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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

VIACOM INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

VIACOM INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

VIACOM (R)

April 28, 1995

Dear Stockholder:

You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Viacom Inc., which will be held at Alice Tully Hall, Lincoln Center, 65th
Street and Broadway, New York, New York at 9:30 a.m. on Thursday, May 25,
1995. Holders of Viacom Inc. Class A Common Stock are being asked to vote on
the matters listed on the enclosed Notice of 1995 Annual Meeting of
Stockholders.

National Amusements, Inc., which owns approximately 61% of the Class A
Common Stock, has advised the Company that it intends to vote its shares of
Class A Common Stock for these matters. Therefore, approval of these matters
by the stockholders of the Company is assured.

I hope you will be able to attend the Annual Meeting. However, if you hold
shares of Class A Common Stock, we urge you to mark, sign and return the
enclosed proxy card promptly, even if you anticipate attending in person, to
ensure that your shares of Class A Common Stock will be represented at the
Annual Meeting. If you do attend, you will, of course, be entitled to vote
such shares in person.

IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON AND HOLD REGISTERED
SHARES OF COMMON STOCK, YOU SHOULD MARK THE APPROPRIATE BOX ON THE ENCLOSED
PROXY CARD (FOR HOLDERS OF CLASS A COMMON STOCK) OR TICKET REQUEST FORM (FOR
HOLDERS OF CLASS B COMMON STOCK) AND AN ADMISSION TICKET WILL BE SENT TO YOU.
IF YOU HOLD COMMON STOCK BENEFICIALLY AND PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, YOU MUST OBTAIN AN ADMISSION TICKET IN ADVANCE BY SENDING A WRITTEN
REQUEST, ALONG WITH PROOF OF OWNERSHIP, SUCH AS A BANK OR BROKERAGE FIRM
ACCOUNT STATEMENT, TO THE MANAGER--INVESTOR RELATIONS, VIACOM INC., 1515
BROADWAY, 45TH FLOOR, NEW YORK, NEW YORK 10036.

Thank you, and I look forward to seeing you at the Annual Meeting.

Sincerely,

/s/ Sumner M. Redstone
Sumner M. Redstone
Chairman of the Board

VIACOM (R)

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

VIACOM INC.

NOTICE OF 1995 ANNUAL MEETING
AND PROXY STATEMENT

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

To Viacom Inc. Stockholders:

The Annual Meeting of Stockholders of Viacom Inc. will be held at Alice
Tully Hall, Lincoln Center, 65th Street and Broadway, New York, New York at
9:30 a.m. on May 25, 1995. The principal business of the meeting will be
consideration of the following matters:

1. The election of 13 directors;

2. The approval of amendments to the Viacom Inc. 1989 and 1994 Long-Term
Management Incentive Plans;

3. The approval of the Viacom Inc. 1994 Stock Option Plan for Outside
Directors;

4. The approval of the appointment of independent accountants for 1995;
and

5. Such other business as may properly come before the Annual Meeting or
any adjournment thereof.

By order of the Board of Directors,

/s/ Philippe P. Dauman
Philippe P. Dauman
Secretary

April 28, 1995

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

PROXY STATEMENT

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

The enclosed Proxy is being solicited by the Board of Directors of Viacom
Inc. (the "Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held May 25, 1995. The Proxy may be revoked at any time prior
to being voted upon by written notice to the Secretary of the Company, by
submission of a Proxy bearing a later date or by voting in person at the
meeting. Each valid and timely Proxy not revoked will be voted at the meeting
in accordance with instructions thereon or if no instructions are specified
thereon, then the Proxy will be voted for the election of the 13 nominated
directors, the approval of the proposed amendments to the Viacom Inc. 1989 and
1994 Long-Term Management Incentive Plans (the "LTMIP Amendments"), the
approval of the Viacom Inc. 1994 Stock Option Plan for Outside Directors (the
"1994 Outside Directors' Plan") and the approval of the appointment of Price
Waterhouse LLP as the Company's independent accountants for 1995. A plurality
of the votes cast is required for the election of directors. The affirmative
vote of a majority of the votes cast is required for the approval of the LTMIP
Amendments, the 1994 Outside Directors' Plan and the appointment of the
independent accountants. Abstentions and broker non-votes will not be included
in vote totals and will have no effect on the outcome of the vote.

Holders of shares of the Company's Class A Common Stock, $0.01 par value
("Class A Common Stock"), on the books of the Company at the close of business
on April 3, 1995 are entitled to notice of and to vote at the Annual Meeting.
The Company then had outstanding 74,693,868 shares of Class A Common Stock,
each of such shares being entitled to one vote, and 285,025,132 shares of non-
voting Class B Common Stock, $0.0l par value ("Class B Common Stock" and,
together with the Class A Common Stock, "Common Stock").

As of April 3, 1995, National Amusements, Inc. ("NAI"), a closely held
corporation that owns and operates more than 900 movie screens in the U.S. and
the U.K., owned approximately 61% of the Class A Common Stock and approximately
26% of the outstanding Class A Common Stock and Class B Common Stock on a
combined basis. Sumner M. Redstone, the controlling stockholder of NAI, is the
Chairman of the Board of the Company.

NAI has advised the Company that it intends to vote all of its shares of
Class A Common Stock in favor of the election of the 13 nominated directors and
the approval of the LTMIP Amendments, the 1994 Outside Directors' Plan and the
appointment of Price Waterhouse LLP as the Company's independent accountants
for 1995; such action by NAI is sufficient to elect such directors and approve
the LTMIP Amendments, the 1994 Outside Directors' Plan and the appointment of
independent accountants without any action on the part of any other holder of
Class A Common Stock.

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 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" and, together with the Paramount Merger, the "Mergers").

The complete mailing address of the principal executive offices of the
Company is 1515 Broadway, New York, New York 10036. The Company intends to
commence its distribution of the Proxy Statement and the Proxy on or about
April 28, 1995.

ELECTION OF DIRECTORS

The election of 13 directors of the Company is proposed, each to hold office
for one year and until his or her successor is elected and qualified. The
persons named in the enclosed Proxy will vote the shares of Class A Common
Stock covered by such Proxy for the election of the nominees set forth below,
unless instructed to the contrary. Each nominee is now a member of the Board of
Directors of the Company. If, for any reason, any of said nominees becomes
unavailable for election, the holders of the Proxies may exercise discretion to
vote for substitutes proposed by the Board. Management has no reason to believe
that the persons named will be unable to serve if elected or decline to do so.

INFORMATION CONCERNING DIRECTORS AND NOMINEES

Set forth below is certain information concerning each nominee for director
of the Company. All of the nominees are currently directors of the Company.

NOMINEE FOR COMPANY OFFICES AND
DIRECTOR* PRINCIPAL OCCUPATION**
----------- ----------------------

George S. Abrams.... Associated with Winer & Abrams, a law firm located in
Age 63 Boston, Massachusetts, for more than five years. Mr.
Director since 1987 Abrams is the former General Counsel and Staff Director
of the United States Senate Judiciary Committee on
Refugees. He is also a member of the Boards of Trustees
and Visiting Committees of a number of art museums,
art-related organizations and educational institutions.
Mr. Abrams is a director of NAI.

Steven R. Berrard... President, Chief Executive Officer of the Blockbuster
Age 40 Entertainment Group ("BEG"), a division of the Company,
Director since 1994 since September 1994. Mr. Berrard served as President,
Chief Operating Officer of Blockbuster from January
1993 to September 1994 and Vice Chairman of the Board
of Blockbuster from May 1989 to September 1994.
Mr. Berrard joined Blockbuster in June 1987 as Senior
Vice President, Treasurer and Chief Financial Officer
and served as a director of Blockbuster from May 1989
to September 1994. Mr. Berrard has been President and
Chief Executive Officer and a director of Spelling
Entertainment Group, Inc. ("Spelling") since April
1993. He is also a director of Discovery Zone, Inc.
("Discovery Zone").

Frank J. Biondi, President, Chief Executive Officer of the Company since
Jr.................. July 1987. From November 1986 to July 1987, Mr. Biondi
Age 50 was Chairman, Chief Executive Officer of Coca-Cola
Director since 1987 Television and, from 1985, Executive Vice President of
the Entertainment Business Sector of The Coca-Cola
Company. Mr. Biondi joined Home Box Office in 1978 and
held various positions there until his appointment as
President, Chief Executive Officer in 1983. In 1984, he
was elected to the additional position of Chairman and
continued to serve in such capacities until October
1984. Mr. Biondi became a director of Spelling in
November 1994. He is also a director of Maybelline,
Inc.

Philippe P. Dauman.. Executive Vice President, General Counsel, Chief
Age 41 Administrative Officer and Secretary of the Company
Director since 1987 since March 1994. From February 1993 to March 1994, Mr.
Dauman 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 is a
director of NAI and became a director of Spelling in
November 1994.

William C. Retired Chairman of the Board and Chief Executive
Ferguson............ Officer of NYNEX Corporation ("NYNEX") since April 1,
Age 64 1995. Mr. Ferguson served as Chairman of the Board and
Director since 1993 Chief Executive Officer of NYNEX from October 1989 to
April 1, 1995. He served as Vice Chairman of the Board
of NYNEX from 1987 to 1989 and as President and Chief
Executive Officer from June to September 1989. He has
served as a director of NYNEX since 1987. Mr. Ferguson
is also a director of CPC International, Inc. and
General Re Corporation.

NOMINEE FOR COMPANY OFFICES AND
DIRECTOR* PRINCIPAL OCCUPATION**
----------- ----------------------

H. Wayne Huizenga... Vice Chairman of the Company and Chairman of BEG since
Age 57 September 1994. Mr. Huizenga served as Chairman of the
Director since 1993 Board and Chief Executive Officer of Blockbuster from
April 1987 to September 1994. He served as President of
Blockbuster from April 1987 until June 1988. From May
1984 to the present, Mr. Huizenga has been an investor
in other businesses and is the sole stockholder and
Chairman of the Board of Huizenga Holdings, Inc.
("Huizenga Holdings"), a holding and management company
with various business interests. In connection with
these business interests, Mr. Huizenga has been
actively involved in strategic planning for, and
executive management of, these businesses. He also has
a majority ownership interest in the Florida Marlins
Baseball, Ltd. (the "Florida Marlins"), a Major League
Baseball sports franchise, and owns the Florida
Panthers Hockey Club, Ltd. (the "Florida Panthers"), a
National Hockey League sports franchise, the Miami
Dolphins, Ltd., a National Football League sports
franchise, and Robbie Stadium Corporation and certain
affiliated entities (collectively, the "Stadium
Companies"), which own and operate the Joe Robbie
Stadium in South Florida. Mr. Huizenga has been
Chairman of the Board of Spelling since April 1993. He
is also a director of Discovery Zone.

George D. Johnson, Mr. Johnson served as President, Retail Operations of
Jr.................. BEG from September 1994 to December 31, 1994 and
Age 52 continues to provide consulting services to BEG. Mr.
Director since 1994 Johnson served as a director and President, Domestic
Consumer Division of Blockbuster from August 1993 until
September 1994. From 1987 to August 1993, he was
managing general partner of WJB Video Limited
Partnership ("WJB"), which prior to its merger with
Blockbuster in August 1993 was Blockbuster's largest
franchise owner. From 1967 through 1987, Mr. Johnson
served as Counsel to the law firm of Johnson, Smith,
Hibbard & Wildman in Spartanburg, South Carolina. Mr.
Johnson is a director of Discovery Zone. He is also a
director of Duke Power Company.

Ken Miller.......... Vice Chairman of C.S. First Boston since June 1994. Mr.
Age 52 Miller served as President, Chief Executive Officer of
Director since 1987 The Lodestar Group, an investment firm, from 1988 to
June 1994. He was Vice Chairman of Merrill Lynch
Capital Markets during 1987 and a Managing Director of
Merrill Lynch Capital Markets for more than the
preceding five years. Mr. Miller is a director of
Kinder-Care Learning Centers, Inc.

Brent D. Redstone... Attorney residing in Denver, Colorado. Mr. Redstone is a
Age 44 member of the Board of Directors of the American
Director since 1991 Prosecutors Research Institute, located in Alexandria,
Virginia. He served as Assistant District Attorney for
Suffolk County, Massachusetts from 1976 to October
1991. Mr. Redstone is a director of NAI.

Shari Redstone...... Executive Vice President of NAI since 1994. Prior to
Age 41 that, during 1994, she served as Vice President,
Director since 1994 Corporate Planning and Development of NAI. Ms. Redstone
practiced law from 1978 to 1993; her practice included
corporate law, estate planning and criminal law. Ms.
Redstone participated on the Executive Committee at the
Boston University School of Law in the early 1980s. She
is currently a member of the Board of Overseers for the
Arts for Tufts University and is a member of the
Advisory Committee for Tufts Hillel. Ms. Redstone is a
member of the Board of Trustees for the Dana Farber
Cancer Institute, and is associated with Children's
Charter of Boston, a trauma center for abused children.
She is also a member of the Executive Committee for the
National Association of Theatre Owners. Ms. Redstone is
a director of NAI.

NOMINEE FOR COMPANY OFFICES AND
DIRECTOR* PRINCIPAL OCCUPATION**
----------- ----------------------

Sumner M. Redstone.. Chairman of the Board of the Company since June 1987.
Age 71 Mr. Redstone has served as Chairman of the Board of NAI
Director since 1986 since 1986 and President, Chief Executive Officer of
NAI since 1967. He served as the first Chairman of the
Board of the National Association of Theatre Owners and
is currently a member of its Executive Committee.
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 Visiting Professor at Brandeis
University. Mr. Redstone graduated from Harvard
University in 1944 and received an LL.B. from Harvard
University School of Law in 1947. Upon graduation, Mr.
Redstone served as Law Secretary with the United States
Court of Appeals, and then as a Special Assistant to
the United States Attorney General. Mr. Redstone became
a director of Spelling in November 1994.

Frederic V. Salerno. Vice Chairman--Finance and Business Development of NYNEX
Age 51 since March 1994. Mr. Salerno was Vice Chairman of the
Director since 1994 Board of NYNEX and President of the Worldwide Services
Group from 1991 to 1994 and President and Chief
Executive Officer of New York Telephone Company from
1987 to 1991. Mr. Salerno is a director of Avnet, Inc.,
The Bear Stearns Companies Inc. and Orange and Rockland
Utilities, Inc.

William Schwartz.... Vice President for Academic Affairs (the chief academic
Age 61 officer) of Yeshiva University since 1993 and University
Director since l987 Professor of Law at Yeshiva University and the Cardozo
School of Law since 1991. Mr. Schwartz has been of
Counsel to Cadwalader, Wickersham & Taft since 1988. He
was Dean of the Boston University School of Law from
1980 to 1988, a professor of law at Boston University
from 1955 to 1991 and Director of the Feder Center for
Estate Planning at Boston University School of Law from
1988 to 1991. Mr. Schwartz has served as Vice Chairman
of the Board of UST Corporation since 1985. He also
served as Chairman of UST Corporation from 1993 to 1994.
Mr. Schwartz has also been a director of WCI Steel, Inc.
since 1994 and is Chairman of its Audit Committee. Mr.
Schwartz is a trustee of several educational and
charitable organizations and an honorary member of the
National College of Probate Judges. He served as
Chairman of the Boston Mayor's Special Commission on
Police Procedures and was formerly a member of the Legal
Advisory Board of the New York Stock Exchange.

- - -------
* Brent Redstone is the son of Sumner Redstone and Shari Redstone is Sumner
Redstone's daughter. None of the other nominees for director is related to
any other director or executive officer of the Company by blood, marriage or
adoption.
** NAI and Spelling are affiliates of the Company. The Company owns, or has
agreed to acquire, approximately 49.9% of the common stock of Discovery Zone.
None of the other corporations or organizations indicated herein is a parent,
subsidiary or other affiliate of the Company.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During 1994, the Board of Directors held ten (10) regular meetings and four
(4) special meetings.

Set forth below is certain information concerning the standing committees of
the Board of Directors (1).

NUMBER OF MEETINGS
COMMITTEE MEMBERS OF COMMITTEE** DURING 1994
--------- ---------------------- ------------------

Audit Committee..................... Messrs. Abrams*,
Ferguson, Miller,
Salerno** and Schwartz 3
Compensation Committee.............. Messrs. Abrams,
Ferguson, Miller, Brent
Redstone, Sumner
Redstone*, Salerno**
and Schwartz and Ms.
Redstone** 11

- - -------
*Chairman of the Committee
** Mr. Salerno became a member of the Audit and Compensation Committees when he
was appointed to the Board of Directors on January 27, 1994. Ms. Redstone
became a member of the Compensation Committee when she was appointed to the
Board of Directors on November 8, 1994. Mr. Huizenga was a member of the
Audit and Compensation Committees from his appointment to the Board of
Directors on October 22, 1993 until September 29, 1994, when Blockbuster
merged into the Company, at which time he became Vice Chairman of the
Company and Chairman of BEG.

NOTE:

(1)The Company does not currently have a Nominating Committee.

The functions of the Audit Committee include reviewing with the independent
accountants the plans and results of the annual audit, approving the audit and
non-audit services by such independent accountants, reviewing the scope and
results of the Company's internal auditing procedures, reviewing the adequacy
of the Company's system of internal accounting controls, reviewing the annual
financial statements prepared for release to stockholders and the public and
approving investments for the tax qualified benefit plans assumed by the
Company as a result of the Paramount Merger. The functions of the Compensation
Committee include reviewing the salaries and bonuses of employees earning over
a specified amount. In addition, the Committee reviews and approves
participation in, and administers, the Senior Executive Short-Term Incentive
Plan and the Company's long-term incentive compensation plans.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Set forth below, as of April 3, 1995, is certain information concerning
beneficial ownership of each equity security of the Company, Spelling and
Discovery Zone by (i) each director of the Company, (ii) each of the named
executive officers and (iii) all directors and executive officers of the
Company as a group. Also set forth below, as of April 3, 1995, is certain
information concerning beneficial ownership of each equity security of the
Company by holders of 5% or more of the Class A Common Stock. The following
table excludes shares of Class B Common Stock issuable upon conversion of the
Class B Preferred Stock of the Company.

BENEFICIAL OWNERSHIP OF EQUITY SECURITIES
-------------------------------------------------------
NUMBER
TITLE OF OF EQUITY OPTION PERCENT
NAME EQUITY SECURITY SHARES SHARES(1) OF CLASS
- - ---- ---------------------- ---------- --------- --------

George S. Abrams...... Class A Common -- (2) -- --
Class B Common 200(2) 5,000 (6)
Steven R. Berrard..... Class A Common 397 199,237 (6)
Class B Common 5,257 1,509,578 (6)
Variable Common Right 4,970 2,490,433 (6)
Contingent Value Right 2,245 -- (6)
3 Year Warrant 1,206 -- (6)
5 Year Warrant 723 -- (6)
Frank J. Biondi, Jr. . Class A Common 453(3) 24,000 (6)
Class B Common 178,361(3) 204,000 (6)

Philippe P. Dauman...... Class A Common 1,064(3) -- (6)
Class B Common 8,365(3) 20,000 (6)
Thomas E. Dooley........ Class A Common 2,120(3) 4,000 (6)
Class B Common 2,133(3) 48,666 (6)
William C. Ferguson..... Class B Common 3,000 5,000 (6)
Edward D. Horowitz...... Class A Common 281(3) 4,000 (6)
Class B Common 708(3) 59,000 (6)
H. Wayne Huizenga....... Class A Common 978,598 321,297 1.7%
Class B Common 7,415,513 2,434,363 3.4%
Variable Common Right 310,609 4,061,204 1.6%
Discovery Zone Common -- 33,334 (6)
George D. Johnson, Jr. . Class A Common 6,482(4) 68,706 (6)
Class B Common 129,127(4) 520,577 (6)
Variable Common Right 7,590 858,824 (6)
Discovery Zone Common -- 33,333 (6)
Ken Miller.............. Class A Common -- (2) -- --
Class B Common -- (2) 5,000 (6)
National Amusements,
Inc. .................. Class A Common 45,547,214(5) -- 61.0%
Class B Common 46,565,414(5) -- 16.3%
Brent D. Redstone....... -- -- -- --
Shari Redstone.......... -- -- -- --
Sumner M. Redstone...... Class A Common 45,547,294(5) -- 61.0%
Class B Common 46,565,494(5) -- 16.3%
Frederic V. Salerno..... Class B Common -- 5,000 (6)
William Schwartz........ Class A Common -- (2) -- --
Class B Common -- (2) 5,000 (6)
Mark M. Weinstein....... Class A Common 392(3) 7,500 (6)
Class B Common 405(3) 62,500 (6)
All directors and execu-
tive officers as a
group other than Mr.
Sumner Redstone (23
persons)............... Class A Common 995,446(3) 639,880 2.2%
Class B Common 7,759,965(3) 4,985,089 4.4%
Variable Common Right 323,169 7,410,461 2.9%
Contingent Value Right 3,730 -- (6)
3 Year Warrant 2,779 -- (6)
5 Year Warrant 1,667 -- (6)
Discovery Zone Common -- 66,667 (6)

- - -------
NOTES:
(1) Reflects shares subject to options to purchase such shares which on April
3, 1995 were unexercised but were exercisable within a period of 60 days from
that date. These shares are excluded from the column headed "Number of Equity
Shares".
(2) Messrs. Abrams, Miller and Schwartz participate in the Deferred
Compensation Plan described below in which their directors' fees are
converted into stock units. Messrs. Abrams, Miller and Schwartz have been
credited with 4,053, 3,685 and 3,658 Class A Common Stock units,
respectively, and 4,256, 3,859 and 3,828 Class B Common Stock units,
respectively.
(3) Includes shares held through the Company's 401(k) plans as of December 31,
1994.
(4) Does not include 158,833 shares of Class A Common Stock and 1,123,470
shares of Class B Common Stock transferred to irrevocable trusts, of which
Mr. Johnson and his wife are beneficiaries, for which Mr. Johnson disclaims
beneficial ownership. Also does not include 14,110 shares of Class A Common
Stock, 106,930 shares of Class B Common Stock and 176,412 Variable Common
Rights held in trusts for the benefit of Mr. Johnson's children for which Mr.
Johnson disclaims beneficial ownership.
(5) Except for 80 shares of each class of Common Stock owned directly by Mr.
Redstone, all shares are owned of record by NAI. Mr. Redstone is the Chairman
and the beneficial owner of the controlling interest in NAI and, accordingly,
beneficially owns all such shares.
(6) Less than 1%.

DIRECTORS' COMPENSATION

Directors of the Company who are not officers or employees of the Company or
NAI or members of their immediate family ("Outside Directors") are entitled to
receive the directors' fees and are eligible to participate in the Company's
retirement and stock option plans described below. Messrs. Abrams, Ferguson,
Miller and Schwartz were Outside Directors for the entire 1994 calendar year.
Mr. Salerno became an Outside Director on January 27, 1994. Mr. Huizenga was an
Outside Director until the Blockbuster Merger on September 29, 1994. In 1994,
only Outside Directors received any compensation for services as a director.

Directors' Fees. Outside Directors received the following fees for 1994: (i)
a quarterly fee of $7,500 for membership on the Board of Directors of the
Company, (ii) a per meeting attendance fee of $1,500 for each Board meeting,
$500 for each Audit Committee meeting and $500 for each Compensation Committee
meeting, and (iii) a $7,500 annual retainer fee for the Chairman of the Audit
Committee (currently Mr. Abrams). Compensation for Messrs. Ferguson and
Salerno's services as Outside Directors for 1994 was paid to NYNEX.
Compensation for Mr. Huizenga's services as an Outside Director during the
period from January 1, 1994 through the Blockbuster Merger on September 29,
1994 was paid to Blockbuster.

Deferred Compensation Plan. In 1989, the Company established an unfunded
Deferred Compensation Plan permitting participating Outside Directors to defer
payment of all of their membership and attendance fees. A participant can elect
to have deferred fees credited to an account which shall either accrue interest
or be deemed invested in a number of stock units equal to the number of shares
of Common Stock the amount of such fees would have purchased at such time.
Since 1989, Messrs. Abrams, Miller and Schwartz have elected to have their fees
credited to their stock unit accounts. The Plan permits participants to elect
to have amounts credited to a participant's account paid in a lump sum or in
three or five annual installments starting seven months after the director's
retirement, with the value of the stock units determined by reference to the
fair market values of the Class A Common Stock and Class B Common Stock at that
time and, if the participant had elected installment payments, credited with
interest until payment had been made in full. For 1994, the stock unit accounts
of Messrs. Abrams, Miller and Schwartz were credited with 950, 829 and 769
Class A Common Stock units, respectively, and 1,048, 907 and 842 Class B Common
Stock units, respectively.

Retirement Income Plan. In 1989, the Company established an unfunded, non-
qualified Retirement Income Plan pursuant to which each Outside Director will
receive annual payments commencing on such director's retirement equal to 100%
of the amount of the annual Board membership fees at the time of such
retirement, provided he has served on the Board for at least three years. The
Plan provides that the director or his estate will receive such annual payments
for the number of years of such director's service on the Board (with current
Outside Directors receiving credit for their years of service on the Board
prior to 1989).

1993 Outside Directors' Stock Option Plan. In 1993, the Board of Directors of
the Company (with Outside Directors Messrs. Abrams, Miller and Schwartz
abstaining) adopted the Viacom Inc. Outside Directors' Stock Option Plan (the
"1993 Outside Directors' Plan"), which was approved by the stockholders of the
Company at the 1994 Annual Meeting of Stockholders. The 1993 Outside Directors'
Plan provides for automatic one-time grants of non-qualified stock options to
purchase 5,000 shares of Class B Common Stock (the "1993 Outside Directors'
Stock Options") to each Outside Director on May 25, 1993 when such Plan was
adopted and to each subsequent Outside Director, effective as of such person's
election or appointment to the Board. On May 25, 1993, Messrs. Abrams, Miller
and Schwartz, who then constituted the Board's Outside Directors, each received
a 1993 Outside Directors' Stock Option grant, with a per share exercise price
of $45 1/2 which was the closing price of a share of Class B Common Stock on
the American Stock Exchange on the date of grant. Messrs. Huizenga, Ferguson
and Salerno each received a 1993 Outside Directors' Stock Option grant when
they were appointed to the Board, with per share exercise prices of $53 1/4,
$42 1/2 and $36 3/4, respectively, which were the closing prices of a share of
the Class B Common Stock on the American Stock Exchange on the dates of their
appointment to the Board. Messrs. Ferguson and Salerno each hold their 1993
Outside Directors' Stock Option grants for the benefit of NYNEX.

1994 Outside Directors' Stock Option Plan. In November 1994, the Board of
Directors of the Company (with Outside Directors Abrams, Ferguson, Miller,
Salerno and Schwartz abstaining) adopted the Viacom Inc. 1994 Outside
Directors' Stock Option Plan (the "1994 Outside Directors Plan"), subject to
the approval of such Plan by the

stockholders of the Company at the Annual Meeting. For a description of such
Plan and terms of the automatic grants of stock options thereunder to the
Outside Directors, see "Approval of the Viacom Inc. 1994 Stock Option Plan for
Outside Directors" below.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Abrams, Ferguson, Miller, Sumner Redstone, Brent Redstone and
Schwartz were members of the Compensation Committee for the entire 1994
calendar year. Mr. Salerno and Ms. Redstone became members of the Compensation
Committee when they were appointed to the Board of Directors on January 27,
1994 and November 8, 1994, respectively. Mr. Huizenga resigned from the
Compensation Committee on September 29, 1994 when Blockbuster merged into the
Company, at which time he became Vice Chairman of the Company and Chairman of
the BEG. For further information regarding certain relationships of Messrs.
Abrams, Berrard, Huizenga and Miller, see the discussion in "Election of
Directors" and "Related Transactions".

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

All members of the Compensation Committee are non-employee directors. The
members include Mr. Sumner Redstone, the controlling stockholder of the
Company. The Committee reviews and, with any changes it believes appropriate,
approves the Company's executive compensation. Independent compensation
consultants have advised the Committee with respect to the long-term incentive
compensation plans since 1987.

The objectives of the executive compensation package for the Company's
executive officers are to:

. Set levels of base salary and annual bonus compensation that will attract
and retain superior executives in the highly competitive environment of
entertainment and media companies;

. Provide annual bonus compensation for executive officers that varies
directly with the Company's financial performance and, in the case of
executive officers with divisional responsibilities, also with the
financial performance of their respective operating units, and, in
addition, reflects the executive officer's individual contribution to
that performance;

. Provide long-term incentive compensation that is tied to the Company's
stock price so as to focus the attention of executives on managing the
Company from the perspective of an owner with an equity stake and, in the
case of executive officers with divisional responsibilities, is also tied
to the financial performance of their respective operating units; and

. Emphasize performance-based compensation, through annual bonus
compensation and long-term incentive compensation, over fixed
compensation.

The completion of the acquisition of Paramount Communications and Blockbuster
increases the importance of attracting and retaining executives with broad
entertainment and media-based experience. Accordingly, the Committee has
developed a new compensation package described below for Mr. Biondi and many of
the Company's senior executive officers to reflect their new responsibilities
as a result of the Mergers. These arrangements are reflected in new (or
amended) employment contracts for Mr. Biondi and these senior executive
officers.

The Committee evaluates the competitiveness of its executive compensation
packages based on information from a variety of sources, including information
supplied by consultants and information obtained from the media or from the
Company's own experience. The Committee also focuses on executive compensation
offered by the members of the peer group included in the Performance Graph set
forth below as Exhibit I. As a result of the Mergers, the composition of

the peer group included in such Performance Graph has been adjusted to more
closely resemble the Company's current lines of business. At times, the
Committee also evaluates compensation at a broader range of companies, whether
or not included in such peer group, that have particular lines of business
comparable to those of the Company.

Executive Compensation

Executive compensation is comprised of base salary, annual bonus compensation
and long-term incentive compensation in the form of stock options. Long-term
incentive compensation for executive officers with divisional responsibilities
also includes performance share awards tied to divisional performance.

Base Salaries

Base salary levels for executive officers are designed to be consistent with
competitive practice and level of responsibility. New base salary levels have
been established for a number of senior executive officers in their new (or
amended) employment contracts to reflect their increased responsibilities as a
result of the Mergers. Base salary levels for other senior executive officers
are generally set forth in their existing employment contracts and increases in
their base salary in 1994 were generally made in accordance with their
contracts. The employment contracts for Mr. Biondi and the other four named
executive officers are described below under "Employment Contracts".

Incentive Compensation

Compliance with Internal Revenue Code Section 162(m). The Omnibus Budget
Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue Code of
1986, as amended (the "Code"), generally limiting to $1 million the federal tax
deductibility of compensation (including stock options) paid to the Company's
Chief Executive Officer and the other four named executive officers, starting
with the 1994 calendar year. The tax law change includes an exception to the
deduction limitation for performance-based compensation (including stock-based
compensation, such as stock options), provided such compensation meets certain
requirements, including stockholder approval. The Viacom Inc. Senior Executive
Short-Term Incentive Plan (the "Senior Executive STIP") and the Viacom Inc.
1994 Long-Term Management Incentive Plan (the "1994 LTMIP") adopted by the
Company's Board of Directors in 1994 and approved by the Company's stockholders
at the 1994 Annual Meeting, were designed to comply with this exception. The
Senior Executive STIP provides objective performance-based annual bonuses
starting with the 1994 calendar year for selected executive officers of the
Company, subject to a maximum limit of six (6) times the executive's base
salary in effect on March 31, 1994. Long-term incentive compensation for the
Company's executive officers is being provided under the 1994 LTMIP starting
with the 1994 calendar year through grants of stock options. Compensation paid
to the Company's Chief Executive Officer and the other four named executive
officers for 1994 does not exceed the Section 162(m) deductibility limit
because of the stockholder approval of the Senior Executive STIP and the 1994
LTMIP and the deferral of a portion (not in excess of 15%) of annual cash
compensation under the Company's 401(k) and excess 401(k) plans and, in the
case of Mr. Biondi, pursuant to his employment contract.

Annual Bonus Compensation. Annual bonus compensation for 1994 for the
Company's Chief Executive Officer and the four named executive officers was
provided under the Senior Executive STIP. In accordance with the Senior
Executive STIP and as permitted by Section 162(m) of the Code, the Compensation
Committee established performance criteria and target awards for these
executive officers. The performance criteria related to the attainment of a
specified level of operating income for the Company as a whole. The award for
Mr. Horowitz was also based on the achievement of performance criteria
established by the Compensation Committee for his operating units. The criteria
related to operating income and/or cash flow levels for those operating units.
For this purpose, "operating income" means revenues less operating expenses
(other than depreciation and amortization) and "cash flow" means "operating
income" less cash capital expenditures and increases or decreases in working
capital and in other long-term assets and liabilities.

The level of the Senior Executive STIP annual bonuses for 1994 for each of
the named executive officers was based on a determination of the Committee, the
starting point of which was the maximum bonus payable pursuant to the Senior
Executive STIP for such executive officers (i.e., six times the executives'
base salary in effect on March 31, 1994), since the performance criteria
established by the Committee for 1994 had been achieved. The Committee
considered a number of factors, including the executives' achievements in
effectuating the Mergers and successfully integrating the operations of
Paramount Communications and Blockbuster into the Company while achieving a
significantly higher level of operating income than in the prior year for the
Company's pre-Mergers businesses, and awarded the annual bonuses set forth
below in the Summary Compensation Table. The Committee took particular note of
the significant size of the Mergers and the major strategic importance of the
Mergers to the Company.

Annual bonus compensation for executive officers other than the Chief
Executive Officer and the four named executive officers for 1994 was provided
under the Company's Short-Term Incentive Plan (the "STIP"). Target levels of
annual operating income and cash flow (as defined above) were established for
1994 for the Company as a whole and for its operating units. The operating
income and cash flow goals were generally given equal weight. Additional
targets were established for specific operating units. The level of achievement
of the applicable corporate or divisional goals determined the aggregate
amounts available for funding awards for corporate or divisional executives;
the amounts were subject to upward or downward adjustment pursuant to a
mathematical formula based on the level of achievement and could exceed 100% of
targeted amounts.

The Committee approved a specific target bonus for each executive officer
which was expressed as a percentage of his salary. These targets are included
in the executive officers' employment contracts. Since the corporate and
divisional targets were met or exceeded for 1994, the executive officers
receiving bonuses under the STIP were eligible for at least 100% of their
target bonuses. Many executive officers also received a special bonus in
recognition of their efforts to complete the Mergers.

Long-Term Incentive Compensation. The Committee believes that the use of
equity-based long-term incentive plans directly links executive interests to
enhancing stockholder value.

From 1990 to 1993, the Committee followed the practice of making annual
grants of stock options to the Company's executive officers under the Viacom
Inc. 1989 Long-Term Management Incentive Plan. Under the 1994 LTMIP, the
Committee, in recognition of the extraordinary efforts leading to the
completion of the Mergers, awarded stock options for Class B Common Stock to
the Company's executive officers (other than its Chief Executive Officer whose
1994 stock option grant is described below under "Chief Executive Officer's
Compensation") as of August 1, 1994 representing such executives' grants for
1994 and 1995; these stock options have an extended vesting period of five
years. The $34.75 exercise price of the 1994 stock option grants was set at the
fair market value of the Class B Common Stock on the date of grant. The stock
options have a ten-year term.

The size of the grant to each executive was within the range assigned to the
executive's relative level of responsibility. In determining the amounts
awarded, the Committee considered the amounts awarded in prior years, as
adjusted for changes in responsibilities.

In 1993, the Committee adopted the Viacom Inc. Long-Term Incentive Plan
(Divisional) (the "Divisional LTIP"). The Divisional LTIP was developed with
the assistance of an independent consultant to provide long-term compensation
for divisional executives based on the performance of their respective
operating units. The first grant of performance shares under the Divisional
LTIP was made with respect to the three year period that commenced January 1,
1993. Subsequent grants of performance shares were made under the Divisional
LTIP with respect to the three year periods that commenced January 1, 1994 and
January 1, 1995. The Committee established the amounts of these grants and the
performance criteria for the initial grant. It is expected that the Committee
will shortly establish the performance criteria for the subsequent grants.
Executive officers with divisional responsibilities such as Mr. Horowitz
received grants under the Divisional LTIP for the three year periods that
commenced January 1, 1993, January 1, 1994 and January 1, 1995. His 1992, 1993
and 1994 LTMIP grants were reduced to reflect his participation in the
Divisional Plan.

Chief Executive Officer's Compensation

Mr. Biondi's compensation package was renegotiated in 1994 to reflect his
increased responsibilities as President, Chief Executive Officer of the Company
after the Mergers. It includes his base salary and deferred compensation, the
right to earn an annual bonus based upon achievement of corporate objectives
established by the Committee under the Senior Executive STIP and a grant of
1994 LTMIP stock options to purchase 1,000,000 shares of Class B Common Stock
as more fully described below. His compensation package is designed to comply
with the limits on annual compensation set forth in Section 162(m) of the Code.
His employment contract is more fully described below under "Employment
Contracts".

The level of the Senior Executive STIP annual bonus for 1994 for Mr. Biondi
was based on a determination of the Committee, the starting point of which was
the maximum bonus payable pursuant to the Senior Executive STIP, since the
performance criteria established by the Committee for 1994 had been achieved.
The Committee considered a number of factors, including Mr. Biondi's
achievement in effectuating the Mergers and successfully integrating the
operations of Paramount Communications and Blockbuster into the Company while
achieving a significantly higher level of operating income than in the prior
year for the Company's pre-Mergers businesses, and awarded Mr. Biondi the
annual bonus set forth below in the Summary Compensation Table.

Mr. Biondi's 1994 stock option grant represents a single grant for the entire
six-year term of his employment contract. The options are ten-year non-
qualified stock options that vest in one-fifth increments starting July 31,
1996 and on each July 31st thereafter so that all the stock options become
exercisable by the end of the six-year initial term of his contract. The
Company has agreed to amend the terms of Mr. Biondi's 1994 stock option grant
as more fully described below under "Employment Contracts".

Sumner M. Redstone, Chairman
George S. Abrams
William C. Ferguson
H. Wayne Huizenga*
Ken Miller
Brent D. Redstone
Shari Redstone**
Frederic V. Salerno***
William Schwartz

Members of the Compensation Committee

- - -------
* Mr. Huizenga resigned from the Compensation Committee on September 29, 1994
when Blockbuster was merged into the Company, at which time he became an
executive officer of the Company.
** Ms. Redstone became a member of the Compensation Committee when she became
a director of the Company on November 8, 1994.
*** Mr. Salerno became a member of the Compensation Committee when he became a
director of the Company on January 27, 1994.

SUMMARY COMPENSATION TABLE

LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION (1) AWARDS PAYOUTS
---------------------------------- ------ -------
SECURITIES
NAME AND PRINCIPAL UNDERLYING
POSITION AT END OF OTHER ANNUAL OPTIONS LTIP ALL OTHER
FISCAL 1994 YEAR SALARY BONUS COMPENSATION (2) PAYOUTS COMPENSATION (3)
------------------ ---- ------ ----- ------------ ---------- ----------- ----------------

Frank J. Biondi, Jr..... 1994 $1,107,808 $3,000,000 $81,176(4) 1,000,000 0 $ 60,441
President, Chief Execu-
tive 1993 1,010,904 1,600,000 -- 90,000 0 65,180
Officer 1992 922,045 1,000,000 -- 90,000 $13,684,800(5) 46,032
Philippe P. Dauman...... 1994 $ 760,692 $1,510,000 -- 200,000 0 $ 14,291
Executive Vice Presi- 1993 553,846 900,000 -- 120,000* 0 0
dent, General Counsel,
Chief
Administrative Officer
and Secretary
Thomas E. Dooley........ 1994 $ 720,000 $1,510,000 -- 200,000 0 $ 18,267
Executive Vice Presi-
dent-- 1993 426,635 400,000 -- 35,000 0 20,909
Finance, Corporate 1992 306,824 277,000 -- 30,000 $ 688,622(6) 10,558
Development and
Communications
Edward D. Horowitz...... 1994 $ 462,789 $ 525,000 -- 81,000 0 $ 19,781
Senior Vice President, 1993 376,442 400,000 -- 30,000 0 15,500
Technology and Chair-
man, 1992 316,805 265,000 -- 30,000 $ 1,538,078(6) 9,604
Chief Executive Offi-
cer,
Viacom Interactive Me-
dia
Mark M. Weinstein....... 1994 $ 545,962 $ 433,125 -- 60,000 0 $ 26,341
Senior Vice President, 1993 493,039 450,000 -- 30,000 0 23,538
Government Affairs 1992 368,538 225,000 -- 30,000 $ 2,014,335(6) 15,118

- - -------
* Mr. Dauman received two grants in 1993: a special one-time grant of 60,000
options for Class B Common Stock as of February 1, 1993 when he joined the
Company and a regular grant of 60,000 options for Class B Common Stock as of
August 1, 1993.

NOTES:

(1) Salary and bonus includes compensation deferred under the Company's 40l(k)
and excess 401(k) plans and, in the case of Mr. Biondi for 1994, pursuant
to his new employment contract, in the following amounts: for Mr. Biondi
for 1994 in the amount of $115,913, for 1993 in the amount of $253,285 and
for 1992 in the amount of $72,980; for Mr. Dauman for 1994 in the amount of
$111,227; for Mr. Dooley for 1994 in the amount of $74,088, for 1993 in the
amount of $28,346 and for 1992 in the amount of $21,497; for Mr. Horowitz
for 1994 in the amount of $49,389, for 1993 in the amount of $38,750 and
for 1992 in the amount of $29,967; and for Mr. Weinstein for 1994 in the
amount of $48,954, for 1993 in the amount of $47,077 and for 1992 in the
amount of $30,237.

(2) Mr. Biondi's 1994 grant of 1,000,000 options for Class B Common Stock
represents the grant for the entire six (6) year term (from August 1994
through July 2000) of his new employment contract. His contract is more
fully described below under "Employment Contracts". The 1994 grants for
Messrs. Dauman, Dooley, Horowitz and Weinstein represent the entire grant
for calendar years 1994 and 1995.

(3) Includes the following: the Company's matching contributions under its
401(k) plan for Mr. Biondi of $2,576 for 1994, $4,497 for 1993 and $3,491
for 1992; for Mr. Dauman of $3,696 for 1994; for Mr. Dooley of $1,757 for
1994, $4,497 for 1993 and $4,364 for 1992; for Mr. Horowitz of $3,966 for
1994, $3,598 for 1993 and $3,491 for 1992; and for Mr. Weinstein of $4,620
for 1994, $4,497 for 1993 and $4,364 for 1992; and credits for the
Company's matching contributions under its excess 401(k) plan for Mr.
Biondi of $57,865 for 1994, $60,682 for 1993 and $42,541 for 1992; for Mr.
Dauman of $10,595 for 1994; for Mr. Dooley of $16,510 for 1994, $16,412
for 1993 and $6,194 for 1992; for Mr. Horowitz of $15,815 for 1994,
$11,902 for 1993 and $6,113 for 1992; and for Mr. Weinstein of $21,721 for
1994, $19,041 for 1993 and $10,754 for 1992.

(4) In accordance with the rules of the Securities and Exchange Commission,
amounts totaling less than $50,000 have been omitted. Amounts included in
Other Annual Compensation for 1994 for Mr. Biondi that represent more than
25% of his total Other Annual Compensation for 1994 consist of
reimbursement for legal expenses of $43,316 and medical expenses of
$20,641.

(5) Consists of: $3,421,200 paid in cash for phantom shares granted to Mr.
Biondi in 1987 under the Viacom Inc. Long-Term Incentive Plan (the "LTIP")
with a December 1992 valuation date; and $10,263,600 of which $3,370,053
was withheld as taxes and the remainder paid as 177,897 shares of Class B
Common Stock which represented payment for his LTIP phantom shares with
future valuation dates. The valuation and payment of Mr. Biondi's LTIP
phantom shares with future valuation dates was accelerated by the
Compensation Committee to December 1992 to preserve certain individual and
corporate tax benefits, with the payment made in stock to further link Mr.
Biondi's interests to increases in stockholder value.

(6) Represents substantially all amounts payable with respect to the LTIP
phantom shares granted to the named executives. Includes payment for the
LTIP phantom shares with a December 1992 valuation date, as well as the
accelerated payment of the LTIP phantom shares with future valuation
dates. The amount payable for their LTIP phantom shares was the $31.23 per
share payment limit. The Committee accelerated payment and valuation of
these LTIP phantom shares both to preserve certain individual and
corporate tax benefits and because the phantom shares had already reached
the $31.23 per share payment limit.

OPTION GRANTS IN FISCAL 1994

The following Option Grant Table includes a column designated "Grant Date
Present Value". The calculation in that column is based on Black-Scholes option
pricing model adapted for use in valuing executive stock options. There is no
way to anticipate what the actual growth rate of the Class B Common Stock will
be.

INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF % OF TOTAL
SHARES OF OPTIONS
CLASS B GRANTED TO EXERCISE GRANT DATE
COMMON STOCK EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME UNDERLYING OPTIONS(1) FISCAL 1994 ($/SHARE) DATE VALUE(2)
- - ---- --------------------- ------------ --------- ---------- -----------

Frank J. Biondi, Jr..... 600,000 15.19% $35.75 8/18/2004 $13,272,000
200,000(3) 5.06% 40.4375 8/18/2004 4,178,000(3)
200,000(4) 5.06% 50.125 8/18/2004 3,712,000(4)
Philippe P. Dauman...... 200,000 5.06% 34.75 8/1/2004 4,260,000
Thomas E. Dooley........ 200,000 5.06% 34.75 8/1/2004 4,260,000
Edward D. Horowitz...... 81,000 2.05% 34.75 8/1/2004 1,725,300
Mark M. Weinstein....... 60,000 1.52% 34.75 8/1/2004 1,278,000

- - -------
NOTES:

(1) Mr. Biondi's options, which were granted on August 18, 1994, will vest in
one-fifth increments on July 31, 1996, July 31, 1997, July 31, 1998, July
31, 1999 and July 31, 2000. The options granted to Messrs. Dauman, Dooley,
Horowitz and Weinstein, which were granted as of August 1, 1994, will vest
in one-fourth increments on August 1, 1996, August 1, 1997, August 1, 1998
and August 1, 1999. These options are more fully described above in the
"Compensation Committee Report on Executive Compensation".

(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. There is no assurance that value realized by
an executive will be at or near the value estimated by the Black-Scholes
model. The grant date values presented in the table were determined in part
using the following assumptions. No adjustments were made for non-
transferability or risk of forfeiture.

AUGUST 1, 1994 AUGUST 18, 1994
-------------- ---------------

Expected volatility........................ .3265 .3268
Risk-free rate of return................... 7.35% 7.50%
Dividend yield............................. 0.00% 0.00%
Time of exercise........................... 10 years 10 years

(3) Stock option grant made with an exercise price of $40.4375 which was 113%
of the fair market value of the underlying stock on the date of grant. The
Black-Scholes value reflects the above-market exercise price.

(4) Stock option grant made with an exercise price of $50.125 which was 140%
of the fair market value of the underlying stock on the date of grant. The
Black-Scholes value reflects the above-market exercise price.

AGGREGATED OPTION EXERCISES IN FISCAL 1994
AND VALUE OF OPTIONS AT END OF FISCAL 1994

NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
END OF FISCAL 1994 END OF FISCAL 1994
SHARES ACQUIRED ------------------------- -------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------- ----------- ------------- ----------- -------------

Frank J. Biondi, Jr. ... -0- -0- 204,000 1,180,000 $3,308,250 $3,825,000
Philippe P. Dauman...... -0- -0- 20,000 300,000 -0- 1,175,000
Thomas E. Dooley........ -0- -0- 48,666 262,334 746,993 1,143,507
Edward D. Horowitz...... -0- -0- 59,000 140,000 923,625 752,125
Mark M. Weinstein....... -0- -0- 62,500 119,000 1,008,500 628,750

- - -------
NOTE:

(1) Options listed below are for shares of Class B Common Stock except that
exercisable options include for Mr. Biondi 24,000 options each for a share
of Class A Common Stock and a share of Class B Common Stock, for Mr. Dooley
4,000 of such options, for Mr. Horowitz 4,000 of such options and for Mr.
Weinstein 7,500 of such options; the aggregate number of exercisable
options includes two underlying securities for each of these options.

LONG-TERM INCENTIVE PLANS
AWARDS IN FISCAL 1994

ESTIMATED FUTURE PAYOUTS
-----------------------------
PERFORMANCE
NUMBER OF PERIOD UNTIL
NAME PERFORMANCE UNITS MATURATION (1) THRESHOLD TARGET(2) MAXIMUM(3)
---- ----------------- ------------- --------- -------- ---------

Frank J. Biondi, Jr..... -0- -- -- -- --
Philippe P. Dauman...... -0- -- -- -- --
Thomas E. Dooley........ -0- -- -- -- --
Edward D. Horowitz...... 2,427(2) 1/1/95- -- (2) -- --
12/31/97
4,688(2) 1/1/94- -- (2) -- --
12/31/96
Mark M. Weinstein....... -0- -- -- -- --

- - -------
NOTES:

(1) These performance units vest at the end of the three-year performance
period. They are more fully described above in the "Compensation Committee
Report on Executive Compensation".
(2) The value of the performance units will be determined by reference to the
performance criteria to be established by the Committee.
(3) There is no maximum since the value of the performance units can increase
without limit pursuant to the formula established under the performance
criteria.

PENSION PLAN TABLE

YEARS OF SERVICE
--------------------------------------------
REMUNERATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------

$ 50,000 .................... $ 9,427 $ 12,569 $ 15,711 $ 18,853 $ 21,995
100,000 .................... 20,677 27,569 34,461 41,353 48,245
200,000 .................... 43,177 57,569 71,961 86,353 100,745
300,000 .................... 65,177 87,569 109,461 131,353 153,245
400,000 .................... 88,177 117,569 146,961 176,353 205,745
500,000 .................... 110,677 147,569 184,461 221,353 258,245
600,000 .................... 133,177 177,569 221,961 266,353 310,745
700,000 .................... 155,677 207,569 259,461 311,353 363,245
800,000 .................... 178,177 237,569 296,961 356,353 415,745
900,000 .................... 200,677 267,569 334,461 401,353 468,245
1,000,000 .................... 223,177 297,569 371,961 446,353 520,745
1,100,000 .................... 245,677 327,569 409,461 491,353 573,245
1,200,000 .................... 268,177 357,569 446,961 536,353 625,745
1,300,000 .................... 290,677 387,569 484,461 581,353 678,245
1,400,000 .................... 313,177 417,569 521,961 626,353 730,745
1,500,000 .................... 335,677 447,569 559,461 671,353 783,245

Under the Company's Pension Plan, and the Company's Excess Pension Plan for
certain higher compensated employees, an eligible employee will receive a
benefit at retirement that is based upon the employee's number of years of
benefit service and average annual salary (salary as set forth in the Summary
Compensation Table) for the highest 60 consecutive months out of the final 120
months. The benefits under the Company's Excess Pension Plan are not subject to
the Internal Revenue Code provisions that limit the compensation subject to
benefits under the Company's Pension Plan. The number of years of benefit
service that have been credited for Messrs. Biondi, Dooley, Horowitz and
Weinstein are approximately 7.6, 13, 4 and 9, respectively. Mr. Dauman has been
credited with two years of service under the Company's Pension Plan; however,
the benefits payable under the Company's Excess Pension Plan shall be
calculated as though he had eleven years of credited service. The foregoing
table illustrates, for representative average annual pensionable compensation
and years of benefit service classifications, the annual retirement benefit
payable to employees under the Plans upon retirement in 1993 at age 65, based
on the straight-life annuity form of benefit payment and not subject to
deduction or offset.

PERFORMANCE GRAPHS

The following two graphs compare the cumulative total stockholder return on
the Class A Common Stock, and, as of June 18, 1990, the Class B Common Stock
with the cumulative total return on the companies listed in the Standard &
Poor's 500 Stock Index and a peer group of companies. The composition of the
peer group included in the graph set forth below as Exhibit I has been revised
to more closely resemble the Company's various lines of business after the
acquisition of Paramount Communications and Blockbuster in 1994. The total
return data was obtained from Standard & Poor's Compustat Services, Inc., which
first reported trading activity for the Class B Common Stock on June 18, 1990.

EXHIBIT I
CUMULATIVE TOTAL STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1994

[GRAPH APPEARS HERE]

December 31... 1989** 1990 1991 1992 1993 1994
- - -------------- ------ ----- ------ ------ ------ ------

Class A Common 100.00 90.28 117.79 151.33 168.09 143.16
Class B Common 95.44 90.37 125.23 153.67 164.68 149.54
S&P 500 100.00 96.89 126.28 135.88 149.52 151.55
Peer Group* 100.00 78.65 89.95 114.75 150.28 134.48

- - -------
* The Peer Group reflected in Exhibit I consists of the following companies:
BHC Communications, Inc.; Capital Cities/ABC, Inc.; CBS, Inc.; Gaylord
Entertainment Co.; King World Productions Inc.; Liberty Media Corp.; McGraw-
Hill Inc.; Melville Corporation; Musicland Stores Corp.; Multimedia, Inc.;
Spelling Entertainment Group Inc.; The News Corp. Ltd. (ADRs); Time Warner
Inc.; Tribune Company; and Turner Broadcasting System Inc.
** Price shown in column labelled "1989" for Class B Common Stock is as of June
30, 1990.

EXHIBIT II
CUMULATIVE TOTAL STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1994

[GRAPH APPEARS HERE]

December 31... 1989** 1990 1991 1992 1993 1994
- - -------------- ------ ----- ------ ------ ------ ------

- - -------
* The Peer Group reflected in Exhibit II consists of the following companies:
BHC Communications, Inc.; Cablevision Systems Corp.; Capital Cities/ABC,
Inc.; CBS, Inc.; Comcast Corp.; Gaylord Entertainment Co.; King World
Productions Inc.; Liberty Media Corp.; Multimedia, Inc.; Paramount
Communications Inc.; Spelling Entertainment Group Inc.; Tele-Communications,
Inc.; The News Corp. Ltd. (ADRs); Time Warner Inc.; and Turner Broadcasting
System Inc.
** Price shown in column labelled "1989" for Class B Common Stock is as of June
30, 1990.

Effective on June 13, 1990, the Company effected a stock split by issuing a
dividend of one share of Class B Common Stock for each share of Class A Common
Stock then outstanding. The Class B Common Stock has rights, privileges,
restrictions and qualifications identical to the Class A Common Stock except
that shares of Class B Common Stock have no voting rights other than those
required by law. As of April 3, 1995, NAI owned 45,547,214 shares or 61% of the
Class A Common Stock and 46,565,414 shares or 16.3% of the Class B Common
Stock. Sumner M. Redstone, the controlling stockholder of NAI, is the Chairman
of the Board of the Company.

The performance graphs assume $100 invested on December 31, 1989 in each of
the Class A Common Stock, the S&P 500 Index and the Peer Group (identified in
such graph), including reinvestment of dividends, through the fiscal year ended
December 31, 1994. The cumulative total stockholder return on the Class B
Common Stock assumes the investment in Class B Common Stock as of June 18, 1990
(the first date on which the Class B Common Stock was publicly traded) of an
amount equal to the cumulative total stockholder return on the Class A Common
Stock as of that date ($95.44).

EMPLOYMENT CONTRACTS

The Company has entered into a new employment contract with Mr. Biondi which
provides that he will be employed as President, Chief Executive Officer of the
Company until July 31, 2000 (the term of such contract to be automatically
extended for successive one-year periods unless either party elects to
terminate the contract) at a salary of $990,000 per annum. The new contract
provides that Mr. Biondi's target bonus for calendar year 1994 is set at
$2,630,250 and, for each succeeding calendar year, at 110% of his target bonus
for the preceding calendar year. In addition, Mr. Biondi's contract provides
for deferred compensation, payable the year after he ceases to be an executive
officer of the Company, in the amount of $179,000 for the period from August
18, 1994 through July 31, 1995 and, for each succeeding contract year (from
August 1st through the following July 31st), in an amount equal to the excess
of (i) 110% of his salary and deferred compensation for the preceding contract
year over (ii) $990,000. Mr. Biondi's contract also provides for the grant of
stock options under the 1994 LTMIP to purchase 1,000,000 shares of Class B
Common Stock, representing Mr. Biondi's stock option grant for the entire six-
year initial term of his employment contract. The options vest in one-fifth
increments starting July 31, 1996 and on each July 31st thereafter so that all
the stock options become exercisable by the end of the initial term of his
employment contract.

The Company has agreed to amend the terms of Mr. Biondi's 1994 stock option
grant, assuming the LTMIP Amendments are approved at the Annual Meeting, to
provide that:

. In the event of the Company's failure to renew Mr. Biondi's employment
contract upon expiration of the initial six-year term or any one-year
renewal thereof, his 1994 LTMIP stock options shall remain exercisable for
six months after the date of termination.

. In the event of the termination of Mr. Biondi's employment without
"cause" or voluntary termination for "good reason" during the term of his
employment contract, his 1994 LTMIP stock options (all of which will have
vested upon termination of employment) shall remain exercisable for the
longer of six months following the date of termination or two years from
the date of grant.

. In the event of the termination of Mr. Biondi's employment due to death
or disability, his 1994 LTMIP stock options (all of which will have vested
upon termination of employment) shall remain exercisable for two years
after such date.

. In the event of termination of Mr. Biondi's employment for "cause" or
voluntary termination other than for "good reason" during the term of his
employment contract, his 1994 LTMIP stock options that are then
exercisable shall remain exercisable for 15 days; all his 1994 LTMIP stock
options that are not exercisable on the date of such termination shall
lapse.

Mr. Biondi's contract also provides that, in the event of the termination of
Mr. Biondi's employment without "cause" or voluntary termination for "good
reason" during the term of his employment contract, he shall be entitled to
receive his salary, deferred compensation and target bonus (pro-rated for any
partial calendar year) for the shorter of three years after such termination or
the remainder of the employment term.

Mr. Dauman became Executive Vice President, General Counsel and Chief
Administrative Officer and Secretary of the Company on March 15, 1994.
Previously, he had served as Senior Vice President, General Counsel and
Secretary of the Company. His employment contract has recently been amended to
reflect his new responsibilities. As amended, Mr. Dauman's contract provides
that he will be employed as Executive Vice President, General Counsel and Chief
Administrative Officer and Secretary of the Company until August 1, 1999, at a
salary of $800,000 for the contract year ending March 31, 1995, with annual
increases of not less than 10% for the two succeeding contract years, and at a
salary of not less than $1,000,000 per annum for the period from April 1, 1997
through August 1, 1999. His amended contract provides that his target bonus is
set at the following percentages of his base salary on November 1st of such
year (or August 1st in the case of 1999): 100% for calendar year 1993, 150% for
calendar years 1994, 1995 and 1996, and 180% for calendar years 1997, 1998 and
1999. Mr. Dauman's amended contract provides that, in the event of the
termination of Mr. Dauman's employment without "cause" or voluntary termination
for "good reason" during the employment term, he shall be entitled to receive
salary and target bonus (pro-rated for any partial calendar year) for the
balance of the employment term. In addition, assuming the LTMIP Amendments are
approved at the Annual Meeting, his stock options (all of which will have
vested upon termination of employment) shall remain exercisable for six months
following the date of termination (but not beyond the expiration date of such
stock options).

Mr. Dooley became Executive Vice President-Finance, Corporate Development and
Communications of the Company on March 15, 1994. Previously, he had served as
Senior Vice President, Corporate Development of the Company. The Company has
recently entered into a new employment contract with Mr. Dooley to reflect his
new responsibilities. His new contract provides that he will be employed as
Executive Vice President-Finance, Corporate Development and Communications of
the Company until August 1, 1999, at a salary of $800,000 for the contract year
ending March 31, 1995, with annual increases of not less than 10% for the two
succeeding contract years, and at a salary of not less than $1,000,000 per
annum for the period from April 1, 1997 through August 1, 1999. The new
contract provides that Mr. Dooley's target bonus is set at the following
percentages of his base salary on November 1st of each year (or August 1st in
the case of 1999): 100% for calendar year 1993, 150% for calendar years 1994,
1995 and 1996, and 180% for calendar years 1997, 1998 and 1999. Mr. Dooley's
contract provides that, in the event of the termination of Mr. Dooley's
employment without "cause" or voluntary termination for "good reason" during
the employment term, he shall be entitled to receive salary and target bonus
(pro-rated for any partial calendar year) for the balance of the employment
term. In addition, assuming the LTMIP Amendments are approved at the Annual
Meeting, his stock options (all of which will have vested upon termination of
employment) shall remain exercisable for six months following the date of
termination (but not beyond the expiration date of such stock options).

Mr. Horowitz became Senior Vice President, Technology of the Company and
Chairman, Chief Executive Officer, Viacom Interactive Media on March 21, 1994.
Previously, he had served as Senior Vice President of the Company and Chairman,
Chief Executive Officer of the Viacom Broadcast Group. The Company has recently
entered into a new employment contract with Mr. Horowitz to reflect his new
responsibilities. Mr. Horowitz's new contract provides that he will be employed
as Senior Vice President, Technology of the Company and Chairman, Chief
Executive Officer of Viacom Interactive Media until June 30, 1997 at a salary
of $500,000 for the contract year ending June 30, 1995, with annual increases
of $50,000 on each July 1st during the employment term. The new contract
provides that Mr. Horowitz's target bonus is set at 100% of his base salary for
calendar years 1994, 1995, 1996 and 1997. Mr. Horowitz's contract provides
that, in the event of the termination of Mr. Horowitz's employment without
"cause" or voluntary termination for "good reason" during the employment term,
he shall be entitled to receive salary and target bonus (pro-rated for any
partial calendar year) for the balance of the employment term. In addition,
assuming the LTMIP Amendments are approved at the Annual Meeting, his stock
options (all of which will have vested upon termination of employment) shall
remain exercisable for six months following the date of termination (but not
beyond the expiration date of such stock options).

Mr. Weinstein's employment contract provides that he will be employed as
Senior Vice President, Government Affairs of the Company until December 31,
1997, at a salary of $500,000 for the contract year that began February 1,
1993, with $50,000 annual increases on each February 1st during the employment
term. For calendar years 1993 through 1997, Mr. Weinstein's target bonus is set
at 75% of his base salary at the end of each year and his bonus compensation
shall not be less than 56.25% of his base salary at that time. Mr. Weinstein's
contract provides that in the event of the termination of Mr. Weinstein's
employment without "cause" or voluntary termination for "good reason", he shall
be entitled to receive salary and bonus for the balance of the employment term.
In addition, the contract provides that his stock options which are then
exercisable shall be exercisable for three months after the date of termination
and stock options which are not then exercisable shall, at the Committee's
option, either be accelerated and exercisable for three months after such
termination or cancelled and treated as stock appreciation rights with the
value determined and payable when the options would otherwise have vested. The
LTMIP stock options granted in 1994 to Mr. Weinstein will become exercisable in
full by December 31, 1997.

RELATED TRANSACTIONS

NAI, the Company's major stockholder, licenses films, in the ordinary course
of its business, for its motion picture theaters from all major studios
including Paramount Pictures, a division of the Company. During the fiscal year
ended December 31, 1994, NAI made payments to Paramount Pictures in the
aggregate amount of $12,610,000 to license Paramount Pictures films. NAI
licenses films from a number of unaffiliated companies and the Company believes
that the terms of the license fees paid by NAI for Paramount Pictures films
were no less favorable to the Company than license fees paid by NAI to
unaffiliated companies. The Company expects to continue to license Paramount
Pictures films to NAI upon similar terms in the future.

Ken Miller, a director of the Company, became Vice Chairman of C.S. First
Boston in June 1994. C.S. First Boston has previously performed and is
currently performing investment banking services for the Company.

George S. Abrams, a director of the Company, entered into an agreement with
the Company in 1994 to provide legal and governmental consulting services for
the Company upon its request. During the fiscal year ended December 31, 1994,
the Company made payments to Mr. Abrams for such services in the aggregate
amount of $100,000.

In 1993, Blockbuster merged with WJB in a pooling of interest business
combination. As a result of this transaction, Blockbuster added 209 Blockbuster
Video stores and six Discovery Zone FunCenters as Blockbuster-owned operations
and, in addition, acquired rights to develop additional Blockbuster Video
stores and Discovery Zone FunCenters. Blockbuster also acquired the real estate
on which 51 of such Blockbuster Video stores are located. George D. Johnson,
Jr., who is a director of the Company, and certain trusts for the benefit of
Mr. Johnson's son and daughter were equity holders of WJB. As a result of the
combination with WJB, Blockbuster became successor in interest to a property
management agreement with Johnson Development Associates, Inc. ("Johnson
Development"), a South Carolina corporation, pursuant to which Johnson
Development serves as the property manager of such 51 Blockbuster Video store
locations. Mr. Johnson is an equity holder of Johnson Development. Pursuant to
the terms of the management agreement with Johnson Development, BEG is
obligated to make monthly payments to Johnson Development in the aggregate
amount of approximately $17,000 for its services. The management agreement
remains in effect until terminated by either party upon 180 days notice. The
Company believes that the terms of the management agreement with Johnson
Development are as favorable to the Company as it could have obtained from an
unaffiliated party.

As a result of the combination with WJB, Blockbuster also became a successor
in interest to a lease agreement with Bell Hill Associates L.P. ("Bell Hill")
for the use of office space located in Spartanburg, South Carolina. Mr. Johnson
is general partner of Bell Hill, and a limited partnership, of which Mr.
Johnson, his wife and trusts for the benefit of his children are equity
holders, is its sole limited partner. Under such lease agreement, BEG is
obligated to make monthly lease payments in the amount of $38,106. Such lease
remains in effect until January 30, 2005. The Company believes that the terms
of the lease agreement with Bell Hill are as favorable to the Company as it
could have obtained from an unaffiliated party.

As a result of the combination with WJB, Blockbuster also became a successor
in interest to a lease agreement with Reidville Road Associates ("Reidville").
Mr. Johnson is general partner of Reidville. Under such lease agreement, BEG is
obligated to make monthly lease payments in the amount of $5,600. Such lease
remains in effect until June 16, 1997 and is renewable for an additional term
of five years at the option of BEG. The Company believes that the terms of the
lease agreement with Reidville are as favorable to the Company as it could have
obtained from an unaffiliated party.

As a result of the combination with WJB, Blockbuster also became a successor
in interest to a lease agreement with Lawson's Fork Associates. Mr. Johnson is
a general partner of Lawson's and a limited partnership, of which Mr. Johnson,
his wife and trusts for the benefit of his children are equity holders, is a
limited partner of Lawson's. Under such lease agreement, BEG is obligated to
make monthly lease payments in the amount of $7,000. Such lease remains in
effect until August 18, 1999 and is renewable for one additional five year term
at BEG's option. The Company believes that the terms of the lease agreement
with Lawson's are as favorable to the Company as it could have obtained from an
unaffiliated party.

In December 1994, BEG entered into a lease agreement with Beaumont Avenue
Associates ("Beaumont") to lease space for a BEG-owned video store. Mr. Johnson
and a limited partnership, of which Mr. Johnson, his wife and trusts for the
benefit of his children are equity holders, are general partners of Beaumont.
Under such agreement, BEG is obligated to make monthly lease payments in the
amount of $5,775. Such lease is for an initial term of ten years and is
renewable for two additional five year terms at BEG's option. The Company
believes that the terms of the lease agreement with Beaumont are as favorable
to the Company as it could have obtained from an unaffiliated party.

During the fiscal year ended December 31, 1994, BEG made payments to Huizenga
Holdings in the aggregate amount of $816,000 for the business use of certain
airplanes owned by Huizenga Holdings. Also during this period, BEG paid all
direct costs associated with the operation of such airplanes. Huizenga Holdings
reimbursed BEC $964,020 for Huizenga Holdings' share of all direct costs
associated with Huizenga Holdings' business use of such airplanes during this
period. The Company believes that the terms of its use of the airplanes were
more favorable to the Company than it could have obtained from an unaffiliated
party and expects to continue to use the airplanes on such terms in the future.

In May 1992, Huizenga Holdings entered a lease agreement with an indirect
wholly owned subsidiary of Blockbuster for the use of office space in One
Blockbuster Plaza, Ft. Lauderdale, Florida, BEG's principal office building.
For the fiscal year ended December 31, 1994, BEG received $63,595 in payments
under such lease. Such lease is for an initial

term of five years and is renewable for an additional term of five years at the
option of Huizenga Holdings. The Company believes that the terms of its lease
agreement with Huizenga Holdings are as favorable to the Company as it could
have obtained from an unaffiliated party.

BEG expects to enter into a lease agreement with Huizenga Holdings for the
use of additional office space in One Blockbuster Plaza. BEG will receive
approximately $100,000 in payments under said lease for the fiscal year ending
December 31, 1995. Such lease is for an initial term of three years and is
renewable for three one-year extensions at the option of Huizenga Holdings. The
Company believes that the terms of the proposed lease agreement with Huizenga
Holdings are more favorable to the Company than it could have obtained from an
unaffiliated party.

During the fiscal year ended December 31, 1994, BEC made payments to Suncoast
Helicopters, Inc. ("Suncoast"), a Florida corporation and a subsidiary of
Huizenga Holdings, in the aggregate amount of $54,096 for the business use of
certain helicopters owned by Suncoast. The Company believes that the terms of
its use of the helicopters were as favorable to the Company as it could have
obtained from an unaffiliated party and expects to continue to use the
helicopters on such terms in the future.

During the fiscal year ended December 31, 1994, BEC paid BRWC, Inc. ("Blue
Ribbon"), a Florida corporation, an aggregate of approximately $20,000 for the
purchase of bottled water and the rental of water coolers for BEG's offices in
Ft. Lauderdale, Florida. Blue Ribbon is owned by H. Wayne Huizenga. The Company
believes that the terms of its agreement with Blue Ribbon with respect to the
purchase of bottled water and rental of water coolers are as favorable to the
Company as it could have obtained from an unaffiliated party. The Company
expects to continue to conduct business with Blue Ribbon upon similar terms in
the future.

Since June 1990, Mr. Huizenga has owned an equity interest in the Stadium
Companies. In June 1994, Mr. Huizenga acquired ownership of 100% of the Stadium
Companies. During the fiscal year ended December 31, 1994, BEG made payments in
the aggregate amount of $224,169 to the Stadium Companies for signage and other
advertising and for tickets to sporting and other events, for which Blockbuster
contracted with the Stadium Companies prior to Mr. Huizenga's investment
therein. BEG also made payments during the fiscal year ended December 31, 1994
in the aggregate amount of $100,000 to the Stadium Companies for scoreboard
signage pursuant to a contract entered into by Blockbuster and the Stadium
Companies after Mr. Huizenga's investment therein. The Company believes that
the terms of the contract for scoreboard signage are as favorable to the
Company as terms as it could have obtained from an unaffiliated party. The
Company expects to continue to conduct business with the Stadium Companies in
the future.

In February 1993, Blockbuster entered into an agreement with the Florida
Marlins to sponsor certain events at or in connection with Florida Marlins
baseball games in the 1993 through 1995 baseball seasons. BEG contracted to pay
the Florida Marlins an aggregate of $366,500 for these sponsorship rights,
which amount is subject to reduction due to cancelled baseball games in the
1994 and 1995 baseball seasons. H. Wayne Huizenga, Jr., G. Harry Huizenga,
Bonnie J. Hudson and Harris W. Hudson, who are Mr. Huizenga's son, father,
sister and brother-in-law, respectively, are all limited partners in the
Florida Marlins. Mr. Berrard also is a limited partner in the Florida Marlins.
Mr. Huizenga is the majority owner thereof and the Chairman and Chief Executive
Officer of Florida Marlins, Inc., its managing general partner. The Company
believes that the terms of the sponsorship agreement are as favorable to the
Company as it could have obtained from an unaffiliated party. The Company
expects to continue to conduct business with the Florida Marlins in the future.

Discovery Zone has entered into an agreement with the Florida Marlins to
sponsor certain events at or in connection with a Florida Marlins baseball game
in each of the 1995 and 1996 baseball seasons. Discovery Zone will pay the
Florida Marlins an aggregate of approximately $100,000 for these sponsorship
rights.

The Company has entered into an agreement to purchase Combined Broadcasting
of Miami, Inc. ("CBM"), a Delaware corporation and the licensee of television
station WBFS-TV in Miami, Florida. Prior to the Company's entering into the CBM
purchase agreement, CBM entered into an agreement with the Florida Marlins
under which CBM obtained the live over-the-air broadcast rights to certain of
the Florida Marlins baseball games for the 1995 and 1996 baseball seasons.
Under such agreement, CBM agreed to make payments for such rights of up to
$4,431,000 and $4,696,860 for the 1995 and 1996 seasons, respectively. In
addition, CBM agreed to make bonus payments to the Florida Marlins in certain
situations. Also, pursuant to such agreement, the Florida Marlins agreed that,
prior to negotiating with any other person for such broadcast rights for the
period subsequent to the term of the agreement, it will first negotiate with
CBM for a new grant of such rights.

The Florida Panthers have entered into an agreement with the Sunshine Network
("Sunshine"), a Florida joint venture, under which Sunshine obtained certain
exclusive subscription telecast and over-the-air broadcast rights in certain of
the Florida Panthers' games. Sunshine has entered into an agreement with CBM
under which Sunshine has purchased from CBM the time for over-the-air
broadcasts of certain Florida Panthers' games to which Sunshine has the
broadcast rights.

In August 1993, Blockbuster entered into a contract with the Florida Panthers
whereby BEG contracted to pay an aggregate of $487,790 for advertising and
sponsorship activities during the 1993-94 and 1994-95 hockey seasons, which
amount is subject to reduction due to cancelled hockey games in the 1994-95
hockey season.

In June 1993, Blockbuster and Mr. Huizenga formed a joint venture, Panthers
Investment Venture (the "Venture"), pursuant to which Blockbuster received an
option, which expired in 1994, to acquire a 50% limited partnership interest in
the Florida Panthers in exchange for BEG's guarantee of a $20,000,000 bank loan
to the Venture. Mr. Huizenga also has guaranteed such bank loan and has agreed
to reimburse BEG for certain losses, if any, which may be incurred under BEG's
guarantee. The Florida Panthers owns and operates the National Hockey League
franchise in South Florida, and Mr. Huizenga is its sole limited partner and
the sole stockholder of its corporate general partner.

During the fiscal year ended December 31, 1994, BEG received from Donovan
Entertainment, Inc. ("Donovan"), a franchise owner of BEG, an aggregate of
approximately $288,719 for the purchase of inventory and equipment and in
payment of franchise royalty fees. In September 1994, BEG acquired certain
assets of Donovan, in exchange for the payment of $350,000 to Donovan. The
assets acquired from Donovan consisted of one of the three Blockbuster Video
stores which Donovan owned as a franchisee of BEG. H. Wayne Huizenga, Jr., a
son of Mr. Huizenga, was a creditor of Donovan until September 1994 and
thereafter has been a stockholder of Donovan. The Company believes that the
terms of the acquisition of assets from Donovan were substantially similar to
the terms of other acquisitions of similarly situated businesses of franchise
owners. The Company also believes that the terms of the franchise and
development agreements with Donovan were as favorable to BEG as those with
BEG's other franchise owners and that the terms of such agreements were
substantially similar to the terms of BEG's other franchise and development
agreements.

During the fiscal year ended December 31, 1994, BEC received from Dorn Video,
Inc. ("Dorn"), a Florida corporation and a franchise owner of BEC, an aggregate
of approximately $148,426 for the purchase of inventory and equipment and in
payment of franchise royalty fees. H. Wayne Huizenga, Jr., a son of Mr.
Huizenga, is a creditor of Dorn. The Company believes that the terms of
development and franchise agreements with Dorn are as favorable to BEG as those
with BEG's other franchise owners and that the terms of such agreements are
substantially similar to the terms of BEG's other franchise and development
agreements.

In September 1994, Blockbuster acquired substantially all of the assets of
Brevard Entertainment Corp. ("Brevard"), a franchisee of Blockbuster, in
exchange for 197,423 shares of common stock of Blockbuster, which were valued
at $25.575 per share. The assets acquired from Brevard consisted of all six of
the Blockbuster Video stores which Brevard owned as a franchisee of
Blockbuster. Bonnie J. Hudson and Harris W. Hudson, respectively the sister and
brother-in-law of Mr. Huizenga, are, as joint tenants, majority stockholders in
Brevard, and they received 168,529 of the shares of common stock of Blockbuster
issued in the transaction. For the period from January 1, 1994 until the
acquisition date, Blockbuster received an aggregate of approximately $680,014
from Brevard for the purchase of inventory and equipment and in payment of
franchise royalty fees. The Company believes that the terms of the acquisition
of assets from Brevard were substantially similar to the terms of other
acquisitions of similarly situated businesses of franchise owners. The Company
also believes that the terms of the franchise and development agreements with
Brevard were as favorable to BEG as those with BEG's other franchise owners and
that the terms of such agreements were substantially similar to the terms of
BEG's other franchise and development agreements.

In September 1994, Blockbuster entered into franchise and development
agreements with Mountain High Video, Inc. ("Mountain High"), related to a
single video store. During the fiscal year ended December 31, 1994, BEG
received from Mountain High an aggregate of approximately $47,760 for the
purchase of inventory and equipment and in payment of franchise royalty and
development fees. Harris W. Hudson and Steven Hudson, respectively the brother-
in-law and nephew of Mr. Huizenga, are the stockholders of Mountain High.

In December 1992, Blockbuster entered into franchise and development
agreements with Royal Palm Video, Inc. ("Royal Palm"), a Florida corporation.
During the fiscal year ended December 31, 1994, BEG received an aggregate of

approximately $281,263 from Royal Palm for the purchase of inventory and
equipment and in payment of franchise and development fees . In February 1994,
Blockbuster entered into franchise and development agreements with Polo Video,
Inc. ("Polo"), a Florida corporation. During the fiscal year ended December 31,
1994, BEG received an aggregate of approximately $118,666 from Polo for the
purchase of inventory and equipment and in payment of franchise and development
fees. E. Charles Pike, a brother-in-law of Mr. Huizenga, is a principal
stockholder of Royal Palm and Polo. The Company believes that the terms of the
franchise and development agreements with Royal Palm and Polo are as favorable
to BEG as those with BEG's other franchise owners, and that the terms of such
agreements are substantially similar to the terms of BEG's other franchise and
development agreements.

For the fiscal year ended December 31, 1994, BEG paid approximately
$1,963,116 to Psychemedics for testing services in connection with BEG's drug
screening policy. Mr. Huizenga owns 11.5% of the common stock of Psychemedics
and each of Mr. Huizenga's spouse, father and children own less than 1% of such
common stock. The Company believes that the terms of the agreement with
Psychemedics are as or more favorable to the Company than it could have
obtained from an unaffiliated party using testing procedures substantially
similar to those used by Psychemedics. The Company expects to continue to
conduct business with Psychemedics in the future.

On March 8, 1995, Spelling entered into an agreement with 2301 S.E. 17th St.,
Ltd. (the "Partnership"), the owner of the Hyatt Regency Pier Sixty Six hotel
(the "Hotel") in Ft. Lauderdale, Florida in connection with the filming of a
television pilot and series, if produced, entitled "Pier 66" on location in and
around the Hotel (the "Premises"). Messrs. Berrard and Huizenga own an 8.33%
and a 16.66% interest, respectively, in 2301 Joint Venture ("2301 JV"), a
Florida general partnership. 2301 JV holds a 79.5% limited partnership interest
in the Partnership. In consideration of the favorable publicity the Hotel will
receive for being depicted in the pilot and series, Spelling will not be
charged fees for the use of the Premises and the Hotel agrees to provide rooms
during preproduction and production of the pilot and series, if produced. The
estimated value of (i) the location filming rights and rooms being provided on
the Pilot is $103,000 and (ii) the rooms being provided on the potential series
is $297,000.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission") and
the American Stock Exchange. Executive officers, directors and greater than ten
percent stockholders are required by the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to furnish the Company with copies of all Section
16(a) forms they file. Based upon the Company's compliance program, as well as
a review of the copies of such forms furnished to the Company, or written
representations that no Forms 5 were required, the Company believes that during
1994, its executive officers, directors and greater than ten percent beneficial
owners complied with all applicable Section 16(a) filing requirements, except
that Steven R. Bernard, a director of the Company, filed an amended report on
Form 3 on April 28, 1995, which report reflected a correction to the number of
shares of equity securities of the Company beneficially owned by Mr. Bernard at
the time he became a director of the Company in November 1994 and H. Wayne
Huizenga, a director of the Company, filed a report on Form 4 on April 28,
1995, which reported the gift of 500 shares of Class A Common Stock in December
1994.

CERTAIN LITIGATION

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

APPROVAL OF AMENDMENTS
TO THE VIACOM INC. 1989 AND 1994
LONG-TERM MANAGEMENT INCENTIVE PLANS

The Viacom Inc. 1989 Long-Term Management Incentive Plan (the "1989 LTMIP")
was adopted by the Board of Directors of the Company as of August 1, 1989 and,
as amended by the Board to reflect the 1990 stock split effected as a dividend
described above in "Performance Graphs", was approved by the stockholders of
the Company at the 1990 Annual Meeting of Stockholders. The Viacom Inc. 1994
Long-Term Management Incentive Plan (the "1994 LTMIP" and, together with the
1989 LTMIP, the "LTMIP") was adopted by the Board of Directors of the Company
on May 26, 1994 and approved by the stockholders of the Company at the 1994
Annual Meeting of Stockholders. The Board of Directors of the Company adopted
amendments to the LTMIP on April 27, 1995, subject to the approval of such
amendments by the affirmative vote of the holders of the majority of the shares
of Class A Common Stock represented in person or by proxy and entitled to a
vote at the Annual Meeting. These amendments (the "LTMIP Amendments"), which
are more fully described below, permit the Compensation Committee (the
"Committee") to have the discretion to extend for up to specified limited
periods of time the periods during which participants in the LTMIP whose
employment with the Company terminates can exercise LTMIP stock options that
are exercisable at the time of their termination. The Board recommends that the
stockholders approve the LTMIP Amendments. The Company has been advised that
NAI intends to vote all of its shares of Class A Common Stock for the approval
of the LTMIP Amendments. Such vote will be sufficient to approve the LTMIP
Amendments without any action on the part of any other stockholder of the
Company.

LTMIP GENERALLY

The following description of the material features of the LTMIP and the LTMIP
Amendments is qualified in its entirety by the full text of the 1994 LTMIP and
1989 LTMIP, as amended by the LTMIP Amendments, as set forth in Exhibits A-1
and A-2 to this Proxy Statement.

The 1989 LTMIP provided for grants of stock options to purchase shares of
Common Stock ("Stock Options"), stock appreciation rights ("SARs"), restricted
shares ("Restricted Shares") of Common Stock and phantom shares ("Phantom
Shares"). Annual grants of Stock Options were made under the 1989 LTMIP during
the period from 1990 through 1993. The 1989 grant under this Plan consisted of
Stock Options and Phantom Shares. The terms and conditions of such grants are
described in more detail below. The 1989 LTMIP terminated on August 1, 1994 and
no additional grants were made after that date.

The 1994 LTMIP provides for grants of Stock Options to purchase shares of
Class B Common Stock, SARS, Restricted Shares of Class B Common Stock and
Phantom Shares, the terms and conditions of which are described in more detail
below. Approximately 800 key employees of the Company are eligible for grants
under the 1994 LTMIP. The terms of the 1994 LTMIP Stock Option grants to Mr.
Biondi and the other four named executive officers are described above in the
"Compensation Committee Report on Executive Compensation" and the Summary
Compensation and Option Grant Tables. All executive officers of the Company as
a group received grants of 1,726,200 Stock Options under this Plan in 1994,
representing such executives' grants for 1994 and 1995. Approximately 150 key
employees of the Company received grants of 3,963,362 Stock Options under this
Plan in 1994. Compensation relating to awards under the 1994 LTMIP is generally
intended to qualify as "performance-based compensation" which is excluded from
the $1,000,000 limit on deductible compensation set forth in Section 162(m) of
the Code.

The maximum aggregate number of shares of Class B Common Stock that may be
granted under the 1994 LTMIP (whether reserved for issuance upon grants of
Stock Options or SARs or granted as Restricted Shares) is 10,000,000. Shares of
Class B Common Stock covered by expired or terminated Stock Options or SARs and
Restricted Shares that are forfeited under the terms of the 1994 LTMIP will not
be counted in applying such limit on grants under the 1994 LTMIP. The maximum
aggregate number of (i) shares of Class B Common Stock that may be granted
subject to the Stock Options or SARs or granted as Restricted Shares and (ii)
Phantom Shares to any employee at the level of Senior Vice President of the
Company or above during any calendar year is 1,000,000. The fair market value
of a share of Class B Common Stock was $46.375 as of April 17, 1995. Grants
under the 1994 LTMIP are authorized by the Committee in its sole discretion.
For this reason it is not possible to determine the benefits or amounts that
will be received by any particular employees or group of employees in the
future.

ADMINISTRATION

The LTMIP is administered by the Committee, which selects from among the
group of eligible employees, those individuals (the "Participants") who receive
grants under the LTMIP. The Compensation Committee must be comprised of at
least three directors, each of whom must be a disinterested person within the
meaning of Rule 16b-3 of the Exchange Act.

STOCK OPTIONS

Stock Options can be either incentive stock options ("Incentive Stock
Options") or options that do not qualify as Incentive Stock Options for federal
income tax purposes ("Non-Qualified Stock Options"), as determined by the
Committee. All Stock Options granted under the LTMIP have been Non-Qualified
Stock Options. For a description of the federal tax consequences associated
with the grant and exercise of Non-Qualified Stock Options, see the discussion
below under "Approval of the Viacom Inc. 1994 Stock Option Plan for Outside
Directors -- Tax Consequences".

Subject to certain limits described below, the Committee determines the
exercise price of Stock Options, the vesting schedule applicable to such Stock
Options and the period during which they can be exercised. The per share
exercise price of Stock Options cannot be, with respect to Nonqualified Stock
Options, less than 50% and, with respect to Incentive Stock Options, less than
100% of the fair market value on the date of grant of a share of Common Stock
for 1989 LTMIP Stock Options and the Class B Common Stock for 1994 LTMIP Stock
Options. No Stock Option can be exercised less than six months after the date
of grant or more than ten years after the date of grant. Each share of Common
Stock purchased through the exercise of a Stock Option must be paid in full at
the time of exercise in cash or, in the discretion of the Committee, in shares
of Common Stock (or other Company securities designated by the Committee) or in
a combination of cash and shares (or such other securities).

PROPOSED AMENDMENTS

The LTMIP currently provide as follows:

. If the employment of a Participant terminates for any reason other than
death or for "cause", his Stock Options can be exercised for three months
after the date of such termination but not beyond the expiration date of
such Stock Options.

. In the event of a Participant's permanent disability, he may exercise his
Stock Options to the extent exercisable at the onset of such disability
for one year after such date but not beyond the expiration date of such
Stock Options.

. In the event of a Participant's death, his stock options may be exercised
to the extent exercisable at the date of death by the person who acquired
the right to exercise such Stock Options by will or by the laws of descent
and distribution for one year after such death (or such longer period as
may in a special case be fixed by the Committee) but not beyond the
expiration date of such Stock Options.

. If a Participant's employment is terminated for "cause", then, unless the
Committee determines otherwise, all Stock Options (whether or not then
vested) will be forfeited by the Participant effective as of the date of
such termination.

The LTMIP Amendments would provide as follows:

. The Committee would have the discretion to permit a Participant whose
employment terminates for any reason other than death or for "cause" to
exercise his Stock Options to the extent exercisable as of the date of
termination for a period determined by the Committee but not in excess of
the longer of six months following the date of termination or two years
from the date of grant and not beyond the expiration date of such Stock
Options.

. The Committee would have the discretion to permit a Participant who
becomes permanently disabled to exercise his Stock Options to the extent
exercisable at the onset of such disability for two years after the onset
of permanent disability but not beyond the expiration date of such Stock
Options.

The provisions relating to the exercise of Stock Options in the event of the
Participant's death or termination for "cause" would not change.

For a description of the amendments that the Company has agreed to make to
Mr. Biondi's 1994 LTMIP Stock Option grant, assuming the LTMIP Amendments are
approved at the Annual Meeting, see the discussion above under "Employment
Contracts." Also discussed above under "Employment Contracts" are the periods
that Messrs. Dauman, Dooley and Horowitz will be permitted to exercise their
LTMIP Stock Options in the event of a termination of employment without "cause"
or voluntary termination for "good reason", assuming the LTMIP Amendments are
approved at the Annual Meeting. It is not possible to quantify the effect of
the LTMIP Amendments on the outstanding LTMIP Stock Options.

SARS

The Committee may grant SARs under the 1994 LTMIP only in tandem with Stock
Options, either at the time of grant or by amendment at any time prior to the
exercise, expiration or termination of such Stock Options. Each SAR entitles
the holder to surrender the related Stock Option in lieu of exercise for an
amount equal to the excess of the fair market value of the share of Class B
Common Stock subject to the Stock Option over the exercise price of such Stock
Option. This amount will be paid in cash or, in the discretion of the
Committee, in shares of Class B Common Stock (or other Company securities
designed by the Committee) or in a combination of cash and shares (or such
other securities). No SAR can be exercised unless the related Stock Option is
then exercisable.

RESTRICTED SHARES

Any Restricted Shares granted under the 1994 LTMIP will be subject to a
vesting schedule established by the Committee; provided, that no Restricted
Shares shall vest until at least six months after the date of grant. The
Committee may, in its discretion, accelerate the dates on which Restricted
Shares vest. Stock certificates representing the number of Restricted Shares
granted to a Participant will be registered in the registrant's name as of the
date of grant but remain held by the Company. The Participant will have all
rights as a holder of such shares of Class B Common Stock except that (i) the
Participant will not be entitled to delivery of such certificates until the
shares represented thereby have vested, (ii) the Restricted Shares cannot be
sold, transferred, assigned, pledged or otherwise encumbered or disposed of
until such shares have vested, and (iii) if the Participant's employment
terminates for any reason or, in the event of the Participant's death,
retirement or permanent disability, the Restricted Shares will be forfeited as
of the date of such event (unless, in a special case, the Committee determines
otherwise with respect to some or all of the unvested Restricted Shares).

PHANTOM SHARES

The value of any Phantom Shares granted under the 1994 LTMIP will be
determined by reference to the fair market value of a share of Class B Common
Stock and cash payments are made with respect to such Phantom Shares based,
subject to any applicable limit on the maximum amount payable, on any increase
in value ("appreciation value") determined as of certain valuation dates over
their "initial value". The 1994 LTMIP empowers the Committee to determine the
initial value of the Phantom Shares as of the date of grant; provided, that the
initial value of a Phantom Share shall not be less than 50% of the average fair
market value of a share of Class B Common Stock over the 30-day period ending
on the date of grant. The 1994 LTMIP further empowers the Committee to
determine the valuation dates (not later than the eighth anniversary of the
date of grant) applicable to a grant of Phantom Shares, the period (not in
excess of five years from the date of grant) during which the Phantom Shares
vest and any limit on the maximum amount of appreciation value payable for the
Phantom Shares.

The value of the Phantom Shares granted under the 1989 LTMIP is determined by
reference to the fair market value of a share of Class A Common Stock and a
share of Class B Common Stock and cash payments will be made with respect to
such Phantom Shares based, subject to a $32 limit on the maximum amount
payable, on the increase in value determined as of the valuation dates over
their initial value of $58.

If a Participant's employment terminates for any reason other than for
"cause" or, in the event of the Participant's death, retirement or permanent
disability, then, unless the Committee determines otherwise, the cash payments
for such Participant's Phantom Shares will be the lesser of the appreciation
value determined as of the date of such termination or event or as of the
originally scheduled valuation dates and such payments will be made after the
originally scheduled valuation dates. All rights with respect to Phantom Shares
that are not vested as of the date of such termination or

event, as the case may be, will be relinquished by the Participant. If a
Participant's employment is terminated for "cause", all Phantom Shares (whether
or not vested) will be forfeited by the Participant.

ADJUSTMENTS

In the event of certain "Reorganization Events" (as defined in the LTMIP)
affecting the Company, the Committee will take one of the following actions
(determined in its sole discretion), unless a given Participant agrees
otherwise. With respect to the Stock Options, SARs and Restricted Shares, the
Committee will (1) cause the surviving entity or new owner of the Company to
adopt the LTMIP and outstanding agreements (subject to equitable adjustment as
specified in the LTMIP), (2) cause the surviving entity or new owner to grant
substitute stock options, stock appreciation rights or restricted shares with
an equivalent value, (3) solely with respect to outstanding Stock Options,
provide for payment upon their termination or cancellation in cash or
securities equal to the excess of the fair market value of the shares of the
applicable class of Common Stock subject to such Stock Options over the
aggregate exercise price of such Stock Options, or (4) accelerate the vesting
dates of outstanding Stock Options, SARs and Restricted Shares. With respect to
Phantom Shares granted pursuant to the LTMIP, the Committee will (1) cause the
surviving entity or new owner of the Company to adopt the LTMIP and outstanding
agreements (subject to certain equitable adjustments specified in the LTMIP),
or (2) determine the appreciation value of Phantom Shares with reference to the
consideration to be paid for the applicable class of Common Stock in the
Reorganization Event and modify the LTMIP and outstanding agreements, if
appropriate, to provide that payments will be based on the appreciation value
of the Phantom Shares as so determined. If, however, the Committee determines
that the previous actions would be a material impediment to the Reorganization
Event, the Committee is authorized to take such other action as it deems
equitable and appropriate to provide each Participant with a benefit equivalent
to that which he would have received had the Reorganization Event not occurred.
In the event a division or subsidiary of the Company is acquired by another
entity or the Company is dissolved, liquidated or reorganized other than in a
Reorganization Event, or the Board of Directors of the Company proposes any of
such transactions or events, the Committee is also authorized to make such
adjustments, if any, as it determines are equitable or appropriate to provide
each Participant with a benefit equivalent to that to which he would have been
entitled had such transaction or event not occurred.

In the event of a stock dividend or split or certain other changes in the
capital structure of the Company which affect the Common Stock, the Committee
will, in its discretion, make any of the following adjustments to provide each
Participant with a benefit equivalent to the benefit to which he would have
been entitled had such event not occurred: (i) adjust the number of shares of
the applicable class of Common Stock subject to Stock Options or SARs or the
number of Restricted Shares or Phantom Shares granted to each Participant, (ii)
adjust the exercise price of shares of the applicable class of Common Stock
subject to such Stock Options or SARs or the initial value of such Phantom
Shares, and (iii) make any other adjustments, or take such other action, as the
Committee deems appropriate.

TRANSFER RESTRICTIONS, ETC.

The rights of a Participant with respect to the Stock Options, SARs,
Restricted Shares or Phantom Shares granted under the LTMIP are not
transferable by the Participant other than by will or the laws of descent and
distribution. Except as described above, no grant under the LTMIP entitles a
Participant to any rights of a holder of shares of Common Stock, nor will any
grant be construed as giving any employee a right to continued employment with
the Company.

LTMIP AMENDMENT AND TERM

The Board of Directors of the Company may at any time alter, amend, suspend
or terminate the LTMIP in whole or in part, except that any amendment which
must be approved by the stockholders of the Company in order to maintain the
continued qualification of the LTMIP under Rule 16b-3 under the Exchange Act
will not be effective unless and until such stockholder approval has been
obtained in compliance with such rule. As described above, the 1989 LTMIP
terminated on August 1, 1994, and no further grants have been made under the
1989 LTMIP since that date. Unless terminated earlier by action of the Board of
Directors of the Company, the 1994 LTMIP will terminate on May 26, 1999, and no
additional grants under the 1994 LTMIP will be made after that date.

APPROVAL OF THE 1994 VIACOM INC.
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS

The Board of Directors adopted (with Outside Directors Messrs. Abrams,
Ferguson, Miller, Salerno and Schwartz abstaining) the Viacom Inc. 1994 Stock
Option Plan for Outside Directors (the "1994 Outside Directors' Plan") on
November 8, 1994, subject to the approval of the 1994 Outside Directors' Plan
by the affirmative vote of the holders of a majority of the shares of Class A
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting. The Board recommends the stockholders approve the 1994 Outside
Directors' Plan. The Company has been advised that NAI intends to vote all of
its shares of Class A Common Stock for the approval of the 1994 Outside
Directors' Plan. Such vote will be sufficient to approve the 1994 Outside
Directors' Plan without any action on the part of any other stockholder of the
Company.

1994 OUTSIDE DIRECTORS' PLAN GENERALLY

The following description of the material features of the 1994 Outside
Directors' Plan is qualified in its entirety by the full text of the 1994
Outside Directors' Plan, as set forth in Exhibit B to this Proxy Statement.

The 1994 Outside Directors' Plan provides for the following grants of stock
options (collectively, the "1994 Outside Directors' Stock Options"): (i)
automatic one-time grants on November 8, 1994 of stock options to purchase
1,500 shares of Class B Common Stock to each person who was an Outside Director
on November 8, 1994; (ii) automatic one-time grants on November 8, 1994 of
stock options to purchase 10,000 shares of Class B Common Stock to each person
who was an Outside Director both on November 8, 1994 and in July 1987; and
(iii) automatic grants of stock options to purchase 1,500 shares of Class B
Common Stock to each person who is an Outside Director on August 1, 1995 and on
each of the second through ninth anniversaries thereof.

The total number of shares of Class B Common Stock reserved for issuance upon
grant of 1994 Outside Directors' Stock Options is 200,000, subject to
adjustments, as more fully described below. Shares of Class B Common Stock
covered by expired or terminated Stock Options will not be counted in applying
such limit on grants of 1994 Outside Directors' Stock Options.

ADMINISTRATION

The 1994 Outside Directors' Plan is administered by the members of the Board
of Directors of the Company who are not Outside Directors.

1994 OUTSIDE DIRECTORS' STOCK OPTIONS

On November 8, 1994, Messrs. Abrams, Miller and Schwartz each received 1994
Outside Directors' Stock Options to purchase 11,500 shares of Class B Common
Stock and Messrs. Ferguson and Salerno each received 1994 Outside Directors'
Stock Options to purchase 1,500 shares of Class B Common Stock, each with a per
share exercise price of $37 7/8 which was the closing price of a share of Class
B Common Stock on the American Stock Exchange on the date of grant. The fair
market value of a share of Class B Common Stock was $46.375 as of April 17,
1995. The 1994 Outside Directors' Stock Option grants to Messrs. Abrams,
Ferguson, Miller, Salerno and Schwartz are subject to stockholder approval of
the 1994 Outside Directors' Plan at the Annual Meeting.

The 1994 Outside Directors' Plan provides that each person who is an Outside
Director on August 1, 1995 and each of the second through ninth anniversaries
thereof will receive automatic grants of 1994 Outside Directors' Stock Options
to purchase 1,500 shares of Class B Common Stock, effective as of the date of
such grant, with a per share exercise price equal to the closing price on that
date of a share of Class B Common Stock on the American Stock Exchange or such
other national securities exchange as may be designated by the Board.

Each grant of 1994 Outside Directors' Stock Options vests on the first
anniversary of the date of grant. No 1994 Outside Directors' Stock Option may
be exercised less than six months after the date of grant or more than ten
years after the date of grant. Each share of Class B Common Stock purchased
through the exercise of a 1994 Outside Directors' Stock Option must be paid in
full at the time of exercise in cash.

An Outside Director may exercise his 1994 Outside Directors' Stock Options up
to one year after the Outside Director ceases to serve for any reason,
including death or permanent disability, as a member of the Board of Directors;
provided, however, that the 1994 Outside Directors' Stock Options are
exercisable only to the extent exercisable on the date of termination and in no
event after the 1994 Outside Directors' Stock Options have otherwise expired.

ADJUSTMENTS

In the event of certain "Reorganization Events" (which are defined
substantially identically in the LTMIP and the 1994 Outside Directors' Plan)
affecting the Company, all of the 1994 Outside Directors' Stock Options shall
be immediately exercisable as of the date of such event. In the event of a
stock dividend or split or certain other changes in the capital structure of
the Company which affect the Class B Common Stock, the 1994 Outside Directors'
Stock Options will be adjusted in the same manner as the stock options granted
under the 1994 LTMIP are adjusted.

TRANSFER RESTRICTIONS, ETC.

Except to the extent permitted by the rules under Section 16(b) of the
Exchange Act, the rights of an Outside Director with respect to the 1994
Outside Directors' Stock Options are not transferable by the Outside Director
other than by will or the laws of descent and distribution. No grant of 1994
Outside Directors' Stock Options entitles an Outside Director to any rights of
a holder of shares of Class B Common Stock, except upon delivery of share
certificates upon exercise of a 1994 Outside Directors' Stock Option, nor will
any such grant be construed as giving an Outside Director the right to remain a
member of the Board of Directors.

AMENDMENT AND TERM

The Board of Directors may at any time alter, amend, suspend or terminate the
1994 Outside Directors' Plan in whole or in part. The provisions with respect
to eligibility or the time or amount of grants, however, will not be amended
more than once every six months other than to comply with applicable law. Any
amendment which must be approved by the stockholders of the Company under the
requirements of applicable law or in order to maintain the continued
qualification of the 1994 Outside Directors' Plan under Rule 16b-3(c)(2)(ii)
under the Exchange Act will not be effective unless and until such stockholder
approval has been obtained in compliance with such rule. Unless terminated
earlier by action of the Board of Directors, the 1994 Outside Directors' Plan
will terminate on November 8, 2004, and no additional grants of 1994 Outside
Directors' Stock Options may be made after that date.

TAX CONSEQUENCES

The 1994 Outside Directors' Stock Options are "non-qualified stock options"
that do not qualify as incentive stock options for federal income tax purposes.
Accordingly, the grant of 1994 Outside Directors' Stock Options generally will
not result in the recognition of taxable income by the Outside Director or in a
tax deduction to the Company or its subsidiaries. Upon exercise of a 1994
Outside Directors' Stock Option, an Outside Director will recognize ordinary
income in an amount equal to the excess of the fair market value of the shares
purchased over the exercise price of such Stock Option. The amount of the
income so recognized is subject to income tax withholding and a tax deduction
equal to the amount of such income is allowable to the Company. Gain or loss
upon a subsequent sale of the stock received upon exercise of a 1994 Outside
Directors' Stock Option generally would be taxed as capital gain or loss (long-
term or short-term, depending on the holding period of the stock sold).

APPROVAL OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors recommends that the stockholders approve the
appointment of Price Waterhouse LLP as independent accountants to serve until
the Annual Meeting of Stockholders in 1996.

In connection with the audit function for 1994, Price Waterhouse LLP also
reviewed the Company's annual report on Form 10-K and its filings with the
Commission, including the filings in connection with the Mergers and provided
certain other accounting, tax and consulting services.

Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting and will be given an opportunity to make a statement if they so
desire. They will also be available to respond to questions at the Annual
Meeting.

OTHER MATTERS

As of the date of this Proxy Statement, Management does not intend to present
and has not been informed that any other person intends to present any matter
for action not specified in this Proxy Statement. If any other matters properly
come before the Annual Meeting, it is intended that the holders of the Proxies
will act in respect thereof in accordance with their best judgment.

In order for proposals by stockholders to be considered for inclusion in the
Proxy and Proxy Statement relating to the 1996 Annual Meeting of Stockholders,
such proposals must be received at the principal executive offices of the
Company on or before December 30, 1995.

By Order of the Board of Directors,

/s/ Philippe P. Dauman
Philippe P. Dauman
Secretary

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

THE COMPANY HAS SENT A COPY OF ITS REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1994, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, TO
EACH OF ITS STOCKHOLDERS OF RECORD ON APRIL 3, 1995 AND EACH BENEFICIAL
STOCKHOLDER ON THAT DATE. IF YOU HAVE NOT RECEIVED YOUR COPY, THE COMPANY WILL
PROVIDE A COPY WITHOUT CHARGE (A REASONABLE FEE WILL BE CHARGED FOR EXHIBITS),
UPON RECEIPT OF WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY'S OFFICES,
ATTENTION SECRETARY.

EXHIBIT A-1

VIACOM INC.

1994 LONG-TERM MANAGEMENT INCENTIVE PLAN
(AS AMENDED AND RESTATED THROUGH APRIL 27, 1995)

ARTICLE I

GENERAL

SECTION 1.1 PURPOSE.

The purpose of the Viacom Inc. 1994 Long-Term Incentive Plan (the "Plan") is
to benefit and advance the interests of Viacom Inc., a Delaware corporation
(the "Company"), and its subsidiaries by rewarding certain key employees of the
Company and its subsidiaries for their contributions to the financial success
of the Company and thereby motivate them to continue to make such contributions
in the future.

SECTION 1.2 DEFINITIONS.

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

(a) "Agreement" shall mean the written agreement governing a Grant under the
Plan, in a form approved by the Committee, which shall contain terms and
conditions not inconsistent with the Plan and which shall incorporate the Plan
by reference.

(b) "Appreciation Value" shall mean the excess, if any, of the Value of a
Phantom Share on the applicable Valuation Date or date of termination of
employment or of the Participant's death, retirement or Permanent Disability
(as described in Section 4.5(a) hereof), as the case may be, over the Initial
Value of such Phantom Share.

(c) "Beneficiary" or "Beneficiaries" shall mean the person(s) designated by
the Participant pursuant to the provisions of the Agreement to receive payments
pursuant to such Agreement upon the Participant's death. If no Beneficiary is
so designated by the Participant or if no Beneficiary is living at the time
such a payment is due pursuant to such Agreement, payments shall be made to the
estate of the Participant. The Agreement shall provide the Participant with the
right to change the designated Beneficiaries from time to time by written
instrument executed by the Participant and filed with the Committee in
accordance with such rules as may be specified by the Committee. No such
written designation shall be effective unless received by the Committee prior
to the date of death of the Participant.

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

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

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

(g) "Committee" shall mean the Compensation Committee of the Board (or such
other Committee as may be appointed by the Board) except that (i) the number of
directors on the Committee shall be not less than three and (ii) each member of
the Committee shall be a "disinterested person" within the meaning of Rule 16b-
3 under the Exchange Act.

(h) "Date of Grant" shall mean the date of the Grant of the Stock Options,
Stock Appreciation Rights, Restricted Shares and/or Phantom Shares as set forth
in the applicable Agreement.

A1-1

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

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

(k) "Grant" shall mean a grant under the Plan which may consist of a grant of
Stock Options, Stock Appreciation Rights, Restricted Shares or Phantom Shares
or a combination of any of the above.

(l) "Initial Value" shall mean the value of a Phantom Share as specified by
the Committee as of the Date of Grant or the Value of a Phantom Share
calculated as of the Date of Grant or such earlier date as the Committee may
determine; provided, however, that in no event shall the Initial Value be less
than 50% of the Value of the relevant Phantom Share as of the Date of Grant.

(m) "Outstanding Phantom Share" shall mean a Phantom Share granted to a
Participant for which the Valuation Date has not yet occurred.

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

(o) "Participant" shall mean any employee who has met the eligibility
requirements set forth in Section 1.4 hereof and to whom an outstanding Grant
has been made under the Plan.

(p) "Permanent Disability" shall have the same meaning as such term or a
similar term has in the long-term disability policy maintained by the Company
or a subsidiary thereof for the Participant and in effect on the date of the
onset of the Participant's Permanent Disability, unless the Committee
determines otherwise, in its discretion, and sets forth an alternative
definition in the applicable Agreement.

(q) "Phantom Share" shall mean a contractual right granted to a Participant
pursuant to Article IV, to receive an amount equal to the Appreciation Value at
such time, and subject to such terms and conditions, as are set forth in the
Plan and the applicable Agreement.

(r) "Restricted Share" shall mean a share of Class B Common Stock granted to
a Participant pursuant to Article III, which is subject to the restrictions set
forth in Section 3.3 hereof, and subject to such other terms and conditions as
are set forth in the Plan and the applicable Agreement.

(s) "Retirement" shall mean the resignation or termination of employment
after attainment of an age required for payment of an immediate pension
pursuant to the terms of any qualified retirement plan maintained by the
Company or a subsidiary in which the Participant participates; provided,
however, that no resignation or termination prior to a Participant's 60th
birthday shall be deemed a retirement unless the Committee so determines in its
sole discretion.

(t) "Stock Appreciation Right" shall mean a contractual right granted to a
Participant pursuant to Article II, to receive an amount determined in
accordance with Section 2.5 of the Plan.

(u) "Stock Option" shall mean a contractual right granted to a Participant
pursuant to Article II, to purchase Class B Common Stock at such time and
price, and subject to such other terms and conditions, as are set forth in the
Plan and the applicable Agreement. Stock Options may be "Incentive Stock
Options" within the meaning of Section 422 of the Code or "Non-Qualified Stock
Options" which do not meet the requirements of such Code section.

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(v) "Termination for Cause" shall mean a termination of employment with the
Company or any of its subsidiaries which, as determined by the Committee, is by
reason of (i) "cause" as such term or a similar term is defined in any
employment agreement applicable to the Participant, or (ii) if there is no such
employment agreement or if such employment agreement contains no such term, (x)
a failure or refusal by a Participant to substantially perform a material duty
of such Participant's employment, (y) the commission by the Participant of a
felony or the perpetration by the Participant of a dishonest act or common law
fraud against the Company or any subsidiary thereof, or (z) any other act or
omission which is materially injurious to the financial condition or business
reputation of the Company or any subsidiary thereof.

(w) "Valuation Date" shall mean the date on which the Appreciation Value of a
Phantom Share shall be measured and fixed in accordance with Section 4.2(a)
hereof.

(x) The "Value" of a Phantom Share shall be determined by reference to the
"average Fair Market Value" of a share of Class B Common Stock. The "average
Fair Market Value" on a given date of a share of Class B Common Stock shall be
determined over the 30-day period ending on such date or such other period as
the Committee may decide shall be applicable to a Grant of Phantom Shares,
determined by dividing (i) by (ii), where (i) shall equal the sum of the Fair
Market Values on each day that the Class B Common Stock was traded and a
closing price was reported on such national securities exchange or on such
automated quotation system or by such marketmaker, as the case may be, during
such period, and (ii) shall equal the number of days on which the Class B
Common Stock was traded and a closing price was reported on such national
securities exchange or on such automated quotation system or by such
marketmaker, as the case may be, during such period.

(y) To "vest" a Stock Option, Stock Appreciation Right, Restricted Stock or
Phantom Share held by a Participant shall mean to render such Stock Option,
Stock Appreciation Right, Restricted Share or Phantom Share nonforfeitable,
except where, with respect to Stock Options, Stock Appreciation Rights and
Phantom Shares, a Participant's employment ends because of a Termination for
Cause.

SECTION 1.3 ADMINISTRATION OF THE PLAN.

The Plan shall be administered by the Committee which shall adopt such rules
as it may deem appropriate in order to carry out the purpose of the Plan. 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 to all
matters relating to the Plan. The Committee shall have authority to select
Participants from among the class of eligible persons specified in Section 1.4
below and to determine the number of Stock Options, Stock Appreciation Rights,
Restricted Shares or Phantom Shares (or combination thereof) to be granted to
each Participant.

SECTION 1.4 ELIGIBLE PERSONS.

Grants may be awarded only to key employees of the Company or one of its
subsidiaries. An individual shall not be deemed an employee for purposes of the
Plan unless such individual receives compensation from either the Company or a
subsidiary of the Company for services performed as an employee of the Company
or any of its subsidiaries.

SECTION 1.5 CLASS B COMMON STOCK SUBJECT TO THE PLAN.

The total aggregate number of shares of Class B Common Stock that may be
distributed under the Plan (whether reserved for issuance upon grant of Stock
Options or Stock Appreciation Rights or granted as Restricted Shares) shall be
10,000,000, subject to adjustment pursuant to Section 5.2 hereof. The shares of
Class B Common Stock shall be made available from authorized but unissued Class
B Common Stock or from Class B Common Stock issued and held in the treasury of
the Company. The delivery of shares of Class B Common Stock upon exercise of a
Stock Option or Stock Appreciation Right in any manner and the vesting of
Restricted Shares shall result in a decrease in the number of shares which
thereafter may be issued for purposes of this Section 1.5, by the number of
shares as to which the Stock Option or Stock Appreciation Right is exercised or
by the number of Restricted Shares which vest. Shares of Class B Common

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Stock with respect to which Stock Options and Stock Appreciation Rights expire,
are cancelled without being exercised or are otherwise terminated may be
regranted under the Plan. Restricted Shares that are forfeited for any reason
shall not be deemed granted for purposes of this Section 1.5 and may thereafter
be regranted under the Plan.

SECTION 1.6 LIMIT ON ANNUAL GRANTS TO PARTICIPANTS.

The maximum aggregate number of (i) shares of Class B Common Stock that may be
distributed under the Plan (whether reserved for issuance upon grant of Stock
Options or Stock Appreciation Rights or granted as Restricted Shares) and (ii)
Phantom Shares that may be granted under the Plan during any calendar year to
any Participant at the level of Senior Vice President of the Company or above
is 1,000,000.

SECTION 1.7 AGREEMENTS.

Each Agreement (i) shall state the Date of Grant and the name of the
Participant, (ii) shall specify the terms of the Grant, (iii) shall be signed
by the Participant and a person designated by the Committee, (iv) shall
incorporate the Plan by reference and (v) shall be delivered to the
Participant. The Agreement shall contain such other terms and conditions as are
required by the Plan and, in addition, such other terms not inconsistent with
the Plan as the Committee may deem advisable.

ARTICLE II

PROVISIONS APPLICABLE TO STOCK OPTIONS

SECTION 2.1 GRANTS OF STOCK OPTIONS.

The Committee may from time to time grant to eligible employees Stock Options
on the terms and conditions set forth in the Plan and on such other terms and
conditions as are not inconsistent with the purposes and provisions of the
Plan, as the Committee, in its discretion, may from time to time determine.
Each Agreement covering a Grant of Stock Options shall specify the number of
Stock Options granted, the exercise price of such Stock Options, whether such
Stock Options are Incentive Stock Options or Non-Qualified Stock Options and
the period during which such Stock Options may be exercised.

SECTION 2.2 EXERCISE PRICE.

The Committee shall establish the per share exercise price at the time any
Stock Option is granted at such amount as the Committee shall determine, except
that such exercise price shall not be less than 50% of the Fair Market Value of
a share of Class B Common Stock subject to the Option on the Date of Grant and
that, with respect to an Incentive Stock Option, such exercise price shall not
be less than 100% of the Fair Market Value of a share of Class B Common Stock
on the Date of Grant. The exercise price will be subject to adjustment in
accordance with the provisions of Article 5.2 of the Plan.

SECTION 2.3 EXERCISE OF STOCK OPTIONS.

(a) Exercisability. Stock Options shall be exercisable only to the extent the
Participant is vested therein. A Participant shall vest in Stock Options over
such time and in such increments as the Committee shall determine and specify
in a vesting schedule set forth in the applicable Agreement. The Committee may,
however, in its sole discretion, accelerate the time at which a Participant
vests in his Stock Options.

(b) Option Period. For each Stock Option granted, the Committee shall specify
the period during which the Stock Option may be exercised; provided, however,
that anything in the Plan or in the applicable Agreement to the contrary
notwithstanding:

(i) Earliest Exercise Date. No Stock Option granted under the Plan shall
be exercisable until six months after the Date of Grant thereof.

(ii) Latest Exercise Date. No Stock Option granted under the Plan shall
be exercisable after the tenth anniversary of the Date of Grant thereof.

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(iii) Registration Restrictions. A Stock Option shall not be exercisable,
no transfer of shares of Class B Common Stock shall be made to any
Participant, and any attempt to exercise a Stock Option or to transfer any
such shares shall be void and of no effect, unless and until (A) a
registration statement under the Securities Act of 1933, as amended, has
been duly filed and declared effective pertaining to the shares of Class B
Common Stock subject to such Stock Option, and the shares of Class B Common
Stock subject to such Stock Option have been duly qualified under
applicable Federal or state securities or blue sky laws or (B) the
Committee, in its sole discretion, determines, or the Participant, upon the
request of the Committee, provides an opinion of counsel satisfactory to
the Committee, that such registration or qualification is not required as a
result of the availability of an exemption from registration or
qualification under such laws. Without limiting the foregoing, if at any
time the Committee shall determine, in its sole discretion, that the
listing, registration or qualification of the shares of Class B Common
Stock subject to such Stock Option under any Federal or state law or on any
securities exchange or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, delivery or purchase of such shares pursuant to the
exercise of a Stock Option, such Stock Option shall not be exercised in
whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.

(i) Termination other than for Cause, Retirement, Death or Permanent
Disability. In the event that (A) the Participant ceases to be an employee
of the Company or any of its subsidiaries by reason of the voluntary
termination by the Participant, the termination by the Company or any of
its subsidiaries other than for Cause or the Participant's Retirement, his
Outstanding Stock Options may be exercised to the extent then exercisable
until the earlier of three months after the date of such termination or
Retirement (or such longer period, not in excess of the longer of six
months after the date of such termination or Retirement or the second
anniversary of the Date of Grant of such Stock Options, as may be
determined by the Committee, in its discretion) or the expiration of such
Stock Options, (B) a Participant dies during a period during which his
Stock Options could have been exercised by him, his Outstanding Stock
Options may be exercised to the extent exercisable at the date of death by
the person who acquired the right to exercise such Stock Options by will or
the laws of descent and distribution until the earlier of one year after
such death (or such longer period as may be determined by the Committee, in
its discretion, prior to the expiration of such one-year period) or the
expiration of such Stock Options, and (C) the Permanent Disability of the
Participant occurs, the Participant may exercise his Outstanding Stock
Options to the extent exercisable upon date of the onset of such Permanent
Disability until the earlier of one year after such date (or such longer
period not in excess of two years after such date as may be determined by
the Committee, in its discretion) or the expiration of such Stock Options.
Upon the occurrence of an event described in clauses (A), (B) or (C) of
this Section 2.3(c)(i), all rights with respect to Stock Options that are
not vested as of such event will be relinquished.

(ii) Termination for Cause. If a Participant's employment with the
Company or any of its subsidiaries ends because of a Termination for Cause,
then unless the Committee, in its discretion, determines otherwise, all
Outstanding Stock Options, whether or not then vested, shall terminate
effective as of the date of such termination.

(iii) Maximum Exercise Period. Anything in this Section 2.3 to the
contrary notwithstanding, no Stock Option shall be exercisable after the
earlier to occur of (A) the expiration of the option period set forth in
the applicable Agreement or (B) the tenth anniversary of the Date of Grant
thereof.

SECTION 2.4 PAYMENT OF PURCHASE PRICE UPON EXERCISE.

Every share purchased through the exercise of a Stock Option shall be paid
for in full at the time of exercise in cash or, in the discretion of the
Committee, in shares of Class B Common Stock or other securities of the Company
designed by the Committee or in a combination of cash, shares or such other
securities.

SECTION 2.5 STOCK APPRECIATION RIGHTS.

The Committee may grant Stock Appreciation Rights only in tandem with a Stock
Option, either at the time of Grant or by amendment at any time prior to the
exercise, expiration or termination of such Stock Option. Each Stock

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Appreciation Right shall be subject to the same terms and conditions as the
related Stock Option and shall be exercisable only at such times and to such
extent as the related Stock Option is exercisable. A Stock Appreciation Right
shall entitle the holder to surrender to the Company the related Stock Option
unexercised and receive from the Company in exchange therefor an amount equal
to the excess of the Fair Market Value of the shares of Class B Common Stock
subject to such Stock Option, determined as of the day preceding the surrender
of such Stock Option, over the Stock Option aggregate exercise price. Such
amount shall be paid in cash or, in the discretion of the Committee, in shares
of Class B Common Stock or other securities of the Company designated by the
Committee or in a combination of cash, shares or such other securities.

ARTICLE III

PROVISIONS APPLICABLE TO RESTRICTED SHARES

SECTION 3.1 GRANTS OF RESTRICTED SHARES.

The Committee may from time to time grant to eligible employees Restricted
Shares on the terms and conditions set forth in the Plan and on such other
terms and conditions as are not inconsistent with the purposes and provisions
of the Plan, as the Committee, in its discretion, may from time to time
determine. Each Agreement covering a Grant of Restricted Shares shall specify
the number of Restricted Shares granted and the vesting schedule (as provided
for in Section 3.2 hereof) for such Restricted Shares.

SECTION 3.2 VESTING.

The Committee shall establish the vesting schedule applicable to Restricted
Shares granted hereunder, which vesting schedule shall specify the period of
time and the increments in which a Participant shall vest in the Grant of
Restricted Shares; provided, however, that no such Restricted Share shall vest
until six months after the Date of Grant thereof.

SECTION 3.3 RIGHTS AND RESTRICTIONS GOVERNING RESTRICTED SHARES.

As of the Date of Grant of Restricted Shares, one or more certificates
representing the appropriate number of shares of Class B Common Stock granted
to a Participant shall be registered in his name but shall be held by the
Company for the account of the Participant. The Participant shall have all
rights of a holder as to such shares of Class B Common Stock (including, to the
extent applicable, the right to receive dividends and to vote), subject to the
following restrictions: (a) the Participant shall not be entitled to delivery
of certificates representing such shares of Class B Common Stock until such
shares have vested; (b) none of the Restricted Shares may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of until such shares have
vested; and (c) except as otherwise provided in Section 3.6 below, all unvested
Restricted Shares shall be immediately forfeited upon a Participant's
termination of employment with the Company for any reason or the Participant's
death, Retirement or Permanent Disability.

SECTION 3.4 ADJUSTMENT WITH RESPECT TO RESTRICTED SHARES.

Any other provision of the Plan to the contrary notwithstanding, the
Committee may, in its discretion, at any time accelerate the date or dates on
which Restricted Shares vest.

SECTION 3.5 DELIVERY OF RESTRICTED SHARES.

On the date on which Restricted Shares vest, all restrictions contained in
the Agreement covering such Restricted Shares and in the Plan shall lapse as to
such Restricted Shares and one or more stock certificates for the appropriate
number of shares of Common Stock, free of the restrictions set forth in the
Plan and applicable Agreement, shall be delivered to the Participant or such
shares shall be credited to a brokerage account if the Participant so directs;
provided, however, that such certificates shall bear such legends as the
Committee, in its sole discretion, may determine to be necessary or advisable
in order to comply with applicable Federal or state securities laws.

SECTION 3.6 TERMINATION OF EMPLOYMENT, RETIREMENT, DEATH OR PERMANENT
DISABILITY.

In the event that (i) the Participant's employment with the Company or any of
its subsidiaries ends by reason of voluntary termination by the Participant,
termination by the Company or any of its subsidiaries other than for Cause,

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termination by the Company or any of its subsidiaries for Cause or the
Participant's retirement, or (ii) the Participant's death or Permanent
Disability, prior to the date or dates on which Restricted Shares vest, the
Participant shall forfeit all unvested Restricted Shares as of the date of such
event, unless, other than in the case of a termination by the Company or its
subsidiaries for Cause, the Committee determines that the circumstances in the
particular case so warrant and provides that some or all of such Participant's
unvested Restricted Shares shall vest as of the date of such event, in which
case certificates representing such shares shall be delivered, in accordance
with Section 3.5 above, to the Participant or in the case of the Participant's
death, to the person or persons who acquired the right to receive such
certificates by will or the laws of descent and distribution.

ARTICLE IV

PROVISIONS APPLICABLE TO PHANTOM SHARES

SECTION 4.1 GRANTS OF PHANTOM SHARES.

The Committee may from time to time grant to eligible employees Phantom
Shares, the value of which is determined by reference to a share of Class B
Common Stock, on the terms and conditions set forth in the Plan and on such
other terms and conditions as are not inconsistent with the purposes and
provisions of the Plan as the Committee, in its discretion, may from time to
time determine. Each Agreement covering a Grant of Phantom Shares shall specify
the number of Phantom Shares granted, the Initial Value of such Phantom Shares,
the Valuation Dates, the number of Phantom Shares whose Appreciation Value
shall be determined on each such Valuation Date, any applicable vesting
schedule (as provided for in Section 4.3 hereof) for such Phantom Shares, and
any applicable limitation on payment (as provided for in Section 4.4 hereof)
for such Phantom Shares.

SECTION 4.2 APPRECIATION VALUE.

(a) Valuation Dates; Measurement of Appreciation Value. The Committee shall
provide in the Agreement for one or more Valuation Dates on which the
Appreciation Value of the Phantom Shares granted pursuant to the Agreement
shall be measured and fixed, and shall designate in the Agreement the number of
such Phantom Shares whose Appreciation Value is to be calculated on each such
Valuation Date. Unless otherwise determined by the Committee, each Valuation
Date shall be December 15 and no Valuation Date shall occur later than the year
in which the eighth (8th) anniversary of the Date of Grant occurs.

(b) Payment of Appreciation Value. Except as otherwise provided in Section
4.5 hereof, and subject to the limitation contained in Section 4.4 hereof, the
Appreciation Value of a Phantom Share shall be paid to a Participant in cash in
a lump sum as soon as practicable following the Valuation Date applicable to
such Phantom Share.

SECTION 4.3 VESTING.

The Committee may, in its discretion, provide in the Agreement that Phantom
Shares granted thereunder shall vest (subject to such terms and conditions as
the Committee may provide in the Agreement) over such period of time, not in
excess of five years from the Date of Grant, as may be specified in a vesting
schedule contained therein.

SECTION 4.4 LIMITATION ON PAYMENT.

The Committee may, in its discretion, establish and set forth in the
Agreement a maximum dollar amount payable under the Plan for each Phantom Share
granted pursuant to such Agreement.

SECTION 4.5 TERMINATION OF EMPLOYMENT, DEATH, RETIREMENT OR PERMANENT
DISABILITY.

(a) Voluntary Termination, Termination by the Company Other Than for Cause,
Death, Retirement or Permanent Disability. If, before the occurrence of one or
more Valuation Dates applicable to the Participant's Outstanding Phantom
Shares, (i) the Participant's employment with the Company or any of its
subsidiaries ends by reason of the voluntary termination by the Participant,
the termination by the Company or any of its subsidiaries other than for Cause
or the Participant's Retirement or (ii) the Participant's death or Permanent
Disability occurs, then, unless the Committee, in its discretion, determines
otherwise, the Appreciation Value of each Outstanding Phantom Share as to which
the

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Participant's rights are vested as of the date of such event shall be the
lesser of (x) the Appreciation Value of such Phantom Share calculated as of the
date of such event or (y) the Appreciation Value of such Phantom Share
calculated as of the originally scheduled Valuation Date applicable thereto.
Unless the Committee, in its discretion, determines otherwise, the Appreciation
Value so determined for each such vested Outstanding Phantom Share shall then
be payable to the Participant or the Participant's Beneficiary following the
originally scheduled Valuation Date applicable thereto in accordance with
Section 4.2(b) hereof. Upon the occurrence of an event described in this
Section 4.5(a), all rights with respect to Phantom Shares that are not vested
as of such date will be relinquished.

(b) Termination for Cause. If a Participant's employment with the Company or
any of its subsidiaries ends because of a Termination for Cause, then, unless
the Committee, in its discretion, determines otherwise, all Outstanding Phantom
Shares, whether or not vested, and any and all rights to the payment of
Appreciation Value with respect to such Outstanding Phantom Shares shall be
forfeited effective as of the date of such termination.

ARTICLE V

EFFECT OF CERTAIN CORPORATE CHANGES AND CHANGES IN CONTROL

SECTION 5.1 EFFECT OF REORGANIZATION.

(a) With respect to Stock Options and Stock Appreciation Rights granted
pursuant to Article II hereof and with respect to Restricted Shares granted
pursuant to Article III hereof, the Committee shall take one of the
following actions, the choice of which being in its sole discretion,
unless, in the case of any Participant, the Participant agrees otherwise:
(i) cause the surviving entity or new owner, as the case may be, to agree
to adopt the Plan and maintain it, with respect to all Outstanding Stock
Options, Stock Appreciation Rights and Restricted Shares, in accordance
with the terms in effect as of the date of the Reorganization Event, and to
agree to adopt the related Agreements and to continue to effect their
respective terms as such terms were in effect as of the date of the
Reorganization Event, except that equitable adjustments shall be made, if
appropriate, to reflect the relative values of the Class B Common Stock
immediately prior to and following the occurrence of the Reorganization
Event; (ii) cause the surviving entity or new owner, as the case may be, to
grant new stock options and stock appreciation rights, if applicable, (the
"Substitute Options"), in substitution for the unexercised Stock Options
and Stock Appreciation Rights as of the date of the Reorganization Event or
to award new restricted shares (the "New Restricted Shares") in
substitution for the unvested Restricted Shares, as of the date of the
Reorganization Event; provided, however, that such Substitute Options or
such New Restricted Shares, as the case may be, shall have a value, as of
the date of such Reorganization Event, equal to the value of such
unexercised Stock Options and Stock Appreciation Rights or such unvested
Restricted Shares as of such date; (iii) solely with respect to Outstanding
Stock Options, provide for the payment upon termination or cancellation of
Outstanding Stock Options of an amount in cash or securities equal to the
excess, if any, of the aggregate Fair Market Value of the Class B Common
Stock subject to such Stock Options at the time of such termination or
cancellation over the aggregate exercise price of such Stock Options; or
(iv) advance the dates upon which all Outstanding Stock Options, Stock
Appreciation Rights and Restricted Shares vest;

(b) With respect to Phantom Shares granted pursuant to Article IV hereof,
the Committee shall take one of the following actions, the choice of which
being in its sole discretion, unless, in the case of any Participant, the
Participant agrees otherwise: (i) cause the surviving entity or new owner,
as the case may be, to agree to adopt the Plan and to maintain it, with
respect to all Outstanding Phantom Shares under the Plan as of the date of
the Reorganization Event, in accordance with the terms in effect as of the
date of the Reorganization Event, and to

A1-8

agree to adopt the related Agreements and to continue in effect their
respective terms as such terms were in effect as of the date of the
Reorganization Event, except that (A) the Plan and related Agreements may
be modified to utilize the stock of such surviving entity or new owner, in
lieu of the Class B Common Stock, to measure the Value of the Phantom
Shares, if equitable adjustments are made to reflect the relative values of
such stock immediately prior to the occurrence of the Reorganization Event
or (B) if the Class B Common Stock continues to be utilized to measure the
Value of the Phantom Shares, equitable adjustments are to be made to
reflect the relative values of such stock immediately prior to and
following the Reorganization Event, if appropriate; or (ii) determine the
Appreciation Value of the Phantom Shares by reference to the consideration
to be paid for the Class B Common Stock in such Reorganization Event, and
modify the Plan and the related Agreements, if appropriate, to provide that
when and if the Participant is entitled to a payment under the provisions
of the Plan and related Agreement (including, without limitation, the
provisions regarding vesting, payment, limitation on payment and employment
requirements) as they were in effect prior to the proposal of the
Reorganization Event, such payment shall be computed on the basis of such
Appreciation Value as so determined.

Notwithstanding the provisions of Sections 5.1(a) and 5.1(b) above, in the
event that the effect of the provisions contained therein should become a
material impediment, either from a financial point of view or otherwise, to the
consummation of a proposed Reorganization Event, the Committee may take such
action as it deems equitable and appropriate to provide each Participant with a
benefit equivalent to that which he would have been entitled had such event not
occurred. Further, for the purposes of the first sentence of this Section 5.1,
no event or series of events involving National Amusements, Inc., the Company
or any of their respective subsidiaries or affiliates shall be deemed to be a
Reorganization Event unless such event or series of events results in there
being no class of equity securities of the Company which is publicly traded.
Any action taken by the Committee may be made conditional upon the consummation
of the applicable Reorganization Event. Further, in the event that a division
or subsidiary of the Company is acquired by another corporation, person, or
entity, the Company is reorganized, dissolved or liquidated, an event or series
of events involving a corporate restructuring not described in the first
sentence of this Section occurs, or the Board shall propose that the Company
enter into any such transaction, event or series of events, then the Committee
will take such action, if any, as it, in its sole discretion, deems equitable
or appropriate to provide each Participant with a benefit equivalent to that
which he would have been entitled had such event not occurred.

SECTION 5.2 DILUTION AND OTHER ADJUSTMENTS.

In the event of a stock dividend or split, issuance or repurchase of stock or
securities convertible into or exchangeable for shares of stock, grants of
options, warrants or rights (other than pursuant to the Plan) to purchase
stock, recapitalization, combination, exchange or similar change affecting the
Class B Common Stock, the Committee shall, in its discretion, make any or all
of the following adjustments to provide each Participant with a benefit
equivalent to that which he would have been entitled had such event not
occurred: (i) adjust the number of shares of Class B Common Stock subject to
any Stock Options or Stock Appreciation Rights or the number of Restricted
Shares or Phantom Shares granted to each Participant, (ii) adjust the exercise
price of the shares of Class B Common Stock subject to such Stock Options or
Stock Appreciation Rights or the Initial Value of such Phantom Shares, and
(iii) make any other adjustments, or take such action, as the Committee, in its
discretion, deems appropriate. Such adjustments shall be conclusive and binding
for all purposes. In the event of a change in the Class B Common Stock which is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par value
to no par value, without increase or decrease in the number of issued shares,
the shares resulting from any such change shall be deemed to be Class B Common
Stock within the meaning of the Plan.

ARTICLE VI

MISCELLANEOUS

SECTION 6.1 NO RIGHTS TO GRANTS OR CONTINUED EMPLOYMENT.

No employee shall have any claim or right to receive Grants 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.

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SECTION 6.2 RESTRICTION ON TRANSFER.

The rights of a Participant with respect to Stock Options, Stock Appreciation
Rights, Restricted Shares or Phantom Shares shall not be transferable by the
Participant to whom such Stock Options, Stock Appreciation Rights, Restricted
Shares or Phantom Shares are granted, otherwise than by will or the laws of
descent and distribution.

SECTION 6.3 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 any Federal, state or local taxes required by law to
be withheld with respect to such payments. The Committee, in its discretion,
may require, as a condition to the exercise of any Stock Option or Stock
Appreciation Right, that a Participant pay an additional amount in cash equal
to the amount of any Federal, state or local taxes owed by the Participant as a
result of such exercise.

SECTION 6.4 STOCKHOLDER RIGHTS.

No Grant under the Plan shall entitle a Participant or Beneficiary to any
rights of a holder of shares of Class B Common Stock, except as provided in
Article III with respect to Restricted Shares or upon the delivery of share
certificates to a Participant upon exercise of a Stock Option or upon the
delivery of share certificates in settlement of a Stock Appreciation Right.

SECTION 6.5 NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CORPORATE CHANGES.

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

SECTION 6.6 SOURCE OF PAYMENTS.

The general funds of the Company shall be the sole source of cash settlements
of Stock Appreciation Rights under the Plan and payments of Appreciation Value,
and 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.
Nothing contained in this Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and a Participant or any other person. To the
extent person acquires any rights to receive payments hereunder from the
Company, such rights shall be no greater than those of an unsecured creditor.

ARTICLE VII

AMENDMENT AND TERMINATION

The Board may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part; provided, however, that any amendment
which must be approved by the stockholders of the Company in order to maintain
the continued qualification of the Plan under Rule 16b-3 under the Exchange Act
shall not be effective unless and until such stockholder approval has been
obtained in compliance with such rule. No termination or amendment of the Plan
may, without the consent of the Participant to whom a grant has been made,
adversely affect the rights of such Participant in the Stock Options, Stock
Appreciation Rights, Restricted Shares or Phantom Shares covered by such Grant.
Unless previously terminated pursuant to this Article VII, the Plan shall
terminate on the fifth anniversary of the Effective Date (as defined below),
and no further Grants may be awarded hereunder after such date.

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ARTICLE VIII

INTERPRETATION

SECTION 8.1 GOVERNMENTAL REGULATIONS.

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

SECTION 8.2 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 8.3 GOVERNING LAW.

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

ARTICLE IX

EFFECTIVE DATE AND STOCKHOLDER APPROVAL

The Plan shall be effective as of May 26, 1994 (the "Effective Date") and
stockholder approval shall be sought at the first annual meeting of
stockholders following such date. In the event that stockholder approval is not
obtained on or before the date of such annual meeting, the Plan and all Grants
thereunder shall be void ab initio and of no effect. No Stock Option or Stock
Appreciation Right shall be exercisable, no Restricted Share shall vest and no
Appreciation Value shall be paid with respect to a Phantom Share until the date
of such stockholder approval.

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EXHIBIT A-2

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)

ARTICLE I

GENERAL

SECTION 1.1 PURPOSE.

The purpose of the Viacom Inc. 1989 Long-Term Management Incentive Plan (the
"Plan") is to benefit and advance the interests of Viacom Inc., a Delaware
corporation (the "Company"), and its subsidiaries by rewarding certain key
employees of the Company and its subsidiaries for their contributions to the
financial success of the Company and thereby motivate them to continue to make
such contributions in the future.

SECTION 1.2 DEFINITIONS.

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

(b) "Appreciation Value" shall mean the excess, if any, of the Value of a
Phantom Share on the applicable Valuation Date or termination date (in the
event of a termination of employment as described in Section 2.5(a) hereof), as
the case may be, over the Initial Value of such Phantom Share.

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

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

(f) "Committee" shall mean the Compensation Committee of the Board (or such
other Committee as may be appointed by the Board) except that (i) the number of
directors on the Committee shall be not less than three and (ii) each member of
the Committee shall be a "disinterested person", within the meaning of Rule
16b-3 of the Exchange Act.

(g) "Common Stock" shall mean Voting Common Stock and the Non-Voting Common
Stock.

(h) "Date of Grant" shall mean the date of the Grant of the Phantom Shares,
Stock Options, Stock Appreciation Rights and/or Restricted Shares as set forth
in the applicable Agreement.

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

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

(k) "Grant" shall mean a grant under the Plan which may consist of a grant of
Phantom Shares, Stock Options, Stock Appreciation Rights or Restricted Shares
or a combination of any of the above.

(m) "Non-Voting Common Stock" shall mean the shares of Non-Voting Common
Stock, par value $0.01 per share, of the Company.

(n) "Outstanding Phantom Share" shall mean a Phantom Share granted to a
Participant for which the Valuation Date has not yet occurred.

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

(p) "Participant" shall mean any employee who has met the eligibility
requirements set forth in Section 1.4 hereof and to whom an outstanding Grant
has been made under the Plan.

(q) "Permanent Disability" shall have the same meaning as such term or a
similar term has in the long-term disability policy maintained by the Company
or a subsidiary thereof for the Participant and in effect on the date of the
Participant's termination of employment with the Company or any subsidiary
thereof, unless the Committee determines otherwise, in its discretion, and sets
forth an alternative definition in the applicable Agreement.

(r) "Phantom Share" shall mean a contractual right granted to a Participant
pursuant to Article II, to receive an amount equal to the Appreciation Value at
such time, and subject to such terms and conditions, as are set forth in the
Plan and the applicable Agreement.

(s) "Restricted Share" shall mean a share of Voting Common Stock or Non-
Voting Common Stock granted to a Participant pursuant to Article IV, which is
subject to the restrictions set forth in Section 4.3 hereof, and subject to
such other terms and conditions as are set forth in the Plan and the applicable
Agreement.

(t) "Retirement" shall mean the resignation or termination of employment
after attainment of an age required for payment of an immediate pension
pursuant to the terms of any qualified retirement plan maintained by the
Company or a subsidiary in which the Participant participates; provided,
however, that no resignation or termination prior to a Participant's 60th
birthday shall be deemed a retirement unless the Committee so determines in its
sole discretion.

(u) "Stock Appreciation Right" shall mean a contractual right granted to a
Participant pursuant to Article III, to receive an amount determined in
accordance with Section 3.5 of the Plan.

(v) "Stock Option" shall mean a contractual right granted to a Participant
pursuant to Article III, to purchase Common Stock (which may be Voting Common
Stock, Non-Voting Common Stock or both) at such time and price, and subject to
such other terms and conditions, as are set forth in the Plan and the
applicable Agreement. Stock Options may be "Incentive Stock Options" within the
meaning of Section 422A of the Code or "Nonqualified Stock Options" which do
not meet the requirements of such Code section.

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(w) "Termination for Cause" shall mean a termination of employment with the
Company or any of its subsidiaries which, as determined by the Committee, is by
reason of (i) "cause" as such term or a similar term is defined in any
employment agreement applicable to the Participant, or (ii) if there is no such
employment agreement or if such employment agreement contains no such term, (x)
a failure or refusal by a Participant to substantially perform a material duty
of such Participant's employment, (y) the commission by the Participant of a
felony or the perpetration by the Participant of a dishonest act or common law
fraud against the Company or any subsidiary thereof, or (z) any other act or
omission which is materially injurious to the financial condition or business
reputation of the Company or any subsidiary thereof.

(x) "Termination of Employment" shall mean the termination of a Participant's
employment with the Company or any of its subsidiaries.

(y) "Valuation Date" shall mean the date on which the Appreciation Value of a
Phantom Share shall be measured and fixed in accordance with Section 2.2(a)
hereof.

(z) The "Value" of a Phantom Share shall be determined by reference to the
"average Fair Market Value" of a share of Voting Common Stock, Non-Voting
Common Stock or combination thereof, as specified by the Committee and set
forth in the applicable Agreement. The "average Fair Market Value" on a given
date of a share of Voting Common Stock or Non-Voting Common Stock, as the case
may be, shall be determined over the 30-day period ending on such date or such
other period as the Committee may decide shall be applicable to a Grant of
Phantom Shares, determined by dividing (i) by (ii), where (i) shall equal the
sum of the Fair Market Values on each day that the applicable class of Common
Stock was traded and a closing price was reported on such national securities
exchange or on such automated quotation system or by such marketmaker, as the
case may be, during such period, and (ii) shall equal the number of days on
which the applicable class of Common Stock was traded and a closing price was
reported on such national securities exchange or on such automated quotation
system or by such marketmaker, as the case may be, during such period.

(aa) To "vest" a Phantom Share, Stock Option, Stock Appreciation Right or
Restricted Share held by a Participant shall mean to render such Phantom Share,
Stock Option, Stock Appreciation Right or Restricted Share nonforfeitable,
except where, with respect to Phantom Shares, Stock Options and Stock
Appreciation Rights, a Participant's employment ends because of a Termination
for Cause.

(bb) "Voting Common Stock" shall mean the shares of voting Common Stock, par
value S0.01 per share, of the Company.

SECTION 1.3 ADMINISTRATION OF THE PLAN.

The Plan shall be administered by the Committee which shall adopt such rules
as it may deem appropriate in order to carry out the purpose of the Plan. 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 select
Participants from among the class of eligible persons specified in Section 1.4
below and to determine the number of Phantom Shares, Stock Options, Stock
Appreciation Rights or Restricted Shares (or combination thereof) to be granted
to each Participant.

SECTION 1.4 ELIGIBLE PERSONS.

Grants may be awarded only to key employees of the Company and its
subsidiaries. An individual shall not be deemed an employee for purposes of the
Plan unless such individual receives compensation from either the Company or a
subsidiary of the Company for services performed as an employee of the Company
or any of its subsidiaries.

SECTION 1.5 PHANTOM SHARES AND COMMON STOCK SUBJECT TO THE PLAN.

The total aggregate number of (i) Phantom Shares that may be granted under
the Plan and (ii) shares of Common Stock that may be distributed under the Plan
(whether granted as Restricted Shares or reserved for distribution upon

A2-3

grant of Stock Options or Stock Appreciation Rights) shall be 7,000,000,
subject to adjustment pursuant to Section 5.2 hereof. The shares of Common
Stock shall be made available from authorized but unissued Common Stock or from
Common Stock issued and held in the treasury of the Company and may be either
shares of Voting Common Stock or Non-Voting Common Stock, as shall be
determined by the Committee. The delivery of shares of Common Stock upon
exercise of a Stock Option or Stock Appreciation Right in any manner and the
vesting of Restricted Shares or the payment of Appreciation Value with respect
to Phantom Shares shall result in a decrease in the number of shares which
thereafter may be issued for purposes of this Section 1.5, by the number of
shares as to which the Stock Option or Stock Appreciation Right is exercised or
by the number of Restricted Shares which vest and the number of Phantom Shares
for which such payment is made. Phantom Shares and Restricted Shares that are
forfeited for any reason shall not be deemed granted for purposes of this
Section 1.5 and may thereafter be regranted under the Plan. Shares of Common
Stock with respect to which Stock Options and Stock Appreciation Rights expire,
are cancelled without being exercised or are otherwise terminated may be
regranted under the Plan. Any Phantom Share for which the Value is determined
by reference to the combined Fair Market Values of a share of Voting Common
Stock and a share of Non-Voting Common Stock shall be counted as two Phantom
Shares for purposes of this Section 1.5.

SECTION 1.6 AGREEMENTS.

Each Agreement (i) shall state the Date of Grant, the name of the Participant
and the Participant's employing company, (ii) shall specify the terms of the
Grant, (iii) shall be signed by the Participant and a person designated by the
Committee, (iv) shall incorporate the Plan by reference and (v) shall be
delivered to the Participant. The Agreement shall contain such other terms and
conditions as are required by the Plan and, in addition, such other terms not
inconsistent with the Plan as the Committee may deem advisable.

ARTICLE II

PROVISIONS APPLICABLE TO PHANTOM SHARES

SECTION 2.1 GRANTS OF PHANTOM SHARES.

The Committee may from time to time grant to eligible employees Phantom
Shares, the value of which is determined by reference to a share of Voting
Common Stock, Non-Voting Common Stock or combination thereof (as determined by
the Committee), on the terms and conditions set forth in the Plan and on such
other terms and conditions as are not inconsistent with the purposes and
provisions of the Plan as the Committee, in its discretion, may from time to
time determine. Each Agreement covering a Grant of Phantom Shares shall specify
the number of Phantom Shares granted, the Initial Value of such Phantom Shares,
the Valuation Dates, the number of Phantom Shares whose Appreciation Value
shall be determined on each such Valuation Date, any applicable vesting
schedule (as provided for in Section 2.3 hereof) for such Phantom Shares, and
any applicable limitation on payment (as provided for in Section 2.4 hereof)
for such Phantom Shares.

SECTION 2.2 APPRECIATION VALUE.

(b) Payment of Appreciation Value. Except as otherwise provided in Section
2.5 hereof, and subject to the limitation contained in Section 2.4 hereof, the
Appreciation Value of a Phantom Share shall be paid to a Participant in cash in
a lump sum as soon as practicable following the Valuation Date applicable to
such Phantom Share.

A2-4

SECTION 2.3 VESTING.

SECTION 2.4 LIMITATION ON PAYMENT.

The Committee may, in its discretion, establish and set forth in the
Agreement a maximum dollar amount payable under the Plan for each Phantom Share
granted pursuant to such Agreement.

SECTION 2.5 EMPLOYMENT REQUIREMENT.

(a) Death, Retirement, Permanent Disability, Voluntary Termination or
Termination by the Company Other Than for Cause. If the employment of a
Participant terminates before the occurrence of one or more Valuation Dates
applicable to the Participant's Outstanding Phantom Shares for reason of such
Participant's death Retirement or Permanent Disability, voluntary termination
by the Participant or termination by the Company or any of its subsidiaries
other than for Cause, then, unless the Committee, in its discretion, determines
otherwise, the Appreciation Value of each Outstanding Phantom Share as to which
the Participant's rights are vested as of the termination date shall be the
lesser of (i) the Appreciation Value of such Phantom Share calculated as of
such date of termination or (ii) the Appreciation Value of such Phantom Share
calculated as of the originally scheduled Valuation Date applicable thereto.
Unless the Committee, in its discretion, determines otherwise, the Appreciation
Value so determined for each such vested Outstanding Phantom Share shall then
be payable to the Participant or the Participant's Beneficiary following the
originally scheduled Valuation Date applicable thereto in accordance with
Section 2.2(b) hereof. Upon a termination described in this Section 2.5(a), all
rights with respect to Phantom Shares that are not vested as of such
termination date will be relinquished.

(b) Termination for Cause. If a Participant's employment with the Company or
any of its subsidiaries ends because of a Termination for Cause, then, unless
the Committee, in its discretion, determines otherwise, all Outstanding Phantom
Shares, whether or not vested. and any and all rights to the payment of
Appreciation Value with respect to such Outstanding Phantom Shares shall be
forfeited effective as of the date of such termination.

ARTICLE III

PROVISIONS APPLICABLE TO STOCK OPTIONS

SECTION 3.1 GRANTS OF STOCK OPTIONS.

The Committee may from time to time grant to eligible employees Stock Options
to purchase Common Stock on the terms and conditions set forth in the Plan and
on such other terms and conditions as are not inconsistent with the purposes
and provisions of the Plan. as the Committee, in its discretion, may from time
to time determine. Each Agreement covering a Grant of Stock Options shall
specify the number of Stock Options granted, whether the shares of Common Stock
subject to the Option shall be shares of Voting Common Stock, Non-Voting Common
Stock or a combination thereof, the exercise price of such Stock Options,
whether such Stock Options are Incentive Stock Options or Nonqualified Stock
Options and the period during which such Stock Options may be exercised.

SECTION 3.2 EXERCISE PRICE.

The Committee shall establish the per share exercise price at the time any
Stock Option is granted at such amount as the Committee shall determine, except
that such exercise price shall not be less than 50% of the Fair Market Value of
a share of the class of Common Stock subject to the Option on the Date of Grant
and that, with respect to an Incentive Stock Option, such exercise price shall
not be less than 100% of the Fair Market Value of a share of the class of
Common Stock on the Date of Grant. The exercise price will be subject to
adjustment in accordance with the provisions of Article 5.2 of the Plan.

A2-5

SECTION 3.3 EXERCISE OF STOCK OPTIONS.

(i) Earliest Exercise Date. No Stock Option granted under the Plan shall
be exercisable until six months after the Date of Grant thereof.

(ii) Latest Exercise Date. No Stock Option granted under the Plan shall
be exercisable after the tenth anniversary of the Date of Grant thereof.

(iii) Registration Restrictions. A Stock Option shall not be exercisable,
no transfer of shares of Common Stock shall be made to any Participant, and
any attempt to exercise a Stock Option or to transfer any such shares shall
be void and of no effect, unless and until (A) a registration statement
under the Securities Act of 1933, as amended, has been duly filed and
declared effective pertaining to the shares of Common Stock subject to such
Stock Option, and the shares of Common Stock subject to such Stock Option
have been duly qualified under applicable Federal or state securities or
blue sky laws or (B) the Committee, in its sole discretion, determines, or
the Participant, upon the request of the Committee, provides an opinion of
counsel satisfactory to the Committee, that such registration or
qualification is not required as a result of the availability of an
exemption from registration or qualification under such laws. Without
limiting the foregoing, if at any time the Committee shall determine, in
its sole discretion, that the listing, registration or qualification of the
shares of Common Stock subject to such Stock Option under any Federal or
state law or on any securities exchange or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of,
or in connection with, delivery or purchase of such shares pursuant to the
exercise of a Stock Option, such Stock Option shall not be exercised in
whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.

(i) Termination other than for Cause. No Stock Option will be exercisable
after the Participant ceases to be an employee of the Company or any of its
subsidiaries except that (A) if such employment terminates by reason of
such Participant's Retirement, voluntary termination by the Participant or
termination by the Company or any of its subsidiaries other than for Cause,
his Outstanding Stock Options may be exercised to the extent then
exercisable until the earlier of three months after the date of such
termination (or such longer period, not in excess of the longer of six
months after the date of such termination or Retirement or the second
anniversary of the Date of Grant of such Stock Options, as may be
determined by the Committee, in its discretion) or the expiration of such
Stock Options, (B) if a Participant dies during a period during which his
Stock Options could have been exercised by him, his Outstanding Stock
Options may be exercised to the extent exercisable at the date of death by
the person who acquired the right to exercise such Stock Options by will or
the laws of descent and distribution until the earlier of one year after
such death (or such longer period as may be determined by the Committee, in
its discretion, prior to the expiration of such one-year period) or the
expiration of such Stock Options, and (C) if such employment terminates by
reason of Permanent Disability, the Participant may exercise his
Outstanding Stock Options to the extent exercisable upon his last day of
employment until the earlier of one year after such termination of
employment (or such longer period not in excess of two years after such
date as may be determined by the Committee, in its discretion) or the
expiration of such Stock Options. Upon a termination described in clauses
(A), (B) or (C) of this Section 3.3(c)(i), all rights with respect to Stock
Options that are not vested as of such termination date will be
relinquished.

(ii) Termination for Cause. If a Participant's employment with the
Company or any of its subsidiaries ends because of a Termination for Cause,
then unless the Committee, in its discretion, determines otherwise, all
Outstanding Stock Options whether or not then vested, shall terminate
effective as of the date of such termination.

A2-6

(iii) Maximum Exercise Period. Anything in this Section 3.3 to the
contrary notwithstanding, no Stock Option shall be exercisable after the
earlier to occur of (A) the expiration of the option period set forth in
the applicable Agreement or (B) the tenth anniversary of the Date of Grant
thereof.

SECTION 3.4 PAYMENT OF PURCHASE PRICE UPON EXERCISE.

Every share purchased through the exercise of a Stock Option shall be paid
for in full at the time of exercise in cash or, unless the Agreement covering
such Stock Option expressly provides to the contrary or the Committee, in its
discretion, determines otherwise, in shares of Voting Common Stock, Non-Voting
Common Stock or other securities of the Company designated by the Committee or
in a combination of cash, shares of Common Stock or such other securities.

SECTION 3.5 STOCK APPRECIATION RIGHTS.

The Committee may grant! Stock Appreciation Rights only in tandem with a
Stock Option, either at the time of Grant or by amendment at any time prior to
the exercise, expiration or termination of such Stock Option. Each Stock
Appreciation Right shall be subject to the same terms and conditions as the
related Stock Option and shall be exercisable only at such times and to such
extent as the related Stock Option is exercisable. A Stock Appreciation Right
shall entitle the holder to surrender to the Company the related Stock Option
unexercised and receive from the Company in exchange therefor an amount equal
to the excess of the Fair Market Value of the shares of Voting Common Stock
and/or Non-Voting Common Stock subject to such Stock Option, determined as of
the day preceding the surrender of such Stock Option, over the Stock Option
aggregate exercise price. Such amount shall be paid in cash or, in the
discretion of the Committee, in shares of Voting Common Stock, NonVoting Common
Stock or other securities of the Company designated by the Committee or in a
combination of cash, shares or such other securities.

ARTICLE IV

PROVISIONS APPLICABLE TO RESTRICTED SHARES

SECTION 4.1 GRANTS OF RESTRICTED SHARES.

SECTION 4.2 VESTING.

SECTION 4.3 RIGHTS AND RESTRICTIONS GOVERNING RESTRICTED SHARES.

As of the Date of Grant of Restricted Shares, one or more certificates
representing the appropriate number of shares of Common Stock granted to a
Participant shall be registered in his name but shall be held by the Company
for the account of the Participant. The Participant shall have all rights of a
holder as to such shares of Common Stock, including the right to receive
dividends and to vote (to the extent applicable) such shares of Common Stock,
subject to the following restrictions: (a) the Participant shall not be
entitled to delivery of certificates representing such shares of Common Stock
until such shares have vested; (b) none of the Restricted Shares may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of until
such shares have vested; and (c) except as otherwise provided in Section 4.6
below, all unvested Restricted Shares shall be immediately forfeited upon a
Participant's termination of employment with the Company for any reason.

A2-7

SECTION 4.4 ADJUSTMENT WITH RESPECT TO RESTRICTED SHARES.

Any other provision of the Plan to the contrary notwithstanding, the
Committee may, in its discretion, at any time accelerate the date or dates on
which Restricted Shares vest.

SECTION 4.5 DELIVERY OF RESTRICTED SHARES.

SECTION 4.6 TERMINATION OF EMPLOYMENT.

If the employment of a Participant terminates for any reason (Participant's
death Retirement or Permanent Disability, voluntary termination by the
Participant. termination by the Company or any of its subsidiaries other than
for Cause or termination by the Company or any of its subsidiaries for Cause)
prior to the date or dates on which Restricted Shares vest, the Participant
shall forfeit all unvested Restricted Shares as of the date of termination,
unless, in the case of a termination other than a termination by the Company or
its subsidiaries for Cause, the Committee determines that the circumstances in
the particular case so warrant and provides that some or all of such
Participant's unvested Restricted Shares shall vest as of the date of such
termination, in which case certificates representing such shares shall be
delivered, in accordance with Section 4.5 above, to the Participant or, in the
case of death, to the person or persons who acquired the right to receive such
certificates by will or the laws of descent and distribution.

ARTICLE V

EFFECT OF CERTAIN CORPORATE CHANGES AND CHANGES IN CONTROL

SECTION 5.1 EFFECT OF REORGANIZATION.

(a) With respect to Phantom Shares granted pursuant to Article II hereof, the
Committee shall take one of the following actions, the choice of which being in
its sole discretion, unless, in the case of any Participant, the Participant
agrees otherwise: (i) cause the surviving entity or new owner, as the case may
be, to agree to adopt the Plan and to maintain it, with respect to all
Outstanding Phantom Shares under the Plan as of the date of the Reorganization
Event, in accordance with the terms in effect as of the date of the
Reorganization Event, and to agree to adopt the related Agreements and to
continue in effect their respective terms as such terms were in effect as of
the date of the Reorganization Event, except that (A) the Plan and related
Agreements may be modified to utilize the stock of such surviving entity or new
owner, in lieu of the Voting Common Stock or Non-Voting Common Stock (or
combination thereof), to measure the Value of the Phantom Shares, if equitable
adjustments are made to reflect the relative values of such stock immediately
prior to the occurrence of the Reorganization Event or (B) if the Voting Common
Stock or Non-Voting Common Stock (or combination thereof) continues to be
utilized to measure the Value of the Phantom Shares, equitable adjustments are
to be made to reflect the relative values of such stock immediately prior to
and following the Reorganization Event, if appropriate; or (ii) determine the
Appreciation Value of the Phantom Shares by reference to the consideration to
be paid for the Voting Common Stock or Non-Voting Common Stock, as the case may
be, in such Reorganization Event, and modify the Plan and the related
Agreements, if appropriate, to provide that when and if

A2-8

the Participant is entitled to a payment under the provisions of the Plan and
related Agreement (including, without limitation, the provisions regarding
vesting, payment, limitation on payment and employment requirements) as they
were in effect prior to the proposal of the Reorganization Event, such payment
shall be computed on the basis of such Appreciation Value as so determined;

(b) with respect to Stock Options and Stock Appreciation Rights granted
pursuant to Article III hereof and with respect to Restricted Shares granted
pursuant to Article IV hereof, the Committee shall take one of the following
actions, the choice of which being in its sole discretion, unless, in the case
of any Participant, the Participant agrees otherwise: (i) cause the surviving
entity or new owner, as the case may be, to agree to adopt the Plan and
maintain it, with respect to all Outstanding Stock Options, Stock Appreciation
Rights and Restricted Shares, in accordance with the terms in effect as of the
date of the Reorganization Event, and to agree to adopt the related Agreements
and to continue in effect their respective terms as such terms were in effect
as of the date of the Reorganization Event, except that equitable adjustments
shall be made, if appropriate, to reflect the relative values of the Voting
Common Stock or Non-Voting Common Stock (or combination thereof) immediately
prior to and following the occurrence of the Reorganization Event; (ii) cause
the surviving entity or new owner, as the case may be, to grant new stock
options and stock appreciation rights, if applicable (the "Substitute
Options"), in substitution for the unexercised Stock Options and Stock
Appreciation Rights as of the date of the Reorganization Event or to award new
restricted shares (the "New Restricted Shares") in substitution for the
unvested Restricted Shares, as of the date of the Reorganization Event;
provided, however, that such Substitute Options or such New Restricted Shares,
as the case may be, shall have a value, as of the date of such Reorganization
Event, equal to the value of such unexercised Stock Options and Stock
Appreciation Rights or such unvested Restricted Shares as of such date; (iii)
solely with respect to Outstanding Stock Options, provide for the payment upon
termination or cancellation of Outstanding Stock Options of an amount in cash
or securities equal to the excess, if any, of the aggregate Fair Market Value
of the Voting Common Stock or Non-Voting Common Stock (or combination thereof)
subject to such Stock Options at the time of such termination or cancellation
over the aggregate exercise price of such Stock Options; or (iv) advance the
dates upon which all Outstanding Stock Options, Stock Appreciation Rights and
Restricted Shares vest.

Notwithstanding the provisions of Sections 5.1(a) and 5.1(b) above, in the
event that the effect of the provisions contained therein should become a
material impediment, either from a financial point of view or otherwise, to the
consummation of a proposed Reorganization Event, the Committee may take such
action as it deems equitable and appropriate to provide each Participant with a
benefit equivalent to that which he would have been entitled had such event not
occurred. Further, for the purposes of the first sentence of this Section 5.1,
no event or series of events involving National Amusements, Inc., the Company
or any of their respective subsidiaries or affiliates shall be deemed to be a
Reorganization Event unless such event or series or events results in there
being no class of equity securities of the Company which is publicly traded.
Any action taken by the Committee may be made conditional upon the consummation
of the applicable Reorganization Event. Further, in the event that a division
or subsidiary of the Company is acquired by another corporation, person, or
entity, the Company is reorganized, dissolved or liquidated, an event or series
of events involving a corporate restructuring not described in the first
sentence of this Section occurs, or the Board shall propose that the Company
enter into any such transaction, event or series of events, then the Committee
will take such action as it, in its sole discretion, deems equitable or
appropriate to provide each Participant with a benefit equivalent to that which
he would have been entitled had such event not occurred.

SECTION 5.2 DILUTION AND OTHER ADJUSTMENTS.

A2-9

any other adjustments, or take such action, as the Committee, in its
discretion, deems appropriate. Such adjustments shall be conclusive and binding
for all purposes. In the event of a change in the Voting Common Stock or Non-
Voting Common Stock, as the case may be, which is limited to a change in the
designation thereof to "Capital Stock" or other similar designation, or to a
change in the par value thereof, or from par value to no par value, without
increase or decrease in the number of issued shares, the shares resulting from
any such change shall be deemed to be Voting Common Stock or NonVoting Common
Stock, as the case may be, within the meaning of the Plan.

ARTICLE VI

MISCELLANEOUS

SECTION 6.1 NO RIGHTS TO GRANTS OR CONTINUED EMPLOYMENT.

SECTION 6.2 RESTRICTION ON TRANSFER.

The rights of a Participant with respect to Phantom Shares, Stock Options,
Stock Appreciation Rights or Restricted Shares shall not be transferable by the
Participant to whom such Phantom Shares, Stock Options, Stock Appreciation
Rights or Restricted Shares are granted, otherwise than by will or the laws of
descent and distribution.

SECTION 6.3 TAX WITHHOLDING.

SECTION 6.4 STOCKHOLDER RIGHTS.

No Grant under the Plan shall entitle a Participant or Beneficiary to any
rights of a holder of shares of Common Stock, except as provided in Article IV
with respect to Restricted Shares or upon the delivery of share certificates to
a Participant upon exercise of a Stock Option or upon the delivery of share
certificates in settlement of a Stock Appreciation Right.

SECTION 6.5 NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CORPORATE CHANGES.

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

SECTION 6.6 SOURCE OF PAYMENTS.

The general funds of the Company shall be the sole source of payments of
Appreciation Value and cash settlements of Stock Appreciation Rights under the
Plan, and 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. Nothing contained in this Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and a Participant or any other
person. 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.

A2-10

ARTICLE VII

AMENDMENT AND TERMINATION

The Board may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part; provided, however, that any amendment
which must be approved by the stockholders of the Company in order to maintain
the continued qualification of the Plan under Rule 16b-3 of the Exchange Act
shall not be effective unless and until such stockholder approval has been
obtained in compliance with such rule. No termination or amendment of the Plan
may, without the consent of the Participant to whom a Grant has been made,
adversely affect the rights of such Participant in the Phantom Shares, Stock
Options, Stock Appreciation Rights or Restricted Shares covered by such Grant.
Unless previously terminated pursuant to this Article VII, the Plan shall
terminate on the fifth anniversary of the Effective Date (as defined below),
and no further Grants may be awarded hereunder after such date.

ARTICLE VIII

INTERPRETATION

SECTION 8.1 GOVERNMENTAL REGULATIONS.

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

SECTION 8.2 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 8.3 GOVERNING LAW.

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

ARTICLE IX

EFFECTIVE DATE AND STOCKHOLDER APPROVAL

The Plan shall be effective as of August 1,1989 (the "Effective Date") and
stockholder approval shall be sought at the first annual meeting of
stockholders following such date. In the event that stockholder approval is not
obtained on or before the date of such annual meeting, the Plan and all Grants
thereunder shall be void ab initio and of no effect. No Stock Option or Stock
Appreciation Right shall be exercisable, no Restricted Share shall vest and no
Appreciation Value shall be paid with respect to a Phantom Share until the date
of such stockholder approval.

A2-11

EXHIBIT B

VIACOM INC.

1994 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS

ARTICLE I

GENERAL

SECTION 1.1 PURPOSE.

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

SECTION 1.2 DEFINITIONS.

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

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

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

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

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

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

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

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

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

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

(k) "Outside Director" shall mean any member of the Board of Directors of the
Company who is not an employee of the Company, Viacom International Inc.,
National Amusements, Inc. or any of their respective affiliates. An individual

B-1

shall not be deemed an employee for purposes of the Plan unless such individual
receives compensation from either the Company or an affiliate of the Company
for services performed as an employee of the Company or any of its affiliates.

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

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

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

SECTION 1.3 ADMINISTRATION OF THE PLAN.

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

SECTION 1.4 CLASS B COMMON STOCK SUBJECT TO THE PLAN.

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

ARTICLE II

GRANTS OF STOCK OPTIONS

Each person who is an Outside Director on the Effective Date shall be granted
an award of Non-Qualified Stock Options to purchase 1,500 shares of Class B
Common Stock at an option price per share equal to the Fair Market Value of a
share of Class B Common Stock on such date (the "Date of Grant" of such Stock
Options), on the terms and conditions set forth in the Plan. In addition, in
recognition of their long years of dedicated service to the Company as Outside
Directors and their role in helping to steer the Company through its
spectacular growth and development, each person who is an Outside Director on
the Effective Date and who was an Outside Director in July 1987 shall be
granted an award of Non-Qualified Stock Options to purchase 10,000 shares of
Class B Common Stock at an option price per share equal to the Fair Market
Value of a share of Class B Common Stock on the Effective Date (the "Date of
Grant" of such Stock Options"), on the terms and conditions set forth in the
Plan. Thereafter, on August 1, 1995 and each of the second through ninth
anniversaries thereof, each person who is an Outside Director on such date
shall be granted an additional award of Non-Qualified Stock Options to purchase
1,500 shares of Class B Common Stock, effective as of such date (the "Date of
Grant" of such Stock Options), at an option price per share equal to the Fair
Market Value of a share of Class B Common Stock on the Date of Grant, on the
terms and conditions set forth in the Plan. The exercise price of the Stock
Options granted under the Plan shall be subject to adjustment in accordance
with the provisions of Section 4.2 of the Plan. The terms and conditions of a
Grant of Stock Options shall be set forth in an option certificate which shall
be delivered to the Outside Director reasonably promptly following the Date of
Grant of such Stock Options.

B-2

ARTICLE III

TERMS AND CONDITIONS OF STOCK OPTIONS

SECTION 3.1 EXERCISE OF STOCK OPTIONS.

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

(b) Option Period.

(i) Earliest Exercise Date. No Stock Option granted under the Plan shall
be exercisable until six months after the Date of Grant thereof.

(ii) Latest Exercise Date. No Stock Option granted under the Plan shall
be exercisable after the tenth anniversary of the Date of Grant thereof.

(iii) Registration Restrictions. Any attempt to exercise a Stock Option
or to transfer any share issued upon exercise of a Stock Option by any
Outside Director shall be void and of no effect, unless and until (A) a
registration statement under the Securities Act of 1933, as amended, has
been duly filed and declared effective pertaining to the shares of Class B
Common Stock subject to such Stock Option have been duly qualified under
applicable Federal or state securities or blue sky laws or (B) the Board,
in its sole discretion, determines, or the Outside Director, upon the
request of the Board, provides an opinion of counsel satisfactory to the
Board, that such registration or qualification is not required as a result
of the availability of any exemption from registration or qualification
under such laws. Without limiting the foregoing, if at any time the Board
shall determine, in its sole discretion, that the listing, registration or
qualification of the shares of Class B Common Stock under any Federal or
state law or on any securities exchange or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of,
or in connection with, delivery or purchase of such shares pursuant to the
exercise of a Stock Option, such Stock Option shall not be exercised in
whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board.

(i) Termination other than for Death or Permanent Disability. If the
services of an Outside Director as a Director of the Company terminate for
any reason other than for death or permanent disability, the Outside
Director may exercise any Outstanding Stock Options only within one year
after the termination date, but only to the extent such Outstanding Stock
Options were vested on the date of such Outside Director's termination.
Upon a termination described in this Section 3.1(c)(i), the Outside
Director shall relinquish all rights with respect to Stock Options that are
not vested as of such termination date.

(ii) Death. If an Outside Director dies within a period during which his
Stock Options could have been exercised by him, his Outstanding Stock
Options may be exercised only within one year after his death, but only to
the extent such Outstanding Stock Options were vested on the date of death,
by any person who acquired the right to exercise such Stock Options by will
or the laws of descent and distribution. All rights with respect to
Outstanding Stock Options that are not vested on the date of death will be
relinquished.

(iii) Permanent Disability. If the services of an Outside Director as a
Director of the Company terminate by reason of permanent disability, he may
exercise his Outstanding Stock Options only within one year after the
termination of his services, but only to the extent such Outstanding Stock
Options were vested when his services terminated. Upon a termination
described in this Section 3.1(c)(iii), the Outside Director shall
relinquish all rights with respect to Stock Options that are not vested as
of such termination date.

SECTION 3.2 PAYMENT OF PURCHASE PRICE UPON EXERCISE.

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

B-3

ARTICLE IV

EFFECT OF CERTAIN CORPORATE CHANGES AND
CHANGES IN CONTROL

SECTION 4.1 EFFECT OF REORGANIZATION.

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

SECTION 4.2 DILUTION AND OTHER ADJUSTMENTS.

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

ARTICLE V

MISCELLANEOUS

SECTION 5.1 RESTRICTION ON TRANSFER.

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

SECTION 5.2 STOCKHOLDER RIGHTS.

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

SECTION 5.3 NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CORPORATE CHANGES.

B-4

purchase stock or of bonds, debentures, preferred or prior preference stocks
whose rights are superior to or affect the Class B Common Stock or the rights
thereof or which are convertible into or exchangeable for Class B Common Stock,
or the dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.

SECTION 5.4 NO RIGHT TO REELECTION.

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

ARTICLE VI

AMENDMENT AND TERMINATION

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

ARTICLE VII

INTERPRETATION

SECTION 7.1 GOVERNMENTAL REGULATIONS.

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

SECTION 7.2 HEADINGS.

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

SECTION 7.3 GOVERNING LAW.

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

ARTICLE VIII

EFFECTIVE DATE AND STOCKHOLDER APPROVAL

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

B-5

P R O X Y

VIACOM INC.
1515 BROADWAY
NEW YORK, NEW YORK 10036

ANNUAL MEETING PROXY CARD

The undersigned hereby appoints FRANK J. BIONDI, JR. and PHILIPPE P. DAUMAN,
and each of them, as proxies with full power of substitution, to represent and
to vote on behalf of the undersigned all of the shares of Class A Common Stock
of Viacom Inc. which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held at Alice Tully Hall, Lincoln Center, 65th Street and
Broadway, New York, New York on Thursday, May 25, 1995 at 9:30 a.m., and at any
adjournments or postponements thereof, upon the matters set forth on the
reverse side as more fully described in the Notice of 1995 Annual Meeting and
Proxy Statement.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF VIACOM INC.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER.

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
BOARD OF DIRECTORS' RECOMMENDATIONS.

THE PROXIES ARE DIRECTED TO VOTE AS SPECIFIED ON THE REVERSE HEREOF AND IN
THEIR DISCRETION ON ALL OTHER MATTERS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR PROPOSALS (1), (2), (3) AND (4). UNLESS OTHERWISE SPECIFIED, THE VOTE
REPRESENTED BY THIS PROXY WILL BE CAST FOR PROPOSALS (1), (2), (3) AND (4).

VIACOM INC.
P.O. Box 11800
New York, N.Y. 10203-0800

(Continued, and to be signed and dated on the reverse side.)

[__]
1. Election of Directors

For [X] Withheld [X] Exceptions* [X]

Nominees: George S. Abrams, Steven R. Berrard, Frank J. Biondi, Jr., Philippe
P. Dauman, William C. Ferguson, H. Wayne Huizenga, George D. Johnson, Jr., Ken
Miller, Brent D. Redstone, Shari Redstone, Sumner M. Redstone, Frederic V.
Salerno, William Schwartz

*Exceptions ....................................................................

................................................................................
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s),
write name(s) of such nominee(s) in the space provided.

2. Amendments to the Viacom Inc. 1989 and 1994 Long-Term Management Incentive
Plans.

For [X] Against [X] Abstain [X]

3. Viacom Inc. 1994 Stock Option Plan for Outside Directors.

For [X] Against [X] Abstain [X]

4. Appointment of Price Waterhouse LLP as independent accountants of Viacom
Inc. for 1995.

For [X] Against [X] Abstain [X]

IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE CHECK THIS BOX AND AN ADMISSION
TICKET WILL BE SENT TO YOU. [X]

Change of Address or Comments, Mark Here [X]

Please sign exactly as name(s) appear hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

DATED ___________________________________________________________________ , 1995

SIGNED _________________________________________________________________________

________________________________________________________________________________

- - --------------------------------------------------------------------------------
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK [X]

VIACOM INC.
1515 BROADWAY
NEW YORK, NEW YORK 10036

ANNUAL MEETING TICKET REQUEST FORM

The Annual Meeting of Stockholders of Viacom Inc. will be held at Alice Tully
Hall, Lincoln Center, 65th Street and Broadway, New York, New York on Thursday,
May 25, 1995 at 9:30 a.m.

Only holders of shares of Viacom Inc. Class A Common Stock of record at the
close of business on April 3, 1995 are entitled to vote at the Annual Meeting
or any adjournment thereof; however, holders of Viacom Inc. Class B Common
Stock are invited to attend the Annual Meeting.

If you plan to attend the Annual Meeting in person and hold registered shares
of Viacom Inc. Class B Common Stock, you should mark the box and return this
card in the enclosed envelope and an admission ticket will be sent to you.

I PLAN TO ATTEND THE
ANNUAL MEETING [_]

Please sign exactly as name(s)
appear hereon. When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
DATED ____________________ , 1995
SIGNED __________________________
_________________________________