<PAGE>   1
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549
 
                                   FORM 10-Q
 
(MARK ONE)
       [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
           OF THE SECURITIES EXCHANGE ACT OF 1934
 
           FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
 
                                        OR
 
       [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
           OF THE SECURITIES EXCHANGE ACT OF 1934
 
                          COMMISSION FILE NO. 0-20570
 
                        SILVER KING COMMUNICATIONS, INC.
 
             (Exact name of registrant as specified in its charter)
 
            DELAWARE                                          59-2712887
 (State or other jurisdiction of                            (I.R.S. Employer)
 incorporation or organization)                            Identification No.)
 
  12425 28TH STREET, NORTH, ST. PETERSBURG, FLORIDA               33716
      (Address of principal executive offices)                  (Zip Code)
 
                                 (813) 573-0339
              (Registrant's telephone number, including area code)
 
                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X . No  ___ .
 
     APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock as of the latest
practicable date.
 
     Total number of shares of outstanding Common Stock as of April 30, 1996:
 

<TABLE>
               <S>                                                      <C>
               Common Stock...........................................  7,055,332
               Class B Common Stock...................................  2,415,945
</TABLE>

 
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<PAGE>   2
 

PART I -- FINANCIAL INFORMATION
 

ITEM 1.  FINANCIAL STATEMENTS.
 
               SILVER KING COMMUNICATIONS, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- - --------------------------------------------------------------------------------
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 

<TABLE>
<CAPTION>
                                                                          QUARTER ENDED
                                                                    -------------------------
                                                                    MARCH 31,       MARCH 31,
                                                                      1996            1995
- - ---------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>
REVENUE
Broadcasting......................................................   $10,730         $10,517
Production........................................................       382             798
                                                                     -------         -------  
  Net revenue.....................................................    11,112          11,315  
COSTS AND EXPENSES                                                                            
Cost of production................................................       128             137  
General and administrative........................................     5,899           5,513  
Depreciation and amortization.....................................     3,458           3,692  
                                                                     -------         -------  
  Total costs and expenses........................................     9,485           9,342  
                                                                     -------         -------  
  Operating profit (loss).........................................     1,627           1,973
OTHER INCOME (EXPENSE)
Interest income...................................................       619             339
Interest expense..................................................    (2,412)         (2,810)
Dividend income...................................................        --             463
Miscellaneous.....................................................       137             (56)
                                                                     -------         -------  
          Total other income (expense)............................    (1,656)         (2,064)
                                                                     -------         -------  
Income (loss) before income taxes.................................       (29)            (91)
Income tax benefit (provision)....................................      (577)            244
                                                                     -------         -------  
NET INCOME (LOSS).................................................   $  (606)        $   153
                                                                     =======         =======
PER SHARE OF COMMON STOCK:
NET INCOME (LOSS) PER COMMON SHARE................................   $  (.06)        $   .02
                                                                     =======         =======
WEIGHTED AVERAGE SHARES OUTSTANDING...............................     9,456           8,903
                                                                     =======         =======
</TABLE>

 
   The accompanying notes are an integral part of these financial statements.
 
                                        2

<PAGE>   3
 
               SILVER KING COMMUNICATIONS, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- - --------------------------------------------------------------------------------
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                              MARCH 31,          DECEMBER 31,
                                                                1996                 1995
- - ---------------------------------------------------------------------------------------------
<S>                                                           <C>                  <C>
                                           ASSETS
CURRENT ASSETS
Cash and cash equivalents...................................  $ 23,318             $ 19,140
Accounts receivable, net....................................       411                1,402
Notes receivable, current...................................     3,010                2,835
Other current assets........................................       841                1,199
Deferred income taxes.......................................     1,797                1,797
                                                              --------             --------
     Total current assets...................................    29,377               26,373
PROPERTY, PLANT AND EQUIPMENT, AT COST                                  
Computer and broadcast equipment............................    73,575               76,033
Buildings and leasehold improvements........................    19,395               19,520
Furniture and other equipment...............................     2,225                2,991
                                                              --------             --------
                                                                95,195               98,544
     Less accumulated depreciation..........................   (70,942)             (72,851)
                                                              --------             --------
                                                                24,253               25,693
Land........................................................     3,334                3,334
Construction in progress....................................       139                  244
                                                              --------             --------
     Total property, plant and equipment....................    27,726               29,271
OTHER ASSETS                                                            
Intangible assets, net......................................    57,643               59,984
Capitalized bank fees, net..................................     3,077                3,293
Capitalized restructuring...................................       170                   --
Notes receivable, net of current............................    11,396               12,188

Long-term investments.......................................     5,135                5,135
Other.......................................................       446                  426
                                                              --------             --------
     Total other assets.....................................    77,867               81,026
                                                              --------             --------
                                                              $134,970             $136,670
                                                              ========             ========
</TABLE>

 
   The accompanying notes are an integral part of these financial statements.
 
                                        3

<PAGE>   4
 
               SILVER KING COMMUNICATIONS, INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) -- (CONTINUED)
- - --------------------------------------------------------------------------------
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                             MARCH 31,   DECEMBER 31,
                                                               1996          1995
- - -------------------------------------------------------------------------------------
<S>                                                          <C>           <C>
                        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations................  $ 12,638      $ 12,456
Accrued liabilities:
  Payroll and payroll taxes................................     1,837         1,315
  Rent.....................................................       633           722
  Interest.................................................     1,445           777
  Other....................................................     2,147         2,217
  Restructuring............................................       905         1,333
                                                             --------      --------
           Total current liabilities.......................    19,605        18,820
DEFERRED INCOME TAXES......................................    14,451        14,399
LONG-TERM OBLIGATIONS, NET OF CURRENT MATURITIES...........    92,730        95,980
COMMITMENTS AND CONTINGENCIES..............................        --            --
STOCKHOLDERS' EQUITY
Preferred stock -- $.01 par value; 50,000 shares
  authorized,
  no shares issued and outstanding.........................        --            --
Common stock -- $.01 par value, 30,000,000 shares
  authorized, 7,055,332 and 6,996,332 shares issued and
  outstanding, respectively................................        71            70
Class B convertible common stock -- $.01 par value;
  2,415,945 shares authorized, issued and outstanding......        24            24
Additional paid-in capital.................................   127,189       126,119
Note receivable from common stock issuance to Key
  Executive................................................    (4,998)       (4,998)
Deficit....................................................  (110,729)     (110,123)
Unearned compensation......................................    (3,373)       (3,621)
                                                             --------      --------
           Total stockholders' equity......................     8,184         7,471
                                                             --------      --------
                                                             $134,970      $136,670
                                                             ========      ========
</TABLE>

 
   The accompanying notes are an integral part of these financial statements.
 
                                        4

<PAGE>   5
 
               SILVER KING COMMUNICATIONS, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
- - --------------------------------------------------------------------------------
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                                          NOTE
                                                                       RECEIVABLE
                                COMMON       CLASS B                   FROM COMMON
                                 STOCK     CONVERTIBLE   ADDITIONAL       STOCK
                               $0.01 PAR     COMMON       PAID-IN     ISSUANCE FROM                 UNEARNED
                                 VALUE        STOCK       CAPITAL     KEY EXECUTIVE    DEFICIT    COMPENSATION   TOTAL
- - -----------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>           <C>          <C>             <C>         <C>            <C>
BALANCE ON JANUARY 1, 1996...     $70          $24        $126,119       $(4,998)     $(110,123)    $ (3,621)    $7,471
Issuance of common stock upon
  exercise of stock
  options....................       1           --             640            --             --           --        641
Income tax benefit relating
  to stock options
  exercised..................      --           --             430            --             --           --        430
Amortization of unearned
  compensation related to
  grant of stock options to
  Key Executive..............      --           --              --            --             --          248        248
Net loss for the quarter
  ended March 31, 1996.......      --           --              --            --           (606)          --       (606)
                                  ---          ---       ---------    ----------      ---------   ----------     ------
BALANCE ON MARCH 31, 1996....     $71          $24        $127,189       $(4,998)     $(110,729)    $ (3,373)    $8,184
                               ======      =======       =========    ==========      =========   ==========     ======
</TABLE>

 
   The accompanying notes are an integral part of these financial statements.
 
                                        5

<PAGE>   6
 
               SILVER KING COMMUNICATIONS, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- - --------------------------------------------------------------------------------
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                                         QUARTER ENDED
                                                                    -----------------------
                                                                                  DECEMBER
                                                                    MARCH 31,       31,
                                                                       1996         1995
- - -------------------------------------------------------------------------------------------
<S>                                                                 <C>          <C>
CASH FLOWS -- OPERATING ACTIVITIES:
Net income (loss).................................................   $   (606)    $    153
Adjustments to reconcile net earnings (loss) to net cash provided
  by (used in) operating activities:
  Depreciation and amortization...................................      3,458        3,692
  Non-cash interest expense.......................................        216          206
  Provision for losses on accounts receivable.....................         20           15
  Expense related to leases with escalation clause................        (89)         (22)
  Amortization of unearned compensation related to grant of stock
     options to Key Executive.....................................        248           --
  (Gain) loss on retirement or sale of fixed assets...............         (2)          54
  Deferred income tax (benefit) expense...........................        412         (156)
  (Increase) decrease in other assets.............................        (20)          --
  Changes in current assets and liabilities:
     (Increase) decrease in accounts receivable...................        847        1,950
     (Increase) decrease in other current assets..................        358          (30)
     Increase (decrease) in accrued liabilities...................      1,386         (371)
                                                                    ---------    ---------
     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES..........      6,228        5,491
                                                                    ---------    ---------
CASH FLOWS -- INVESTING ACTIVITIES:
  Capital expenditures............................................        (73)        (596)
  Proceeds from sale of fixed assets..............................          3            1
  Payment of capitalized restructuring fees.......................       (170)          --
  Investment in long-term notes receivable........................         --       (1,400)
  Proceeds from long-term notes receivable........................        617          266
                                                                    ---------    ---------
     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES..........        377       (1,729)
                                                                    ---------    ---------
CASH FLOWS -- FINANCING ACTIVITIES:
  Principal payments on long-term obligations.....................     (3,068)      (2,618)
  Proceeds from exercise of stock options.........................        641           30
                                                                    ---------    ---------
     NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES..........     (2,427)      (2,588)
                                                                    ---------    ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................      4,178        1,174
Cash and cash equivalents at beginning of period..................     19,140       12,554
                                                                    ---------    ---------
Cash and cash equivalents at end of period........................   $ 23,318     $ 13,728
                                                                    =========    =========
</TABLE>

 
   The accompanying notes are an integral part of these financial statements.
 
                                        6

<PAGE>   7
 
               SILVER KING COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE A - ORGANIZATION AND DISTRIBUTION
 
     In July 1986, Silver King Broadcasting Company, Inc. ("SKBC") was
incorporated in Delaware and began acquiring UHF television stations. SKBC was
formed as part of a strategy to broaden the viewership of the retail sales
programming produced by Home Shopping Club, Inc. ("HSC"), a wholly-owned
subsidiary of Home Shopping Network, Inc. ("HSN") and a leader in the electronic
retailing industry. HSC sells a variety of consumer goods and services by means
of HSC's live, customer-interactive retail sales programming, which is received
on a full-time or part-time basis by broadcast television stations, cable
television systems and satellite dish receivers. SKBC subsequently changed its
name to HSN Communications, Inc. ("HSNC") and, on August 25, 1992, HSNC changed
its name to Silver King Communications, Inc. ("SKC" when referring to the parent
company alone, but when referring to SKC and/or one or more of its direct or
indirect wholly-owned subsidiaries, the "Company"). Currently, the Company owns
and operates 12 independent full-power UHF television stations, including one
television satellite station (the "Stations"), which affiliate with and
primarily broadcast HSC retail sales programming. The Stations serve eight of
the 13 largest metropolitan television markets in the United States. As of
December 31, 1995, the Stations reached approximately 28.0 million television
households, which is one of the largest audience reaches of any owned and
operated independent television broadcasting group in the United States.
 
     In addition, the Company owns 26 low power television ("LPTV") stations
that broadcast HSC retail sales programming. The Company and HSN are discussing
an amendment to their existing LPTV affiliation agreements which would provide
additional revenue to the Company. LPTV stations have lower power transmitters
than conventional television stations and, therefore, the broadcast signals of
LPTV stations do not cover as broad a geographical area as conventional
broadcast television stations.
 
     On December 28, 1992 (the "Distribution Date"), HSN distributed the capital
stock (the "Distribution") of the Company to HSN's stockholders of record as of
December 24, 1992 (the "Record Date"), in the form of a pro-rata stock dividend.
The capital stock of Telemation, Inc. ("Telemation") was contributed to SKC
prior to the Distribution. Telemation is a video production and post-production
company providing a full range of communications services to corporations and
advertising agencies, and Telemation also produces television shows and videos
for the entertainment industry.
 
     The Distribution resulted in 100% of the outstanding shares of the
Company's Common Stock and the Company's Class B Common Stock being distributed
to holders of HSN Common Stock and HSN Class B Common Stock on a pro-rata basis
as of the Record Date.
 
     Roy M. Speer indirectly controls the Company through the ownership, by RMS
Limited Partnership ("RMSLP"), a Nevada limited partnership, of 100% of the
Company's Class B Common Stock. On February 11, 1993, RMSLP entered into an
agreement granting an assignable option to purchase 2,000,000 shares of its
Class B Common Stock in the Company to Liberty Media Corporation ("Liberty").
This agreement was subsequently amended on September 23, 1994, and Liberty
retained its option to purchase 2,000,000 shares. Liberty and Barry Diller (the
"Key Executive") entered into an agreement pursuant to which Liberty and Mr.
Diller have formed Silver Management Company ("SMC") to which Liberty intends to
assign the option. On March 6, 1996, the Federal Communications Commission
("FCC") granted its approval of the transfer of control of SKC from Mr. Speer to
SMC by the proposed consummation of the option. However, the FCC attached
certain conditions to the grant and also adopted a stay order released on the
same day as the grant delaying the effectiveness of the grant until the agency
completed an investigation of allegations raised against SKC by Urban
Broadcasting Corporation ("Urban") that could implicate SKC's qualifications as
an FCC licensee. SMC has filed a pleading requesting that the FCC delete or
modify one of the conditions to the grant which requires prior FCC approval if
Liberty's parent company, Tele-Communications, Inc., materially increases its
cable systems' percentage of subscribers in any of the 11 markets served by the
Company's Stations. Separately, SKC has filed pleadings at the FCC opposing
Urban's allegations and seeking an order vacating the stay. A decision is
currently pending on SMC's request and the FCC's
 
                                        7

<PAGE>   8
 
investigation of the Urban allegations. If a sale pursuant to exercise of the
option is consummated between RMSLP and SMC, Mr. Speer will no longer control
the Company. See "Note D -- Subsequent Events" regarding the issuance of
additional Company shares.
 
     The Company has changed its fiscal year end from August 31st to December
31st effective January 1, 1996.
 
NOTE B - BASIS OF PRESENTATION
 
     The accompanying Condensed Consolidated Financial Statements include the
accounts of SKC and all subsidiaries, all of which are wholly-owned. All
intercompany transactions and accounts have been eliminated. The Condensed
Consolidated Financial Statements are unaudited and should be read in
conjunction with the audited Consolidated Financial Statements and notes thereto
for the fiscal year ended August 31, 1995.
 
     In the opinion of management, all adjustments necessary for a fair
presentation of such Condensed Consolidated Financial Statements have been
included. Such adjustments consist only of normal recurring items. Interim
results are not necessarily indicative of results for a full year. The Condensed
Consolidated Financial Statements and notes thereto are presented as permitted
by the Securities and Exchange Commission and do not contain certain information
included in the Company's annual Consolidated Financial Statements and notes
thereto as discussed above.
 
NOTE C - LITIGATION
 
     On May 22, 1995, Silver King Broadcasting of Virginia, Inc. ("SKVA"), a
wholly-owned subsidiary of the Company, and Urban Broadcasting Corporation
("Urban") and its principals settled a lawsuit relating to Urban's default on a
note receivable of $10.5 million to SKVA. Pursuant to the settlement, SKVA
received approximately $3.5 million on May 23, 1995, consisting of $1.8 million
in interest income and $1.7 million in principal on SKVA's $10.5 million loan to
Urban. Additionally, SKVA forgave approximately $.1 million of interest under
the terms of the settlement and Urban dismissed its $6.5 million Amended
Counterclaim. Urban remained obligated to repay the outstanding principal
balance of approximately $8.8 million over the remaining term of the loan.
 
     On July 3, 1995, Urban and Theodore M. White, the President, sole director
and owner of all the voting stock of Urban, separately filed voluntary Chapter
11 bankruptcy petitions. On September 26, 1995, the bankruptcy court entered a
final cash collateral order with respect to the Urban bankruptcy executed by
Urban and SKVA that lasted until December 31, 1995 and will continue thereafter
for successive periods of three months unless Urban or SKVA gives 30 days'
notice of termination prior to the end of any such three-month period. To date,
no such notice has been provided. Accordingly, the final cash collateral order
shall remain in effect at least until June 30, 1996. Under the cash collateral
order, the escrow agreement SKVA and Urban entered into pursuant to the
settlement of SKVA's lawsuit against Urban remains in effect. Under the escrow
agreement, HSC makes affiliation payments due Urban under its affiliation
agreement with HSC into an escrow account. The escrow agents thereafter disburse
the proceeds to SKVA in an amount equal to the loan payment due SKVA from Urban,
and any remaining proceeds are disbursed to Urban. As of May 1, 1996, Urban is
current on its loan payment obligations. The Official Committee of Unsecured
Creditors (the "Committee") has filed a motion for the appointment of a trustee.
That motion remains pending. On April 29, 1996, the bankruptcy court denied a
motion by Urban to extend the exclusive period for the debtor (i.e., Urban) to
file a plan of reorganization. Since that ruling, Urban and the Committee have
both filed plans of reorganization and disclosure statements. Mr. White has
filed a plan of reorganization and has filed a motion to extend the exclusive
period for consideration of his plan in the separate White proceeding.
 
NOTE D - SUBSEQUENT EVENTS
 
     On November 27, 1995, the Company entered into agreements to acquire a
controlling interest in Home Shopping Network, Inc. from Liberty Media
Corporation and to merge Savoy Pictures Entertainment, Inc. ("Savoy") into a new
subsidiary of the Company. SKC plans to issue new shares of Common Stock to
effect
 
                                        8

<PAGE>   9
 
the Savoy transaction and new shares of Common and Class B Common Stock to
effect the HSN transaction. Both transactions are subject to stockholder and FCC
approval and the satisfaction of certain other conditions.
 
     On June 27, 1995, the Company, the Class A shareholders of Blackstar
Communications, Inc. ("BCI") and Fox Television Stations, Inc. ("Fox") executed
a Limited Liability Company Agreement (the "LLC"), a side agreement to the LLC
and a Funding Agreement establishing the rights and obligations of the parties
pursuant to a new venture, Blackstar L.L.C., formed to acquire television
stations in the United States which may affiliate with Fox. Effective December
15, 1995, the FCC granted applications of subsidiaries of Blackstar L.L.C. to
acquire Station KHGI-TV, Kearney, Nebraska and its satellite stations KWNB-TV
and KSNB-TV, licensed to Hayes Center and Superior, Nebraska, respectively; and
Station KEVN-TV, Rapid City, South Dakota and its satellite station KIVV-TV,
licensed to Lead-Deadwood, South Dakota. The KHGI-TV/KWNB-TV/KSNB-TV transaction
has not yet been consummated. On February 7, 1996, the LLC was amended, which,
in part, modified the Company's preferred stock and dividend rights in BCI, and
the Company agreed to permit BCI to defer payment of current dividends. Also on
February 7, 1996, the Company contributed its common stock interest in BCI to
Blackstar L.L.C. and Blackstar L.L.C. consummated the acquisition of Stations
KEVN-TV and KIVV-TV.
 
     On April 5, 1996, the Company entered into a contract to sell its corporate
headquarters building in St. Petersburg, Florida for $3.0 million. The sale is
expected to be completed by July 1, 1996 and the Company expects to record a
gain on the sale of the building of approximately $.5 million. There can be no
assurance that the sale will be consummated, or that the terms of sale will not
be materially changed.
 
     On April 26, 1996, an entity in which the Company holds a 49% nonvoting
common stock interest consummated the acquisition of Station KPST-TV, Vallejo,
California which serves the San Francisco market. SKC Investments, Inc., a
subsidiary of the Company, loaned the purchasing entity $7.9 million on similar
terms to other loans of this nature to finance the acquisition and the Company
may fund an additional $1.0 million for construction of a new studio.
 
     On May 8, 1996, the Company received a prepayment of approximately $1.4
million in full satisfaction of the note receivable from Roberts Broadcasting
Company ("RBC"). The Company still retains a 45% nonvoting convertible common
stock interest in RBC.
 
     On May 8, 1996, the Company and Savoy entered into Amendment No. 1 to the
Merger Agreement ("Amendment No. 1") extending certain dates in the Merger
Agreement. Amendment No. 1 extends the termination date for the Merger Agreement
from May 30, 1996 to July 30, 1996, except that, if the Merger has not been
consummated due to the failure to obtain approval by the Federal Communications
Commission, then such date shall be extended to October 30, 1996.
 
NOTE E - RESTRUCTURING
 
     The Company has accrued $2.0 million in restructuring charges (the
"Restructuring"), which relate to termination benefits (including severance and
out placement assistance) except for $100,000 which is the estimated charge to
relocate the corporate headquarters to Los Angeles, California. The total number
of employees to be terminated related to this Restructuring is 95. The actual
termination benefits paid and charged against the accrual as of March 31, 1996
are approximately $1.1 million. There were no adjustments to the original $2.0
million accrual for the Restructuring during the transition period.
 
NOTE F - RECLASSIFICATIONS
 
     Certain amounts in the Company's balance sheet have been reclassified to
reflect more recent information than was available when the transition Form 10-Q
for the period ended December 31, 1995 was filed.
 
                                        9

<PAGE>   10
 

I
TEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
 
A.  RESULTS OF OPERATIONS
 
     The following is a discussion of material changes in the consolidated
results of operations of Silver King Communications, Inc. and its subsidiaries
("SKC" when referring to the parent company alone, but when referring to SKC
and/or one or more of its direct or indirect wholly-owned subsidiaries, the
"Company") which occurred in the quarter ended March 31, 1996 compared to the
quarter ended March 31, 1995. The Company's primary business is the operation of
12 independent full-power television stations which primarily broadcast Home
Shopping Club ("HSC") retail sales programming.
 
QUARTER ENDED MARCH 31, 1996 VS. QUARTER ENDED MARCH 31, 1995
 
     The following tables summarize the changes in selected operating items,
including dollar changes, percentage changes and percent of net revenue for the
quarter ended March 31, 1996 compared to the quarter ended March 31, 1995. The
financial position of the Company during the period will not be indicative of
future financial results or conditions if one or both of the Savoy and HSN
transactions discussed in footnote D of the financial statements is consummated.
 

<TABLE>
<CAPTION>
                                           QUARTER ENDED
                                        --------------------                                     % OF NET
                                                      MAR.                       LINE ITEM        REVENUE
                                        MAR. 31,       31,       $ CHANGE        % CHANGE      -------------
                                          1996        1995     FAV./UNFAV.)    FAV./(UNFAV.)   1996     1995
                                        --------     -------   -------------   -------------   ----     ----
                                                              (IN MILLIONS, EXCEPT %)
<S>                                      <C>         <C>           <C>            <C>          <C>     <C>
Net revenue...........................   $ 11.0      $ 11.3        $ (.3)             (3)      100 %    100 %
Cost of production....................      (.1)        (.1)          --              --        (1)      (1)    
General and administrative............     (5.9)       (5.5)         (.4)             (7)      (53)     (49)    
Depreciation and amortization.........     (3.4)       (3.7)          .3               8       (31)     (32)    
                                         ------      ------        -----          ------       ---     ----     
Operating profit (loss)...............      1.6         2.0          (.4)            (20)       15       18     
Other income (expense)................     (1.6)       (2.1)          .5              24       (15)     (19)    
                                         ------      ------        -----          ------       ---     ----     
Income (loss) before income taxes.....       --         (.1)          .1             100        --       (1)    
Income tax benefit (provision)........      (.6)         .2          (.8)           (400)       (5)       2     
                                         ------      ------        -----          ------       ---     ----     
Net income (loss).....................   $  (.6)      $  .1        $ (.7)           (700)       (5)%      1 %   
                                         ======      ======        =====          ======       ===     ====
</TABLE>


NET REVENUE
 
     For the quarter ended March 31, 1996, net revenue decreased $.3 million
from $11.3 million to $11.0 million. The decrease primarily relates to the
closing of the Denver Telemation facility in December 1995.
 
     Each of the Company's Stations and then-owned LPTV stations entered into
Affiliation Agreements with HSC on the Distribution Date. The Affiliation
Agreements with the Stations, which provide for payment to the Stations of a
minimum affiliation fee for carriage of HSC programming, are the primary source
of the Company's revenue. Station revenue can exceed the hourly affiliation fee
if HSC's net sales credited to the Stations meet certain criteria. The
Affiliation Agreements, as amended November 30, 1995, provide for the broadcast
by each Station of HSC's electronic retail sales programming for 159 hours per
week and the availability to the Stations of two and one-half minutes of
broadcast time each hour. Each Affiliation Agreement has an initial term of five
years and is renewable for two additional five-year terms at each Station's sole
option. The Affiliation Agreements are cancelable by the Stations with 18
months' written notice prior to the end of any scheduled term. The Company and
HSC have agreed in principle to extend the date by which the Stations must give
notice of nonrenewal with respect to the next five-year term from June 28, 1996
until December 28, 1996. Under the Affiliation Agreements, each Station has nine
hours per week available for non-HSC programming, which are currently used for
one hour Monday through Friday and four hours each Sunday morning for the
broadcast of issue-responsive, children's, ethnic, religious and/or paid
informational programming. Additionally, under the Affiliation Agreements, the
Stations may use two and one-half minutes of each broadcast hour for advertising
inserts and public service programming. Each Station
 
                                       10

<PAGE>   11
 
may also preempt HSC programming for an additional three hours per week (i.e.,
156 hours per year) subject to forfeiture of twice the applicable hourly
affiliation fee provided for in such Station's Affiliation Agreement.
Notwithstanding anything else to the contrary, a Station may also preempt any
amount of HSC programming for public interest reasons and in such event, such
Station will forfeit twice the hourly affiliation fee for such preemption
period.
 
     The Station Affiliation Agreements provide for higher compensation to the
Stations if a Station's Compensation Amount, which is based upon a formula
involving HSC's net sales credited to the Station, exceeds the minimum
affiliation fee based upon that Station's hourly affiliation rate. The
determination is made on an annual basis within 30 days of each anniversary of
the Affiliation Agreements. As a result of the July 2, 1993 Federal
Communications Commission ruling that television stations with home shopping
formats are eligible for "must carry" status (see "C. OTHER SIGNIFICANT
MATTERS"), the Company believes that its Stations increased their viewership due
to an increase in the number of cable systems that carried the Stations.
Management believes this increased viewership, to some degree, increased the
sales by HSC credited to the Stations during calendar year 1994, resulting in a
portion of the additional affiliation fees received by the Company in January
1995. Based upon reported HSC sales performance for calendar year 1995, the
Company received $.8 million of additional affiliation fees in January 1996
accrued in December 1995 for sales by HSC credited to the Stations in calendar
year 1995.
 
GENERAL AND ADMINISTRATIVE
 
     For the quarter ended March 31, 1996, general and administrative expenses
increased $.4 million from $5.5 million to $5.9 million compared to the same
period last year. The Company recognized approximately $.9 million of charges
under the terms of the Equity and Bonus Compensation Agreement (the "Agreement")
between the Company and its Chairman, Barry Diller. The increase in compensation
was offset by an $.8 million decrease in payroll expenses due to the
Restructuring which took place in December 1995. The remaining increase is
primarily due to additional consulting and legal expenses associated with the
terms of the Agreement. The Company has also initiated the hiring of several
experienced broadcast executives which will increase general and administrative
expenses in future periods.
 
     In the event one or both of the Savoy and HSN transactions (as discussed in
Note D of the financial statements) is not consummated, transaction costs of
approximately $4.0 million will be charged to operations and will increase
general and administrative expenses.
 
DEPRECIATION AND AMORTIZATION
 
     For the quarter ended March 31, 1996, depreciation and amortization
decreased by $.3 million from $3.7 million to $3.4 million compared to the same
period last year. The decrease was primarily due to the closure of the Denver
Telemation facility in December 1995. The Company sold many of the assets of
Telemation decreasing the depreciation expense in the first quarter of fiscal
year 1996.
 
OTHER INCOME (EXPENSE)
 
     For the quarter ended March 31, 1996, other expense decreased by $.5
million from $2.1 million to $1.6 million compared to the same period last year
as a result of the recognition of interest income from the May 1995 settlement
of the Company's lawsuit against Urban Broadcasting Corporation ("Urban") as
discussed in Note C of the financial statements. The Company did not recognize
any interest income from Urban in the same period last year.
 
INCOME TAXES
 
     The Company's effective tax rate for periods presented differed from the
statutory rate due primarily to the amortization of goodwill and other acquired
intangible assets relating to acquisitions from prior years, other nondeductible
items, and state income taxes.
 
                                       11

<PAGE>   12
 
     State taxes are more significant than federal taxes for the Company as some
of the Company's subsidiaries generate taxable income while others generate net
operating losses. For federal tax purposes, the net operating losses offset the
taxable income as the corporations file a consolidated federal tax return.
 
     For state purposes, many states such as New Jersey, New York, Massachusetts
and Maryland require each subsidiary doing business in the state to file a
separate tax return. As related to the Company, subsidiaries doing business in
New Jersey and New York generate significant taxable income and are therefore
subject to state tax on this separate company taxable income. Other subsidiaries
generate net operating losses for which no state tax benefit is received as the
net operating loss cannot be offset against another subsidiary's taxable income
for state tax purposes.
 
B.  FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
 
     The Company had working capital of $9.8 million as of March 31, 1996,
compared with working capital of $7.6 million as of December 31, 1995.
 
     The Company historically has generated sufficient cash flow to fund its
operating, investing and financing activities.
 
     The Company has used its internally generated cash flow for investing
activities to fund capital expenditures and investments in television
broadcasting companies controlled by FCC-recognized minority groups. During the
quarter ended March 31, 1996, the Company had capital expenditures of
approximately $.1 million. The Company expects to utilize either internally
generated funds or available cash to fund capital expenditures of approximately
$.9 million during the 1996 calender year, although the Company has no
contractual commitments with any parties.
 
     The Company has used its internally generated cash flow for financing
activities to service principal obligations under its Credit Agreement with
Chemical Bank and other named Lenders (the "Bank Group".) During the quarter
ended March 31, 1996, the Company paid approximately $3.1 million of principal
obligations to the Bank Group and expects to pay approximately $9.4 million
during the remainder of 1996. Under certain conditions, the Company's Borrowing
Group, which consists of all Company entities with the exception of SKC, Silver
King Investment Holdings, Inc., Thames Acquisition Corp. (which will be merged
into Savoy if such transaction is consummated) and SKC Investments, Inc., is
required to fund mandatory principal prepayments in advance of scheduled
principal payments to the Bank Group. The Borrowing Group may at any time fund
optional principal prepayments in satisfaction of mandatory principal
prepayments or in advance of scheduled principal payments to the Bank Group.
 
     Based on current projections, the Company expects that all operating,
investing and financing activities for calendar year 1996 will be met from
either internally generated cash flow or available cash. However, in the event
that these projections are not met, the Borrowing Group has a revolving credit
facility available from the Bank Group of $15.0 million.
 
     In the event one or both of the Savoy and HSN transactions (as discussed in
footnote D of the financial statements) is consummated, the Company's financial
position and liquidity needs may change significantly.
 
     On April 5, 1996, the Company entered into a contract to sell its corporate
headquarters building in St. Petersburg, Florida for $3.0 million. The sale is
expected to be completed by July 1, 1996 and the Company expects to record a
gain on the sale of the building of approximately $.5 million. There can be no
assurance that the sale will be consummated, or that the terms of sale will not
be materially changed.
 
     On April 26, 1996, an entity in which the Company holds a 49% nonvoting
common stock interest consummated the acquisition of Station KPST-TV, Vallejo,
California which serves the San Francisco market. SKC Investments, Inc., a
subsidiary of the Company, loaned the purchasing entity $7.9 million on similar
terms to other loans of this nature to finance the acquisition and the Company
may fund an additional $1.0 million for construction of a new studio.
 
                                       12

<PAGE>   13
 
     On May 8, 1996, the Company received a prepayment of approximately $1.4
million in full satisfaction of the note receivable from RBC. The Company still
retains a 45% nonvoting convertible common stock interest in RBC.
 
C.  OTHER SIGNIFICANT MATTERS
 
     On July 2, 1993, the Federal Communications Commission ("FCC") ruled that
stations predominantly used for the transmission of sales presentations or
program-length commercials operate in the public interest and are entitled to
"must carry" status. Therefore, if requested to do so pursuant to FCC rules,
cable television systems must carry the signals of local commercial television
stations with home shopping formats. A petition for reconsideration of the FCC's
ruling currently is pending before the FCC. The Company has filed an opposition
to that petition.
 
     On April 8, 1993, a decision by the United States District Court for the
District of Columbia upheld the constitutional validity of "must carry"
generally. On appeal, in a multi-opinion decision released on June 27, 1994, the
Supreme Court declined to rule on the constitutional validity of "must carry."
Instead, the Supreme Court vacated the District Court decision and remanded the
case to the District Court to permit development of a full factual record
concerning the need for "must carry." On December 12, 1995, the District Court
again upheld the constitutional validity of "must carry" by a two to one
majority. The Supreme Court is expected to consider another appeal of the
District Court decision in the fall of 1996.
 
     On June 27, 1995, the Company, the Class A shareholders of Blackstar
Communications, Inc. ("BCI") and Fox Television Stations, Inc. ("Fox") executed
a Limited Liability Company Agreement (the "LLC"), a side agreement to the LLC
and a Funding Agreement establishing the rights and obligations of the parties
pursuant to a new venture, Blackstar L.L.C., formed to acquire television
stations in the United States which may affiliate with Fox. Effective December
15, 1995, the FCC granted applications of subsidiaries of Blackstar L.L.C. to
acquire Station KHGI-TV, Kearney, Nebraska and its satellite stations KWNB-TV
and KSNB-TV, licensed to Hayes Center and Superior, Nebraska, respectively; and
Station KEVN-TV, Rapid City, South Dakota and its satellite station KIVV-TV,
licensed to Lead-Deadwood, South Dakota. The KHGITV/KWNB-TV/KSNB-TV transaction
has not yet been consummated. On February 7, 1996, the LLC was amended, which,
in part, modified the Company's preferred stock and dividend rights in BCI, and
the Company agreed to permit BCI to defer payment of current dividends. Also on
February 7, 1996, the Company contributed its common stock interest in BCI to
Blackstar L.L.C. and Blackstar L.L.C. consummated the acquisition of Stations
KEVN-TV and KIVV-TV.
 
     On April 5, 1996, the Company entered into a contract to sell its corporate
headquarters building in St. Petersburg, Florida for $3.0 million. The sale is
expected to be completed by July 1, 1996 and the Company expects to record a
gain on the sale of the building of approximately $.5 million. There can be no
assurance that the sale will be consummated, or that the terms of sale will not
be materially changed.
 
     On April 26, 1996, an entity in which the Company holds a 49% nonvoting
common stock interest consummated the acquisition of Station KPST-TV, Vallejo,
California which serves the San Francisco market. SKC Investments, Inc., a
subsidiary of the Company, loaned the purchasing entity $7.9 million on similar
terms to other loans of this nature to finance the acquisition and the Company
may fund an additional $1.0 million for construction of a new studio.
 
     On May 8, 1996, the Company received a prepayment of approximately $1.4
million in full satisfaction of the note receivable from RBC. The Company still
retains a 45% nonvoting convertible common stock interest in RBC.
 
     On May 8, 1996, the Company and Savoy entered into Amendment No. 1 to the
Merger Agreement ("Amendment No. 1") extending certain dates in the Merger
Agreement. Amendment No. 1 extends the termination date for the Merger Agreement
from May 30, 1996 to July 30, 1996, except that, if the Merger has not been
consummated due to the failure to obtain approval by the Federal Communications
Commission, then such date shall be extended to October 30, 1996.
 
                                       13

<PAGE>   14
 
     Roy M. Speer indirectly controls the Company through the ownership, by RMS
Limited Partnership ("RMSLP"), a Nevada limited partnership, of 100% of the
Company's Class B Common Stock. On February 11, 1993, RMSLP entered into an
agreement granting an assignable option to purchase 2,000,000 shares of its
Class B Common Stock in the Company to Liberty Media Corporation ("Liberty").
This agreement was subsequently amended on September 23, 1994, and Liberty
retained its option to purchase 2,000,000 shares. Liberty and Barry Diller
entered into an agreement pursuant to which Liberty and Mr. Diller have formed
Silver Management Company ("SMC") to which Liberty intends to assign the option.
On March 6, 1996, the FCC granted its approval of the transfer of control of SKC
from Mr. Speer to SMC by the proposed consummation of the option. However, the
FCC attached certain conditions to the grant and also adopted a stay order
released on the same day as the grant delaying the effectiveness of the grant
until the agency completed an investigation of allegations raised against SKC by
Urban Broadcasting Corporation ("Urban") that could implicate SKC's
qualifications as an FCC licensee. SMC has filed a pleading requesting that the
FCC delete or modify one of the conditions to the grant which requires prior FCC
approval if Liberty's parent company, Tele-Communications, Inc., materially
increases its cable systems' percentage of subscribers in any of the 11 markets
served by the Company's Stations. Separately, SKC has filed pleadings at the FCC
opposing Urban's allegations and seeking an order vacating the stay. A decision
is currently pending on SMC's request and the FCC's investigation of the Urban
allegations. If a sale pursuant to exercise of the option is consummated between
RMSLP and SMC, Mr. Speer will no longer control the Company.
 
     On February 8, 1996, the President signed into law the Telecommunications
Act of 1996 (the "Act"). The Act permits, among other things, one company to own
an unlimited number of full-power, full-service television stations and
increases permissible national coverage by one company's television stations
from 25% to 35% of television homes. The Act also repeals the ban contained in
the Communications Act of 1934, as amended, on ownership by one entity of a
cable television system and television station in the same market, but leaves
the FCC's regulation precluding cable system-television station cross-ownership
in place. The Act also directs the FCC to conduct a rulemaking proceeding
addressing its local television ownership rules.
 
     As a result of the Restructuring, on December 12 and December 22, 1995, the
IBEW and CWA in Newark, New Jersey and Central Islip, New York, respectively,
withdrew union recognition with respect to Company Stations WHSE-TV and WHSI-TV.
 

P
ART II - OTHER INFORMATION
 

ITEM 1.  LEGAL PROCEEDINGS.
 
     See Part I, Item 1. Financial Statements. Note C -- Litigation
 

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
 
(a)     Exhibits
 
10.1    Equity and Bonus Compensation Agreement, dated as of August 24, 1995,
        between Silver King Communications, Inc. and Barry Diller.
 
10.2    Stock Pledge Agreement, dated as of August 24, 1995, between SKC
        Investments, Inc. and Barry Diller.
 
10.3    Non-Recourse Secured Promissory Note, dated as of August 24, 1995,
        executed by Barry Diller.
 
10.4    AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER, dated as of
        May 8, 1996, by and among Silver King Communications, Inc., Thames
        Acquisition Corp., and Savoy Pictures Entertainment, Inc., regarding the
        extension of date for termination of Merger Agreement.
 
27      Financial Data Schedule (for SEC use only)
 
                                       14

<PAGE>   15
 
(b)     Reports on Form 8-K and Form 8-K/A
 
        The Company filed a report on Form 8-K on February 13, 1996 disclosing a
        change of Certifying Accountants for the fiscal year ending December 31,
        1996.
 
        The Company filed a report on Form 8-K/A on March 1, 1996 disclosing
        that there had been no disagreements with the Company's Certifying
        Accountants during the previous two fiscal years.
 
                                       15

<PAGE>   16
 
               SILVER KING COMMUNICATIONS, INC. AND SUBSIDIARIES
 

                                   SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 

<TABLE>
<S>                                            <C>
                                                     SILVER KING COMMUNICATIONS, INC.
                                                               (Registrant)
Date:  May 15, 1996                            /s/ Barry Diller
                                               -------------------------------------------
                                               Barry Diller, Chairman and Chief Executive
                                               Officer

Date:  May 15, 1996                            /s/ Steven H. Grant
                                               -------------------------------------------
                                               Steven H. Grant, Executive Vice President,
                                               Chief Financial/Administrative Officer
                                               and Treasurer

Date:  May 15, 1996                            /s/ Joan E. Halfaker
                                               -------------------------------------------
                                               Joan E. Halfaker, Vice President and
                                               Controller
                                               (Principal Accounting Officer)
</TABLE>

 
                                       16





<PAGE>   1

                    EQUITY AND BONUS COMPENSATION AGREEMENT

         AGREEMENT by and between Silver King Communications, Inc., a Delaware
corporation (the "Company"), and Barry Diller (the "Executive"), dated as of
the 24th day of August, 1995.

         WHEREAS, the Board of Directors of the Company (the "Board") has
approved the Term Sheet entered into by the Company and the Executive, dated as
of the date hereof, relating to the subject matter hereof (the "Term Sheet");
and

         WHEREAS, the Term Sheet provides for the grant to the Executive of
options to purchase the common stock, par value $.01 per share (the "Stock"),
of the Company (the "Options") in tandem with the LSARs (as defined herein), on
terms and conditions set forth in the Term Sheet; and

         WHEREAS, the Term Sheet provides that the Executive will serve as
Chairman of the Board and/or Chief Executive officer and/or President of the
Company on certain terms and conditions; and

         WHEREAS, the Term Sheet also provides for the payment of certain
bonuses to the Executive; and

         WHEREAS, Executive and the Company wish to set forth the terms and
conditions of the Options and such

<PAGE>   2

         (c)     Method of Exercise. (i) Notice. Subject to the provisions of
this Section 1, the Executive may exercise one or more Options at any time when
they are
 exercisable by giving written notice of exercise to the Company
specifying: (A) the number of shares of Stock with respect to which the Options
are being exercised; (B) the method of withholding of taxes that the Executive
has chosen pursuant to paragraph (d) of Section 9, if not previously specified;
and (C) whether the Executive elects to pay the exercise price by (1) tendering
to the Company previously owned shares of Stock with an aggregate Fair Market
Value (calculated as of the day before the date of exercise) equal to the
aggregate exercise price of the Options being exercised or (2) delivering to
the Company (I) a copy of an irrevocable instruction from the Executive to an
underwriter or broker directing such underwriter or broker to sell shares of
Stock to be acquired by the exercise of such Options in an amount (net of
brokers', and underwriters', fees, commissions or discounts) sufficient to pay
such exercise price in full, and promptly remit to the Company the amount of
such exercise price, all of which arrangements shall be reasonably satisfactory
to the Company, (II) irrevocable instructions from the Executive to the Company
to withhold from the shares of Stock to be acquired by the exercise of such
Options a number of shares having a Fair Market Value on the date of exercise
sufficient to pay such exercise price in full or (III) a combination of the





                                      -3-

<PAGE>   3

foregoing (in the case of (I), (II) or (III), a "Cashless Exercise").

         (ii)    Payment of Exercise Price. Upon the exercise of an Option,
except to the extent the Executive pays the applicable exercise price by means
of a Cashless Exercise, the Executive shall pay the applicable exercise price
in cash, by bank check or such other instrument as the Company may accept.

         (iii)   Issuance of Stock. As soon as practicable after receiving (A)
payment of the applicable exercise price of an Option that is exercised or (B)
the certificates for the shares of Stock referred to in clause (C)(1) of
subparagraph (c)(i) of this Section 1, or (c) the instructions referred to in
clause (C)(2)(I) or (II), as applicable, of subparagraph (i) of paragraph (c)
of this Section 1 with respect to the exercise of an Option by Cashless
Exercise and the Company's reasonable satisfaction with the arrangements in
respect thereof, as applicable, but subject to the provisions of paragraph (d)
of Section 9 (pertaining to the withholding of taxes), the Company shall issue
to the Executive in accordance with his instructions one or more stock
certificates in respect of the Stock acquired by that exercise (net of any
shares to be retained by the Company pursuant to clause (C)(1) of subparagraph
(c)(i) of this section 1), which certificates shall be registered in the name
of the Executive





                                      -4-

<PAGE>   4

and shall bear an appropriate legend substantially in the following form:

                 The securities represented by this certificate have not been
                 registered under the Securities Act of 1933 or under the
                 securities laws of any state, and may not be sold or otherwise
                 disposed of except pursuant to an effective registration
                 statement under said Act and applicable state securities laws
                 or an applicable exemption to the registration requirements of
                 such Act or laws.

In addition, such securities shall also bear an appropriate legend referring to
any restrictions on the sale, transfer, assignment, pledge or other disposition
of such Stock contained in any stockholders agreement to which the Executive is
a party. When the Executive has given proper notice of exercise of an Option
and has paid the applicable exercise price in full as provided above, the
Executive shall have all of the rights of a stockholder of the Company holding
the Stock acquired by such exercise (including, if applicable, the right to
vote the shares or express consent and the right to receive dividends).

         (d)     Effect of a Change in Control. (i) Options. Upon a Change in
Control, all Options that have not previously become exercisable or been
terminated shall become exercisable.

         (ii)    LSARS. With respect to each Option that has not been exercised
or terminated as of the date a Change in





                                      -5-

<PAGE>   5

Control occurs, from and after the date of the Change in Control until the
termination of the Options in accordance with Section 1 above, the Executive
shall have the right (an "LSAR"), in lieu of exercising such Option in
accordance with Section 1 above, upon notice to the Company of his election to
exercise an LSAR, to surrender such Option to the Company for cancellation in
exchange for cash in an amount equal to the amount by which the Change in
Control Price per share of the Stock on the date of such election exceeds the
exercise price per share of Stock under such Option, multiplied by the number
of shares of Stock subject to such Option as to which the right granted under
this paragraph (d) of Section 1 is being exercised; provided, however, that if
the Change in Control occurs within six months of the date of this Agreement,
no such election shall be made before the expiration of six months from the
date of this Agreement.

         (e)     Other Terms and Conditions of Options and LSARS. (i)
Nontransferability. No Option or LSAR shall be transferable by the Executive
except (i) by will or by the laws of descent and distribution or (ii) with the
consent of the Board of Directors of the Company. Any transfer or purported
transfer in violation of this paragraph shall be void and of no effect. All
Options and LSARs shall be exercisable, during the Executive's lifetime, only
by the Executive or by the guardian or legal representative of the Executive,





                                      -6-

<PAGE>   6

it being understood that for purposes of this Section 1, references to the
Executive include the guardian and legal representative of the Executive and
any person to whom an Option and the related LSAR is transferred by will or the
laws of descent and distribution.

         (ii)    Adjustments. (A) Dividends, Etc. The number and kind of
securities purchasable upon the exercise of the Options and the exercise price
of the Options shall be subject to adjustment from time to time upon certain
events, as follows:

                 (1)      If the Company pays a dividend in shares of Stock,
         makes a distribution to all holders of shares of any class of its
         capital stock in shares of Stock, subdivides its outstanding shares of
         Stock into a greater number of shares, or combines its outstanding
         shares of Stock into a smaller number of shares of Stock, then the
         number of shares of Stock purchasable upon exercise of the Options
         shall be adjusted so that the Executive shall be entitled to receive
         the kind and number of shares or other securities of the Company that
         it would have owned and/or been entitled to receive as a result of any
         of the events described above, had such Options been exercised
         immediately before such event, effective immediately after the
         effective date of such event.

                 (2)      whenever the number of shares of Stock purchasable
         upon the exercise of the Options is adjusted pursuant to this
         subparagraph (ii)(A) of paragraph (e) of Section 1, the exercise price
         per share shall also be adjusted (to the nearest cent) by multiplying
         the exercise price per share immediately before such adjustment by a
         fraction, the numerator of which is the number of shares of Stock
         purchasable upon the exercise of the Options immediately before such
         adjustment, and the denominator of which is the number of shares of
         Stock so purchasable immediately thereafter.





                                      -7-

<PAGE>   7

                 (3)      In the event that at any time, as a result of an
         adjustment made pursuant to this subparagraph (ii)(A) of paragraph (e)
         of Section 1, the Options shall become exercisable for any securities
         of the Company other than shares of Stock, thereafter the number of
         such other securities so purchasable upon exercise of the Options and
         the exercise price of such securities shall be subject to adjustment
         from time to time in a manner and on terms as equivalent as
         practicable to the provisions of this subparagraph (A) with respect to
         the shares of Stock.

         (B)     Preservation of Purchase Rights Upon Reclassification,
Consolidation, etc. In case of any reclassification or change of outstanding
Stock or other securities purchasable upon exercise of the Options (other than
a change in par value or as a result of a subdivision or combination of shares
of Stock), recapitalization, separation (including a spin-off or other
distribution of stock or property of the Company), reorganization, any dividend
or distribution not described in subparagraph (ii)(A)(1) of this paragraph (e)
of Section 1, or any consolidation or merger of the Company with another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation that does not result in,any reclassification of or change
in the outstanding shares of Stock) or partial or complete liquidation, or any
sale or conveyance to another corporation of all or substantially all of the
assets of the Company (other than by mortgage or pledge), then the Company or
such successor or purchasing corporation, as the case may be, shall undertake
to assure that: (1) the Options shall be exercisable, upon





                                      -8-

<PAGE>   8

payment of the applicable exercise price in effect immediately before such
action, for the kind and amount of shares and other securities and property
that the Executive would have owned and/or been entitled to receive after such
action, had such Options been exercised immediately before such action; and (2)
each such Option, and the applicable exercise price, shall be subject to
adjustments, which shall, to the greatest extent practicable, be equivalent to,
and subject to the same terms and provisions as, the adjustments provided for
in this paragraph (e) of Section 1. The provisions of this paragraph shall
similarly apply to successive reclassifications, consolidations, mergers, sales
and conveyances.

         (C)     LSARS. Upon any adjustments of an Option pursuant to the
foregoing provisions of this subparagraph (ii), corresponding adjustments to
the related LSAR shall also be made.

         (D)     Post-Adjustment References. Following an adjustment Under this
paragraph (e) of Section 1, all references in this Section 1 to the number of
Options and LSARS, the number and kind of shares of Stock subject thereto, and
the exercise price thereof, shall be deemed to refer to such number, kind and
exercise price as adjusted.

         2.      Bonuses. (a) Initial Bonus. The Company shall pay the
Executive a bonus (the "Initial Bonus") equal to the





                                      -9-

<PAGE>   9

amount such that, after payment of all Taxes on the Initial Bonus, the
Executive will retain an amount sufficient to pay all Taxes that he is required
to pay as a result of the purchase of the Initial Shares and the Additional
Shares, determined as set forth in this Section 2. The determination of the
amount of the Initial Bonus shall be made by the Accounting Firm based upon the
assumption that the Executive pays all applicable Taxes at the highest marginal
rate thereof, and such determination shall be final and binding upon the
Company and the Executive. The Accounting Firm shall notify the Company and the
Executive of the amount of the Initial Bonus as so determined on or before
October 15, 1995, and the Company shall pay the Initial Bonus to the Executive
in a single cash lump sum payment within five business days after receipt of
such notice. Notwithstanding the foregoing, in no event shall the amount of the
Initial Bonus exceed $1,000,000.

         (b)     Additional Bonuses. In addition to the Initial Bonus, the
Company shall pay the Executive the following bonuses (the "Additional
Bonuses"): on August 24, 1996, the Company shall pay the Executive, in a single
cash lump sum payment, $2,498,889.63, and on August 24, 1997, the Company shall
pay the Executive, in a single cash lump sum payment, $2,498,889.62; Provided,
however, that the Additional Bonuses shall be payable immediately in full (to
the extent not theretofore paid) upon the first to occur of (i) a Change in





                                      -10-

<PAGE>   10

Control of the Company, or (ii) the termination of the Executive's employment
with the Company for any reason other than (A) by the Company at any time for
Cause or (B) by the Executive at any time before the Control Date without Good
Reason; provided, further, that in the event the Executive's employment is
terminated for Cause prior to the date on which an Additional Bonus is
otherwise due, the obligation of the Company to pay any such Additional Bonus
shall terminate. Except as provided in paragraph (d) of Section 9 with respect
to the withholding of taxes, neither the Company nor the Executive shall have
the right to offset all or any portion of the Additional Bonuses against any
amount owed by the Executive to the Company.

         (c)     Severance Bonus. If the Executive's employment with the
Company is terminated on or before August 24, 1996 for any reason other than by
the Company for Cause, the Company shall pay the Executive an additional bonus
(the "Severance Bonus") equal to two times the amount (if any) by which
$4,999,989.25 exceeds the Fair Market Value, on the date of such termination,
of the Additional Shares; provided, however, that the Severance Bonus shall in
no event exceed $2,000,000.

         (d)     Penalty for Late Payment of Additional and Severance Bonuses.
Subject to the provisions of this Agreement, in the event that the Company does
not pay when due all





                                      -11-

<PAGE>   11

or any portion of any of the bonuses provided for in paragraph (b) or (c) of
this Section 2, and the Executive shall have provided the Company with written
notice that such bonus is due and has not been timely paid in full, the Company
shall have three business days after receipt of such notice to pay such unpaid
amount (the "Late Payment Date"). If any portion of such unpaid amount remains
unpaid at the close of business on the Late Payment Date, the remaining unpaid
amount shall be increased by 20% (as so increased, the "Unpaid Bonus"). The
amount of the Unpaid Bonus shall accrue interest from and after the Late
Payment Date until the date of payment at the short-term applicable federal
rate, as defined in Section 1274(d) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Unpaid Bonus, together with all such accrued
interest, shall be immediately due and payable.

         3.      Registration. Upon request by the Executive, the Company shall
use all reasonable efforts promptly to effect a registration of Stock owned by
the Executive without cost to the Executive, other than underwriting discounts
and commissions, any broker or dealer fees or commissions and the fees and
expenses of any special accounting required in connection with the
registration, which shall be paid by the Executive; provided, however, that the
Company shall not be obligated to effect any registration pursuant to this
paragraph if counsel designated by the Company (which counsel





                                      -12-

<PAGE>   12

shall be reasonably acceptable to the Executive) delivers an opinion to the
Executive to the effect that the number of shares of Stock specified in such
request for registration could then be sold by the Executive within a
three-month period under Rule 144 (or any successor provision then in effect)
under the Securities Act of 1933, as amended, and the Executive is then
entitled to sell Stock pursuant to said Rule 144. Such registration shall be
effected pursuant to registration rights customary under the circumstances.

         4.      Nonexclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
stockholders or affiliated companies and for which the Executive may qualify.
Furthermore, nothing in this Agreement shall limit or otherwise affect such
rights or obligations as the Executive may have, subject to paragraph (f) of
Section 9, under any other contract or agreement with the Company or any of its
stockholders or affiliated companies.

         5.      Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this





                                      -13-

<PAGE>   13

Agreement or otherwise, but determined without regard to any additional
payments required under this Section 5) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

         (b)     Subject to the provisions of paragraph (c) of Section 5, all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Accounting Firm in its reasonable discretion and good faith, which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested





                                      -14-

<PAGE>   14

by the Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by the Company to the Executive within five days of
the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to paragraph (c) of Section 5 and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

         (c)     The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay





                                      -15-

<PAGE>   15

such claim prior to the expiration of the 30-day period following the date on
which the Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:

                 (i)      give the Company any information reasonably requested
         by the Company relating to such claim;

                 (ii)     take such action in connection with contesting such
         claim as the Company shall reasonably request in writing from time to
         time, including, without limitation, accepting legal representation
         with respect to such claim by an attorney reasonably selected by the
         Company;

                 (iii)    cooperate with the Company in good faith in order
         effectively to contest such claim; and

                 (iv)     permit the Company to participate in any proceedings
         relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this paragraph (c) of Section 5, the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue





                                      -16-

<PAGE>   16

or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.





                                      -17-

<PAGE>   17

         (d)     If, after the receipt by the Executive of an amount paid or
advanced by the Company pursuant to paragraphs (b) or (c) of Section 5, the
Executive becomes entitled to receive any refund with respect to such amount,
the Executive shall (subject to the Company's complying with the requirements
of paragraph (c) of Section 5) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (c) of Section 5, a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.

         6.      Certain Other Terms and Conditions of Employment. (a) Expense
Reimbursement. The Company shall pay, or shall reimburse the Executive for, the
Executive's out-of-pocket expenses related to his employment by the Company,
on a basis consistent with such reimbursements from his prior employer.





                                      -18-

<PAGE>   18

         (b)     Incentive Compensation Plans. In addition to the compensation
provided for in this Agreement, and subject to any required approval of the
Board, the Executive shall be entitled, during his employment by the Company,
to participate in any and all incentive compensation plans of any kind
(including without limitation short-term and long-term plans and programs and
cash-based and stock-based plans and programs) maintained by the Company from
time to time for its management and/or key employees.

         (c)     Indemnification. If Executive or his affiliates are or become
a party or are threatened to be made a party to any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative, the Company shall indemnify the Executive and his affiliates
against, and hold them harmless from, to the fullest extent permitted by law,
any and all claims, costs and expenses (including reasonable attorneys' fees
and expenses), judgments, fines and settlements (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld), whether involving third parties or otherwise, incurred by or
asserted against the Executive and his affiliates (including without limitation
contests between the Company and the Executive, or between either of them and
any third party, and including without limitation contests involving any
payment pursuant to this Agreement) in connection with or arising from the





                                      -19-

<PAGE>   19

Executive's serving as Chairman of the Board and/or Chief Executive Officer of
the Company (and, if applicable, President of the Company) and the Executive
and his affiliates' entering into any and all definitive agreements
contemplated by or entered into pursuant to the Term Sheet, including without
limitation the stockholders agreement. The right of indemnification shall
include the advancement and payment of any and all expenses of the Executive
and his affiliates in connection with any matter for which the Executive may be
entitled to indemnification. Notwithstanding the foregoing, neither Executive
nor his affiliates shall be entitled to indemnification with respect to any
action, suit or proceeding by or on behalf of the Company in which the
Executive is finally determined to have breached the Stock Pledge Agreement.

         (d)     Legal Fees. The Company shall pay and/or reimburse the
Executive for all legal fees and expenses incurred by him and his affiliates in
connection with the negotiation of the Term Sheet and any and all definitive
agreements contemplated by or entered into pursuant to the Term Sheet,
including without limitation the stockholders agreement.

         7.      Definitions. The following terms shall have the meanings set
forth in this Section 7.





                                      -20-

<PAGE>   20

         (a)     The "Accounting Firm" means Price Waterhouse or any other
nationally recognized firm of certified public accountants reasonably
acceptable to the Company that the Executive may designate.

         (b)     The "Additional Bonuses" has the meaning assigned to it in
paragraph (b) of Section 2.

         (c)     The "Additional Shares" means the Additional Shares as defined
in the Term Sheet, together with any other security into which the Additional
Shares may be converted as a result of any reclassification, stock split,
consolidation, merger or other change in the number or kind of security
represented by the Additional Shares.

         (d)     The "Board" has the meaning assigned to it in the second
paragraph of this Agreement.

         (e)     A "Cashless Exercise" has the meaning assigned to it in
subparagraph (i) of paragraph (c) of Section 1.

         (f)     "Cause" means the willful and continued failure of the
Executive substantially to perform his duties to the Company (other than as a
result of physical or mental illness or injury), after the Board delivers to
the Executive a written demand for substantial performance that specifically
identifies the manner in which the Board believes that he has not
substantially performed his duties.





                                      -21-

<PAGE>   21

         (g)     A "Change in Control of the Company" means any transaction in
which any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Executive, Liberty Media Corporation ("Liberty"), Roy M.
Speer ("Speer"), and their respective affiliates (within the meaning of Rule
12b-2 promulgated under the Exchange Act), including any trusts or foundations
established by Speer (a "Person"), acquires (i) beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of equity
securities of the Company representing a majority of the voting power of the
then-outstanding equity securities of the Company; (ii) all or substantially
all of the assets of the Company; or (iii) in the event that the Executive and
Liberty, and the members of their respective Stockholder Groups, collectively
cease to beneficially own equity securities of the Company representing a
majority of the voting power of the then-outstanding equity securities of the
Company (for such purpose, treating any shares of Class B Common Stock of the
Company then still subject to the Liberty Option as if they were owned by
Liberty and/or the Executive), the greatest of (w) equity securities of the
Company representing 25 percent of the voting power of the then-outstanding
equity securities of the Company, (x) equity securities of the Company having
an aggregate voting power in





                                      -22-

<PAGE>   22

excess of the aggregate voting power represented by the equity securities of
the Company then owned by Liberty and the members of its Stockholder Group, and
(y) equity securities of the Company having an aggregate voting power in excess
of the aggregate voting power represented by the equity securities of the
Company then owned by the Executive and the members of his Stockholder Group,
and (z) at any time when Liberty and the Executive (or their respective
affiliates) are parties to a stockholders agreement relating to the ownership
and voting of equity securities of the Company, the Executive and his
Stockholder Group own at least 1,000,000 shares of Stock (taking into account
all shares of Stock issuable upon exercise of all unexercised Options, whether
or not then exercisable, any other options to purchase, or securities
convertible into, shares of Stock owned by the Executive and the members of his
Stockholder Group, the Additional Shares and any other shares of Stock owned by
the Executive and the members of his Stockholder Group), and the Executive is
Chairman of the Board and/or Chief Executive Officer and/or President of the
Company, equity securities of the Company having an aggregate voting power in
excess of the aggregate voting power represented by the equity securities of
the Company then owned by Liberty and the Executive and the members of their
respective Stockholder Groups, collectively.





                                      -23-

<PAGE>   23

         (h)     The "Change in Control Price" means the higher of (i) the
highest reported sales price, regular way, of a share of Stock in any
transaction reported on the New York Stock Exchange Composite Tape or other
national exchange on which such shares are listed or on NASDAQ during the
60-day period prior to and including the date of a Change in Control or (ii) if
the Change in Control is the result of a tender or exchange offer or merger,
consolidation or other similar transaction (a "Corporate Transaction"), the
highest price per share of Stock paid in such tender or exchange offer or
Corporate Transaction; provided, however, that if the Change in Control occurs
within six months of the date of this Agreement, then the Change in Control
Price shall be the Fair Market Value of the Stock on the date the LSAR is
exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, or, for purposes of the provision in the preceding sentence, to
determine the Fair Market Value of the Stock if such value is not otherwise
determinable pursuant to the definition of "Fair Market Value" contained
herein, the value of such securities or other noncash consideration shall be
determined in good faith by the Board.

         (i)     The "Code" has the meaning assigned to it in paragraph (a) of
Section 5.





                                      -24-

<PAGE>   24

         (j)     The "Company" means the Company as defined in the first
paragraph of this Agreement and any successor to its business and/or assets
that assumes and agrees to perform this Agreement by operation of law, or
otherwise.

         (k)     The "Control Date" means the date on which the Liberty Option
shall have been validly exercised.

         (l)     The "Excise Tax" has the meaning assigned to it in paragraph
(b) of Section 5.

         (m)     The "Executive" has the meaning assigned to it in the first
paragraph of this Agreement.

         (n)     "Fair Market Value" means, as of any given date, the mean
between the highest and lowest reported sales prices of the Stock in the
over-the-counter market, as reported by NASDAQ, or, if the Stock is listed on a
national securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national security exchange on which the Stock is listed or admitted to trading,
on that date or, if there are no reported sales on that date, on the next day
after that date on which there are such reported sales.

         (o)     "Good Reason" means the assignment to the Executive of any
duties inconsistent in any respect with his position as Chairman of the Board
and/or CEO and/or President, as the case may be, of the Company, or any other
action





                                      -25-

<PAGE>   25

by the Company that results in a diminution in his position, authority, duties
or responsibilities; any reduction of the Executive's compensation or benefits
below what is required by the terms of his employment with the Company; and any
purported termination of the Executive's employment by the Company other than
for Cause.

         (p)     The "Initial Bonus" has the meaning assigned to it in
paragraph (a) of Section 2.

         (q)     The "Initial Shares" means the 220,994 shares of Stock
purchased by the Executive in exchange for cash as of August 24, 1995.

         (r)     The "Liberty Option" means the option, held by Liberty on the
date hereof, to acquire shares of Class B Common Stock of the Company from RMS
Limited Partnership.

         (s)     The "LSARs" has the meaning assigned to it in subparagraph
(ii) of paragraph (d) of Section 1.

         (t)     "NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotations System.

         (u)     The "Options" has the meaning assigned to it in the third
paragraph of this Agreement.

         (v)     The "Severance Bonus" has the meaning assigned to it in
paragraph (c) of Section 2.





                                      -26-

<PAGE>   26

         (w)     The "Stock" means the common stock of the Company, par value
$.01 per share.

         (x)     "Stockholder Group" means, in the case of Liberty, Liberty and
the controlled affiliates of Liberty and Tele-Communications, Inc. and, in the
case of the Executive, the Executive and his 90-percent owned and controlled
affiliates.

         (y)     "Taxes" means all federal, state and local income and other
applicable taxes.

         (z)     The "Term Sheet" has the meaning assigned to it in the second
paragraph of this Agreement.

         (aa)    An "Underpayment" has the meaning assigned to it in paragraph
(b) of Section 5.

         8.      Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive except by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
guardian and legal representatives. The Executive shall be entitled to assign
any rights of the Executive under this Agreement to any corporation or other
entity at least 90% owned by the Executive, in which case all references in
this Agreement to the Executive shall thereafter refer to such corporation or
other entity, as the case may





                                      -27-

<PAGE>   27

be, and such corporation or entity shall thereupon become bound hereby,
provided, that prior to such time as the Executive ceases to own at least 90%
of such corporation or entity, the Executive shall cause such rights to be
reassigned to the Executive or another corporation or entity at least 90% owned
by the Executive.

         (b)     This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

         (c)     The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place, except as otherwise provided in subparagraph (ii)
of paragraph (e) of Section 1.

         9.      Miscellaneous. (a) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties





                                      -28-

<PAGE>   28

hereto or their respective successors and legal representatives.

         (b)     Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by facsimile, overnight courier, or registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

         If to the Executive:

                 1940 Coldwater Canyon
                 Beverly Hills, CA 90210

                 Facsimile: (310) 247-9153

         If to the Company:

                 12425 28th Street North
                 St. Petersburg, FL 33716

                 Attention: Chief Financial Officer
                            General Counsel

                 Facsimile: (813) 572-1488

or to such other address or facsimile number as any party shall have furnished
to the others in writing in accordance with this paragraph (b) of Section 9.
Notice and communications shall be effective when actually received by the
addressee.

         (c)     Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.





                                      -29-

<PAGE>   29

         (d)     Withholding Taxes. No later than the date as of which an
amount first becomes includible in the gross income of the Executive for
federal income tax purposes with respect to any Options under this Agreement,
the Executive shall pay to the Company, or make arrangements satisfactory to
the Company regarding the payment of, any Taxes that are required by law to be
withheld with respect to such amount. The obligations of the Company under this
Agreement shall be conditional on such payment or arrangements.

         (e)     No Waiver. The failure of the Executive or the Company to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have under this
Agreement shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.

         (f)     Entire Agreement. The Executive and the Company acknowledge
that this Agreement supersedes any prior agreement (including the Term Sheet)
between the parties with respect to the subject matter of this Agreement.

         (g)     Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same original.

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to authorization from





                                      -30-

<PAGE>   30

their respective governing authorities, the Company has caused this Agreement
to be executed in its name on their behalf, all as of the day and year first
above written.

                                           /s/ Barry Diller
                                           ---------------------------------
                                           Barry Diller

                                           SILVER KING COMMUNICATIONS, INC.

                                           By /s/ Steven H. Grant
                                              ------------------------------
                                              Executive Vice President


                                      -31-



<PAGE>   1

                             STOCK PLEDGE AGREEMENT


         THIS STOCK PLEDGE AGREEMENT (the "Stock Pledge Agreement") , dated as
of August 24, 1995, is made and entered into by and between SKC Investments,
Inc., a Delaware Corporation ("SKC"), and Barry Diller (the "Pledgor").


                              W I T N E S S E T H:

         WHEREAS, the Pledgor and Silver King Communications, Inc., a Delaware
corporation (the "Company"), have entered into a certain Equity Compensation
Agreement, dated as of August 24, 1995 (as such agreement may be amended from
time to time, the "Agreement") whereby the Company has agreed, inter alia, to
issue and sell to Pledgor 441,988 shares of common stock, par value $0.01 per
share, of the Company (the "Shares"). Capitalized terms used herein and not
otherwise defined shall have the same meanings ascribed to them in the
Agreement;

         WHEREAS, in consideration of a loan by SKC to the Pledgor of
$4,997,779.25, receipt of which by the Pledgor is hereby acknowledged, to
enable the Pledgor to purchase 220,994 of the Shares (the "Restricted Shares"),
the Pledgor is delivering to SKC a duly executed Non-Recourse Secured
Promissory Note of the Pledgor in the principal amount of $4,997,779.25 dated
as of the date hereof (as such note may be amended from time to time, the
"Note");

         WHEREAS, the Pledgor wishes to grant
 further security and assurance to
SKC as provided in this Agreement in order to secure the payment of the
principal of, and all fees, expenses and other amounts owing in respect of, the
Note and to pledge to SKC the Restricted Shares along with 44,199 additional
Shares (the "Additional Pledged Shares");

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

         Section 1. Pledge. As collateral security for the full and timely
payment of the principal of, and all fees, expenses and other amounts owing in
respect of, the Note, the Pledgor hereby delivers, deposits, pledges, transfers
and assigns to SKC, in form transferable for delivery, and creates in SKC a
continuing security interest in (i) the

<PAGE>   2

Restricted Shares, the Additional Pledged Shares and all certificates or other
instruments or documents evidencing any of the above now owned by the Pledgor
(together with any securities or property required to be delivered to the
Pledgor pursuant to section 2(b) hereof, the "Pledged Securities") (ii) all
dividends, payments and distributions of every kind due and payable or
distributable in respect of all or any of the Pledged Securities (the "Pledged
Dividends") and (iii) all other property, assets, accounts and moneys received
by Pledgor in respect of the Pledged Securities or the sale, transfer,
assignment, encumbrance or other disposition thereof (together with the Pledged
Securities and Pledged Dividends, the "Collateral").

         The Pledgor hereby delivers to SKC the Pledged Securities and
appropriate undated security transfer powers duly executed in blank for the
Pledged Securities set forth above.

         Section 2. Administration of Collateral. The following provisions
shall govern the administration of the Collateral:

         (a)     So long as no Event of Default has occurred and is continuing
(as used herein, "Event of Default" shall mean the occurrence of any Event of
Default under the Note), the Pledgor shall be entitled to act with respect to
the Pledged Securities in any manner not inconsistent with this Stock Pledge
Agreement, the Agreement, the Note or any document or instrument delivered or
to be delivered pursuant to or in connection with the Agreement, including
voting the Pledged Securities and receiving all cash Pledged Dividends and
giving consents, waivers and ratifications in respect thereof.

         (b)     (i) If, while this Stock Pledge Agreement is in effect, the
Pledgor shall become entitled to receive or shall receive any debt or equity
security certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection
with any reorganization), option or right, whether as a dividend or
distribution in respect of, in substitution of, or in exchange for any Pledged
Securities, or in the event of a recapitalization, reclassification or similar
transaction, the Pledgor agrees to accept the same as SKC's agent and to hold
the same in trust on behalf of and for the benefit of SKC and to deliver the
same forthwith to SKC in the exact form received, with the endorsement of the
Pledgor, when necessary, and/or appropriate undated security





                                      -2-

<PAGE>   3

transfer powers duly executed in blank, to be held by SKC, subject to the terms
of this Stock Pledge Agreement, as additional Collateral. Notwithstanding the
foregoing, it is agreed that the Pledgor may exercise any option or right
received as contemplated in the preceding sentence, and SKC will exercise any
such option or right upon receipt of written instructions to such effect,
accompanied by any required payments or documents from the Pledgor and the
securities received upon such exercise of any such option or right shall be
delivered to and thereafter held by SKC as contemplated by the preceding
sentence, subject to the other terms and conditions of this Stock Pledge
Agreement.

                 (ii)     SKC specifically acknowledges and agrees that the
Pledgor shall be permitted to exchange any or all of the Restricted Shares and
the Additional Pledged Shares for an equal number of shares of the Company's
Class B Common Stock par value $.01 per share (the "Class B Shares") pursuant
to the terms of the Stockholders' Agreement, dated as of August 24, 1995, by
and between Liberty Media Corporation ("Liberty") and the Pledgor (the
"Stockholders' Agreement"), provided, however, that Pledgor shall deliver to
SKC as Collateral hereunder all Class B Shares so obtained by Pledgor, which
shall become Pledged Securities for all purposes hereunder. Upon receipt by SKC
of Class B Shares as Collateral as described in the immediately preceding
sentence, SKC shall release from the liens created hereunder that number of
Shares equal to the number of Class B Shares so received and shall execute and
deliver to Pledgor all releases or other documents reasonably requested by
Pledgor to evidence such release.

         (c)     The Pledgor shall immediately upon request by SKC and in
confirmation of the security interests hereby created, execute and deliver to
SKC such further instruments, deeds, transfers, assurances and agreements, in
such form and substance as SKC shall request, including any financing
statements and amendments thereto, or any other documents, required under
Delaware law and any other applicable law to protect the security interests
created hereunder.

         (d)     Subject to the exercise of any right with respect to the
Pledged Securities and other Collateral by SKC pursuant to this Stock Pledge
Agreement, and subject to Sections 3 and 5 below, upon prepayment of
$2,498,889.63 of the principal amount of the Note, SKC shall release from the
pledge hereunder and return to the Pledgor Pledged Securities evidencing an
aggregate of 154,696 Shares and/or Class B Shares (in such proportion as
requested by the Pledgor), together with any and all Pledged Dividends and
other Pledged





                                      -3-

<PAGE>   4

Securities received by SKC pursuant to Section 2(b) hereof in respect of such
154,696 Shares and/or Class B Shares and shall execute and deliver to Pledgor
all releases or other documents reasonably requested by Pledgor to evidence
such release. The remaining Collateral shall be released from the pledge
hereunder and returned to the Pledgor upon payment in full of the unpaid
principal of and all fees, expenses and other amounts owing in respect of the
Note.

         Section 3. Remedies in Case of an Event of Default.

         (a)     Subject to paragraph (b) below, in case an Event of Default
shall have occurred and be continuing, SKC shall have in each case all of the
remedies of a secured party under the Delaware Uniform Commercial Code, and,
without limiting the foregoing, shall have the right, in its sole discretion,
to sell, resell, assign and deliver all or, from time to time, any part of the
Collateral, including without limitation, the Pledged Securities, and any
interest in or option or right to purchase any part thereof, on any securities
exchange on which the Pledged Securities or any of them may be listed, at any
private sale or public auction, with or without demand of performance or other
demand, advertisement or notice of the time or place of sale or adjournment
thereof or otherwise (except that SKC shall give ten days, notice to the
Pledgor of the time and place of any sale pursuant to this Section 3, which
period Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code), for cash, on credit or for other
property, for immediate or future delivery, and for such price or prices and on
such terms as SKC shall reasonably determine, the Pledgor hereby waiving and
releasing any and all right or equity of redemption whether before or after
sale hereunder. At any such sale SKC may bid for and purchase the whole or any
part of the Collateral so sold free from any such right or equity of
redemption. SKC shall apply the proceeds of any such sale first to the payment
of all costs and expenses, including reasonable attorneys' fees, incurred by
SKC in enforcing its rights under this Stock Pledge Agreement, second to the
payment of all fees, expenses and other amounts owing in respect of the Note
and third to the unpaid principal of the Note. Any purchaser at any such sale
described in this paragraph shall hold the property so purchased absolutely
free from any claim or right on the part of the Pledgor, and the Pledgor hereby
waives (to the extent permitted by law) all rights of redemption, stay and
appraisal which the Pledgor may now have or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.





                                      -4-

<PAGE>   5

         (b)     Notwithstanding anything to the contrary contained herein, SKC
shall not sell, assign or purchase any Pledged Securities consisting of Class B
Shares. In the event SKC determines it is necessary to dispose of any of the
Class B Shares in the exercise of its remedies hereunder (such shares, the
"Foreclosed Class B Shares"), SKC shall first make an offer to Pledgor to
exchange each Foreclosed Class B Share for a share of common stock of the
Company. To the extent the Pledgor shall not make such exchange within 10 days
of receipt of such offer, SKC shall then offer to exchange the remaining
Foreclosed Class B Shares to Liberty (or its designee) and the Silver Company
(as defined in the Stockholders' Agreement), which offer Liberty and the Silver
Company shall have 10 days to accept or reject, for an equal number of shares
of common stock of the Company, in which case such exchange shall occur
following the receipt of all required regulatory consents, authorizations and
approvals and the expiration of all waiting periods in connection with such
exchange or sale, if any. If, after making the offers and exchanges described
above in this Section 3(b), SKC retains any Foreclosed Class B Shares, prior to
any disposition thereof to any person or entity other than Pledgor, Liberty (or
its designee) or the Silver Company, SKC shall cause the Company to convert to
common stock each such Foreclosed Class B Share pursuant to the terms of the
Class B Shares and the Company's Restated Certificate of Incorporation. Upon
the transfer to Pledgor, Silver Company or Liberty of any Foreclosed B Shares,
SKC shall release from the liens created hereunder such transferred shares and
shall execute and,deliver to Pledgor, Silver Company or Liberty, as the case
may be, all releases or other documents reasonably requested by such entity to
effect such release.

         (c)     The Pledgor recognizes that SKC may be unable to effect a
public sale of all or a part of the Collateral by reason of certain
prohibitions contained in the Securities Act or in the rules and regulations
promulgated thereunder or in applicable state securities, or "blue sky," laws,
but may be compelled to resort to one or more private sales to a purchaser or
group of purchasers, including Liberty (or its designee) and/or the Silver
Company, who will be obliged to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor agrees that private sales so made
may be at prices and on other terms less favorable to the seller than if the
Collateral was sold at public sale, and that SKC has no obligation to delay the
sale of the Collateral for the period of time necessary to permit the
registration of the Pledged Securities or other Collateral for public sale
under the Securities Act and under





                                      -5-

<PAGE>   6

applicable state securities, or "blue sky," laws. The Pledgor agrees that a
private sale or sales made under the foregoing circumstances shall be deemed to
have been made in a commercially reasonable manner.

         (d)     Neither failure nor delay on the part of SKC to exercise any
right, remedy, power or privilege provided for herein or by statute or at law
or in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.

         Section 4. Pledgor's Obligations Not Affected. The obligations of the
Pledgor under this Stock Pledge Agreement shall remain in full force and effect
without regard to, and shall not be impaired or affected by (a) any
subordination, amendment or modification of or addition or supplement to the
Agreement or the Note; (b) any exercise or non-exercise by SKC of any right,
remedy, power or privilege under or in respect of this stock Pledge Agreement
or the Note, or any waiver of any such right, remedy, power or privilege; (c)
any waiver, consent, extension, indulgence or other action or inaction in
respect of the Note or any assignment or transfer of the Agreement, the Note or
this Stock Pledge Agreement; or (d) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like, of SKC,
whether or not the Pledgor shall have notice or knowledge of any of the
foregoing.

         Section 5. Transfer by Pledgor. The Pledgor will not sell, assign,
transfer or otherwise dispose of, grant any option with respect to, or
mortgage, pledge or otherwise encumber the Pledged Securities or any interest
therein, except in accordance with this Stock Pledge Agreement, the Agreement
and the Stockholders' Agreement. In the event of a sale, assignment, transfer
or other disposition of or mortgage, pledge or other encumbrance of Pledged
Securities pursuant to the Agreement or the Stockholders' Agreement, the
Pledged Securities so sold, assigned, transferred or otherwise disposed of or
mortgaged, pledged or otherwise encumbered shall remain subject to the
provisions of this Stock Pledge Agreement, except as provided in Section
2(b)(ii), and no such sale, assignment, transfer or other disposition of or
mortgage, pledge or other encumbrance of Pledged Securities may be effected
(other than an exchange of Shares as provided in Section 2(b)(ii) hereof)
unless and until the proposed purchaser, assignee, transferee or other
acquiror, mortgagee or pledgee shall agree in writing, in form and substance
satisfactory to SKC in its sole discretion, to be bound by





                                      -6-

<PAGE>   7

all the terms of this Stock Pledge Agreement with the same force and effect as
if such transferee were a party hereto.

         Section 6. Attorney-in-Fact. SKC is hereby appointed the
attorney-in-fact of the Pledgor and the Pledgor's transferees for the purpose
of carrying out the provisions of this Stock Pledge Agreement and taking any
action and executing any instrument that SKC reasonably may deem necessary or
advisable to accomplish the purposes hereof and/or to exercise its rights
hereunder, which appointment as attorney-in-fact is irrevocable as one coupled
with an interest.

         Section 7. Termination. Upon payment in full of the unpaid principal
of, and all fees, expenses and other amounts owing in respect of, the Note,
this Stock Pledge Agreement shall terminate, the liens created hereunder shall
be released and all rights in the Collateral shall revert to Pledgor. Following
such termination, SKC shall deliver such of the Pledged Securities and other
Collateral as have not theretofore been released pursuant to Section 2(d) or
Section 5 hereof or otherwise applied pursuant to the provisions of this Stock
Pledge Agreement (including pursuant to Section 3) and, upon request of
Pledgor, shall execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination and release.

         Section 8. Notice. All notices or other communications required or
permitted to be given hereunder shall be delivered as provided in the Agreement
and, in the case of SKC, in care of the Company at the address provided in the
Agreement.

         Section 9. Binding Effect, Successors and Assigns. This Stock Pledge
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and nothing herein is intended or
shall be construed to give any other person any right, remedy or claim under,
to or in respect of this Stock Pledge Agreement.  Notwithstanding the
foregoing, the parties hereto acknowledge and agree that each of Liberty and
the Silver Company shall be beneficiaries of the provisions of Section 3(b)
hereof and shall be entitled to enforce the obligations set forth in such
Section 3(b) as if a party to this Stock Pledge Agreement.





                                      -7-

<PAGE>   8

         Section 10. Miscellaneous. SKC and its assigns shall have no
obligation in respect of the Pledged Securities, except to hold, dispose of and
release the same in accordance with the terms of this Stock Pledge Agreement.
Neither this Stock Pledge Agreement nor any provision hereof may be amended,
modified, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the amendment,
modification, waiver, discharge or termination is sought (including Liberty and
the Silver Company in the case of any amendment, modification, waiver of other
change in the terms of Section 3(b) hereof). The provisions of this Stock
Pledge Agreement shall be binding upon the successors and assigns of the
Pledgor. The captions in this Stock Pledge Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. This Stock
Pledge Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to the principles of
conflicts of law thereof. This Stock Pledge Agreement may be executed
simultaneously in counterparts, each of which is an original, but all of which
together shall constitute one instrument.

         Section 11. Regulatory Approvals. Notwithstanding anything to the
contrary contained herein, if any action to be taken hereunder requires the
prior approval of the Federal Communications Commission, the action shall not
be taken until such time as the required approval is obtained, and the Pledgor
and SKC will cooperate to obtain any such required approval.

         Section 12. Severability. In case any provision of this Stock Pledge
Agreement is invalid, illegal or unenforceable in any jurisdiction, (i) such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability, (ii) the invalidity, illegality or
unenforceability of such provision shall in no way affect or impair any other
provision of this Stock Pledge Agreement, each of which will continue to be
valid and enforceable, and (iii) the parties hereto shall use their best
efforts to negotiate a replacement provision, which provision shall, to the
extent permitted by law, have the same effect as any severed term.

         Section 13. Third Party Beneficiaries. It is the intention and
agreement of the parties hereto that each of Silver Company and Liberty is a
beneficiary of the provisions of Section 3(b) hereof.





                                      -8-

<PAGE>   9

         IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge
Agreement to be executed and delivered as of the date first written above.

                                        PLEDGOR:

                                        /s/ Barry Diller
                                        -----------------------------------
                                            Barry Diller


                                        PLEDGEE:

                                        SKC Investments, Inc.

                                        By /s/ Steven H. Grant
                                           --------------------------------
                                           Name: Steven H. Grant
                                           Title: Secretary/Treasurer


                                      -9-



<PAGE>   1


                      NON-RECOURSE SECURED PROMISSORY NOTE


$4,997,779.25                                        August 24, 1995

                 FOR VALUE RECEIVED, the undersigned, Barry Diller (the
"Investor"), hereby promises to pay to SKC Investments, Inc., a Delaware
corporation ("SKC"), or to the legal holder of this Note at the time of
payment, the principal sum of Four Million Nine Hundred Ninety-Seven Thousand
Seven Hundred Seventy-Nine and 25/100 Dollars ($4,997,779.25) in lawful money
of the United States of America. All principal of this Note will be due and
payable on September 5, 1997.

                 This Note evidences a loan made by SKC to the Investor to
facilitate the purchase by the Investor of shares of Common Stock, par value
$.01 per share, of Silver King Communications, Inc., a Delaware corporation
(the "Company") (the "Restricted Shares") in accordance with the terms of the
Equity Compensation Agreement, dated as of August 24, 1995, by and between the
Company and the Investor (the "Agreement"). Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the
Agreement. Payment of the principal of, and all fees, expenses and other
amounts owing in respect of this Note is secured pursuant to the terms of a
certain Stock Pledge Agreement, dated as of August 24, 1995, by and between
 the
Investor and the Company (as such agreement may be amended from time to time,
the "Stock Pledge Agreement"), reference to which is made for a description of
the collateral provided thereby and the rights of SKC and the holder of this
Note in respect of such collateral.

                 This Note is subject to the following further terms and
conditions:

                 Section 1. Payment and Prepayment. All payments and
prepayments of principal of, and all fees, expenses and other amounts owing in
respect of, this Note shall be made to SKC or its order, or to the legal holder
of this Note or such holder's order, in lawful money of the United States of
America at the principal offices of SKC (or at such other place as the holder
hereof shall notify the Investor in writing). The Investor may, at its option,
prepay this Note in whole or in part at any time or from time to time without
penalty or premium. Upon final payment of principal of, and all fees, expenses
and other amounts owing in respect of, this Note it shall be surrendered for
cancellation.

<PAGE>   2

                 Section 2. Events of Default. Upon the occurrence of any of
the following events ("Events of Default"):

                 (a)      failure to pay any principal of this Note, when due;

                 (b)      termination of Investor's employment by the Company
         for Cause (as ouch term is defined in the Agreement);

                 (c)      voluntary termination of Investor's employment with
         the Company prior to the Control Date without Good Reason (as such
         terms are defined in the Agreement); or

                 (d)      Institution by or against Investor of any bankruptcy
         case or other proceeding under any bankruptcy or insolvency law;

then, and in any such event, the holder of this Note may declare, by notice of
default given to the Investor, the entire principal amount of this Note to be
forthwith due and payable, whereupon the entire principal amount of this Note
outstanding shall become due and payable without presentment, demand, protest,
notice of dishonor and all other demands and notices of any kind, all of which
are hereby expressly waived.

                 No delay or failure by the holder of this Note in the exercise
of any right or remedy shall constitute a waiver thereof, and no single or
partial exercise by the holder hereof of any right or remedy shall preclude any
other or future exercise thereof or the exercise of any other right or remedy.

                 Section 3. No Recourse. Except for recourse against the
Collateral (as such term is defined in the Stock Pledge Agreement) as provided
in the Stock Pledge Agreement, no recourse for the payment of the principal of
this Note or for any claim based hereon (including costs of collection) shall
be had against the Investor, all ouch liability being, by the acceptance hereof
and as part of the consideration for the issue hereof, expressly waived and
released.

                 Section 4. Miscellaneous.

                 (a)      The provisions of this Note shall be governed by and
         construed in accordance with the laws of the State of Delaware,
         without regard to the principles of conflicts of law thereof.





                                      -2-

<PAGE>   3

                 (b)      All notices and other communications hereunder shall
         be in writing and will be deemed to have been duly given if delivered
         or mailed in accordance with the Agreement.

                 (c)      Investor agrees that, subject to the limitations in
         Section 3 above, Investor will pay SKC the amount of any and all costs
         and expenses, including all reasonable fees and expenses of counsel,
         incurred in connection with the exercise or enforcement of any of
         SKC's rights under this Note or the Stock Pledge Agreement and the
         failure of Investor to perform or observe any of the provisions of
         this Note or the Stock Pledge Agreement. Any such amounts as provided
         under this paragraph (c), will be added to the obligations of Investor
         under this Note.

                 (d)      The headings contained in this Note are for reference
         purposes only and shall not affect in any way the meaning or
         interpretation of the provisions hereof.

                 (e)      This Note shall not be assignable without the prior
         written consent of Investor.

                 IN WITNESS WHEREOF, this Note has been duly executed and
delivered by the Investor as of the date first written above.

                                           /s/ Barry Diller
                                           -----------------------------
                                           Barry Diller

Witness:


/s/ Carolyne Snow
- - ----------------------------
Carolyne Snow





                                      -3-



<PAGE>   1


                            AMENDMENT NO. 1 TO THE
                         AGREEMENT AND PLAN OF MERGER

        AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER, dated as of May 8,
1996 (this "Amendment No.1"), by and among Silver King Communications, Inc., a
Delaware Corporation ("Parent"), Thames Acquisition Corp., a Delaware
Corporation ("Sub"), and Savoy Pictures Entertainment, Inc., a Delaware
corporation (the "Company").

        WHEREAS, Parent, Sub and the Company have entered into an Agreement and
Plan of Merger, dated as of November 27, 1995 (the "Merger Agreement"); and

        WHEREAS, Parent, Sub and the Company desire to amend and modify the
Merger Agreement as set forth herein.

        NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Parent, Sub and the Company
hereby agree that the Merger Agreement shall be, and hereby is, amended and
modified as follows:

        1.   Paragraph (b) of Section 7.1 of the Merger Agreement is hereby
amended and replaced in its entirety to read as follows:

        "(b) by either Parent or the Company if the Merger shall not have been
consummated by July 30, 1996 (provided) that, if the Merger shall not have been
consummated due to the failure to obtain the FCC Approvals and such approvals
are, in the reasonable opinion of FCC counsel to Parent
 or FCC counsel to the
Company, likely to be received or made final on or prior to October 30, 1996,
then such date shall be extended to October 30, 1996, and provided, further,
that the right to terminate this Agreement under this Section 7.1(b) shall not
be available to any party whose action or failure to act has been the cause of
or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement);"

        2.    Except as amended and modified by this Amendment No.1, all other
terms of the Merger Agreement shall remain unchanged.

        3.    This Amendment No. 1 shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed therein, without












<PAGE>   2



giving effect to the laws that might otherwise govern under applicable
principles of conflicts of laws.

        4.    This Amendment No. 1 may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument.













<PAGE>   3



      IN WITNESS WHEREOF, each of Parent, Sub and the Company has caused this
Amendment No. 1 to be executed on its behalf, all as of the day and year first
above written.

                                       SILVER KING COMMUNICATIONS, INC.


                                       By: /s/ Steven H. Grant
                                           -------------------------------
                                           Name:  Steven H. Grant
                                           Title: Executive Vice President

                                        
                                       THAMES ACQUISITION CORP.


                                       By: /s/ Steven H. Grant
                                           -------------------------------
                                           Name:  Steven H. Grant
                                           Title: President


                                       SAVOY PICTURES ENTERTAINMENT, INC.


                                       By: /s/ Lewis J. Korman
                                           -------------------------------
                                           Name:  Lewis J. Korman
                                           Title: President



<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               MAR-31-1996
<EXCHANGE-RATE>                                      1
<CASH>                                          23,318
<SECURITIES>                                         0
<RECEIVABLES>                                    3,468
<ALLOWANCES>                                        47
<INVENTORY>                                          0
<CURRENT-ASSETS>                                29,377
<PP&E>                                          98,668
<DEPRECIATION>                                  70,942
<TOTAL-ASSETS>                                 134,970
<CURRENT-LIABILITIES>                           19,605
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            95
<OTHER-SE>                                       8,089
<TOTAL-LIABILITY-AND-EQUITY>                   134,970
<SALES>                                              0
<TOTAL-REVENUES>                                11,249
<CGS>                                                0
<TOTAL-COSTS>                                      128
<OTHER-EXPENSES>                                 9,337
<LOSS-PROVISION>                                    20
<INTEREST-EXPENSE>                               2,412
<INCOME-PRETAX>                                    (29)
<INCOME-TAX>                                       577
<INCOME-CONTINUING>                               (606)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                      (606)
<EPS-PRIMARY>                                     (.06)
<EPS-DILUTED>                                        0
        

</TABLE>