------------------------------
Name: James K. Downy
Title: Associate Director
BANK BRUSSELS LAMBERT
By:/s/ Dominick H. J. Vangaever
--------------------------------
Name: Dominick H. J. Vangaever
Title: Vice President
BANK OF MONTREAL
By:/s/ Yvonne Bos
--------------------------------
Name: Yvonne Bos
Title: Managing Director
14
CREDIT LYONNAIS
By:/s/ James E. Morris
--------------------------------
Name: James E. Morris
Title: Vice President
15
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of May 15, 1995 ("Amendment No. 1"), to the
$1.8 BILLION CREDIT AGREEMENT, dated as of September 29, 1994 (the "Credit
Agreement"), among VIACOM INC., a Delaware corporation ("Viacom"), each of the
several Banks, 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, BANK OF AMERICA
NT&SA, as a Managing Agent, and the Banks identified as Agents on the signature
pages thereof, as Agents.
W I T N E S S E T H:
WHEREAS, Viacom has requested certain amendments to be made to
certain provisions of the Credit Agreement; and
WHEREAS, the parties who have heretofore entered into the Credit
Agreement now desire to amend such provisions of such agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments. (a) The definition of EBIDT in Section 1.1 of
the Credit Agreement is hereby amended by:
(i) deleting clause (a)(ii) in its entirety and replacing it with the
following:
"(ii) amortization expense (including all amortization expenses
recognized in accordance with APB 16 and 17 but excluding (A) all
other amortization of programming, production and pre-publication
costs and (B) amortization of videocassettes)";
and
(ii) deleting the phrase ", less (c) Net Video Tape Purchases" after
the word "definition" at the end of clause (b).
(b) Section 1.1 of the Credit Agreement is hereby amended to delete
the definition of Net Video Tape Purchases.
(c) The definition of "Applicable Eurodollar Rate Margin" in Section
1.1 of the Credit Agreement is hereby amended by deleting the proviso in its
entirety and replacing it with the following:
"provided, however, that if the ratings assigned by S&P and
Moody's shall differ, the Credit Rating shall be the rating which is
the higher rating".
(d) Section 3.4 (a) of the Credit Agreement is hereby amended by
deleting the proviso in its entirety and replacing it with the following:
"provided, however, that if the ratings assigned by S&P and
Moody's shall differ, the Credit Rating shall be the rating which is
the higher rating".
(e) Section 8.6 of the Credit Agreement is hereby amended by
replacing it in its entirety with the following:
"8.6.Subsidiary Indebtedness. The Borrower shall not permit any
of its Subsidiaries, other than a Guarantor Subsidiary, to incur
Indebtedness for borrowed money other than (a) the Subsidiary Loans
(as defined in the July Agreements), (b) under existing facilities
identified on Schedule 8.6 or any replacement facilities thereto
which in the aggregate do not exceed the amounts of the commitments
reflected on such Schedule and (c) Indebtedness for borrowed money in
the total amount of $25 million for all Subsidiaries other than a
Guarantor Subsidiary."
(f) Section 8.7 of the Credit Agreement is hereby amended by
inserting the following after the words "Commercial Paper" in the parentheses:
"and up to $500 million of Indebtedness with maturities of no
less than seven years from the date such Indebtedness is incurred".
SECTION 2. Effectiveness. This Amendment No. 1 will be effective upon
the execution thereof by each of Viacom, the Guarantor Subsidiary and (i) except
in the case of the amendments contained in Sections 1(c) and (d) hereof, the
2
Majority Banks and (ii) in the case of the amendments contained in Sections 1(c)
and (d) hereof, each of the Banks.
SECTION 3. Representations and Warranties. Each of the Borrower and
the Guarantor Subsidiary hereby represents and warrants that as of the date
hereof, both before and after giving effect to this Amendment No. 1, no Default
or Event of Default shall exist or be continuing under the Credit Agreement.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.
(b) Except as amended hereby, all of the terms of the Credit
Agreement shall remain and continue in full force and effect and are hereby
confirmed in all respects.
(c) This Amendment No. 1 shall be a Loan Document for the purposes of
the Credit Agreement.
(d) This Amendment No. 1 may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment No. 1 by telecopier shall be effective as
delivery of a manually executed counterpart of this Amendment No. 1.
(e) THIS AMENDMENT NO. 1 AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment No. 1
and confirms that the VII Guarantee remains in full force and effect.
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower
VIACOM INTERNATIONAL INC., as a Subsidiary
Guarantor
By: /s/ Vaughn A. Clark
----------------------------
Name: Vaughn A. Clark
Title: Senior Vice President,
Treasurer
Managing Agents
THE BANK OF NEW YORK, as Managing Agent, the
Documentation Agent and a Bank
By: /s/ Geoffrey C. Brooks
----------------------------
Name: Geoffrey C. Brooks
Title: Vice President
CITIBANK, N.A., as Managing Agent, the
Administrative Agent and a Bank
By: /s/ Margaret C. Ullrich
----------------------------
Name: Margaret C. Ullrich
Title: Vice President
4
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Managing Agent and a Bank
By: /s/ Mathias Blumschein
----------------------------
Name: Mathias Blumschein
Title: Associate
BANK OF AMERICA NT&SA, as Managing Agent and a
Bank
By:/s/ Amy S. Trapp
----------------------------
Name: Amy S. Trapp
Title: Vice President
Syndication Agent
JP MORGAN SECURITIES INC., as the Syndication
Agent
By: /s/ Barbara J. Asch
----------------------------
Name: Barbara J. Asch
Title:Vice President
Agents
BANK OF MONTREAL, as Agent and a Bank
By: /s/ Yvonne Bos
----------------------------
Name: Yvonne Bos
Title:Managing Director
5
THE BANK OF NOVA SCOTIA, as Agent and a Bank
By: /s/ Vince J. Fitzgerald
----------------------------
Name: Vince J. Fitzgerald
Title: Senior Relationship Mgr.
BANK OF TOKYO TRUST COMPANY, as Agent and a Bank
By: /s/ Charles Poer
----------------------------
Name: Charles Poer
Title: Vice President & Manager
BANQUE PARIBAS, as Agent and a Bank
By: /s/ Nicole Cawley
----------------------------
Name: Nicole Cawley
Title:Vice President
By: /s/ Cynthia D. Hewitt
----------------------------
Name: Cynthia D. Hewitt
Title: Vice President
BARCLAYS BANK PLC, as Agent and a Bank
By: /s/ Michael W. Ballard
----------------------------
Name: Michael W. Ballard
Title:Associate Director
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as Agent and a Bank
By: /s/ Bruce Longenkamp
----------------------------
Name: Bruce Longenkamp
Title:Vice President
6
CHEMICAL BANK, as Agent and a Bank
By: /s/ Mary E. Cameron
----------------------------
Name: Mary E. Cameron
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as Agent
and a Bank
By: /s/ M. Bernadette Collins
----------------------------
Name: M. Bernadette Collins
Title:Authorized Signature
THE DAI-ICHI KANGYO BANK LTD., NEW YORK BRANCH,
as Agent and a Bank
By: /s/ Shinya Wako
----------------------------
Name: Shinya Wako
Title:Senior Vice President
and Department Head
THE FUJI BANK, LIMITED, as Agent and a Bank
By: /s/ Kazuaki Kitabatake
----------------------------
Name: Kazuaki Kitabatake
Title:Joint General Manager
7
THE INDUSTRIAL BANK OF JAPAN, LTD., as Agent and
a Bank
By: /s/ Jeffrey Cole
----------------------------
Name: Jeffrey Cole
Title:Senior Vice President
LTCB TRUST COMPANY, as Agent and a Bank
By: /s/ John A. Krob
----------------------------
Name: John A. Krob
Title: Senior Vice President
MELLON BANK, N.A., as Agent and a Bank
By: /s/ G. Luis Ashley
----------------------------
Name: G. Luis Ashley
Title: First Vice President
THE MITSUBISHI BANK, LIMITED, as Agent and a Bank
By: /s/ Paula Mueller
----------------------------
Name: Paula Mueller
Title: Vice President
8
THE MITSUBISHI TRUST & BANKING CORPORATION, as
Agent and a Bank
By: /s/ Patricia Loret de Mola
Name: Patricia Loret de Mola
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A., as Agent and a Bank
By: /s/ Chad E. Coben
----------------------------
Name: Chad E. Coben
Title: Vice President
THE NIPPON CREDIT BANK, LTD., LOS ANGELES AGENCY,
as Agent and a Bank
By: /s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President and Manager
ROYAL BANK OF CANADA, as Agent and a Bank
By: /s/ Eduardo Salazar
----------------------------
Name: Eduardo Salazar
Title: Senior Manager
9
THE SAKURA BANK, LIMITED, as Agent and a Bank
By: /s/ Hiroshi Shimazaki
----------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President and Manager
THE SANWA BANK, LTD., as Agent and a Bank
By: /s/ Dominic J. Sorresso
Name: Dominic J. Sorresso
Title:Vice President
SOCIETE GENERALE, as Agent and a Bank
By: /s/ Pascale Hainline
----------------------------
Name: Pascale Hainline
Title:Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH, as
Agent and a Bank
By:/s/ S. Higashi
----------------------------
Name: S. Higashi
Title: Joint General Manager
THE TOKAI BANK, LIMITED, NEW YORK BRANCH, as
Agent and a Bank
By: /s/ Masaharu Muto
----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
10
THE TORONTO-DOMINION BANK, as Agent and a Bank
By: /s/ Neva Nesbitt
----------------------------
Name: Neva Nesbitt
Title:Manager Credit Admin.
UNION BANK, as Agent and a Bank
By: /s/ J. Kevin Sampson
----------------------------
Name: J. Kevin Sampson
Title:
UNION BANK OF SWITZERLAND, as Agent and a Bank
By: /s/ James P. Kelleher
----------------------------
Name: James P. Kelleher
Title: Assistant Vice President
By: /s/ Peter B. Yearley
----------------------------
Name: Peter B. Yearley
Title: Vice President
CREDIT SUISSE, as Agent and a Bank
By: /s/ Michael C. Mast
----------------------------
Name: Michael C. Mast
Title: Member of Senior Management
11
By: /s/ Kristina Catlin
----------------------------
Name: Kristina Catlin
Title: Associate
DEUTSCHE BANK AG, through its New York and/or
Cayman Islands Branch, as Agent and a Bank
By: /s/ Steven M. Godeke
----------------------------
Name: Steven M. Godeke
Title: Vice President
By: /s/ Bina R. Dabbah
----------------------------
Name: Bina R. Dabbah
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON, N.A.
By:/s/ Susan Hendrixson
----------------------------
Name: Susan Hendrixson
Title: Vice President
12
AMENDMENT
This Amendment ("Amendment"), dated as of November 17, 1995, shall
be:
AMENDMENT NO. 2 to the $1.8 BILLION CREDIT AGREEMENT, dated as of
September 29, 1994, as amended, (the "Credit Agreement") among VIACOM Inc., a
Delaware corporation ("Viacom"), each of the several Banks, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents of the signature pages thereof, as Agents.
WITNESSETH:
WHEREAS, Viacom, Viacom International Inc., a wholly-owned subsidiary
of Viacom ("VII"), Viacom International Services Inc., a wholly-owned subsidiary
of VII ("VII Services"), Tele-Communications Inc. ("TCI"), and TCI
Communications Inc. ("TCI Sub"), a wholly -owned subsidiary of TCI, have entered
into a series of agreements ("the Transaction Documents", which are listed on
Schedule I attached hereto) pursuant to which (i) VII will convey to VII
Services proceeds from the $1.7 billion bank debt described below and all of its
assets relating to business operations other than the cable television business
(the "Non Cable Businesses"), and VII Services will assume all of VII's
liabilities (including its existing public debt and bank debt) other than the
$1.7 Billion bank debt described below and liabilities relating to the cable
television business (the "Cable Business"), (ii) VII will distribute the stock
of VII Services to Viacom (the "First Distribution"), (iii) VII, after giving
effect to the First Distribution, will be solely engaged in the Cable Business
and VII will be recapitalized with new VII Class A common stock, (iv) the Class
A common stock of VII will be split off to the shareholders of Viacom in an
exchange offer (the "Exchange Offer") in which shares of Viacom common stock
will be exchanged for shares of VII Class A common stock, (v) VII prior to the
expiration of the Exchange Offer will borrow $1.7 billion from a syndicate of
lenders, the proceeds of which will be deposited in a secured collateral account
1
until the date of consummation of the Exchange Offer when VII will transfer such
proceeds to VII Services as described above, and (vi) immediately after the
split off, TCI has agreed to purchase Class B common stock of VII and the Class
A common stock will be automatically converted upon such purchase into preferred
stock, and (vii) VII will no longer be a subsidiary of Viacom and will be
renamed TCI Pacific Communications Inc. and VII Services will be renamed Viacom
International Inc. (collectively the "Cable Transaction"); and
WHEREAS, Viacom has requested certain amendments to be made to and
certain consents obtained with respect to certain provisions of the Credit
Agreement; and
WHEREAS, the parties who have heretofore entered into the Credit
Agreement now desire to amend certain provisions of such agreement and for the
Majority Banks to consent to the waiver of the application of certain other
provisions in connection with the Cable Transaction
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments.
(a) Section 8.6 of the Credit Agreement is hereby amended by
replacing it in its entirety with the following:
"8.6. Subsidiary Indebtedness. The Borrower shall not
permit any of its Subsidiaries, other than the Guarantor Subsidiary, to incur
Indebtedness for borrowed money other than (a) the Subsidiary Loans (as defined
in the Subsidiary Facility), (b) under existing facilities identified on
Schedule 8.6 to this Amendment No. 2 or any replacement facilities thereto which
in the aggregate do not exceed the amounts of the commitments on such Schedule
and (c) Indebtedness for borrowed money in an aggregate amount at any time
outstanding of not more than $300 million; provided, however, the aggregate
amount of Indebtedness for borrowed money scheduled to mature earlier than six
months after the Commitment Termination Date at any time permitted to be
outstanding under 8.6(c) and 8.7(b) may not exceed $300 million.
2
(b) Section 8.7 of the Credit Agreement is hereby amended by
replacing it in its entirety with the following:
"8.7. Other Restrictions on Indebtedness. The Borrower
shall not, and shall not permit the Guarantor Subsidiary to, incur Indebtedness
for borrowed money maturing earlier than six months after the Commitment
Termination Date other than (a) Commercial Paper and (b) up to $300 million at
any time outstanding (less the aggregate amount outstanding under 8.6(c)
scheduled to mature earlier than six months after the Commitment Termination
Date) and on terms no more onerous than the terms hereof."
(c) Section 11.1 of the Credit Agreement is hereby amended by
deleting the word "or" preceding clause (f) therein, and inserting the following
new clause (g): "or (g) amend clause (i) of Section 11.6".
(d) Clause (i) of Section 11.6 of the Credit Agreement is hereby
amended to read in its entirety as follows: "the Borrower shall have no right to
assign its rights or obligations hereunder or any interest herein (and any such
purported assignment shall be void) without the prior consent of the Banks
except in connection with any (x) merger or consolidation permitted under
Section 10.2 or the (y) merger, consolidation or sale of assets consented to by
the Majority Banks".
SECTION 2. Consents. In connection with the Cable Transaction:
(a) On the Cable Transaction Effective Date, the Guarantor
Subsidiary may assign all of its rights and obligations under the VII Guaranty
to VII Services (which will change its name to Viacom International Inc.) if in
connection therewith VII Services (i) assumes all of the obligations of VII
under the VII Guaranty and (ii) receives an assignment of the Non Cable
Businesses. VII Services will become the Guarantor Subsidiary and VII will be
released from all of its obligations thereunder.
(b) Prior to the expiration of the Exchange Offer, VII may
borrow $1.7 billion from a syndicate of banks on terms permitted pursuant to the
Transaction Documents substantially in the form of those in effect at the date
hereof and may grant such banks a Lien on such funds until they are released to
3
VII Services on the date of consummation of the Exchange Offer and a Lien on
rights under the Subscription Agreement referred to in Schedule I.
(c) After the Cable Transaction Effective Date, VII Services may
hold certain cable franchises for the benefit of VII until regulatory approvals
are obtained and may assign the receivables related to such franchises to the
banks lending to VII.
(d) For purposes of the Credit Agreement, the $1.7 Billion loan
to VII shall not be considered Indebtedness of the Borrower or any of its
Subsidiaries.
Upon the execution and delivery hereof by the Majority Banks, the
Majority Banks shall have consented to each of the foregoing relating to the
Cable Transaction and, to the extent any of the matters described in (a) - (e)
above are otherwise inconsistent with the terms of the Credit Agreement, as
hereby amended, this Amendment shall constitute a waiver of the provisions
thereof to the extent necessary to permit the Cable Transaction.
SECTION 3. Assumption of Liabilities. As of the Cable Transaction
Effective Date, VII Services hereby expressly assumes and agrees to pay, satisfy
and perform when due all liabilities of VII under each Loan Document to which
VII is a party. For purposes of clarity, VII's obligations under the $1.7
billion bank debt described above will not be assumed by VII Services.
SECTION 4. Effectiveness This Amendment will be effective upon the
execution hereof by each of Viacom, the Guarantor Subsidiary, VII Services, and
the Majority Banks.
SECTION 5. Representations and Warranties Each of the Borrower and
the Guarantor Subsidiary hereby represents and warrants that (i) as of the date
hereof, both before and after giving effect to this Amendment, and (ii) as of
the date of, and after giving effect to consummation of, the Cable Transaction,
no Default or Event of Default shall exist or be continuing under the Credit
Agreement.
SECTION 6. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.
(b) Except as amended or waived hereby, all of the terms of the
4
Credit Agreement shall remain and continue in full force and effect and are
hereby confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of
the Credit Agreement.
(d) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 7. Covenant. Viacom shall within two Business Days following
the Cable Transaction Effective Date deliver to the Documentation Agent, dated
as of the Cable Transaction Effective Date, as to VII Services only:
(i) each of the documents referred to in Section 4.1(a), (b) and (c)
of the Credit Agreement;
(ii) a favorable opinion of Shearman & Sterling, special counsel to
the Loan Parties, with respect to this Amendment substantially to the same
effect as contemplated by paragraph 1 of Exhibit E-1 to the Credit Agreement;
and
(iii) a favorable opinion of Philippe P. Dauman, General Counsel to
the Loan Parties, with respect to this Amendment substantially to the same
effect as contemplated by paragraphs 1 - 6 of Exhibit E-2 to the Credit
Agreement.
SECTION 8. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower
By: /s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL INC., as a Subsidiary
Borrower and as a Guarantor Subsidiary
By: /s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
On behalf of the following Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.,
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL SERVICES INC.
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
CREDIT SUISSE
By:/s/ J. Hamilton Crawford
--------------------------------
Name: J. Hamilton Crawford
Title: Associate
6
SOCIETE GENERALE
By:/s/ Elaine I. Khalil
--------------------------------
Name: Elaine I. Khalil
Title: Vice President
THE BANK OF NEW YORK
By:/s/ Geoffrey C. Brooks
--------------------------------
Name: Geoffrey C. Brooks
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:/s/ John P. Judge
--------------------------------
Name: John P. Judge
Title: Vice President
THE TOYO TRUST & BANKING CO., LTD.
By:/s/ Hiroyuki Fukuro
--------------------------------
Name: Hiroyuki Fukuro
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON
By:/s/ Susan Hendrixson
--------------------------------
Name: Susan Hendrixson
Title: Vice President
7
UNION BANK OF SWITZERLAND
By:/s/ Stephen A. Cayer
--------------------------------
Name: Stephen A. Cayer
Title: Assistant Treasurer
By:/s/ Peter B. Yearly
--------------------------------
Name: Peter B. Yearly
Title: Vice President
MITSUBISHI BANK, LTD.
By:/s/ Paula Mueller
--------------------------------
Name: Paula Mueller
Title:
THE MITSUBISHI TRUST AND BANKING CORPORATION
By:/s/ Patricia Loret De Mola
--------------------------------
Name: Patricia Loret De Mola
Title: Senior Vice President
THE SUMITOMO BANK, LTD.
By:/s/ S. Higashi
--------------------------------
Name: S. Higashi
Title: Joint General Manager
THE NIPPON CREDIT BANK, LTD.
By:/s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President & Manager
8
THE SAKURA BANK, LTD.
By:/s/ Hiroshi Shimazaki
--------------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
& Manager
THE ROYAL BANK OF CANADA
By:/s/ Cynthia K. Wong
--------------------------------
Name: Cynthia K. Wong
Title: Manager
THE SANWA BANK, LTD.
By: /s/ Dominic J. Sorresso
--------------------------------
Name: Dominic J. Sorresso
Title: Vice President
TOKAI BANK, LTD.
By:/s/ Stuart Schulman
--------------------------------
Name: Stuart Schulman
Title: Senior Vice President
CHEMICAL BANK
By:/s/ John J. Huber III
--------------------------------
Name: John J. Huber III
Title: Managing Director
9
THE DAI-CHI KANGYO BANK, LTD.
By:/s/ Ronald Wolinsky
--------------------------------
Name: Ronald Wolinsky
Title: Vice President & Group Leader
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ R. BLake Witherington
--------------------------------
Name: R. BLake Witherington
Title: Vice President
10
CITIBANK, N.A.
By:/s/ Margaret C. Ullrich
--------------------------------
Name: Margaret C. Ullrich
Title: Vice President
MELLON BANK, N.A.
By: /s/ G. Luis Ashley
--------------------------------
Name: G. Luis Ashley
Title: First Vice President
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPENNE
By:/s/ Brian O'Leary
--------------------------------
Name: Brian O'Leary
Title: Vice President
By:/s/ Marcus Edward
--------------------------------
Name: Marcus Edward
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ Vincent Fitzgerald, Jr.
--------------------------------
Name: Vincent Fitzgerald, Jr.
Title: Authorized Signatory
THE FUJI BANK, LTD.
By:/s/ Katsunori Nozawa
--------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
11
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:/s/ John A. Krob
--------------------------------
Name: John A. Krob
Title: Deputy General Manager
BANK OF AMERICA
By:/s/ Amy S. Trapp
--------------------------------
Name: Amy S. Trapp
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By:/s/ Chad E. Coben
--------------------------------
Name: Chad E. Coben
Title: Vice President
DEUTSCHE BANK
By:/s/ Steven M. Godeke
--------------------------------
Name: Steven M. Godele
Title: Vice President
By:/s/ Bina R. Dabbah
--------------------------------
Name: Bina R. Dabbah
Title: Vice President
12
UNION BANK
By:/s/ Gabriel A. Renga
--------------------------------
Name: Gabriel A. Renga
Title: Senior Vice President
THE TORONTO DOMINION BANK
By:/s/ Neva Nesbitt
--------------------------------
Name: Neva Nesbitt
Title: Manager, Credit Admin.
BANQUE PARIBAS
By:/s/ Eileen M. Burke
--------------------------------
Name: Eileen M. Burke
Title: Vice President
By:/s/ Cindy D. Hewitt
--------------------------------
Name: Cindy D. Hewitt
Title: Vice President
BARCLAYS BANK PLC
By:/s/ James K. Downy
--------------------------------
Name: James K. Downy
Title: Associate Director
BANK OF MONTREAL
By:/s/ Yvonne Bos
--------------------------------
Name: Yvonne Bos
Title: Managing Director
13
CREDIT LYONNAIS
By:/s/ James E. Morris
--------------------------------
Name: James E. Morris
Title: Vice President
14
Schedule I
1. Parents Agreement, dated as of July 24, 1995, among Viacom, TCI
and TCI Sub.
2. Implementation Agreement, dated as of July 24, 1995, between VII
and VII Services.
3. Subscription Agreement, dated as of July 24, 1995, among VII, TCI
and TCI Sub.
15
PRICING
AMENDMENT
This Amendment ("Amendment"), dated as of November 17, 1995, shall
be:
AMENDMENT NO. 3 to the $1.8 BILLION CREDIT AGREEMENT, dated as of
September 29, 1994, as amended, (the "Credit Agreement") among VIACOM Inc., a
Delaware corporation ("Viacom"), each of the several Banks, 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, BANK OF AMERICA NT&SA, as a Managing Agent, the Banks identified as
Agents of the signature pages thereof, as Agents.
WITNESSETH:
WHEREAS, the parties who have heretofore entered into the Credit
Agreement now desire to amend certain provisions of such agreement to provide
for a change in the Applicable Eurodollar Rate Margin and Commitment Fees
payable thereunder
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments.
(a) The definition of Applicable Eurodollar Rate Margin in
section 1.1 of the Credit Agreement is hereby amended by deleting the table
appearing therein and replacing it with the following table:
CREDIT RATING MARGIN
------------- ------
A-/A3 or better 0.300%
BBB+/Baa1 0.375%
BBB/Baa2 0.450%
BBB-/Baa3 0.500%
BB+/Ba1 0.750%
BB/Ba2 0.875%
BB-/Ba3 or lower 1.250%
1
(b) Section 3.4(a) of the Credit Agreement is hereby amended by
deleting the table appearing therein and replacing it with the following table:
CREDIT RATING COMMITMENT FEE
------------- --------------
A-/A3 or better 0.1250%
BBB+/Baa1 0.1500%
BBB/Baa2 0.1875%
BBB-/Baa3 0.2000%
BB+/Ba1 0.3125%
BB/Ba2 0.3500%
BB-/Ba3 or lower 0.4000%
SECTION 2. Effectiveness This Amendment will be effective upon the
execution hereof by each of Viacom, the Guarantor Subsidiary, VII Services, and
each of the Banks.
SECTION 3. Representations and Warranties Each of the Borrower and
the Guarantor Subsidiary hereby represents and warrants that as of the date
hereof, both before and after giving effect to this Amendment no Default or
Event of Default shall exist or be continuing under the Credit Agreement.
SECTION 4. Miscellaneous. (a) Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.
(b) Except as amended hereby, all of the terms of the Credit
Agreement shall remain and continue in full force and effect and are hereby
confirmed in all respects.
(c) This Amendment shall be a Loan Document for the purposes of
the Credit Agreement.
(d) This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto were upon the same instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopier shall be effective as delivery of
a manually executed counterpart of this Amendment.
2
(e) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 5. Guarantor Subsidiary Confirmation. By signing below, the
Guarantor Subsidiary hereby agrees to the terms of the foregoing Amendment and
confirms that the VII Guarantee remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
VIACOM INC., as Borrower
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL INC., as a Subsidiary
Borrower and as a Guarantor Subsidiary
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
On behalf of the following Subsidiary Borrowers:
VIACOM CABLEVISION OF DAYTON INC.,
WNYT INC.,
WMZQ INC. and
WVIT INC.,
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
VIACOM INTERNATIONAL SERVICES INC.
By:/s/ Vaughn A. Clarke
--------------------------------
Name: Vaughn A. Clarke
Title: Senior Vice President
3
CREDIT SUISSE
By:/s/ J. Hamilton Crawford
--------------------------------
Name: J. Hamilton Crawford
Title: Associate
SOCIETE GENERALE
By:/s/ Elaine I. Khalil
--------------------------------
Name: Elaine I. Khalil
Title: Vice President
THE BANK OF NEW YORK
By:/s/ Geoffrey C. Brooks
--------------------------------
Name: Geoffrey C. Brooks
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:/s/ John P. Judge
--------------------------------
Name: John P. Judge
Title: Vice President
THE TOYO TRUST & BANKING CO., LTD.
By:/s/ Hiroyuki Fukuro
--------------------------------
Name: Hiroyuki Fukuro
Title: Vice President
FIRST INTERSTATE BANK OF WASHINGTON
By:/s/ Susan Hendrixson
--------------------------------
Name: Susan Hendrixson
Title: Vice President
4
UNION BANK OF SWITZERLAND
By:/s/ Stephen A. Cayer
--------------------------------
Name: Stephen A. Cayer
Title: Assistant Treasurer
By:/s/ Peter B. Yearly
--------------------------------
Name: Peter B. Yearly
Title: Vice President
MITSUBISHI BANK, LTD.
By:/s/ Paula Mueller
--------------------------------
Name: Paula Mueller
Title:
THE MITSUBISHI TRUST AND BANKING CORPORATION
By:/s/ Patricia Loret De Mola
--------------------------------
Name: Patricia Loret De Mola
Title: Senior Vice President
THE SUMITOMO BANK, LTD.
By:/s/ S. Higashi
--------------------------------
Name: S. Higashi
Title: Joint General Manager
THE NIPPON CREDIT BANK, LTD.
By:/s/ Bernardo E. Correa-Henschke
--------------------------------
Name: Bernardo E. Correa-Henschke
Title: Vice President & Manager
5
THE SAKURA BANK, LTD.
By:/s/ Hiroshi Shimazaki
--------------------------------
Name: Hiroshi Shimazaki
Title: Senior Vice President
& Manager
THE INDUSTRIAL BANK OF JAPAN, LTD.
By:/s/ Jeffrey Cole
--------------------------------
Name: Jeffrey Cole
Title: Senior Vice President
THE ROYAL BANK OF CANADA
By:/s/ Cynthia K. Wong
--------------------------------
Name: Cynthia K. Wong
Title: Manager
THE SANWA BANK, LTD.
By: /s/ Dominic J. Sorresso
--------------------------------
Name: Dominic J. Sorresso
Title: Vice President
TOKAI BANK, LTD.
By:/s/ Stuart Schulman
--------------------------------
Name: Stuart Schulman
Title: Senior Vice President
6
CHEMICAL BANK
By:/s/ John J. Huber III
--------------------------------
Name: John J. Huber III
Title: Managing Director
THE DAI-CHI KANGYO BANK, LTD.
By:/s/ Ronald Wolinsky
--------------------------------
Name: Ronald Wolinsky
Title: Vice President & Group Leader
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ R. BLake Witherington
--------------------------------
Name: R. BLake Witherington
Title: Vice President
MELLON BANK, N.A.
By: /s/ G. Luis Ashley
--------------------------------
Name: G. Luis Ashley
Title: First Vice President
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPENNE
By:/s/ Brian O'Leary
--------------------------------
Name: Brian O'Leary
Title: Vice President
By:/s/ Marcus Edward
--------------------------------
Name: Marcus Edward
Title: Vice President
7
THE CHASE MANHATTAN BANK
By:/s/ Bruce Longenkamp
--------------------------------
Name: Bruce Longenkamp
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ Vincent Fitzgerald, Jr.
--------------------------------
Name: Vincent Fitzgerald, Jr.
Title: Authorized Signatory
THE FUJI BANK, LTD.
By:/s/ Katsunori Nozawa
--------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By:/s/ John A. Krob
--------------------------------
Name: John A. Krob
Title: Deputy General Manager
BANK OF AMERICA
By:/s/ Amy S. Trapp
--------------------------------
Name: Amy S. Trapp
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By:/s/ Chad E. Coben
--------------------------------
Name: Chad E. Coben
Title: Vice President
8
DEUTSCHE BANK
By:/s/ Steven M. Godeke
--------------------------------
Name: Steven M. Godele
Title: Vice President
By:/s/ Bina R. Dabbah
--------------------------------
Name: Bina R. Dabbah
Title: Vice President
UNION BANK
By:/s/ Gabriel A. Renga
--------------------------------
Name: Gabriel A. Renga
Title: Senior Vice President
THE TORONTO DOMINION BANK
By:/s/ Neva Nesbitt
--------------------------------
Name: Neva Nesbitt
Title: Manager, Credit Administration
BANQUE PARIBAS
By:/s/ Eileen M. Burke
--------------------------------
Name: Eileen M. Burke
Title: Vice President
By:/s/ Cindy D. Hewitt
--------------------------------
Name: Cindy D. Hewitt
Title: Vice President
9
BANK OF MONTREAL
By:/s/ Yvonne Bos
--------------------------------
Name: Yvonne Bos
Title: Managing Director
CREDIT LYONNAIS
By:/s/ James E. Morris
--------------------------------
Name: James E. Morris
Title: Vice President
10
VIACOM INC.
SENIOR EXECUTIVE
SHORT-TERM INCENTIVE PLAN
(as amended and restated through March 27, 1996)
ARTICLE I
GENERAL
SECTION 1.1 Purpose. The purpose of the Viacom Inc. Senior Executive
Short-Term Incentive Plan (the "Plan") is to benefit and advance the interests
of Viacom Inc., a Delaware corporation (the "Company"), by rewarding selected
senior executive officers of the Company and its subsidiaries for their
contributions to the Company's financial success and thereby motivate them to
continue to make such contributions in the future by granting annual
performance-based awards ("Awards").
SECTION 1.2 Administration of the Plan. The Plan shall be administered by
a committee ("Committee") which shall adopt such rules as it may deem
appropriate in order to carry out the purpose of the Plan. The Committee shall
be the Compensation Committee of the Company's Board of Directors ("Board") (or
such other Committee as may be appointed by the Board) except that (i) the
number of directors on the Committee shall not be less than three (3) and (ii)
each member of the Committee shall be an "outside director" within the meaning
of Section 162(m)(4) of the Internal Revenue code of 1986, as amended (the
"Code"). All questions of interpretation, administration and application of the
Plan shall be determined by a majority of the members of the Committee then in
office, except that the Committee may authorize any one or more of its members,
or any officer of the Company, to execute and deliver documents on behalf of the
Committee. The determination of such majority shall be final and binding in all
matters relating to the Plan. The Committee shall have authority to determine
the terms and conditions of the Awards granted to eligible persons specified in
Section 1.3 below ("Participants").
SECTION 1.3 Eligible Persons. Awards may be granted only to employees of
the Company or one of its subsidiaries who are at the level of Senior Vice
President of the Company or at a more senior level. An individual shall not be
deemed an employee for purposes of the Plan unless such individual receives
compensation from either the Company or one of its subsidiaries for services
performed as an employee of the Company or any of its subsidiaries.
ARTICLE II
AWARDS
SECTION 2.1 Awards. The Committee may grant Awards to eligible employees
with respect to each fiscal year of the Company, subject to the terms and
conditions set forth in the Plan.
SECTION 2.2 Terms of Awards. Prior to the end of the first quarter of each
fiscal year of the Company, the Committee shall establish (i) performance goals
and objectives ("Performance Targets") for the Company and the subsidiaries and
divisions thereof for such fiscal year ("Performance Period") and (ii) target
awards ("Target Awards") for each Participant which shall be a percentage of the
Participant's salary (as defined in Section 2.3 below). Such Performance Targets
shall relate to the achievement of annual financial goals based on the
attainment of specified levels of Operating Income and/or Cash Flow (as such
terms are defined below) for the Company and the subsidiaries and divisions
thereof. For purposes of the Plan, "Operating Income" shall mean revenues less
operating expenses (other than depreciation and amortization) and "Cash Flow"
shall mean Operating Income less cash capital expenditures and increases or
decreases in working capital and in other balance sheet investments.
SECTION 2.3 Limitation on Awards. The aggregate amount of all Awards to
any Participant for any Performance Period shall not exceed the amount
determined by multiplying such Participant's Salary by a factor of eight (8).
For purposes of the Plan, "Salary" shall mean the base salary of the Participant
on March 27, 1996 or, in the case of a Participant hired after March 27, 1996,
such Participant's base salary on the date of hire.
SECTION 2.4 Determination of Award. The Committee shall, promptly after
the date on which the necessary financial or other information for a particular
Performance Period becomes available, certify whether the Performance Targets
have been achieved in the manner required by Section 162(m) of the Code. If the
Performance Targets have been achieved, the Awards for such Performance Period
shall have been earned except that the Committee may, in its sole discretion,
reduce the amount of any Award to reflect the Committee's assessment of the
Participant's individual performance or for any other reason. Subject to Section
2.5, such Awards shall become payable in cash as promptly as practicable
thereafter.
SECTION 2.5 Employment Requirement. To be eligible to receive payment of
an Award, the Participant must have remained in the continuous employ of the
Company or its subsidiaries through the end of the applicable Performance
Period. If the Company or any subsidiary terminates a Participant's employment
other than for "cause" or a Participant becomes "permanently disabled" (in each
case, as determined by the Committee in its sole discretion) or a Participant
2
dies during a Performance Period, such Participant or his estate shall be
awarded, unless his employment contract provides otherwise, a pro rata portion
of the amount of the Award for such Performance Period except that the Committee
may, in its sole discretion, reduce the amount of such Award to reflect the
Committee's assessment of such Participant's individual performance prior to the
termination of such Participant's employment, such Participant's becoming
permanently disabled or such Participant's death, as the case may be, or for any
other reason.
ARTICLE III
ADJUSTMENT OF AWARDS
In the event that, during a Performance Period, any recapitalization,
reorganization, merger, acquisition, divestiture, consolidation, spin off,
combination, liquidation, dissolution, sale of assets, or other similar
corporate transaction or event, or any extraordinary event, or any other event
which distorts the applicable performance criteria occurs involving the Company
or a subsidiary or division thereof, the Committee shall adjust or modify, as
determined by the Committee in its sole and absolute discretion, the calculation
of Operating Income and/or Cash Flow, or the applicable Performance Targets, to
the extent necessary to prevent reduction or enlargement of Participants' Awards
under the Plan for such Performance Period attributable to such transaction or
event. Such adjustments shall be conclusive and binding for all purposes.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 No Rights to Awards or Continued Employment. No employee shall
have any claim or right to receive Awards under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained by the Company or any of its subsidiaries.
SECTION 4.2 Restriction on Transfer. The rights of a Participant with
respect to Awards under the Plan shall not be transferable by the Participant to
whom such Award is granted, otherwise than by will or the laws of descent and
distribution.
SECTION 4.3 Tax Withholding. The Company or a subsidiary thereof, as
appropriate, shall have the right to deduct from all payments made under the
Plan to a Participant or to a Participant's beneficiary or beneficiaries any
Federal, state or local taxes required by law to be withheld with respect to
such payments.
3
SECTION 4.4 No Restriction on Right of Company to Effect Changes. The Plan
shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any recapitalization, reorganization, merger,
acquisition, divestiture, consolidation, spin off, combination, liquidation,
dissolution, sale of assets, or other similar corporate transaction or event
involving the Company or a subsidiary thereof or any other event or series of
events, whether of a similar character or otherwise.
SECTION 4.5 Source of Payments. The Company shall not have any obligation
to establish any separate fund or trust or other segregation of assets to
provide for payments under the Plan. To the extent any person acquires any
rights to receive payments hereunder from the Company, such rights shall be no
greater than those of an unsecured creditor.
SECTION 4.6 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. No
termination or amendment of the Plan may, without the consent of the Participant
to whom an Award has been made, adversely affect the rights of such Participant
in such Award.
SECTION 4.7 Governmental Regulations. The Plan, and all Awards hereunder,
shall be subject to all applicable rules and regulations of governmental or
other authorities.
SECTION 4.8 Headings. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of the Plan.
Section 4.9 Governing Law. The Plan and all rights and Awards hereunder
shall be construed in accordance with and governed by the laws of the State of
Delaware.
SECTION 4.10 Effective Date. The Plan became effective as of January 1,
1994. The amendment and restatement thereof shall be effective as of March 27,
1996; provided, however, that it shall be a condition to the effectiveness of
the amendment and restatement of the Plan, and any Awards made after March 27,
1996, that the stockholders of the Company approve the amendment of the Plan at
the 1996 Annual Meeting of Stockholders. Such approval shall meet the
requirements of Section 162(m) of the Code and the regulations thereunder. If
such approval is not obtained, then the amendment and restatement of the Plan
shall not be effective and any Award made after March 27, 1996 shall be void ab
initio.
4
As of January 1, 1996
Philippe P. Dauman
655 Park Avenue
New York, NY 10021
Dear Mr. Dauman:
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 January
1, 1996 and, unless terminated by Viacom or you pursuant to paragraph 8 hereof,
shall continue through and until December 31, 2000. The period from January 1,
1996 through December 31, 2000 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. This is not intended to prevent you from engaging in other
activities that do not conflict with or interfere with the performance of your
duties and responsibilities hereunder. You will be Deputy Chairman and Executive
Vice President, General Counsel and Chief Administrative Officer and Secretary
of Viacom reporting directly and solely to the Chairman of the Board of Viacom
(the "Chairman"), 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 Chairman. You will have such authority as is necessary for the
performance of your obligations hereunder. You shall serve as a member of the
Board of Directors of Viacom. Your principal place of business shall be at
Viacom's headquarters in the New York City metropolitan area and you shall not
be required to relocate outside of 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 One Million Dollars ($1,000,000)
per annum ("Salary"), payable in accordance with Viacom's then effective payroll
practices.
Philippe P. Dauman
January 1, 1996
Page 2
(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 Viacom's
Short-Term Incentive Plan and its Senior Executive Short-Term
Incentive Plan, as the same may be amended from time to time
(collectively, the "STIP"), which objectives shall be no less
favorable to you than the objectives used to determine the
amount of bonus payable to any other executive of Viacom whose
bonus is based in whole or in part on corporate performance
and who participates in the STIP.
(ii) Your Target Bonus for each of the calendar years during the
Employment Term shall be 250% of Salary and Deferred
Compensation (as defined in paragraph 3(c)) for such calendar
year.
(iii) Your Bonus for any calendar year shall be payable by February
28 of the following year.
(c) Deferred Compensation: In addition to your Salary and Bonus, you
shall earn, in respect of calendar year 1997 and each calendar year during the
Employment Term after 1997, an additional amount ("Deferred Compensation"), the
payment of which (together with the return thereon as provided in this paragraph
3(c)) shall be deferred until January of the first calendar year following the
year in which you cease to be an executive officer of Viacom for purposes of the
Securities Exchange Act of 1934, as amended. The amount of Deferred Compensation
for calendar year 1997 shall be One Hundred Thousand Dollars ($100,000); for
each subsequent calendar year during the Employment Term, the amount of Deferred
Compensation shall be the excess of (X) 110% of the aggregate amount of the
Salary and Deferred Compensation earned during the immediately preceding
calendar year over (Y) $1,000,000 (e.g. the Deferred Compensation for the 1998
calendar year shall be ((110% x ($1,000,000 + 100,000)) - $1,000,000) =
$210,000). Deferred Compensation shall be credited to a bookkeeping account
maintained by Viacom on your behalf, the balance of which account shall
periodically be credited (or debited) with deemed positive (or negative) return
calculated in the same manner, and at the same times, as the deemed return on
your account under the excess 401(k) plan of Viacom (as such plan may be amended
from time to time) is determined. Viacom's obligation to pay the Deferred
Compensation (including the return thereon provided for in this paragraph 3(c))
shall be an unfunded obligation to be satisfied from the general funds of
Viacom.
Philippe P. Dauman
January 1, 1996
Page 3
(d) Long-Term Incentive Plans.
(i) Special Grant: You have been awarded a special grant (the
"Special Grant") under Viacom's 1994 Long-Term Management
Incentive Plan (the "1994 LTMIP") of stock options to purchase
Two Hundred Fifty Thousand (250,000) shares of Viacom's Class
B Common Stock, effective as of January 29, 1996 (the "Date of
Special Grant"), with an exercise price of $40 for each share.
The Special Grant shall vest in three equal installments on
the second, third and fourth anniversaries of the Date of
Special Grant.
(ii) Annual Grants: In addition to the Special Grant, you shall
receive an annual grant (the "Annual Grant") for each calendar
year during the Employment Term under the 1994 LTMIP or any
successor plans (collectively, the "LTMIP") of stock options
to purchase One Hundred Fifty Thousand (150,000) shares of
Class B Common Stock; provided, that the amount of each Annual
Grant shall not be less than the amount of the second largest
grant awarded to any executive of Viacom under the LTMIP; and
provided, further, that the amount of the Annual Grant shall
be adjusted in the event of a stock split or a stock dividend.
Each Annual Grant shall be made as of August 1st or the date
as of which the Compensation Committee of the Viacom Board of
Directors shall award the major stock option grant under the
LTMIP to Viacom's senior executives for such calendar year.
Each Annual Grant shall vest in three equal installments on
the second, third and fourth anniversaries of the date of
grant.
4. Benefits.
(a) You shall be entitled to participate in such 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; provided, however, that no modification of any plans in
which you participate shall be made which results in treating you less favorably
than other senior executives of Viacom. 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
Philippe P. Dauman
January 1, 1996
Page 4
plan expressly provides otherwise. You shall be entitled to four (4) weeks
vacation.
(b) Viacom shall provide you with no less than Five Million Dollars
($5,000,000) of life insurance during the Employment Term. You shall have the
right to assign the policy for such life insurance to your spouse or issue or to
a trust or trusts primarily for the benefit of your spouse and/or issue.
(c) In addition to the benefits described in paragraph 4(a) and (b)
hereof, Viacom agrees that the benefits payable under the Excess Pension Plan
shall be calculated as though nine (9) years of benefit service were added to
your actual credited years of benefit service at the time of your termination.
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 and insurance in accordance
with Viacom's policy.
6. Exclusive Employment, Confidential Information, Etc.
(a) Non-Competition. You agree that your employment hereunder is on
an exclusive basis, and that during the shorter of (x) the Employment Term and
(y) one (1) year after the termination of your employment pursuant to paragraph
8(b) or 8(c) hereof or eighteen (18) months after the termination of your
employment pursuant to paragraph 8(a) hereof (the "Non-Compete Period"), you
will not engage in any other business activity which is in conflict with your
duties and obligations hereunder. You agree that during the Non-Compete Period
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 except as described in your memorandum to Frank
J. Biondi dated January 25, 1993; 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
Philippe P. Dauman
January 1, 1996
Page 5
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
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
Philippe P. Dauman
January 1, 1996
Page 6
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 Write Books, Articles, Etc. During the Employment
Term, except as authorized by Viacom, you shall not prepare or assist any person
or entity in the preparation of any books, articles, television or motion
picture productions or other creations, 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 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 and, to the extent set forth in the next
sentence, Viacom agree that each party shall not, during the Employment Term and
for one (1) year thereafter criticize, ridicule or make any statement which
disparages or is derogatory of the other party in any communications with any
customer or client. Viacom's obligations under the preceding sentence shall be
limited to communications by its senior corporate executives having the rank of
Senior Vice President or above.
(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
Philippe P. Dauman
January 1, 1996
Page 7
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), (v) and (vi) 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.
7. Incapacity. In the event you become totally medically disabled at any
time during the Employment Term and are not expected to be able to substantially
perform your duties for a six (6) month period, the Chairman, at any time after
such disability has in fact continued for 60 consecutive days, may determine
that Viacom requires such duties and responsibilities be performed by another
executive. In the event you become disabled, 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
Viacom's Long-Term Disability ("LTD") program in accordance with its terms. Upon
receipt of benefits under the LTD program, you will also be entitled to receive,
subject to applicable withholding taxes:
(i) a Target Bonus pro-rated for the portion of calendar year through
the date on which you become eligible to receive benefits under the
LTD program, payable at the time the Bonus for such calendar year
would otherwise be paid;
(ii) pro-rated Deferred Compensation for the calendar year in which such
benefits commence and Deferred Compensation attributable to prior
calendar years, payable, together with the return thereon as
provided in paragraph 3(c), prior to January 31 of the calendar year
following the calendar year in which such benefits commence; and
(iii) the following with respect to grants to you under Viacom's 1989
Long-Term Management Incentive Plan (the "1989 LTMIP") and the LTMIP
(the 1989 LTMIP and the LTMIP are collectively referred to as the
"LTMIP Plans"):
(x) stock options granted to you under the LTMIP Plans which are
exercisable on or prior to the date as of which benefits
Philippe P. Dauman
January 1, 1996
Page 8
commence under the LTD program or that would have vested and
become exercisable on or before the last day of the Employment
Term will be exercisable for one (1) year after the date as of
which such benefits commence or, if earlier, the expiration
date of the stock options; and
(y) stock options that would have been granted to you under the
LTMIP Plans pursuant to paragraph 3(d)(ii) shall be granted
with an exercise price equal to the closing price of the Class
B Common Stock on the date of grant and such options will be
exercisable during the period commencing six (6) months after
the date of grant (or such earlier date as may be permitted
under the LTMIP Plans) and ending on the earlier of (A) two
(2) years after the date of grant, or (B) the later of the end
of the Employment Term or one (1) year after the date of
grant;
In the event that you thereafter become able to substantially perform your
duties, you will then be entitled to receive from Viacom your Salary and
Deferred Compensation at the rate being paid to you immediately prior to the
commencement of such disability, and your Bonus calculated pursuant to paragraph
3(b) hereof, through the remainder of the Employment Term reduced by any
employment compensation earned by you for any work or service performed for any
other person.
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 embezzlement, fraud or other conduct which would constitute a felony,
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 and within which period Viacom cannot terminate this Agreement for the
stated reasons.
Philippe P. Dauman
January 1, 1996
Page 9
(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 any of the following, 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:
(i) the assignment to you by Viacom of duties substantially
inconsistent with your positions, duties, responsibilities,
titles or offices or the withdrawal of a material part of your
responsibilities or a change in your reporting relationship, as
set forth in paragraph 2;
(ii) a reduction by Viacom in your Salary or Target Bonus as in
effect at the date hereof or as the same may be increased from
time to time during the Employment Term;
(iii) Viacom's requiring you to be based anywhere other than the New
York City metropolitan area, except for required travel on
Viacom's business to any extent substantially consistent with
business travel obligations of other senior executives of
Viacom;
(iv) your failure to receive the Annual Grants under the LTMIP
Plans pursuant to paragraph 3(d)(ii); or
(v) the material breach by Viacom 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);
Philippe P. Dauman
January 1, 1996
Page 10
(iii) Deferred Compensation for each calendar year during the
Employment Term after 1996 as set forth in paragraph 3(c);
Deferred Compensation attributable to the calendar year in
which the termination pursuant to paragraph 8(b) or 8(c)
hereof occurs and to prior calendar years shall be payable,
together with the return thereon as provided in paragraph
3(c), prior to January 31 of the calendar year following such
termination; and Deferred Compensation attributable to
subsequent calendar years shall be payable, together with the
return thereon as provided in paragraph 3(c), prior to January
31 of the following calendar year;
(iv) your car allowance and insurance as provided in paragraph 5
until the end of the Employment Term, payable in accordance
with Viacom's then effective payroll practices;
(v) 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;
(vi) life insurance coverage as set forth in paragraph 4(b) until
the end of the Employment Term (the amount of such insurance
to be reduced by the amount of any insurance provided by a new
employer);
(vii) the following with respect to grants to you under the LTMIP
Plans:
(x) stock options granted to you under the LTMIP Plans 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
Philippe P. Dauman
January 1, 1996
Page 11
(y) stock options that would have been granted to you under
the LTMIP Plans pursuant to paragraph 3(d)(ii) shall be
granted as of the date of termination of your employment
with an exercise price equal to the closing price of the
Class B Common Stock on the date of grant and such
options will be exercisable during the period commencing
six (6) months after the date of grant (or such earlier
date as may be permitted under the LTMIP Plans) and
ending one (1) year after the date of grant;
(viii) a supplemental pension benefit calculated in accordance with
the terms of the Excess Pension Plan and paragraph 4(c) as
though you were employed through the end of the Employment
Term; and
(ix) provision of an appropriate office and secretarial assistance
for up to six (6) months after the termination of your
employment;
provided, however, you shall be required to mitigate the amount of any payment
provided for in (i), (ii), (iii) and (iv) of this paragraph 8(d) by seeking
other employment and the amount of any such payment provided for in (i), (ii),
(iii) and (iv) (but only with respect to Deferred Compensation attributable to
the period after the termination occurs) shall be reduced by any employment
compensation earned by you except that mitigation shall not be required for
twenty-four (24) 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 and Excess Pension Plan benefits), coverage
under all Viacom benefit plans and programs (including, without limitation,
vacation, 401(k), excess 401(k) and pension plans, LTD 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. In the event that Viacom does not extend or renew this
Agreement at the end of the Employment Term on no less favorable terms, the
vesting of all stock options granted under the LTMIP Plans that are not
Philippe P. Dauman
January 1, 1996
Page 12
exercisable as of the end of the Employment Term shall be accelerated and such
stock options, together with all stock options granted under the LTMIP Plans
which are exercisable at the end of the Employment Term, will be exercisable
until six (6) months after the end of the Employment Term or, if earlier, the
expiration date of the stock options.
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, a pro-rated Target Bonus and pro-rated Deferred
Compensation for the calendar year in which the death occurs and Deferred
Compensation attributable to prior calendar years payable, together with the
return thereon as provided in paragraph 3(c), prior to January 31 of the
following calendar year. In addition, the vesting of all stock options granted
under the LTMIP Plans that are not exercisable as of the date on which the death
occurs shall be accelerated, and your beneficiary or estate shall be entitled to
exercise such stock options, together with all stock options that are
exercisable as of the date of death, for one (1) year after the date of death
or, if earlier, the expiration date of the stock options.
10. Section 317 and 507 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
regarding employment practices and with applicable federal, state and local laws
prohibiting discrimination on the basis of race, color, creed, national origin,
age, sex or disability.
12. Indemnification.
(a) Viacom shall indemnify and hold you harmless, to the maximum
extent permitted by law and by the Restated Certificate of Incorporation and/or
the Bylaws of Viacom, against judgments, fines, amounts paid in settlement of
and reasonable expenses incurred by you in connection with the defense of any
action or proceeding (or any appeal therefrom) in which you are a party by
reason of your position as Deputy Chairman and Executive Vice President, General
Counsel, Chief Administrative Officer and Secretary of Viacom or by reason of
any prior positions held by you with Viacom, or for any acts or omissions made
by you in good faith in the performance of any of your duties as an officer of
Viacom.
(b) To the extent that Viacom maintains officers' and directors'
liability insurance, you will be covered under such policy.
Philippe P. Dauman
January 1, 1996
Page 13
13. 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. Any notice given by mail shall be deemed to have been
given three days following such mailing.
14. 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.
15. 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. Any action to enforce
this Agreement shall be brought in the state or federal courts located in the
City of New York.
16. 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.
17. 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.
18. 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.
Philippe P. Dauman
January 1, 1996
Page 14
19. Supersedes Previous Agreement. This Agreement supersedes and cancels
all prior agreements relating to your employment by Viacom or any of its
affiliates, including, without limitation, the employment agreement with Viacom,
dated as of February 1, 1993, as amended as of April 1, 1994. Notwithstanding
the preceding sentence, this Agreement is not intended, and shall not be
construed, to affect your rights in any compensation or benefits that have been
granted or accrued prior to the beginning of the Employment Term .
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/ Sumner M. Redstone
--------------------------------
Name: Sumner M. Redstone
Title: Chairman of the Board and
Chief Executive Officer
ACCEPTED AND AGREED:
/s/ Philippe P. Dauman
- ----------------------------
Philippe P. Dauman
As of January 1, 1996
Thomas E. Dooley
147 Oxford Boulevard
Garden City, NY 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 January
1, 1996 and, unless terminated by Viacom or you pursuant to paragraph 8 hereof,
shall continue through and until December 31, 2000. The period from January 1,
1996 through December 31, 2000 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. This is not intended to prevent you from engaging in other
activities that do not conflict with or interfere with the performance of your
duties and responsibilities hereunder. You will be Deputy Chairman and Executive
Vice President - Finance, Corporate Development and Communications of Viacom
reporting directly and solely to the Chairman of the Board of Viacom (the
"Chairman"), 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 Chairman. You will have such authority as is necessary for the
performance of your obligations hereunder. You shall serve as a member of the
Board of Directors of Viacom. Your principal place of business shall be at
Viacom's headquarters in the New York City metropolitan area and you shall not
be required to relocate outside of 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 One Million Dollars ($1,000,000)
per annum ("Salary"), payable in accordance with Viacom's then effective payroll
practices.
Thomas E. Dooley
January 1, 1996
Page 2
(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 Viacom's
Short-Term Incentive Plan and its Senior Executive Short-Term
Incentive Plan, as the same may be amended from time to time
(collectively, the "STIP"), which objectives shall be no less
favorable to you than the objectives used to determine the
amount of bonus payable to any other executive of Viacom whose
bonus is based in whole or in part on corporate performance
and who participates in the STIP.
(ii) Your Target Bonus for each of the calendar years during the
Employment Term shall be 250% of Salary and Deferred
Compensation (as defined in paragraph 3(c)) for such calendar
year.
(iii) Your Bonus for any calendar year shall be payable by February
28 of the following year.
(c) Deferred Compensation: In addition to your Salary and Bonus, you
shall earn, in respect of calendar year 1997 and each calendar year during the
Employment Term after 1997, an additional amount ("Deferred Compensation"), the
payment of which (together with the return thereon as provided in this paragraph
3(c)) shall be deferred until January of the first calendar year following the
year in which you cease to be an executive officer of Viacom for purposes of the
Securities Exchange Act of 1934, as amended. The amount of Deferred Compensation
for calendar year 1997 shall be One Hundred Thousand Dollars ($100,000); for
each subsequent calendar year during the Employment Term, the amount of Deferred
Compensation shall be the excess of (X) 110% of the aggregate amount of the
Salary and Deferred Compensation earned during the immediately preceding
calendar year over (Y) $1,000,000 (e.g. the Deferred Compensation for the 1998
calendar year shall be ((110% x ($1,000,000 + 100,000)) - $1,000,000) =
$210,000). Deferred Compensation shall be credited to a bookkeeping account
maintained by Viacom on your behalf, the balance of which account shall
periodically be credited (or debited) with deemed positive (or negative) return
calculated in the same manner, and at the same times, as the deemed return on
your account under the excess 401(k) plan of Viacom (as such plan may be amended
from time to time) is determined. Viacom's obligation to pay the Deferred
Compensation (including the return thereon provided for in this paragraph 3(c))
shall be an unfunded obligation to be satisfied from the general funds of
Viacom.
Thomas E. Dooley
January 1, 1996
Page 3
(d) Long-Term Incentive Plans.
(i) Special Grant: You have been awarded a special grant (the
"Special Grant") under Viacom's 1994 Long-Term Management
Incentive Plan (the "1994 LTMIP") of stock options to purchase
Two Hundred Fifty Thousand (250,000) shares of Viacom's Class
B Common Stock, effective as of January 29, 1996 (the "Date of
Special Grant"), with an exercise price of $40 for each share.
The Special Grant shall vest in three equal installments on
the second, third and fourth anniversaries of the Date of
Special Grant.
(ii) Annual Grants: In addition to the Special Grant, you shall
receive an annual grant (the "Annual Grant") for each calendar
year during the Employment Term under the 1994 LTMIP or any
successor plans (collectively, the "LTMIP") of stock options
to purchase One Hundred Fifty Thousand (150,000) shares of
Class B Common Stock; provided, that the amount of the Annual
Grant shall be adjusted in the event of a stock split or a
stock dividend. Each Annual Grant shall be made as of August
1st or the date as of which the Compensation Committee of the
Viacom Board of Directors shall award the major stock option
grant under the LTMIP to Viacom's senior executives for such
calendar year. Each Annual Grant shall vest in three equal
installments on the second, third and fourth anniversaries of
the date of grant.
4. Benefits.
(a) You shall be entitled to participate in such 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; provided, however, that no modification of any plans in
which you participate shall be made which results in treating you less favorably
than other senior executives of Viacom. 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. You shall be entitled to four (4) weeks
vacation.
Thomas E. Dooley
January 1, 1996
Page 4
(b) Viacom shall provide you with no less than Five Million Dollars
($5,000,000) of life insurance during the Employment Term. You shall have the
right to assign the policy for such life insurance to your spouse or issue or to
a trust or trusts primarily for the benefit of your spouse and/or issue.
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 and insurance in accordance
with Viacom's policy.
6. Exclusive Employment, Confidential Information, Etc.
(a) Non-Competition. You agree that your employment hereunder is on
an exclusive basis, and that during the shorter of (x) the Employment Term and
(y) one (1) year after the termination of your employment pursuant to paragraph
8(b) or 8(c) hereof or eighteen (18) months after the termination of your
employment pursuant to paragraph 8(a) hereof (the "Non-Compete Period"), you
will not engage in any other business activity which is in conflict with your
duties and obligations hereunder. You agree that during the Non-Compete Period
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,
Thomas E. Dooley
January 1, 1996
Page 5
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
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.
Thomas E. Dooley
January 1, 1996
Page 6
(f) No Right to Write Books, Articles, Etc. During the Employment
Term, except as authorized by Viacom, you shall not prepare or assist any person
or entity in the preparation of any books, articles, television or motion
picture productions or other creations, 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 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 and, to the extent set forth in the next
sentence, Viacom agree that each party shall not, during the Employment Term and
for one (1) year thereafter criticize, ridicule or make any statement which
disparages or is derogatory of the other party in any communications with any
customer or client. Viacom's obligations under the preceding sentence shall be
limited to communications by its senior corporate executives having the rank of
Senior Vice President or above.
(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), (v) and (vi) of paragraph
8(d). You and Viacom agree that the restrictions and remedies contained in
Thomas E. Dooley
January 1, 1996
Page 7
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.
7. Incapacity. In the event you become totally medically disabled at any
time during the Employment Term and are not expected to be able to substantially
perform your duties for a six (6) month period, the Chairman, at any time after
such disability has in fact continued for 60 consecutive days, may determine
that Viacom requires such duties and responsibilities be performed by another
executive. In the event you become disabled, 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
Viacom's Long-Term Disability ("LTD") program in accordance with its terms. Upon
receipt of benefits under the LTD program, you will also be entitled to receive,
subject to applicable withholding taxes:
(i) a pro-rated Target Bonus for the calendar year in which such
benefits commence, payable at the time the Bonus for such calendar
year would otherwise be paid;
(ii) pro-rated Deferred Compensation for the calendar year in which such
benefits commence and Deferred Compensation attributable to prior
calendar years, payable, together with the return thereon as
provided in paragraph 3(c), prior to January 31 of the calendar year
following the calendar year in which such benefits commence; and
(iii) the following with respect to grants to you under Viacom's 1989
Long-Term Management Incentive Plan (the "1989 LTMIP") and the LTMIP
(the 1989 LTMIP and the LTMIP are collectively referred to as the
"LTMIP Plans"):
(x) stock options granted to you under the LTMIP Plans which are
exercisable on or prior to the date as of which benefits
commence under the LTD program or that would have vested and
become exercisable on or before the last day of the Employment
Term will be exercisable for one (1) year after the date as of
which such benefits commence or, if earlier, the expiration
date of the stock options;
Thomas E. Dooley
January 1, 1996
Page 8
(y) stock options that would have been granted to you under the
LTMIP Plans pursuant to paragraph 3(d)(ii) shall be granted
with an exercise price equal to the closing price of the Class
B Common Stock on the date of grant and such options will be
exercisable during the period commencing six (6) months after
the date of grant (or such earlier date as may be permitted
under the LTMIP Plans) and ending on the earlier of (A) two
(2) years after the date of grant, or (B) the later of the end
of the Employment Term or one (1) year after the date of
grant; and
(z) payments on the phantom shares granted to you under the 1989
LTMIP in 1989 will be calculated in the manner and made at
such times as provided in the 1989 LTMIP.
In the event that you thereafter become able to substantially perform your
duties, you will then be entitled to receive from Viacom your Salary and
Deferred Compensation at the rate being paid to you immediately prior to the
commencement of such disability, and your Bonus calculated pursuant to paragraph
3(b) hereof, through the remainder of the Employment Term reduced by any
employment compensation earned by you for any work or service performed for any
other person.
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 embezzlement, fraud or other conduct which would constitute a felony,
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 and within which period Viacom cannot terminate this Agreement for the
stated reasons.
(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
Thomas E. Dooley
January 1, 1996
Page 9
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 any of the following, 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:
(i) the assignment to you by Viacom of duties substantially
inconsistent with your positions, duties, responsibilities,
titles or offices or the withdrawal of a material part of your
responsibilities or a change in your reporting relationship, as
set forth in paragraph 2;
(ii) a reduction by Viacom in your Salary or Target Bonus as in
effect at the date hereof or as the same may be increased from
time to time during the Employment Term;
(iii) Viacom's requiring you to be based anywhere other than the New
York City metropolitan area, except for required travel on
Viacom's business to any extent substantially consistent with
business travel obligations of other senior executives of
Viacom;
(iv) your failure to receive the Annual Grants under the LTMIP
Plans pursuant to paragraph 3(d)(ii); or
(v) the material breach by Viacom 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) Deferred Compensation for each calendar year during the
Employment Term after 1996 as set forth in paragraph 3(c);
Thomas E. Dooley
January 1, 1996
Page 10
Deferred Compensation attributable to the calendar year in
which the termination pursuant to paragraph 8(b) or 8(c)
hereof occurs and to prior calendar years shall be payable,
together with the return thereon as provided in paragraph
3(c), prior to January 31 of the calendar year following such
termination; and Deferred Compensation attributable to
subsequent calendar years shall be payable, [together with the
return thereon as provided in paragraph 3(c), prior to January
31 of the following calendar year;
(iv) your car allowance and insurance as provided in paragraph 5
until the end of the Employment Term, payable in accordance
with Viacom's then effective payroll practices;
(v) 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;
(vi) life insurance coverage as set forth in paragraph 4(b) until
the end of the Employment Term (the amount of such insurance
to be reduced by the amount of any insurance provided by a new
employer);
(vii) the following with respect to grants to you under the LTMIP
Plans:
(x) stock options granted to you under the LTMIP Plans 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;
(y) stock options that would have been granted to you under
the LTMIP Plans pursuant to paragraph 3(d)(ii) shall be
granted as of the date of termination of your employment
with an exercise price equal to the closing price of the
Thomas E. Dooley
January 1, 1996
Page 11
Class B Common Stock on the date of grant and such
options will be exercisable during the period commencing
six (6) months after the date of grant (or such earlier
date as may be permitted under the LTMIP Plans) and
ending one (1) year after the date of grant; and
(z) payments on the phantom shares granted to you under the
1989 LTMIP in 1989 will be calculated in the manner and
made at such times as provided in the 1989 LTMIP;
(viii) a supplemental pension benefit calculated in accordance with
the terms of the Excess Pension Plan as though you were
employed through the end of the Employment Term; and
(ix) provision of an appropriate office and secretarial assistance
for up to six (6) months after the termination of your
employment;
provided, however, you shall be required to mitigate the amount of any payment
provided for in (i), (ii), (iii) and (iv) of this paragraph 8(d) by seeking
other employment and the amount of any such payment provided for in (i), (ii),
(iii) and (iv) (but only with respect to Deferred Compensation attributable to
the period after the termination occurs) shall be reduced by any employment
compensation earned by you except that mitigation shall not be required for
twenty-four (24) 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 and Excess Pension Plan benefits), coverage
under all Viacom benefit plans and programs (including, without limitation,
vacation, 401(k), excess 401(k) and pension plans, LTD 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. In the event that Viacom does not extend or renew this
Agreement at the end of the Employment Term on no less favorable terms, the
vesting of all stock options granted under the LTMIP Plans that are not
Thomas E. Dooley
January 1, 1996
Page 12
exercisable as of the end of the Employment Term shall be accelerated and such
stock options, together with all stock options granted under the LTMIP Plans
which are exercisable at the end of the Employment Term, will be exercisable
until six (6) months after the end of the Employment Term or, if earlier, the
expiration date of the stock options.
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, a pro-rated Target Bonus and pro-rated Deferred
Compensation for the calendar year in which the death occurs and Deferred
Compensation attributable to prior calendar years payable, together with the
return thereon as provided in paragraph 3(c), prior to January 31 of the
following calendar year. In addition, the vesting of all stock options granted
under the LTMIP Plans that are not exercisable as of the date on which the death
occurs shall be accelerated, and your beneficiary or estate shall be entitled to
exercise such stock options, together with all stock options that are
exercisable as of the date of death, for one (1) year after the date of death
or, if earlier, the expiration date of the stock options.
10. Section 317 and 507 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
regarding employment practices and with applicable federal, state and local laws
prohibiting discrimination on the basis of race, color, creed, national origin,
age, sex or disability.
12. Indemnification.
(a) Viacom shall indemnify and hold you harmless, to the maximum
extent permitted by law and by the Restated Certificate of Incorporation and/or
the Bylaws of Viacom, against judgments, fines, amounts paid in settlement of
and reasonable expenses incurred by you in connection with the defense of any
action or proceeding (or any appeal therefrom) in which you are a party by
reason of your position as Deputy Chairman and Executive Vice President -
Finance, Corporate Development and Communications of Viacom or by reason of any
prior positions held by you with Viacom, or for any acts or omissions made by
you in good faith in the performance of any of your duties as an officer of
Viacom.
(b) To the extent that Viacom maintains officers' and directors'
liability insurance, you will be covered under such policy.
Thomas E. Dooley
January 1, 1996
Page 13
13. 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. Any notice given by mail shall be deemed to have been
given three days following such mailing.
14. 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.
15. 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. Any action to enforce
this Agreement shall be brought in the state or federal courts located in the
City of New York.
16. 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.
17. 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.
18. 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.
19. Supersedes Previous Agreement. This Agreement supersedes and cancels
all prior agreements relating to your employment by Viacom or any of its
affiliates, including, without limitation, the employment agreement with Viacom,
dated as of April 1, 1994. Notwithstanding the preceding sentence, this
Agreement is not intended, and shall not be construed, to affect your rights in
any compensation or benefits that have been granted or accrued prior to the
beginning of the Employment Term .
Thomas E. Dooley
January 1, 1996
Page 14
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/ Sumner M. Redstone
--------------------------------
Name: Sumner M. Redstone
Title: Chairman of the Board and
Chief Executive Officer
ACCEPTED AND AGREED:
/s/ Thomas E. Dooley
- -------------------------------
Thomas E. Dooley
Exhibit 11
Viacom Inc. and Subsidiaries
Computation of Net Earnings Per Share
Year ended December 31,
------------------------------------
1995 1994 1993
---- ---- ----
(In millions, except per share amounts)
Earnings:
Net earnings from continuing operations......... $214.9 $130.5 $ 169.5
Cumulative convertible preferred stock dividend
requirement................................... 60.0 75.0 12.8
------ ------ -------
Earnings from continuing operations attributable
to common stock............................... 154.9 55.5 156.7
Earnings (loss) from discontinued operations, net
of tax........................................ 7.6 (20.5) --
Extraordinary loss, net of tax.................. -- (20.4) (8.9)
Cumulative effect of change in accounting
principle..................................... -- -- 10.4
Net earnings attributable to common stock....... $162.5 $ 14.6 $ 158.2
Primary Computation:
- --------------------
Shares:
Weighted average number of common shares..... 362.4 207.6 120.6
Common shares potentially issuable in
connection with:
Stock options and warrants................ 8.3 2.6 --
Contingent value rights (a)............... -- 5.8 --
Variable common rights (b)................ 4.4 4.0 --
Weighted average common shares and common
share equivalents......................... 375.1 220.0 120.6
Net earnings per common share:
Net earnings from continuing operations..... $ .41 $ .25 $ 1.30
Earnings (loss) from discontinued operations,
net of tax.................................. .02 (.09) --
Extraordinary loss, net of tax.............. -- (.09) (.07)
Cumulative effect of change in accounting
principle................................... -- -- .08
------ ------ ------
Net earnings................................ $ .43 $ .07 $ 1.31
====== ====== ======
Fully Diluted Computation (c):
- --------------------------
Shares:
Weighted average number of common shares
outstanding................................ 362.4 207.6 120.6
Common shares potentially issuable in
connection with:
Stock options and warrants................ 8.6 3.0 --
Contingent value rights (a)............... -- 5.8 --
Variable common rights (b)................ 4.5 4.0 --
------ ------ ------
Weighted average common shares and common
share equivalents......................... 375.5 220.4 120.6
====== ====== ======
Net earnings per common share:
Net earnings from continuing operations...... $ .41 $ .25 $ 1.30
Earnings (loss) from discontinued operations,
net of tax................................ .02 (.09) --
Extraordinary loss, net of tax............... -- (.09) (.07)
Cumulative effect of change in accounting
principle................................. -- -- .08
------ ------ ------
Net earnings................................. $ .43 $ .07 $ 1.31
====== ====== ======
(a) The contingent value rights (the "CVRs") matured on July 7, 1995. The
Company paid approximately $81.9 million in cash of approximately $1.44
per CVR to settle is obligation.
(b) The variable common rights (the "VCRs") matured on September 29, 1995.
The Company issued approximately 6.1 million shares of Viacom Inc.
Class B Common Stock, or .022665 of a share of Viacom Inc. Class B Common
Stock per VCR, to settle its obligation under the VCRs.
(c) The Preferred Stock and related dividend requirement had an
anti-dilutive effect on earnings per share in 1995, 1994 and 1993 and,
therefore, were excluded from the computation.
Exhibit 21
The following are substantially all of the direct and indirect
subsidiaries of Viacom Inc.:
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
101 Properties Corp. Florida 100
1020917 Ontario Inc. Canada (Ontario) 100
176309 Canada Inc. Canada (Federal) 100
200 S. Andrews, Inc. Delaware 100
2853-5912 Quebec Inc. Canada (Quebec) 100
37th Floor Productions Inc. Delaware 100
5555 Communications Inc. Delaware 100
730995 Ontario Inc. Canada (Ontario) 100
779991 Ontario Inc. Canada (Ontario) 100
90210 Productions, Inc. California 100
A-R Acquisition Corp. Delaware 100
A.S. Payroll Company California 100
A.S.P. International, Inc. Virgin Islands 100
Aaron Spelling Productions, Inc. California 100
Abaco Farms, Limited Bahamas 100
Acorn Pipe Line Company Texas 100
Acorn Properties, Inc. Texas 100
Acorn Trading Company Texas 100
Addax Music Co., Inc. Delaware 100
Aetrax International Corporation Delaware 100
Ages Electronics, Inc. Delaware 100
Ages Entertainment Software, Inc. Delaware 100
AHV Holding Corporation Delaware 100
Alaska Oil Company, Inc. Florida 100
Alaska Oil Company (Partnership) Florida 93.3
All Media Inc. Delaware 100
American Teaching Aids, Inc. California 100
Anall Pty. Limited Australia 100
Antics G.P. Inc. Delaware 100
Antics Inc. Delaware 100
Antilles Oil Company, Inc. Puerto Rico 100
Appleton & Lange, Inc. Delaware 100
Arco Publishing, Inc. Delaware 100
Are We Having Fun Yet? Productions Canada 100
Aros N.V. Netherlands Antilles 100
Around the Block Productions, Inc. Delaware 100
Atlantic Associates, Inc. Delaware 100
Atlantic Home Video Delaware 80
Avalon Vertriebs GmbH Germany 60
Bahamas Underwriters Services Limited Bahamas 100
Bardwire Inc. Delaware 100
Belhaven Limited Bahamas 100
Beta Theatres Inc. Delaware 100
Big Shows Inc. Delaware 100
Big Ticket Music Inc. Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
Big Ticket Pictures Inc. Delaware 100
Big Ticket Productions Inc. Delaware 100
Big Ticket Television Inc. Delaware 100
Blockbuster Adventures, Inc. Delaware 100
Blockbuster Airship Holding Corporation Delaware 100
Blockbuster Airships, Inc. Delaware 100
Blockbuster Amphitheater Corp. Delaware 100
Blockbuster Amusement Corporation Delaware 100
Blockbuster Amusement Holding Corporation Delaware 100
Blockbuster Australia Pty Ltd. Australia 100
Blockbuster Computer Systems Corporation Florida 100
Blockbuster Discovery Investment Inc. Delaware 100
Blockbuster Entertainment Inc. Delaware 100
Blockbuster Family Fun, Inc. Delaware 100
Blockbuster Fun & Fitness Holding Corp. Delaware 100
Blockbuster Mid-America, Inc. Delaware 100
Blockbuster Music Corporation Delaware 100
Blockbuster Music Holding Corporation Delaware 100
Blockbuster Music Retail, Inc. Texas 100
Blockbuster Park, Inc. Delaware 100
Blockbuster Park Holding Corporation Delaware 100
Blockbuster Park Lands, Inc. Florida 100
Blockbuster Pictures Holding Corporation Delaware 100
Blockbuster Productions Corporation Delaware 100
Blockbuster Promotions Inc. Delaware 100
Blockbuster SC Holding Corporation Delaware 100
Blockbuster SC Music Corporation Delaware 100
Blockbuster SC Video Holding Corporation Delaware 100
Blockbuster SC Video Operating Corporation Delaware 100
Blockbuster Technology Holding Corporation Delaware 100
Blockbuster UK Group Limited United Kingdom 100
Blockbuster Video (New Zealand) Ltd. New Zealand 100
Blockbuster Video Acquisition Corp. Delaware 100
Blockbuster Video Canada Inc. Canada (Ontario) 100
Blockbuster Video de Mexico S.A. de C.V. Mexico 80
Blockbuster Video Deutschland GmbH Germany 51
Blockbuster Video Distribution, Inc. Delaware 100
Blockbuster Video Espana, S.L. Spain 88
Blockbuster Video International Corporation Delaware 100
Blockbuster Video Italy, Inc. Delaware 100
Blockbuster Video Superstores (Australia) Pty Australia 100
Limited
Blockbuster Videos, Inc. Texas 100
Brady Communications Company, Inc. District of Columbia 100
Branded Productions, Inc. California 100
Broadcast Leasing Inc. Delaware 100
Broadview Television Company Washington 100
Brookvale Developments No. 1 Pty. Limited Australia (NSW) 100
Brookvale Developments No. 2 Pty. Limited Australia (NSW) 100
Bruin Music Company Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
BS Hotel, Inc. Delaware 100
Bulletin Company Delaware 100
BVJV Corporation Delaware 100
Cable T.V. of Marin, Inc. California 100
Cable TV Puget Sound, Inc. Washington 100
Caloil Inc. Canada 100
Capital Equipment Leasing Limited United Kingdom 100
Casmo Mining, Ltd. Canada (B.C.) 95
Cayman Overseas Reinsurance Association Cayman Islands 100
Center for Applied Research in Education, Delaware 100
Inc., The
Central Park Theatres Limited Canada (Alberta) 100
Centurion Satellite Broadcast Inc. Delaware 100
Century Entertainment Ltd. United Kingdom 100
Channel 3 Everett, Inc. Washington 100
Charlotte Amphitheater Corporation Delaware 100
Charmac, Inc. Florida 100
Chartcom, Inc. Delaware 100
Charter Barge Company New York 100
Charter Caribbean Company Florida 100
Charter Crude Oil Company Texas 100
Charter Crude Oil Trading Company Texas 100
Charter Futures Trading Company Texas 100
Charter International Development Co. Florida 100
Charter International Finance N.V. Netherlands Antilles 100
Charter International Oil Company Texas 100
Charter Marine Transportation Inc. Delaware 100
Charter Media Company Delaware 100
Charter Oil (Alaska), Inc. Florida 100
Charter Oil (Bahamas), Inc. Florida 100
Charter Oil (Bahamas) Limited Bahamas 100
Charter Oil (International), Inc. Florida 100
Charter Oil Company Florida 100
Charter Oil Services, Inc. Texas 100
Charter Oil Specialities Limited Bahamas 100
Charter Publishing Company Delaware 100
Cherokee Rose Productions Inc. Delaware 100
Cinema Dominicana S.A. Dominican Republic 100
Cinematic Arts B.V. Netherlands 100
Cityvision plc United Kingdom 100
Cityvision Videotheken Ges.M.B.H. Austria 100
Clear View Cable Systems, Inc. California 100
COFI Credit Corporation Delaware 100
Columbus Circle Films Inc. Delaware 100
Com-Cable TV, Inc. Delaware 100
Combined Broadcasting of Miami, Inc. Delaware 100
Combined Broadcasting of Philadelphia, Inc. Delaware 100
Community Telecable of Bellevue, Inc. Washington 100
Community Telecable of Seattle, Inc. Washington 100
Compelling Music Corporation California 100
Computer Curriculum Corporation Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
Contra Costa Cable Co. Washington 100
Coronet Films, Inc. New York 100
CPW Holdings Inc. Delaware 100
Crockett Cable System, Inc. California 100
Dayton Press, Inc. Florida 100
Desilu Productions, Inc. Delaware 100
Direct Court Productions, Inc. Delaware 100
Direct Response Associates, Inc. Connecticut 100
DJM Management, Inc. Massachusetts 100
Dynamic Soap, Inc. California 100
E.G. Songs Inc California 100
Eagle Direct Inc. Delaware 100
Early Morning Madness Productions, Inc. California 100
EBF Liquidating Company, Inc. District of Columbia 100
Educational Management Group, Inc. Illinois 100
Eighth Century Corporation Delaware 100
Electronic Publishing, Inc. New York 100
Ellis Horwood Limited United Kingdom 100
Energy Development Associates, Inc. Delaware 100
Ensign Music Corporation Delaware 100
EPI Music Company California 100
Erol's, Inc. Delaware 100
Esquire Films, Inc. Delaware 100
Everett Cablevision, Inc. Washington 100
Evergreen Programs, Inc. New York 100
EWB Corporation Delaware 100
Executive Reports Corporation New Jersey 100
Executive Tax Reports, Inc. New York 100
EXP Limited United Kingdom 100
EXP Music Publishing Limited United Kingdom 100
Family Entertainment Centers, Inc. Florida 100
Famous Music Corporation Delaware 100
Famous Music Publishing Limited United Kingdom 100
Famous Orange Productions Inc. Delaware 100
Famous Players Inc. Canada (Federal) 100
Famous Players International B.V. Netherlands 100
Famous Players Investments B.V. Netherlands 100
Far-West Communications, Inc. Oregon 100
Festival Inc. Delaware 100
Fifty-Sixth Century Antrim Iron Company, Inc. Delaware 100
Film Intex Corporation Delaware 100
Films Paramount S.A. France 100
Fitzwilliam Publishing Limited United Kingdom 100
FLC Holding Corp. Florida 100
Focus Video Pty. Ltd. Australia 100
Forgive Me Inc. Delaware 100
Forty-Fourth Century Corporation Delaware 100
French Street Management Inc. Delaware 100
Front Street Management Inc. Delaware 100
Future General Corporation Delaware 100
G & W Leasing Company Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
G & W Natural Resources Company, Inc. Delaware 100
Games Animation Inc. Delaware 100
Games Productions Inc. Delaware 100
Ginn Publishing (Canada) Limited Canada (Federal) 100
Glendale Property Corp. Delaware 100
Global Film Distributors B.V. Netherlands 100
Globe Fearon Inc California 100
Gloucester Titanium Company, Inc. Delaware 100
Gramps Company, Inc., The Delaware 100
Grand Bahama Petroleum Company Limited Bahamas 100
Grande Alliance Co. Ltd. Cayman Islands 100
Great American Entertainment Motion California 100
Pictures, Inc.
Great American Entertainment Television, Inc. California 100
Green Tiger Press, Inc. California 100
Greenvale Editorial Services, Inc. New York 100
Gulf & Western Casket Corporation Delaware 100
Gulf & Western do Brazil Industria e Comercio Brazil 100
Limitada
Gulf & Western Holdings Limited Bahamas 100
Gulf & Western Indonesia, Inc. Delaware 100
Gulf & Western Intercontinental Netherlands Antilles 100
Investments N.V.
Gulf & Western International Finance N.V. Netherlands Antilles 100
Gulf & Western International N.V. Netherlands Antilles 100
Gulf & Western Limited Bahamas 100
H-C-G Cablevision, Inc. California 100
H. M. Gousha Company, The California 100
Hamilton Projects, Inc. New York 100
Harvester Press Limited, The United Kingdom 100
High Command Productions Limited United Kingdom 100
Houston Video Management Inc. Texas 100
Houston Video Venture, Inc. Florida 100
HZH Company Delaware 100
Image Edit, Inc. Delaware 100
IMR Acquisition Corp. Delaware 100
Independent Petrochemical Corporation Ohio 100
Institute for Business Planning, Inc. New York 100
International Book Distributors Limited United Kingdom 100
International Bureau of Software Test, Inc. Delaware 100
International Overseas Film Services, Inc. Delaware 66.7
International Overseas Productions, Inc. California 66.7
International Raw Materials Limited Bahamas 100
Interstitial Programs Inc. Delaware 100
J. K. Lasser, Inc. Delaware 100
Jack of Hearts Joint Venture California 100
Japan Regents Publishing Company Inc. Japan 100
Jossey-Bass, Inc., Publishers California 100
Katled Liquidating Inc. Delaware 100
Katled Systems Inc. Delaware 100
KBSG Inc. Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
Kilo Mining Corporation Pennsylvania 100
Kings Island Company Delaware 100
KNDD Inc. Delaware 100
KSLQ, Inc. Missouri 100
KYSR Inc. Delaware 100
LAPTV (N.A.) N.V. Netherlands Antilles 100
Latin American Pay Television Service C.V. Netherlands Antilles 100
Latin American Pay Television Service de Venezuela 100
Venezuela C.A.
Latin American Pay Television Service S.A. Mexico 100
de C.V.
Laurel Entertainment, Inc. Delaware 100
Living Color Financial Displays, Inc. Florida 100
Lizarb B.V. Netherlands 100
Long Road Productions Illinois 75
Low Key Productions Inc. Delaware 100
LT Holdings Inc. Delaware 100
M.R.E. Enterprises, Inc. Florida 100
Maarten Investerings Partnership New York 100
Macmillan, Inc. Delaware 100
Macmillan College Publishing Company, Inc. Delaware 100
Magic Hour Productions, Ltd. Canada 100
Magicam, Inc. Delaware 83.5
Majestic Theatres Limited Canada (Alberta) 100
Major Video Corp. Nevada 100
Major VIdeo National Advertising Council Nevada 100
Corporation
Major Video Super Stores, Inc. Nevada 100
Marin Cable Television, Inc. California 100
Markt & Technik GmbH Germany 100
Mars Film Produzione S.P.A. Italy 100
Master Data Center, Inc. Michigan 100
Matlock Company, The Delaware 100
Melrose Productions Inc. California 100
Merritt Inc. Delaware 100
Monetas N.V. Netherlands Antilles 100
Montgomery Acquisition, Inc. Texas 100
MTV Asia Development Company Inc. Delaware 100
MTV Australia Inc. Delaware 100
MTV India Development Company Inc. Delaware 100
MTV India LDC Cayman Islands 100
MTV International Development Limited Delaware 100
MTV Latino Inc. Delaware 100
MTV Networks AB Sweden 100
MTV Networks B.V. Netherlands 100
MTV Networks Company Delaware 100
MTV Networks Europe Inc. Delaware 100
MTV Networks GmbH Germany 100
MTV Networks SARL France 100
MTV Networks South Africa Inc. Delaware 100
MTV Networks Srl Italy 100
MTV SA LDC Cayman Islands 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
MTV Songs Inc. Delaware 100
MTVN Shopping Inc. Delaware 100
Multi Mineral Corporation Texas 100
Music By Nickelodeon Inc. Delaware 100
Music By Video Inc. Delaware 100
Nepco (Florida), Inc. Florida 100
Nepco Energy Corporation New York 100
Nepco Exploration (U.K.) Limited United Kingdom 100
Nepco Petroleum Limited Canada 100
New CORAL Ltd. Cayman Islands 100
New England Petroleum Corporation New York 100
New Jersey Zinc Exploration Company, The Delaware 100
New Jersey Zinc Exploration Company (Canada) Canada (Federal) 100
Ltd.
New Leaf Entertainment Corporation Delaware 100
New Providence Assurance Company Limited Bahamas 100
New River Entertainment Corporation Delaware 100
Newtel Inc. Delaware 100
Nickelodeon Australia Inc. Delaware 100
Nickelodeon Huggings U.K. Limited United Kingdom 100
Nickelodeon India Corporation Delaware 100
Nickelodeon Magazines Inc. Delaware 100
Nickelodeon Movies Inc. Delaware 100
Night Falls Productions Inc. Delaware 100
Northshore Productions Inc. California 100
Notgnirrab Inc. California 100
NTA, Inc. New York 100
NTA Films, Inc. New York 100
Number One FSC Ltd. US Virgin Islands 100
Oswego Barge Corporation Delaware 100
Our Home Productions Inc. Delaware 100
Outatown Productions Inc. Delaware 100
Overseas Services B.V. Netherlands 100
Para-Sac Music Corporation Delaware 100
Paramount (PDI) Distribution Inc. Delaware 100
Paramount Americas Film Corporation Delaware 100
Paramount British Pictures Limited United Kingdom 100
Paramount Canada's Wonderland Inc. Canada (Ontario) 100
Paramount Canadian Productions, Inc. Delaware 100
Paramount Communications Acquisition Delaware 100
Corporation
Paramount Communications Merchandising and Delaware 100
Licensing Corporation
Paramount Communications Properties Inc. Delaware 100
Paramount Communications Realty Corporation Delaware 100
Paramount Communications Technology Delaware 100
Group Inc.
Paramount Digital Entertainment Inc. Delaware 100
Paramount Film Production (Deutschland) GmbH Germany 100
Paramount Films B.V. Netherlands 100
Paramount Films of Australia Inc. Delaware 100
Paramount Films of China, Inc. Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
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 General Entertainment Australia Delaware 100
Inc.
Paramount Home Video, Inc. Delaware 100
Paramount Images Inc. Delaware 100
Paramount International Holding Company Delaware 100
Paramount LAPTV Inc. Delaware 100
Paramount Music Corporation Delaware 100
Paramount Overseas Productions, Inc. Delaware 100
Paramount Parks Inc. Delaware 100
Paramount Pictures (Australia) Pty. Limited Australia 100
Paramount Pictures (Canada) Inc. Canada (Ontario) 100
Paramount Pictures (U.K.) Limited United Kingdom 100
Paramount Pictures Corporation Delaware 100
Paramount Pictures Corporation (Canada) Inc. Canada (Ontario) 100
Paramount Production Support Inc. Delaware 100
Paramount Productions, Inc. Canada (Ontario) 100
Paramount Productions Service Corporation Delaware 100
Paramount Publishing Deutschland GmbH Germany 100
Paramount Publishing Europe B.V. Netherlands 100
Paramount Publishing Nederland B.V. Netherlands 100
Paramount Stations Group Inc. Virginia 100
Paramount Stations Group of Fort Worth/Dallas Virginia 100
Inc.
Paramount Stations Group of Houston Inc. Virginia 100
Paramount Stations Group of Philadelphia Inc. Virginia 100
Paramount Stations Group of Washington Inc. Virginia 100
Paramount Studios, Inc. California 100
Paramount Television International Services, Bermuda 100
Ltd.
Paramount Television Limited United Kingdom 100
Paramount Television Service, Inc. Delaware 100
Paramount-Immobiliare Inc. Delaware 100
Park Court Productions, Inc. Delaware 100
Parker Publishing Company, Inc. New York 100
Part-Time Productions Inc. Delaware 100
PCCGW Company, Inc. Delaware 100
PCI Canada Inc. Delaware 100
PCI Network Partner Inc. Delaware 100
Pet II Productions Inc. Delaware 100
Pier 66 Productions Inc. Florida 100
PMV Productions Inc. Delaware 100
Pocket Books of Canada, Ltd. Canada (Federal) 100
Premier Advertiser Sales Inc. Delaware 100
Premiere House, Inc. Delaware 100
Pren-Hall Corporation, The New York 100
Prentice-Hall, Inc. Delaware 100
Prentice-Hall (China) Pte. Limited Hong Kong 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
Prentice-Hall (M) Sdn Bhd Malaysia 100
Prentice-Hall (South Africa) (Proprietary) South Africa 100
Limited
Prentice-Hall Canada Inc. Canada (Ontario) 100
Prentice-Hall Developmental Learning New Jersey 100
Centers, Inc.
Prentice-Hall Hispanoamericana, S.A. Mexico 100
Prentice-Hall International, Inc. New York 100
Prentice-Hall International (U.K.) Ltd. United Kingdom 100
Prentice-Hall Learning Systems, Inc. Delaware 100
Prentice-Hall of Australia Pty. Limited Australia 100
Prentice-Hall of Japan, Inc. Japan 100
Prentice-Hall Professional Software, Inc. Delaware 100
Preye, Inc. California 100
Prospect Company Ltd. Cayman Islands 100
Proxy Music Corporation California 100
Publishing FSC Ltd. US Virgin Islands 100
QM Music Company California 100
Quebec Oil Refinery, Ltd. Canada 100
Quemahoning Coal Processing Company Pennsylvania 100
QWERTY Inc. Delaware 100
R.H. Productions Inc. California 100
Reality Check Productions Inc. Delaware 100
Regents Publishing Co., Inc. New York 100
Remote Productions Inc. Delaware 100
Republic Direct Inc. California 100
Republic Distribution Corporation Delaware 100
Republic Entertainment Inc. Delaware 100
Republic Pictures Corporation, B.V. Netherlands 100
Republic Pictures Corporation of Canada, Ltd. Canada 100
Republic Pictures Enterprises, Inc. Delaware 100
Republic Pictures Entertainment, Inc. Delaware 100
Republic Pictures N.V. Netherlands Antilles 100
Republic Pictures Productions, Inc. California 100
Reston Information Systems, Inc. Pennsylvania 100
Reston Publishing Co., Inc. Delaware 100
Ritz Video Film Hire Limited United Kingdom 100
Riverside Broadcasting Co., Inc. Delaware 100
Robert J. Brady Co. Maryland 100
Rope of Sand Productions, Inc. California 100
RTV News Inc. Delaware 100
San Francisco Broadcasters, Inc. California 100
Satellite Holdings Inc. Delaware 100
Saucon Valley Iron and Railroad Company, The Pennsylvania 100
Scarab Publishing Corporation Delaware 100
Scott Mattson Farms, Inc. Florida 100
SEGI Holding Co. Delaware 100
SFI Music Inc. Delaware 100
SFI Song Company Delaware 100
Show Industries, Inc. California 100
Showtime Networks Inc. Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
Showtime Networks Inc. (U.K.) Delaware 100
Showtime Networks Middle East Inc. Delaware 100
Showtime Networks Satellite Programming California 100
Company
Showtime Satellite Networks Inc. Delaware 100
Showtime/Sundance Holding Company Inc. Delaware 100
SIFO One Inc. Delaware 100
SIFO Two Inc. Delaware 100
Silver Burdett Ginn Inc. Delaware 100
Simon & Schuster, Inc. New York 100
Simon & Schuster (Asia) Pte. Ltd. Singapore 100
Simon & Schuster (Australia) Pty. Limited Australia 100
Simon & Schuster Limited United Kingdom 100
Simon & Schuster Macmillan France SARL France 100
Simon & Schuster of Canada (1976) Ltd. Canada (Federal) 100
SNI Development Corp. Delaware 100
Solar Service Company Delaware 100
Son of the Morningstar Productions, Inc. California 100
Southeastern Home Video, Inc. Delaware 100
Special Effects Merchandise, Inc. Delaware 100
Spelling Entertainment Group Inc. Delaware 75
Spelling Entertainment Inc. Delaware 100
Spelling Films Inc. Delaware 100
Spelling Pictures Inc. Delaware 100
Spelling Satellite Networks, Inc. California 100
Spelling Television (Canada) Inc. Canada (B. C.) 100
Spelling Television Inc. Delaware 100
Spelling/Ball Joint Venture, The California 100
St. Francis Ltd. Cayman Islands 100
St. Ives Company Ltd. Cayman Islands 100
State of Mind Inc. Delaware 100
Sunn Classic Pictures, Inc. Utah 100
T & R Payroll Company Delaware 100
Talent Court Productions, Inc. Delaware 100
Taylor Forge Memphis, Inc. Delaware 100
Tele-Vu Ltee. Canada (Federal) 100
Tele-Vue Systems, Inc. Washington 100
Television Signal Corporation California 100
Theatre 59 Ltd. Delaware 100
They Productions Inc. Delaware 100
Thinner Productions, Inc. Delaware 100
Third Century Company Delaware 100
Thirteenth Century Corporation Delaware 100
Thirtieth Century Corporation Delaware 100
Ticket Songs Inc. Delaware 100
Timber Purchase Company Florida 100
Titus Productions, Inc. California 100
Toe-To-Toe Productions Inc. Delaware 100
Torand Payroll Company Delaware 100
Torand Productions Inc. Delaware 100
Total Warehouse Services Corporation Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
Trans-American Resources, Inc. Delaware 100
Tredegars Home Entertainment Limited United Kingdom 100
TRF III Entertainment, Inc. Delaware 100
Triohurst Limited. United Kingdom 100
TS Video, Inc. Louisiana 100
TSM Services Inc. Delaware 100
Tunes By Nickelodeon Inc. Delaware 100
TV Scoop Inc. Delaware 100
UI Video Stores, Inc. Colorado 100
UIV Acquisition Corporation Delaware 100
United Community Antenna System, Inc. Washington 100
Universal American Corporation Delaware 100
Uptown Productions Inc. Delaware 100
Uro, S.A. Spain 100
Valdez Oil Inc. Delaware 100
VE Development Company Delaware 100
VE Drive inc. Delaware 100
VE Television Inc. Delaware 100
VH-1 Management GmbH Germany 100
VH-1 OHG Germany 100
VHONE Inc. Delaware 100
Viacom A.G. Switzerland 100
Viacom Asia Inc. Delaware 100
Viacom Bay Area Sports Inc. Delaware 100
Viacom Bay Interconnect Inc. California 100
Viacom Broadcasting East Inc. Delaware 100
Viacom Broadcasting of Missouri Inc. Delaware 100
Viacom Broadcasting West Inc. Delaware 100
Viacom Cablevision Inc. California 100
Viacom Cablevision of Dayton Inc. Delaware 100
Viacom Cablevision of Northern California California 100
Inc.
Viacom Camden Lock Inc. Delaware 100
Viacom Canada Limited Canada (Federal) 100
Viacom Capital Ownership Inc. Delaware 100
Viacom Communications Inc. California 100
Viacom Enterprises Canada Ltd. Canada (Federal) 100
Viacom First Run Development Company Inc. Delaware 100
Viacom First Run Limited Delaware 100
Viacom Group Finance Limited United Kingdom 100
Viacom HA! Holding Company Delaware 100
Viacom IDA Inc. Delaware 100
Viacom International (Netherlands) B.V. Netherlands 100
Viacom International Canada Ltd. Canada (Ontario) 100
Viacom International Holdings B.V. Netherlands 100
Viacom International Inc. Delaware 100
Viacom International Inc. Political Action New York 100
Committee Corporation
Viacom International Limited United Kingdom 100
Viacom International Pty. Limited Australia 100
Viacom International Services Inc. Delaware 100
Viacom Japan Inc. New York 85
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
Viacom K-Band Inc. Delaware 100
Viacom MGS Services Inc. Delaware 100
Viacom Middle East VOF Netherlands Antilles 100
Viacom Networks Europe Inc. Delaware 100
Viacom Networks Inc. New York 100
Viacom Pacific Limited Vila, Vanuatu 100
Viacom Phoenix Inc. Delaware 100
Viacom Pictures Development Company Delaware 100
Viacom Pictures Inc. 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
Viacom Properties Inc. Delaware 100
Viacom Realty Corporation Delaware 100
Viacom Satellite News Inc. Delaware 100
Viacom Shopping Inc. Delaware 100
Viacom Telecom Inc. Delaware 100
Viacom Telecommunications (D.C.) Inc. Delaware 100
Viacom VHENO GmbH Germany 100
Viacom VHENO Inc. Delaware 100
Viacom Video-Audio Communicacoes Limitada Brazil 100
Viacom WBFS Inc. Delaware 100
Viacom WGBS Inc. Delaware 100
Viacom World Wide Ltd. New York 100
Viacom WSBK Inc. Delaware 100
Video Club (G.B.) Limited United Kingdom 100
Video Store (Jersey) Limited Channel Islands 100
VIE Holding Company Delaware 100
Virgin Interactive Entertainment (Espana) Spain 100
S.A.
Virgin Interactive Entertainment (Europe) United Kingdom 100
Ltd.
Virgin Interactive Entertainment (France) France 100
S.A.R.L. Ltd.
Virgin Interactive Entertainment (Holdings) United Kingdom 100
Ltd.
Virgin Interactive Entertainment United Kingdom 100
(Investments) Limited
Virgin Interactive Entertainment (Japan) K.K. Japan 100
Virgin Interactive Entertainment (Overseas) United Kingdom 100
Ltd.
Virgin Interactive Entertainment Deutschland Germany 100
GmbH
Virgin Interactive Entertainment Limited United Kingdom 100
Virgin Interactive Inc. Delaware 100
Virgin Retail Australia Pty. Ltd. Australia 100
VISI Services Inc. Delaware 100
Vision Productions, Inc. New York 100
Vista Television Cable, Inc. Washington 100
VJK Inc. Delaware 100
VNM Inc. Delaware 100
VP Direct Inc. Delaware 100
VP Programs Inc. California 100
VSC Cable Inc. Delaware 100
PERCENTAGE OF VOTING
--------------------
STATE OR OTHER JURISDICTION OF SECURITIES OWNED DIRECTLY OR
------------------------------ ----------------------------
SUBSIDIARIES INCORPORATION INDIRECTLY
------------ ------------- ----------
VSC Communications Inc. Delaware 100
VSC Compositions Inc. New York 100
VSC Music Inc. New York 100
Warren Schloat Productions, Inc. New York 100
Western Row Properties, Inc. Ohio 100
Westside Amphitheater Corporation, The Arizona 100
Westwood Studios, Inc. Nevada 100
Wheatsheaf Books Limited United Kingdom 100
Wilshire Court Productions, Inc. Delaware 100
Wilshire Entertainment Inc. Delaware 100
Wilshire Payroll Inc. Delaware 100
Wilshire/Hauser Company Delaware 100
WMJX, Inc. Florida 100
WMZQ Inc. Delaware 100
WNYT Inc. Delaware 100
Woburn Insurance Ltd. Bermuda 100
Woodhead-Faulkner (Publishers) Limited United Kingdom 100
World Entertainment Corporation New York 100
World Volleyball League, Inc. New York 100
Worldvision Enterprises, Inc. New York 100
Worldvision Enterprises, GmbH Germany 100
Worldvision Enterprises (France) S.A.R.L. France 100
Worldvision Enterprises (United Kingdom), New York 100
Ltd.
Worldvision Enterprises de Venezuela Venezuela 100
Worldvision Enterprises Latino-Americana Panama 100
Worldvision Enterprises of Australia, Pty., Australia 100
Ltd.
Worldvision Enterprises of Canada, Limited New York 100
Worldvision Filmes do Brasil, Ltda. Brazil 100
Worldvision Foreign Sales Corporation Virgin Islands 100
Worldvision Home Video, Inc. New York 100
Worldvision Television Programming, Inc. Delaware 100
Worldwide Productions, Inc. Delaware 100
WSBK License, Inc. Delaware 100
WV Productions, Inc. Delaware 100
WVIT Inc. Delaware 100
Yellams LDC Cayman Islands 100
Young Reader's Press, Inc. Delaware 100
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. 33-53485
and No. 33-55785) of Viacom Inc. and Viacom International Inc. and in the
Registration Statements on Form S-8 (No. 41934, No. 56088, No. 59049, No.
59141, No. 55173, No. 55709 and No. 60943) of Viacom Inc. of our report
dated February 14, 1996 included in Item 8 of this Form 10-K.
PRICE WATERHOUSE LLP
New York, New York
March 29, 1996
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, 1995 (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 25th day of March,
1996.
/s/ George S. Abrams
--------------------------
George S. Abrams
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, 1995 (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 25th day of March,
1996.
/s/ Ivan Seidenberg
--------------------------
Ivan Seidenberg
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, 1995 (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 25th day of March,
1996.
/s/ Thomas E. Dooley
--------------------------
Thomas E. Dooley
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, 1995 (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 25th day of March,
1996.
/s/ George D. Johnson, Jr.
----------------------------
George D. Johnson, Jr.
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, 1995 (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 25th day of March,
1996.
/s/ Ken Miller
--------------------------
Ken Miller
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, 1995 (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 25th day of March,
1996.
/s/ Brent D. Redstone
--------------------------
Brent D. Redstone
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, 1995 (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 25th day of March,
1996.
/s/ Shari Redstone
--------------------------
Shari Redstone
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, 1995 (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 25th day of March,
1996.
/s/ Frederic V. Salerno
--------------------------
Frederic V. Salerno
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, 1995 (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 25th day of March,
1996.
/s/ William Schwartz
--------------------------
William Schwartz
5
1,000,000
OTHER
DEC-31-1995
DEC-31-1995
464
0
1,998
126
903
5,199
3,975
757
29,026
4,099
10,712
0
1,200
4
10,890
29,026
11,689
11,689
7,073
10,195
0
0
821
689
417
215
8
0
0
163
0.43
0.43
